Curry v. Contract Fabricators Profit Sharing Plan

• Decision Date: 01 June 1988
• Docket Number: Civ. A. No. 86-T-751-N.
• Citation: 744 F. Supp. 1061
• Parties: Alexander CURRY, Plaintiff, v. CONTRACT FABRICATORS INCORPORATED PROFIT SHARING PLAN, et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

744 F. Supp. 1061

Alexander CURRY, Plaintiff, v. CONTRACT FABRICATORS INCORPORATED PROFIT SHARING PLAN, et al., Defendants.

Civ. A. No. 86-T-751-N.

United States District Court, M.D. Alabama, N.D.

March 18, 1988.

On Motion for Attorney Fees June 1, 1988.

COPYRIGHT MATERIAL OMITTED

Theron Stokes, Kenneth L. Thomas, Massey, Means & Thomas, Montgomery, Ala., for plaintiff.

Thomas R. DeBray, Kaufman, Rothfeder & Blitz, Montgomery, Ala., for defendants.

MEMORANDUM OPINION

MYRON H. THOMPSON, District Judge.

Plaintiff Alexander Curry has brought this lawsuit under the Employee Retirement Income Security Act (commonly known as ERISA), 29 U.S.C.A. §§ 1001-1461, against the following defendants: his former employer, Contract Fabricators, Inc.; the company profit sharing plan, Contract Fabricators Incorporated Profit Sharing Plan; and the company president, Victor M. Haber. Curry initially sought to recover pension benefits, compensatory damages for emotional and mental distress, punitive damages, civil penalties, and attorney fees. Since the filing of this lawsuit, Curry has received his pension benefits. The law is also now clear in this circuit that punitive damages are not available under ERISA, Bishop v. Osborn Transportation, Inc., 838 F.2d 1173 (11th Cir.), cert. denied, 488 U.S. 832, 109 S.Ct. 90 (1988); and at trial Curry failed to present any evidence establishing his entitlement to compensatory damages for emotional and mental distress.¹ The only issues remaining for resolution are therefore whether Curry is entitled to civil penalties and attorney fees. Based on the evidence presented at a non-jury trial, the court finds that Curry is entitled to $800 in civil penalties and an as yet undetermined amount in attorney fees, all from Contract Fabricators and Haber, individually and as president of the company.

I.

Alexander Curry was employed for approximately 12 to 13 years by Contract Fabricators. During the last ten years of his employment, Curry was a member of the company's employee benefit plan. As established in 1971, the plan included a provision stating that a plan participant leaving employment with the company would be required to wait two years for pension benefits if the participant accepted employment with a competitor of the company within a 500 mile radius of Montgomery, Alabama. The plan was, however, amended in 1977 to delete the two-year waiting requirement and to give the plan administrator discretionary authority to refuse payment of employee pension benefits until the employee reaches the minimum retirement age of 65. The plan allows the administrator a maximum of 60 days following an employee's termination to determine if he will grant early benefits to the employee. Under the amended plan, the company is responsible for administering the plan; the company has in turn, however, appointed its president, Victor M. Haber, to serve as plan administrator.

In September of 1983, Curry decided to leave Contract Fabricators because he could not get along with his superintendent. His benefits in the plan had become vested. 29 U.S.C.A. § 1053. When Curry asked Haber about payment of his pension benefits, Haber told him that because he might go work for the "competition" he would have to wait two years to receive his benefits. As the plan administrator, Haber knew, however, that the amended plan contained no two-year waiting period if an employee went to work for a competitor, but left payment of benefits to his discretion. He had reviewed the 1977 amendments with the attorneys representing the plan prior to their adoption. After waiting the two-year period, Curry returned in mid-1985 to collect his benefits. Haber still refused to give Curry his benefits. Curry then sought legal assistance.

In mid-November 1985, Curry's attorney telephoned Haber and asked him why he had refused Curry's request for benefits. Haber told him that, under the profit sharing plan, Curry would have to wait until he was 65 because he had gone to work for a company competitor. Curry's attorney asked Haber to send him plan documents substantiating his reason. Haber agreed to send the information; he also referred Curry's attorney to the plan's accountant. Curry's attorney immediately called the plan's accountant, but the accountant refused to answer any questions because he had not received prior authorization from Haber to do so. Several days later, in late November, Curry's attorney wrote Haber a letter asking again for plan documents to support the reason Haber gave for not releasing benefits. The letter was not dated. Curry's attorney received neither the requested benefits nor the information, and therefore filed this lawsuit.

After this lawsuit was filed, Haber furnished the requested documents. Haber also tendered to Curry a claims form, which Curry filled out and returned; Haber then paid Curry his benefits. Curry is the only plan participant who has ever been denied benefits because he went to work for a competitor.

II.

ERISA provides that an administrator who fails to furnish plan information to a participant within 30 days after a request for such "may in the court's discretion be personally liable to such participant ... in the amount of up to $100 a day from the date of such failure." 29 U.S.C.A. 1132(c). The court is convinced by the evidence that Haber not only failed to comply with this provision, he failed to do so in bad faith.

The law is clear that ERISA permits a company executive to wear "two hats"; he may continue both as a company official and serve as plan administrator. 29 U.S. C.A. § 1108(c). But when a company official serving as a plan administrator engages in conduct on behalf of the plan he has the fiduciary duty to act exclusively for the benefit of the plan and its participants and beneficiaries, § 1104(a)(1)(A)(i); he abuses this duty if he acts for the benefit of his company and to the detriment of the plan or its participants. § 1106(b)(1); see also Local Union 2134 v. Powhatan Fuel, Inc., 828 F.2d 710, 713 (11th Cir.1987).

The evidence reflects that Haber entered into a fraudulent scheme to use the profit sharing plan for the benefit of himself and his company and to single out and punish Curry, a plan participant: First, in 1983, in order to keep Curry from going to work for a business competitor, Haber knowingly and intentionally misrepresented to Curry that the plan prohibited payment of benefits for two years to any participant who went to work for a company competitor; Haber knew that this prohibition had been deleted when the plan was amended in 1977. Second, in 1985, after Curry had waited two years and had again requested his benefits, Haber again refused to give him his benefits because, as the court is convinced, Curry had worked for a competitor. Finally, in late 1985, when Curry's attorney requested Curry's benefits, Haber again knowingly and intentionally attempted to mislead the attorney into believing that the plan prohibited Curry from receiving benefits until he was 65 because he had gone to work for a competitor. Haber's later failure to furnish Curry's attorney with requested plan information was not an innocent oversight, but rather was knowingly done in furtherance of his fraudulent scheme; his refusal to provide the information was an effort to cover-up his scheme.

Haber's conduct therefore warrants a civil penalty. His refusal to furnish the requested information was an intentional abuse of his fiduciary authority. Frary v. Shorr Paper Products, Inc., 494 F.Supp. 565, 569 (N.D.Ill.1980). Because Haber refused to furnish the information for at least eight months — from the latter part of December 1985 (30 days after Curry's attorney requested the information in writing) until after this lawsuit was filed in August 1986 — the court finds that a fine of $100 a month or $800 is appropriate. Furthermore, because Haber acted improperly for his and his company's own benefit, the fine should be paid by the company and by him, individually and as president of the company; the fine should not be paid by the profit sharing plan.²

Haber nevertheless argues that he was not obligated to furnish the information to Curry because Curry had not filed a claim for benefits. For reasons given later in this opinion, the court finds that Curry met the requirements for filing a claim when he first asked Haber for his benefits in 1983. But, in any event, a plan participant's right to information is not dependent on his having first filed a benefit claim. ERISA, in particular, 28 U.S.C.A. § 1024(b)(4), requires that a plan administrator provide a participant with, among other things, updated copies of documents describing the plan.³ Section 1024(b)(4) does not condition this duty on the receipt of a benefit claim.

Haber next argues that Curry's request for information "is not within the scope or contemplation of ... § 1132(c)." It is unclear whether Haber objects to the form of the request or objects to an attorney making the request on behalf of his client. Both objections lack merit. An attorney may request information on the behalf of a client who is a plan participant. Porcellini v. Strassheim Printing Co. Inc., 578 F.Supp. 605, 611 (E.D.Pa.1983). Additionally, a request for information is sufficient if it provides the administrator with clear notice of the information requested. Wesley v. Monsanto Co., 554 F.Supp. 93, 98 n. 6 (E.D.Mo.1982), aff'd, 710 F.2d 490 (8th Cir.1983). Curry's attorney submitted a written request for documents after Haber stated that he had documents supporting his claim that Curry was not entitled to benefits. Under the circumstances, Haber clearly understood that, at the very least, Curry's attorney was seeking a copy of the plan description.

Haber further contends that penalties should not be awarded under § 1132(c) because the request for information was undated. Although the lack of a date on the letter may affect the calculation of a...