Yeseta v. Baima
| Decision Date | 15 January 1988 |
| Docket Number | No. 86-6686,86-6686 |
| Citation | 837 F.2d 380 |
| Parties | , 9 Employee Benefits Ca 1377 Thomas J. YESETA, Plaintiff-Counter-Defendant-Appellee, v. Anthony S. BAIMA, Michael Baima, A. Baima, Inc., Rodney C. Miles, individually and as Executor under the Will of Anthony P. Baima, Deceased, and Andrew Hanley, Defendants-Counter-Plaintiffs-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Charles E. Weber, Gianni R. Driller, Keller, Weber & Dobrott, Irvine, Cal., for defendants-counter-plaintiffs-appellants.
Arthur E. Schwimmer, and Patricia S. Brady, Los Angeles, Cal., for plaintiff-counter-defendant-appellee.
Appeal from the United States District Court for the Central District of California.
Before ANDERSON, FERGUSON and NOONAN, Circuit Judges.
A. Baima, Inc. ("Baima Inc.") and the additional defendants appeal a judgment for Thomas J. Yeseta ("Yeseta") for $34,099.67 on the main claim and a $22,750 attorneys' fees award. Yeseta's suit was based upon the Employee Retirement Income Security Act, 29 U.S.C. Secs. 1001, et seq. ("ERISA"). The defendants counterclaimed based on ERISA also. The district court entered a judgment for Yeseta, offset by the counterclaim. The result was a net judgment for Yeseta. We affirm in part and reverse in part.
Baima Inc., a roofing company, was jointly owned and operated by Anthony Baima and his three sons, Steve (aka Anthony S.), Michael, and Joel Baima. In 1973, Yeseta was hired and delegated the necessary authority to help manage the business and run the front office. This authority included making payments to and from income and expense accounts, as well as maintaining the company's records.
Baima Inc. maintained a profit sharing plan and trust, the A. Baima, Inc. Profit Sharing Plan and Trust ("Plan"), for the benefit of its employees. The Plan was administered by Baima Inc., with Anthony and Steve serving as named fiduciaries. Employees participated in the Plan with the expectation they would become vested participants eligible to receive their accrued benefits.
In November, 1979, Joel Baima requested Yeseta to withdraw $14,200 from the Plan and pay it over to Joel for his personal use. Yeseta complied with the request, which was purportedly a loan from the Plan evidenced by a promissory note. At the time of the withdrawal, Joel's Plan account balance was $7,737.83. Sometime later, Joel was killed and the loan was never repaid to the Plan. However, Joel's $7,737.83 account balance was paid over to his estate.
On two other occasions, to help cover operating expenses by Baima Inc. when its accounts were depleted, Yeseta made withdrawals from the Plan totalling $25,000. These withdrawals were not paid back to the Plan. Additionally, Steve Baima made a $20,000 transfer of funds out of the Plan and into the Baima Inc. expense accounts. This transfer was to help cover operating expenses, and while it was supposedly paid back to the Plan, this point was disputed.
In May of 1980, Anthony Baima died and attorney Rodney Miles was appointed executor of his estate. In June, Yeseta terminated his employment with Baima Inc. and made a demand for his vested interest in the Plan, to which demand there was no response. Later, Steve Baima made $9,200 in additional withdrawals from the Plan, supposedly for personal use. By February, 1981, Baima Inc. had ceased operations, although prior to this time it had remained solvent.
Yeseta and three other former employees filed suit for their accrued Plan benefits. The other employees were dismissed from the suit and Yeseta pursued his individual claim. He named as defendants Steve and Michael Baima, Baima Inc., the estate of Anthony Baima, and Rodney Miles, its attorney-executor, and Andrew Hanley, the accountant for Baima Inc. The Plan itself was not named as a party. The defendants asserted a counterclaim against Yeseta for the withdrawals he made from the Plan as being beyond the scope of his authorization.
The district court made findings of fact and conclusions of law and entered judgment against Yeseta on the counterclaim. It then ordered an accounting to determine the amount Yeseta was owed for his accrued benefits on the main claim. This accounting was disputed by the parties. The district court then made amended findings of fact and conclusions of law and entered an amended judgment in Yeseta's favor for $33,979.12 (plus $10,806.60 in interest) and against the defendants, jointly and severally, for Yeseta's vested interest in the Plan. This amount was offset by the counterclaim against Yeseta for $6,462.07 (plus $4,223.98 in interest) as a personal liability for the difference between the $14,200 loan which Yeseta made from the Plan to Joel Baima and Joel's $7,737.83 interest in the Plan. The result was a net judgment of $34,099.67 for Yeseta. Almost five months later, Yeseta was granted an additional judgment for $22,750 in attorneys' fees. The named defendants appeal, raising numerous contentions.
The defendants first contend that the Plan was an indispensable party. As part of this contention, Michael Baima, Rodney Miles and Andrew Hanley argue they were not fiduciaries who could be held personally liable for the Plan's losses. A second contention is Yeseta's status as a fiduciary and the extent of his liability for the $25,000, as well as the $14,200 withdrawal he made from the Plan. Also, the defendants contend the district court erred in finding Baima Inc. was solvent at the time of the Plan withdrawals and that Yeseta was a vested participant in the Plan. Finally, the defendants argue a master should have been appointed to review the Plan and that the award of attorneys' fees was improper.
Yeseta should have listed the Plan as a defendant in the caption of the amended complaint as required by Fed.R.Civ.P. 10(a). However, his failure to do so does not mean the action could not be maintained against the Plan. The body of the amended complaint refers repeatedly to the Plan, identifies Baima Inc. as its administrator, and explicitly refers to Rodney Since the Plan was sufficiently identified in the body of the complaint, the action was properly maintained. See Rice v. Hamilton Air Force Base Commissary, 720 F.2d 1082, 1085 (9th Cir.1983) () (citing Hoffman v. Halden, 268 F.2d 280, 303-304 (9th Cir.1959). See also Greenwood v. Ross, 778 F.2d 448, 451-52 (8th Cir.1985) ().
Miles and Michael Baima as trustee of the Plan. These parties were all joined and served. Moreover, for reasons unknown, the Plan did appear in the judgment as an individual entity against which judgment was entered.
Even if we were to assume the Plan was not identified in the body of the complaint, this is no impediment to Yeseta for failing to join the Plan. The Plan was administered by Baima Inc. which was named in the complaint. Also, Baima Inc. was owned by Steve, Michael and Anthony Baima, each of whom was named in the complaint, and both the Plan's named trustees, Steve and Anthony Baima, were named in the complaint. In short, anyone with legal responsibility to meet any Plan liability towards Yeseta was named in the caption on the complaint and properly served. See Dockray v. Phelps Dodge Corp., 801 F.2d 1149, 1151-52 n. 2 (9th Cir.1986). As a result, the action against the Plan was correctly maintained. 1
Individually, defendants Michael Baima, Rodney Miles, and Andrew Hanley each argue they are not fiduciaries of the Plan who could have been held personally liable.
In enacting ERISA, Congress set out to protect participants in employee benefit plans by establishing standards of conduct, responsibility, and obligations for fiduciaries of employee benefit plans, and by providing for appropriate remedies. See Pilot Life Insurance Co. v. Dedeaux, --- U.S. ----, ----, 107 S.Ct. 1549, 1550, 95 L.Ed.2d 39, 45-46 (1987). As part of this objective, two sections of ERISA designate who a fiduciary is. Section 1002(21) provides:
(A) Except as otherwise provided in subparagraph (B), a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. Such term includes any person designated under section 1105(c)(1)(B) of this title.
(B) If any money or other property of an employee benefit plan is invested in securities issued by an investment company registered under the Investment Company Act of 1940 [15 U.S.C.A. Sec. 80a-1 et seq.], such investment shall not by itself cause such investment company or such investment company's investment adviser or principal underwriter to be deemed to be a fiduciary or a party in interest as those terms are defined in this subchapter, except insofar as such investment company or its investment adviser or principal underwriter acts in connection with an employee benefit plan covering employees of the investment company, the investment adviser, or its principal underwriter. Nothing contained in this subparagraph shall limit the duties imposed on such investment ERISA also contains a collateral definition of a "named" fiduciary.
company, investment adviser, or principal underwriter by any other law.
(1) Every employee benefit plan...
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