AT & T Management Pension Plan v. Tucker

• Decision Date: 14 August 1995
• Docket Number: No. CV 95-2263 ABC.,CV 95-2263 ABC.
• Citation: 902 F. Supp. 1168
• Court: U.S. District Court — Central District of California
• Parties: AT & T MANAGEMENT PENSION PLAN, an employee pension benefit plan; and AT & T CORP., a New York corporation; Plaintiffs, v. Sandra TUCKER, an individual, Morris Tucker, an individual, and Does 1 through 10, inclusive, Defendants.

902 F. Supp. 1168

AT & T MANAGEMENT PENSION PLAN, an employee pension benefit plan; and AT & T CORP., a New York corporation; Plaintiffs, v. Sandra TUCKER, an individual, Morris Tucker, an individual, and Does 1 through 10, inclusive, Defendants.

No. CV 95-2263 ABC.

United States District Court, C.D. California.

August 14, 1995.

Seyfarth, Shaw, Fairweather & Geraldson, Mitchel D. Whitehead, Steven B. Katz, Los Angeles, CA, for plaintiffs.

William Rehwald, Lawrence Matthew Glasner, Rehwald, Rameson, Lewis & Glasner, Woodland Hills, CA, for defendants.

ORDER RE:

1. Defendants' Motion to Dismiss Pursuant to FRCP 12(b)(6); and

2. Plaintiffs' Motion for Summary Judgment

COLLINS, District Judge.

Defendants' Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6), and Plaintiffs' Motion for Summary Judgment came on regularly for hearing before this Court on August 14, 1995. After reviewing the materials submitted by the parties, argument of counsel, and the case file, it is hereby ORDERED that Defendants' Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) is DENIED, and Plaintiffs' Motion for Summary Judgment is GRANTED. It is ORDERED FURTHER that Defendants' request for sanctions is DENIED.

I. Background

Except as indicated, the following facts are undisputed. Plaintiff AT & T MANAGEMENT PENSION PLAN ("the Plan") is an employee pension benefit plan existing pursuant and subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended. Plaintiff AT & T CORPORATION ("AT & T"), a New York corporation, is a sponsor of the Plan, the Plan administrator, and a fiduciary of the Plan, as those terms are defined in ERISA. Also, AT & T has been designated to carry out the fiduciary responsibilities of the Plan administrator regarding qualified domestic relation orders ("QDROs")¹ as set forth in ERISA.

Defendant MORRIS D. TUCKER is a participant in the Plan. Defendant SANDRA TUCKER is Morris D. Tucker's former spouse. On January 22, 1981, in a proceeding entitled In re: Marriage of Tucker, Los Angeles Superior Court Case No. NWD 83405 ("the Tucker divorce proceedings"), the Superior Court for the State of California (hereinafter "family court") entered an order dissolving the Tuckers' marriage, reserving jurisdiction over disputed issues. On August 7, 1990, during the Tucker divorce proceedings, the family court ordered the Plan joined to the proceedings as a party in interest pursuant to California Family Code sections 2060-2065. On October 8, 1990, the Plan appeared in the Tucker divorce proceedings and responded to the Order of Joinder and Pleadings, reserving the right to object to any order containing provisions inconsistent with ERISA (including amendments pursuant to the Retirement Equality Act of 1984 ("REA")).

Subsequently, Defendants' counsel, particularly counsel for Sandra Tucker, communicated with the Plan and its counsel regarding the form of the QDRO. In January 1993, Sandra Tucker's counsel proposed a QDRO that would have allowed Sandra Tucker an unlimited right to designate anyone as the beneficiary of her assigned benefits in Morris D. Tucker's pension in the event that Sandra Tucker predeceased Morris D. Tucker. (Ex. 5, attached to Lewis Decl. at 78, 82:7-14.) The Plan objected to the proposed QDRO on the grounds that the proposed order did not meet the requirements for a QDRO within the meaning of ERISA § 206(d)(3)(B)(i), 29 U.S.C. § 1056(d)(3)(B)(i). Defendants contend that the Plan took and maintained a position contrary to California family law. The Plan asserts that its position was entirely meritorious under ERISA and Ninth Circuit case law.²

On July 6, 1993, Sandra Tucker obtained a Temporary Restraining Order and Order to Show Cause Re: Preliminary Injunction restraining the Plan from distributing any payments and benefits to Defendant Morris D. Tucker pending further order of the family court. At the hearing on the Order to Show Cause on July 29, 1993, the family court declined to enter an injunction upon the Plan's representation, with the concurrence of Morris D. Tucker, that no payment or benefits due to Morris D. Tucker would be disbursed prior to an order by the family court. The Plan complied with the representation and held the funds due to Morris D. Tucker until otherwise ordered by the family court. The family court set for trial certain reserved issues, including the form of the QDRO to divide Defendants' respective community property interests in the employee pension benefits held by the Plan and Defendants' application for an award of attorneys' fees against the Plan pursuant to California Family Code section 2030.

In February 1994, counsel for the Plan suggested to Sandra Tucker's counsel that they consider converting their proposed QDRO into a pair of QDROs: one that provided for payment to Sandra Tucker of her community property share of Morris Tucker's pension benefits, and one that provided for payment to the children of Morris and Sandra Tucker, contingent upon Sandra Tucker predeceasing Morris Tucker. (Whitehead Decl. ¶ 7.) Eventually, the Tuckers adopted counsel for the Plan's suggestion. (Id. at ¶ 8.)

On February 24, 1994, the Plan filed a brief in opposition to Defendants' application for an award of attorneys' fees, arguing that ERISA § 514, 29 U.S.C. § 1144, preempted such an award. On May 5, 1994, the United States Secretary of Labor, appearing as amicus curiae, filed a brief in opposition to Defendants' application for an award of attorneys' fees, arguing that ERISA § 514, 29 U.S.C. § 1144, preempted the prior order of the family court joining the Plan to the Tucker divorce proceedings. On October 21, 1994, after a hearing, the family court granted Defendants' request for an award of attorneys' fees against the Plan pursuant to California Family Code sections 2030 and 271 and ordered the Plan to pay Defendants $50,680 by December 15, 1994 ("Order for Attorneys' Fees"). The ruling was memorialized in a written order entered on December 28, 1994.³ The attorneys' fees that the family court ordered the Plan to pay were incurred, accordingly to Defendants' counsel, during their communications with the Plan, and in defending their application for attorneys' fees against the objections of the Plan and the Secretary of Labor.

On December 15, 1994, the Plan filed a Notice of Appeal from the Order for Attorneys' Fees. Subsequently, Defendants requested a further award of attorneys' fees against the Plan pursuant to California Family Code sections 2030 and 271 for attorneys' fees expected to be incurred in the Plan's appeal from the Order for Attorneys' Fees. On January 27, 1995, after a hearing, the family court granted Defendants' request, directing the Plan to pay an additional $10,000 to Defendants or their lawyers by February 11, 1995 (hereinafter, the orders of October 21, 1994 and January 27, 1995 for attorneys' fees are referred to collectively as "Orders for Attorneys' Fees").

Also on January 27, 1995, the family court entered two domestic relations orders pursuant to the stipulation of all parties, including the Plan. The Plan has since reviewed these domestic relations orders pursuant to ERISA § 206(d), 29 U.S.C. § 1056(d), and has qualified them as complying with all relevant provisions of ERISA. On March 15, 1995, the Plan filed a Notice of Appeal from the January 27, 1995 Order for additional attorneys' fees.

On April 7, 1995, Plaintiffs filed a Complaint in this Court against Defendants for injunctive and declaratory relief to restrain violations of ERISA.

II. Defendants' Motion to Dismiss

On June 14, 1995, Defendants filed the instant motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). On July 17, 1995, Plaintiffs filed an opposition to the motion, and on July 24, 1995, Defendants filed a reply to the opposition.

A. Plaintiff's Allegations

In their Complaint, Plaintiffs allege the undisputed facts recited supra. Additionally, the Complaint alleges as follows:

1. The Plan was not obliged under ERISA or any other applicable law to aid Defendants in their efforts to enter a QDRO in proper form in the family court or to participate in the Tucker divorce proceedings to ensure any order entered by the family court met the criteria for a QDRO as set forth in ERISA. (Compl. ¶ 19.)

2. Plan representatives fully cooperated with Defendants' counsel to fashion a QDRO that satisfied all applicable legal criteria. (Compl. ¶ 19.)

3. The Plan's liabilities under the Orders for Attorneys' Fees are based upon its voluntary extension of assistance to Defendants and their counsel with respect to the proper form of a QDRO. (Compl. ¶ 19.)

4. The family court never reviewed the merits of the Plan's comments and suggestions for the QDROs and never made any finding that said comments and suggestions were contrary to law or made in bad faith. (Compl. ¶ 19.)

5. Compliance with the Orders for Attorneys' Fees or the enforcement of such compliance, would violate Title I of ERISA because the Orders are preempted under ERISA § 514, 29 U.S.C. § 1144. (Compl. ¶ 24.)

6. Compliance with the Orders for Attorneys' Fees or the enforcement of such compliance, would violate Title I of ERISA because the Orders violate both the terms of the Plan and the provisions of ERISA § 206(d)(1), 29 U.S.C. § 1056(d)(1), because the Orders for Attorneys' Fees are not QDROs and constitute a prohibited assignment or alienation of moneys held by the Plan and its trust to provide pension benefits to its participants and beneficiaries, including Defendants. (Compl. § 25.)

7. Compliance with the Orders for Attorneys' Fees or the enforcement of such compliance, would violate Title I of ERISA because compliance with the Orders for Attorneys' Fees would require violation of fiduciary duties imposed upon AT & T under ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1). (Compl. ¶ 26.)

8. Defendants have threatened and endeavored, and...