Browe v. CTC Corp.

• Decision Date: 22 June 2018
• Docket Number: Case No. 2:15–cv–267
• Citation: Browe v. CTC Corp., 331 F. Supp. 3d 263 (D. Vt. 2018)
• Court: U.S. District Court — District of Vermont
• Parties: Donna BROWE, Tyler Burgess, Bonnie Jamieson, Philip Jordan, Lucille Launderville, and the Estate of Beverly Burgess, Plaintiffs, v. CTC CORPORATION and Bruce Laumeister, Defendants.

331 F.Supp.3d 263

Donna BROWE, Tyler Burgess, Bonnie Jamieson, Philip Jordan, Lucille Launderville, and the Estate of Beverly Burgess, Plaintiffs,

v.CTC CORPORATION and Bruce Laumeister, Defendants.

Case No. 2:15–cv–267

United States District Court, D. Vermont.

Signed June 22, 2018

John D. Stasny, Esq., Patrick J. Bernal, Esq., Woolmington, Campbell, Bernal & Bent, P.C., Manchester Center, VT, for Plaintiffs.

A. Jay Kenlan, Esq., Rutland, VT, for Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Christina Reiss, District JudgePlaintiffs Donna Browe, Tyler Burgess, Bonnie Jamieson, Philip Jordan, Lucille Launderville, and the Estate of Beverly Burgess (collectively, "Plaintiffs") allege that Defendants CTC Corporation ("CTC") and Bruce Laumeister (collectively, "Defendants") violated the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 – 1191c, by failing to adequately fund and by wrongfully denying them benefits under 1990 and 1997 deferred compensation plans (collectively, the "Plan"). They further allege that Defendants breached fiduciary duties and reporting and disclosure obligations owed to them under ERISA.

Defendants deny liability and assert that the Plan is a nonqualified "top hat" plan pursuant to which they have no further obligations. They further assert that the applicable statute of limitations bars Plaintiffs' claims. In the alternative, if they are found liable for Plaintiffs' claims, pursuant to the counterclaims they have asserted, they contend that Plaintiff Lucille Launderville should be held jointly and severally liable and indemnify them for any ERISA damages awarded against them.

From December 6–8, 2017 and March 5–6, 2018, the court conducted a bench trial. On March 26, 2018, the parties submitted supplemental briefing, at which time the court took the matter under advisement.

Patrick J. Bernal, Esq. and John D. Stasny, Esq. represent Plaintiffs. A. Jay Kenlan, Esq. represents Defendants.

I. Findings of Fact.

Based upon the preponderance of the evidence, the court makes the following findings of fact:

Absence of Relevant Records.

1. The court's ability to make findings of fact in this matter is severely hampered by the destruction of most of CTC's corporate records and by Plaintiffs' failure to retain copies of the documents that they rely on for their claims.¹

2. In many instances, there is a lack of reliable evidence especially with regard to key issues such as the number of CTC employees; the number of employees to whom the Plan was offered; the number of Plan Participants; and the salary and wages of CTC employees including Plaintiffs.

The Parties.

3. Plaintiff Donna Browe was employed by CTC from its inception until on or about November 12, 2012. Ms. Browe began her work at the company as a "minimum-wage" clerk, and continued working as a "clerk" in CTC's accounting department. She became the manager of CTC's accounting department in approximately 2000. Ms. Browe voluntarily left the employ of CTC on or about November 12, 2012 for a position at Morris Repair Company in Bennington, Vermont.

4. Beverly Burgess was employed by CTC from the time of its formation in 1980 until approximately 2004. She passed away on November 29, 2004.

Plaintiffs Tyler Burgess and Bonnie Jamieson are the children of Ms. Burgess and are the sole beneficiaries of their mother's estate.

5. Plaintiff Philip Jordan was employed by CTC from its inception until on or about October 1986 and again from on or about October 1988 until January 4, 2008. Mr. Jordan worked initially as a salesman and eventually became the sales manager for CTC in or around 1997.

6. Plaintiff Lucille Launderville began her employment with CTC at its inception. She was initially employed in customer service and was eventually promoted to, among other positions, President of CTC, Director, and general manager/Chief Operating Officer ("COO"). She resigned from CTC in 2008 for a position at Plasan Industries.

7. Defendant Bruce Laumeister was CTC's sole shareholder, Chief Executive Officer ("CEO"), and Chairman of the Board of Directors throughout its existence. He was CTC's President from 1979 until 2000 and from 2008 until its dissolution in 2014. He is an experienced business executive with a bachelor's degree in engineering and a master's degree in business administration, as well as an honorary Ph.D. from Southern Vermont College. Prior to forming CTC, he held executive positions in several major companies, supervised over three hundred employees, and managed a multi-million dollar company.

8. Defendant CTC is a dissolved corporation that ceased doing business in 2014.

CTC's History.

9. In approximately 1979, Mr. Laumeister formed CTC, a photo-finishing and processing company, for the purpose of acquiring the assets of Cap Tan, a film developing and photo processing plant and photographic equipment retail store. In addition to acquiring Cap Tan's business assets, CTC hired several Cap Tan employees. When CTC purchased its assets, Cap Tan was generating approximately $800,000 in annual sales and had approximately thirty employees.

10. From approximately 1979 until 2014, CTC operated a retail photo-finishing facility and retail store located on Benmont Avenue in Bennington, Vermont (the "Bennington facility") from which it serviced walk-in and mail-order customers under the tradename "Vermont Color Photo Lab."

11. In addition to its headquarters in Bennington, CTC operated between twenty-three and twenty-six one-hour photo labs in Vermont, Connecticut, Massachusetts, New Hampshire, and New York (the "One–Hour Labs") which were engaged in developing, processing, and printing film as well as operating retail stores selling photographic equipment and supplies.

12. The One–Hour Labs were incorporated in the states in which they conducted business, filed their own tax returns, and paid their employees through three corporations which held separate bank accounts controlled by CTC: VSL Corporation (New Hampshire) ("VSL"), LWB Corporation (Massachusetts) ("LWB"), and BRL Corporation (Vermont and New York) ("BRL").

13. Although Mr. Laumeister testified that the One–Hour Labs were CTC's wholly owned subsidiaries and that the One–Hour Labs' employees should be considered employees of CTC, Defendants have proffered no evidence to support this claim beyond Mr. Laumeister's testimony. LWB was not a wholly owned subsidiary but was instead owned by Mr. Laumeister and Christopher Belknap, a fact which Mr. Laumeister conceded when impeached.

14. To avoid liability after a major accident with one of its route drivers, Mr. Laumeister formed a separate Vermont corporation, ES Services ("ESS") to employ the drivers who serviced the One–Hour Labs and the convenience stores, drugstores, and other customers that offered CTC photo processing. All of the route drivers were employed part-time although some drivers worked up to thirty hours per week. Mr. Laumeister created a chart that indicated that there were eight part-time route drivers. He, however, also testified that they had "at least 15 or 16" route drivers and "16 to 18[,]" all of whom worked part-time. (Doc. 209 at 134.) He and his wife owned ESS's stock.

15. In 1990, CTC acquired an interest in Weybridge Partners, LP ("Weybridge Partners"), a Vermont limited partnership that owned and operated an apartment complex in Middlebury, Vermont. At the time CTC acquired its limited partnership interest in Weybridge Partners, Mr. Laumeister was Weybridge Partners' general partner. The residential housing property owned by Weybridge Partners was a federally subsidized property that generated significant tax losses. Approximately ninety-five percent of those losses were allocated to CTC, allowing CTC to shelter a significant amount of its income from state and federal taxation.

16. Starson Services ("Starson") was a corporation formed prior to CTC and owned by Mr. Laumeister and his wife. Starson acted as the property manager for Weybridge Partners' apartment complex, providing services such as rent assessment and collection, property management and maintenance, and general, administrative, and accounting services. Weybridge Partners paid Starson fees for its property management services. Starson also owned the photo-finishing equipment and other equipment in the Bennington facility and leased it to CTC.

17. The records of both Weybridge Partners and Starson appear to have been destroyed with the CTC records, although the parties did not address this issue directly.

18. Ms. Launderville claims she was never employed by Starson, however, she admits she received a bonus check on at least one occasion from Starson. She testified that the amount in question was approximately $20,000. In contrast, Mr. Laumeister testified that both Mr. Massari and Ms. Launderville received substantial bonuses from Starson, that almost half of their compensation was paid by Starson in certain years, and that they received bonuses in some years of approximately $50,000.

19. In 2009, Weybridge Partners sold its real property, paid its creditors, and dissolved.

20. Between 1980 and around 2000, CTC grew significantly. At its peak operation, CTC's Bennington facility operated three and sometimes four shifts per day, depending on the seasonal volume of the film to be developed and printed. During peak times, CTC and One–Hour Labs employed additional employees, typically on a part-time basis.

Credibility and Reliability of Mr. Laumeister's Testimony.

21. Although at times in his testimony Mr. Laumeister demonstrated an impressive recall of the relevant facts, the court did not find his testimony wholly reliable or credible because Mr. Laumeister issued a number of statements under the penalties of perjury which he now concedes are incorrect. For example:

A. In his declaration dated May 23, 2016 (the "5/23/16 declaration") he averred that: "From 1997 until about 2000, I was the president and chief operating officer of CTC Corporation." (Doc. 195

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