Costley v. Thibodeau, Johnson & Feriancek, Pllp
| Citation | 259 F.Supp.2d 817 |
| Decision Date | 27 February 2003 |
| Docket Number | No. CIV.01-602 (RLE).,CIV.01-602 (RLE). |
| Parties | Timothy A. COSTLEY, Plaintiff, v. THIBODEAU, JOHNSON & FERIANCEK, PLLP, and David M. Johnson and J.D. Feriancek, individually and in their capacity as Trustees, Defendants. |
| Court | U.S. District Court — District of Minnesota |
Eric J. Braaten, Eagan, MN, for Plaintiff.
Mark A. Fredrickson, Minneapolis, MN, for Defendants.
This matter came before the undersigned United States Magistrate Judge pursuant to the consent of the parties, as authorized by Title 28 U.S.C. § 636(c), upon the Defendants' Motion for Summary Judgment and for Attorney's Fees. At a Hearing on the Motions, the Plaintiff Timothy A. Costley ("Costley") appeared personally, and by Eric J. Braaten, Esq., and the Defendants Thibodeau, Johnson & Feriancek, PLLP ("the Law Firm"), David M. Johnson ("Johnson"), and J.D. Feriancek ("Feriancek"), both individually, and in their capacities as Trustees, appeared by Mark A. Fredrickson, Esq. For reasons which follow, we grant the Defendants' Motion for Summary Judgment, but deny their Motion for Attorney's Fees.
Costley was formerly a partner in the Law Firm, which was formed on January 1, 2000. See, Complaint, at ¶ 8. Prior to that time, the four named partners worked together in another firm—Johnson, Killen, Thibodeau & Seiler, P.A. ("Johnson Killen").
In July of 2000, the partners of the Law Firm began discussing whether to adopt a retirement or pension plan. See, Ex. D, attached to Affidavit of Diane B. Bratvold ("Bratvold Aff.")(notes of partnership meeting on July 19, 2000). In that process, they met with advisors—LeRoy Kolquist ("Kolquist"), an accountant, and Brian Liberty ("Liberty"), a financial advisor with U.S. Bancorp/Piper Jaffray—in order to create such a plan. Id. (). There were a number of meetings, between the partners and Kolquist, as well as one or two meetings with Liberty. See, Affidavit of LeRoy Kolquist, at ¶ 2 ("Kolquist Aff."); Affidavit of Brian Liberty, at ¶ 1 ("Liberty Aff."); Deposition of Timothy Costley, at 44-52, Ex. C to Bratvold Aff. ("Costley Depo.").
One of the issues, which was addressed in the meetings with Kolquist, was the ability of Thomas Thibodeau ("Thibodeau") to be exempted from the Plan, as he was not interested in participating in the Plan, since he was close to retirement age. See, Affidavit of Timothy A. Costley, at ¶ 6 ("Costley Aff."); Costley Depo., at 29-80, 34, 40-41. Apparently, Kolquist advised the partners that everyone in the Law Firm had to participate in the retirement or pension plan, and therefore, another solution was needed in order to ensure that Thibodeau vested as soon as possible. See, Costley Aff., at ¶ 7; Costley Depo., at 34-35.
All of the partners in the Law Firm, including Thibodeau, had a five-year employment contract, extending to December 31, 2004. See, e.g., Employment Agreement for Thomas R. Thibodeau, Ex. E to Bratvold Aff. ("Thibodeau Employment Agreement"); Costley Depo., at 33. At the end of the five-year contract, Thibodeau would be sixty-two years old. See, Affidavit of Thomas R. Thibodeau, at ¶ 3 ("Thibodeau Aff."). In order to ensure that Thibodeau could retire, and be fully vested at the time of retirement, the partners, and Kolquist, began discussing alternative scenarios. Apparently, they did discuss the "Vesting Service" box, which is at the crux of this case, but Kolquist thought it would be "useless." Kolquist Aff, at ¶ 6; Costley Depo., at 45-46. Costley asserts that the partners specifically spoke to Kolquist about using prior years of service at Johnson Killen for the purposes of vesting, Costley Depo., at 44-45, but Kolquist does not recall such a conversation, Kolquist Aff, at ¶¶ 9-10. Rather, in regard to the "Vesting Service" box at issue, Kolquist wrote in his notes, "I feel does not apply because firm is only 10 mos. old [therefore] won't help Tom T." Ex. 1 to Kolquist Aff. According to Kolquist, the note "was made in reference to the fact that checking `yes' would not address the issue of having Tom Thibodeau vested within the five-year contract." Kolquist Aff., at ¶ 8.
Eventually, as to the Thibodeau situation, Kolquist suggested that the partners make the "normal retirement age," under the retirement or pension plan, sixty-two— at which time a participant would be fully vested. Kolquist Aff., at ¶5; see also, Costley Depo., at 52-53. In fact, Johnson recalls confirming the advice with Liberty, who observed that the Law Firm could make the "normal retirement age" even lower. Johnson Aff., at ¶ 3. Since Thibodeau would be sixty-two at the end of his five-year contract, the Defendants claim that the "normal retirement age" designation, at sixty-two, solved the Thibodeau situation.
According to Costley, however, the "normal retirement age" approach was only a partial solution, as Thibodeau's employment contract allowed him to decrease his work load, after the third year of the contract. See, Costley Depo., at 29-30, 43-44; Ex. A to Thibodeau Employment Contract.1 Therefore, in order to allow Thibodeau to obtain his retirement funds as soon as possible—perhaps as early as 2003, when he had the option to reduce his work load, Costley contends that the partners discussed whether they could use their years of service at Johnson Killen to satisfy the required years of vesting service. Costley Aff., at ¶ ¶ 8-9; Costley Depo., at 44-45. As already noted, Costley maintains that the partners specifically asked Kolquist if they could count their years of service at Johnson Killen to help Thibodeau vest, prior to the normal six years, but that Kolquist said that would not work. Costley Aff., at ¶ 10; Costley Depo., at 44-45. All of the Defendants, as well as Kolquist and Liberty, deny such a discussion, however. Kolquist Aff., at WI 9-10 ("None of my meeting notes, or any other document I maintained regarding the adoption of the Plan, refers in any way to the phrase `years before the Employer first maintained the Plan' as including years of service with a former law firm."); Liberty Aff., at ¶ 5; Affidavit of J.D. Feriancek, at ¶ 4 ("Feriancek Aff."); Affidavit of David M. Johnson, at ¶ 4 ("Johnson Aff."); Thibodeau Aff., at ¶ 5.
Eventually, on December 15, 2000, the Law Firm established a "Retirement Plan for Businesses and Professionals" ("the Plan"). See, Ex. B to Bratvold Aff. ("Adoption Agreement"); Ex. 1 to Affidavit of Doreen A Mohs ("Plan Document"). The Plan was made retroactive to the date the Law Firm was created—January 1, 2000. Adoption Agreement, at Section B. Vesting under the Plan was "graded," with the percentage of vesting increasing as the years with the Law Firm increased, and with a participant becoming 100% vested after six or more "years of service."2 Adoption Agreement, at Section D. Costley, Johnson, and Feriancek, were designated as the Trustees of the Plan. Adoption Agreement, at Section B.
Liberty met with the trustees of the Plan on December 15, 2000, in order to complete the final Adoption Agreement. Liberty Aff., at ¶ 2; Costley Depo., at 58. Liberty recalls advising the Trustees that, by checking "yes" in the "vesting service" box, they would ensure that the year 2000 counted toward the vesting schedule. Liberty Aff., at ¶ 3. He further recalls advising that no vesting would occur based upon service prior to the year 2000. Id. In fact, both Feriancek, and Johnson aver, that they believed that, by checking the "yes" box, they were ensuring that the entire year 2000 counted for vesting purposes. Feriancek Aff., at ¶ 6; Johnson Aff., at ¶ 6.
In contrast, Costley does not recall any conversation with Liberty, at the meeting on December 15, 2000, regarding checking the "yes" box for "vesting service" in order to ensure that the entire year of 2000 counted toward vesting. Costley Depo., at 70-71. He similarly denies any such discussion with Kolquist. Id. at 71. Rather, Costley asserts that, prior to, or at the meeting with Liberty on December 15, 2000, he and Feriancek discussed whether they should still attempt to include prior years of service at Johnson Killen for vesting service, "so that Mr. Thibodeau would be immediately vested and could access his funds at the end of three years, or earlier if we bought out his partnership interest sooner than his contract provided." Costley Aff., at ¶ 12; see also, Costley Depo., at 43-45, 47, 49-52, 55, 62-63. In particular, Costley remembers the meeting as follows:
A. I don't recall if it was Brian [Liberty] or his assistant or it might have even been David [Johnson], but somehow somebody went—had looked through the plan, and I remember the conversation at the table saying this should work under the terras of the pension plan, meaning—this meaning that prior years of service would work.
Q. Prior years of service with a different law firm?
A. With a different firm, that it would work. We had gone through the thing with Mr. Kolquist. I don't know if he didn't like the idea, didn't think it would work, but I remember there was discussions about that, that that might not be the option to the six-year vesting problem, so we might have to find something else to do. Then in the interim, before Brian showed up in the office, we had come to the conclusion that it would work.
17. Okay.
A. That's why we told Brian to check yes for years of service.
Costley further testified as follows:
Q. And what was your basis for Mr. Liberty knowing that what you wanted was the prior years of service with the Johnson Killen firm to be included as prior years of service?
A. Conversations with him or—I mean, I don't know how to ...
Q. Okay. So that was a specific conversation you had with him as you're filling out the...
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