Harrold v. Coble, C-214-G-65.

• Decision Date: 05 December 1966
• Docket Number: No. C-214-G-65.,C-214-G-65.
• Citation: 261 F. Supp. 29
• Court: U.S. District Court — Middle District of North Carolina
• Parties: Wayne H. HARROLD, Plaintiff, v. H. L. COBLE, J. F. Kirkpatrick, Leon G. Coble, Stuart Honaker, Kay Aylchick, individually and as Administrators of the "Profit Sharing Plan And Trust Agreement Of H. L. Coble Construction Company and Coble Contracting And Engineering Company," Defendants.

261 F. Supp. 29

Wayne H. HARROLD, Plaintiff, v. H. L. COBLE, J. F. Kirkpatrick, Leon G. Coble, Stuart Honaker, Kay Aylchick, individually and as Administrators of the "Profit Sharing Plan And Trust Agreement Of H. L. Coble Construction Company and Coble Contracting And Engineering Company," Defendants.

No. C-214-G-65.

United States District Court M. D. North Carolina, Greensboro Division.

December 5, 1966.

Lawrence Egerton, Jr., and W. Douglas Albright, Greensboro, N. C., for plaintiff.

G. Neil Daniels and C. T. Leonard, Jr., Greensboro, N. C., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

EDWIN M. STANLEY, Chief Judge.

This is an action under the Welfare and Pension Plan Disclosure Act, 29 U.S.C. §§ 301-309, to recover the statutory penalty provided for in 29 U.S.C. § 308(b), by reason of the alleged failure of the defendants to disclose to the plaintiff, a participant or beneficiary, a description of the defendants' pension and profit-sharing plan.

The case was tried to the court without a jury. After considering the evidence offered by the parties, including stipulations and exhibits, and the briefs and oral arguments of counsel, the Court makes and files herein its Findings of Fact and Conclusions of Law, separately stated:

FINDINGS OF FACT

1. The plaintiff, Wayne H. Harrold, is a citizen and resident of Guilford County, North Carolina.

2. The defendant, H. L. Coble, was at the time of the commencement of this action, a citizen and resident of Broward County, Florida. The defendants J. F. Kirkpatrick, Leon G. Coble, Kay Aylchick and Stuart Honaker are citizens and residents of Guilford County, North Carolina.

3. H. L. Coble is chairman of the board of H. L. Coble Construction Company; J. F. Kirkpatrick is president of H. L. Coble Construction Company; Leon G. Coble is vice president of H. L. Coble Construction Company; and Kay Aylchick is a payroll clerk employed by H. L Coble Construction Company. Stuart Honaker is an independent tax consultant with offices in the H. L. Coble Office Building, and frequently does work for H. L. Coble Construction Company. The individual defendants collectively comprise the administration committee of the pension and profit-sharing plan of H. L. Coble Construction Company and were appointed to such committee by the Board of Directors of H. L. Coble Construction Company.

4. The profit-sharing plan of H. L. Coble Construction Company was established in January of 1952, when a profit-sharing plan and trust agreement was entered into between H. L. Coble Construction Company and Guilford National Bank of Greensboro, as trustee. Guilford National Bank was subsequently merged into Security National Bank, and the North Carolina National Bank, the successor to the merged banking institutions, is now the trustee of the amended profit-sharing plan and trust agreement of H. L. Coble Construction Company.

5. The purpose of the profit-sharing plan of H. L. Coble Construction Company is to provide retirement security for employees of the company, and the plan is financed entirely by the company.

6. The profit-sharing plan and trust agreement provides for the appointment by the Board of Directors of H. L. Coble Construction Company of a "Profit-Sharing Administration Committee," to serve without compensation at the pleasure of the Board. The committee is responsible for the general administration of the plan, and is charged with the responsibility of communicating the principal provisions of the plan to the employees of the company. The composition of the committee has been changed frequently since the inception of the plan in 1952.

7. The H. L. Coble Construction Company reserves the right, at any time and from time to time, to amend the plan and trust agreement in any manner it determines desirable, or to terminate the plan and trust agreement completely.

8. The defendant Honaker was first appointed to the Profit-Sharing Administration Committee by the Board of Directors of H. L. Coble Construction Company during the latter part of 1964, but was not advised of said appointment until sometime during the early part of 1965. He was chosen by the committee as its chairman at a meeting held on May 4, 1965, and has acted in such capacity since that date.

9. The plaintiff was employed by H. L. Coble Construction Company on April 1, 1959, as an assistant to one of the executives of the company at its main office in Greensboro, North Carolina. He later took over the purchasing duties of the company and continued in that capacity until sometime in 1963. In the latter part of 1964, plaintiff was named vice president and director of H. L. Coble Construction Company, and placed in charge of its Greensboro office. He continued in that capacity until he resigned from the company on April 30, 1965.

10. During the time plaintiff was in charge of the Greensboro office of H. L. Coble Construction Company, copies of the profit-sharing plan and trust agreement were available in the main office of the company at Greensboro, North Carolina.

11. Prior to the termination of plaintiff's employment with H. L. Coble Construction Company, he discussed the provisions of the company's profit-sharing plan with the defendant Honaker. During this conference, plaintiff and Mr. Honaker went over a copy of the plan together, and Mr. Honaker furnished all information requested by the plaintiff.

12. On June 17, 1965, Mr. Honaker, as chairman of the Administration Committee, mailed to the plaintiff the following letter:

"Mr. Wayne H. Harrold 1805 Brookcliff Drive Greensboro, North Carolina 27410

Dear Mr. Harrold:

The Profit Sharing Administration Committee, as recently reconstituted, has adopted a policy of notifying, by letter, all retired, disabled, or withdrawn employees of their rights under the Profit Sharing Agreement, and when their benefits may be expected.

Since you have raised some questions as to the percentage of your account you will receive, and when you are entitled to receive it, I am going into more detail than usual in citing the controlling provisions of the Trust Agreement.

According to company records you were employed on April 1, 1959, and resigned as of April 30, 1965. Under Article III (1) of the Agreement, as amended 9/8/59, you entered the Plan on December 31, 1960, having completed one year of continuous employment on April 1, 1960. Under the same Article, your participation was retroactive to April 1, 1960, the date you had completed one year of continuous employment.

Article VIII, as amended 9/8/59 relating to Benefits on Serverence of Employment, insofar as here pertinent, reads as follows:

`(1) If the employment with the Company of a participating employee who entered the Plan on the 31st day of December, 1959, or on a subsequent adjustment date, shall be severed for any reason other than retirement, disability, or death, such withdrawn employee shall not be entitled to receive any part of the amount credited to his account for (or on account of) the first full twelve months period of his continuous participation in the Plan (prior to his severance), but he shall be entitled to receive twenty per cent (20%) of the amount credited to his account (adjusted, as of the adjustment date next succeeding such severance, as provided in Article VI hereof) for each full twelve months period of his continuous participation in the Plan after that first full twelve months period and prior to and ending with the actual date of such severance, to a maximum of one hundred percent (100%); and any balance remaining in the account of such withdrawn employee shall be forfeited by him.'

`(2) Any severance benefits to which any withdrawn employee of the Companies may be entitled under the provisions of this Article VIII shall be payable to such withdrawn employee in one lump sum within sixty (60) days after the adjustment date next succeeding his withdrawal;'.

Paragraph (1) quoted above fixes the participation of a withdrawn employee at 20% of his account, as adjusted `for each full twelve months period', less one, of his continuous participation in the Plan `prior to and ending with the actual date of such severance, to a maximum of one hundred per cent (100%)'. As your period of continuous participation dates from April 1, 1960, to April 30, 1965, it is apparent that five full twelve months periods are involved. Since under the provisions of Paragraph (1) of Article VIII one year must be omitted, it appears that you have left four (4) full twelve months periods, which at 20% per year gives you 80% of your account as it stands after all necessary adjustments at December 31, 1965.

Paragraph (2) of Article VIII, quoted above, provides that the severance benefits to which a withdrawn employee may be entitled, shall be payable within sixty (60) days after the December 31 next succeeding his withdrawal. The reason for the delay is, of course, that he shares in the net income or net loss of the Trust for the full year, and consequently his account cannot be properly adjusted until the report of the Trustee is received, which is usually around the latter part of February or the early part of March.

I believe you are already aware that a lump sum payment of this nature qualifies for long term capital gains treatment in your Federal Income Tax

Return for the year in which it is received. It should be reported in Schedule D of your return as `Lump sum payment from H. L. Coble Construction Company Profit Sharing Trust upon termination of employment'.

If there is anything in this letter or in the Agreement itself which is not clear to you or which you would like to discuss, I shall be glad to go over over it with you at your convenience.

With kindest personal regards, I am

Very truly yours (S) Stuart F. Honaker Stuart F. Honaker, Chairman Profit Sharing Administration Committee"

13. On June 16, 1965, the plaintiff dispatched the following letter to the Administrator of the profit-sharing...