Hollingshead v. Burford Equipment Co.

Citation747 F. Supp. 1421
Decision Date15 October 1990
Docket Number89-D-179-N.,Civ. A. No. 88-D-461-N
PartiesErnest Lee HOLLINGSHEAD, Jr., et al., Plaintiffs, v. BURFORD EQUIPMENT COMPANY, et al., Defendants and Third-Party Plaintiffs, v. Kenneth G. PARMER, Third-Party Defendant. Charles K. CALLIHAN, et al., Plaintiffs, v. BURFORD EQUIPMENT COMPANY, et al., Defendants and Third-Party Plaintiffs, v. Kenneth G. PARMER, Third-Party Defendant.
CourtU.S. District Court — Middle District of Alabama


E.J. Saad, Crosby, Saad & Beebe, Mobile, Ala., Jay F. Guin, Tanner, Guin, Ely, Lary & Neiswender, P.C., Tuscaloosa, Ala., for plaintiffs and third-party defendant Kenneth G. Parmer.

Robert G. Tate, A. Brand Walton, Burr & Forman, Birmingham, Ala., for Burford Equip. Co., Burford, Inc., and Lamar Burford.

Richard A. Ball, Jr., Ball, Ball, Matthews & Novak, P.A., Montgomery, Ala., L. Traywick Duffie, Daniel G. Calugar, Kurt A. Powell, Hansell & Post, Atlanta, Ga., for defendants and third-party plaintiffs.


DUBINA, District Judge.

This cause is before the court on cross motions for summary judgment filed by the parties.

The plaintiffs (hereinafter sometimes referred to collectively as "the Burford employees") filed motions for partial summary judgment on January 17, 1989, and April 23, 1990. They filed memorandum briefs in support thereof on January 18, 1989, February 14, 1989, and June 28, 1990. The defendants, Burford Equipment Company; Burford, Inc.; and J. Lamar Burford, Jr. (hereinafter sometimes collectively referred to as "Burford"), filed memorandum briefs in opposition to the Burford employees' motions on January 30, 1989, February 14, 1989, and June 18, 1990.

The third-party defendant, Kenneth G. Parmer ("Parmer"), filed a motion to dismiss and a motion for summary judgment on April 23, 1990, together with a memorandum brief in support thereof. Burford filed a memorandum brief in opposition thereto on June 18, 1990.

Burford filed a motion for partial summary judgment on July 3, 1990. It filed a memorandum brief in support thereof on July 9, 1990, and the Burford employees filed a memorandum brief in opposition to Burford's motion on July 17, 1990.

The parties have also submitted numerous letter briefs to the court. In addition, the court heard oral arguments from the parties on July 26, 1990.


In 1934, J. Lamar Burford, Sr., together with other incorporators, established Burford-Toothaker Tractor Company. The company's name was changed to Burford Equipment Company ("Burford Equipment") in 1962. In 1985, it became a wholly owned subsidiary of Burford, Inc. On April 26, 1987, Burford Equipment sold its assets to Thompson Tractor & Equipment Company, Inc. ("Thompson Tractor"). Burford Equipment has not, however, been dissolved.

Burford, Inc., was incorporated in 1985, and owns 100% of the outstanding stock of Burford Equipment.

J. Lamar Burford, Jr. ("Lamar Burford"), owns 100% of the voting stock of Burford, Inc. He is president and chairman of the board of both corporate defendants.

Burford Equipment provided certain fringe benefits for its employees. These benefits included a profit-sharing plan to which the company made discretionary contributions and to which employees could also contribute if they chose. Any funds due to employees from the profit-sharing plan were paid upon their retirement, either in an annuity format or a lump sum payment. The terms of the profit-sharing plan were fully set out in a written document, and the plan was qualified with the Internal Revenue Service ("IRS").

Burford Equipment payroll records also indicate that pension benefits to retired persons have been among the fringe benefits provided for many years. These retirement benefits were paid on a monthly basis to the recipients and were in addition to any funds due from the profit-sharing plan. Pension benefits were paid on an informal basis beginning in the 1950's. Burford Equipment had no written documentation of any retirement policy, however, until 1977, when the minutes of the board of directors' meeting of January 25, 1977, reflected the following:

Mr. Burford brought up the fact that we have no formal retirement policy, but that we need to establish some guidelines. He suggested the following:
-To be eligible, an employee would have to be 62 years of age.
-Employees with 15 to 20 years service would be guaranteed 40% of their preceding year's salary with the exception of salesmen. Salesmen will be guaranteed 40% based on an average of their previous five years income. Their Social Security payment to be a part of the 40%.
-Employees with 20 to 25 years service would be given 50%; and, employees with 25 years and over service would be given 60%.
Mike Hutson made a motion to adopt the retirement guidelines as presented. Barney Beaird seconded the motion. Motion carried.

The company amended the 1977 resolution in 1978, when the minutes of the board of directors' meeting of January 17, 1978, reflected the following:

Bill Canter brought up the need to amend the company guidelines for employee retirement to cover "Unusual Circumstances". It was suggested that if the Board of Directors approved it as beneficial to the company, a sic employee would be eligible for a special retirement if he or she were 55 years of age. Mike Hutson made a motion to adopt the proposed amendment as presented. Barney Beaird seconded the motion. Motion carried.

The foregoing corporate resolutions constitute the only written formulations of the terms of the retirement policy that existed at Burford Equipment. After their adoption, but prior to Burford Equipment's selling its assets, numerous employees attained retirement age, retired from their employment, and received pension benefits consistently thereafter. After the sale of assets to Thompson Tractor, however, no other employees received retirement benefits pursuant to this policy.

At issue in this lawsuit is the latter retirement policy. Burford claims that it was a voluntary, gratuitous service award program for key employees under which neither corporation has any obligation to make further payments, although Burford, Inc., is presently continuing to pay benefits to those employees who retired before the sale of Burford Equipment's assets to Thompson Tractor. The Burford employees contend that Burford Equipment had established a retirement plan under which they are entitled to receive all benefits either promised to them by the company or guaranteed to them by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"). In order to distinguish the disputed retirement plan from the profit-sharing plan, this court will hereinafter refer to the plan at issue as "the service retirement plan."

All of the Burford employees seek to enforce the terms of the service retirement plan pursuant to ERISA. The Hollingshead plaintiffs are former employees of Burford Equipment or the spouses of former employees who were denied retirement benefits pursuant to the service retirement plan after the asset sale. The Callihan plaintiffs are participants or the spouses of participants in the service retirement plan who retired prior to the asset sale and are currently receiving benefits pursuant to the plan. They are also requesting class certification to represent all persons (with the exception of the Hollingshead plaintiffs) who have a vested accrued benefit in the plan, whether or not the benefit is being paid, and the spouses of those persons who would be entitled to receive a survivor annuity.

Parmer is one of the Hollingshead plaintiffs, and was formerly on the board of directors of Burford Equipment.


Rule 56(c), Fed.R.Civ.P., provides that a summary judgment may be granted only:

if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Accordingly, when considering a motion for summary judgment, the court must refrain from deciding any material factual issues. Instead, the court's sole function on a motion for summary judgment is to determine whether there exist issues of material fact to be tried and, if not, whether the moving party is entitled to a judgment as a matter of law. See Dominick v. Dixie Nat'l Life Ins. Co., 809 F.2d 1559 (11th Cir.1987); Tippens v. Celotex Corp., 805 F.2d 949 (11th Cir.1986); Keiser v. Coliseum Properties, Inc., 614 F.2d 406 (5th Cir.1980). Moreover, in performing this function, inferences which are drawn from the underlying facts must be viewed in the light most favorable to the party opposing summary judgment. In other words, all doubt as to the existence of a genuine issue of material fact must be resolved against the party moving for summary judgment. See United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Tippens, 805 F.2d at 954; Carlin Communication, Inc. v. Southern Bell Tel. & Tel. Co., 802 F.2d 1352 (11th Cir.1986).

As to the burden of proof on a motion for summary judgment, the movant clearly bears the exacting burden of showing both that there is no actual dispute as to any material fact and that the moving party is entitled to a judgment as a matter of law. See Combs v. King, 764 F.2d 818 (11th Cir.1985). In clarifying the proper allocation of this burden, the United States Supreme Court recently stated as follows:

We are convinced that the inquiry involved in a ruling on a motion for summary judgment or for a directed verdict necessarily implicates the substantive evidentiary standard of proof that would apply at the trial on the merits. If the defendant in a run-of-the-mill civil case moves for summary judgment or for a directed verdict based on the lack of proof of a material fact, the judge must ask himself not whether he

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