Hursey v. Hursey
| Decision Date | 12 February 2010 |
| Docket Number | Civil Action No. 3:09-CV-079-JTC. |
| Citation | 704 F.Supp.2d 1288 |
| Parties | Julie Ann Hamrick HURSEY, Plaintiff,v.Sidney B. HURSEY, Defendant. |
| Court | U.S. District Court — Northern District of Georgia |
Alvah O. Smith, Levine & Smith, Jack M. Martin, Benefits Law Group, Atlanta, GA, for Plaintiff.
Barry B. McGough, Elizabeth Alford Beskin, Warner Mayoue Bates & Nolen, Atlanta, GA, for Defendant.
Pending before the Court is Defendant's Motion to Add Party [# 5] and Plaintiff's Motion to Remand to State Court [# 12]. Plaintiff initiated this action in the Superior Court of Fayette County, Georgia as a Motion for Contempt of a Qualified Domestic Relations Order (“QDRO”). Defendant removed the action to this Court pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”) and moved to join the Pension Benefit Guaranty Corporation (the “PBGC”) as a party. Plaintiff then moved to remand this case to the Superior Court. The Court DENIES the Motion to Add Party [# 5] and GRANTS the Motion to Remand to State Court [# 21].
I. Factual Background
Plaintiff Julie Ann Hamrick Hursey and Defendant Sidney Hursey were husband and wife; they divorced in 2004. (Pl.'s Mot. for Contempt at ¶ 1; Def's Answer at ¶ 1.) On December 30, 2004, the Superior Court of Fayette County entered a QDRO incorporating the parties' Settlement Agreement. (Pl.'s Mot. for Contempt at ¶¶ 1, 3; Def's Answer at ¶¶ 1, 3.)
At all times relevant to this dispute, Defendant was an airline pilot employed by Delta Air Lines, Inc. (“Delta”). As a pilot for Delta, Defendant participated in several retirement plans Delta offered to its pilots. These retirement plans include the Delta Pilots Retirement Plan, which is a tax-qualified, defined benefit pension subject to ERISA. See generally In re Delta Air Lines, Inc., No. 06 Civ. 9418, 2006 WL 3592334, at *1 (S.D.N.Y. Dec. 11, 2006). In addition, pilots received pension benefits from related non-qualified plans, such as the Delta Pilots Supplemental Annuity Plan and the Delta Pilots Bridge Plan. See Id. Pursuant to the terms of the Settlement Agreement, Plaintiff received one-half of Defendant's interest in the Delta Family-Care Savings Plan, the Delta Pilots Retirement Plan, the Delta Pilots Supplemental Annuity Plan, the Delta Pilots Bridge Plan, and the Delta Pilots Money Purchase Plan. (Settlement Agreement ¶ 8, Oct. 29, 2004.)
Less than a year after their divorce, Delta filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York. During the course of the bankruptcy, the Air Line Pilots Association (“ALPA”) and Delta reached a Letter of Agreement (“LOA # 51”) altering the terms of a collective bargaining agreement regarding pay, benefits, and work rules. One of the terms of LOA # 51 was that the ALPA agreed not to oppose any voluntary, involuntary or distress termination of the Delta Pilots Retirement Plan or the termination of the Delta Pilots Bridge Plan or the Delta Pilots Supplemental Annuity Plan. In addition, LOA # 51 provided that Delta would terminate the Money Purchase Pension Plan and distribute its assets to the participants.
Pursuant to LOA # 51, Delta provided the ALPA with a general unsecured claim in the amount of $2.1 billion. In addition, Delta agreed to issue $650 million in senior unsecured notes upon the termination of the Delta Pilots Retirement Plan. Delta then moved the Bankruptcy Court for approval of LOA # 51. (Debtors' Mot., No. 05-17923, Bankr.S.D.N.Y., filed May 9, 2006.) The Pension Benefit Guaranty Corporation 1 (the “PBGC”) objected to Delta's motion. (Objection of PBGC at 2, No. 05-17923, Bankr.S.D.N.Y., filed May 24, 2006.) Specifically, PBGC objected to LOA # 51 because it allowed Delta to seek a distress termination of the Delta Pilots Retirement Plan and compensated its active pilots for the unfunded benefits under the Delta Pilots Retirement Plan by giving them $650 million in notes and a $2.1 billion unsecured claim. (Objection of PBGC at 2.) PBGC argued that ERISA assigned any claim for a pension plan's total under funding exclusively to it. ( Id. at 2-3.)
The Bankruptcy Court overruled PBGC's Objection and ordered that, as set forth in LOA# 51, the ALPA shall not oppose the termination of the Delta Pilots Retirement Plan or the other contribution retirement plans at issue. In re Delta Air Lines, Inc., Case No. 05-17923, slip op. at 3-4 . In addition, the Bankruptcy Court allowed ALPA to receive a $2.1 billion general non-priority unsecured claim in the bankruptcy proceedings (the “ALPA Claim”), as well as $650 million in notes issued by Delta upon the termination of the Delta Pilots Retirement Plan (the “ALPA Notes”). Id. at 4-5. PBGC appealed the Bankruptcy Court's Order to the United States District Court for the Southern District of New York. (Notice of Appeal, No. 05-17923, Bankr.S.D.N.Y., filed June 7, 2006.)
After PBGC appealed the Bankruptcy Court's Order, it reached a settlement with Delta resolving the issues regarding the termination of the Delta Pilots Retirement Plan. (Settlement Agreement, Dec. 4, 2006.) Pursuant to the terms of this Settlement Agreement, PBGC agreed to complete the distress termination of the Delta Pilots Retirement Plan as soon as practical with an effective termination date of September 2, 2006. ( Id. at ¶ 3.) PBGC received a pre-petition, general, non-priority unsecured claim against Delta in the amount of $2.2 billion. ( Id. at ¶ 6(a).) In addition, the proposed plan of reorganization provided for the distribution to PBGC of $225 million in senior unsecured notes. ( Id. ¶ 1.) Finally, PBGC agreed to withdraw with prejudice its appeal of the Bankruptcy Court's May 31, 2006, Order approving LOA # 51. ( Id. ¶ 9.) The Bankruptcy Court approved the Settlement Agreement. In re Delta Air Lines, Inc., 359 B.R. 468, 471 (Bankr.S.D.N.Y.2006). After the termination of the Delta Pilots Retirement Plan, PBGC became the Plan's statutory trustee. Delta also terminated the Delta Pilots Bridge Plan, and the Delta Pilots Supplemental Annuity Plan. (Pl.'s Mot. For Contempt at ¶ 4; Def's Answer at ¶ 4.) These plans, however, are not covered by PBGC's pension plan termination insurance program. See 29 U.S.C. §§ 1002(35), 1321(a).
Meanwhile, the ALPA allocated the ALPA Claim and ALPA Note to the pilots. (Pl.'s Mot. for Contempt at ¶¶ 6, 7.) Defendant received “cash and a contribution” to his account in the Delta Family Care Savings Plan for his share of the ALPA Claim. (Def.'s Ans. at ¶ 6.) In addition, Defendant received “cash and a contribution” to his account under the Delta Pilots Defined Contribution Plan for his share of the ALPA Note. ( Id. at ¶ 7.) Plaintiff contends that the amount Defendant received for the ALPA Claim and Note represent Defendant's share of the consideration received by current Delta pilots, including Defendant, for agreeing to surrender rights and benefits under the pension plans. (Pl.'s Mot. for Contempt at ¶ 8.) Because the QDRO divided Defendant's pension benefits between him and Plaintiff, Plaintiff contends that she is entitled to a proportionate share of the amount of the ALPA Claim and Note paid to Defendant. ( Id. at ¶ ¶ 8-9.)
After Defendant declined to provide Plaintiff with any of these funds, Plaintiff filed a Motion for Contempt in the Superior Court of Fayette County, the Court that entered the QDRO. Defendant removed the action to this Court and moved the Court to add PBGC as a party. Plaintiff then moved to remand the case to the Superior Court.
II. AnalysisA. Motion to Add Party
Defendant moves pursuant to Rule 19 of the Federal Rules of Civil Procedure to add PBGC as a party to this action. Rule 19 provides that a court should join a party where it cannot grant complete relief to the existing parties without joining the person, or where the non-party claims an interest relating to the subject of the action and is situated so that disposing of the action in its absence impairs the non-party's ability to protect its interest. Fed.R.Civ.P. 19(a). Defendant contends that PBGC should be joined in this action because it is the party responsible for determining and paying benefits under the Delta Pilots Retirement Plan, and, thus, Plaintiff cannot obtain the relief she requests without joining PBGC as a defendant.
As PBGC states in response to Defendant's motion to add it as party, the Court can grant the relief Plaintiff seeks without joining PBGC. Unlike the cases relied upon by Defendant, this is not an action against a plan administrator for recovery of benefits. See generally Preite v. Charles of the Ritz Group, Ltd. Pension Plan, 471 F.Supp.2d 1271, 1280-81 (M.D.Fla.2006) (). Plaintiff does not request an accounting of her benefits due under the remaining funds in the Delta Pilots Retirement Plan or a payment of pension benefits from PBGC. Rather, Plaintiff seeks to recover funds in the sole possession of Defendant. These funds were not paid from either the PBGC or an ERISA plan, but by Delta as a part of the bankruptcy reorganization. In short, Plaintiff seeks no relief from the Delta Pilots Retirement Plan or PBGC, and joinder is not required under Rule 19(a)(1)(A).
Moreover, PBGC does not have an interest in the subject of this action-the share of the ALPA Claim and Note that ALPA allocated to Defendant. A ruling by the Court on whether Plaintiff is entitled to any of the funds in Defendant's possession under the terms of the QDRO will not bind PBGC or impact its determination of benefits under the Delta Pilots Retirement Plan and Title IV of ERISA. If PBGC determines that participating in this action is necessary to ensure that the Court limit its findings to the QDRO, it may do so by requesting leave to file an amicus curiae brief with the...
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