In re Meinen

• Decision Date: 30 December 1998
• Docket Number: Adversary No. 97-2520-MBM.,Bankruptcy No. 97-26170-MBM
• Citation: 228 BR 368
• Parties: In re Warren MEINEN, Debtor. James T. Healey, Plaintiff, v. Warren Meinen, Defendant.
• Court: U.S. Bankruptcy Court — Western District of Pennsylvania

228 B.R. 368 (1998)

In re Warren MEINEN, Debtor James T. Healey, Plaintiff, v. Warren Meinen, Defendant.

Bankruptcy No. 97-26170-MBM, Adversary No. 97-2520-MBM.

United States Bankruptcy Court, W.D. Pennsylvania, Pittsburgh Division.

December 30, 1998.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Mark Clement, Pittsburgh, PA, for James T. Healey.

Gary W. Short, Pittsburgh, PA, for Warren Meinen.

Jeffrey J. Leech, Pittsburgh, PA, for Carpenters' Combined Funds, Inc., appearing as amicus curiae.

Mary Reitmeyer, Pittsburgh, PA, Trustee.

MEMORANDUM OPINION

M. BRUCE McCULLOUGH, Bankruptcy Judge.

James T. Healey, plaintiff herein and a judgment lien creditor of the above-captioned debtor, objects to the discharge of Warren Meinen, said debtor and defendant herein, on several grounds. Plaintiff, in Count I of his complaint, (a) asks that the debtor be denied a discharge pursuant to 11 U.S.C. § 727(a)(5) because, according to plaintiff, the debtor has failed to explain satisfactorily why the debtor's interest in the terminated Millwrights' Local Union No. 2235 Savings Fund (hereafter "Millwrights' Plan" or "Plan"), which interest is valued in the debtor's Bankruptcy Schedule B at $53,968.88, is not available to satisfy the debtor's liabilities, and (b) seeks a declaration by this Court that the debtor's interest in the Millwrights' Plan constitutes property of the debtor's bankruptcy estate. Plaintiff raises Count I because the debtor asserts that the Millwrights' Plan is an ERISA¹ -qualified plan and, as such, it contains an enforceable anti-alienation clause that effectively operates to exclude the debtor's interest in said plan from the debtor's bankruptcy estate pursuant to 11 U.S.C. § 541(c)(2). Plaintiff vigorously disagrees with the debtor's characterization of the Millwrights' Plan as an ERISA-qualified plan, primarily arguing in particular that (a) a plan, in order to be an ERISA-qualified plan, must also meet the tax qualification requirements of the Internal Revenue Code (hereafter "IRC"), and (b) the Millwrights' Plan, for several reasons, does not meet several of the federal tax qualification requirements. The debtor now moves for summary judgment in his favor on plaintiff's Count I, while plaintiff, in addition to responding to the debtor's motion, also cross-moves for summary judgment in his favor.

The Court notes that the contentions of both of the parties herein focus on the debtor's interest in the terminated Millwrights' Plan even though (a) the Millwrights' Plan was terminated at some point in 1997, and all of the assets within the Millwrights' Plan were distributed in 1997, see Meinen's Affidavit, para. 6, and (b) the debtor, on August 29, 1997, elected to directly roll over all of the funds distributed to him from his interest in the Millwrights' Plan to the Carpenters' District Council of Western Pennsylvania Annuity and Savings Fund (hereafter "Carpenters' Plan"). See Meinen's Affidavit, para. 7 & Meinen's Appendix C.² The Court concludes, however, that the parties' focus is correct because (a) the contents of a bankruptcy estate are established as of the commencement of a bankruptcy case, see 11 U.S.C.A. § 541(a)(1) (West 1993), which means that whether property can properly be excluded from said estate must also be determined as of said commencement, (b) the debtor filed his Chapter 7 bankruptcy petition on August 26, 1997, which is three days prior to when he rolled over to the Carpenters' Plan those funds that he received in distribution from his interest in the Millwrights' Plan, which means that the debtor's funds which now reside in the Carpenters' Plan resided in his account with the Millwrights' Plan on the date that he filed his bankruptcy petition, and (c) therefore, whether said funds can properly be excluded from the debtor's bankruptcy estate depends upon whether his interest in the terminated Millwrights' Plan, as opposed to his present interest in the Carpenters' Plan, can be excluded from said bankruptcy estate pursuant to § 541(c)(2).

Carpenters' Combined Funds, Inc., in its capacity as Administrator of the Millwrights' Plan (hereafter "Carpenters"), moved to intervene in the above-captioned adversary proceeding only with respect to plaintiff's Count I because it asserted that it has a direct and substantial interest in the subissue raised by plaintiff regarding the tax qualification status of the Millwrights' Plan, which status plaintiff asserts bears upon whether the debtor's interest in the Plan can be excluded from the debtor's bankruptcy estate. While the Court denied Carpenters' motion to intervene by order dated February 25, 1998, the Court, in the same order, granted Carpenters leave to file an amicus curiae brief regarding the issues raised in plaintiff's Count I "within the same time period allotted to . . . the debtor for his response to plaintiff's brief regarding the same issues." Although Carpenters has filed its amicus curiae brief, plaintiff now moves to strike said brief and an accompanying affidavit filed by Carpenters because, plaintiff asserts, (a) Carpenters filed its brief prematurely, (b) Carpenters somehow exceeded its capacity as amicus curiae by filing its supporting affidavit, and (c) Carpenters, in its amicus curiae brief, inappropriately advocates the position which is taken by the debtor.

The Court, in this opinion, shall dispose of the parties' dueling motions for summary judgment as to Count I of plaintiff's complaint, as well as plaintiff's motion to strike Carpenters' amicus curiae brief. For the reasons set forth herein, the Court (a) GRANTS the debtor's motion for summary judgment on plaintiff's Count I and DENIES WITH PREJUDICE plaintiff's similar motion, which means that (i) the debtor's discharge shall not be denied pursuant to § 727(a)(5), and (ii) the debtor is correct in excluding his interest in the Millwrights' Plan from his bankruptcy estate, and (b) DENIES WITH PREJUDICE plaintiff's motion to strike Carpenters' amicus curiae brief and supporting affidavit.

STATEMENT OF FACTS

The Millwrights' Plan, prior to its termination, covered those employees of employers who were a party (i.e., participating employers) to the collective bargaining agreement (hereafter "the Collective Bargaining Agreement") with the Millwrights and Machinery Erectors of the United Brotherhood of Carpenters and Joiners of America Local Union No. 2235 (hereafter "the Union"). See Meinen's Affidavit, para. 5; Plaintiff's Brief, p. 11. The Collective Bargaining Agreement required participating employers to make periodic contributions to the Millwrights' Plan as a percentage of employees' compensation, and such contributions needed to be made regardless of whether the participating employers operated at a profit. See Meinen's Affidavit, para. 12; Plaintiff's Brief, p. 10.

The Plan Document for the Millwrights' Plan, as apparently amended on September 20, 1995, with amendments made effective as of October 1, 1991, see Meinen's Appendix D, IRS Form 5303 Application for Determination for Collectively Bargained Plan dated 9/13/95, item 3a, and apparently in effect except perhaps for pertinent termination provisions not therein contained, contains the following pertinent provisions:

(a) A clause providing that:

No benefit provided by the . . . Plan will be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. To the maximum extent permitted by law, no such benefit shall be liable for or subject to attachment or other legal process for or against any payee.

See Meinen\'s Appendix A, Millwrights\' Plan Document, Art. X, § 10.3 at 39.

(b) A designation of the Millwrights\' Plan "as a profit sharing plan under Section 401(a) of the Code." See Id. at Art. II at 3.

(c) A statement that "the primary purpose of the . . . Plan is to encourage and assist Employees in providing funds for old age security by supplementing monthly pensions from the Carpenters\' Pension Plan with a savings plan." See Id.

(d)(i) An annual option to participating plan beneficiaries either to (1) withdraw employer contributions credited to their accounts for the October 1-September 30 Plan year that ended two years prior to September 30 of the immediately preceding Plan year, or (2) permit such amounts to remain in their accounts "until the severance of . . . their employment in the industry by reason of . . . their retirement, death, permanent withdrawal from the industry in the geographic area covered by the jurisdiction of the Union, or on April 1 of the calendar year following the calendar year of attained age seventy and one-half (70½)." See Id. at Art. VI, § 6.7(a) at 17-18.

(ii) An option to participating plan beneficiaries to withdraw, upon application, amounts then credited to their accounts except for employer contributions made to the Plan during the two-year period preceding payment of said withdrawal, except that withdrawal of employer contributions made within the aforementioned two-year period is permitted to enable a plan beneficiary to meet a financial hardship. See Id. at Art. VI, § 6.7(c) at 18-20. The Plan provides that the following, upon an appropriate showing by the beneficiary, are the only reasons for obtaining a hardship withdrawal:

(1) Expenses for medical care described in Section 213(d) of the Code previously incurred by the Employee, the Employee\'s spouse, or any dependents of the Employee or amounts necessary for these persons to obtain medical care described in Section 213(d) of the Code;

(2) Purchase (excluding mortgage payments) of a primary residence of the Employee;

(3) Tuition payment and related educational fees for the next twelve (12) months of post secondary education for the Employee or a dependent in his immediate family;

(4) The need to prevent eviction of the Employee from his principal residence or the foreclosure of the mortgage on the Employee\'s

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