In re Volpitto
| Decision Date | 22 March 2011 |
| Docket Number | Bankruptcy No. 09–12350.,Adversary No. 09–01101. |
| Citation | 455 B.R. 273 |
| Parties | In re G. David VOLPITTO, Debtor.Todd Adams, Paul Chancellor, Erica Collins, Joyce Dross, Jeff Hornung, Lance Hudson, Mary Ann Kinsler, Dean Loss, Dennis Moberg Todd Nesley, Jamie Porterfield, Keith B. Powell, Robert Sarafin, Alan Smith, Thomas E. Starnes, Matthew Stewart, Martin J. Taylor George Maule, and Cindi Griffith, Plaintiffsv.G. David Volpitto, Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of Georgia |
OPINION TEXT STARTS HERE
Victor Hawk, Augusta, GA, for Plaintiffs.Andrew Wayne Holliday, Fulcher Hagler LLP, Augusta, GA, J. Andrew Tisdale, Tisdale Law Firm, Evans, GA, James C. Overstreet, Jr., Klosinski Overstreet, LLP, Augusta, GA, for Defendant.
Todd Adams, Paul Chancellor, Erica Collins, Joyce Dross, Jeff Hornung, Lance Hudson, Mary Ann Kinsler, Dean Loss, Dennis Moberg, Todd Nesley, Jamie Porterfield, Keith B. Powell, Robert Sarafin, Alan Smith, Thomas E. Starnes, Matthew Stewart, Martin J. Taylor, George Maule, and Cindi Griffith (collectively, “Plaintiffs”) seek to hold Dr. G. David Volpitto (“Volpitto”) personally liable for unpaid employer contributions into the Anesthesia and Pain Medicine Associates, LLC 401(k) Profit Sharing Plan and Trust (“the Plan”) in which Volpitto is the Trustee and Plaintiffs further request that this debt be declared non-dischargeable pursuant to 11 U.S.C. § 523(a)(4). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I) and the Court has jurisdiction pursuant to 28 U.S.C. § 1334.
At the end of the trial, Volpitto moved for a judgment pursuant to Federal Rule of Civil Procedure 52(c) 1 made applicable to this adversary proceeding by Federal Rule of Bankruptcy Procedure 7052 and I deferred ruling until the close of all evidence. See In re Smith, 2008 WL 7880897 at *2 (Bankr.N.D.Ga. August 27, 2008) (). For the reasons set forth below, I find this debt is dischargeable.
I previously ruled on a motion for summary judgment and the facts recited in that order are hereby incorporated by reference. See Order, Dckt. No. 98. Volpitto is the sole owner of Anesthesia and Pain Medicine Associates, LLC (“APM” or “Employer”). He also is the Trustee (“Trustee”) of APM's 401(k) profit sharing plan, “Anesthesia and Pain Medicine Associates, LLC 401(k) Profit Sharing Plan and Trust” (“the Plan”). Plaintiffs were employees of APM either as nurse anesthetists or physicians and their claim involves employer contributions for a portion of the calendar year 2006 and all of the calendar year 2007.
In 2003, APM was formed by Dr. Jack Carter and Volpitto. In that same year, the Plan was formed. Dr. Carter and Volpitto were the trustees of the Plan, until Dr. Carter left in 2005, at which time Volpitto became the sole shareholder of APM and the Trustee of the Plan. APM held two contracts to provide anesthesia services at Doctors Hospital (“Doctors Hospital”) and at the Evans Surgery Center, respectively. Hospital Corporation of America (“HCA”) manages both Doctors Hospital and the Evans Surgery Center. Prior to their employment with APM, many of the Plaintiffs worked at Westside Anesthesia Group, LLC (“Westside Anesthesia”) providing services to Doctors Hospital. In 2003, APM began providing these services and many of the Plaintiffs became employees of APM.
Ms. Denning, APM's accountant, testified that Westside Anesthesia had a different type of retirement plan. Westside Anesthesia had an ERISA money purchase plan, where the employer is legally required to make defined contributions to the pension plan. Denning testified that when APM was formed and began formulating its pension plan, she suggested the Plan should be a profit sharing plan rather than a money purchase plan because Westside Anesthesia's owner ultimately had to personally borrow a large sum of money to make the legally required employer contributions. Mr. Hagler, APM's counsel, explained that one of the legal differences in a profit sharing plan and a money purchase plan, is that under a profit sharing plan, employer contributions are discretionary whereas in a money purchase plan employer contributions are mandatory. Karen Dixon Burrows, President of Qualified Plan Administrators, confirmed that APM's plan was a profit sharing plan and that employer contributions are discretionary.
Plaintiffs contend they were never told of the change in the nature of their retirement. Plaintiffs further argued the course of dealing with APM and its predecessors was for the employer to annually contribute an amount equal to 12% of their gross salary into their retirement. APM was not formed until 2003, but many of the employees had worked at Doctors Hospital through various corporate entities and owners since the 1990s. Most of the Plaintiffs 2 worked for APM under oral contract from 2003 until 2006 when written contracts were required as a condition of continued employment.
The nurse anesthetists' employment contracts provide:
6. FRINGE BENEFITS
a. Disability Health and Retirement. Employee shall participate in [APM]'s disability income plan, health insurance plan, and retirement plan under the same terms and conditions as those plans offered to [APM]'s [nurse anesthetists] only so long as those plans are offered to [APM]'s employees as a benefit. [APM] reserves the right to reduce or terminate any such benefit plans at any time.
Trial October 20–22, 2010, Pls.' Ex. Nos. 10–21, 23–24, and 26–28 (emphasis added). Furthermore, each nurse anesthetist contract has an attached term sheet summarizing various benefits, including: “Pension: 12% employer contribution plan for retirement with 3 yr. vesting.” Trial October 20–22, 2010, Pls.' Ex. Nos. 10–21, 23–24, and 26–28. This term sheet was used even when Plaintiffs were working under the oral contracts.
The physicians' employment contracts provide:
8. FRINGE BENEFITS: Except as stated herein, Employee shall also be entitled to participate equally with other physician employees in the fringe benefits plans authorized and adopted from time to time by [APM]. Employee's participation and rights under said plans shall be subject to the terms of said plans. Said plans may be amended or terminated at Employer's discretion. These benefits may include group health insurance, group disability insurance, group life insurance and profit sharing or a money purchase pension plan. Provided, however, if a profit sharing or a money purchase pension plan is offered to physician employees, in no instance will Employer's contribution for Employee be more than Twelve Percent (12%) of Employee's Covered Compensation as defined in said profit sharing or money purchase pension plan.
Trial October 20–22, 2010, Pls.' Ex. Nos. 22 and 25 (emphasis added).
The parties acknowledge the pertinent parts of the actual Plan provide:
(c) Non–Elective Contributions: Each Plan Year, the Employer in its sole discretion may make a Non–Elective Contribution on behalf of each Allocation Group ... and will notify the Trustee in writing of the amount contributed. The amount of the Non–Elective Contribution will be determined by the Employer, and the Employer will notify the Trustee in writing of the amount contributed. Non–Elective Contributions will be made to the Plan subject to the following provisions:
(1) Employer's Determination is Final: The Employer's determination of the amount of its Non–Elective Contribution will be binding on the Trustee, the Administrator and all Participants and may not be reviewed in any manner.
Trial October 20–22, 2010, Pls.' Ex. No. 3 (emphasis added).
In addition, each of the Plaintiffs appearing at trial received the “Summary Plan Description.” 3 The plan summary states in pertinent part, Trial Oct. 20–22, 2010, Pls.' Ex. Nos. 1 and 2 (emphasis added). Volpitto argues the language of the employment contracts, the Plan's language and the plan summary fully informed the Plaintiffs that the employer contributions were discretionary. Plaintiffs disagree contending the course of dealing was for the employer to make the 12% contribution annually. That had always been the practice and the Plaintiffs contend Volpitto told them there would be no change from past practice. They further argue the term sheet requires the employer to make these contributions.
Plaintiffs also argue the Plan language does not allow for “retroactive” termination of the benefits. Volpitto contends the termination was not retroactive. APM timely obtained an extension until October 15, 2007 to establish and make any additional 2006 contributions, and the deadline to establish and tender any contributions for 2007 was not until April 15, 2008. Volpitto contends APM timely opted not to fund any additional 2006 contributions or any 2007 contributions.
APM contributed the full 12% from 2003–2005. Traditionally, the timing of the Plan payments was irregular, but, prior to 2006, payments were always made by the deadline. In 2006, only 10% per vested employee was contributed to the Plan, and no employer contributions were made for 2007.
APM was experiencing financial trouble due, in part, to an increased caseload from the burn unit at Doctors Hospital. APM's private insurance case volume dropped while the number of burn unit cases increased. While the medical bills in burn cases generally are very high, a large percentage is uncollectible because there often is no private insurance for such cases. See Trial October 20–22, 2010, Pls.' Ex. No. 36.
Adding to APM's financial difficulties was the concern of obtaining and...
To continue reading
Request your trial