Manowitz v. Senter

• Decision Date: 27 June 1978
• Citation: 62 A.D.2d 898,406 N.Y.S.2d 466
• Parties: William MANOWITZ, Plaintiff-Appellant, v. Jonas SENTER, Irving M. Kallick, Murray N. Meadow, as Trustees of the Employee Pension Plan of CITC Industries, Inc., and CITC Industries, Inc., Defendants-Respondents, David Mark, as Trustee, etc., Defendant.
• Court: New York Supreme Court — Appellate Division

Page 466

406 N.Y.S.2d 466

62 A.D.2d 898

William MANOWITZ, Plaintiff-Appellant, v. Jonas SENTER, Irving M. Kallick, Murray N. Meadow, as Trustees of the Employee Pension Plan of CITC Industries, Inc., and CITC Industries Inc., Defendants-Respondents David Mark, as Trustee, etc., Defendant.

Supreme Court, Appellate Division,First Department.

June 27, 1978.

Sheldon M. Greenbaum, New York City, of counsel (Thomas F. Ryan, New York City, with him on the brief; Hess, Segall, Guterman, Pelz & Steiner, New York City, attys.), for plaintiff-appellant.

Jonathan S. Gaynin, New York City, of counsel (Vincenti & Schickler, New York City, attys.), for defendants-respondents.

Before KUPFERMAN, J. P., and EVANS, FEIN, LANE and MARKEWICH, JJ.

FEIN, Justice:

Plaintiff appeals from an order which denied his motion for partial summary judgment declaring that he was "unlawfully removed from the pension roll" of defendant CITC Industries, Inc. (CITC) and is entitled to pension rights which vested prior to his voluntary termination of employment.

Plaintiff was employed by CITC from October 1962 to January 31, 1973. During his tenure with defendant, CITC, he became its general manager in charge of men's and sporting goods footwear. Following his resignation on January 19, 1973, effective January 31, 1973, he entered the employ of a competing company. During the period subsequent to his resignation, he requested and received statements as to the value of his pension plan account, which on January 31, 1976, allegedly contained an accumulated sum of $63,540.54. On September 9, 1976, one week prior to plaintiff's sixty-fifth birthday, defendants advised him that his pension plan account had been closed because of willful misconduct during the course of plaintiff's prior employment with CITC, a determination made more than three and one-half years after plaintiff's termination.

Upon receipt of notification that defendants had declared a forfeiture of plaintiff's vested pension benefits, plaintiff commenced a special proceeding to obtain a copy of the pension plan. That proceeding was disposed of by order of Justice Helman, dated November 26, 1976, directing that a copy of the plan be furnished to plaintiff.

When defendants continued to resist plaintiff's claim that he was entitled to pension rights under the plan, this action was commenced in February 1977. Following joinder of issue, plaintiff moved for partial summary judgment for a declaration that he was improperly divested of his rights under the pension plan and for reinstatement of all pension benefits. Special Term denied the motion, finding there were questions of fact as to whether plaintiff engaged in conduct which warranted forfeiture of pension rights and whether plaintiff concealed from defendants his alleged improper and unauthorized conduct during the period of his employment.

Special Term denied the motion on authority of Hadden v. Consolidated Edison Co., 34 N.Y.2d 88, 356 N.Y.S.2d 249, 312 N.E.2d 445. We disagree. We conclude that Hadden requires a declaration that (1) defendants improperly sought to forfeit plaintiff's interest in the pension plan, and (2) plaintiff is entitled to reinstatement of his pension benefits.

The pension plan provides in § 8.02:

"If such termination of employment is voluntary or is the result of a discharge other than as provided in Section 8.03, he shall be entitled, subject to the provisions of Section 8.04, to receive a percentage of the value of the Accumulation Account held for his account determined by the length of his continuous employment as follows:

"Vested equity to be 100% beginning with entry date."

§ 8.03 provides in pertinent part as follows:

"If a participant shall cease to be an employee through his own proven dishonesty or through any wilful act in the course of his employment to the injury of the Employer or his fellow workers, then regardless of how near he may be to his normal retirement date, he shall be treated as he would have been had he never been a participant. * * * Within 10 days after a person ceases to be an employee the Pension Committee shall make any determination that the provisions of this section are operative and shall notify him by registered mail, addressed to his last known address. He shall be given a period of 20 days following the mailing of such notice in which to appeal, and if he does not appeal within such period by writing addressed to the Pension Committee, the determination of the Pension Committee shall be final. * * * "

The plan further provides a procedure for arbitration in the event the participant disputes or challenges the Pension Committee determination declaring a forfeiture of pension benefits.

Here, defendants do not contest the fact that plaintiff's termination of employment was voluntary. Under the terms of the pension plan, an employee who voluntarily retires is clearly entitled to vested pension benefits. Only where employment is terminated as a result of the "proven dishonesty" or " wilful act (of the employee) in the course of his employment to the injury of the Employer or his fellow workers" ( § 8.03) does the pension plan authorize forfeiture of benefits. Where termination of employment is voluntary or as a result of discharge other than for dishonesty, the employee is entitled to his vested benefits. Nowhere in the pension plan is there a provision permitting the employer to declare a retroactive forfeiture when acts of dishonesty are discovered or ascertained after the employee has retired. As the Court of Appeals observed in Hadden v. Consolidated Edison Co., supra 34 N.Y.2d at p. 98, 356 N.Y.S.2d at p. 256, 312 N.E.2d at p. 450:

"If the parties to the Pension Plan herein wanted pension benefits to be adversely affected when an employee's misconduct comes to light after his retirement, rules governing the Company's and the employee's rights in such a situation should properly have been covered by provisions in the Plan."

Here, the plan contains no provision authorizing the employer to divest an employee of vested rights by reaching back and relying upon alleged improper conduct not discovered until well after the employee's retirement, in this case, more than three and one-half years after plaintiff had voluntarily terminated his employment. The only conditions under which forfeiture of benefits may be declared under the pension plan in issue here are proven dishonesty and certain willful acts ascertained prior to and which form the basis of the employee's termination or discharge.

Hadden v. Consolidated Edison Co., supra, is not to the contrary. That case does not authorize forfeiture of pension benefits for conduct concealed from the employer prior to the employee's termination, in the absence of an appropriate provision in the pension plan pertaining to that contingency. In that case, a Consolidated Edison executive was permitted to retire under an early retirement option rather than face discharge for cause and accompanying loss of pension benefits, after disclosure to the employer of the employee's involvement in a bribery scandal and after assurance given to management that that involvement was his sole indiscretion. Two years after Hadden's retirement, the Trustees of the Pension Plan discovered that there were more serious transgressions and sought to effect a retroactive termination of pension benefits, similar to what respondents seek in the case at bar. The pension plan in Hadden, as in this case, contained no express provision authorizing post-retirement termination of pension benefits. Hadden emphasized the protection required to be accorded employee rights under a pension plan as a form of deferred...