Morrissey v. Curran, 69 Civ. 442.
Decision Date | 26 October 1972 |
Docket Number | No. 69 Civ. 442.,69 Civ. 442. |
Citation | 351 F. Supp. 775 |
Parties | James M. MORRISSEY et al., Plaintiffs, v. Joseph CURRAN et al., Defendants. |
Court | U.S. District Court — Southern District of New York |
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Duer & Taylor, New York City, for plaintiffs; Arthur E. McInerney, New York City, of counsel.
Bloom & Epstein, New York City, for defendants Curran, Wall and Freedman; Harold Epstein, Robert Milner and Warren Pesetsky, New York City, of counsel.
Simpson, Thacher & Bartlett, New York City, for defendant Segal; Roy L. Reardon, Melvyn L. Cantor and John W. Ohlweiler, New York City, of counsel.
Surrey, Karasik, Morse & Seham, New York City, for defendant Karchmer; Herman E. Cooper and Carl F. Goodman, New York City, of counsel.
In prior proceedings it has been held that the 1960 constitution of the National Maritime Union of America ("NMU") did not authorize the inclusion of non-officers of NMU in the NMU Officers Pension Plan ("the Officers Pension Plan"), and that NMU was entitled to recover from the Trustees of the Officers Pension Plan all amounts paid by NMU into the Officers Pension Plan for the account of non-officers, plus interest. Morrissey v. Curran, 302 F.Supp. 32 (S.D.N.Y.1969), aff'd in part, rev'd in part, 423 F.2d 393 (2d Cir.), cert. denied, 399 U.S. 928, 90 S.Ct. 2245, 26 L.Ed.2d 796 (1970), Segal v. Morrissey, 400 U.S. 826, 91 S.Ct. 52, 27 L.Ed. 56 (1970), on remand, 336 F. Supp. 1107 (S.D.N.Y.1972). Accordingly, on February 18, 1972, judgment was entered in favor of NMU against the Officers Pension Plan in the amount of $674,222.60 (representing $520,283.38 paid by NMU to the Officers Pension Plan for the account of non-officers, plus interest in the amount of $153,939.22), which judgment has been paid. On February 18, 1972, judgment was also entered in favor of the Officers Pension Plan against the defendant William Perry ("Perry"), a non-officer, in the principal amount of $222,200. (the amount of the lump sum pension paid to him), plus interest in the amount of $41,107., or a total of $263,307. This judgment has not been paid. The court has been advised that the Officers Pension Plan has instituted supplementary proceedings to collect the Perry judgment.
By Memorandum filed January 11, 1972, plaintiffs were authorized to "notice a hearing to determine the personal liability, if any, of the defendant trustees of the Pension Plan, Freedman, Segal and Karchmer, and officers of NMU, Curran and Wall, to NMU for the monies which the Pension Plan has paid out to non-officers and which it is unable to recoup." The hearing was held, and plaintiffs presented their evidence on April 13, 14 and May 1, 1972. The defendants then moved to dismiss, pursuant to Rule 41(b), F.R.Civ.P., on the ground that plaintiffs had shown no right to relief. By Memorandum filed June 29, 1972, the defendants' motions were granted with respect to the payments made to non-officer employees of NMU other than Perry,1 and were denied with respect to the payment made to defendant Perry by the Officers Pension Plan on January 16, 1969. On July 12, 1972, the hearing was resumed and the defendants presented their evidence.
Plaintiffs are members of NMU, suing on behalf of all of its members under Section 5012 of the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. § 501. Defendants Martin Segal ("Segal"), Abraham E. Freedman ("Freedman") and Leon Karchmer ("Karchmer") are the trustees of the Officers Pension Plan pursuant to an Agreement and Declaration of Trust of December 29, 1952 as subsequently amended. Freedman is also General Counsel of NMU. Defendant Joseph Curran ("Curran") is the President of NMU. Defendant Shannon Wall ("Wall") is the Secretary-Treasurer of NMU.
Freedman became a trustee of the Officers Pension Plan in 1963 when he became General Counsel of NMU. As trustee, Freedman drafts legal documents for the Officers Pension Plan and renders legal opinions to the other trustees.
Segal has been a trustee since the inception of the Officers Pension Plan in 1953, and the Martin E. Segal Company ("the Segal Company"), of which Segal is Chairman of the Board, has administered it. The Segal Company processes pension applications and computes pension benefits. The Segal Company also is the actuary for the NMU Welfare Plan and a pension plan covering the membership of NMU.
Karchmer, an original trustee of the Officers Pension Plan, is a Certified Public Accountant whose firm acts for NMU, the NMU Welfare Plan, the NMU Vacation Plan and the pension plan covering the membership of NMU. Karchmer keeps the books of the Officers Pension Plan and issues and receives checks on its behalf.
Perry had been employed by NMU since 1954, and as Assistant to the President since 1958. On August 2, 1966, he entered into an employment contract with NMU which provided that he would continue in the employ of NMU to serve as Assistant to the President until October 20, 1974. Paragraph 3 of the contract provided:
"In the event that this Agreement or Perry's employment should be terminated, with or without cause, prior to the expiration date hereof . . . Perry shall be entitled to continue to receive his said salary in full, including contributions to the NMU Officers Pension Plan and any other fringe benefits payable to the National Officers as under paragraph 2 hereof, during the balance of the term hereof . . . . In the event, however, of such termination . . . Perry shall have the option to demand and receive at one time . . . an amount equal to the said total salary, including contributions to the NMU Officers Pension Plan and any other fringe benefits payable to National Officers which he would have received during the balance of the original term . . . . (Emphasis added.)
Attached at the end of Perry's contract is an undated statement signed by Freedman, Segal and Karchmer, the Trustees of the Officers Pension Plan by which they acknowledged that paragraph 43 of Perry's Agreement "shall be binding upon us and our successors in determining William Perry's entitlement to participation in, and benefits from, the NMU Officers Pension Plan." There is appended at the end of this opinion a copy of the Perry contract and of the statement signed by the trustees. The statement signed by the trustees may have been added on or about August 29, 1966, on which day Freedman, following discussions with Karchmer and Segal, furnished them with his legal opinion, quoted in part as follows:
In May of 1968, the plaintiffs wrote several letters to Wall, Secretary-Treasurer of NMU, demanding that NMU institute suit or other proceeding to recover, on behalf of NMU, all monies contributed to the Officers Pension Plan with respect to non-officers, including the "Assistant to the President" (Perry). These letters were sent by certified mail on May 17 and May 23, 1968. Wall received the letters, made copies of them available to Curran and Charles Sovel, Freedman's law partner, and after checking the NMU constitution and conferring with Sovel, Wall decided not to institute suit on behalf of NMU. There is no evidence that plaintiffs were notified. Curran testified that copies of plaintiffs' letters were handed to him but that he paid no attention to them as he considered them "propaganda." There is no evidence that plaintiffs' letters were brought to the attention of Segal and Karchmer.
In a letter dated November 4, 1968, Mr. De Novellis, an administrator of the Officers Pension Plan at the Segal...
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