Neidich v. Estate of Neidich
| Decision Date | 06 September 2002 |
| Docket Number | No. 01 Civ. 7464(CM)(GAY).,01 Civ. 7464(CM)(GAY). |
| Parties | Florence NEIDICH, Plaintiff, v. ESTATE OF Henry K. NEIDICH, Henry K. Neidich & Co., Inc., Henry K. Neidich & Co., Inc. Profit Sharing Plan & Trust, Henry K. Neidich & Co., Inc. Profit Sharing Corporate Plan, Daniel M. Neidich and Warren S. Neidich, both individually and as co-executors of the Estate of Henry K. Neidich, and Eugene Fox, individually and as Trustee of Henry K. Neidich & Co., Inc. Profit Sharing Plan & Trust and/or the Henry K. Neidich & Co., Inc. Profit Sharing Corporate Plan, Defendants. |
| Court | U.S. District Court — Southern District of New York |
William H. Mulligan, Jr., Bleakley, Platt & Schmidt, LLP, for Defendants.
Anthony J. Pirrotti, Pirrotti & Pirrotti LLP, Ardsley, NY, for Plaintiff.
Plaintiff Florence Neidich brings this action against the above named defendants for (1) a declaration that an alleged waiver of surviving spouse death benefits, pursuant to a profit-sharing plan governed by the provisions of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. (hereinafter "ERISA"), was fraudulently obtained and therefore invalid, ineffective, and unenforceable; (2) a declaration that an alleged "Beneficiary Designation and Pre-Retirement Death Benefit Form" governed by the provisions of ERISA was not a "qualified election" within the meaning of 29 U.S.C. § 1055(c)(2)(A) and the provisions of the profit sharing plan; and (3) recoupment from Daniel and Warren Neidich of funds that have unjustly enriched them. Plaintiff seeks an award of surviving spouse death benefits pursuant to the provisions of ERISA and the profit sharing plan.
All defendants move for summary judgment on all of plaintiff's claims. Defendants argue that the "Beneficiary Designation and Pre-Retirement Death Benefit Form" ("Beneficiary Designation Form") constitutes a "qualified election" pursuant to ERISA, that plaintiff's waiver of her death benefits was not fraudulently obtained and is valid, effective and enforceable, and that no award of surviving spouse death benefits or damages for unjust enrichment should be paid to plaintiff.
For the reasons stated below, all claims against Eugene Fox, Warren Neidich, Daniel Neidich, Henry K. Neidich & Co. Inc., and the Henry K. Neidich & Co. Inc. Profit Sharing Corporate Plan are dismissed. Plaintiff's Third Cause of Action is also dismissed. Defendants' motion for summary judgment on the First and Second Causes of Action as against the Estate of Henry K. Neidich and the Henry K. Neidich & Co. Inc. Profit Sharing Plan & Trust is denied.
Henry K. Neidich ("Henry" or "the decedent") and Florence Neidich ("Florence" or "Plaintiff") were married on April 30, 1978. It was Henry's second marriage and Florence's third marriage. At the time they were married, Henry was 68 years old and Florence was 60. [Def. Facts at ¶ 2.] Florence and Henry had first met over 40 years earlier, and had remained friends throughout those years. [Pl. Facts at ¶ 1; Def. Facts at ¶ 5.]
Defendants Daniel and Warren Neidich ("Daniel" and "Warren") are Henry's surviving sons from a previous marriage. [Def. Facts at ¶ 3.]
Henry died on April 13, 1999 at the age of 88. He was survived by Daniel, Warren and Florence. Id. Daniel and Warren were appointed Co-executors under Henry's Last Will and Testament dated September 16, 1997, which was admitted to probate in the Surrogate's Court, Westchester County on June 16, 1999. Id. at ¶ 4.
On April 28, 1978, two days before Henry and Florence were married, they executed a two-page reciprocal antenuptial agreement (the "Antenuptial Agreement"), by which each waived all rights that either may have in the property or Estate of the other by reason of their marriage under the laws of any jurisdiction. [Def. Facts at ¶ 18.] The Antenuptial Agreement included a waiver of each person's right to elect against the other's will. Id. When the Antenuptial Agreement was executed, Henry and Florence each had two grown sons and grandchildren. Defendants argue that this Antenuptial Agreement was written because both Henry and Florence wanted to take care of their own estate and to look after their own children and grandchildren. [Def. Facts at ¶ 22.]
After Henry's death in April 1999, Florence filed a Notice of Election in an attempt to receive an elective share of Henry's estate as determined under EPTL § 5-1.1-A. Warren and Daniel commenced a proceeding to determine the validity and effect of Florence's Notice of Election. Daniel and Warren, as Co-Executors of Henry's Will, alleged that the Notice of Election was ineffective and in violation of the terms of the Antenuptial Agreement, and that any challenge to the Antenuptial Agreement was barred by the expiration of the applicable statute of limitations. Florence argued that the Antenuptial Agreement was void and unenforceable because it was the unconscionable product of overreaching and undue influence by Henry over her. [Def. Facts at ¶¶ 26 -27.] She also argued that the statute of limitations for a claim of fraud should be tolled during the duration of her marriage because she was unable to discover the fraud and undue influence until Henry's death.
Florence moved for summary judgment. Daniel and Warren, as Co-Executors, cross-moved for summary judgment. [Def. Facts at ¶ 28.] On November 22, 2000, Surrogate Albert J. Emanuelli denied Florence's motion and granted Daniel and Warren's cross-motion for summary judgment. Surrogate Emanuelli held that the Notice of Election was invalid and of no effect in view of the express terms of the 1978 Agreement. He held that Florence's challenge to the Antenuptial Agreement on the basis of fraud or undue influence was time-barred. [Def. Facts at ¶ 29.] In response to Florence's argument that the limitations period should be tolled during the period of her marriage, Surrogate Emanuelli noted that Florence had "failed to give a convincing explanation why `fraud,' `undue influence' or `overreaching' could not have been discovered at the time she executed the Agreement simply by reading the two-page document which she signed." [Def. Facts at ¶ 33.]
Florence appealed Surrogate Emanuelli's Decision and Order. On January 28, 2002, the Appellate Division of the Second Department of the Supreme Court of New York affirmed the lower court's ruling. See Decision and Order, Jan. 28, 2002, at 1.
Throughout his marriage to Florence, and until his death, Henry was President and sole shareholder of the Henry K. Neidich & Co., Inc. (the "Company"), also a defendant in this action. The Company is a corporation duly organized and existing pursuant to and by virtue of the laws of the State of New York. [Def. Facts at ¶ 7.] In 1990, the Company adopted a Standardized Corporate Prototype Profit Sharing Plan sponsored by Oppenheimer & Co., Inc. ("Oppenheimer") which became effective March 1, 1990. Id. at ¶ 8. The name of the plan is the Henry K. Neidich & Co. Inc. Profit-Sharing Plan & Trust (the "1990 Plan").1 Id. The 1990 Plan succeeded a previous profit sharing plan adopted on January 28, 1980 (the "1980 Plan"), which succeeded an original and dissolved plan dated February 21, 1971 (the "1971 Plan"). Id. at ¶ 9. The assets maintained in the 1971 Plan were transferred to and maintained in the 1980 Plan. Id. at n. 5.
On or about November 26, 1990, the 1990 Plan was adopted pursuant to Henry's execution of a Prototype Form of Adoption Agreement. He proceeded, in accordance with the terms of the Adoption Agreement, to appoint Oppenheimer as Custodian under the Plan, and directed that the Plan be administered and contributions invested according to options selected and made available as set forth in the aforesaid Adoption Agreement. Henry executed the Adoption Agreement in his capacity as President of the Company and as sole Trustee of the Plan. No Successor or Co-Trustee was named in the Plan. [Def. Facts at ¶¶ 13-14.] When the 1990 Plan was adopted, the funds maintained in the 1980 plan were transferred to Oppenheimer in its capacity as Custodian. [Def. Fact at ¶ 15.] Henry never retired from the Company and never received a distribution from the 1990 Plan before his death. [Def. Facts at ¶ 16.]
1. The Spousal Waiver
On or about December 10, 1990, Henry executed a two page document entitled "Oppenheimer & Co., Inc. Corporate Prototype Money Purchase and/or Profit Sharing Plan Beneficiary Designation and Pre-Retirement Death Benefit Form" (the "Beneficiary Designation Form"). [Def. Facts at ¶ 35.] The introductory paragraph on the first page of the form provided as follows:
In accordance with federal regulations, unless you, with the specific consent of your spouse, elect otherwise, or you should die before you are eligible to retire, the plan will use your account balance to provide a survivor annuity for your spouse as the normal form of death benefit. This annuity will provide your spouse with a series of monthly payments over his/her life.
However, you may elect to waive either or both the requirement that your spouse be your beneficiary and the requirement that the death benefit be paid to your spouse in the form of a survivor annuity. This election must be acknowledged in writing by your spouse. If the Company does not have the spouses's [sic] waiver on file at the time of your death (unless he/she elects otherwise at the time of your death), your spouse will receive a survivor annuity, even if you have designated another beneficiary and/or elected another form of death benefit.
Underneath this statement is a section titled "Designation of Beneficiary." Herein, Henry...
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