Parsow v. Parsow's Fashions for Men, Inc.
| Decision Date | 16 July 2013 |
| Docket Number | 8:11CV297 |
| Parties | DEBRA L. PARSOW, Individually and for her IRA Account, Plaintiff, v. PARSOW'S FASHIONS FOR MEN, INC., a Corporation, and PARSOW'S FASHIONS FOR MEN, INC. PROFIT SHARING PLAN, Defendants. |
| Court | U.S. District Court — District of Nebraska |
This matter is before the court on defendants' motion for summary judgment, Filing No. 63; plaintiff's motion for summary judgment, Filing No. 66; plaintiff's objection to index, Filing No. 70; plaintiff's motion for a hearing, Filing No. 74; and defendants' motion to strike, Filing No. 78. Plaintiff brought this action under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1104(c) and 29 U.S.C. § 1132(e)(1) alleging that the defendants Parsow's Fashions for Men, Inc. Profit Sharing Plan ("Profit Sharing Plan") and Parsow's Fashions for Men, Inc. ("PFM") owes her additional death benefits under the company Profit Sharing Plan. Plaintiff's husband, Steven Parsow, died on September 10, 2008, and plaintiff received a death benefit under the Profit Sharing Plan in the amount of $637,002.03 on April 29, 2009.1 Plaintiff is seeking to recover additional benefits under the Profit Sharing Plan as the beneficiary and surviving spouse of Steven Parsow. She also contends that the defendants violated fiduciary obligations to her and asks the court to impose civil penalties and equitable relief under ERISA.
Plaintiff's husband, Steven Parsow, was an employee of PFM and a participant in the Profit Sharing Plan. Steven Parsow served as the plan administrator of the Profit Sharing Plan and Chairman of the Plan Investment Committee. He made and controlled the decisions regarding his own personal investments within the Profit Sharing Plan.
On November 20, 2007, Steven Parsow executed an Investment Election document and invested 100% of his assets under the Profit Sharing Plan in Elkhorn Partners Limited Partnership ("Elkhorn Partnership"). Filing No. 64-4, Ex. B, PFM0142 - PFM0143. He could have chosen other investment options, but he chose to invest all of his money in this one investment. The Investment Election form stated:
To help achieve long-term retirement and security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money.
Id., Ex. B, PFM0142. The plaintiff and Steven Parsow personally invested in Elkhorn Partnership for 15 years. In 2008, Elkhorn Partnership sustained significant losses.
Steven Parsow died of a bee sting on September 10, 2008. Three brothers were involved in the business: Steven, who is now deceased; David who acted as the chief operating officer of the company; and Alan who served as the director, shareholder and officer of PFM and who operates the separate business at Elkhorn Partnership. Elkhorn Partnership is a closed, invitation only, investment fund. During 2008 and into early 2009 the investors, including plaintiff, received notification from the Elkhorn Partnership of losses of approximately 6% as of April 14, 2008, losses of 34.1% as of October 19,2008, and losses of approximately 44% as of the end of 2008. Filing No. 64-7, Ex. B, PFM0321 - PFM0329.
Two years later plaintiff filed this lawsuit alleging the death benefit was improperly calculated. On November 30, 2011, this court stayed the lawsuit and instructed the parties to allow for administrative review of the claims. On February 17, 2012, the plan administrator determined that the death benefit paid to the plaintiff was properly calculated under the terms of the Profit Sharing Plan. Filing No. 64-5, Determination, Ex. B, PFM0226 - PFM0229.
Summary judgment is appropriate when, viewing the facts and inferences in the light most favorable to the nonmoving party, "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "The movant 'bears the initial responsibility of informing the district court of the basis for its motion, and must identify 'those portions of [the record] . . . which it believes demonstrate the absence of a genuine issue of material fact.'" Torgerson v. City of Rochester, 643 F.3d 1031, 1042, (8th Cir. 2011) (en banc) (quoting Celotex, 477 U.S. at 323). If the movant does so, "the nonmovant must respond by submitting evidentiary materials that set out 'specific facts showing thatthere is a genuine issue for trial.'" Id. (quoting Celotex, 477 U.S. at 324). "The inquiry performed is the threshold inquiry of determining whether there is the need for a trial— whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A "genuine" issue of material fact exists "when there is sufficient evidence favoring the party opposing the motion for a jury to return a verdict for that party." Id. at 251-52 (1986) (). If "reasonable minds could differ as to the import of the evidence," summary judgment should not be granted. Id. at 251.
The evidence must be viewed in the light most favorable to the nonmoving party, giving the nonmoving party the benefit of all reasonable inferences. Kenney v. Swift Transp., Inc., 347 F.3d 1041, 1044 (8th Cir. 2003). "In ruling on a motion for summary judgment, a court must not weigh evidence or make credibility determinations." Id. "Where the unresolved issues are primarily legal rather than factual, summary judgment is particularly appropriate." Koehn v. Indian Hills Cmty. Coll., 371 F.3d 394, 396 (8th Cir. 2004).
A filing of cross-motions for summary judgment does not "necessarily indicate that there is not dispute as to a material fact, or have the effect of submitting the cause to a plenary determination on the merits." Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983). Consequently, "where conflicting inferences as to a material fact may reasonably be drawn from the materials before the court, the case is not appropriate for summary judgment." Id.
Under ERISA, when a denial of benefits is challenged through judicial review, "the record that was before the administrator furnishes the primary for review." Trustees of Electricians' Salary Deferral Plan v. Wright, 688 F.3d 922, 925 (8th Cir. 2012); see also Brown v. Seitz Foods, Inc., Disability Benefits Plan, 140 F.3d 1198, 1200 (8th Cir. 1998) ().
The underlying purpose of ERISA is to protect the interests of participants in employee benefit plans and their beneficiaries . 29 U.S.C. § 1001(b); see also Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113 (1989). Under ERISA, a plan "participant or beneficiary" may bring a "civil action" to "recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B); see CIGNA Corp. v. Amara, — U.S. —, —, 131 S. Ct. 1866, 1871 (2011).
An administrator's decision is reviewed for an abuse of discretion when an ERISA plan grants discretionary authority to the plan administrator to determine eligibility for benefits. Jobe v. Medical Life Ins. Co., 598 F.3d 478, 481 (8th Cir. 2010); Bruch, 489 U.S. 115. However, the district court should apply a de novo standard of review, rather than an abuse of discretion standard, when the "administrator did not exercise the discretion granted to it." Alliant Techsystems, Inc. v. Marks, 465 F.3d 864, 868 (8th Cir. 2006). A less deferential standard of review (de novo review) is also appropriate where there is material, probative evidence demonstrating that a serious procedural irregularity existed that caused a serious breach of the plan administrator's fiduciary duty. Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998), abrogated inpart by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008); see Wrenn v. Principal Life Ins. Co., 636 F.3d 921, 924 n.6 (8th Cir. 2011) (); Wade v. Aetna Life Ins. Co., 684 F.3d 1360, 1362 n. 2 (8th Cir. 2012).
"Where an ERISA plan grants the administrator discretion to determine eligibility for benefits and to interpret the plan's terms, courts must apply a deferential abuse-of-discretion standard of review." Green v. Union Sec. Ins. Co, 646 F.3d 1042, 1050 (8th Cir. 2011) ; see also Bruch, 489 U.S. 115. Under this standard, the court may only reverse a decision to deny ERISA benefits if the decision is "arbitrary and capricious." Jackson v. Prudential Ins. Co. of America, 530 F.3d 696, 701 (8th Cir. 2008). When a plan administrator or fiduciary "offers a reasonable explanation for its decision, supported by substantial evidence, it should...
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