Perlman v. Fid. Brokerage Servs. LLC

• Decision Date: 26 March 2013
• Docket Number: No. 11–CV–0326 (JFB)(ETB).,11–CV–0326 (JFB)(ETB).
• Parties: Hildegard PERLMAN, Plaintiff, v. FIDELITY BROKERAGE SERVICES LLC, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

932 F.Supp.2d 397

Hildegard PERLMAN, Plaintiff,

v.FIDELITY BROKERAGE SERVICES LLC, et al., Defendants.

No. 11–CV–0326 (JFB)(ETB).

United States District Court, E.D. New York.

March 26, 2013.

Amalia Goldvaser, Rachel Dara Nicotra, and Steven Jay Hyman of McLaughlin & Stern, LLP, New York, N.Y., for Plaintiff.

Charles F. Seemann of Jackson Lewis LLP, New Orleans, LA, Ana Shields of Jackson Lewis LLP, Melville, N.Y., for Fidelity Brokerage Services LLC.

Michael J. Zaretsky of Chorpenning, Good, Carlet & Garrison Esqs., New York, N.Y., and Virginia T. Shea of Carlet, Garrison, Klein & Zaretsky, LLP, Clifton, N.J., for Ameriprise.

Phillip C. Landrigan of McCarthy Fingar LLP, White Plains, N.Y., for Wendy Perlman.

Craig A. DiPrima of The Law Office of Craig A. DiPrima LLC, Huntington, N.Y., and Eric Wilen Penzer of Farrell Fritz, PC, Uniondale, N.Y., for Jonathan Blass.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Hildegard Perlman (“plaintiff” or “Hildegard”) brought this action against Fidelity Brokerage Services LLC, Fidelity Management Trust Company (collectively, “Fidelity”), Ameriprise Financial Services Inc. (“Ameriprise”), Jonathan Blass (“Blass”), as Executor and Trustee under the Last Will and Testament of Norman Perlman, and Wendy Perlman (“Wendy”) (collectively, “defendants”), alleging violations of the Employee Retirement Income Security Act of 1975 (“ERISA”), 29 U.S.C. § 1001 et seq., as to the Individual Retirement Account (“IRA”) of her late husband, Norman Perlman (“Norman”).

Specifically, plaintiff claims that, as the surviving spouse of an ERISA plan participant, she is entitled to assets that she alleges were improperly rolled over into an IRA. Plaintiff asserts that, because she did not provide formal written authorization, the transfer of assets from her late husband's Keogh plan into an IRA was improper under ERISA. Accordingly, she claims that Norman's beneficiary declaration under the IRA (entitling her to one-third of the assets) is invalid, and that she is therefore entitled to all of the assets in the IRA. Plaintiff seeks declaratory judgment affirming that she is entitled to survivorship rights in the IRA, pursuant to Section 205(a) of ERISA.

Presently before the Court are three motions made by defendants: (1) a motion for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, and to deposit funds, pursuant to 28 U.S.C. §§ 1335 and 2361, by Ameriprise; (2) a motion for judgment on the pleadings, pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, and for summary judgment, pursuant to Rule 56, by Fidelity (along with a request that the Court grant Fidelity leave to move for attorneys' fees and costs pursuant to 29 U.S.C. § 1132(g)); and (3) a motion for summary judgment, pursuant to Rule 56, and to dismiss, pursuantto Federal Rule of Civil Procedure 12(b)(7)¹ by Wendy (along with a request for attorneys' fees and costs pursuant to 29 U.S.C. § 1132(g)).

Because the uncontroverted evidence shows that ERISA does not govern Norman's plan and, even if it did, that plaintiff's ERISA claims would otherwise be barred by the statute of limitations, the Court grants summary judgment in favor of defendants on plaintiff's ERISA claims. Additionally, because the Internal Revenue Code (“IRC” or the “Code”) provisions cited by plaintiff do not create a private right of action for her, to the extent plaintiff is seeking relief pursuant to the IRC, the Court grants summary judgment in favor of defendants. Finally, for the reasons discussed in detail below, the Court declines to exercise jurisdiction over Ameriprise's interpleader counterclaim and cross-claims and, as such, does not permit Ameriprise to deposit the IRA proceeds with the Court and declines to discharge Ameriprise from liability pursuant to 28 U.S.C. § 2361.

Also before the Court is a cross-motion for summary judgment made, pursuant to Rule 56, by plaintiff. Plaintiff requests a declaratory judgment (pursuant either to ERISA or, in the alternative, to the Declaratory Judgment Act) and any other “make whole” remedies, including legal fees, which the Court deems appropriate. However, as discussed in detail below, because plaintiff has no federal claim that survives summary judgment, she cannot maintain an action for a declaratory judgment. Accordingly, the Court denies plaintiff's cross-motion for summary judgment in its entirety.

Additionally, the Court declines to exercise supplemental jurisdiction over any remaining state law claims and, in its discretion, declines to award attorney's fees and costs to any party in this litigation.

I. Background

A. Factual Background

The Court has taken the facts set forth below from the parties' depositions, affidavits, exhibits, and respective Rule 56.1 Statements of Facts. Upon consideration of a motion for summary judgment, the Court shall construe the facts in the light most favorable to the non-moving party. See Capobianco v. City of New York, 422 F.3d 47, 50 (2d Cir.2005). Unless otherwise noted, where a party's 56.1 statement is cited, that fact is undisputed or the opposing party has not pointed to any evidence in the record to contradict it. ²

Hildegard and Norman were married on June 3, 2011. (Pl.'s Ameriprise 56.1 ¶ 1.) They resided together in Woodmere, New York. (Ameriprise 56.1 ¶ 2.) Defendant Wendy Sue Perlman is Norman's daughter from a previous marriage. ( See Wendy Perlman 56.1 (“Wendy 56.1”) ¶ 8.) In 2001, before they married, Norman and Hildegard entered into a prenuptial agreement. (Fidelity 56.1 ¶ 6.) ³ Approximately two years after they were married (on approximately June 10, 2003), Norman set up a Money Purchase Pension Plan Keogh account and plan (the “Keogh account” and the “Keogh plan”), which were maintained by Fidelity. (Ameriprise 56.1 ¶ 3; Wendy 56.1 ¶ 3.)

In the Koegh plan documents, Norman listed himself as the sole employer and sole plan administrator. (Ameriprise 56.1 ¶ 4.) Norman also listed himself, and no others, as a participant in the Keogh plan. ( Id. ¶ 5.) According to Brian Hogan, Director of Retirement Product Management for Fidelity, a search was conducted during the pendency of this action to determine whether there were participants in the Keogh plan other than Norman; no evidence of other participants was found. ( Id. ¶ 6.) Discovery in this action has similarly failed to produce any evidence of participants other than Norman ( id. ¶ 7), and Hildegard acknowledged, at her deposition, that she herself was unaware of any additional participants in the Keogh plan ( id. ¶ 8). Additionally, Norman signed his own name in the section titled, “Spousal Consent,” above the line labeled, “Signature of Participant's Spouse.” (Pl.'s Ameriprise 56.1 ¶ 4; see Decl. of Rachel Nicotra in Opp'n to Defs.' Summ. J. Mots. and in Supp. of Pl.'s Cross Mot. for Summ. J. (“Nicotra Decl.”) Ex. A, at 5.⁴)

At all times relevant to this action, Norman was an attorney. (Wendy Perlman 56.1 ¶ 2.) In his Keogh plan documents, as noted above, Norman identified himself as his own employer. ( Id. ¶ 4.) Indeed, in a letter dated September 9, 2000, Norman explicitly references the “solo practitioner practice” of his that he handed over to his son eight years earlier, as well as the fact that, although he worked in the same office as his son following the transfer, he remained “totally independent.” (Nicotra Decl. Ex. Y, at 4.) During his legal career, Norman had a professional relationship with Robert D. Rosen (“Rosen”)—a relationship that Norman described as “essentially a two man partnership presented to the world as a solo practice in his name with my own inclusion as trial counsel.” ( Id.) Norman believed that “upon [his] retirement or disability [his son] and Robert (Rosen) will undoubtedly form a conventional partnership.” ( Id.) At his deposition, Rosen testified that his relationship with Norman began in about 1992, and that virtually all of the cases he handled were referred to him by Norman. (Nicotra Decl. Ex. DD, Dep. of Robert D. Rosen (“Rosen Dep.”) at 14–15.) When asked about his fee sharing arrangement with Norman, Rosen testified that it was “50/50.” ( Id. at 15.) This professional relationship between Norman and Rosen continued until approximately 2007, when Norman acted as trial counsel on one of Rosen's cases for the final time. ( Id. at 33–34.)

While they were married, Norman and Hildegard filed joint tax returns, including a Self Employment Tax Schedule SE and/or Schedule C reflecting Norman's self employment. (Wendy 56.1 ¶ 5.) Hildegard states, however, that in 2007, one year prior to Norman's death, she began filing individual tax returns. (Pl.'s Decl. in Opp'n to Summ. J. ¶ 12.)

Fidelity managed Norman's Keogh plan from December 2004 to January 2007. (Fidelity 56.1 ¶ 1.) On or about January 22, 2007, Norman sought to transfer all of the assets from his Keogh plan to an IRA maintained by Ameriprise. (Ameriprise 56.1 ¶ 10.) Whether or not Hildegard knew that the type of plan was changing during this transfer, she knew that Norman's funds were in fact being transferred from Fidelity to Ameriprise before that transfer occurred. (Fidelity 56.1 ¶ 3; see also Wendy 56.1 ¶ 10 (citing Hildegard deposition testimony about an Ameriprise representative coming to her home sometime in January 2007 before the transfer to discuss the transfer).) In fact, at her deposition, Hildegard recalled that Norman had asked for her permission to conduct such a transfer. (Decl. of Virginia T. Shea in Supp. of Ameriprise's Mot. for Summ. J. and to Interplead Funds (“Shea Decl.”) Ex A., Dep. of Hildegard Perlman (“Hildegard Dep.”) at 103 (“Q. Did Norman ever ask for your permission to transfer the assets from the Fidelity account to Ameriprise? A. I remember signing something, a spousal consent.... Q. Have you ever seen a copy of that document? A. No. Q. But you believe that you signed it? A. I believe so.”).) ⁵ Indeed, Hildegard recalled...