Richard B. Roush, Inc. v. New England Mut. Life
| Decision Date | 16 October 2001 |
| Docket Number | No. 4:CV-99-0485.,4:CV-99-0485. |
| Citation | 166 F.Supp.2d 187 |
| Parties | RICHARD B. ROUSH, INC. Profit Sharing Plan, by Richard K. Roush, Trustee, Roush Insurance Group, Inc., as successor to Richard B. Roush, and Richard B. Roush, and Richard K. Roush, Plaintiffs v. THE NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY and New England Financial, Defendants |
| Court | U.S. District Court — Middle District of Pennsylvania |
Michael A. Finio, Stephen F.J. Martin, Paige Macdonald-Matthes, Saul, Ewing, Remick & Saul, LLP, Harrisburg, PA, for plaintiffs.
E. Thomas Henefer, Stevens & Lee, Reading, PA, for defendants.
BACKGROUND:
Plaintiffs initiated this Employee Retirement Income Security Act ("ERISA")1 action against defendants with the filing of a complaint pursuant to ERISA § 502(e)(1), 29 U.S.C. § 1132(e)(1) and 28 U.S.C. § 1331.
In their complaint, plaintiffs allege both state law and ERISA claims with respect to defendants' purported mismanagement of assets under an employee pension benefit plan. Defendants filed a motion to dismiss plaintiffs' state law claims based on ERISA preemption. In response, plaintiffs filed an amended complaint, including only two counts, one asserting a breach of fiduciary duty under ERISA (Count I) and the other alleging a violation of ERISA's prohibited transaction rules (Count II). The court subsequently denied as moot defendants' motion to dismiss.
Plaintiffs have now moved for partial summary judgment as to liability on Counts I and II, and defendants have moved for summary judgment.
For the reasons that follow, plaintiffs' motion will be denied and defendants' motion will be granted.
DISCUSSION:
I. STANDARD OF REVIEW
Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c) (emphasis added).
... [T]he 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. In such a situation, there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is `entitled to judgment as a matter of law' because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.
Celotex Corp. v. Catrett, 477 U.S. 317, 323-324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The moving party bears the initial responsibility of stating the basis for its motions and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. Id. at 323, 106 S.Ct. 2548. He or she can discharge that burden by "showing ... that there is an absence of evidence to support the non-moving party's case." Id. at 325, 106 S.Ct. 2548.
Issues of fact are genuine "only if a reasonable jury, considering the evidence presented, could find for the non-moving party." Childers v. Joseph, 842 F.2d 689, 693-694 (3d Cir.1988) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Material facts are those which will affect the outcome of the trial under governing law. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The court may not weigh the evidence or make credibility determinations. Boyle v. County of Allegheny, 139 F.3d 386, 393 (3d Cir.1998). In determining whether an issue of material fact exists, the court must consider all evidence and inferences drawn therefrom in the light most favorable to the non-moving party. Id.; White v. Westinghouse Elec. Co., 862 F.2d 56, 59 (3d Cir.1988).
If the moving party satisfies its burden of establishing a prima facie case for summary judgment, the opposing party must do more than raise some metaphysical doubt as to material facts, but must show sufficient evidence to support a jury verdict in its favor. Boyle 139 F.3d at 393 (quoting, inter alia, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).
II. STATEMENT OF FACTS
The following claims are those applicable to the instant motion, and the facts relating thereto are essentially undisputed.2
Plaintiffs are an ERISA-regulated profit sharing plan, Richard B. Roush, Inc. Profit Sharing Plan ("the Plan"); the two Plan trustees, Richard B. Roush and his son, Richard K. Roush; and the Plan sponsor, Roush Insurance Group, Inc. (successor by merger with Richard B. Roush, Inc.). Roush Insurance Group, Inc. and Richard B Roush, Inc. will be referred to collectively as "RBR Inc." Defendants are The New England Mutual Life Insurance Company and its successor New England Financial, referred to collectively as "New England."
In 1973, RBR Inc. established the Plan which was registered under section 401(a) of the Internal Revenue Code for the purpose of providing retirement benefits for the employees of RBR Inc.
In 1994, plaintiffs were approached by an insurance agent named Robert H. Todd ("Todd") about possibly transferring its profit-sharing plan invested with Massachusetts Financial Services ("MFS") to New England.3 In reliance on representations by Todd and another New England representative named Joseph M. Malis ("Malis"), plaintiffs decided to transfer the Plan to New England. Thereafter, on December 6, 1994, Richard K. Roush ("Roush"), on behalf of RBR Inc., executed the New England Age Based Contribution Plus Profit Sharing Plan Adoption Agreement ("Adoption Agreement"). The Adoption Agreement was designed by New England, and constituted an amendment and restatement of RBR Inc.'s existing profit-sharing plan, whereby RBR Inc. adopted, in place of its former profit-sharing plan, the New England's Age Based Contribution Plus Profit Sharing Plan. The Adoption Agreement incorporated by reference The New England Age Based Contribution Profit Sharing Plan Basic Plan Document ("Basic Plan Document").
On March 14, 1995, plaintiffs completed an application for a group policy called the "Performer" ("the Policy") issued by New England under which the Plan's funds could be invested. The Policy was accepted by New England and given an effective date of March 29, 1995. The Basic Plan Document contemplates individual retirement accounts for the individual participants in the Plan which could be invested in various funds. The Policy, in turn, provides several different investment funds into which the Plan's trustees could direct the investment of the Plan funds — presumably based on investment elections communicated by the Plan participants to the trustees.
The Policy provided that New England would "establish and maintain ... a Deposit Fund to receive deposits of Plan contributions," and which would be "assigned to and made part of the assets" of New England's General Investment Account. The Policy also provided that the Deposit Fund would "be credited with deposits and interest ... as provided under this Policy." The Policy further stated: "Upon receipt of sufficient investment direction, the Deposit Fund and each Separate Investment Fund to which a portion of the deposit is directed by the Policyholder will be so credited as of its earliest possible Business Day or Valuation Date, as the case may be."
On May 22, 1995, at Todd's direction, Plan participants completed Selection Forms allocating their individual retirement accounts into the various Plan investment funds and gave these Selection Forms to Todd and Malis. On May 24 1995, Plan assets in the amount of $961,394.89 were transferred to New England for investment and allocation into the investment funds selected by the Plan participants.
During the period between May 24, 1995 and September 30, 1995, Roush made numerous requests to New England for a complete accounting of the funds transferred to New England, and verification of proper allocation of the Plan assets into the various investment funds as directed by the Selection Forms.
On September 30, 1995, New England provided plaintiffs with statements of the Plan's funds. However, the information provided did not indicate the specific amounts transferred by New England into each investment fund for each Plan participant, nor did the information reflect the proper accrual of interest and earnings for each participant in each investment fund. After reviewing the information provided by New England, Roush made several telephone calls and sent letters to New England to inform them that the Plan participants' account balances were incorrect, that New England had failed to properly allocate the Plan assets as specified by each participant on the Selection Forms, and to demand that adjustments be made to reflect proper accrual of interest and earnings on each participant's account.
On or about November 7, 1995, New England sent the same information dated September 30, 1995 to Roush. After receiving the uncorrected statement, Roush again made numerous telephone calls and sent letters to New England demanding a proper accounting and adjustments to the Plan participants' accounts to reflect the interest and earnings which should have accrued since May 24, 1995.
On December 12, 1995, Stephen Chiumenti ("Chiumenti"), inhouse counsel for New England wrote plaintiffs and acknowledged plaintiffs' complaint about untimely investment allocations. Further, Chiumenti informed plaintiffs that upon confirmation that the investment elections had not changed, the Plan funds would be invested in accordance with those elections immediately and ...
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