Richard Mfg. Co. v. Richard

• Decision Date: 15 January 2021
• Docket Number: No. 3:17-cv-01444 (VAB),3:17-cv-01444 (VAB)
• Citation: 513 F.Supp.3d 261
• Parties: RICHARD MANUFACTURING CO., INC., Plaintiff, v. Karen RICHARD, et al., Defendants.
• Court: U.S. District Court — District of Connecticut

513 F.Supp.3d 261

RICHARD MANUFACTURING CO., INC., Plaintiff,

v.Karen RICHARD, et al., Defendants.

No. 3:17-cv-01444 (VAB)

United States District Court, D. Connecticut.

Signed January 15, 2021

Charles Samuel Harris, Stephanie C. Laska, Harris, Harris & Schmid, Norwalk, CT, for Plaintiff.

Dale P. Faulkner, Kevin Gerard Smith, Faulkner & Graves, P.C., New London, CT, for Defendant Karen Richard.

John W. Cannavino, William N. Wright, Cummings & Lockwood, Stamford, CT, for Defendant Joe Richard.

RULING AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT, MOTION TO DISMISS, AND MOTION FOR LEAVE TO AMEND

VICTOR A. BOLDEN, UNITED STATES DISTRICT JUDGE

Richard Manufacturing Company, Incorporated ("Plaintiff," "RMCO" or the "Company") has sued Karen Richard ("Defendant" or "Mrs. Richard") and Joel Richard, on behalf of the Estate of Edward A. Richard ("Estate"), for interpleader and declaratory relief and has asked the Court to determine who is entitled to payments under a Supplemental Executive Retirement Plan and Agreement (the "SERP agreement," or the "Plan") between RMCO and Edward Richard ("Mr. Richard" or "Decedent"). See Compl., ECF No. 1 (Aug. 25, 2017). Mrs. Richard, Decedent's widow, and Joel Richard, Decedent's child, are co-executors of the Estate. Id. ¶¶ 5-7.

Joel Richard, in his capacity as co-executor of the Estate,¹ has filed a breach of contract counterclaim against RMCO. Answer and Counterclaim, ECF No. 16 (Nov. 29, 2017) ("Estate Answer"). Mrs. Richard also has filed several counterclaims against RMCO and a crossclaim against the Estate. See Def.’s Answer to Compl. for Interpleader and Declaratory Relief, Counterclaim and Crossclaim, ECF No. 37 (Mar. 6, 2019) ("Def.’s Answer").

Both the Estate and RMCO have moved for summary judgment. See Def. Joel Richard as Co-Executor of the Estate of Edward A. Richard's Mot. for Summ. J., ECF No. 84 (Mar. 12, 2020) ("Estate MSJ") (moving for summary judgment on both the Complaint and Mrs. Richard's crossclaim); Def. Joel Richard as Co-Executor of the Estate of Edward A. Richard's Mem. of Law in Supp. of Mot. for Summ. J., ECF No. 85 (Mar. 12, 2020) ("Estate Mem."); Pl. Richard Manufacturing Co., Inc.’s Mot. to Dismiss and/or Mot. for Summ. J., ECF No. 87 (Mar. 13, 2020) ("Pl.’s MSJ") (moving for summary judgment on the Complaint); Pl. Richard Manufacturing Co., Inc.’s Mem. of Law in Supp. of its Mot. to Dismiss and/or Mot. for Summ. J., ECF No. 87-1 (Mar. 13, 2020) ("Pl.’s Mem."). RMCO has also moved to dismiss both the Estate and Mrs. Richard's counterclaims. See Pl.’s MSJ.

Mrs. Richard opposes these motions. See Karen Richard's Mem. in Opp'n to the Estate's Mot. for Summ. J., ECF No. 100 (May 18, 2020) ("Def.’s Opp'n to Estate MSJ"); Karen Richard's Mem. in Opp'n to RMCO's Mot. for Summ. J. and Mot. to Dismiss, ECF No. 102 (May 18, 2020) ("Def.’s Opp'n to Pl.’s MSJ").

Mrs. Richard also seeks leave to amend her counterclaims against RMCO. Mot. to Amend Karen Richard's Counterclaim, ECF No. 106 (May 22, 2020) ("Mot. to Amend").

For the following reasons, RMCO's and the Estate's motions for summary judgment are GRANTED ; RMCO's motion to dismiss is GRANTED as to both Mrs. Richard's and the Estate's counterclaims, and Mrs. Richard's motion for leave to amend is DENIED .

I. FACTUAL AND PROCEDURAL BACKGROUND²

A. Factual Background

Parties

RMCO is incorporated and has its principal place of business in Connecticut. Pl. Richard Manufacturing Co., Inc.’s Local Rule 56(a)(1) Statement of Undisputed Facts in Supp. of Mot. to Dismiss and/or Mot. for Summ. J., ECF No. 88 ¶ 1 (Mar. 13, 2020) ("Pl.’s SMF").

Until 2009, Edward A. Richard served as the president of RMCO. Id. ¶ 8; Karen Richard's Local Rule 56(a)(2) Statement of Facts in Opp'n to Summ. J. ¶ 8, ECF No. 101 (May 18, 2020) ("Def.’s Opp'n to Estate SMF"); Karen Richard's Local Rule 56(a)(2) Statement of Facts in Opp'n to Summ. J. Filed by RMCO, ECF No. 103 at 2 ¶ 8 (May 18, 2020) ("Def.’s Opp'n to Pl.’s SMF").

In December 2006, Mr. and Mrs. Richard were married. Def.’s Opp'n to Estate SMF at 26 ¶ 9.³ Mrs. Richard is the widow of Mr. Richard, id. ¶ 5, and resides in Florida, id. ¶ 2.

Joel Richard is Mr. Richard's son, id. ¶ 6, and resides in California, id. ¶ 3.

Karen Richard and Joel Richard are co-executors, or personal representatives, of the Estate. Id. ¶ 4. The Estate is being probated in the Probate Division of the Circuit Court of Monroe County in Florida. Id.

Edward Richard's Retirement and Pension Plans

During his time with RMCO, Mr. Richard participated in three retirement and/or pension plans: the "Defined Benefit Pension Plan,"⁴ the "Profit Sharing Plan," and the Supplemental Executive Retirement Plan ("SERP") agreement. See Pl.’s SMF ¶ 14.

The Defined Benefit Pension Plan was available to all eligible employees at RMCO, see Defined Benefit Pension Plan, and provided retirement benefits to participants equal to the participant's accrued benefit, based on the number of years of service with the Company, id. at 19-22. Under the Defined Benefit Pension Plan, the beneficiary of death benefits under the plan is the decedent's surviving spouse, unless another beneficiary was designated. Id. at 23. On March 27, 2006, benefit accruals under the Defined Benefit Pension Plan were frozen. Id. at 1.

The Profit Sharing Plan is a "type of qualified retirement plan commonly referred to as a profit sharing plan" intended to provide participants "with additional income for retirement." Richard Manufacturing Company, Inc., Profit Sharing Plan, Summary Plan Description, ECF No. 116-1 at 10 (June 22, 2020) ("Profit Sharing Plan").⁵ Under the Profit Sharing Plan, eligible employees receive both employee rollover contributions, as well as a share of discretionary employer contributions the amount which depends on the compensation received by the given participant and assigned classifications. See id. at 11–12.

In 1996, 1998, and 2006, Mr. Richard signed beneficiary designation forms for the Defined Benefit Plan. Def.’s Opp'n to Pl.’s SMF at 21-22 ¶ 13 (citing Exs. 2-5 to Def.’s Opp'n to Pl.’s MSJ (ECF Nos. 102-3, 102-4, 102-5)). On September 5, 2006, Mr. Richard named Mrs. Richard the primary beneficiary of the Defined Benefit Plan. Id. at 22 ¶ 15.

In 2002, 2006, and 2007, Mr. Richard signed beneficiary designation forms for the Defined Profit Sharing Plan and named Mrs. Richard the primary beneficiary of that plan on each form. Id. at 22 ¶ 16 (citing Exs. 6-8 to Def.’s Opp'n to Pl.’s MSJ (ECF Nos. 102-6, 102-7, 102-8)). These forms referred to the "Profit Sharing Plan" in both the title and the text. Id. at 22 ¶ 17 (citing Exs. 6-7).

On April 30, 2009, RMCO and Mr. Richard entered into the SERP agreement. Def.’s Opp'n to Pl.’s SMF at 20 ¶ 4; Pl.’s SMF ¶ 10 (citing Ex. A to Def. Joel Richard as Co-Executor of the Estate of Edward A. Richard's Local Rule 56(a)(1) Statement, ECF No. 86-1 at 1 ¶ 1 (Mar. 12, 2020) ("SERP").).

The SERP is "an unfunded and unsecured plan maintained by [RMCO] primarily for the purpose of providing supplemental deferred compensation for a select and key member of [RMCO]’s executive management employees."⁶ SERP at 1 ¶ 1.

The SERP contains the following provision, defining Mr. Richard as the "Executive":

In consideration for Executive's past services to Company, including Executive's long tenure as President of Company and Executive's skill and experience in performing such services for the benefit of Company, and for Executive entering into the covenants contained in this Agreement, Company shall (i) pay Executive one hundred eighty-eight (188) monthly payments of ... $20,833.33[ ] each, with each payment due on or before the first day of the month, for the period commencing on the first day of the first month following Executive's separation from service (as defined in Section 2(b) below) through December 1, 2024 (the "Compensation Period") ...

Id. at 2–3 ¶ 2(a).

Section 2(b) of the SERP defined "separation of service" to mean:

"the complete and intended termination of the employment relationship between Executive and Company and all corporations or entities or organizations with which Company would be considered a single employer pursuant to subsections (b) and (c) of Section 414 of the Code determined in conformance with Section 409A of the Code and Section 1.409A-1(h) of the Final Treasury Regulations or corresponding provisions in future guidance issued by the IRS or Department of the Treasury.

Id. at 3 ¶ 2(b).

The SERP also provided that:

[i]n the event of Executive's death prior to the expiration of the Compensation Period: (i) all amounts payable by Company pursuant to Section 2(a)(i) shall be payable in accordance with the terms thereof to such beneficiary or beneficiaries as Executive may have designated in writing and filed with Company or, in the absence of such designation, to Executive's estate; (ii) Executive's spouse, if any, shall be entitled to purchase the automobile referred to in Section 2(a)(ii) from Company at book value; and (iii) Executive's spouse, if any, shall receive COBRA benefits for the maximum statutory period at Company's expense.

Id. at 3 ¶ 2(c).

At some point in 2009, Mr. Richard sold his interest in RMCO to his son-in-law, James Steponavich. Estate SMF at 2 ¶ 7. RMCO and the Estate allege that this sale occurred on April 30, 2009, and in connection with the sale, Mr. Steponavich took over as President of RMCO. Pl.’s SMF ¶ 8; Estate SMF ¶¶ 7-8. Mrs. Richard alleges that Mr. Richard instead sold his interest in RMCO to Mr. Steponavich, effective January 1, 2009, and that Mr. Steponavich took over as President that same day. Def.’s Opp'n to Pl.’s SMF at 2 ¶ 8. As part of the sale of the company, a promissory note and stock purchase agreement were issued. Pl.’s SMF ¶¶ 9-10.

On either April 30, 2009, or May 1, 2009, Mr. Richard retired from RMCO. See Pl.’s SMF ¶ 8; Estate SMF ¶¶ 7–8; Def.’s Opp'n to Pl.’s SMF at 2 ¶ 8; 21 ¶ 5. The Estate alleges that the SERP was part of Mr. Richard's sale of RMCO to Mr....