Solis v. Koresko
| Decision Date | 03 August 2012 |
| Docket Number | Civil Action No. 09–988. |
| Citation | 884 F.Supp.2d 261 |
| Parties | Hilda L. SOLIS, Secretary of Labor, United States Department of Labor v. John J. KORESKO, V, et al. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
OPINION TEXT STARTS HERE
Linda M. Henry, Ashton S. Phillips, U.S. Department of Labor, Philadelphia, PA, for Hilda L. Solis.
Jeanne L. Bakker, Karen Marie Ibach, Richard H. Martin, Montgomery, McCracken, Walker & Rhoads, Philadelphia, PA, Stephen Moniak, Timothy J. Nieman, Rhoads & Sinon LLP, Harrisburg, PA, for John J. Koresko, V, et al.
This action arises out of alleged violations of fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., in connection with a multiple-employer employee death benefit arrangement. The Secretary of Labor (the “Secretary” or “DOL”) moves for partial summary judgment as to three purported ERISA plans (collectively, the “Plans”): the Cetylite Industries Inc. Health and Welfare Benefit Plan (the “Cetylite Plan”), the Decor Coordinates Health and Welfare Benefit Plan (the “Decor Plan”), and the Domenic Castellano D.D.S., P.A. Health and Welfare Benefit Plan (the “Castellano Plan”). The Secretary brings her motion against only some of the defendants, namely: John J. Koresko, V (“Koresko”), Jeanne Bonney, PennMont Benefit Services, Inc. (“PennMont”), Koresko & Associates, P.C. (“KAPC”), and Koresko Law Firm, P.C. (“KLF”). The Court will refer to these defendants collectively as the “Koresko Defendants.” The Secretary did not move for summary judgment against defendant Farmers & Merchants Trust Company of Chambersburg (“F & M Trust”), successor by merger to Community Trust Company (“CTC”).1
The Secretary argues that the Plans are employee welfare benefit plans as defined by ERISA; that the Plans have plan assets in the form of employer contributions, insurance policy proceeds, and earnings therefrom; that the Koresko Defendants are ERISA fiduciaries with respect to those plan assets; and that the Koresko Defendants breached several of their fiduciary duties by failing to maintain plan assets in trust and transferring assets into non-trust accounts that they themselves controlled. The Court will grant the Secretary's motion as to defendants Koresko, Bonney, and PennMont for violations of ERISA Sections 403, 29 U.S.C. § 1103; 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A); and 404(a)(1)(B), 29 U.S.C. § 1104(a)(1)(B) for all three Plans. The Court will grant the motion as to defendants Koresko, Bonney, and PennMont for violations of ERISA Section 406(a)(1)(D), 29 U.S.C. § 1106(a)(1)(D) as to the Cetylite Plan, and deny without prejudice as to the Decor and Castellano Plans. The Court will deny the motion without prejudice as to KAPC and KLF, and as to violations of ERISA Section 406(b)(1), 29 U.S.C. § 1106(b)(1).
I. Summary Judgment Standard
Summary judgment is appropriate if there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the initial burden of informing the court of the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once a properly supported motion is made, the burden shifts to the nonmoving party to set forth specific facts showing that there is a genuine issue of material fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
A fact is “material” if it might affect the outcome of the suit under the governing law. Id. at 248, 106 S.Ct. 2505. A dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. The court must view the facts in the light most favorable to the nonmoving party. See Sheridan v. NGK Metals Corp., 609 F.3d 239, 251 n. 12 (3d Cir.2010).
The Koresko Defendants' response to the Secretary's statement of undisputed facts purports to “dispute” the majority of the Secretary's factual recitations. However, their response is replete with legal arguments, lacks citations to the record, and generally does not comply with Federal Rule of Civil Procedure 56(c)(1) or this Court's procedures. See generally Koresko Stmt. Resp. (ECF No. 284). The Court considered properly supported facts genuinely disputed only where the Koresko Defendants provided citations to the record.
Defendant F & M Trust denied many of the Secretary's facts under Federal Rule of Civil Procedure 56(d), which states:
If a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition, the court may: (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate order.
The Court of Appeals for the Third Circuit has interpreted this provision to require a party seeking further discovery in response to a summary judgment motion to submit an affidavit specifying what particular information is sought; how, if uncovered, it would preclude summary judgment; and why it has not previously been obtained. Pa. Dep't of Public Welfare v. Sebelius, 674 F.3d 139, 157 (3d Cir.2012) (citing Dowling v. City of Phila., 855 F.2d 136, 139 (3d Cir.1988)). The Secretary has not moved for summary judgment against F & M Trust. The affidavit submitted by attorney Timothy J. Nieman on behalf of F & M Trust referred to documents in the DOL's possession, but does not explain how the documents would preclude summary judgment on the legal issues relevant to F & M Trust, or why the documents were not previously obtained.2 Decl. of Timothy J. Nieman (ECF No. 283).
Thus, except where the defendants countered the Secretary's factual recitation with citations to the record, the Court considered any properly supported facts undisputed for the purposes of the motion pursuant to its discretion under Federal Rule of Civil Procedure 56(e)(2). The Court now sets forth those facts.
II. Factual Background3A. The REAL VEBA Employee Benefit Arrangement
Defendant John J. Koresko (“Koresko”) and his brother, Lawrence Koresko, run a loose, unincorporated association of unrelated employers called the Regional Employers Assurance Leagues (“REAL”). The REAL offers a program of employee welfare benefits, including death benefits, to employers through the Regional Employers Assurance Leagues Voluntary Employees' Beneficiary Association (“REAL VEBA”) Trust, a multiple employer trust. Koresko and his brother sign documents and take actions on behalf of the REAL, which is neither an actual business entity nor a corporation....
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