Sweeney v. Allen, 3:05cv389.
| Decision Date | 09 July 2007 |
| Docket Number | No. 3:05cv389.,3:05cv389. |
| Citation | 494 F.Supp.2d 818 |
| Parties | John F. SWEENEY, as Trustee for the Miami Valley Worldwide, Inc. Profit Sharing Plan, Plaintiff, v. Dan E. ALLEN, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
Diane Leslie Gentile, Cooper & Gentile Co., Dayton, OH, for Plaintiff.
Ronald J. Kozar, Dayton, OH, for Defendant.
DECISION AND ENTRY SUSTAINING DEFENDANT'S MOTION FOR LEAVE TO FILE AMENDED COUNTERCLAIM (DOC. # 13); SUSTAINING, IN PART, AND OVERRULING, IN PART, PLAINTIFF'S MOTION TO DISMISS DEFENDANT'S COUNTERCLAIM AND JURY DEMAND (DOC. # 6); OVERRULING, WITHOUT PREJUDICE, PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (DOC. # 7); AND SUSTAINING DEFENDANT'S MOTION TO STAY SUMMARY JUDGMENT BRIEFING UNDER RULE 56(f) (DOC. # 14); CONFERENCE CALL SET
Plaintiff filed the instant Complaint on November 11, 2005, pursuant to, 29 U.S.C. § 1132, the Employee Retirement Income Security Act of 1974 ("ERISA"). Doc. # 1. The Defendant Answered on December 30, 2005, (Doc. # 4) and on January 12, 2006, filed a Counterclaim (Doc. # 5). This matter is currently before the Court on the Plaintiffs Motion to Dismiss the Defendant's Counterclaim and Jury Demand (Doc. # 6), the Defendant's Motion for Leave to File Amended Counterclaim (Doc. # 13), the Plaintiffs Motion for Summary Judgment (Doc. # 7) and the Defendant's Motion to Stay Summary Judgment Briefing, filed pursuant to Fed.R.Civ.P. 56(f) (Doc. # 14). Based on the reasoning and citations of authority contained herein, the Plaintiffs Motion to Dismiss (Doc. # 6) is SUSTAINED, in part, and OVERRULED, in part, his Motion for Summary Judgment (Doc. # 7) is overruled, without prejudice, and the Defendant's Motion to Stay Summary Judgment Briefing and the Defendant's Motion for Leave to File an Amended Counterclaim are SUSTAINED.
Miami Valley Worldwide, Inc. ("Worldwide"), is a corporation with its principal place of business in Dayton, Ohio. Doc. # 1, ¶ 2. It sponsors the Miami Valley Worldwide, Inc., Profit Sharing Plan ("the Plan"). Id. Plaintiff, John Sweeney, is, and was, the sole trustee of the Plan and a fiduciary as that term is defined by ERISA Section 3(21). Id., ¶¶ 3 and 4. He was, also the sole shareholder and president of Miami Valley Worldwide, Inc. Doc. # 13, Att. # 1, Amended Counterclaim, ¶ 8. Defendant Dan Allen was an employee of Worldwide and a participant and beneficiary of the Plan. Id., ¶ 3. On August 12, 2003, the Defendant's employment with Worldwide was terminated. Doc. # 1, 7.
On April 29, 2004, the Defendant requested a distribution from the plan. Doc. # 1, ¶ 9. According to the Defendant, this request was made at the urging of the Plaintiff. Doc. # 13, ¶ 11. The parties here were involved in a lawsuit in the Montgomery County Court of Common Pleas. Id., ¶ 9. They had agreed to a settlement, but, as part of the settlement negotiations, Sweeney demanded that Allen request a distribution of his holdings in the Plan. Id., ¶¶ 10 and 11.
On May 18, 2004, the Plan issued a check to the Defendant in the amount of $177,579.07 and he deposited the proceeds of the check into another retirement account. Doc. # 1, ¶ 11; Doc. # 13, ¶ 4. According to the terms of that other account, he would be subject to penalties, taxes and other adverse consequences should he withdraw the money prior to turning 65. Doc. # 13, ¶ 4. The Plaintiff contends that, according to the terms of the Plan, the Defendant was only entitled to $159,863.47. Doc. # 1, ¶ 10. The Plaintiff seeks to recover the amount of over-payment and the Defendant seeks, among other things in his counterclaim, a set off for the taxes and penalties he would have to pay should he withdraw the money from its present account. The Plaintiff asks that the Court dismiss the Defendant's Counterclaim and seeks Summary Judgment on his claims against the Defendant. For analytical reasons, the Court will first address the Plaintiffs Motion to Dismiss the Defendant's counterclaim and jury demand (Doc. # 6) and the Defendant's Motion to File Amended Counterclaim (Doc. # 13). The Court will then address the Plaintiffs Motion for Summary Judgment (Doc. # 7) and the Defendant's Motion to Stay Summary Judgment Briefing Under Rule 56(f) (Doc. # 14).
The Plaintiff seeks to have the Defendant's Counterclaim dismissed, arguing that it is preempted by ERISA and was untimely filed. Doc. # 6. In response, the Defendant argues that the Counterclaim was filed in a timely manner and seeks leave to amend same to assert his claims as arising under ERISA. Defendant filed his Answer on December 30, 2005. Doc. # 4. Two weeks later, on January 12, 2006, he filed his Counterclaim. Doc. # 5.
Rule 13(f) provides that "[w]hen a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the pleader may by leave of court set up the counterclaim by amendment." Fed.R.Civ.P. 13(f). The Defendant argues that, pursuant to Rule 15(a), he had 20 days to amend his answer, and therefore his Counterclaim was timely filed. This argument is unavailing. While Rule 15(a) provides that a pleading may be amended at any time within 20 days after it is served "if the pleading is one to which no responsive pleading is permitted ...," under Rule 13(f), an omitted counterclaim may be set up only by leave of court. "With respect to the scope of Rule 13(f), it is clear that it provides a remedy for setting up omitted counterclaims which is separate and apart from the remedy provided in Rule 15(a)." Stoner v. Terranella, 372 F.2d 89, 91 (6th Cir.1967). "[T]he remedies provided by the two rules are mutually exclusive in the sense that an amendment asserting a previously omitted counterclaim ..., is made pursuant to Rule 13(f) and not Rule 15(a)." Id. Consequently, pursuant to Rule 13(f), the Defendant must seek the leave of the Court to add a counterclaim. While he failed to do so at the time that he originally filed his counterclaim, he has since done so. See Doc. # 12 and Doc. # 13.
The decision to allow amendment in order to add an omitted counterclaim "is a matter of judicial discretion...." Budd Co. v. Travelers Indem. Co., 820 F.2d 787, 791 (6th Cir.1987) (quoting 6 CHarles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1430 at 155 (1971)). "The clause in Rule 13(f) permitting amendments `when justice requires' is especially flexible and enables the court to exercise its discretion and permit amendment whenever it seems desirable to do so." Id. at 791-92; see also Silvers v. TTC Industries, 484 F.2d 194, 198 (6th Cir.1973) (). In exercising its discretion under Rule 13(f), the district court must balance the equities, "including whether the non-moving party will be prejudiced, whether additional discovery will be required, and whether the court's docket will be strained." Budd Co., 820 F.2d at 792 (citations omitted). Courts are particularly hesitant to deny amendment, even at late stages in the proceedings, when the interest in resolving all related issues militates in favor of such a result and no prejudice is demonstrated. Id. (citations omitted).
The Plaintiff does not argue that the Defendant's proposed Amended Counterclaim would result in prejudice, rather he opposes them arguing that the Counterclaim is preempted by ERISA (Doc. # 6 at 2-3) and that the Defendant lacks standing to assert claims under that legislation (Doc. # 16 at 2-3). As all of the claims in the Defendant's Amended Counterclaim are made pursuant to ERISA, the only questions material to this Court's analysis are whether he should be allowed to amend his Answer to assert his claims, and whether he has standing to assert such. Regarding standing, the Plaintiff argues that the check sent to the Defendant in 2004 encompassed all of the benefits he was entitled to under the plan and, as he has received all benefits he was entitled to, he is not a plan "participant" and therefore lacks standing to assert claims pursuant to ERISA. Doc. # 16 at 2. This argument is unavailing.
Only "participants," "beneficiaries," "fiduciaries," and the Secretary of Labor may bring an action under ERISA. 29 U.S.C. § 1132. Under § 3(7) of ERISA, "participant" is defined as "any employee or former employee ... who is or may become eligible to receive a benefit of any type from an employee benefit plan ..." 29 U.S.C. § 1002(7). In Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the Supreme Court further defined this term, stating, with regard to former employees, that "participant" is "naturally read to mean ... employees who `have ... a reasonable expectation of returning to covered employment' or who have `a colorable claim' to vested benefits." Id. at 117, 109 S.Ct. at 958 (citations omitted). The Court defined a "colorable claim to vested benefits" as a colorable claim that (1) the person will "prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future." Id. at 117-18, 109 S.Ct. at 958.
In Teagardener v. Republic-Franklin Inc. Pension Plan, 909 F.2d 947 (6th Cir.1990), cert. denied, 498 U.S. 1027, 111 S.Ct. 678, 112 L.Ed.2d 670 (1991), the Sixth Circuit applied the reasoning of Bruch, and concluded that employees cease to be "participants" in a plan when they effectively terminate all their rights under the plan. Id. at 952. The definition of "participant" "excludes retirees who have accepted the payment of everything due them in a lump sum, because these erstwhile participants have already received the full extent of their benefits and are no longer eligible to receive future payments." Id. (quoting Joseph v. New Orleans Elect. Pension and Retirement Plan, 754 F.2d 628, 630 (5th Cir.), cert....
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