Taylor v. Bank One, Texas, NA
| Decision Date | 18 February 1992 |
| Docket Number | Civ. A. No. H-90-3815. |
| Citation | 137 BR 624 |
| Parties | Jimmy F. TAYLOR, as the Administrative Committee, and for and on behalf of the Welfare Plan of Mercantile Employees' Beneficiary Association, and Ameritrust Texas, N.A., Trustee of Mercantile Employees' Beneficiary Association Trust, Plaintiffs, v. BANK ONE, TEXAS, N.A., the Deposit Insurance Bridge Bank Employees' Beneficiary Association Trust, the Welfare Plan of Bank One, Texas, Employees' Beneficiary Association, Banc One Mortgage Company of Texas f/k/a MBank Mortgage Company, MCorp, MCorp Financial, and MCorp Management, Defendants. |
| Court | U.S. District Court — Southern District of Texas |
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John H. Bennett, Jr., Pohl & Bennett, Houston, Tex., for plaintiffs.
Thomas D. Graber, Hopkins & Sutter, Dallas, Tex., Peter F. Lovato, III, Nancy J. Anglin, Dallas, Tex., for defendants Bank One Texas, N.A., Bank One Texas Employees' Beneficiary Trust, Welfare Plan of Bank One, Texas, Employees' Beneficiary Ass'n and Banc One Mortg. Co. of Texas.
Riva T. Johnson, Hughes & Lace, L.L.P., Dallas, Tex., Douglas S. Sandage, Sullivan, King, & Sabom, P.C., Houston, Tex., for defendants MBank El Paso N.A., MBank Brownsville, N.A., MBank New Braunfels N.A. and MBank Waco N.A.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This cause came on for non-jury trial, before this Court, on November 13-15, 1991. The case was excellently prepared and presented, by both sides. Not only was the Court privileged to witness exceptional advocacy, by all counsel involved in the case, but the Court had the additional privilege of meeting and listening to some remarkable witnesses. This Court is absolutely convinced that this case involves no wrongdoing on the part of anyone, and the Court perceives sincerely high motives on the part of all concerned. Unfortunately, that only makes this decision all the more difficult. From a legal standpoint, this Court must address an important issue of first impression: which is paramount between the F.D.I.C., and its need for transaction finality in the reorganization of failed banks, or E.R.I.S.A., which safeguards the rights of the employees of such institutions. Factually, and on a much more human level, this Court is faced with balancing the legitimate needs of Plaintiffs, representing the interests of numerous retired and disabled former employees, who have every right to be secure in their retirement, and to be provided with adequate medical insurance and related benefits, against the equally legitimate needs of a fledgling bank, which, like the Phoenix, arose from the ashes of the demise of a predecessor entity, and their respective welfare and benefits plans, the integrity of which this Court must take pains to properly protect. Out of such disparate interests in this case, each seeking only fairness, this Court must fashion a remedy that tries to achieve justice.
It is with that high purpose in mind, and the Court's full knowledge of and appreciation of the needs of the respective parties, that the Court hereby enters the following Findings of Fact and Conclusions of Law, issued pursuant to F.R.Civ.P. Rule 52(a). Any finding of fact which may be a conclusion of law is adopted as such, and any conclusion of law which may be a finding of fact is adopted as such. Findings of fact not expressly made are deemed made in support of the Judgment.
1. Defendant MCorp is the owner of Defendant MCorp Financial and Defendant MCorp Management, which respectively own and manage Texas banking associations whose names include "MBank." Since March 1989, MCorp, MCorp Financial and MCorp Management have operated under Chapter 11 bankruptcy proceedings pending in the United States Bankruptcy Court for the Southern District of Texas. (PTO Adm 16).
2. MCorp is the sponsor of several "welfare benefit plans" (as defined by Sec. 3(1) of the Employee Retirement Income Security Act of 1974) (E.R.I.S.A.), that are included within the MCorp Cafeteria Plan and are collectively known as the Mercantile Employees' Beneficiary Association Plan (the "MEBA Welfare Plan"). Plaintiff Jimmy F. Taylor administers welfare benefits under the MEBA Welfare Plan. (PTO Adm 1).
3. The funding medium for the MEBA Welfare Plan is Plaintiff, the Mercantile Employees' Beneficiary Association Trust (the "MEBA Trust"). The Trustee for the MEBA Trust is Ameritrust Texas, N.A., a company that was formerly known as MTrust Corp, N.A. (PTO Adm 7 and 8).
4. Plaintiff Jimmy F. Taylor is familiar with both the Plan and the Trust. In his view, trustees of the Trust take directions for disbursements from the Plan's Committee. According to Sec. 11, of the Trust Document, if one of the employers fails, funds are immediately dedicated to beneficiaries, regardless of who contributed them. (Exh. 1).
5. Deposit Insurance Bridge Bank, National Association (the "Bridge Bank") is a statewide national banking association that was chartered and owned on March 28, 1989 by the Federal Deposit Insurance Corporation ("FDIC"). The Bridge Bank changed its name to Bank One, Texas, N.A. ("Bank One") when Banc One Corporation began to manage the Bridge Bank. Later, the FDIC sold stock in the Bridge Bank to Banc One Corporation. (PTO SC 3). References to Bridge Bank and Bank One N.A. are interchangeable.
6. On March 28, 1989, the Office of the Comptroller of Currency declared twenty of the MBanks insolvent: MBank Abilene, N.A., MBank Corsicana, N.A., MBank Dallas, N.A., MBank Marshall, N.A., MBank Mid Cities, N.A., MBank Wichita Falls, N.A., MBank Houston, N.A., MBank The Woodlands, N.A., MBank Denton County, N.A., MBank Orange, N.A., MBank Sherman, N.A., MBank Alamo, N.A., MBank Austin, N.A., MBank Brenham, N.A., MBank Odessa, N.A., MBank Round Rock, N.A., MBank Greenville, N.A., MBank Longview, N.A., MBank Fort Worth, N.A., and MBank Jefferson County, N.A. For convenience the MBanks that were declared insolvent are referred to as the "Failed Banks" to distinguish them from several other MBanks that were not declared insolvent and that continued in business. (PTO Adm 17).
7. On March 28, 1989, the FDIC was appointed Receiver for each of the Failed Banks. On March 28, 1989, the Receiver for each Failed Bank sold certain assets to Deposit Insurance Bridge Bank, National Association (the "Bridge Bank"). The Bridge Bank purchases those assets from the Receiver and assumed certain liabilities pursuant to twenty separate Purchase and Assumption Agreements. (See, e.g. Exh. 16). For purposes of this case the Purchase and Assumption Agreements may be considered identical. (PTO Adm 20) The employees of the Failed Banks went to work for Bridge Bank the morning of March 29, 1989. (PTO SC 4).
8. On May 5, 1989 Bridge Bank established Defendant, the Deposit Insurance Bridge Bank Voluntary Employees' Beneficiary Association (the "Bridge Bank Welfare Plan"). (PTO Adm 21).
9. On May 5, 1989, the MCorp Compensation Committee undertook an extraordinary meeting, at which it discussed MCorp's benefit plans. The meeting was apparently urgent, because MCorp was collapsing. Bridge Bank was thinking about participating only long enough to withdraw funds, intending to thereafter "freeze out" former employees. An amendment to the MEBA Trust (Exh. 26) was voted on, and delivered to the President of the Bridge Bank. A letter confirming this intention was also transmitted. (Exh. 27). These indicate a controversy as to whether the funds were to remain in the immediate trust.
10. Peter Bartholomew was the President and CEO of MCorp. He directly participated in all of the administrative activities pertaining to this suit, from his management position. On May 5, 1989, he wrote to James Gardner, his counter-part at Bridge Bank, with the intention of putting Bridge Bank on notice that no one could adopt any successor plans without approval of MCorp. (Exh. 27). His intent was to settle uncertainties regarding benefits issues. Certain actions were contemplated at the Bridge Bank that would effect MCorp employees and former employees, particularly retirees who had retired prior to 1984, when MCorp was created. It was his intent to safeguard their status with any successor trust. Similarly, he indicated that any funds continuing to be held in the MEBA Trust were not available to MCorp, and that MCorp was denied access to such because they were held solely for the benefit of the trust beneficiaries.
11. On May 10, 1989, Bridge Bank gave notice that it wanted to withdraw from the MEBA Plan, and that it stood in the shoes of a "successor employer". (Exh. 32).
12. Mr. Bartholomew recalled seeing Bridge Bank's notice of its intent to withdraw from the MEBA trust (Exh. 32), but he did not consider it binding. He conceded that Bridge Bank asserted that they stood in separate shoes, but it is his position that the MCorp compensation committee and board had the right to approve any successor trust, and that regardless of their intent otherwise, any subsequent trusts were only successor trusts. Of particularly moment, he testified that Bridge Bank collected and retained money from former employees of MCorp, and therefore, he feels certain that the Bridge Bank trust took over as merely a successor trust.
13. Bridge Bank attempted to set up its own Plan, and related Trust agreement. However, for all intent and purposes, it adopted identical provisions, of the predecessor Plan and Trust. No Summary Plan Description or benefit selections were undertaken by the Bridge Bank, as would be required, unless the Bridge Bank is a successor interest. No Form 1024 was completed, as required by Section 501(c)(9). No recalculation was mandated, for Plan participants, with regard to accumulation of deductibles, again indicating clear intent of the establishment of merely a successor plan.
14. Critically, on ...
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