Wright v. Elton Corp.
| Decision Date | 25 January 2023 |
| Docket Number | C. A. 17-286 |
| Parties | JOSEPH WRIGHT, and T. KIMBERLY WILLIAMS, Plaintiffs/Counter-defendants, v. ELTON CORPORATION, GREGORY FIELDS, FIRST REPUBLIC TRUST COMPANY OF DELAWARE LLC, and M.C. DUPONT CLARK EMPLOYEES PENSION TRUST, Defendants/Counter-claimants/Third-party plaintiffs, v. JAMES B. WYETH, Solely as Executor and Personal Representative of the Estate of Phyllis M. Wyeth, MARY MILLS ABEL SMITH, CHRISTOPHER T. DUPONT, MICHAEL DUPONT, LUCY DUNNE, representative for HELENA DUPONT WRIGHT, KATHARINE D. GAHAGAN and JAMES MILLS, Third-party defendants. |
| Court | U.S. District Court — District of Delaware |
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This matter is before the Court for findings and conclusions after a bench trial.[1]This is an action for relief under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. This Court has jurisdiction under 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e)(1). In this action, plaintiff Kimberly Williams contends that a trust instrument created by Mary Chichester duPont in 1947 is covered by ERISA. She further contends that the defendants have breached their fiduciary duties by failing to operate the plan in compliance with ERISA, which has led to severe underfunding of the plan's liabilities. She seeks injunctive and other equitable relief to bring the plan into compliance with ERISA and to ensure its operation in compliance with ERISA into the future.
This case involves a pension plan (the “trust” or “the plan”) that was established in 1947 by Mary Chichester duPont to provide pensions to her employees and to the employees of her children and her grandchildren. She, her children, and her grandchildren are referred to in the trust document as the “qualified employers.” This action was originally brought in February 2016 in the United States District Court for the District of Maryland by two of these grandchildren/qualified employers-Helena duPont Wright and James P. Mills-against Defendant Elton Corporation (“Elton Corp.”), formerly the trustee of the plan, and Gregory Fields, an employee of Elton Corp.[2] Wright and Mills later filed an amended complaint adding the trust/plan itself and First Republic Trust Company of Delaware LLC (“First Republic”) the present trustee, as defendants.
In December 2016, Wright and Mills filed a second amended complaint (the operative complaint in the case), which, among other things, added two of their employees (both participants in the plan) as plaintiffs-T. Kimberly Williams, who was employed at that time by Helena duPont Wright, and Joseph Wright (no relation to Helena Du Pont Wright), who was then employed by Mills.[3] D.I. 35. On the defendants' motion, the case was transferred to this Court in March 2017. D.I. 46.
Shortly thereafter, defendant First Republic filed a counterclaim against Wright and Mills and a third-party complaint against the other then-living qualified employers: Mary Mills Abel Smith, Christopher T. duPont, Michael duPont, Phyllis Mills Wyeth, and Katharine duPont Gahagan.[4] D.I. 61. In its counterclaim and third-party complaint, First Republic seeks a declaration that each of the qualified employers is separately liable to fund the plan in accordance with ERISA. Id.
The plaintiff then sought leave to file an amended complaint, alleging a putative class action and seeking realignment of the parties. D.I. 207. The Court denied the motion, finding a putative class action would not serve any useful purpose because the Court could impose plan-wide relief in any event and stating that, although the interests of the plaintiffs were at odds, it was not necessary to formally realign the parties since the action was to be tried to the Court and the same result could be achieved in the context of the pretrial order and by adjusting the order of proof. D.I. 327. Thereafter, the original plaintiffs, Helena DuPont Wright and James Mills moved to dismiss their claims against the trust defendants, effectively realigning themselves. D.I. 373, 374.
The Court has determined that ERISA governs the plan. D.I. 442. The Court found that the plan is a defined benefit pension plan covered by ERISA, state trust law is preempted with respect to the plan, plaintiff Williams is a plan participant, and the defendants/third party defendants are all ERISA fiduciaries with respect to the plan. Id.; see also D.I. 457, Memorandum and Order at 13. Those findings are the law of the case and will not be disturbed herein.
The matter was tried to the Court and the Court took post-trial motions under advisement. The Court permitted written closing arguments. Plaintiff Williams contends that she proved at trial that defendants breached fiduciary duties in underfunding the plan, failing to tax-qualify the plan, making imprudent investments, and failing to maintain records and to provide required notices. She also contends she has shown First Republic and Elton Corp. participated in disloyal conduct as evidenced by their seeking indemnification agreements. James B. Wyeth, as executor of the Estate of Phyllis Wyeth (hereinafter, “Wyeth Estate”) argues that: 1) plaintiff Williams and third-party defendant First Republic lack standing to sue the Wyeth Estate; 2) Phyllis Wyeth was not an employer engaged in commerce or in any industry or activity affecting commerce in her employment of the employees covered by the trust; 3) Phyllis Wyeth is not a named or functional fiduciary; 4) the Wyeth Estate cannot be liable as a plan administrator of the plan; 5) and the Wyeth Estate cannot be liable for funding the trust (i.e. the single employer plan). The Wyeth Estate and several other qualified employers also argue that the plaintiff Article III standing as well as standing under ERISA because the trust/plan is not a single employer plan, but is actually five separate plans. James Mills argues that he never had an employee that was eligible for benefits from the trust.
The parties agree to the following relevant facts. D.I. 436, Pretrial Order (“PTO”) at 7-10; see also Trial Transcript ( ) at 13. Kimberly Williams was employed by a single qualified employer-Helena duPont Wright. D.I. 436, PTO at 7. Her birthdate is September 22, 1965. Id. Her employment with Wright terminated on July 11, 2018. Id. She was never employed by Elton Corp. or by First Republic Trust Company of Delaware, LLC. Id. While employed by Wright, Williams primarily worked in an office located on Unicorn Farm, Wright's homestead in Maryland. Id. at 10. Williams resided in Maryland for the entire period of employment with Wright. Id.
In the trust, Mary Chichester duPont designated herself; her children (A. Felix duPont, Jr., Lydia C. duPont, and Alice duPont Mills); her daughter-in-law (Allaire Crozier duPont); and her grandchildren as “qualified employers.” Id. at 7. Helena duPont Wright, James P. Mills, Phyllis Mills Wyeth, Mary Mills Abel Smith, and Kathryn duPont Gahagan are all grandchildren of Mary Chichester duPont and are defined as qualified employers under the trust. Id.; T. Ex. 53, Trustee Release and Indemnification at 1-2. All of the grandchildren were either minor children or were not yet born when the trust was established in 1947. D.I. 436, PTO at 9.
The trust defines “pensioner” as “any domestic employee or any employee rendering secretarial, accounting or other assistance in the management of his employer's private, financial or social affairs” for a qualified employer, and who was continuously employed for 10 years and reached age 65 or met certain other criteria. Id. at 7. The trust provides that a Pensioner would receive an annual benefit of 60% of his or her annual salary or wages in effect when the Pensioner met the eligibility requirements, plus an additional 1% for each year of service above 10 years. Id. It also provides that each qualifying Pensioner, as defined in the trust, is entitled “to an annual pension for the life of such Pensioner or during the continuance of this trust, whichever is shorter.” Id. The trust also provides one (1) year of benefits for a deceased Pensioner's surviving spouse. Id. at 8. The trust further provides that the trust “shall continue until twenty (20) years after the death of the last surviving grandchild of the trustor who is living at the execution of this trust agreement or until the entire corpus of the trust and all additions thereto and all income accrued thereon shall be exhausted, whichever event shall happen first.” Id. On the termination of the trust, the rights of any pensioners or other beneficiaries were to have ceased. Id.
Mary Chichester duPont funded the trust with 50 shares of common stock of Christiana Securities Company, a holding company for common stock of the duPont Company. D.I. 436, Pretrial Order at 8; See E.I. duPont de Nemours & Co. v. Collins, 432 U.S. 46, 57 (1977) (). By 1999, the trust held 112,772 shares of duPont stock, worth about $7.4 million. D.I. 436, PTO at 8. Other than the initial contribution of stock shares made by Mary Chichester duPont, no qualified employer under the trust has ever subsequently contributed anything to the trust assets. Id.
The trust provides the trustee with the exclusive authority and discretion to manage and control the assets of the trust. Id. at 8. The trust authorizes the trustees to “retain any and all stocks, bonds, notes, securities and/or other property hereby or hereafter transferred to this trust” and to “accept additions to this trust by way of gift, bequest, or otherwise from...
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