Burke v. Bodewes

250 F. Supp. 2d 262, 30 Employee Benefits Cas. (BNA) 1165, 2003 U.S. Dist. LEXIS 3931, 2003 WL 1249362
CourtDistrict Court, W.D. New York
DecidedFebruary 28, 2003
Docket1:00-cv-00065
StatusPublished
Cited by4 cases

This text of 250 F. Supp. 2d 262 (Burke v. Bodewes) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Burke v. Bodewes, 250 F. Supp. 2d 262, 30 Employee Benefits Cas. (BNA) 1165, 2003 U.S. Dist. LEXIS 3931, 2003 WL 1249362 (W.D.N.Y. 2003).

Opinion

OPINION

CURTIN, District Judge.

Plaintiffs Thomas W. Burke, Curtis Zamerski, and Richard Kohl, as trustees of and/or participants in the Buffalo Carpenters Pension Fund (the “Fund”), brought this action pursuant to section 502 of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132, seeking equitable relief and damages for alleged breach of fiduciary duty by eight current and former trustees of the Fund. 1 Four of the defendants — Terrence L. Bodewes, James Maloney, Ernest Bouchard, and Vincent Fetes (referred to herein as the “moving defendants”) — have moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure seeking dismissal of plaintiffs’ claims insofar as they pertain to (1) fiduciary conduct occurring more than six years prior to the filing of the complaint, (2) conduct occurring after the defendants ceased their service as trustees, and (3) conduct involving amendment of the Fund to increase pension benefits (see Items 90 and 95).

For the following reasons, defendants’ summary judgment motions are denied.

BACKGROUND

As described in the pleadings, the Fund is a collectively bargained, multi-employer pension fund jointly administered pursuant to Section 302(c)(5) of the Labor Management Relations Act (“LMRA” or “TafN Hartley”), 29 U.S.C. § 185(c)(5). It is also an “employee pension plan” as defined in ERISA at 29 U.S.C. § 1002(2) (Item 14, ¶ 14). The Fund was formed in 1961 to provide pension benefits to members of Buffalo Carpenters Local 9 (the “Union”) based on length of service, retirement age, and other specified criteria. Participating employers are responsible for making contributions to the Fund, in amounts negotiated in collective bargaining agreements between the Union and the employers, that are sufficient to pay for the prescribed benefits currently and in the future (see id., ¶ 17).

At one time, the Fund had more than 1,400 active participants. However, changing demographics and employment conditions in the Buffalo area over the *264 years led to the severe contraction of the active membership. As alleged in the complaint, as of June 1, 1998, the Fund had only 527 active participants, while at the same time there were 980 retirees receiving pension benefits under the plan (id., ¶ 3). As a result, since at least 1989, the Fund was only able to meet its minimum funding requirements by “borrowing” future contributions and applying them to the previous year, ostensibly in accordance with the minimum pension plan funding and waiver provisions of ERISA and the Internal Revenue Code (id., ¶¶ 17-18).

Plaintiffs allege that, despite the continuous funding deficiencies and other warning signs indicating that the Fund was in serious financial trouble, the trustees regularly approved increases of pension benefits for retired employees and took other actions in breach of their fiduciary duties with respect to the Fund. More specifically, plaintiffs allege that between 1983 and 1998 the trustees improved benefits payable pursuant to the plan on an almost annual basis, without fully evaluating whether or not the Fund could afford the improvements or recommending commensurate increases in the rates of employer contributions (see id., ¶¶ 36-37). Plaintiffs assert the following six causes of action against the trustees pursuant to the “prudent person” standard of care set forth in ERISA’s fiduciary duty provisions at 29 U.S.C. § 1104(a)(1)(B):

1.Failure to review, verify, and make adjustments for inaccurate actuarial information provided by the Segal Company in its annual Fund valuation reports.
2. Failure to monitor the financial status of the Fund.
3. Failure to consider the financial condition of the Fund when implementing pension benefit improvements between the years 1983 and 1998.
4. Failure to prudently oversee investments.
5. Failure to implement policies or guidelines for collection of delinquent contributions by employers.
6. Failure to adequately collect delinquent contributions. 2

(Id., ¶¶ 58-74).

Defendants Terrence L. Bodewes, James Maloney, Ernest Bouchard, 3 and Vincent Fetes, all former trustees, now move for summary judgment. As alleged in the amended complaint, Bodewes served as trustee from 1985 to July 1, 1996, and Maloney, Bouchard, and Fetes served as trustees from 1985 to September 1, 1994. The moving defendants seek summary judgment on the following grounds:

1. ERISA’s “statute of limitation and repose,” 29 U.S.C. § 1113, bars plaintiffs’ claims based on acts occurring before January 19,1994.
2. ERISA expressly provides that “[n]o fiduciary shall be liable with respect to a breach of fiduciary duty under this subchapter if such breach was committed ... after he ceased to be a fiduciary.” 29 U.S.C. § 1109(b).
*265 3. Amendment of a pension plan to provide increased benefits is not an exercise of fiduciary duty actionable under ERISA.

Each of these grounds is discussed in turn below.

DISCUSSION

I. Summary Judgment

The standard for summary judgment under Rule 56 is a familiar one. A motion for summary judgment may be granted only when it is shown that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying [which materials] ... it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. A fact is “material” only if the fact “might affect the outcome of the suit under the governing law ....

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Bluebook (online)
250 F. Supp. 2d 262, 30 Employee Benefits Cas. (BNA) 1165, 2003 U.S. Dist. LEXIS 3931, 2003 WL 1249362, Counsel Stack Legal Research, https://law.counselstack.com/opinion/burke-v-bodewes-nywd-2003.