NELSON S. ROMÁN, District Judge.
Plaintiff Daniel Verdier ("Verdier") brings this action against his former employer, Defendant Thalle Construction Company, Inc. ("Thalle"), pursuant to 29 U.S.C. § 1132, to recover benefits allegedly Owed to him under a Deferred Compensation Plan. For the following reasons, Verdier's motion for summary judgment and to amend his complaint is GRANTED in part and DENIED in part.
The following facts are taken from the record before the Court, including the parties' respective submissions, affidavits, and exhibits. Unless otherwise noted, these facts are undisputed.
Verdier was employed by Thalle for a total of seventeen years — from April 1970 through November 1978, and again from November 1981 through February 1990. (Affidavit of Daniel Verdier in Support of Plaintiffs Motion to Amend Complaint and for Summary Judgment 2, ECF No. 36 [hereinafter "Pl. Affidavit"]; see Pl. Affidavit, Ex. 12, Letter from Greg Pacchiana, President of Thalle Construction Co., Inc. dated August 24, 2015 [hereinafter "Def.'s Aug. 2015 Letter"].1):, In or around 1982, the parties entered into a binding Deferred Compensation Plan ("the Agreement"), which was revised in 1984.
Under the Agreement, Plaintiff would begin to receive his benefits in 2013, when he reached sixty-five years of age.
In the years preceding this suit, Plaintiff attempted to contact Defendant to discuss and arrange to receive payments owed to him under the Agreement, but Defendant failed to respond. (See Pl. Affidavit ¶ ¶ 11, 12; id. at Exs. 7, 8.) In May 2015, Plaintiff initiated this action, and in late August of that year, Defendant began to make payments to Plaintiff. (Id. at Ex. 9; Def.'s Aug. 2015 Letter.) Defendant has stipulated that it is liable to Plaintiff under the Agreement. (Def. 56.1 ¶ 2.) However, the parties dispute the actual amount owed to Plaintiff pursuant to the terms of the Agreement. (See e.g., Pl. Affidavit It 16; Def. 56.1 ¶¶ 5, 6.)
Plaintiff brings this action under the assumption that the Court has subject-matter jurisdiction pursuant to 28 U.S.C. § 1331, on the basis that Thalle's Deferred Compensation Plan qualifies as a "pension plan" under the Employee Retirement Income Security Act of 1974 ("ERISA"), codified at 29 U.S.C. § 1001 et seq.
As an initial matter, Thalle's Deferred Compensation Plan appears to qualify as an ERISA "pension plan" under 29 U.S.C. § 1002(2)(A)), in that it is maintained by Thalle, for the purpose of providing deferred income to Thalle employees post-retirement.
Furthermore, to the extent that a reasonable person could ascertain from the plan the base level of intended benefits, to be provided by Thalle, after the triggering event of retirement, in accordance with a formula, and could deduce, at least, that the class of beneficiaries is some subset of employees, the Thalle Plan also comports with a basic tenet of ERISA law — that "[a] `plan, fund, or program' . . . [falls under] ERISA [where,] from the surrounding circumstances a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving the benefits." Kuhbier, 95 F. Supp. 3d at 409 (quoting Grimo v. Blue Cross/Blue Shield of Vt., 34 F.3d 148, 151 (2d Cir.1994)).
Additionally, to the extent the "`touchstone' for determining if a plan is governed by ERISA is whether administering it necessitates `an ongoing administrative scheme,'" id. (quoting Castagna v. Luceno, No. 09-CV-9332, 2011 WL 1584593, at *19 (S.D.N.Y. Apr. 26, 2011), aff'd, 744 F.3d 254 (2d Cir. 2014) and aff'd, 558 Fed.Appx. 19 (2d Cir. 2014), this Court finds the level of managerial discretion and individualized review to be exercised by Thalle sufficient to satisfy such a requirement. See District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 n. 2 (1992) (noting a plan exists only if an employer has "some minimal, ongoing `administrative' scheme or practice"). For example, aside from the requirement that Thalle provide continuous, monthly installments over the course of 120 or 180 months, Paragraphs 3.3 and 3.5 of the Plan afford Thalle the discretion to evaluate and monitor the ongoing status of an employee's disability, for the purpose of benefit disbursement prior to normal retirement age. Furthermore, Paragraph 11 permits Defendant to analyze individual compliance with the Agreement's non-compete provision. See Okun v. Montefiore Med. Ctr., 793 F.3d 277, 279 (2d Cir. 2015) (factors used to evaluate whether "administrative scheme" is sufficient to constitute ERISA plan include: "whether employer's undertaking . . . requires managerial discretion in its administration; whether a reasonable employee would perceive an ongoing commitment by the employer to provide . . . benefits; and whether the employer was required to analyze circumstances of each employee's termination separately in light of certain criteria"); see also Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 18 n. 10 (1987) (noting that "a commitment to pay . . . benefits to employees as each person [leaves] employment" can create "the need for an administrative scheme to pay these benefits on an ongoing basis."); Kuhbier, 95 F.Supp.3d 402, at 416-18 (non-compete provision requiring Defendants to engage in individualized analyses weighed against finding administrative scheme insufficient to constitute ERISA plan).
Additionally, the Plan represents the very kind that ERISA was designed to regulate, in that it vests Thalle with the "`responsibility to pay benefits on a regular basis,'" causing Thalle to "face[] . . . periodic demands on its assets that require long-term coordination and control." Okun, 793 F.3d at 280 (quoting Fort Halifax, 482 U.S. at 12). Moreover, because ERISA's protections are designed to "safeguard the financial integrity of employee benefit funds . . . and to ensure that employers' promises are kept," and Plaintiff brings this suit to recover unpaid benefits, this action appears to present one of the very circumstances contemplated under the Act. Belanger v. Wyman-Gordon Co., 71 F.3d 451, 454 (1st Cir. 1995).
Finally, another court in this district has asserted subject-matter jurisdiction over litigation involving the same Deferred Compensation Plan, under 28 U.S.C. § 1331. See Pierorazio v. Thalle Const. Co., 13-CV-4500 (VB), 2014 WL 3887185, at *1 (S.D.N.Y. June 26, 2014) (recognizing federal jurisdiction where plaintiff sued Thalle Construction Company under ERISA for failure to pay benefits accrued under deferred compensation plan.) Nor does Defendant contest that this plan comes within the ambit of ERISA, and there is no dispute as to this fact.
Motions for summary judgment are governed by Rule 56 of the Federal Rules of Civil Procedure. The rule states in pertinent part:
Fed. R. Civ. P. 56(a). The moving party bears the initial burden of demonstrating the absence of any genuine dispute or issue of material fact by pointing to evidence in the record, "including depositions, documents . . . [and] affidavits or declarations," Fed. R. Civ. P. 56(c)(1)(A), "which it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has fulfilled its preliminary burden, the onus shifts to the nonmoving party to raise the existence of a genuine dispute of material fact. Fed. R. Civ. P. 56(c)(1)(A); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). A genuine dispute of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Annuity, Pension, Welfare & Appretinceship Skill Improvement & Safety Funds of Int'l Union of Operating Engineers v. Colonial Sur. Co., 11-C00178 (NSR), 2014 WL 4493803, at *2 (S.D.N.Y. Sept. 11, 2014) (quoting Anderson, 477 U.S. at 248; accord Benn v. Kissane, 510 F. App'x 34, 36 (2d Cir. 2013)). Courts must "constru[e] the evidence in the light most favorable to the non-moving party and draw[] all reasonable inferences in its favor." Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 720 (2d Cir. 2010) (quoting Allianz Ins. Co. v. Lerner, 416 F.3d 109, 113 (2d Cir. 2005)). In reviewing the record, "the judge's function is not himself to weigh the evidence and determine the truth of the matter." Anderson, 477 U.S. at 249. Rather, "the inquiry performed is the threshold inquiry of determining whether there is the need for a trial." Id. at 250.
Generally, a party may amend a pleading once as a matter of course or at any time before trial with leave of the court. Fed. R. Civ. P. 15(a)(1)-(2). If a party seeks leave to amend a pleading, "[t]he court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2). "Reasons for a proper denial of leave to amend include undue delay, bad faith, futility of amendment, and perhaps most important, the resulting prejudice to the opposing party." State Teachers Ret. Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981) (citing Foman v. Davis, 371 U.S. 178, 182, (1962). Leave to amend may properly be denied "on grounds of futility if the proposed amendment fails to state a legally cognizable claim or fails to raise triable issues of fact." AEP Energy Servs. Gas Holding Co. v. Bank of Am., NA., 626 F.3d 699, 725-726 (2d Cir. 2010) (quoting State Teachers Ret. Bd., 654 F.2d 843, 846) (2d Cir. 1981); accord Ruotolo, 514 F.3d 184, 191 (2d Cir. 2008) (quoting Foman, 371 U.S. at 182)).
Plaintiff moves for summary judgment on the basis that he is entitled to $289,900 pursuant to the terms of the Agreement. (See Memorandum of Law in Support of Plaintiff's Motion to Amend His Complaint and for Summary Judgment, 5, ECF No. 35 [hereinafter "Pl. Mem."]).) Defendant contends that Plaintiff is only entitled to $123,202. (See Affidavit of Attorney Wynn in Opposition to Plaintiff's Motion for Summary Judgment, ¶¶ 5,6, ECF No. 33 [hereinafter "D. Counsel Affidavit"].)
The Agreement references, but does not provide the formula used to calculate Plaintiff's total benefit amount. (See Agreement at 2.) However, the parties appear to agree that this benefit is deduced by multiplying Plaintiff's average compensation over his final five years of employment by sixty percent (which accounts for social security payments to be received by Plaintiff), and multiplying that number by 10. (See Pl. Mem. at 5; see also D. Counsel Affidavit ¶ 5.) This formula results in a total benefit amount of $289,900, and there is no dispute of fact as to this number. Id.
The parties only dispute whether or not Plaintiff's total benefit amount should be modified, per the Agreement, in order to account for Plaintiff's early departure from Thalle, prior to retirement. Defendant contends that Plaintiff would only have been entitled to the full benefit amount of $280,900 if he had remained at Thalle until retirement, and that his benefit must be modified, pursuant to Exhibit B of the Agreement, in order to account for his leave preretirement. (See D. Counsel Affidavit ¶¶ 5, 9.) Thus the question before the Court is whether it can determine the benefit amount owed to Plaintiff under the terms of the Agreement, as a matter of law, and what that amount is.
As a preliminary matter, the Court must determine whether the ERISA Agreement is ambiguous. "Whether contract language is ambiguous is a question of law that is resolved by reference to the contract alone." Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir. 2002) (internal quotation marks and citations omitted); see also Aramony v. United Way of Am., 254 F.3d 403, 412 (2d Cir. 2001) (when determining whether a contract is ambiguous "reference may not be had to matters external to the entire . . . agreement.") (internal quotation marks and citation omitted). Language in a plan "`is ambiguous when it is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire. . . agreement.'" Critchlow v. First UNUM Life Ins. Co. of Am., 378 F.3d 246, 256 (2d Cir. 2004).
Generally, "unambiguous language in an ERISA plan must be interpreted and enforced in accordance with its plain meaning." Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140, 149 (2d Cir. 1999) (citing Devlin v. Transportation Communications Int'l, 173 F.3d 94, 103 (2d Cir.1999). To the extent that an ERISA plan contains ambiguous terms, the Court may consider extrinsic evidence to clarify the Agreement. Gibbs ex rel. Estate of Gibbs v. CIGNA Corp., 440 F.3d 571, 579 (2d Cir.2006). Furthermore, any ambiguities in the contract must be construed in favor of the beneficiary. Fay v. Oxford Health Plan, 287 F.3d at 104. Nonetheless, whether determined to be ambiguous or clear, "the provisions of an ERISA plan should be construed so as to render all provisions meaningful and to avoid illusory promises." Aramony v. United Way Replacement Benefit Plan, 191 F.3d at 150 (internal quotation marks and citations omitted).
Paragraph six of the Agreement covers employment terminations prior to retirement, for reasons other than disability or death.
The paragraph that follows reads: "[n]otwithstanding the provisions of the preceding paragraph, the Employee shall be entitled to a 100% non-forfeitable interest in his retirement benefit as indicated in Paragraph 1 when he attains his normal retirement date." (Id.) Plaintiff argues that this paragraph is "intended to supercede,"
The Court finds Plaintiff's reading inconsistent with the plain terms of the Agreement.
Instead, viewing the contract as a whole, the Court finds that the "100% non-forfeitable interest in [Plaintiff's] retirement benefit," referenced in the second paragraph of Exhibit B, refers not to Plaintiff's full benefit amount, but to Plaintiff's claim to a benefit under the Agreement. Thus, the Court finds that if a "reasonably intelligent person . . . examined the context of the entire . . . agreement" they would find that Plaintiff's benefit amount is rightly modified, pursuant to the "non-forfeitable percentage" schedule, resulting in a total payment of $123,202.
Other aspects of the Agreement support this conclusion.
Plaintiff brings this action pursuant to ERISA Section 1132. As relevant to this motion, Section 1132 provides for the following remedies; recovery of benefits due, enforcement or clarification of rights under the agreement, an injunction, or "other appropriate equitable relief." 29 U.S.C. § 1132. On numerous occasions, the Second Circuit has stated that "[c]lassic punitive damages are never included within other appropriate equitable relief." Gerosa v. Savasta & Co., 329 F.3d 317, 320-321 (2d Cir. 2003) (internal quotation marks and citations omitted); see Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 108 (2d Cir.2008) (holding that "sole remedies" available to plan participants bringing actions under 29 U.S.C. § 1132(a)(1) are for "recovery of benefits due, or for enforcement of the terms of retirement plan); see also Kim v. Columbia Univ., 460 F. App'x 23, 26 (2d Cir. 2012) (noting restoration of Plaintiff's retirement account with interest was the only relief available under 29 U.S.C. § 1132(a)(1)). Plaintiff fails to address this barrier to his claim in a meaningful manner.
Because punitive damages are not recoverable under ERISA, such a claim would not be legally cognizable, and Plaintiff's leave to amend would be futile. For this reason, Plaintiff's motion to amend is denied.
Section 502(g) of ERISA provides that "the court in its discretion may allow reasonable attorney's fees and costs . . . to either party." 29 U.S.C. § 1132(g)(1). To qualify for an award of attorneys' fees, a party must have achieved "some degree of success on the merits." Donachie v. Liberty Life Assurance Co. of Boston, 745 F.3d 41, 46 (2d Cir. 2014) (quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 254-55 (2010)). "Whether a plaintiff has obtained some degree of success on the merits is the sole factor that a court must consider in exercising its discretion." Id. Although a court may, without further inquiry, award attorneys' fees to a plaintiff who has had "some degree of success . . . courts retain discretion to consider five additional factors" when determining whether such an award is appropriate. Id. (internal quotation marks and citations omitted). Known as the "Chambless factors," they are:
Id. (citations omitted).
Because Plaintiff has prevailed in asserting his right to benefits under the Agreement, and Defendant concedes that it became liable to Plaintiff for these benefits when he turned sixty-five,
For these reasons, the Court finds that Plaintiff is entitled to recover reasonable attorneys' fees. This matter is respectfully referred to Magistrate Judge Lisa M. Smith for a determination regarding the appropriate amount of such fees.
Plaintiff seeks prejudgment interest on the total benefit amount at the statutory rate of interest of nine percent. (See Pl. Mem., at 5-6.)
Whether a prevailing party in "a suit to enforce a right under ERISA" is entitled to prejudgment interest is "ordinarily left to the discretion of the district court." Jones v. UNUM Life Ins. Co. of Am., 223 F.3d 130, 139 (2d Cir. 2000); see Slupinski, 554 F.3d at 53-54. In exercising such discretion, courts consider the following factors: "(i) the need to fully compensate the wronged party for actual damages suffered, (ii) considerations of fairness and the relative equities of the award, (iii) the remedial purpose of the statute involved, and/or (iv) such other general principles as are deemed relevant by the court." Id. at 55; Jones, 223 F.3d at 139 (internal quotation marks and citations omitted). Although the decision to grant prejudgment interest ultimately lies with the Court, such an award should be granted to "make the [plaintiff] whole," "not to give them a windfall." Algie v. RCA Glob. Commc'ns, Inc., 891 F.Supp. 875, 899 (S.D.N.Y. 1994), aff'd, 60 F.3d 956 (2d Cir. 1995); see City of Milwaukee v. Cement Division, National Gypsum Co., 515 U.S. 189, 195 (1995) ("The essential rationale for awarding prejudgment interest is to ensure that an injured party is fully compensated for its loss").
As to the first factor, Plaintiff had a reasonable expectation that he would begin receiving retirement benefits from Thalle beginning in August 2013, and had to bring the instant action in order to vindicate his rights under the Agreement. Plaintiff attempted to contact Defendant on at least four occasions, both before and after he reached retirement age, in order to inquire as to his benefits, and Defendant never provided a response. (See Pl. Affidavit ¶¶ 11, 12; id., Ex. 7; see also Pl. Reply Affidavit, Ex. 24, 21:11-14.) Given these circumstances, and relevant caselaw, the Court finds that the first factor weighs in favor of a prejudgment interest award. See Slupinski, 554 F.3d at 54 (quoting Kansas v. Colorado, 533 U.S. 1, 10 (2001)) ("a monetary award does not fully compensate Plaintiff unless it includes an interest component."); Jones, 223 F.3d at 139 ("prejudgment interest is an element of the plaintiff's complete compensation"). Second, Defendant has conceded that Plaintiff's payments were "due and owing" as of August 1, 2013, effectively admitting a breach under the Agreement. Furthermore, between August 2013 and September 2015, Defendant enjoyed access to, and deprived Plaintiff of, funds to which he was entitled. (See Def. August 2015 Letter); see also Slupinski, 554 F.3d at 54 ("an award of prejudgment interest may be needed in order to ensure that the defendant not enjoy a windfall as a result of its wrongdoing"). Thus, as to the second factor, fairness and equity warrant an award of prejudgment interest. Third, "[i]n light of ERISA's purpose of protecting employees' rights to receive the benefits they are due, . . . [the] third factor[], i.e., the remedial purpose of ERISA," also favors Plaintiff. Slupinski, 554 F.3d at 55.
However, the record reflects that Defendant paid Plaintiff a monthly interest fee of nine percent for all late payments due through September 2015, and began to make regular payments from that point forward. (See Def.'s Aug. 2015 Letter; Pl. Affidavit, Ex. 13.) In light of this, the Court finds that Plaintiff's award for prejudgment interest should be reduced to account for the interest already paid. The Court refers this matter to Magistrate Judge Lisa M. Smith for a determination as to the appropriate interest rate and timeframe for the award of prejudgment interest.
For the foregoing reasons, Verdier's motion to amend and for summary judgment is GRANTED in part and DENIED in part. The Court finds that Plaintiff is only entitled to benefits in the amount of $123,202 under the terms of the Agreement, and grants partial summary judgment in favor of the Defendant on this point. The Court denies Plaintiffs motion to amend, and grants Plaintiff's request for attorney's fees and prejudgment interest. This matter is hereby referred to Magistrate Judge Lisa M. Smith for an inquest regarding attorneys' fees and a determination regarding an appropriate award of prejudgment interest. The Court respectfully directs the Clerk to terminate the motion at ECF No. 34.
SO ORDERED.
