The opinion of the court was delivered by: ROBERT W. SWEET
Donnelly filed her summons and complaint on January 31, 1992. Issue has been joined, and no discovery has been taken.
Donnelly has set forth four claims in her complaint. The first claim for relief alleges that the Defendants breached their fiduciary duties under § 404 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1104, by failing or refusing to inform Donnelly of her rights to severance benefits. The second claim alleges that the Defendants breached their fiduciary duties under § 404(a)(1)(D) of ERISA, 29 U.S.C. § 1104(a)(1)(D), by failing to comply with the documents and instruments governing the Plan, as defined infra. The third claim alleges a violation of the claims procedure set forth in § 503 of ERISA, 29 U.S.C. § 1133, based on the Defendants' denial of severance benefits and failure to specify in writing the reasons for the denial or to accord Donnelly a full and fair review. The fourth claim alleges that the Defendants violated § 510 of ERISA, 29 U.S.C. § 1140, by interfering with Donnelly's protected rights under ERISA. Donnelly seeks a declaration that she is entitled to severance benefits under the Policy, a determination of the amount of severance benefits to which she is entitled, an order enjoining the Defendants to pay her severance benefits and attorneys' fees and costs.
The present motion was filed on April 22, 1992. Oral argument was heard on May 20, 1992, at which time the motion was considered fully submitted.
Donnelly was initially hired by Irving on April 20, 1966. By 1988, Donnelly had risen to the position of senior clerk and unit leader in Irving's Corporate Agency Division where her duties were to ensure the accuracy of entries and Irving's balance on more than 800 corporate accounts. She was in Irving's employ at the time of the merger between Irving Bank Corporation ("IBC") (Irving's parent) and BNYC in November 1988, and thereafter remained as an employee of BNY, a BNYC subsidiary, until she resigned in December of 1990 or January of 1991.
On July 2, 1987, the IBC Board of Directors adopted the IBC Separation Policy (the "Policy" or the "Plan"), an employee welfare benefit plan under ERISA. The Plan provides for severance payments under certain circumstances, only one of which is in issue in this action. Under the relevant provision of the Plan, a participant is entitled to severance benefits if, within two years of a "Change in Control"
his or her job duties are materially diminished without consent, and he or she resigns within sixty days of the diminishment. Specifically, § 4.2(a)(iii) states that:
if within two years of a Change in Control a participant's duties and responsibilities are materially diminished without his consent, be may terminate his employment within sixty (60) days of the occurrence of such reduction and be entitled to Severance Benefits set forth in Section 4.3.
Shortly after it adopted the Plan, IBC entered into a Trust Agreement with MHT on January 22, 1989 under which it established a Trust to provide a litigation fund to qualified claimants to pursue claims under the Policy turned down by the Plan Administrator. MHT was selected to serve as trustee. By its own terms, the Trust "shall be administered, in accordance with the laws of the United States and of the State of New York" and "nothing in this Agreement shall be construed to subject the Trust created hereunder to [ERISA]." Conlan Aff. Ex. B Art. TWENTIETH (a). The preamble to the Trust also notes that "the Trustee is not a party to the Plans" covered by the Trust Agreement.
Under the terms of the Trust, following a "Change in Control," a participant of the Plan may notify the Trustee that IBC or its successor has refused in writing to pay a claim asserted under the Plan. After receiving such a notification, the Trustee must determine whether the claim for benefits has any basis in law and fact as defined by the Plan and as restated in the Trust. The Trustee considers the claims through an informal committee (the "Trustee Committee"), which meets with the claimant, considers all information furnished by the claimant and the Plan Administrator, and evaluates whether the claimant's case is plausible. The Trust is not permitted to provide any benefits if the Trustee determines that the employee's claim has no basis in law or fact. See id. Art. NINTH (d)(2).
On October 7, 1988, BNYC and IBC entered into a merger agreement, and a "Change in Control" under the terms of the Plan occurred on November 29, 1988 when IBC was merged into BNYC. This Change in Control triggered the provisions of both the Plan and the Trust. As of the time BNYC took over Irving, BNYC became the Plan Administrator.
Donnelly remained as an employee of the merged institution's subsidiary, BNY. At first, her duties remained the same, and she continued to work in the same location. In the fall of 1989, her work station was moved a number of times although she continued to be charged with her normal tasks. Each time she was moved she was informed that the changes were temporary and that she would be returned shortly to a steady location with her previous duties.
In December 1989 Donnelly was moved to 90 Washington Street where, for about a month and a half, she continued work in the mornings on the accounts to which she had previously been assigned by Irving. In the afternoons, she assisted in reconciling BNY accounts. Beginning in late January or early February 1990, Donnelly was no longer permitted to work on her longstanding accounts, and BNY began training her in its method for correcting reject reports, a task which had been only a small part of her previous duties. When she spoke to her supervisor and his manager during that period about the apparent changes in her duties, she was advised that BNY had not had a reconciliation department until recently and that the situation would improve upon a contemplated move back to 101 Barclay Street, her prior location, where necessary technical equipment would be available.
Donnelly then wrote to BNY's Chairman of the Board, who referred her letter to the manager of the employee relations department. This individual repeated the previous advice that Donnelly was entitled to no severance benefits.
By late May 1990, Donnelly became disabled and could not continue working. On June 5, 1990, she wrote to the Chairman of BNY, recounting her job experience since November of 1989, including the loss of her duties and equipment, and the reassurances given to her. She stated: "I fully realize that my job has diminished drastically. I am now doing a small part of reconcilimen [sic] when I once performed the entire job." On or about June 21, 1990, she wrote BNY concerning her right to severance pay under the Policy.
Donnelly commenced sick leave on June 25, 1990. Both her husband, who suffers from asbestosis, and she needed medical care and, therefore, continuance of her medical benefits. She was told by Geraldine Gallashaw, BNY's Affirmative Action Vice President, that if she resigned in order to file a formal application for severance pay she would lose her coverage under BNY's medical plan.
By letter dated July 21, 1990, BNY Senior Vice President Frank Peterson, Jr. ("Peterson") responded to Donnelly's June 19, 1990 letter. He stated that BNY "is not able to support your request to receive severance benefits under [the Plan]." He continued to advise her, "however, please be aware that our decision does not prevent you from applying for benefits directly through the Irving Benefits Protection Trust."
In August 1990, the Trustee received a letter from Donnelly's attorney requesting the Trustee to consider her claim for severance benefits. By letter to Donnelly's attorney dated September 4, 1990, BNY advised that before she could avail herself of the benefits of the Trust, Donnelly would have to resign her employment at BNY, make a formal written demand for payment of severance benefits and receive a letter from BNY denying her those benefits. See Donnelly ...