The opinion of the court was delivered by: ROBERT W. SWEET
Defendants Elliot Dann Co., Inc. Pension Plan and Trust (the "Plan"), Elliot Dann Co., Inc. ("Dann Co."), Martin Fawer ("Fawer"), Steven Rudin ("Rudin") (collectively, the "Moving Defendants") have moved, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for an order granting summary judgment against the Plaintiff Gilbert Snyder ("Snyder") in this ERISA action. Plaintiff Snyder has cross-moved, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for an order granting summary judgment against the Defendants on his First and Fifth Counts of the Amended Complaint.
For the reasons set forth below, the Defendants' motion for an order of summary judgment is granted as to Counts One through Four, Six and Seven. Plaintiff's cross-motion for an order of summary judgment is granted as to his Fifth Count for "top-heavy minimum benefits."
Plaintiff Snyder, an individual residing in New York City, is a vested participant in the Plan, an ERISA employee pension benefit plan within the meaning of 29 U.S.C. § 1002(2)(A).
The Defendant Plan is administered within the Southern District of New York through the accounting offices of Defendant Fawer, a licensed CPA. The Plan was established on June 30, 1980 and maintained continuously thereafter by Dann Co.
Defendant Dann Co., a New York Corporation, is a real estate brokerage and management company. Elliot Dann owned 100% of the issued and outstanding sock and was the sole officer of Dann Co. from its formation in 1969 until his death on July 20, 1989. Dann Co., the Administrator of the Plan as defined by 29 U.S.C. § 1002(16)(A), maintains its offices and records at the Fawer offices. Dann Co. is also a fiduciary of the Plan within the meaning of 29 U.S.C. § 1002(21)(A).
Defendant Fawer, pursuant to delegation from Dann Co., maintains the records of the Plan, performs all the functions as Administrator of the Plan, within the meaning of Administrator in 29 U.S.C. § 1002(16)(A), and is a fiduciary of the Plan, within the meaning of 29 U.S.C. § 1002(21)(A).
Defendant Rudin, an executor under the Last Will and Testament of Elliot W. Dann, is a Fiduciary of the Plan within the meaning of 29 U.S.C. § 1002(21)(A).
Non-Moving Defendant Ruth Dann was a Trustee of the Plan and is a Fiduciary of the Plan within the meaning of 29 U.S.C. § 1002(21)(A).
On November 26, 1993, the Defendants filed this motion for summary judgment on all counts. Plaintiff cross-moved for an order of summary judgment as to Counts One (claim for benefits under the Plan) and Five (claim for top-heavy minimum benefits) of the Amended Complaint. Oral argument was heard on this motion on April 6, 1994 and the motion was considered fully submitted at that time.
On May 19, 1994, at the request of Chambers, the Plaintiffs provided this Court with a courtesy copy of their Amended Complaint, which they neglected to file. In the interest of equity and judicial economy, and since both parties have incorporated the Amended Complaint in their briefs to this Court, the Amended complaint has been duly considered by the Court as if it had been properly filed.
Plaintiff Snyder was employed as a licensed real estate broker at Dann Co. from May 1, 1969 through September 16, 1986.
During his tenure at Dann Co. Snyder was compensated on a 50% commission basis. Snyder worked closely with the founder and owner, Elliot Dann, also a licensed real estate broker who initiated and closed his own transactions.
On August 7, 1980, the Plan was adopted by Dann Co.
The Plan was submitted to the Internal Revenue Service (the "IRS") in September 1980 for a ruling on its tax-qualified status and received a favorable Determination Letter dated January 12, 1981.
Snyder contends that in 1980 he had several discussions with Elliot Dann regarding the formation of a pension plan in which he was told that his benefits under such a plan would be proportionately tied to increases in his commission income. Snyder contends that he never received an announcement, summary plan description (known as "SPDs") or any other documents describing the Plan. Plaintiff contends that he was never informed that his benefits under the Plan would not be based upon total compensation, contrary to his alleged conversations with Elliot Dann otherwise.
A disputed question of fact concerns whether the Plan states that employees compensated on a commission basis, in whole or in part, is subject to a $ 2,167 Limitation per month. In August 1980 the Plan's attorneys prepared an announcement for delivery to all Plan participants describing the Plan and stating the "correct" $ 2,167 Limitation. (See Defs.' Ex. F.) In 1981, a SPD was prepared which, according to the Defendants, contained a typographical error stating that the compensation Limitation of commission employees for Plan purposes was $ 3,167 instead of $ 2,167. (See Defs.' Ex. G.)
Several years later, in June of 1985, the Plan's attorneys amended the Plan. In the updated SPD, which Dann Co. delivered to its employees in July 1986, the correct $ 2,167 Limitation was published. (See Defs.' Ex. H at 2, Ex. I at 3.) According to the Defendants, then, the original Plan, all Amendments thereto, both announcements and two of the three SPDs provided to their employees stated the "correct" $ 2,167 Limitation; the 1981 SPD with the one digit "typographical error" stating the Limitation was $ 3,167 as opposed to $ 2,167 was an unfortunate mistake which remained unrectified until the release of the 1985 SPD.
The Plaintiff states that the Plan's actuary calculated Plaintiff's compensation for benefit calculation and funding purposes to be: $ 80,664 for the year ending June 30, 1984; $ 133,092 for the Plan year ending June 30, 1985; $ 133,092 for the Plan year ending June 30, 1986; and $ 200,000 for the Plan year ending June 30, 1988. (Pl.'s Mem. of Law at 6.) The Plaintiff asserts that the Defendants were using these figures to create a large tax-deductible contributions to the Plan and have only recently "resurrected" the $ 2,167 Limitation to "deprive the Plaintiff of the benefits to which he is entitled." Id.
On October 31, 1990, the Plan was terminated. On October 25, 1991, the IRS issued a favorable Determination Letter concerning the Plan's termination. The Pension Benefit Guaranty Corporation has not issued a notice of noncompliance regarding the Plan's termination and, as a result, the termination is considered standard. Upon termination the Plan had assets of $ 1,912,166, benefits payable of $ 734,763 (including the $ 61,205 purportedly owed to Snyder) and excess assets equal to $ 1,177,403 which would revert to the Company upon payment of the Plan benefits.
In August of 1992 Snyder received forms from the Plan's outside administrator informing him that the Plan had been terminated and describing his benefits. Plaintiff alleges that he attempted to contact the outside administrator and the Plan's attorneys to discuss whether his benefits were improperly calculated. In correspondence the Plan's attorneys urged Snyder to sign the distribution forms on the basis that his compensation was subject to the $ 2,167 Limitation. The Plan's attorneys accordingly calculated that Snyder was entitled to a monthly benefit of $ 403.29 which equaled the $ 68,885 lump sum payment as of November 30, 1992.
Snyder subsequently retained counsel, who sought additional information from the Plan's attorneys. In a letter of January 15, 1993, the Plan's attorneys upwardly revised their calculations of Snyder's benefits to $ 553.61 per month, which equaled a lump sum payment of $ 94,560 as of November 30, 1992.
In a letter dated February 23, 1993, Snyder's attorneys again requested documents from the Plan's attorneys and stated that that letter was a claim for his benefits. On March 24, 1993, in a written response the Plan's attorneys provided some, but not all, of the requested documents and told the Plaintiff's attorneys to "please set forth [Snyder's] claim in detail ...