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August 1, 1994

LAURA A. FUSCO, in her capacity as the Appointed Financial Trustee Under § 4049 of the Employee Retirement Income Security Act of 1974 for the Termination of the Retirement Insurance Plan for Hourly Rated Employees of Rome Cable Corporation, Plaintiff,


The opinion of the court was delivered by: NEAL P. MCCURN



 The guaranteed benefits were insufficient, however, to cover the cost of the benefit commitments to all of the Plan's participants and beneficiaries. After realizing this, on December 9, 1988, the PBGC and Rome Cable entered into a settlement agreement with respect to these so-called "unguaranteed benefits." Affidavit of Rock E. White (Dec. 16, 1993), at PP 5 and 6, and exh. 1 thereto. Under the terms of that agreement, the PBGC was appointed statutory trustee pursuant to 29 U.S.C. §§ 1342(b) and (c) and § 1348(a). Id., exh. 1 thereto at P 1(b). Also under the terms of that agreement, among other things, Rome Cable transferred its assets to the PBGC. Id., exh. 1 at P 2.

 Several years later, effective June 25, 1992, the PBGC appointed plaintiff Laura Fusco as the Financial Trustee of the section 4049 trust. *fn1" See 29 U.S.C. § 1349 (West Supp. 1994). *fn2" Affidavit of Martha Berry in Support of Plaintiff's Motion for Summary Judgment ("Berry Supporting Affidavit") (Dec. 2, 1993), exh. D thereto. That section allowed a trust to be established by the PBGC in connection with a termination plan, such as that proposed by Rome Cable, for the purpose of distributing liability payments to plan participants and beneficiaries. That statute also specifically provided that the PBGC "shall designate a fiduciary . . . to serve as trustee of the trust for purposes of conducting negotiations and assessing and collecting liability pursuant to section 1362(c) of this title[,]" and that is what the PBGC did when it appointed plaintiff as Financial Trustee in June, 1992. 29 U.S.C. § 1349(b)(1)(A) (West Supp. 1994).

 Just two and one-half weeks after her appointment as Financial Trustee, plaintiff sent a letter, dated July 13, 1992, advising Rome Cable's Chairman of her appointment. Berry Supporting Affidavit, exh. E thereto. In that letter plaintiff requested that Rome Cable submit to her, within 20 days from the date thereof, a plan for payment to the Trust of the outstanding benefit commitments (i.e. the unguaranteed liability payments). Id. Plaintiff closed that letter by writing, "failure to submit such plan within twenty days will force the Financial Trustee to take action to perfect the interest of the Section 4049 Trust as a judgment creditor of Rome Cable." Id.

 When Rome Cable failed to submit the requested payment plan, and after the time to do so had passed, on September 11, 1992, plaintiff commenced the present declaratory judgment action against Rome Cable. In her complaint, plaintiff purportedly alleges two separate causes of action. Her first cause of action is specifically designated as one for declaratory judgment, wherein plaintiff is seeking a declaration that Rome Cable is liable to the trust for unguaranteed liability payments in the amount of $ 649,300.00, plus interest. Complaint at 7, PP 24-26. Plaintiff titles her second cause of action as one for "nonpayment of unguaranteed benefit commitments." Id. at 7. This cause of action contains only two paragraphs (both of which are designated paragraph 27); in the first paragraph of this cause of action the preceding twenty-six paragraphs of the complaint are incorporated by reference. In the second paragraph of this cause of action, plaintiff simply alleges that Rome Cable's failure to pay the unguaranteed liability payments violates its ERISA obligations and the terms of the distress termination of the Plan.Id. at 7-8. *fn3"

 In March, 1993, Rome Cable filed a motion to dismiss the complaint; it also sought at that time to have plaintiff removed as the Financial Trustee due to a claimed conflict of interest. After hearing oral argument, this court denied Rome Cable's motion without prejudice to renew, noting its concern, inter alia, that before the court considered the issue of the propriety of plaintiff Fusco serving as Financial Trustee, perhaps the PBGC, as an agency with expertise in such matters, should more properly be addressing this asserted conflict, at least in the first instance.

 In February, 1994, the plaintiff Trustee brought a motion seeking partial summary judgment on the issue of liability only; and it is this motion which is presently before the court, as well as Rome Cable's cross-motion. Plaintiff now seeks a court order "finding and declaring that Rome Cable is liable to the § 4049 Trust for outstanding benefit commitments due and owing eligible participants and beneficiaries of the Retirement Plan." Memorandum in Support of Plaintiff's Summary Judgment Motion on the Issue of Defendant's Liability ("Plaintiff's Supporting Memorandum") at 18. On its cross-motion for summary judgment Rome Cable asserts, as it did in its earlier motion to dismiss, that plaintiff has failed to allege an actual case or controversy. Alternatively, Rome Cable seeks dismissal of the complaint pursuant to Fed. R. Civ. P. 57 and the Declaratory Judgment Act, 22 U.S.C. § 2201.

 Since the denial of Rome Cable's original motion in March, 1993, and indeed until April, 1994, little had changed with respect to the PBGC's actions in connection with the section 4049 trust which is the subject of this litigation. In April, 1993, shortly after this court denied Rome Cable's motion to dismiss and for removal of plaintiff as the section 4049 trustee, the PBGC, in response to Rome Cable's November, 1992, request recognized that Rome Cable "had raised factual issues that may or my not have been addressed at the time of the appointment of Ms. Fusco as the Section 4049 Trustee." Affidavit of Albert M. Rizzo (Dec. 23, 1993), exh. 2 thereto. Despite the fact that Rome Cable's request for the PBGC's reconsideration of plaintiff's appointment as Financial Trustee has been pending for over a year now, the PBGC has yet to take any definitive action in this regard. Therefore, at least for the moment, plaintiff Fusco remains the Financial Trustee. Finally, in April, 1994 the PBGC advised plaintiff's counsel that it had "determined that as of the date of termination of the Plan the outstanding amount of benefit commitments was $ 847,151[.]" *fn4" Letter from PBGC to Attorney Berry (April, 1994), Docket Entry #37. *fn5" Enclosed with that letter was a memorandum prepared by the PBGC detailing the calculations used to arrive at that amount of outstanding benefit commitments. See id.

 In the meantime, effective February 4, 1994, Ms. Fusco voluntarily resigned from her position as an attorney with the law firm of Hancock & Estabrook. Affidavit of Martha Berry in Opposition to Defendant's Cross-Motion for Summary Judgment ("Berry Opposition Affidavit") (Feb. 11, 1994) at P 7. In a telephone conference with the court on March 18, 1994, held in connection with these motions, plaintiff's counsel advised the court that even though plaintiff will not be practicing law for the foreseeable future, she intends to continue serving as financial trustee in the present action.


 Before addressing the substantive aspects of the parties' motions, the court observes that the alternative basis for Rome Cable's motion is procedurally flawed. As previously mentioned, in its Notice of Motion Rome Cable expressly states that it is moving in the alternative for dismissal of the complaint pursuant to Fed. R. Civ. P. 57 and the Declaratory Judgment Act, 28 U.S.C. § 2201. Defendant's Notice of Cross-Motion at 2, P (b). On its face, however, Rule 57 does not provide a basis for making a motion; it just acknowledges the availability of declaratory judgment as a remedy. *fn6" Nor does section 2201 provide an independent basis for making a motion; it simply creates the remedy of declaratory relief. Cf. Interport Pilots Agency, Inc. v. Sammis, 774 F. Supp. 734, 737 (E.D.N.Y. 1991), aff'd on other grounds, 14 F.3d 133 (2d Cir. 1994) (emphasis in original) ("the [Declaratory Judgment] Act itself merely creates a remedy of declaratory relief, and does not create or confer federal subject matter jurisdiction over an action that would not normally come within the Court's original jurisdiction.") Thus, Rome Cable improperly relies upon Rule 57 and 28 U.S.C. § 2201 as a basis for alternative relief.

 Despite this procedural irregularity, in the interest of justice, the court will construe this alternative motion as also seeking relief under Fed. R. Civ. P. 56. The court will proceed in this manner in part because, as will be seen, Rome Cable combined its response to plaintiff's motion with a request for alternative relief. More specifically, in its memorandum of law Rome Cable raises several arguments in opposition to plaintiff's motion for partial summary judgment, while at the same time, at the close of each of those arguments, it seeks dismissal of the complaint. Plaintiff will not be prejudiced in any way by the court's handling of Rome Cable's cross-motion in this way, as plaintiff had ample opportunity to and did fully brief all of Rome Cable's arguments in this regard.

 With this procedural matter behind it, the court is now free to turn to a discussion of the merits of the parties' respective motions. For her part, the plaintiff argues that Rome Cable is statutorily liable to the section 4049 trust, and thus she is entitled to summary judgment on that liability issue. Rome Cable responds by making a cross-motion for summary judgment asserting that plaintiff has failed to allege an actual case or controversy. Rome Cable further responds that, in any event, plaintiff's motion for partial summary judgment must be denied because declaratory relief is inappropriate under the particular facts of this case. According to Rome Cable, plaintiff's motion also must be denied because there are genuine issues of material fact as to the existence of Rome Cable's liability to the section 4049 trust.

 If Rome Cable ultimately prevails on its argument that it is entitled to summary judgment dismissing plaintiff's complaint because there is no actual controversy extant, then obviously there would be no need for the court, indeed it would be unable, to reach plaintiff's motion for summary judgment as to liability. See Berni v. Intern. Gourmet Restaurants of America, 838 F.2d 642, 648 (2d Cir. 1988) ("In the absence of such controversy [under section 2201], the court lacks jurisdiction to grant such relief."). Consequently, the court must first address the "actual controversy" argument raised in Rome Cable's cross-motion. Only if the requisite ...

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