and maintained a Retirement Plan ("the Plan") for its employees. Sometime in 1982 Rome Cable began experiencing severe financial difficulties. Due to continuing financial woes, on approximately July 13, 1987, Rome Cable issued a formal Notice of Intent to Terminate the Plan under the "distress termination" provisions of ERISA, 29 U.S.C. § 1341 (West Supp. 1994). Effective September 14, 1987, the Pension Benefit Guaranty Corporation ("PBGC") approved that distress termination subject to certain terms and conditions. After the PBGC approved that termination, Rome Cable transferred the Plan's assets to the PBGC. Those assets are referred to as the "guaranteed benefits" because the PBGC guaranteed that they be paid to Plan participants and beneficiaries; and apparently those benefits have continued to be paid on an ongoing basis.
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.
See 29 U.S.C. § 1349 (West Supp. 1994).
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.
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[.]"
Letter from PBGC to Attorney Berry (April, 1994), Docket Entry #37.
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.
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 controversy is shown to exist here, will the court go on to consider the relative merits of plaintiff's motion for partial summary judgment on the liability issue.
I. Rome Cable's Cross-Motion
A. "Actual Controversy" Requirement
Section 2201 of the Declaratory Judgment Act states in pertinent part:
In a case of actual controversy within its jurisdiction, . . ., any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.
28 U.S.C. § 2201(a) (West 1994) (emphasis added). Rome Cable contends that the "actual controversy" language of that statute is not satisfied in the present action because there are no allegations in the complaint "as to (a) when the determination of liability was made; (b) if it was made, how the determination was made; and (c) if $ 649,300 is the amount of liability owed by Rome Cable, what the amount of outstanding benefit commitments is upon which the liability is based." Rome Cable Corporation's Memorandum of Law in Support of its Cross-Motion for Summary Judgment Dismissing the Complaint and in Opposition to Plaintiff's Motion for Summary Judgment ("Defendant's Memorandum") at 7. Plaintiff counters that because Rome Cable has denied liability to the section 4049 trust, a "substantial controversy" does exist between the parties. Memorandum on Behalf of Plaintiff in Opposition to Cross-Motion for Summary Judgment at 8. Before examining these arguments in greater detail, it is necessary to consider both the purpose of the Declaratory Judgment Act and the relevant case law construing it.
Congress passed the Declaratory Judgment Act in 1934 ("the Act"), which for the first time empowered federal courts to hear actions for declaratory judgment. Sturge v. Diversified Transport Corp., 772 F. Supp. 183, 185 (S.D.N.Y. 1991). As plaintiff correctly notes, that Act has "a broad, remedial purpose and, therefore, should be construed liberally." Akzona Inc. v. E.I. du Pont de Nemours & Co., 662 F. Supp. 603, 615 (D. Del. 1987) (citation omitted); see also Bellefonte Reinsurance Co. v. Aetna Cas. & Sur. Co., 590 F. Supp. 187, 192 (S.D.N.Y. 1984) (citations omitted). Quoting extensively from Judge Friendly's decision in United States v. Doherty, 786 F.2d 491 (2d Cir. 1986), the district court in Sturge, set forth the variety of ways in which courts have defined the Act's purpose:
'Essentially, a declaratory relief action brings an issue before the court that otherwise might need to await a coercive action brought by the declaratory relief defendant,' . . . ; the fundamental purpose of the [Declaratory Judgment Act] is to "avoid accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to bring suit, after damage has accrued," . . . ; the primary purpose of the [Declaratory Judgment Act] is to have a declaration of rights not already determined, not to determine whether rights already adjudicated were adjudicated properly, . . . ; the declaratory judgment procedure 'creates a means by which rights and obligations may be adjudicated in cases involving an actual controversy that has not reached the stage at which either party may seek a coercive remedy, or in which the party entitled to such a remedy fails to sue for it,' . . . ; the declaratory judgment procedure 'enables a party who is challenged, threatened, or endangered in the enjoyment of what he claims to be his rights, to initiate the proceedings against his tormentor and remove the cloud by an authoritative determination of plaintiff's legal right, privilege and immunity and the defendant's absence of right, and disability,' . . . .