Court had considered the denial contained in Fater's Declaration.
Defendants' liability does not depend on a definitive finding that they affirmatively acted to approve the real estate purchases but, rather, is based on the conclusion that, through various of their actions and omissions, they failed to discharge their fiduciary obligations under ERISA "with the care, skill, prudence, and diligence . . . that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character." 29 U.S.C. § 1104(a)(1)(B); see also Fink v. National Sav. and Trust Co., 249 U.S. App. D.C. 33, 772 F.2d 951, 955 (D.C.C. 1985); Marshall v. Snyder, 1 Empl. Ben. Cases (BNA) 1878, 1886 (E.D.N.Y. 1979).
In determining whether a defendant has discharged his fiduciary obligations, a court's task is "to inquire whether the individual trustees, at the time they engaged in the challenged transactions, employed appropriate methods to investigate the merits of the investment and to structure the investment." Katsaros v. Cody, 744 F.2d 270 (2d Cir. 1984) quoting Donovan v. Mazzola, 716 F.2d 1226, 1232 (9th Cir. 1983). In light of ERISA's command that trust fund fiduciaries act solely in the interest of a fund's participants, the Court is unable to say which constitutes the greater breach of fiduciary obligations -- actively approving the purchase of a property for over $ 8 million more than its appraised value, or remaining ignorant of a $ 24 million purchase until after it has occurred. In either case, the fiduciary has failed to act as a "prudent fiduciary with experience dealing with a similar enterprise." Marshall v. Snyder, 1 Empl. Ben. Cases (BNA) 1878, 1886 (E.D.N.Y. 1979); see also Whitfield v. Cohen, 682 F. Supp. 188, 195 (S.D.N.Y. 1988) ("The failure to make any independent investigation and evaluation of a potential plan investment is a breach of fiduciary obligations.").
Defendants contend that "the actions and inquiries that the Court says should have been undertaken prior to the approval of the purchases presuppose that Mr. Fater knew in advance of the contemplated purchases." The Opinion does not so state.
In addition, Defendants argue for the first time that Plaintiffs' claims for ERISA violations are barred by ERISA's statute of limitations.
The statute of limitations is an affirmative defense under Federal Rule of Civil Procedure 8(c)
and, therefore, must be asserted in a party's responsive pleading "at the earliest possible moment," or else it is deemed to be waived. Davis v. Bryan, 810 F.2d 42, 44 (2d Cir. 1987).
Nevertheless, Defendants argue that they had no reason to assert the statute of limitations defense in their responsive pleading because Plaintiffs' complaint alleged fraud or concealment, thus triggering ERISA's six-year statute of limitations. Defendants now contend that Plaintiffs had actual knowledge of the alleged ERISA violations, thus triggering instead the three-year statute of limitations contained in 29 U.S.C. § 1113(a)(2). Defendants also contend that Plaintiffs, in their motion for partial summary judgment, did not make a showing of fraud or concealment sufficient to trigger the six-year statute of limitations.
In any event, in order to trigger the three-year limitations period, Defendants must also show that Plaintiffs had "actual knowledge" of ERISA violations. 29 U.S.C. § 1113(2). The only evidence Defendants present in support of such a showing is a July 1991 newspaper article in Newsday which quotes a Labor Department "organized crime investigator" as saying of the New York and Florida real estate transactions: "It certainly looks interesting." The most that can be inferred from the Newsday article is that the United States Department of Labor was alert to the need to conduct an investigation into the transactions. The article does not support an inference that Plaintiffs had actual knowledge of ERISA violations more than three years prior to filing suit.
Moreover, ERISA's three-year limitations period is not triggered by a showing that a plaintiff had merely constructive knowledge of ERISA violations three years prior to filing suit. See Gluck v. Unisys Corp., 960 F.2d 1168, 1177 (3d Cir. 1992) (holding that 29 U.S.C. § 1113 requires that a plaintiff have actual knowledge of all material facts necessary to understand that some claim exists); see also Brock v. Nellis, 809 F.2d 753, 755 (11th Cir. 1987) ("to charge the Secretary [of Labor] with actual knowledge of an ERISA violation, it is not enough that he had notice that something was awry; he must have had specific knowledge of the actual breach of duty upon which he sues"); Ziegler v. Connecticut General Life Ins. Co., 916 F.2d 548 (9th Cir. 1990). As the Court noted in Gluck, "Congress knew how to require constructive knowledge; it required it in [ERISA] sections 1303 and 1370." 960 F.2d at 1176. Thus, Congress' failure to call for constructive knowledge in section 1113 was not accidental.
Defendants argue that whether Plaintiffs had "actual knowledge" of ERISA violations more than three years prior to filing this action is a factual question to be determined by the trier of fact. On a motion for reargument, the movant is burdened to demonstrate that the Court overlooked controlling decisions or factual matters that were put before the Court on the underlying motion. Fulani v. Brady, 149 F.R.D. 501, 503 (S.D.N.Y. 1993). Defendants had ample opportunity to raise a statute of limitations defense in their response to Plaintiffs' summary judgment motion. Federal Rule of Civil Procedure 8(c) dictates that their failure to do so constitutes a waiver of the defense.
For the reasons stated above, Defendants' motion for an order permitting reconsideration of the Opinion is hereby denied. Because the Opinion did not make a factual finding on the issue of damages, and because the record presently before the Court is insufficient to support such a factual finding, entry of the Final Judgment at this time would be inappropriate. The parties are hereby ordered to submit, within 30 days, evidence bearing on the question whether the Final Judgment accurately assesses the damages against each Defendant.
It is so ordered.
New York, N. Y.
August 18, 1995
ROBERT W. SWEET