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MATTHEWS AND FIELDS LUMBER v. NEW ENGLAND INS. CO.

September 26, 2000

MATTHEWS AND FIELDS LUMBER CO., INC., PLAINTIFF,
V.
NEW ENGLAND INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Larimer, Chief Judge.

DECISION AND ORDER

BACKGROUND

The complaint alleges that in 1968, M & F adopted a retirement benefit plan for its employees. M & F purchased the Plan from New England, which had drafted it. Although M & F was the Plan administrator, New England did provide certain services to M & F with respect to the Plan's administration, including calculation of employee benefits.

Plan benefits were calculated based on employees' compensation. In 1982, M & F modified its compensation structure for certain salespersons to provide for a salary plus commissions.*fn1 The Plan provided that commissions would be excluded from benefit calculations, however.

In 1984, M & F, upon defendant's recommendation, executed a restatement of the Plan in order to remain in compliance with certain statutory changes. New England prepared the restatement, and on June 25, 1987,*fn2 Scott Fields, M & F's Secretary and Treasurer, signed the restatement on behalf of M & F. The signature page stated, inter alia, that M & F "ha[d] received, read, accept[ed] and incorporate[ed] by reference" the restated Plan. See Affidavit of Stephen Chiumenti, Esq. (Docket Item 6) Ex. A. It further stated, "It is understood that [New England] shall not be responsible for the tax and legal aspects of the Plan and Trust, full responsibility for which is assumed by [M & F], which hereby acknowledges that it has consulted legal and tax counsel to the extent considered necessary." Id.

Unlike the original Plan, the restatement contained a provision stating that commissions would be included in benefit calculations. Plaintiff alleges that, despite the statement that M & F had read and accepted the restated Plan, in fact neither Fields nor anyone else from M & F had read the restated Plan when Fields signed it. M & F alleges that it was unaware that the restated Plan provided that commissions were to be included, and that M & F, relying on defendant's representations that no substantive changes had been made to the terms of the original Plan, simply assumed that commissions remained excluded as before.

In May 1996, M & F decided to terminate the Plan, resulting in lump-sum distributions of accrued benefits to the covered employees. The distributions, however, allegedly came up some $62,000 short of the amount to which the employees were entitled. At this stage of the proceedings, it is not entirely clear why that occurred, but it appears that plaintiff alleges that the shortfall was related to the fact that the Plan as restated called for the inclusion of commissions in calculating benefits. At any rate, M & F eventually made up the shortfall out of its own funds by paying its employees the additional amounts owed. M & F also alleges that it incurred other expenses due to this error because it was forced to reprocess the termination of the Plan in order to comply with Internal Revenue Service requirements.

DISCUSSION

Defendant asserts two grounds in support of its motion to dismiss. First, defendant alleges that plaintiffs claims are preempted by ERISA, and that because M & F has not asserted an ERISA claim, the complaint must be dismissed.

Second, defendant contends that M & F's claims are time-barred. Citing 29 U.S.C. § 1113, defendant states that the limitations period for a breach of fiduciary duty claim is six years after the last act that constituted part of the breach, or three years after the earliest date on which the plaintiff either had actual knowledge of the breach, or on which a report from which the plaintiff could reasonably be expected to have obtained knowledge of the breach was filed with the Secretary of Labor, whichever period ends first. Here, defendant states, the last act that was part of the alleged breach could have occurred no later than 1987, when Scott Fields signed the restated Plan on M & F's behalf. According to defendant, then, the limitations period ended in 1993 at the latest, well before the complaint was filed in 1998.

Defendant also asserts that even if plaintiffs claims are not preempted by ERISA, they are time-barred under New York law, which provides limitations periods of six years for breach of contract, and three years for negligence and breach of the duty of due care. Again, according to defendant, the last date on which those periods could have commenced was 1987.

M & F denies that its claims are preempted by ERISA. M & F contends that it is not asserting a claim for benefits or for equitable relief under ERISA, but simply a straightforward common-law claim for damages based on ...


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