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DEVLIN GRAPHIC INDUSTRIES, INC. v. LEWIS

March 30, 2004.

DEVLIN GRAPHIC INDUSTRIES, INC. PENSION PLAN, and JOAN D. LEWIS, as trustee of Devlin Graphic Industries, Inc. Pension Plan, Plaintiffs, -against- DAVID LEWIS, Defendant


The opinion of the court was delivered by: MICHAEL DOLINGER, Magistrate Judge

ORDER

On March 30, 2004, Magistrate Judge Michael H. Dolinger issued a Report and Recommendation ("Report") recommending that Plaintiff's motion for summary judgment be granted. No objections to the Report have been filed.

In reviewing a Report and Recommendation, the Court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C.A. § 636(b)(1)(C). To accept the Report and Recommendation of a magistrate judge to which no timely objection has been made, a district court "`need only satisfy itself that there is no clear error on the record.'" Johnson v. Reno, 143 F. Supp.2d 389, 391 (S.D.N.Y. 2001) (citation omitted). See also Brvant v. New York State Dep't of Corr. Serv., 146 F. Supp.2d 422, 424-25 (S.D.N.Y. 2001) (court may accept those portions of report to which no written objection has been made, so long as they are "not facially erroneous").

  The Court has reviewed thoroughly Magistrate Judge Dolinger's well-reasoned Report and has determined that there is no clear error on the face of the record. The Court adopts Page 2 the Report for the reasons stated therein. Accordingly, Plaintiff's motion for summary judgment is granted. The Clerk of Court is directed to enter judgment declaring that the June 30, 1998 Order is not a Qualified Domestic Relations Order under the terms of 29 U.S.C. § 206(d)(3)(B)(i) and enjoining Defendant from enforcing that Order against Mrs. Lewis in any court.

  Magistrate Judge Dolinger's Report follows.

  SO ORDERED.

  Plaintiffs Devlin Graphic Industries, Inc. Pension Plan and its trustee Joan Lewis commenced this lawsuit under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132 (a)(3), principally to challenge the validity of a New York State court domestic relations order as unenforceable under ERISA. Plaintiffs now move for summary judgment, which we recommend be granted.

  BACKGOUND

  This lawsuit is an outgrowth of a very long-running matrimonial proceeding between Mrs. Lewis and her estranged husband, defendant David Lewis. The particular point of controversy concerned Mr. Page 3 Lewis' entitlement to payments under the pension plan of a family-owned corporation known as Devlin Graphic Industries, Inc.

  On June 30, 1998, a New York State Supreme Court justice issued an order in the course of the couple's divorce proceeding, directing that a portion of the plan's assets be distributed to Mr. Lewis. (See Affirmation of Scott M. Reimer, Esq., executed Dec. 5, 2002, at ¶ 3 & Ex. C). That order had been submitted by Mr. Lewis, purportedly to effectuate an agreement between him and his wife for the equitable distribution of their assets in the form of a Qualified Domestic Relations Order ("QDRO").

  Mrs. Lewis filed the current action in this court in 2000, in her capacity as a trustee of the pension plan, to seek a determination that the 1998 order did not constitute a QDRO under ERISA, because it was inconsistent with several provisions of the plan. (See Compl. at UU 15-34). Defendant in turn asserted a counterclaim under ERISA for alleged non-provision of plan information. (See Verified Answer & Counterclaim at ¶¶ 5-12).

  Within weeks after commencement of this lawsuit, defendant moved in state court for an order holding his former wife in contempt for non-compliance with the 1998 distribution order. That proceeding in turn triggered a motion by plaintiffs in this court for a temporary restraining order and preliminary injunction. The District Court entered a temporary restraining order on November Page 4 30, 2000, prohibiting enforcement of the 1998 state-court order. See Devlin v. Graphinc. Industries, Inc. Pension Plan v. Lewis, 2001 WL 310626, *1 (S.D.N.Y. March 30, 2001). The Court subsequently entered a preliminary injunction on March 29, 2001, granting the same relief for the pendency of this lawsuit. See id. at *10.

  In granting injunctive relief, the court relied upon its conclusion that the 1998 order was inconsistent in at least two respects with specific provisions of the plan. First, the order defined the benefits payable to the plan participants on the basis of their percentage of ownership of the plan assets — finding that Mrs. Lewis had an "interest" in the plan calculated as 92.3% of plan assets — and ordered a transfer of half that amount (46.15% of plan assets) to David Lewis. In contrast, the plan defined the participants' benefits as a percentage — thirty percent — of their average monthly compensation, reduced by 1/28 for each year of service less than twenty-eight years. Accordingly, the court concluded that "[t]he State Court Order is thus clearly inconsistent with the terms of the Plan in relying on a benefit calculation formula not provided for under the Plan. It fails to satisfy the ERISA section 206(d)(3)(D)(i) requirement that a QDRO not `require a plan to provide any type or form of benefit . . . not otherwise provided under the Plan.'" Id. at *9.

  Second, the court agreed with plaintiffs' contention that the Page 5 1998 order was inconsistent with the terms of the plan because it ordered a distribution of plan assets to Mrs. Lewis before she was eligible for receipt of ...


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