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Levy v. Young Adult Institute, Inc.

United States District Court, S.D. New York

May 9, 2017

JOEL M. LEVY and JUDITH W. LYNN, Plaintiffs,
v.
YOUNG ADULT INSTITUTE, INC., et al., Defendants.

          OPINION AND ORDER

          J. PAUL OETKEN, District Judge.

         Plaintiffs Joel M. Levy and Judith W. Lynn brought this action against Young Adult Institute, Inc., d/b/a YAI National Institute for People with Disabilities (“YAI”), the Board of Trustees of YAI (“the Board”), the Pension Retirement Committee of the Board, the Supplemental Pension Plan and Trust for Certain Management Employees of YAI, and the Life Insurance Plan and Trust for Certain Management Employees of YAI (collectively “Defendants”) under the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. § 1001 et seq., seeking to recover benefits due under YAI's supplemental executive retirement plan (“SERP”).

         Familiarity with this case and with its lengthy history is presumed. A bench trial was held in this matter, beginning on November 15, 2016, and concluding on November 22, 2016. The Court issued a ruling from the bench. This Opinion and Order addresses the Defendants' motion for reconsideration of this Court's bench ruling and several outstanding matters relevant to the final judgment in this case.

         I. Motion for Reconsideration

         In its bench ruling of November 22, 2016, this Court employed a test articulated under New York law to determine whether Defendants had materially breached the Acknowledgment and Release (“A&R”). Specifically, the Court, quoting from Innovative Biodefense, Inc. v. VSP Techs., Inc., 176 F.Supp.3d 305, 317 (S.D.N.Y. 2016), looked at five factors in considering whether the A&R had been materially breached:

(a) “the ratio of the performance already rendered to that unperformed”;
(b) “the quantitative character of the default”;
(c) “the degree to which the purpose behind the contract has been frustrated”;
(d) “the willfulness of the default”; and
(e) “the extent to which the aggrieved party has already received the substantial benefit of the performance.”

(Trial Tr. 1060:5-13 (quoting Innovative Biodefense, 176 F.Supp.3d at 317).)

         Following the Court's ruling that Defendants had materially breached the A&R, Defendants filed a motion for reconsideration, arguing that the Court should have applied federal common law, rather than New York law, in evaluating whether the contract had been materially breached, due to preemption under ERISA. (See Dkt. No. 608 at 1.)

         The relevant factors endorsed by Restatement (Second) of Contracts § 241, which Defendants urge the Court to apply in this case, are as follows:

(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances ...

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