Amron v. Yardain Inc. Pension Plan

KENNETH AMRON, Plaintiff, v. YARDAIN INC. PENSION PLAN, et al., Defendants.

18 Civ. 11336 (LGS)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

December 5, 2019

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:

Plaintiff Kenneth Amron brings this action against Defendants Yardain Inc. Pension Plan (the "Plan"), Yardain Inc. (the "Company") and Sandra Adelsberg, alleging breach of contract and violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Defendants move to dismiss the First Amended Complaint (the "Complaint") pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons below, the motion is granted in part and denied in part.

I. BACKGROUND

The following facts are taken from the Complaint, documents appended to or referenced in the Complaint, and are accepted as true only for purposes of this motion. See Hu v. City of New York, 927 F.3d 81, 88 (2d Cir. 2019) ("In deciding a Rule 12(b)(6) motion, the court may consider only the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings[,] and matters of which judicial notice may be taken.") (internal quotation marks omitted) (alteration in original).

Plaintiff and Defendant Adelsberg were married in 1985. Defendant Adelsberg was the President and Chief Executive Officer of the Company, which was incorporated in 1995. The Company adopted the Plan on or about January 1, 2001. The Plan was later amended and restated on or about January 1, 2002, and January 1, 2011. The Company was the Plan Administrator, and Plaintiff and Defendant Adelsberg were the sole participants in the Plan.

Defendant Adelsberg filed for divorce from Plaintiff on December 7, 2006, in Bronx County Supreme Court. The Judgment of Divorce, dated March 13, 2009, provided that the Plan at issue "shall be divided equally, fifty (50%) percent each between the parties" and that "[t]he parties shall facilitate such QDROs as required to accomplish the division of" the assets. A QDRO is a Qualified Domestic Relations Order under 29 U.S.C. § 1056(3)(B)(i).¹

A QDRO was issued on December 23, 2015, by the Bronx County Supreme Court, which "assigns to the Alternate Payee [Plaintiff] an amount equal to FIFTY PERCENT (50%) of the Participant's [Defendant Adelsberg's] vested accrued benefit under the Plan as of December 7, 2006." On the same day the QDRO was issued, the Plan's actuary sent a memo to Plaintiff's counsel providing calculations of the benefits due to Plaintiff under the Plan, both as a direct Participant and as the Alternate Payee sharing in 50% of Defendant Adelsberg's vested benefit pursuant to the QDRO. The memo attached distribution election forms for Plaintiff as a direct Participant and as Alternate Payee for Plaintiff's share of Defendant Adelsberg's benefit. The latter provided for a lump sum distribution of "$263,013 (vested value)" consisting of "50% of benefit determined as of 12/07/2006 as per QDRO agreement." Plaintiff did not return the distribution election forms at that time, nor did he otherwise respond to the benefits determination.

On December 2, 2016, Thomas Lally, an actuary hired by Plaintiff to review the calculations provided by the Plan, wrote a letter on behalf of Plaintiff "[t]o whom it may concern," asserting:

The current QDRO calculation incorporates the lump sum present value of these accrued benefits as of December, 2006 to adjust the current benefits that are being proposed. In my opinion, that's 100% wrong. If the participant's accrued benefit has yet to be distributed from the plan, the lump sum value from 10 years ago is irrelevant. The annuity is what is preserved. The lump sum payout option will be based on the mandated IRS 417(e) interest rates and mortality table at the time of distribution.²

Based on this opinion, Mr. Lally calculated the present value of Plaintiff's benefits to be approximately $750,000 to $800,000. Plaintiff subsequently retained counsel, who hired another actuary. The second actuary calculated Plaintiff's benefits due at $925,359.86.

On August 15, 2017, Plaintiff's counsel wrote a letter to Defendant Adelsberg, addressed to "Sandra S. Adelsberg, Chief Executive Officer, Veritas Property Management," asserting that the calculation of Plaintiff's benefits under the Plan provided in 2015 "violates the terms of the QDRO, the pension law and generally accepted actuarial practice" because Plaintiff is entitled to 50% of Defendant Adelsberg's vested accrued benefit as of December 2006, the present value of which must "be calculated at the time of Ken Amron's normal retirement date." The letter requests "a corrected calculation of our client's benefits along with revised distribution forms" as well as, among other things, various Plan documents. Defendant Adelsberg's matrimonial counsel responded with a letter on September 14, 2017, declining to provide the documents requested. She also asserted that the funds were "transferred on consent of your client over a year ago," "all transfers required under the parties' QDRO's were correct and consented to byMr. Amron prior to being transferred" and "this matter has been fully litigated for 10 years at the lower court and Appellate Division level."

On October 23, 2017, Plaintiff's counsel wrote another letter to Defendant Adelsberg's matrimonial counsel, referring to Defendant Adelsberg as the "Plan Administrator" and stating an intention to write to the Plan Administrator to "make a formal claim for benefits under the Plan which will be sent simultaneously with this letter." Defendant Adelsberg's counsel responded on November 15, 2017, acknowledging that the benefits from the Yardain Inc. Pension Plan were never distributed due to an "oversight" and because Plaintiff's distribution papers were never returned. "[A]s soon as we get the distribution papers back from Mr. Amron, they will be sent . . . for distribution." In this letter, Defendant Adelsberg's counsel states that certain forms should have been "sent to Ms. Adelsberg as Plan Administrator."

On April 11, 2018, Plaintiff's counsel sent a letter to Defendant Adelsberg directly, addressed to "Sandy Adelsberg, Plan Administrator, Yardain, Inc. Pension Plan," providing modified participant distribution forms "to reflect the correct value of the benefits." The letter also stated that it

constitutes an appeal of your deemed denial of your client's benefit claim under the plan. If we do not receive payment of our client's full benefit entitlement as set forth on the enclosed distribution forms within 60 days of your receipt of this letter, we will consider our claims appeal for benefits denied and our administrative remedies exhausted.

On May 9, 2018, the Plan's actuary who provided the original calculation of benefits to Plaintiff on December 23, 2015, sent a memorandum to Plaintiff's counsel responding to the April 11, 2018, letter to Defendant Adelsberg. This memorandum is referenced in the Complaint in paragraph 26. In this memorandum, the actuary asserted that

the accrued benefits used by your actuary . . . are IDENTICAL to the one's [sic] I used. Where the discrepancy lies is in the determination date for the presentvalue. . . . Our original valuation of 526,025 was the value as of December, 2006 NOT the current value. The December, 2006 date was stipulated and ordered to be the determination date by Judge Latisha Martin of the Bronx Supreme Court. The exclusion of subsequent earnings was also part of that stipulation.

Plaintiff subsequently filed this lawsuit.

II. STANDARD

To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). It is not enough for a plaintiff to allege facts that are consistent with liability; the complaint must "nudge[]" claims "across the line from conceivable to plausible." Twombly, 550 U.S. at 570. The court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in favor of the non-moving party, Montero v. City of Yonkers, 890 F.3d 386, 391 (2d Cir. 2018), but gives "no effect to legal conclusions." Stadnick v. Vivint Solar, Inc., 861 F.3d 31, 35 (2d Cir. 2017) (quoting Starr v. Sony BMG Music Entm't, 592 F.3d 314, 321 (2d Cir. 2010)).

III. DISCUSSION

A. The Complaint States a Claim that Defendants Violated ERISA § 502(a)(1)(B)

1. Standard of Review

The Complaint makes a claim for benefits "using the correct actuarial methodology as determined by" Plaintiff's actuary. The parties dispute the standard of review under which Plaintiff's benefits calculation should be reviewed. Plaintiff argues that the review is properly de novo, while Defendants argue that the arbitrary and capricious standard applies. The Courtreviews de novo because the question as Plaintiff has framed it is one of statutory interpretation. Because the claim under ERISA § 502(a)(1)(B) is sufficient under a de novo standard of review, it necessarily is sufficient under the more lenient arbitrary and capricious standard, were it to apply.

Plaintiff alleges the calculation in question was wrong as a matter of law, because it violated the statutory methodology for determining the present value of an accrued benefit. "[W]e owe the plan administrators no deference" where "the question before [the court] is simply one of statutory interpretation." Wilkins v. Mason Tenders Dist. Council Pension Fund, 445 F.3d 572, 581 (2d Cir. 2006); accord Munnelly v. Fordham Univ. Faculty, 316 F. Supp. 3d 714, 727 (S.D.N.Y. 2018). Also, courts have found that a Plan...