Campanella v. Mason Tenders' Dist. Council Pension

299 F.Supp.2d 274

Nicola and Pietro CAMPANELLA, Individually and on behalf of all others similarly situated, Plaintiffs, v. MASON TENDERS' DISTRICT COUNCIL PENSION PLAN, and the Board of Trustees of the Mason Tenders' District Council Pension Plan, Personally and in its capacity as plan administrator, Defendants.

No. 02 Civ.0032 VM.

United States District Court, S.D. New York.

January 21, 2004.

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Edgar Pauk, New York, NY, for plaintiff.

Allan M. Marcus, Myron D. Rumeld, Proskauer Rose LLP, New York, NY, for defendants.

DECISION AND ORDER

MARRERO, District Judge.

Plaintiffs Nicola and his brother Pietro Campanella (the "Campanellas") are retired participants in the Mason Tenders' District Council Pension Plan (the "Plan"). The Campanellas bring this action on their own behalf, and on behalf of all other Plan participants, against the Plan and the Board of Trustees of the Plan (the "Trustees" and collectively with the Plan, the "Defendants") pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"). They allege numerous violations of ERISA by the Plan and the Trustees. The parties have filed cross-motions for summary judgment. For the reasons discussed below, the Defendants' motion is granted in its entirety and the Campanellas' motion is denied.

I. FACTS AND PROCEEDINGS

Pietro Campanella worked in covered employment under the Plan in 1982 and 1983 and again from 1986 until 1992, when he became unable to work after being injured in a job-related accident. Following his injury, Pietro Campanella applied for and received workers' compensation benefits under the Plan and a Social Security Disability Award. He then applied for a disability pension from the Plan.

The Director of the Mason Tenders' District Council Pension Fund (the "Pension Fund"), Paul Ragone ("Ragone"), denied Pietro Campanella's claim for a disability pension because he determined that Campanella had failed to satisfy the Plan's eight-year vesting requirement. Under the Plan as then in effect, a participant who does not have a vested benefit ceases to be a participant upon a break in service, and forfeits any credit earned for service worked before that break if "the number of consecutive 1-year Breaks in Service equals or exceeds ... [the] years of credit for service earned by the Participant prior to the Break in Service." (Mason Tenders' District Council Pension Fund (the "1989 Plan") § II(1)(A), dated Jan. 1, 1989, attached as Exh. D to Affidavit of John J. Virga dated May 13, 2003 ("Virga Aff.").) Ragone determined that Pietro Campanella had only seven years of credited service because he had worked in covered service from 1986 through 1992 and his two consecutive one-year breaks in service in 1984 and 1985 were longer than the one and one-quarter years of service he worked in 1982 and 1983.

Pietro Campanella appealed this ruling to the Trustees, who denied the appeal in 1994. Pietro Campanella then hired his present counsel, Edgar Pauk ("Pauk"), to represent him in this dispute. Pauk argued to John Virga ("Virga"), who replaced Ragone as Director of the Pension Fund, that under the terms of the Plan, Campanella should receive credit for service based on his receipt of workers' compensation benefits. The Trustees ultimately agreed in 1997 to grant Pietro Campanella service credit for the year 1993 based on his receipt of workers' compensation, and consequently Pietro Campanella qualified for a disability pension based on eight years of service.

Nicola Campanella worked in covered employment under the Plan from 1986 through 1992, when he became unable to work after suffering an injury in a job-related accident. Like his brother, Nicola Campanella applied for and received workers' compensation benefits and a Social Security Disability Award. Nicola Campanella then applied for a disability pension from the Plan. Ragone denied the pension request because Nicola Campanella had only accrued seven years of credited service under the plan between 1986 and 1992. In 1994, the Trustees upheld the denial of Nicola Campanella's claim for a pension.

Nicola Campanella then retained Pauk, who had successfully obtained a disability pension from the fund under virtually identical circumstances for Pietro Campanella. In 1998, the Plan granted Nicola Campanella a disability pension based on eight years of credited service, including one year of workmens' compensation.

Later in 1998, Pauk wrote separate letters to Virga on behalf of Pietro Campanella and Nicola Campanella challenging several aspects of the Plan as being in violation of ERISA, and seeking greater pensions for the Campanellas. Virga failed to respond to the Campanellas' claims. The Campanellas filed an appeal to the Trustees, who denied their claims. Correspondence between Pauk and Virga continued for several years.

In 2002, the Campanellas filed this action on their own behalf and on behalf of all other Plan participants. The Campanellas assert eight claims for relief against the Plan and the Trustees. The first four claims allege statutory violations of ERISA. The Campanellas claim that: the Plan's ranges of accrual of service credit violate ERISA § 204(b)(4)(B), 29 U.S.C. § 1054(b)(4)(B); the Plan's freeze of accrual rates for breaks in service violates ERISA § 204(b)(1)(B), 29 U.S.C. § 1054(b)(1)(B); the accrual rate freeze violates ERISA's minimum vesting standards under ERISA §§ 203(a) and 3(19), 29 U.S.C. §§ 1053(a) and 1002(19); and the Plan's policy of not allowing service credit for workers' compensation benefits violates ERISA § 204(b)(4)(A), 29 U.S.C. § 1054(b)(4)(A). In their remaining claims, the Campanellas allege violations of the Plan's terms, seek interest on the delayed payment of benefits, and request penalties against the Trustees.

The Campanellas move for summary judgment on liability, and Defendants cross-move for summary judgment.

II. DISCUSSION

A. STANDARD OF REVIEW

A court may enter summary judgment in favor of a party when "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). See also, Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Sabatino v. Flik Int'l Corp., 286 F.Supp.2d 327 (2003).

B. STATUTE OF LIMITATIONS

Defendants argue that the Campanellas' first four claims are barred under ERISA's statute of limitations for breach of fiduciary duty claims set forth in ERISA § 413, 29 U.S.C. § 1113.¹ Defendants characterize the Campanellas' first four claims as claims for breach of fiduciary duty because, Defendants argue, the claims "challenge the Trustees' actions implementing such provisions." (Memorandum of Law in Support of Defendants' Motion for Summary Judgment, dated May 14, 2003 (Def.MSJ), at 4.) Defendants assert that because the provisions of the Plan that the Campanellas challenge in their first four claims had been in effect for more than six years when the Campanellas brought this action, those claims are time-barred under ERISA § 413.²

Defendants mischaracterize the Campanella's claims. Claims for breach of fiduciary duty to which the statute of limitations in ERISA § 413 apply typically involve claims for violations of the fiduciary duties enunciated in ERISA § 404, 29 U.S.C. § 1104. Section 404 sets forth a prudent person standard of care to which fiduciaries must adhere in their management of employee benefit plans.³ The Campanellas' claims here are not brought under ERISA § 404 or any other section in Part Four of Subchapter One of ERISA, which governs fiduciary responsibilities.

The Part under which the claims are brought is significant because the ERISA statute of limitations in § 413 applies only to claims "with respect to a fiduciary's breach of any responsibility, duty or obligation under this part, or with respect to a violation of this part." 29 U.S.C. § 1113 (emphasis added). In Wright v. Southwestern Bell Telephone Co., 925 F.2d 1288, 1290 (10th Cir.1991), the Tenth Circuit held that 29 U.S.C. § 1113 was "only applicable to actions arising out of violations of the portion of [ERISA] addressing fiduciary responsibilities, 29 U.S.C. §§ 1101-12." The Circuit Court noted that the plaintiff's claims did "not involve fiduciary responsibilities regarding financial solvency or accountability as contemplated by [29 U.S.C.] section 1113." Id.; see also, Carollo v. Cement and Concrete Workers District Council Pension Plan, 964 F.Supp. 677, 688 (E.D.N.Y.1997) (holding that statute of limitations in ERISA § 413 applies only to claims for breach of fiduciary duty and distinguishing claims brought pursuant to 29 U.S.C. § 1132(a)(3)).

The "part" referred to in ERISA § 413, 29 U.S.C. § 1113, is Part Four of Subchapter I of ERISA, titled "Fiduciary Responsibility." The Campanellas' first four claims are brought under 29 U.S.C. § 1132 for alleged violations of 29 U.S.C. §§ 1054(b)(4)(B), 1054(b)(1)(B), 1053(a), and 1054(b)(4)(A), which are all located within Part Two of Subchapter I, Participation and Vesting. Section 1132(a)(3) allows any plan participant or beneficiary to bring a civil action "(A) to enjoin any act or practice which violates any provision of this subchapter ... or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3) (emphasis added). The Campanellas do not allege that the Trustees mismanaged the Plan's assets or failed to follow the terms of the Plan. Instead, they allege that the Plan itself violates ERISA. The statute of limitations in ERISA § 413, 29 U.S.C. § 1113, does not apply to these claims. See Laurenzano v. Blue Cross and Blue Shield of Massachusetts, Inc. Retirement Income Trust, 134 F.Supp.2d 189, 205 (D.Mass. 2001) (declining to apply 29 U.S.C. § 1113 statute of limitations...