Quirk v. Vill. Car Co.

JOHN E. QUIRK, Plaintiff, v. VILLAGE CAR COMPANY, Defendant

1:19-cv-00217-JCN

UNITED STATES DISTRICT COURT DISTRICT OF MAINE

February 25, 2020

DECISION AND ORDER ON CROSS-MOTIONS FOR JUDGMENT

In this action, Plaintiff alleges that Defendant violated the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., and related regulations by reducing payments to him under a deferred compensation plan, by paying his benefits weekly instead of quarterly, by failing to provide written notice of the reduction, and by failing to provide requested information regarding the reduction. Each party filed a motion for judgment on the record. (Motions, ECF Nos. 16 & 17.)

Following a review of the record and after consideration of the parties' arguments, the Court dismisses Plaintiff's motion for judgment on the record, dismisses Defendant's motion for judgment on the record, and dismisses Plaintiff's complaint.

THE ADMINISTRATIVE RECORD

Plaintiff entered into a Cross Purchase Agreement (the Agreement), effective January 1, 2005, with his five sons. (Admin. R. 8.)¹ Under the Agreement, each of Plaintiff's five sons purchased an equal amount of Plaintiff's ownership interests in Defendant and five of Defendant's affiliates. (Id.)

The purchase price was paid in the form of five equal Promissory Notes ("Note" or the "Notes") delivered to Plaintiff at closing (which was deemed January 1, 2005), with each Note payable to Plaintiff in 140 monthly installments commencing January 1, 2005 and continuing through August 1, 2016. (Admin. R. 8, 10, 15.) In accordance with the Agreement, Defendant and Plaintiff also entered into an Employment Agreement effective January 1, 2005, for the employment of Plaintiff by Defendant from January 1, 2005, until the Notes were paid in full. (Admin. R. 8, 10, 17.) Pursuant to Section 10 of the Employment Agreement, Defendant also adopted a plan of deferred compensation for the benefit of Plaintiff, and Plaintiff agreed to the terms of that plan (the "Plan"). (Admin. R. 19, 22.)

The Plan provides for payments of deferred compensation to Plaintiff starting in September 2016, when his employment with Defendant ceased and the Notes were paid in full.² The Plan is maintained by Defendant exclusively for the purpose of providing deferred compensation for one management employee, specifically, Plaintiff. (Admin. R. 22.) The Plan provides that Plaintiff is entitled to a "Maximum Benefit" of $1,776,000 of deferred compensation payable to him in a series of twenty (20) quarterly payments of $83,250 and one final quarterly payment of $111,000. (Admin. R. 22 (§ I.E), 23 (§ II.D.). The payments were made weekly, rather than quarterly, which process evidently was initially acceptable to Plaintiff. (Admin. R. 2, 46-57, 64.) The Plan provides no benefit other than the payment of deferred compensation. (Admin. R. 22-25.)

Plaintiff received weekly payments of approximately $6,400 (gross) from September of 2016 until August 30, 2018, for the pay period ending August 26, 2018. (Admin. R. 53, 46-55.) On September 6, 2018, for the pay period ending September 2, 2018, Plaintiff received a reduced amount of $3,000. (Admin. R. 52.) For the following nine (9) weeks, Plaintiff received reduced amounts of $3,000 per week through October 4, 2018, and $2,000 each week from October 11, 2018 through November 8, 2018. (Admin. R. 52.)

As a result of the reduced payments that started on September 6, 2018, Plaintiff, through counsel, submitted a claim dated October 15, 2018, for benefits due under the Plan (the "October 2018 Claim"), demanding resumption of full weekly payments. (Admin. R. 64.) Defendant notified Plaintiff, through counsel, that the Plan accepted the October 2018 Claim as a written claim for benefits due pursuant to Section V(A) of the Plan. (Admin. R. 66.)³

Section V of the Deferred Compensation Agreement sets forth the Plan's claims procedure. (Admin. R. 24.) The Plan calls for the initial review of a claim by the Defendant through the office of its President, and if Defendant "partially or wholly denies the claim," Defendant is required to set forth the specific reasons for the denial, and to provide certain additional information to the claimant as required under ERISA's claims procedure regulation, 29 C.F.R. § 2560.503-1. (Id.) Plaintiff may then request a second level review of such denial or partial denial of the claim by submitting that request, again, to the office of the President of Defendant, at which point the Board of Directors of Defendant would appoint a so-called "Reviewing Officer" to review and decide the claim upon this second level of review. (Id.)

The Reviewing Officer is vested with

[f]ull discretionary authority (1) to interpret the provisions of this Plan, (2) to make findings of fact necessary or appropriate for the determination of eligibility for benefits under this Plan, and (3) to make determinations of eligibility for benefits or the amount of benefits due under this Plan.

(Admin. R. 25.)

On November 15, 2018, for the pay period ending November 11, 2018, Plaintiff began receiving his regular weekly amount of approximately $6,400. (Admin. R. 52.) On November 29, 2018, for the pay period ending November 25, 2018, Plaintiff received his regular payment of approximately $6,400, plus an additional $39,038.50 to make up for the ten weeks of reduced payments between September 6 and November 8, 2018. (Id.)

Plaintiff, who received the payment for the prior arrearage, did not raise the issue again, but raised the issue of quarterly payments a few months later. (Admin. R. 52, 118.) By letter dated January 17, 2019, Plaintiff, through counsel, stated that he "does not agree to weekly installment payments," and he demanded a quarterly payment to him of deferred compensation as of "January 15, 2019," and then another such quarterly payment on April 15, 2019. (Admin. R. 118.)

On January 24, 2019, Tim Ingerson, the previous CFO of Quirk Automotive Group, advised Plaintiff's counsel that if Plaintiff had decided to receive quarterly payments, Plaintiff needed to advise Defendant how to withhold taxes to satisfy his income tax liabilities. (Admin. R. 120.) Mr. Ingerson followed up on January 31, 2019, with a detailed breakdown of the income tax and other withholdings on the weekly installments. (Admin. R. 122.)⁴

In mid-March 2019, Bart Haag, Plaintiff's accountant, believed that he and Mr. Ingerson agreed upon appropriate withholdings for quarterly payments and he thought Quirk Auto Group would make "adjustments in their payroll system" for Plaintiff. (Admin. R. 136.) Counsel for Plaintiff inquired on March 21, 2019, as to the status of an April quarterly payment and Mr. Ingerson asked on March 25th that she "forward to [him] something from Plaintiff acknowledging this change from weekly checks to quarterly payments and approving the Federal and State of Maine withholding amounts as determined by Bart [Haag]." (Admin. R. 137.)

On March 28, 2019, before receiving a response to his request, Mr. Ingerson wrote to counsel for Plaintiff informing her that after he receives Plaintiff's "consent to quarterly payments we will start on the pay date closest to the payment date, which could be couple days before the 15[th] or a couple days after." (Admin. R. 149.) On March 29, 2019, counsel for Plaintiff forwarded by email attachment a document titled "Consent and Demand for Quarterly Payments" (the "Consent"). (Admin. R. 61-63.) The consent form did not mention the withholdings proposed by Mr. Haag. (Admin. R. 63.)

On April 9, 2019, Mr. Ingerson raised a concern with Plaintiff's counsel regarding Plaintiff's signature on the consent form. Plaintiff stated that he had never seen Plaintiff "sign his last name with a Q in that fashion [as appears on the Consent]." (Admin. R. 60-61.) Mr. Ingerson requested that Plaintiff provide a notarized signature on the form, sign off on the tax withholdings for the quarterly payments, and acknowledge that payments to Plaintiff under the Plan were otherwise current. (Admin. R. 59, 61.) Counsel for Plaintiff did not respond to the requests, and on April 29, 2019, told Mr. Ingerson that Plaintiff "will proceed with enforcement of his contractual rights in a judicial setting." (Admin. R. 154.)

On May 9, 2019, Mr. Ingerson wrote to counsel for Plaintiff, stating that he is "looking out for [Plaintiff]," and that if she

can not confirm that [Plaintiff] signed the consent in [her] presence then please have [Plaintiff] call me and confirm this change.... This will save you and I time and frustration. It is a very simple request to resolve this issue.

(Admin. R. 154.)

Counsel for Plaintiff responded that same day to Mr. Ingerson that "we have represented to you as attorneys that his signature was notarized." (Admin. R. 153-54.) On May 17, 2019, Mr. Ingerson asked counsel for Plaintiff to resend the notarized Consent to him, and after receipt he would "make sure the payment schedule is changed to quarterly payments [starting in June of 2019]." (Admin. R. 153.)⁵

On May 29, 2019, Plaintiff served his complaint on the Defendant by service on Christopher Austin, Defendant's corporate clerk. (Admin. R. 199.) As of June 19, 2019, Defendant submitted its payroll for the period ending June 16, 2019, including arrangements for the direct deposit on June 20, 2019, into Plaintiff's account, of the $83,250 quarterly payment due in June. (Admin. R. 56.)

Through correspondence dated July 2, 2019, Plaintiff requested that Defendant reinstate Plaintiff's vehicle stipend, pay $8,500 for economic losses incurred due to the discontinuation of Plaintiff's vehicle stipend in August 2018, and reimburse Plaintiff for attorney fees in the amount of $9,000. (Admin. R. 5-7.) Plaintiff considered this correspondence to be a settlement offer. (Plaintiff's Objection to Defendant's Appendix of Facts, ECF No. 19, ¶ 7.) Defendant treated Plaintiff's correspondence as a claim under Article V(A) of the Plan,...