RODEN v. AMERISOURCEBERGEN Corp.

186 Cal.App.4th 620

113 Cal.Rptr.3d 20

Donald R. RODEN, Plaintiff and Appellant,

v.AMERISOURCEBERGEN CORPORATION, Defendant and Appellant.

No. G041990.

Court of Appeal, Fourth District, Division 3, California.

July 8, 2010.

Review Denied Oct. 13, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Richard E. Hodge, Inc. and Richard E. Hodge, Malibu, for Plaintiff and Appellant.

O'Melveny & Myers, Gordon E. Krischer, Los Angeles, Adam J. Karr and Jessica B. Hardy, Newport Beach, for Defendant and Appellant.

OPINION

MOORE, J.

We now have before us Donald R. Roden (Roden) and AmerisourceBergen Corporation (AmerisourceBergen) in the fourth round of their dispute concerning Roden's entitlements arising out of his employment termination. In the third appeal, we addressed a postjudgment order concerning retirement benefits, a severance payment, a stock option award, and loan forgiveness. As concerns the retirement benefits, we reversed the portions of the postjudgment order with respect to the amount of the change in control benefit and the amount of any excise taxes and resultant income taxes owing to Roden under the company's supplemental executive retirement plan (SERP). “We remand[ed] those issues to the trial court with directions to further remand them to the plan administrator for determination in the first instance.” ( Roden v. AmerisourceBergen Corp. (2007) 155 Cal.App.4th 1548, 1552, 67 Cal.Rptr.3d 26 ( Roden III ).)

On remand, the trial court rejected the determination of the administrative review official to the effect that Roden was entitled to a change in control benefit in the amount of $7,503,300. The court awarded Roden a change in control benefit in the amount of $14,432,141.74 instead. However, it affirmed the determination of the administrative review official to the effect that Roden was not entitled to an additional amount for excise taxes and resultant income taxes. AmerisourceBergen appeals from those portions of the order pertaining to the amount of the change in control benefit, the postjudgment interest rate applied, and the manner of application of payments made towards principal and interest. Roden also appeals, seeking to overturn the portions of the order pertaining to the prejudgment interest rate, the date from which postjudgment interest begins to accrue, the denial of his request for excise taxes and resultant income taxes, and the denial of his request for attorney fees and costs.

We hold that the trial court erred in concluding the review official had abused his discretion in calculating the amount of Roden's change in control benefit. The review official properly followed actuarial principles, methods and assumptions found to be appropriate by the plan actuary. We reverse the portion of the order overturning the review official's award and awarding Roden a $14,432,141.74 change in control benefit. We remand the matter to the trial court with instructions to modify its order to affirm the review official's determination of the change in control benefit, as expressed in his February 6, 2009 order.

The trial court was correct in affirming the decision of the review official to the effect that Roden is not, at this time, entitled to any payment with respect to potential excise tax liability. It would result in an absurdity to construe the SERP as requiring the payment of over $8 million with respect to excise taxes that are extremely unlikely ever to become due. Furthermore, as the review official held, and AmerisourceBergen has agreed, in the unlikely event excise taxes ever do become due, AmerisourceBergen will indemnify Roden as required by the SERP.

The trial court also did not err in affirming the decision of the review official as to the application of prejudgment interest at the federal bank discount rate. Federal law controls with respect to the application of prejudgment interest to benefits paid under the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq.), and Roden has not shown that the review official erred in his application of Ninth Circuit law in the determination of that interest rate.

We further hold the trial court did not err in applying the state statutory postjudgment interest rate. Postjudgment interest, unlike prejudgment interest, is not a part of the ERISA benefit, and there is no reason to apply the federal statutory postjudgment interest rate to a state court judgment. The trial court was also correct in applying postjudgment interest from the date of the order that is the subject of this fourth appeal. As we held in Roden III, supra, 155 Cal.App.4th 1548, 67 Cal.Rptr.3d 26, Roden's legal entitlement to a change in control benefit was established in the order that was the subject of the third appeal, but the trial court had no authority, at the time it made that order, to award damages. ( Id. at p. 1551, 67 Cal.Rptr.3d 26.) It was not until after the plan administrator, on remand, had determined the amount of the change in control benefit in the first instance, and the matter had gone through the administrative review process, that the court first had the authority to award damages. No money judgment was properly entered with respect to the change in control benefit until the order that is the subject of this fourth appeal was entered on April 9, 2009. Postjudgment interest runs from that date.

We also hold that the trial court did not err in providing that payments made pursuant to the order, which is in essence a money judgment, are to be applied first to interest and then to principal. This mandate is consistent with Code of Civil Procedure section 695.220. However, two sizeable payments were made to Roden before the date of the order, and the rules on application of payments to a money judgment are inapplicable to those two payments.

Finally, the trial court did not err in declining to award Roden attorney fees and costs. It did not abuse its discretion in concluding that neither party was the prevailing party at trial.

We affirm in part, reverse in part, and remand.

I FACTS

A. Prior Appeals:

“ ‘As discussed in our [first] opinion, Bergen hired Roden as its president and chief operating officer in 1995. [Citation.] Roden later became chief executive officer. Bergen terminated Roden's employment in 1999 and a disagreement ensued concerning Roden's rights under his employment contract and the company's benefit plans. Rancorous litigation followed. [Citation.]’ [Citation.]” ( Roden III, supra, 155 Cal.App.4th at p. 1552, 67 Cal.Rptr.3d 26.)

“ ‘The matter [first] came to this court on the interpretation of a Code of Civil Procedure section 998 settlement agreement that had been reduced to judgment. The judgment required, inter alia, the payment to Roden of $5 million ... and the continuation of certain benefits as provided in section 5 of Roden's employment contract. [Citation.] We affirmed the postjudgment order at issue. [Citation.] In doing so, we stated, “Bergen agreed to pay a $5 million lump sum to get rid of the litigation, and to continue the section 5 employment benefits, including retirement benefits.” [Citation.]’ [Citation.]” ( Roden III, supra, 155 Cal.App.4th at p. 1552, 67 Cal.Rptr.3d 26.)

The next time we saw the parties, they were fighting over an order permitting postjudgment discovery. That appeal ended in dismissal. ( Roden III, supra, 155 Cal.App.4th at p. 1551, 67 Cal.Rptr.3d 26.)

Judgment in hand, “ ‘Roden sought to collect the amounts due him.... However, the parties disagreed as to the amount of the employment benefits to which he was entitled.’ [Citation.] Consequently, Roden filed a motion for a second postjudgment order interpreting and implementing the judgment. He sought an order regarding his rights under the company's supplemental executive retirement plan (SERP)....” ( Roden III, supra, 155 Cal.App.4th at p. 1553, 67 Cal.Rptr.3d 26.) “The court awarded Roden $14,432,141.74 in SERP benefits.... Roden and AmerisourceBergen both appeal[ed].” ( Ibid.)

“In [the third] appeal, ... Roden claim[ed] the court erred in awarding him only $14,432,141.74 in employment benefits, over and above the $5 million settlement amount previously awarded.... In its cross-appeal, AmerisourceBergen ..., successor by merger to Bergen Brunswig Corporation (Bergen), ¹ counter[ed] that the court erred in awarding the additional $14,432,141.74.” ( Roden III, supra, 155 Cal.App.4th at p. 1551, 67 Cal.Rptr.3d 26.)

In the third appeal, we held that “[t]he trial court did not err in determining that Roden was entitled to a change in control benefit under the retirement plan. However, the court did err in calculating the amount of that benefit. The benefit amount must be determined in the first instance by the retirement plan administrator, not by the trial court. It is also the province of the plan administrator to determine in the first instance whether the terms of the retirement plan require the employer to pay excise and/or income taxes with respect to the change in control benefit. To the extent the court made a decision with respect to such taxes, the court erred.” ( Roden III, supra, 155 Cal.App.4th at p. 1551, 67 Cal.Rptr.3d 26.)

“Accordingly, we affirm[ed] the portions of the order holding that Roden was entitled to a change in control benefit.... We reverse[d] the portions of the order concerning the amount of the change in control benefit, and the amount, if any, of excise and/or income taxes owing to Roden under the retirement plan. We remand[ed] those issues to the trial court with directions to further remand them to the plan administrator for determination in the first instance.” ( Roden III, supra, 155 Cal.App.4th at p. 1552, 67 Cal.Rptr.3d 26.)

B. Proceedings on Remand after Third Appeal:

On remand, Roden demanded $14,432,141.74 for the change in control benefit, minus the amount of a partial payment he had received. He also...