No. 347 Philadelphia 1980, Appeal from the Order of the Court of Common Pleas of Montgomery County, Civil Action, Equity, at No. 74-7 of January 29, 1980.
Joseph Lurie, Philadelphia, for appellants.
Mabel D. Sellers, Ambler, for appellee.
Spaeth, Hester and Cavanaugh, JJ.
[ 283 Pa. Super. Page 504]
This is an appeal from a final decree in equity directing the retroactive reinstatement of appellee in a profit sharing and retirement plan.
Appellee, John Fudula, began working for appellant Keystone Wire & Iron Works, Inc., in 1945 as a foreman. As a foreman, appellee was in a supervisory position, and by 1955 he began to be paid on a salaried basis. However, at the request of Robert Robinson, who was Keystone's president and chief stockholder, and appellee's close friend, appellee continued to be a member of the Ironworkers Union. In 1959 Keystone established an IRS-qualified profit-sharing and retirement plan for its salaried employees, and named appellant The First Pennsylvania Banking and Trust Company as trustee. As a salaried employee, appellee was included in the plan, and he received yearly statements from First Pennsylvania concerning his interest in the plan's fund.
[ 283 Pa. Super. Page 505]
When members of the Ironworkers Union went on strike at Keystone in 1962, appellee offered to quit the union. However, Robinson asked him to continue his membership in the union and to join the picket line, and Keystone continued to pay appellee his full salary while he was out on strike. The strike resulted in a collective bargaining agreement that obligated Keystone to contribute to a union pension plan on behalf of each qualified union member in its employ. Since appellee was both a union member and a salaried employee, he was eligible for membership in both the union pension plan and Keystone's profit-sharing plan. However, Keystone's accountant informed Robinson as Keystone's president that Keystone could not contribute to both plans on behalf of appellee and continue to enjoy favorable tax treatment of these contributions. This advice was erroneous: IRS regulations allow an employer to deduct contributions made on behalf of an employee to more than one pension plan as long as the total amount deducted does not exceed 25 per cent of the compensation otherwise paid to the employee,*fn1 and Keystone's contributions to both plans would not have exceeded 17 per cent of the compensation otherwise paid appellee. Nevertheless, acting on the accountant's advice, Robinson met with appellee and Charles Schleeter (the one other employee who was eligible for both plans), informed them of the accountant's advice, and told them that they would have to choose one of the two plans. Appellee denied that this meeting had ever taken place, but the lower court found that it had, and that as a result of it, appellee chose to continue his membership in the union pension plan and to withdraw from Keystone's profit-sharing plan.
In December 1972 appellee retired from Keystone. After receiving a much smaller payment from the profit-sharing plan than he had anticipated, he discovered that since 1962, Keystone had made no payments to this account.
On April 19, 1974, appellee instituted this action in equity, seeking his reinstatement in Keystone's plan an accounting
[ 283 Pa. Super. Page 506]
of all contributions made into the plan on behalf of him and all other participants, and a recalculation of his vested interest in the plan. Appellants' preliminary objection that appellee had an adequate remedy at law was dismissed by the lower court without an opinion. On September 19, 1977, after a hearing on March 1 and 2, 1977, the chancellor entered an adjudication and decree nisi dismissing the complaint. This decision was based on the chancellor's finding, mentioned above, that after his meeting in 1962 with Robinson, appellee had chosen to withdraw from Keystone's profit-sharing plan, and on the conclusion that appellee was therefore not entitled to benefits after that date. On appellee's exceptions to the chancellor's adjudication, the lower court en banc concluded that the chancellor had erred. It was of the opinion that appellee should be permitted to rescind his withdrawal from Keystone's plan as based on Robinson's and appellee's mutual mistake in accepting the accountant's advice as accurate. Accordingly, by final decree of January 29, 1980, the court en banc ordered appellants to reinstate appellee in the plan, retroactive to 1962, to render an accounting, and to recalculate appellee's vested interest in the plan.
On appeal, appellants argue: 1) that appellee has an adequate remedy at law; 2) that the action is barred either by the statute of limitations or by laches; and 3) that in permitting appellee to rescind his withdrawal from the plan, the court en banc ignored important evidence.
In arguing that appellee has an adequate remedy at law, appellants, say that appellee's action is really in assumpsit, for money damages, and that in an action in assumpsit an accounting may be demanded. Appellants are correct that in an action in assumpsit an accounting may be demanded. See Pa.R.Civ.P. 1021; Setlock v. Sutila, 444 Pa. 552, 282 A.2d 380 (1971); Stuyvesant Insurance Company v. Keystone Insurance Agency, Inc., 420 Pa. 578, 218 A.2d 294 (1966). However, equity has jurisdiction of an action for an accounting "when the accounts are mutual or complicated or
[ 283 Pa. Super. Page 507]
when discovery is needed and is material to the relief." Setlock v. Sutila, supra 444 Pa. at 554, 282 A.2d at 381. See also Stuyvesant Insurance Company v. Keystone Insurance Agency, Inc., supra; Williams v. Finlaw, Mueller & Co., Inc., 292 Pa. 244, 141 A. 47 (1928); Crennell v. Fulton, 241 Pa. 572, 88 A. 783 (1913). The question therefore, is whether in the present case it may be said "that a jury would not be qualified to state such an account," or even that "it is doubtful whether adequate relief could be had at law." Stuyvesant Insurance Company v. Keystone Insurance Agency, Inc., supra 420 Pa. at 581, 218 A.2d at 296, quoting Williams v. Finlaw, Mueller & Co., Inc., supra.
According to Keystone's plan,*fn2 Keystone was obligated to contribute ten per cent of its net income each year to the plan; it could also contribute additional amounts as specially authorized by its Board of Directors (Plan, IV -- A). The total amount contributed each year was to be "allocated proportionately among the Members [of the plan] on the basis of the ratio that the total compensation of each member [bore] to the total compensation of all the members." (Plan, V -- A). Any amounts forfeited or otherwise undistributable were also to be allocated proportionately each year to members' accounts (Plan, VIII -- F). In addition, members of the plan could make voluntary contributions to their accounts of up to ten per cent of their total annual compensation (Plan, IV -- D). The total fund of all the members' accounts was to be invested as a unit (Plan, VI -- B), the fund was to be valued at least annually, and the members' accounts were to be adjusted to preserve their proportionate beneficial interests in the fund (Plan, VI -- C).
Since Keystone made no contributions to appellee's account from 1963 until his retirement in 1972, appellee's interest in the plan will have to be recalculated for those ten years. We cannot say with certainty that it would be impossible for a jury, with extensive expert testimony, to state such an account; but given the complexity of the plan
[ 283 Pa. Super. Page 508]
and the number of years involved, we cannot say either that this accounting is so simple that equitable jurisdiction was lacking.
Furthermore, we note an additional ground for equitable jurisdiction. As mentioned, the lower court permitted appellee to rescind his withdrawal from the plan as based on mutual mistake. It is settled that equity has jurisdiction to correct mistakes. Smith v. Capital Bank and Trust, 325 Pa. 369, 191 A.2d 124 (1937).
The statute of limitations*fn3 is an affirmative defense, which must be specifically pleaded as "New Matter." Pa.R.Civ.P. 1030, 1051; Ziemba v. Hagerty, 436 Pa. 179, 259 A.2d 876 (1969); Fike v. Ball, 234 Pa. Super. 305, 338 A.2d 619 (1975); Louis v. Clark, 227 Pa. Super. 547, 323 A.2d 298 (1974). The defense is waived if it is not pleaded. Pa.R.Civ.P. 1032, 1051. Although appellants pleaded the defense of laches in their answer to appellee's complaint, they did not plead the defense of the statute of limitations, nor did they at any time petition the lower court for leave to amend their answer to plead that defense. See Pa.R.Civ.P. 1033. We therefore conclude that appellants have waived the defense of the statute of limitations. Furthermore, we will not consider defenses not ...