$81,761, and the amount held in trust by the Plan for distribution, $36,768.37. The amount of this difference is $44,993.
The PBGC also seeks interest in the amount of $22,764.58. Title IV of ERISA provides for the assessment of interest on 29 U.S.C. § 1362 liability. Title 29 U.S.C. § 1368(a) provides that "if any employer . . . liable to the [Pension Benefit Guaranty Corporation] corporation under 29 U.S.C. § 1362 neglect or refuse to pay, after demand, the amount of such liability (including interest), there shall be a lien in favor of the corporation upon all property and right to property . . . belonging to such employer . . ." The right to interest also is implicit in the statutory scheme which values assets and benefits as of the date of plan termination. Unless the difference is paid to the PBGC on that date, the imposition of interest is necessary to make Title IV's insurance system whole. Ludlow Industries v. Pension Benefit Guaranty Corporation, 524 F. Supp. 155 (N.D. Ill. 1981). See Freund v. Marshall & Ilsley Bank, 485 F. Supp. 629, 644 (W.D. Wisc. 1979); Nedd v. United Mine Workers of America, 488 F. Supp. 1208 (M.D. Pa. 1980).
Interest on 29 U.S.C. § 1362 liability is charged at the interest rate established pursuant to Section 6621 of the Internal Revenue Code. 29 C.F.R. 2622.7(c). This rate has been chosen, not just to make the insurance system whole, but also to discourage employers from using the insurance system as a source of financing. See 45 Fed. Reg. 34904. Interest on 29 U.S.C. § 1362 liability normally accrues from the date of plan termination. However, in the preamble to its proposed regulation on Employer Liability for Single Employer Plan Termination, which was published in 45 Fed. Reg. 34901 (May 23, 1980), the PBGC noted that because of uncertainty with respect to the rules for the calculation of employer liability, it has foregone collection of interest from the date of plan termination in certain cases. In those cases, the PBGC collected interest from the time PBGC gave the employer specific advice concerning the amount of its 29 U.S.C. § 1362 liability. 45 Fed. Reg. 34901, 34904. By notices published in the Federal Register on January 28, 1981 and February 24, 1981, the PBGC clarified this policy and advised employers that maintained single employer plans which terminated before April 1, 1981, that the PBGC normally would waive interest on 29 U.S.C. § 1362 liability from the date of termination until April 1, 1981. Thereafter, the PBGC would collect interest at the IRS rate. 45 Fed. Reg. 9545; 46 Fed. Reg. 13690. Since the Furlong plan was terminated in 1975, and payment under 29 U.S.C. § 1362 was not demanded of the defendants until after April 1, 1981, only interest from April 2, 1981, is sought by the PBGC.
A trial court may enter summary judgment if, viewing the evidentiary material of record in the light most favorable to the party opposing the motion, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Hollinger v. Wagner Mining & Equipment Co., 667 F.2d 402, 405 (3d Cir. 1981). If a summary judgment motion is made and properly supported under Fed.R.C.P. 56, the adverse party may not rest upon the allegations of his pleadings. He must, by affidavit or by reference to interrogatories, admissions, depositions, and other evidentiary material of record, show that there is a genuine material issue for trial. Fed.R.C.P. 56(e). Sunshine Books, Ltd. v. Temple University, 697 F.2d 90, 96 (3d Cir. 1982). For the reasons which follow, the plaintiff's motion for summary judgment will be granted and judgment entered in favor of the plaintiff and against the defendant in the amount of $67,757.58.
Based on the pleadings, admissions, and affidavits, the following facts are uncontested. The PBGC is a wholly-owned United States Government corporation created by 29 U.S.C. § 1302 to administer the mandatory, self-financing pension plan termination insurance program established by Title IV of ERISA. The PBGC's principal purpose is to insure the payment of pension benefits to participants in pension plans that terminate when covered by Title IV of ERISA. 29 U.S.C. § 1302(a)(2). The Title IV insurance program is financed through premiums paid by pension plans that are covered by Title IV, by payments received from employers pursuant to liability imposed by 29 U.S.C. § 1362, and by the assets owned by plans at their termination. 29 U.S.C. §§ 1306, 1342, 1362-1364.
Defendant Furlong is a Pennsylvania corporation; defendants Blizlee and Mendelson are New York corporations. All of the defendants are headquartered in Furlong, Pennsylvania. Leon Mendelson owns all of the stock of Furlong, Blizlee, and Mendelson. As of July 1, 1975, the combined net worth of the defendants exceeded $150,000.
The Plan was established by Furlong in 1972 to provide pension benefits for its employees. By letter dated June 17, 1975, Furlong notified the PBGC of its intent to terminate the Plan effective July 1, 1975, citing unfavorable business conditions as the basis for the proposed termination. On May 29, 1979, the PBGC and Furlong entered into an agreement, pursuant to 29 U.S.C. §§ 1342 and 1348, appointing the PBGC statutory trustee of the Plan and establishing July 1, 1975, as the date of plan termination.
Title 29 U.S.C. § 1362(a) imposes liability on "any employer who maintained a [covered] plan . . . at the time it was terminated. . . ." The amount of the liability is equal to the lesser of:
(a) the current value of the plan's benefits guaranteed under this subchapter on the date of termination over
(b) the current value of the plan's assets allocable to such benefits on the date of termination, or