MEMORANDUM AND ORDER
MAY 17, 1995
Presently before the court are the cross-motions for summary judgment of plaintiff Frank J. Soriero ("plaintiff") and defendant Federal Deposit Insurance Corporation ("FDIC"). For the reasons set forth below, the court will grant Soriero's motion for summary judgment and will deny the FDIC's motion for summary judgment. Judgment will be entered in favor of plaintiff and against the FDIC.
This case involves a claim for supplemental pension benefits made by a former employee of a failed bank, against the FDIC, as receiver for the bank. Plaintiff brought suit pursuant to 12 U.S.C. § 1821(d)(2)(H) and 12 U.S.C. § 1821(d)(6) of the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA").
The parties have filed cross-motions for summary judgment and have agreed to a Joint Stipulation of Uncontested Facts.
Plaintiff began working for Philadelphia Savings Fund Society ("PSFS") in May, 1986, as vice-president for construction lending. (Stipulation at P 4). On May 20, 1986, plaintiff and PSFS entered into a supplemental pension agreement (the "SPA"). (Stipulation at P 5). The SPA was designed to augment plaintiff's standard pension plan by crediting plaintiff for his eight years of service with Industrial Valley Bank, his previous employer.
(Soriero Dep. at 17). By the terms of the SPA, PSFS agreed to provide plaintiff not only with his regular pension when he retired, but also a supplementary pension to be calculated as if he had joined PSFS on January 9, 1978, the day he joined Industrial Valley Bank. (See Pl. Mot. for Summary Judgment, Ex. 2 at P 1). The SPA further provided that the "supplementary pension payable to or on behalf of [plaintiff] under this Agreement shall be paid in the same form and at the same time as the benefit payable...to or on behalf of [plaintiff] under the Pension Plan." (Id.)
Several months after plaintiff began working at PSFS, PSFS became Meritor Savings Bank ("Meritor"). (Soriero Dep. at 13). Meritor succeeded to all of the rights and obligations of PSFS under the SPA. (Stipulation at P 5).
On December 11, 1992, the Secretary of Banking of the Commonwealth of Pennsylvania seized Meritor, closed it, and appointed the FDIC as receiver. (Stipulation at P 6). At that time, all Meritor employees, including plaintiff, ceased to be employed by Meritor. (Stipulation at P 7). Three days later, on December 14, plaintiff elected to retire under the standard Meritor pension plan, effective January 1, 1993. (Stipulation at P 10). Prior to the FDIC's appointment as receiver for Meritor, plaintiff had reached the age of 64 years, nine months and eighteen days which made him eligible to retire under the terms and conditions of Meritor's pension plan if he chose to do so. (Stipulation at P 12). Plaintiff has been receiving benefits under the Meritor pension plan since then, and the FDIC does not contest plaintiff's right to such benefits. (Stipulation at PP 8, 10).
At the time the FDIC was appointed as receiver for Meritor on December 11, 1992, plaintiff was not entitled to receive benefits under the SPA because his employment with Meritor had not been terminated, and under the SPA, payment of benefits is conditioned on termination of employment. (Stipulation at PP 15-16). After retiring from Meritor, plaintiff filed a timely claim with the FDIC, requesting supplemental pension benefits under the SPA, pursuant to 12 U.S.C. § 1821(d)(3). (Stipulation at P 18). The FDIC disallowed plaintiff's claim by letter of January 27, 1994. (Stipulation at P 19). Plaintiff then commenced this suit seeking to compel the FDIC to pay him the sum of $ 103,563.50, which the parties agree is the present value of the benefits due plaintiff under the SPA if the court were to find in favor of plaintiff.
(Stipulation at P 23).
II. LEGAL STANDARD
The function of a motion for summary judgment is to avoid a trial in cases where it is unnecessary and would only cause delay and expense. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977). In evaluating a motion for summary judgment, the court may examine the pleadings and other material offered by the parties to determine if there is a genuine issue of material fact to be tried. Fed. R. Civ. P. 56(c); Sims v. Mack Truck Corp., 488 F. Supp. 592, 597 (E.D. Pa. 1980). A fact is material if it might affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).
In considering a motion for summary judgment, the court must determine whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is a genuine issue of material fact, and thus whether the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir. 1987) (en banc). An issue is "genuine" only if the evidence is such that a reasonable jury could find for the non-moving party. Anderson, 477 U.S. at 255.
Finally, Rule 56(e) does not allow the non-moving party to rely merely upon bare assertions, conclusory allegations or suspicions. Fireman's Ins. Co. v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982). The non-moving party must offer specific facts contradicting the facts averred by the movant which indicate that there is a genuine issue for trial. Lujan v. National Wildlife Fed'n, 497 U.S. 871, 888, 111 L. Ed. 2d 695, 110 S. Ct. 3177 (1990); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).
The parties agree that plaintiff had not, prior to the FDIC's appointment as receiver for Meritor, retired, given notice of retirement, or applied for or received any benefits under either the regular Meritor plan or the SPA. Plaintiff asserts, however, that his claim against the FDIC for supplemental pension benefits should be recognized, because at the time the FDIC was appointed as receiver for Meritor, his claim was sufficiently "fixed and certain" to pass muster under the established "Kennedy rule," which holds that in order to be recognized, claims against insolvent banks must be "unconditionally fixed on or before the time [the bank] is declared insolvent." Kennedy v. Boston-Continental Nat'l Bank, 84 F.2d 592, 597 (1st Cir. 1936).
Plaintiff points to three federal cases to support his argument. In Office & Professional Employees Int'l Union, Local 2 v. FDIC, 307 U.S. App. D.C. 148, 27 F.3d 598 (D.C. Cir. 1994), ("OPEIU"), the FDIC repudiated a collective bargaining agreement between a union and a failed bank pursuant to which the union members were entitled to severance pay if they were laid off for economic reasons. Id. at 600. After the bank failed and the FDIC was appointed receiver, the FDIC refused to honor the employees' claims. Id.
The Court of Appeals for the District of Columbia Circuit held that "the employees had a right to severance pay as of the date of the appointment -- albeit a contingent one -- and that right should be treated essentially the same as the right to accrued vacation pay or health benefits." Id. at 601. "So viewed," held the OPEIU court, "the employees' right to severance pay is...'vested.'" Id. The court noted, however, that "the value of the severance payments under the agreement should be discounted for the risk that the employees would not be discharged for economic reasons -- for instance, that the employees would quit, retire, die, or be discharged for misconduct." Id.
Similar to OPEIU, the district court in LaMagna v. FDIC, 828 F. Supp. 1 (D.D.C. 1993), held that a former bank executive's right to severance benefits "vested the day he and [the bank] reached their agreement," that the FDIC as receiver for the failed bank was "obligated to honor the severance payment provision of the employment agreement," and that the FDIC could not repudiate the employment contract under 12 U.S.C. § 1821(e). Id. at 3.
Lastly, in Modzelewski v. Resolution Trust Corporation, 14 F.3d 1374 (9th Cir. 1994), the Court of Appeals for the Ninth Circuit confronted a case in which the RTC, after taking over a failed bank, terminated two executives and refused to pay them anything under their salary continuation agreements, which provided for certain monthly payments in the event of retirement, death, or termination without cause. Id. at 1375. The plaintiff executives sued the RTC under 12 U.S.C. § 1821(e)(3), claiming that they were entitled to damages because the RTC had repudiated their employment contracts. Id. The RTC countered that the obligations in the executives' contracts did not survive receivership because they were not "vested." Id. at 1376. The Ninth Circuit rejected the RTC's arguments and held that:
in order to be vested...rights need not be free of every contingency or possibility of divestiture. Rather, a right is vested when the employee holding the right is entitled to claim immediate payment. It's not material that the employee fails to make such a demand...so long as the decision not to claim payment lies entirely within his control.