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Plan Administrator v. Kienast

January 23, 2008


The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge


Now pending before the Court are the MOTION FOR SUMMARY JUDGMENT (Document No. 10), with brief in support, filed by Defendant Fred Kienast and the MOTION FOR SUMMARY JUDGMENT (Document No. 14), with brief in support, filed by Plaintiffs. The motions have been thoroughly briefed and are ripe for disposition.

Factual and Procedural Background

The facts in this ERISA case are straight-forward. Defendant Fred Kienast was employed by Limbach Facility Services, Inc. ("Limbach") for fifty-two years, until his retirement from his position as Executive Vice President and Chief Executive Officer of the Pittsburgh branch in December 2002. Kienast was a participant in an ERISA defined contribution plan, the Limbach Holdings, Inc. Profit Sharing Retirement Plan (the "Plan"). In 2003, Kienast requested a distribution of his account balance in the Plan, which he anticipated would be approximately $700,000. On July 2, 2003, the Plan disbursed $312,595.67 to Kienast, which he rolled over into an Individual Retirement Account ("IRA") which het had established with F&G Life. Kienast directed that those proceeds be used to purchase an annuity. In 2004, Kienast again requested a distribution of his account balance from the Plan. Due to an administrative error, the Plan approved this second request as well. On October 7, 2004, the Plan disbursed $218,816.97, which was rolled over into an IRA which Kienast had established with Capital Bank & Trust. The assets in the Capital Bank & Trust IRA were initially invested in six different American Funds mutual funds, but before the end of 2004, Kienast consolidated the investments in his Capital Bank & Trust IRA into a single mutual fund, the Cash Management Trust of America. In February 2005, Kienast added $26,530.53 to the Capital Bank & Trust IRA by rollover from another separate IRA. In the fall of 2004, while responding to another inquiry from Kienast, the Plan discovered that it had erroneously made two distributions to Kienast and requested that he return the overpayment. Kienast disregarded the Plan's request.

Limbach was a subsidiary of Enron Corporation, and due to the failure of Enron, accounts of the Plan were not reconciled until Hewitt Associates LLC ("Hewitt") completed that task in October 2006. During Hewitt's reconciliation, in addition to the second erroneous distribution in 2004, it was determined that Kienast had been overpaid in the July 2003 distribution by $12,248.08. Thus, Plaintiffs contend that Kienast has been overpaid a total sum of $231.065.05. Kienast admits having received the distributions from the Plan, but he disputes, legally, that the distributions are overpayments.

Plaintiffs seek equitable relief to recover the overpayment under two distinct theories. The Plan Administrator, in its role as a fiduciary, seeks recovery pursuant to 29 U.S.C. § 502(a)(3)(B). In the alternative, the Plan, in its own right, seeks to proceed under federal common law, pursuant to Luby v. Teamsters Health, Welfare and Pension Trust Funds, 944 F.2d 1176 (3d Cir. 1991). Defendant contends that Plaintiffs' claims are not cognizable under the statutory text of ERISA or federal common law.

Standard of Review

Rule 56(c) of the Federal Rules of Civil Procedure reads, in pertinent part, as follows: [Summary Judgment] shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

In interpreting Rule 56(c), the United States Supreme Court has stated:

The plain language . . . mandates entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to material fact," since a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial.

Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986).

An issue of material fact is genuine only if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court must view the facts in a light most favorable to the non-moving party, and the burden of establishing that no genuine issue of material fact exists rests with the movant. Celotex, 477 U.S. at 323. The "existence of disputed issues of material fact should be ascertained by resolving all inferences, doubts and issues of credibility against the moving party." Ely v. Hall's Motor Transit Co., 590 F.2d 62, 66 (3d Cir. 1978) (quoting Smith v. Pittsburgh Gage & Supply Co., 464 F.2d 870, 874 (3d Cir. 1972)). Final credibility determinations on material issues cannot be made in the context of a motion for summary judgment, nor can the district court weigh the evidence. Josey v. John R. Hollingsworth Corp., 996 F.2d 632 (3d Cir. 1993); Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224 (3d Cir. 1993).

When the non-moving party will bear the burden of proof at trial, the moving party's burden can be "discharged by 'showing' -- that is, pointing out to the District Court -- that there is an absence of evidence to support the non-moving party's case." Celotex, 477 U.S. at 325. If the moving party has carried this burden, the burden shifts to the non-moving party, who cannot rest on the allegations of the pleadings and must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Petruzzi's IGA Supermarkets, 998 F.2d at 1230. When the non-moving party's evidence in opposition ...

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