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Ruggieri v. Quaglia

December 24, 2008

MICHAEL A. RUGGIERI, ESQUIRE PLAINTIFF
v.
RAYMOND J. QUAGLIA, ET AL. DEFENDANT



The opinion of the court was delivered by: Timothy R. Rice U.S. Magistrate Judge

MEMORANDUM OPINION

This Motion for Summary Judgment arises from an action initiated by Michael A. Ruggieri, Esquire on February 28, 2007 to collect pension benefits under his Defined Benefit Plan, a plan covered by the Employee Retirement Income Security Act ("ERISA"). Ruggieri filed claims against his former employer, Raymond J. Quaglia, Esquire and Raymond J. Quaglia P.C. (collectively referred to as "Quaglia"), Pension Administration Services, Inc. ("PAS"), and Stephen H. Rosen & Associates ("Rosen"). Ruggieri withdrew his claim against PAS and Rosen and settled with Quaglia, effectively removing Ruggieri from the case. Quaglia asserted crossclaims against PAS and Rosen, which form the basis of this summary judgment motion.

Quaglia claimed it could not pay Ruggieri because PAS and Rosen did not send the pension benefit amount or the necessary releases to allow payment from the Plan. See Quaglia's Memorandum of Law Contra Cross-claim Defendants' Motion for Summary Judgment at 2, Ruggieri v. Quaglia, No. 07-756, (E.D. Pa. filed Sept. 23, 2008) [hereinafter "Reply Brief"].

Quaglia seeks contribution for, or indemnity from, any loss caused by the alleged negligence of PAS and Rosen, see Quaglia's Amended Answer ¶ 49-50, Ruggieri v. Quaglia, et. al., No. 07-CV-756, (E.D. Pa. filed Jan. 22, 2008) [hereinafter Amended Answer], i.e., from the $7,556.43 paid in additional benefits and the $25,000.00 in attorney fees paid by Quaglia to Ruggieri. See Reply Brief at 11.

Although this case implicates several novel legal issues, I need not resolve them because Quaglia is not entitled to relief as a matter of law under any theory. For the following reasons, I grant summary judgment in favor of PAS and Rosen.

I. Background

The evidence will be viewed in the light most favorable to Quaglia, the non-moving party.

See Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). Between 1986 and 2005, Ruggieri worked as an attorney at Raymond J. Quaglia, P.C., a small law firm. See Amended Complaint ¶ 5, Ruggieri v. Quaglia, et. al., No. 07-CV-756, (E.D. Pa. filed Dec. 18, 2007) [hereinafter Amended Complaint]; Amended Answer ¶ 5. Ruggieri participated in the Raymond J. Quaglia, Esq. P.C. Defined Benefit Plan ("the Plan"),*fn1 which entitled him to pension benefits. See Motion for Summary Judgment of Defendants Pension Administration Services, Inc. and Stephen H. Rosen & Associates, Inc. to Dismiss Cross-Claim of Raymond J. Quaglia, Esquire and Raymond J. Quaglia Esq. P.C. Defined Benefit Pension Plan [hereinafter "Summary Judgment Motion"], at Ex. A [hereinafter "Dep. of Raymond J. Quaglia"], at 22:19-23.

Quaglia was the Plan's trustee and admits Plan documents described him as the Plan Administrator. See Dep. of Raymond J. Quaglia, at 92:10-11, 1-5; Dep. of Raymond J. Quaglia, Ex. 48, at 1-2 [hereinafter "Summary Plan Description"]. The Plan's trustee is responsible for making "all benefit payments from the trust fund to participants" and the Plan Administrator's duties include providing participants with "information regarding [their] rights and benefits under the Plan." See Summary Plan Description, at 1-2.

PAS, a Pennsylvania corporation, see Summary Judgment Motion, at Ex. F, Declaration of Stephen H. Rosen [hereinafter "Rosen Declaration"], at ¶ 2, provided pension support services for clients, including calculating pension distribution values for benefit plan participants and making mandatory federal filings on behalf of clients, see Summary Judgment Motion, at Ex. D, Unsworn Declaration of Patrick Connor [hereinafter "Connor Declaration"], at ¶¶ 2-3. PAS provided these services to Quaglia from 1985 to 2006. See Reply Brief, at Ex. D, Sworn Declaration of Raymond J. Quaglia, Esquire [hereinafter "Quaglia Declaration"], at ¶ 1-3.

In 1999, Quaglia terminated the Plan and PAS assisted with this termination. See Dep. of Raymond J. Quaglia, at 33:1-3; Connor Declaration, at ¶ 10. In a June 27, 2000 letter to Quaglia, Michael Bluestein, the President of PAS, confirmed PAS should proceed with the termination of the Plan and outlined the termination process. See Dep. of Raymond J. Quaglia, at Ex. 34. He suggested Quaglia should not distribute any funds from the Plan until the Internal Revenue Service ("I.R.S.") approved the termination. Id. (recommending Quaglia "not distribute any funds from the plan until the IRS approval is received" and firmly reiterating that he "not distribute any assets from the plan until [they] receive IRS approval"). Bluestein also specified PAS's fees for "obtaining the necessary approvals and . . . arranging distribution of plan assets." Id.

On November 21, 2001, in a "Letter of Determination," the I.R.S. confirmed the termination of the Plan. See Dep. of Raymond J. Quaglia, at Ex. 24. Upon formal termination, Quaglia was required to adhere to annual federal filings, with which PAS attempted to assist him. Id.; Dep. of Raymond J. Quaglia, at Ex. 34. PAS sent multiple letters to Quaglia requesting information to properly terminate the Plan, calculate the participants' benefits, and file the appropriate governmental forms. See Dep. of Raymond J. Quaglia, at Exs. 34-46. Quaglia failed to submit the necessary documents and information to PAS, which delayed PAS's ability to perform an annual review and employee certificates.*fn2 See Dep. of Raymond J. Quaglia, at Exs. 39-42; see also Connor Declaration, at ¶ 12.

In 2005, National Investment Managers ("NIM") acquired PAS. See Rosen Declaration, at ¶ 13. In an April 10, 2006 letter to Quaglia, Bluestein announced his retirement from PAS and offered the assistance of Rosen to service Quaglia's Plan. See Dep. of Raymond J. Quaglia, at Ex. 32. Accompanying this letter was a letter sent by Rosen to Quaglia welcoming Quaglia to the Rosen firm [hereinafter "Welcome Letter"].

In December 2005, after NIM acquired PAS, but before PAS ceased its business operations, Ruggieri ended his employment with Quaglia P.C. See Quaglia Declaration, at ¶ 11; Reply Brief, at Ex. E. In early 2006, based on information available to him at the time, Patrick Connor, a pension administrator at PAS, calculated the estimated distributions to Plan participants as of June 30, 2005 and sent these calculations to Quaglia. See Dep. of Raymond J. Quaglia, at 7:21-24, 8:1-24, 9:1-20; Reply Brief, at Ex. C; Connor Declaration, at ¶ 13. Connor requested Quaglia inform him if the "numbers are acceptable" and, if so, Connor would "begin the process of sending out the first letters to the participants." See Reply Brief, at Ex. C.*fn3 On April 28, 2006, Quaglia sent a letter to Connor informing him Ruggieri had quit and requested Ruggieri's pension benefits be transferred to Ruggieri. See Dep. of Raymond J. Quaglia, at Ex. 20. In the letter, Quaglia asked Connor to "begin the process of distributing the plan as per your earlier correspondence." See id. Neither Quaglia nor Connor distributed the amounts.*fn4

On August 14, 2006, after not hearing from either party, Ruggieri, through his attorney, formally requested the benefits due to him under the Plan from Quaglia, PAS, and Rosen. See Reply Brief, at Ex. E. In a December 18, 2006 letter addressed to Quaglia, Damien Callahan, a senior pension analyst at Rosen, emphasized Rosen could not properly calculate Ruggieri's benefit payment until Quaglia sent Rosen the necessary insurance information. See Dep. of Raymond J. Quaglia, at Ex. 27. In that letter, Callahan referenced a December 11, 2006 telephone conversation with Quaglia, during which they discussed the importance of receiving the insurance documents. See id.; Dep. of Raymond J. Quaglia, at 47:11-24, 48:1-18. Callahan also sent a follow-up letter on December 27, 2006, reiterating a request for the same information. See Dep. of Raymond J. Quaglia, at Ex. 29. In early January 2007, Callahan and Quaglia scheduled a meeting to discuss this outstanding issue. The meeting never occurred. See Dep. of Raymond J. Quaglia, at 126:5-17; Summary Judgment Motion, at Ex. E, Declaration of Damien Callahan [hereinafter "Callahan Declaration"], at ¶ 16; Callahan Declaration, at Ex. E-2. On January 3, 2007, Rosen sent an engagement letter to Quaglia to retain Rosen's services. See Dep. of Raymond J. Quaglia, at Ex. 30.; id. at 41:24, 42:1-2. Quaglia, however, never retained Rosen. Id. at 46:14-18, 63:5-11.

On February 28, 2007, Ruggieri filed a lawsuit against Quaglia, PAS, and Rosen, claiming they failed to distribute his pension benefits due under ERISA. See Amended Complaint, at ¶¶ 26-27. On April 9, 2007, Quaglia sent a letter to Ruggieri's attorney stating the value of the Plan's insurance policy. See Dep. of Raymond J. Quaglia, at Ex. 28. Quaglia also stated he stopped attempting to work with Rosen after Ruggieri filed the lawsuit. See Dep. of Raymond J. Quaglia, at 23:17-24, 24:1-8, 53:11-12.

Ruggieri dismissed his claim against PAS and Rosen and, on February 13, 2008, I entered a stipulation of dismissal. During a bench trial ending on May 6, 2008, Quaglia and Ruggieri reached a settlement and Quaglia agreed to pay Ruggieri the amount due to him under the Plan and attorney's fees. As a result, on August 4, 2008, I dismissed Ruggieri's claim against Quaglia.

Quaglia, however, maintains a cross-claim against PAS and Rosen, alleging they were negligent in "administering the plan" and failing to "timely distribute the proceeds" to Ruggieri. See Amended Answer, at Crossclaims ¶ 49. Quaglia argues that as a result of the negligence, PAS and Rosen owe contribution and/or indemnity to Quaglia to the extent Quaglia was liable to Ruggieri for additional benefits and attorney fees because of the delay in distributing Plan benefits.*fn5 See id. at ΒΆ 50. Quaglia claimed he relied on the expertise of PAS and Rosen to terminate the Plan and Connor's promise to send the necessary letters and distribute Ruggieri's benefits. See Reply Brief at 11. Quaglia claims PAS and Rosen breached the duty of good faith and fair dealing implied in every contract and as a result of ...


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