The opinion of the court was delivered by: Schiller, J.
Plaintiffs Carpenters Pension and Annuity Plan of Philadelphia and Vicinity ("Pension Plan"), Carpenters Health and Welfare Plan of Philadelphia and Vicinity ("Health Plan") and Piotr Tonia, a fiduciary of the Plans, bring this ERISA action against Defendant Vincent Grosso, a beneficiary of the Plans, to recover Plan payments made to Grosso to which he was not entitled. Plaintiffs' Amended Complaint asserts the following claims, pursuant to ERISA and federal common law, against Grosso: (1) enforcement of Pension Plan terms; (2) enforcement of Health Plan terms; (3) breach of pension contract; (4) breach of health contract; (5) conversion; (6) constructive trust; (7) unjust enrichment; (8) breach of fiduciary duty; and (9) prohibited transaction. Grosso never responded to the Amended Complaint, and a default was entered on January 2, 2008.
Plaintiffs filed a motion for default judgment seeking to recover $163,130.01 in pension benefits paid to Grosso since April 1, 1996 and $91,021.40 in earnings from the use of plan assets.Their motion assumed that Grosso received approximately ten years of Plan benefits that he was not entitled to because he engaged in work that subjected his benefits to suspension ("suspendible work"). On June 16, 2009, this Court denied Plaintiffs' outstanding motion without prejudice.
Plaintiffs ultimately renewed their motion and supplemented the previously filed exhibits with additional exhibits, including Grosso's deposition. Although Grosso was served with the initial motion and the amended version, his counsel informed the Court that he would not be filing any response.
Grosso applied for early retirement pension benefits on March 16, 1996, at the age of 59. (Hackett Decl. ¶ 9.) He began receiving monthly benefits under the Pension Plan on April 1, 1996. (Id. ¶ 10.) With the exception of 1998, Grosso received annual checks in varying amounts from 1996 through 2006. (Id. ¶ 10.) Grosso also began receiving retiree health coverage under the Health Plan on May 1, 1996. (Id. ¶ 12.) Upon turning 62 in February of 1999, Grosso's early retirement supplement terminated and his monthly benefit payment decreased from March 1999 forward. (Id.)
At or prior to his retirement, Grosso received information concerning his benefits and their limitations, including summary plan descriptions for the Pension Plan and Health Plan, which explained the effect of suspendible work on those benefits. (Hackett Decl. ¶¶ 13-15 & Ex. MH1 [Mar. 1991 Retiree Reference Booklet] & Ex. MH2 [Oct. 1998 Retiree Reference Booklet] & Ex. MH3 [Pension Plan Benefits Effective May 1, 1989 with Amendments to April 30, 1995] & Ex. MH4 [May 1, 1988 Summary Plan Description] & Ex. MH5 [Plan of Benefits for Health Fund effective January 1, 2004] & Ex. MH6 [July 2003 Welfare Fund Summary Plan Description].) These documents explained that a retiree's pension and supplemental payments are subject to suspension "[i]f the Retiree returns to work in any phase of the Construction Industry for more than 40 hours per month." (Id. Ex. MH1 at MH13; see also id. Ex. MH4 at MH51-52.) Health Plan benefits would terminate permanently if a beneficiary engaged in any such work. (Id. Ex. MH5 at MH59.)
Each year after his retirement, Grosso certified to the Plans that he was not engaged in suspendible work. (Hackett Decl. ¶ 16 & Ex. MH9 [Grosso Certifications].) Nevertheless, the Plans learned in late 2006 that Grosso was working in the construction industry for Martinelli Construction ("Martinelli"). (Hackett Decl. ¶ 17; Naughton Decl. ¶ 4.) Based on this discovery, the Plans terminated Grosso's benefits, effective January 1, 2007. (Hackett Decl. ¶ 19.) Grosso did not appeal those determinations. (Id. ¶ 20.) He had received a total of $163,130.01 in pension payments from the Pension Plan from 1996 through the end of 2006 and $50,000 in medical benefits through the Health Plan over that time. (Id. ¶ 12 & Ex. MH7 [Pension Payments].) Furthermore, as of December 31, 2008, the interest on the payments made to Grosso from April 1996 through December 2006 amounted to $91,021.40. (McKeogh Decl. ¶¶ 1, 5(a).)
According to the Amended Complaint Grosso performed suspendible work years prior to the 2006 discovery by the Plans. (Am. Compl. ¶ 16.) The Plans sent Grosso several letters and contacted him via telephone to ascertain the extent of this suspendible work. (Hackett Decl. ¶ 18 & Ex. MH10 [Letters from Hackett to Grosso].)
Despite Plaintiffs repeated attempts to obtain information and/or documentation from Grosso, he was less than forthcoming. He sent an unverified, undated statement that he was no longer working and that "the only time [he] worked was approximately [two and a half] weeks in December." (Hackett Decl. Ex. 11 [Grosso Statement].) This statement conflicted with independent observations of Grosso's work. (Hackett Decl. ¶ 7(k); Naughton Decl. ¶ 4.) Ultimately, after the Complaint was filed, Grosso turned over tax returns from tax years 1995-1997, 1999-2001 and 2003-2006, however, he failed to provide some of the supporting W-2s used to prepare those returns. (Hope Decl. Ex. JH1[Grosso Tax Returns].) He did not submit tax returns from 1998 or 2002.
Based on these documents, Plaintiffs surmised that Grosso had been working for Martinelli since shortly after his retirement but that Martinelli was paying him through Grosso's wife, who also worked for Martinelli, and that the increased income to her reflected on their joint tax returns was actually income earned by Grosso. (See Pls.' Mem. of Law in Supp. of Pls.' Mot. for J. by Default [hereinafter "Pls.' Mem."] at 12 ("[A] gap in W-2 Forms for 1996 and a sudden and sustained increase in the pay from Martinelli Construction to Grosso's spouse from 1997 forward suggests that Grosso was regularly employed at that company from almost immediately after his retirement.").) Since the tax returns were inconclusive, the Court ordered Grosso to produce all records of any work he performed from April 1996 through December 2006 that would have subjected his benefits to suspension, and ordered him to testify concerning any such work at a deposition.
A deposition was scheduled, but Grosso, through an attorney who was not representing him in this case, postponed the deposition. Plaintiffs ultimately moved to hold Grosso in contempt. A rule to show cause hearing was held on April 23, 2009. Grosso appeared pro se. He agreed to submit to a deposition on April 29, 2009 and to produce additional documents.
At his deposition, Grosso declined to answer questions pertaining to suspendible work "based upon [his] 5th Amendment rights." (Supplemental Hope Decl. Ex. VG1 [Grosso Dep.] at VG(JH2)7-15.) Grosso also produced an undated draft bankruptcy petition, which was prepared sometime after this case was filed. (Supplemental Hope Decl. Ex. JH9 [Draft Bankruptcy Pet.].) The petition confirms ...