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Schrey v. Lovett

April 22, 2010

LARRY SCHREY, PLAINTIFF,
v.
HAROLD LOVETT, DEFENDANT.



The opinion of the court was delivered by: Joyner, J.

MEMORANDUM AND ORDER

Before the Court is Defendant's Motion for Summary Judgment (Doc. Nos. 13, 15, 16) and Plaintiff's response thereto (Doc. No. 19).

I. BACKGROUND*fn1

Bustleton Landscaping Company, Inc. ("the Company") was created by Harold Lovett and Leslie Schrey, the Defendants, in approximately 1955. The Company established a pension plan ("the Plan") in approximately 1996. Philadelphia Pension Planning Corporation ("PPPC") was retained at that time to perform administrative services for the Plan. At the time that PPPC was hired by the Company, Bernard Berger was the principal owner of PPPC. In January 1989, Charleen Ryan became dominant shareholder, president, and chief executive officer of PPPC. In 1991, the Company converted the pension plan to a profit sharing plan. Defendant Lovett was a Trustee of the Plan.

Employees of PPPC maintained records and credited income to the Plan as it was earned, re-invested, paid income into the Plan, and prepared necessary filings regarding the Plan. At some point during the 1990s, Ryan began investing the Plan assets herself. Thereafter, assets were diverted away from the Plan and by approximately 2000 there were no assets in the Plan. Ryan contends that the Plan assets were diverted from the Plan by her then-husband. Ryan knew there were no assets in the Plan by 2000. Ryan concealed loss of Plan assets from the Company and continued to produce records showing that assets were still in the Plan. Until some time in 2005, the Trustees relied upon the reports, accountings, and tax returns generated by PPPC in connection with the Plan. The Company ceased operations in October 2001. Ryan has been indicted in the Eastern District of Pennsylvania for one count of filing a false IRS form on behalf of the Plan. Defendant also filed a civil suit against Ryan and PPPC in 2005.

Plaintiff, Larry Schrey, is a participant in the Plan. He sued the Plan trustees Harold Lovett and Leslie Schrey (now deceased and no longer a part of this litigation). Plaintiff alleges that Defendant is liable for losses to the Plan caused by Ryan's mismanagement due to his failure to monitor the trust assets.

II. STANDARD OF REVIEW

Summary judgment is appropriate if "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Material facts are those that may affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. If the moving party establishes the absence of a genuine issue of material fact, the burden shifts to the non-moving party to "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). If the non-moving party bears the burden of persuasion at trial, "the moving party may meet its burden on summary judgment by showing that the nonmoving party's evidence is insufficient to carry that burden." Kaucher v. County of Bucks, 456 F.3d 418, 423 (3d Cir. 2006) (quoting Wetzel v. Tucker, 139 F.3d 380, 383 n. 2 (3d Cir. 1998)).

III. Discussion

A. Statue of Limitations

Defendant argues that this action is barred by the statute of limitations. The Employee Retirement Income Security Act ("ERISA") § 413 establishes a combination of limitations provisions which govern breach of fiduciary duty claims. It provides:

No action may be commenced under this subchapter with respect to a fiduciary's breach of any responsibility, duty, or obligation under this part, or with respect to a violation of this part, after the earlier of:

(1) six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission, the latest date on which the fiduciary could have cured the breach or violation, or;

(2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation; except that in the case of fraud or concealment, such action may be commenced not later than six years ...


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