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Perez v. Koresko

United States District Court, E.D. Pennsylvania

May 13, 2015

THOMAS E. PEREZ, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR
v.
JOHN J. KORESKO, V, et al.

MEMORANDUM

McLaughlin, J.

Defendants John J. Koresko, V, and Jeanne Bonney each filed requests with the Court to revisit the Court’s February 6 Memorandum Opinion (Docket No. 1134) and corresponding March 13 Judgment and Order (Docket No. 1149). Through his counsel, Dilworth Paxson LLP (“Dilworth”), Mr. Koresko filed a motion for a new trial or, in the alternative, to alter or amend judgment pursuant to Rule 59 (Docket No. 1168), while Ms. Bonney, acting pro se, submitted a letter to the Court, [1] requesting various amendments to the findings of fact and conclusions of law (Docket No. 1182). The U.S. Department of Labor (“DOL”) responded to each separately (Docket Nos. 1179, 1194). For the reasons that follow, Mr. Koresko’s motion is denied in part and granted in part, and the Court shall amend the judgment to reduce the Koresko Defendants’[2] total liability by $79, 568.74, from $38, 417, 109.63 to $38, 337, 540.89 (Docket No. 1149). Ms. Bonney’s request is granted insofar as it relates to confirming that she is permanently enjoined from serving in any capacity with regard to an employee benefit plan under the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., (Docket No. 1149).

I. Background

Given the long, protracted history of this matter, the Court incorporates into this opinion the facts and procedural history as set forth in the Court’s February 6, 2015, Memorandum Opinion (Docket No. 1134).

II. Analysis

Rule 59(a) of the Federal Rules of Civil Procedure provides that a Court may, “on motion for a new trial, open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new ones, and direct the entry of a new judgment.” Fed.R.Civ.P. 59(a)(2). But a judge need only reopen the trial record when she is “confused on certain matters, ” In re Japanese Elec. Products Antitrust Litig., 631 F.2d 1069, 1087 (3d Cir. 1980), or when it is apparent that a decision would result in the “miscarriage of justice, ” Murphy v. City of Long Beach, 914 F.2d 183, 187 (9th Cir. 1990).[3]

Because there is no confusion on the record before the Court and because the Court has repeatedly given Mr. Koresko the benefit of the doubt -- even in the face of countless protests by plan beneficiaries and persistent filings by the DOL -- the Court has no reason to disturb its findings of fact or conclusions of law. However, in abiding by those same conclusions of law, the Court must reduce the Koresko Defendants total liability from $38, 417, 109.63 to $38, 337, 540.89 (Docket No. 1149). In addition, the Court confirms that Ms. Bonney is permanently enjoined from serving in any capacity with regard to an employee benefit plan under ERISA, as articulated in paragraphs 2 and 4 of the Judgment and Order (Docket No. 1149).

The Court considers each party’s arguments below, beginning with Mr. Koresko’s.

A. Mr. Koresko’s Motion

Mr. Koresko raises issues with regard to the Court’s finding on indemnification and the 2009 Amendment, which he believes each warrants the grant of a new trial, and seven smaller concerns related to specific findings of whether certain legal services “were necessary for the establishment or operation of the plan, ” 29 U.S.C. § 1108(b)(2), which he argues require an amendment in the judgment. Although the Court has addressed each of the larger, more substantive arguments with Mr. Koresko before, the Court will again explain why neither has merit. The Court will also address Mr. Koresko’s concerns regarding the “safe harbor” provision set forth in ERISA Section 408.

The brunt of Mr. Koresko’s motion is that the judgment “is based entirely on an incomplete and one-sided trial record” and is therefore unjust (Docket No. 1168-1). The “failure to provide for the advancement of defense costs” -- by the Court first freezing Mr. Koresko’s bank accounts and then refusing to indemnify him for his legal fees -- was a “fundamental error, ” according to Mr. Koresko, because it “impaired his ability to meaningfully participate in the trial” (Id. ).

To begin, Mr. Koresko’s assertions of “being deprived of counsel” are belied by the record. Mr. Koresko was given ample opportunity to participate in trial and in post-trial motions. Although Dilworth initially represented Mr. Koresko only through his contempt proceedings, which began in October 2013 (Docket No. 530), that representation was expanded in June 2014 so that Mr. Koresko could supplement the trial record and submit proposed findings of fact and conclusions of law (Docket Nos. 894, 898). Not only has Dilworth fully advocated on behalf of Mr. Koresko since that appointment -- filing no less than three separate memoranda alone on Mr. Koresko’s request to supplement the trial record and challenge the DOL’s legal arguments, in addition to various other letters and filings[4] --Dilworth has also been paid $852, 779.21 from trust assets between October 2013 until January 2015 (Docket Nos. 984, 1015, 1036). Perez v. Koresko, No. 09-988, 2015 WL 505471, at *67 (E.D. Pa. Feb. 6, 2015) judgment entered, No. 09-988, 2015 WL 1182846 (E.D. Pa. Mar. 13, 2015). As the Court stated in its Order dated December 9, 2014, “[g]iven [this] number, it is hard to imagine what Mr. Koresko envisions as representation different from what he already has”[5] (Docket No. 1092).

Such representation by Dilworth is on top of Mr. Koresko’s own vigorous advocacy. Mr. Koresko continues to file motions directly with the Court, despite his having counsel, including a 34-page emergency motion to stay the proceedings on December 9, 2014 (Docket No. 1091). In fact, prior to Dilworth joining Mr. Koresko as counsel, Mr. Koresko routinely filed motions directly with the Court, even while he was represented by his previous law firm, Montgomery, McCracken, Walker & Rhoads LLP (“Montgomery McCracken”) (Docket Nos 399, 403, 404, 426, 432, 433, 440, 441, 449, 450, 451, 452). Such motions continued once the Court granted Montgomery McCracken’s motion to withdraw ...


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