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LOCKREY v. LEAVITT TUBE EMPLES. PROFIT SHARING PLA

October 15, 1990

JOHN G. LOCKREY, Plaintiff,
v.
LEAVITT TUBE EMPLOYEES' PROFIT SHARING PLAN, an Employee Benefit Plan; LEONARD DONOFRIO, ROY HERMAN, KENNETH LEAVITT, WILLIAM LEAVITT and LEON MEYER, Individually and as Members of the Fiduciary Committee Established Under the Leavitt Tube Employees' Profit Sharing Plan, Defendants


Ilana Diamond Rovner, United States District Judge.


The opinion of the court was delivered by: ROVNER

ILANA DIAMOND ROVNER, UNITED STATES DISTRICT JUDGE

 I. INTRODUCTION

 This is an ERISA action brought by John G. Lockrey to recover additional benefits allegedly due pursuant to the Leavitt Tube Employees' Profit Sharing Plan. The lawsuit originally asserted claims for both breach of fiduciary duty and estoppel. In a Memorandum Opinion and Order of September 14, 1989, the Court dismissed the estoppel claim on the ground that estoppel was not available in an ERISA action. On April 18, 1990, the Seventh Circuit Court of Appeals, in the case of Black v. TIC Investment Corp., 900 F.2d 112 (7th Cir. 1990), recognized the availability of estoppel in at least some ERISA actions. On May 9, 1990, this Court sua sponte ordered the parties to submit briefs addressing whether Black warranted reinstatement of plaintiff's ERISA claim. The Court now holds that although Black allows estoppel in some ERISA contexts the present case is not an instance where estoppel may apply.

 II. FACTS

 As in its decision on defendants' motion to dismiss, the Court accepts as true the factual allegations of the complaint. Plaintiff was born on April 2, 1928. In 1962, he became employed by Leavitt Tube Company, Inc. He is currently employed by that company's successor, UNR, Inc.

 Section 2.2 of the Plan defines a participant's accrued benefit as the "Participant's interest in the Trust composed of such Participant's Accounts." Section 2.2 further provides that the accrued benefit shall be valued according to its value "as adjusted on the coinciding or immediately preceding Valuation Date." The valuation dates are defined in Section 2.51 as "March 31, June 30, September 30 and December 31 of each year and such additional dates as the Committee shall deem appropriate." Section 7.4(d) allows a fully vested participant who has reached the age of 59 1/2 to withdraw from the Plan, with the consent of the Plan Committee and to receive distribution of his accrued benefit.

 In early September, 1987, a group of participants, including plaintiff, attended a meeting with defendant Leonard Donofrio, a member of the Plan Committee. At that meeting, Donofrio stated that when plaintiff reached the age of 59 1/2 on October 2, 1987, he could withdraw from the plan and receive an immediate distribution of benefits. If he did so, the amount of his distribution would be determined as of the last quarterly valuation date -- presumably September 30, 1987. Donofrio also advised plaintiff that he could wait until later in the quarterly period to effect his withdrawal. If plaintiff waited until late December, according to Donofrio, plaintiff would have the choice of withdrawing then, and having his benefits determined according to the September 30, 1987 valuation date, or waiting until early January, 1988, and having his benefits determined as of the December 31, 1987 valuation date. The value of plaintiff's benefits determined according to the September 30, 1987 valuation date was approximately $ 130,000.

 Based on Donofrio's statements, plaintiff elected to wait until later in the quarter before withdrawing from the Plan. On October 19, 1987, plaintiff's best-laid plans were destroyed when the stock market crashed, with the Dow Jones Industrial Average dropping over 500 points. In early November, plaintiff elected to withdraw from the Plan.

 Shortly after plaintiff elected to withdraw, the Plan Committee established additional valuation dates for the fourth quarter of 1987. Those dates were October 20, October 31, November 10, November 20, November 30, December 10 and December 20. Donofrio then informed plaintiff in writing that plaintiff's benefits would be determined as of the newly established October 31 valuation date. The resulting value of plaintiff's benefits was $ 97,511.67.

 On September 19, 1988, plaintiff filed this action against the Plan and members of the Plan Committee. Count I of the original complaint alleged that defendants breached their fiduciary duties by failing to calculate plaintiff's benefits in accordance with the Plan's provisions and defendants' representations. Count II alleged that defendants breached their fiduciary duties by retroactively decreasing accrued benefits. Upon defendants' motion to dismiss, the Court noted that each of the two counts seemed to subsume more than one claim. Both counts alleged breach of fiduciary duty, but Count I also appeared to include an estoppel claim and Count II also appeared to include a claim for improper decrease of benefits under 29 U.S.C. § 1054(g)(1). The Court dismissed the estoppel claim and the § 1054(g)(1) claim with prejudice and dismissed the fiduciary duty claims without prejudice. In dismissing the estoppel claim, the Court relied principally on dictum in Reiherzer v. Shannon, 581 F.2d 1266 (7th Cir. 1978), in which the Seventh Circuit stated that it had "serious doubts . . . as to the advisability of employing estoppel principles in determining whether an individual will receive benefits from an employer-funded union pension plan." 581 F.2d at 1267 n. 1.


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