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LOCKREY v. LEAVITT TUBE EMPLES. PROFIT SHARING PLA

July 19, 1991

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 plaintiff John G. Lockrey ("Lockrey") to recover additional benefits allegedly due to him pursuant to the Leavitt Tube Employees' Profit Sharing Plan (the "Plan"). Plaintiff's original complaint asserted claims for both breach of fiduciary duty and estoppel. In its Memorandum Opinion and Order of September 14, 1989, the Court dismissed the estoppel claim on the ground that estoppel was unavailable in an ERISA action. See Lockrey v. Leavitt Tube Employees' Profit Sharing Plan, 1989 U.S. Dist. LEXIS 10875 (N.D. Ill. Sept. 14, 1989). Subsequent to that decision, however, the Seventh Circuit recognized the availability of estoppel claims in at least some ERISA actions. See Black v. TIC Investment Corp., 900 F.2d 112 (7th Cir. 1990). After further briefing on the impact of the Black decision on plaintiff's claim for estoppel, the Court, in its opinion of October 15, 1990, held that an estoppel theory was available to plaintiff in the circumstances of this case. The Court, therefore, vacated that portion of its earlier opinion dismissing plaintiff's estoppel claim. See Lockrey v. Leavitt Tube Employees' Profit Sharing Plan, 748 F. Supp. 662 (N.D. Ill. 1990). Shortly thereafter, defendants filed the instant motion for partial summary judgment. Defendants contend in their motion that they are entitled to summary judgment on plaintiff's estoppel claim because plaintiff cannot establish the existence of a misleading representation by defendants upon which he relied. In response to defendants' motion, plaintiff filed his own motion for partial summary judgment on the estoppel claim. The Court will deny defendants' motion for partial summary judgment but will grant partial summary judgment in favor of plaintiff on Count I of plaintiff's original complaint.

 II. FACTS

 The facts relating to the instant motions are largely undisputed. Plaintiff was born on April 2, 1928. (Plaintiff's Statement of Uncontested Facts ("Pl. 12(m)") para. 2.) He has been employed by the Leavitt Tube Division of UNR, Inc. or its predecessor continuously since 1962, and he has participated in the Plan continuously since 1969. (Id. at PP 1, 3.) At all times relevant hereto, the Plan has operated to provide deferred compensation benefits to UNR employees. The parties agree, therefore, that the Plan constitutes an employee benefit plan within the meaning of the ERISA statute. (Id. at P 6.) As of December 31, 1987, the Plan held assets of $ 6,479,022.00 and covered 112 active participants. (Id. at P 7.)

 Section 2.2 defines a participant's accrued benefit in the Plan as the "Participant's interest in the Trust composed of such Participant's Accounts." That section further provides that "the value of an accrued benefit at any time during any Plan Year shall be its value as adjusted on the coinciding or immediately preceding Valuation Date." (Id. at P 8(b); Defendants' Statement of Uncontested Facts ("Def. 12(m)") para. 1(b).) The applicable valuation dates are defined in § 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." (Pl. 12(m) para. 8(c); Def. 12(m) para. 1(c).) Section 7.4(b), (d) of the Plan permits a participant who has reached the age of 59-1/2 to withdraw from the Plan with the consent of the Plan Committee. (Def. 12(m) para. 1(a); Pl. 12(m) para. 8(a).)

 On or about June 6, 1986, the Plan Committee issued to participants a Summary Plan Description. Accompanying this document was a transmittal letter stating that participants having questions regarding the Plan could direct those questions either to Roy Herman ("Herman") or Leonard Donofrio ("Donofrio"), two members of the Plan Committee. (Pl. 12(m) paras. 10-11.) As the Vice-President of Finance, Donofrio customarily fielded questions from participants regarding the Plan. (See Pl. 12(m) para. 15; Defendants' Response to Plaintiff's Statement of Uncontested Facts ("Def. 12(n)") para. 15.) In September 1987, plaintiff and several other Plan participants attended a meeting with Donofrio to discuss various matters relating to the operations of Leavitt Tube. At the conclusion of that meeting, there was a fifteen- to thirty- minute discussion relating to the Plan. (Pl. 12(m) paras. 16-18.) In the course of this discussion and in response to a specific question relating to the ability of plaintiff to withdraw his benefits upon reaching the age of 59-1/2 on October 2, 1987, Donofrio told plaintiff that he could withdraw from the Plan and receive an immediate distribution of benefits, valued as of September 30, 1987, the preceding quarterly valuation date. (Id. at P 19.) Donofrio also stated that plaintiff could wait until the latter part of the fourth quarter of 1987 to decide whether to withdraw from the Plan and still have his account valued as of September 30. (Id. at P 20.)

 Plaintiff turned 59-1/2 on October 2, 1987, and he therefore became eligible for an immediate withdrawal of his benefits from the Plan. (Id. at P 22.) Valued as of September 30, 1987, the valuation date applicable on October 2, plaintiff's Plan benefits were worth $ 131,288.00. (Id. at P 21.) Plaintiff did not elect to withdraw his benefits on October 2, however. Instead, in reliance on Donofrio's statements at the above-described meeting, plaintiff delayed an election to withdraw until later in the fourth quarter of 1987. (Id. at P 23; Appendix to Pl. 12(m) at Ex. K, Lockrey Dep. Tr. at 80-81.) Between October 2, 1987 and the date of plaintiff's withdrawal election, however, the stock market suffered a significant decline, with the Dow Jones Industrial Average falling over 500 points on October 19, 1987. (Pl. 12(m) para. 24; Def. 12(m) para. 5.)

 On November 2, 1987, plaintiff orally requested to withdraw from the Plan. He followed up with a written request on November 10. (Pl. 12(m) para. 25; Def. 12(m) para. 3.) On November 11, 1987, the Plan Committee, pursuant to § 2.51 of the Plan, created new valuation dates for the fourth quarter of 1987 and applied those dates to all post-crash claims. (Def. 12(m) para. 6.) The additional dates were October 20, October 31, November 10, November 20, November 30, December 10, and December 20, 1987. (Pl. 12(m) para. 26.) Prior to November 12, 1987, the Plan Committee never had designated additional valuation dates pursuant to § 2.51. (Def. 12(m) para. 9.) By letter dated November 12, 1987, Donofrio informed plaintiff that his request for withdrawal would be granted but that the value of his benefits would be determined by the new October 31, 1987 valuation date. (Def. 12(m) para. 7.) Lockrey requested that the Committee review this decision, and subsequent to such a review, the Committee affirmed its initial determination. (Id.) Valued pursuant to the October 31 valuation date, plaintiff's benefits under the Plan were worth $ 97,511.67, and plaintiff later received this amount. (Pl. 12(m) para. 29.)

 Plaintiff filed the instant action against the Plan and the members of the Plan Committee on September 19, 1988. On defendants' motion, the Court dismissed with prejudice plaintiff's estoppel claim and its claim for an improper decrease of benefits pursuant to 29 U.S.C. § 1054(g)(1). On May 9, 1990, after reviewing the Seventh Circuit's opinion in Black, however, the Court requested further briefing on the estoppel issue. By its Memorandum and Opinion of October 15, 1990, the Court determined that, pursuant to Black, a claim for estoppel was available with respect to the ERISA plan at issue in this case. The Court also rejected defendants' argument that plaintiff had failed to allege facts sufficient to state a claim for estoppel.

 III. ANALYSIS

 On a motion for summary judgment, the moving party bears the burden of establishing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See New Burnham Prairie Homes, Inc. v. Village of Burnham, 910 F.2d 1474, 1477 (7th Cir. 1990); Fed. R. Civ. P. 56(c). The Court must consider the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmovant, and where there are doubts as to whether a genuine factual dispute exists, the Court must resolve such doubts in favor of the non-moving party. Burnham, 910 F.2d at 1477. However, once the movant has satisfied its initial burden, the non-moving party then has the affirmative burden to come forward with evidence demonstrating that there is a genuine issue of material fact which must reach the factfinder. Id.; Baucher v. Eastern Indiana Production Credit Association, 906 F.2d 332, 334 (7th Cir. 1990). A disputed fact is material when it is "outcome determinative under the governing law." Whetstine v. Gates Rubber Co., 895 F.2d 388, 392 (7th Cir. 1990); see also Shlay v. Montgomery, 802 F.2d 918, 920 ...


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