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December 17, 1996

HOWARD R. MONTGOMERY, for himself and for all others similarly situated and for Aetna Plywood, Inc. Profit Sharing Plan as successor to Aetna Plywood, Inc., Employee Stock Ownership Plan, Nominal Defendants, Plaintiffs,
AETNA PLYWOOD, INC., a Delaware corporation, JEFFREY DAVIS, a trustee of Aetna Plywood, Inc., ESOP, JOHN FRANCIONE, a trustee of Aetna Plywood, Inc., ESOP, PETER JOHN, a trustee of Aetna Plywood, Inc., ESOP, and PETER THOMSEN, a trustee of Aetna Plywood, Inc., ESOP, Defendants.

The opinion of the court was delivered by: HART

 In this class action, former participants in the Aetna Plywood, Inc. Employee Stock Ownership Plan (the "ESOP") claim that defendants breached their fiduciary duties when defendant Aetna Plywood, Inc. ("Aetna Plywood") repurchased its stock from the ESOP for an allegedly undervalued price. The individual defendants were all trustees of the ESOP during the pertinent time period. In a proposed amended complaint, they are also alleged to have been directors of Aetna Plywood during the pertinent time period. Counts I and II assert breach of fiduciary duty claims under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Count I alleges as a violation of 29 U.S.C. § 1104(a)(1) which requires that investments be made in the interests of the participants and beneficiaries and in a prudent manner. Count II is a claim for a violation of 29 U.S.C. § 1106 which prohibits certain self-dealing. Defendant Davis, one of the trustees, owned all shares of Aetna Plywood not owned by the ESOP and became the sole owner of Aetna Plywood upon the repurchase of the ESOP stock. Plaintiffs move to amend their complaint to add a claim under Delaware law that defendants' conduct, in their role as directors of Aetna Plywood, also constituted a breach of their fiduciary duty to the shareholders of the corporation. Defendants oppose the motion to amend and move for summary judgment on the ERISA counts on the ground that the claims are untimely under ERISA's statute of limitations.

 Summary judgment will be considered first. The parties do not dispute the pertinent underlying facts. On April 24, 1992, the trustees of the ESOP sent a letter to the ESOP participants. *fn1" The letter informed participants that all shares owned by the ESOP would be allocated to individual accounts of participants by the end of fiscal year 1992. The trustees stated that they "believed it would be prudent" to thereafter convert the retirement funds from company stock to more diversified and liquid investments. The trustees further stated that they were "considering" making this change. It was also stated:

The value of Company stock at October 31, 1991 was $ 85.75 per share. There will be a more current valuation by an independent appraisal firm before the conversion from Aetna stock to more diversified and liquid investments can be completed, and you would be advised as to that value. On October 31st, 1992 there will be a final distribution of shares to your account, and then following a final valuation those shares would then be converted to cash and transferred to the Profit Sharing Plan at [Lake Shore National Bank] for investment.

 The participants were also informed that, "if" all the ESOP's shares are repurchased by Aetna Plywood, the only remaining common stock would all be owned by the Davis family.

 The letter closed by stating:

This would be a major financial transaction by the Company, and as such, we would like any input and/or opinions concerning this matter. Therefore, we have enclosed a survey form and a self-addressed stamped envelope for your completion. So that this transaction may be completed in a timely fashion, please respond within ten (10) days. We look forward to your response.

 As of April 1992, named plaintiff Howard Montgomery was a participant in the ESOP, but a former employee of Aetna Plywood working at a competitor. At his deposition, Montgomery testified that he was immediately suspicious, primarily because he distrusted the people who ran the company and the ESOP. He was also suspicious that there would be a new appraisal because the $ 85.75 figure was within a "reasonable window" of the valuation that had been given for years. Montgomery apparently meant he was suspicious that a new appraisal would propose an even lower valuation; he did not testify that he was suspicious that the $ 85.75 valuation was too low.

 The shares were purchased for $ 85.75 per share on June 12, 1992. No evidence is presented as to any further communications with the participants between April 24 and June 12. Neither is any evidence presented as to any communication after June 12 informing participants that the transaction had been completed. As mentioned in the April 24 letter, a current appraisal was obtained. Zweifler Financial Research's appraisal, dated June 1, 1992, values the stock at $ 85.00 per share. There is no evidence that participants were informed that the appraisal had been completed, nor any evidence that they were ever informed of the results of any appraisal. The corporate board of Aetna Plywood did not approve the transaction until August 10, 1992, retroactive to June 12. *fn2" No evidence is presented as to when the ESOP trustees formally approved the transaction.

 Counsel for Montgomery, now counsel for the class, obtained a copy of the Zweifler appraisal in February 1995. The present lawsuit was filed on May 30, 1995.

 The parties agree that the following ERISA provision contains the applicable statute of limitations.

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 ...

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