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Mintjal v. Professional Benefit Trust

United States District Court, N.D. Illinois, Eastern Division

August 26, 2016



          Robert M. Dow, Jr. United States District Judge

         Before the Court is Plaintiffs' motion to reconsider or revise [326] the Court's memorandum opinion and order of September 29, 2015 granting in part and denying in part Plaintiffs' motion for summary judgment [317]. For the reasons set forth below, the Court grants Plaintiffs' motion to reconsider [326].

         I. Background

         Beginning in 1995, Plaintiffs' employer, General Produce Distributors, Inc., participated in the Professional Benefit Multiple Employer Welfare Benefit Plan & Trust (“the PBT Trust”), which provided death and living benefits to employees of participating employers. [311], Maven's Add'l Facts ¶ 1-2. Plaintiffs David and Therese Mintjal were beneficiaries of the Trust between 1995 and 2006. Id. at 4. Defendant Professional Benefit Trust, Ltd. (“PBT Ltd.”) was the trustee of the PBT Trust, id. at 3, Defendant PBT Administration, LLC (“PBT Administration”) was the administrator, and a company called Professional and Small Business Council Inc. was the trust sponsor. [281], Pls.' Mem. at 33. Tracy Sunderlage was the CEO and Chairman of the PBT Trust. See, e.g., [274], Ex. 36. Plaintiffs further alleged that Linda Sunderlage, Tracy's wife and business partner, also was a fiduciary as she exercised discretionary authority and had control over the management of assets of the Trust. [145], SAC 7.

         Prior to its termination, the PBT Trust was a multiple employer plan. The assets of the PBT Trust, including contributions by participating employers, were held in a single pool. [145], SAC 5. At the end of the year, each participating employer was designated a “beneficial interest” in the Trust based on the pro rata of its investment or contribution to the Trust. Id. at 6.

         Plaintiffs moved for summary judgment as to various alleged breaches of fiduciary duties committed by Defendants. The alleged breaches occurred in connection with three major events: (1) the termination of the PBT Trust and General Produce's decision to no longer participate in a new single employer model with Maven, (2) certain loans that the PBT Trust made to a West Indies company called Dufferin Capital, Ltd. (“Dufferin”) in 2002 and 2004, and (3) a $2.16 million administrative fee that Tracy Sunderlage awarded himself for administration of the PBT Trust. On September 29, 2015, the Court granted summary judgment in favor of Plaintiffs on (1) the Sunderlages' liability for breaches of their fiduciary duties with regard to the transactions with Maven, (2) Maven's liability as a party in interest in prohibited transactions with the named plan fiduciaries PBT Administration and PBT Ltd., (3) the termination of the PBT Trust, (4) the award of the $2, 163, 000 administrative fee when the PBT Trust was terminated, and (5) SRG Inc. and SRG International's liability for aiding and abetting the breaches of fiduciary duties by Tracy Sunderlage. The Court denied Plaintiffs' motion as to the 2002 and 2004 Loans from the PBT Trust to Dufferin.

         Invoking both Rules 54(b) and 59(e) of the Federal Rules of Civil Procedure Plaintiff now asks the Court to reconsider its summary judgment ruling, arguing that the Court erred when it determined that there was a genuine issue of material fact as to whether Linda Sunderlage was a fiduciary of the PBT Trust within the meaning of 29 U.S.C. §1002(21)(a) under the PBT Trust. and when the Court denied summary judgment on the claim that the 2002 and 2004 loans to Dufferin Capital were prohibited transactions under 29 U.S.C. § 1106. Defendants' responses were due on February 26, 2016, and replies were due March 11, 2016. Defendants failed to file a response, and presumably Plaintiffs stand on their opening brief in support of their motion to reconsider.

         II. Legal Standard

         In “any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties, ” Rule 54(b) of the Federal Rules of Civil Procedure allows the Court to “revise[] at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.” Additionally, Rule 59(e) of Federal Civil Procedure allows a party to direct the court's attention to a “manifest error of law or fact or to newly discovered evidence.” United States v. Resnick, 594 F.3d 562, 568 (7th Cir. 2010). Essentially, the rule allows “a district court to correct its own errors, sparing the parties and the appellate courts the burden of unnecessary appellate proceedings.” Russell v. Delco Remy Div. of Gen. Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995).

         A motion to reconsider asks a court to “reexamine its decision in light of additional legal arguments, a change of law, or perhaps an argument or aspect of the case which was overlooked.” Ahmed v. Ashcroft, 388 F.3d 247, 249 (7th Cir. 2004) (internal quotation omitted); see also Seng-Tiong Ho v. Taflove, 648 F.3d 489 (7th Cir. 2011) (explaining that a court can amend its judgment only if the petitioner can demonstrate a manifest error of law or present newly discovered evidence) (citation omitted); U.S. v. Ligas, 549 F.3d 497, 501 (7th Cir. 2008). However, its purpose is not “to enable a party to complete presenting his case after the court has ruled against him. Were such a procedure to be countenanced, some lawsuits really might never end, rather than just seeming endless.” Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir. 1995); see also Oto v. Metropolitan Life Insurance Company, 224 F.3d 601, 606 (7th Cir. 2000) (“A party may not use a motion for reconsideration to introduce new evidence that could have been presented earlier.”); Divane v. Krull Electric Company, 194 F.3d 845, 850 (7th Cir. 1999); LB Credit Corporation v. Resolution Trust Corporation, 49 F.3d 1263, 1267 (7th Cir. 1995). In regard to the manifest error prong, the Seventh Circuit has explained that a motion to reconsider is proper only when the Court has patently misunderstood a party, or has made a decision outside the adversarial issues presented to the Court by the parties, or has made an error not of reasoning but of apprehension. Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990).

         III. Analysis

         A. Whether Linda Sunderlage Acted as a Fiduciary

         Plaintiffs argue that the Court committed a manifest error of law when the Court failed to apply the appropriate clause of 29 U.S.C. § 1002(21)(a) in connection with its analysis of whether Linda Sunderlage acted as a “fiduciary” for the PBT Trust. In the Court's prior opinion [317], it concluded that there was a disputed issue of material fact in regard to whether Linda Sunderlage was a “fiduciary” within the meaning of ERISA because there was a lack of evidence that she “had any discretionary authority or discretionary responsibility in the administration of the plan” as required by the first clause of 29 U.S.C. § 1002(21)(A)(1). 29 U.S.C. § 1002(21)(A)(1) reads as follows: “Except as otherwise provided in subparagraph (B), a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets.” Plaintiffs point out that the second clause of subsection (1) of 29 U.S.C. § 1002(21)(a) provides that a person who exercises “any” authority or control over the management or disposition of trust assets, including cash in the trust's bank accounts, is considered to be a “fiduciary” when exercising such authority or control, and no showing that the person had discretion over the assets is required.

         In Board of Trustees of Bricklayers v. Wettlin Assocs., 237 F.3d 270, 274 (3d. Cir. 2001), the Third Circuit pointed out that the adjective “discretionary, ” which is “so carefully selected for plan administration and management, is omitted in subsection (i) when dealing with authority or control over the management or disposition of plan ‘assets.” Id. Accordingly, the Third Circuit concluded that since “[t]he statute treats control over the cash differently from control over administration, ” discretionary responsibility over control of assets is not required for an individual to be deemed a fiduciary under 29 U.S.C. § 1002(21)(a). The Third Circuit added that such a reading squares with the Supreme Court's analysis in Pegram v. Herdrich, 530 U.S. 211, 231 (2000). ‚ÄúThat Congress established a lower threshold for fiduciary status where control of assets is at stake is not ...

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