United States District Court, N.D. Illinois, Eastern Division
DR. ALAN RESNICK AND DR. JAMES THOMPSON, derivatively, on behalf of the ASSOCIATED ALLERGISTS & ASTHMA, LTD. DEFINED BENEFIT PENSION PLAN & TRUST; and ASSOCIATED ALLERGISTS & ASTHMA, LTD., Plaintiffs,
DR. DONALD SCHWARTZ; RONALD SPITZ; and RONALD SPITZ AND ASSOCIATES, INC., Defendants.
MEMORANDUM OPINION AND ORDER
Honorable Edmond E. Chang United States District Judge
years ago, Dr. Donald Schwartz withdrew, in a lump sum, over
$800, 000 in benefits from his pension-plan account with
Associated Allergists. R. 29, Corr. Am. Compl. at 3 ¶
But he should not have taken a lump sum: under federal
pension-benefits law (known by its acronym, ERISA), Dr.
Schwartz was considered a “highly compensated”
employee, so he was required to take annuity payments over
time instead of a lump-sum payment. Id. at 3 ¶
3. Eventually, the Plan's current fiduciaries, Drs. Alan
Resnick and James Thompson, brought suit against both Dr.
Schwartz and the Plan's then-actuaries, Ronald Spitz and
Ronald Spitz and Associates (collectively the Defendants),
alleging ERISA violations as well as Illinois state claims.
See Corr. Am. Compl. at 12-22.
in the case, both Dr. Schwartz and the Spitz Defendants
independently moved to dismiss the claims against them. R.
32, Spitz's Mot. Dismiss Br.; R. 36-1 Schwartz's Mot.
Dismiss Br. As relevant here, Schwartz argued that the
Plaintiffs' claims were barred by ERISA's three-year
statute of limitations. The Court agreed with Schwartz in
general, but nevertheless denied Schwartz's motion to
dismiss because the fraudulent-concealment exception to
ERISA's statute of limitations might apply. Whether the
exception applied, though, could not be resolved at the
pleading stage, so the Court allowed the parties to take
discovery on that limited issue. After the parties finished
the limited discovery, the Defendants moved for summary
judgment, R. 87, Defs.' Mot. Summ. J., and t1he
Plaintiffs cross-moved against the limitations defense, R.
89, Pls.' Mot. Summ. J. For the reasons discussed below,
the Defendants' motion is granted.
Opinion assumes familiarity with the facts described in the
prior opinion that decided the Defendants' motions to
dismiss. R. 61, 9/3/18 Opinion at 2-6; Resnick v.
Schwartz, 2018 WL 4191525, at *1-2 (N.D. Ill. Sept. 3,
2018). In deciding the motion for summary judgment, the Court
must view the evidence in the light most favorable to the
non-moving party. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986). Because both
parties have both moved for summary judgment, the Court will
consider the evidence in the light most favorable to each
party to see if the opposing party is entitled to summary
in early 2000, Dr. Donald Schwartz retired and became
eligible to receive payments from his pension plan with
Associates Allergists & Asthma (for clarity's sake,
this opinion will call it the “Plan”). R. 86,
DSOF ¶¶ 4, 8; R. 89-2, Pls.' Resp. DSOF
¶¶ 4, 8. At the time of his retirement, the total
amount due to Schwartz from the Plan was at least $822, 596.
DSOF ¶ 8; Pls.' Resp. DSOF ¶ 8. Schwartz chose
to have those pension benefits paid in a single lump sum,
rather than smaller annual payouts through an annuity. DSOF
¶ 11; Pls.' Resp. DSOF ¶ 11. On February 16,
2000, Schwartz received a lump-sum payment of $822, 596. DSOF
¶ 17; Pls.' Resp. DSOF ¶ 17. About a year
later, Ronald Spitz, the actuary for the Plan from 1999
through 2016, mailed Associated Allergists the IRS forms
related to participant distributions for calendar year 2000,
which included Schwartz's 2000 Form 1099-R. DSOF ¶
19; Pls.' Resp. DSOF ¶ 19. That form reflected the
$822, 596 lump-sum distribution to Schwartz that was made
back in February 2000. Id.
time of the distribution, Schwartz did not personally
communicate with Dr. Alan Resnick or Dr. James Thompson, who
were Trustees of the Plan (as well as participants and
beneficiaries of the Plan), about the distribution. DSOF
¶ 21; Pls.' Resp. DSOF ¶ 21. But neither did
Schwartz take any overt acts to conceal the distribution from
Resnick or Thompson. DSOF ¶ 22; Pls.' Resp. DSOF
¶ 22. Either way, the Plan, Resnick, and Thompson all
knew about the lump-sum disbursement the day it was made.
DSOF ¶¶ 17-18; Pls.' Resp. DSOF ¶ 17-18;
R. 89-1, PSOF ¶ 1. What Resnick and Thompson did not
know at the time, however, was that Schwartz was restricted
from taking a lump-sum payment from the pension fund under
ERISA because he was a “highly compensated”
employee, as defined by the Internal Revenue Code. DSOF
¶¶ 12-13; Pls.' Resp. DSOF ¶¶ 12-13.
Since at least 1994, the Plan has included that regulatory
restriction against highly compensated employees in the
written terms of the Plan document. DSOF ¶ 14; Pls.'
Resp. DSOF ¶ 14. But it was not until May 2016, when the
Plan's new actuary discovered the applicability of the
restriction, that Resnick and Thompson, along with the other
Trustees, beneficiaries, and participants of the Plan,
actually found out that Schwartz's lump-sum distribution
was not proper under the law. PSOF ¶ 6; Defs.' Resp.
PSOF ¶ 6.
seventeen years after the lump-sum distribution, Resnick and
Thompson sued Schwartz and Spitz for the illegal lump-sum
withdrawal. The Plaintiffs asserted in their Amended
Complaint that Dr. Schwartz violated his fiduciary duties to
the Plan under ERISA (Count 1) and participated in a
prohibited transaction (Count 2). The Plaintiffs further
contended that Spitz too participated in the prohibited
transaction (Count 3), and that Spitz should be ordered to
disgorge his fees (Count 4). The Plaintiffs also brought
supplemental state law claims against Spitz (Counts 5, 6, and
Both Dr. Schwartz and the Spitz Defendants independently
moved to dismiss the claims against them, arguing that the
Corrected Amended Complaint (for convenience's sake, the
remainder of the Opinion will drop the
“Corrected”) failed to adequately state a claim,
and in any event, the claims are barred by the statute of
limitations. See Spitz's Mot. Dismiss Br.;
Schwartz's Mot. Dismiss Br.
Court granted Spitz's motion to dismiss the ERISA claims,
and denied Schwartz's motion. Resnick, 2018 WL
4191525, at *10. As relevant here, the Court held that, on
the face of the Amended Complaint, the claims against
Schwartz were barred by ERISA's three-year statute of
limitations because the lump-sum distribution happened in
2000 and the Plaintiffs knew about the distribution at that
time. Id. at *6. But the Plaintiffs' had invoked
ERISA's longer fraud-or-concealment statute of
limitations, which gives a plaintiff “six years after
the date of discovery of such breach or violation” to
commence an action, 29 U.S.C. § 1113. Id. at
*6-7. And at that stage of the case, the Plaintiffs were not
required to plead the facts underlying the exception. See
id.; Xechem, Inc. v. Bristol-Myers Squibb Co.,
372 F.3d 899, 901 (7th Cir. 2004). So the Court denied
Schwartz's motion to dismiss to allow for limited
discovery on whether the fraudulent-concealment exception
applies. Resnick, 2018 WL 4191525, at *7. The Court
also stayed the state law claims against Spitz until the
limitations defense as to Schwartz was resolved.
finishing the limited discovery, both sides have now moved
for summary judgment on the statute of limitations defense.
Schwartz and Spitz filed a combined motion arguing that the
undisputed facts revealed in discovery now demonstrate that
ERISA's fraudulent-concealment exception does
not apply. In response, the Plaintiffs argue that
the undisputed facts show that the exception applies.
Standard of Review
judgment must be granted “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). A genuine issue of material fact exists
if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In
evaluating summary judgment motions, courts must “view
the facts and draw reasonable inferences in the light most
favorable to the” non-moving party. Scott v.
Harris, 550 U.S. 372, 378 (2007) (cleaned
The Court “may not weigh conflicting evidence or make
credibility determinations, ” Omnicare, Inc. v.
UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir.
2011) (cleaned up), and must consider only evidence that can
“be presented in a form that would be admissible in
evidence.” Fed.R.Civ.P. 56(c)(2). The party seeking
summary judgment has the initial burden of showing that there
is no genuine dispute and that they are entitled to judgment
as a matter of law. Carmichael v. Village of
Palatine, 605 F.3d 451, ...