Solis v. Amtren Corporation et al

Filing 13

OPINION. Signed by Honorable Judge Myron H. Thompson on 12/6/11. (scn, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

HILDA L. SOLIS, Secretary
of Labor, United States
Department of Labor,

)
)
)
)
Plaintiff,
)
)
v.
)
)
AMTREN CORPORATION, AMTREN )
CORPORATION PROFIT SHARING )
PLAN, and CHARLES KIRK
)
LAMBERTH,
)
)
Defendants.
)

CIVIL ACTION NO.
2:11cv460-MHT
(WO)

OPINION
This

lawsuit,

brought

pursuant

to

the

Employee

Retirement Income Security Act of 1964 (ERISA), 29 U.S.C.
§ 1001 et seq., is before the court on a motion for
default final judgment filed by plaintiff Secretary of
Labor

Hilda

L.

Solis

against

defendants

Amtren

Corporation, Amtren Corporation Profit Sharing Plan, and
Charles Kirk Lamberth.

The defendants having failed or

refused to plead or otherwise defend this action; the

clerk of the court having entered default against the
defendants; and upon consideration of the affidavit filed
by the Labor Secretary in support of her motion, the
court concludes that the secretary’s motion should be
granted.

I.
1.

FINDINGS OF FACT

Lamberth is or was at all relevant times a trustee of
the

Amtren

Corporation

Profit

Sharing

Plan

and,

therefore, a “fiduciary” within the meaning of 29
U.S.C. § 1002(21)(A) and a “party in interest” within
the meaning of 29 U.S.C. § 1002(14)(A) and (C).
2.

Amtren Corporation is or was at all times relevant to
this action the plan sponsor and administrator and,
therefore, a “fiduciary” within the meaning

29

U.S.C. § 1002(21)(A) and a “party in interest” within
the meaning of 29 U.S.C. § 1002(14)(A) and (C).
3.

The

Sharing

benefit

plan

Plan

is

within

a
the

2

single-employer-employeemeaning

of

29

U.S.C.

§ 1002(3), subject to coverage under ERISA pursuant
to § 4(a), 29 U.S.C. § 1003(a), and is joined as a
party defendant pursuant to Federal Rule of Civil
Procedure 19(a) solely to ensure that complete relief
may be granted.
4.

Amtren Corporation adopted the Sharing Plan in or
around December 30, 1999, and funded the plan with
yearly discretionary employer contributions.

5.

Lamberth, as trustee, has at all relevant times had
the

authority

to

direct

the

investment

and

distribution of the plan assets.
6.

As

of

December

$

152,475.79

31,
in

2005,

assets

the

Sharing

for

ten

Plan

held

participants,

including a participant account for Lamberth.
7.

Through three transactions in September, October, and
December 2006, Lamberth transferred $ 139,000 of the
Sharing Plan’s assets to Amtren Corporation as a loan
to fund business expansion.

3

8.

Amtren Corporation did not execute any loan documents
for the loan.

9.

Amtren Corporation provided no security or promissory
note for the loan.

10. Amtren Corporation never made any loan repayments or
interest payments to the Sharing Plan.
11. As

of

November

28,

2008,

the

Sharing

Plan

held

$ 2,568.21 in assets for six participants.
12. In

total,

the

Sharing

Plan’s

non-fiduciary

participants’ portion of the loan was $ 77,671.60.
13. Lost earnings associated with this unpaid loan total
$ 36,583.43 as of October 20, 2011.
14. Amtren Corporation is no longer in the business of
manufacturing computer-related devices and has no
employees.
15. The

Sharing

Plan

has

not

made

distributions

to

participants following their separation as required
by the terms of the plan documents.

4

II.
1.

Jurisdiction

CONCLUSIONS OF LAW

is

proper

pursuant

to

29

U.S.C.

§ 1132(e)(1).
2.

Venue lies pursuant to 29 U.S.C. § 1132(e)(2).

3.

In causing or permitting virtually all of the Sharing
Plan’s assets to be loaned back to the sponsoring
company

(Amtren

Corporation)

in

exchange

for

no

security or promissory note and without adequate
record keeping and monitoring, Lamberth and Amtren
Corporation
duties

failed

solely

in

to

discharge

the

interests

their
of

fiduciary

the

plan’s

participants and beneficiaries and for the exclusive
purpose of providing benefits to participants and
beneficiaries

and

defraying

reasonable

plan

administration expenses as required by 29 U.S.C.
§ 1104(a)(1)(A).
4.

In causing or permitting virtually all of the Sharing
Plan’s assets to be loaned back to the sponsoring
company

without

security

5

or

promissory

note

and

without

adequate

record

keeping

and

monitoring,

Lamberth and Amtren Corporation violated their duty
of prudence as imposed by 29 U.S.C. § 1104(a)(1)(B).
5.

In causing or permitting the investment of virtually
all of the Sharing Plan’s assets in loans to Amtren
Corporation, Lamberth and Amtren Corporation failed
to diversify the investments of the plan so as to
minimize the risk of large losses, as required by 29
U.S.C. § 1104(a)(1)(C).

6.

In

causing

Sharing

or

Plan’s

permitting
assets

to

virtually
be

loaned

all

of

the

back

to

the

sponsoring company, Lamberth and Amtren Corporation
caused the plan to engage in a transaction that they
knew or should have known constituted a direct or
indirect lending of money or other extension of
credit between the plan and a party in interest, in
violation of
7.

29 U.S.C. § 1106(a)(1)(B).

In causing or permitting virtually all of the Sharing
Plan’s assets to be loaned back to the sponsoring

6

company, Lamberth and Amtren Corporation caused the
plan to engage in a transaction that they knew or
should have known constituted a direct or indirect
transfer to, or use by or for, the benefit of a party
in interest of assets of the plan, in violation of 29
U.S.C. § 1106(a)(1)(D).
8.

In causing or permitting virtually all of the Sharing
Plan’s assets to be loaned back to the sponsoring
company, Lamberth and Amtren Corporation dealt with
the assets of the plan in their own interest or for
their

own

account,

in

violation

of

29

U.S.C.

§ 1106(b)(1).
9.

In causing or permitting virtually all of the Sharing
Plan’s assets to be loaned back to the sponsoring
company, Lamberth and Amtren Corporation acted with
respect to the plan on behalf of a party whose
interests were adverse to the interests of the plan
or

the

interests

of

7

its

participants

or

beneficiaries,

in

violation

of

make

distributions

29

U.S.C.

§ 1106(b)(2).
10. By

failing

to

participants
documents,

as

required

Lamberth

and

by

to

the

terminated
Plan

Corporation

Amtren

Sharing

have

failed to discharge their duties with respect to the
plan

solely

in

the

interests

of

the

plan’s

participants and beneficiaries and for the exclusive
purpose of providing benefits to participants and
beneficiaries

and

defraying

reasonable

plan

administration expenses as required by 29 U.S.C.
§ 1104(a)(1)(A).
11. By

failing

to

participants
documents,

as

make

distributions

required

Lamberth

and

by
Amtren

to

the

terminated

Sharing

Plan

Corporation

have

failed to discharge their duties in accordance with
the documents and instruments governing the plan as
required by 29 U.S.C. § 1104(a)(1)(D).

8

***

For the foregoing reasons, the Labor Secretary’s
motion

for

default

judgment

will

be

granted.

appropriate judgment will be entered.
DONE, this the 6th day of December, 2011.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE

An