Wright et al v. Elton Corporation et al

Filing 442

MEMORANDUM AND ORDER re DKT. No. 395 , 399 , 402 , 404 , 412 414 and 433 . Signed by Judge Joseph F. Bataillon on 3/29/2022. (cna, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

JOSEPH WRIGHT, and T. KIMBERLY
WILLIAMS,
Plaintiffs/Counterdefendants,

C.A. NO. 17-286-JFB

vs.
ELTON CORPORATION, GREGORY
FIELDS, FIRST REPUBLIC TRUST
COMPANY OF DELAWARE LLC, and
M.C. DUPONT CLARK EMPLOYEES
PENSION TRUST,

MEMORANDUM AND ORDER

Defendants/Counterclaimants/Third-party
Plaintiffs,
vs.
JAMES B. WYETH, Solely as Executor
and Personal Representative of the Estate
of Phyllis M. Wyeth, MARY MILLS ABEL
SMITH, CHRISTOPHER T. DUPONT,
MICHAEL DUPONT, LUCY DUNNE,
representative for HELENA DUPONT
WRIGHT, KATHARINE D. GAHAGAN and
JAMES MILLS,
Third-party defendants.
This matter is before the Court on the following motions: plaintiff Kimberly
Williams’s motion for summary judgment, D.I. 395; third-party plaintiffs First Republic
Trust Company of Delaware LLC’s, M.C. DuPont Clark Employees’ Pension Trust’s
(hereinafter the “Trust Defendants”) motion for summary judgment, D.I. 399;1 third-party

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Helena DuPont Wright and James Mills were originally plaintiffs in this action, as well as counterclaim
defendants. The Court granted a motion to dismiss Mrs. Wright’s and Mr. Mills’ claims without prejudice.
D.I. 374. Those parties remain in the case as defendants to the third-party claim. Though the docket and

1

defendants’ Katharine D. Gahagan, James Mills, Mary Mills Abel Smith, Helena Dupont
Wright, James B. Wyeth, Phyllis M. Wyeth, and Christopher T. duPont’s (hereinafter, “the
Grandchildren”) motion to strike, D.I. 402; the Trust Defendants’ cross-motion for
summary judgment, D.I. 412; the Grandchildren’s motion for summary judgment, D.I. 414;
and the Trust Defendants’ and Grandchildren’s’ joint motion to sever, D.I. 433.2
I.

BACKGROUND
A.

Procedural History

This action involves a Trust, known as the Mary Chichester duPont Clark Pension
Trust (the “Trust”), that was created to provide retirement benefits to household
employees of the duPont family, including those working for the grandchildren of the
Trust’s Settlor, Mary Chichester duPont. Originally, two of the grandchildren, Helena
duPont Wright and James Mills, sued Elton Corporation (“Elton Corp.”) and Gregory
Fields, who were then alleged to be trustees of the Trust, in the District of Maryland
alleging, among other things, that Defendants improperly operated the Trust and
mishandled the Trust’s assets in violation of ERISA, 29 U.S.C. § 1132(a)(3), D.I. 25,
amended complaint. In their second amended complaint, the plaintiffs, characterizing
themselves as employers and plan administrators, added their two employees, Kimberley
Williams and Joseph Wright, as plaintiffs and added First Republic Trust Co. of Delaware,
the successor trustee, as a defendant.

The district court in Maryland granted the

defendant’s motion to dismiss for improper venue and transferred the action to this Court,
D.I. 46.

pleadings refer to the various parties as counterclaimants and counterclaim defendants, they are actually
parties to the third-party claim and will be referred to as such.
2
Also pending is a motion to expedite and stay interim deadlines, D.I. 404, which will be denied as moot.

2

Defendant First Republic then filed protective counterclaims against plaintiffs
Helen DuPont Wright and James Mills and brought a third-party complaint against the
other then-living Grandchildren/Employers: Mrs. Abel Smith, Christopher duPont, Michael
duPont, Phyllis M. Wyeth, and Mrs. Gahagan, seeking a declaratory judgment that each
of them is separately liable to fund the Plan as required by ERISA if the Trust is an ERISA
plan, D.I. 61.
This Court bifurcated the case to determine first whether ERISA governed the
Trust, then, if so, whether ERISA violations occurred. The parties filed cross-motions for
summary judgment on the first issue and the Court held that that the Plan is an ERISA
plan and that the plaintiffs Williams and Joseph Wright are participants in the Plan. D.I.
132, Memorandum and Order at 14. The Court further stated
It is clear that members of the duPont family established, maintained, and
ratified the Trust over the years. The evidence is sufficient to demonstrate
that present and former trustees actively managed the Trust for the benefit
of the duPont family members’ domestic employees. Thus, the Court finds
that the “established or maintained” element is satisfied.
Id. at 13. The Court also found an interstate nexus. Id. at 12. Further, the Court found
An intention to provide benefits on a regular and long-term basis is
evidenced by the DuPont heirs’ continued involvement in or acquiescence
to the Trust which is shown in meeting minutes and correspondence.
Evidence that other employees are in line for benefits also supports this
conclusion.
Id. at 14.
The Trust Defendants moved for entry of final judgment on, and/or to sever, the
discrete legal claim “that the [Trust] is governed by ERISA,” in order to enable an
immediate appeal to the Third Circuit. D.I. 133 at 1. The Grandchildren joined in that
motion and also requested certification of an interlocutory appeal. D.I. 134. The Court
denied those requests. D.I. 176. The Trust Defendants and the Grandchildren also filed

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cross-motions for summary judgment and or judgment as to the Trust Defendants’ thirdparty claim. D.I. 142 and 161. The Court denied those motions as premature, pending
discovery, D.I. 176.
Later, the Trust Defendants again moved to clarify or stay the Court’s
determination that the Trust was governed by ERISA. D.I. 212. The Court denied that
motion, D.I. 280, and the Third Circuit Court of Appeals dismissed an appeal of the order
for lack of jurisdiction, D.I. 428-2.
In December 2020, the Court denied the plaintiff’s motion for leave to file a third
amended complaint adding the Grandchildren as defendants and asserting class action
allegations, holding that “the action can be properly disposed of as it is presently
configured.” D.I. 327, at 7. The Court noted that the relief afforded in this action will apply
to all plan participants even without class certification. Id. Further, the Court stated
As far as realigning the parties, the Court agrees that interests of plaintiffs
may be at odds. The Court finds it may make sense to realign the parties.
However, since this is a bench trial, it is not necessary to do so formally.
The pretrial order will supersede the pleadings and issues and claims can
be clarified at that time. The same result can be achieved in the context of
the pretrial order and by adjusting the order of proof. The Court will structure
the presentation of the case accordingly.
Id. Also, the Court found that
[t]he gravamen of the complaint is, and has always been, equitable relief for
breaches of duty in connection with the administration of an ERISA plan, no
matter how characterized. Employers, plan sponsors, administrators, and
fiduciaries are accountable under ERISA. Any new allegations in the
proposed amended complaint relate to the same factual and legal scenario
presented in the second amended complaint.
Id.
Thereafter, in April 2021, the Court granted a motion to dismiss Mrs. Wright’s and
Mr. Mills’ claims without prejudice. D.I. 374. Those parties remain in the case as
defendants as to the third-party claim.
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B.

Facts

Mary Chichester duPont created the Trust at issue in 1947. The record shows she
designated herself; her children, A. Felix duPont, Jr., Lydia C. duPont, and Alice duPont
Mills; her daughter-in-law Allaire Crozier duPont; and her grandchildren as “Qualified
Employers” in the Trust. D.I. 415-2, Ex. 1, Trust at 2. She defined a “Pensioner” as “any
domestic employee or any employee rendering secretarial, accounting or other
assistance in the management of his employer’s private, financial or social affairs” for a
Qualified Employer, and who was continuously employed for 10 years and reached age
65 or met certain other criteria. Id. She provided that a Pensioner would receive an
annual benefit of 60% of his or her annual salary or wages in effect when the Pensioner
met the eligibility requirements, plus an additional 1% for each year of service above 10
years. Id. at 2-3. She also provided for benefits for deceased Pensioners’ surviving
spouses and other dependents. Id.
The Trust provided that it
shall continue until twenty (20) years after the death of the last surviving
grandchild of the Trustor who is living at the execution of the trust
agreement or until the entire corpus of the trust and all additions thereto and
all income accrued thereon shall be exhausted, whichever event shall
happen first.
Id. at 5. The Trust states that the Trustees
shall have power: . . . (g) to accept additions to this trust by way of gift,
bequest, or otherwise from any person or persons whomsoever, to hold
such additions under the terms hereof, and to merge such additions in this
trust to be administered and distributed in accordance with the terms hereof.
Id. at 6-7.

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Mary Chichester duPont funded the Trust with 50 shares of common stock of
Christiana Securities Company.3 Id. at 10. The original trustees of the trust were Mary
Chichester duPont’s three children – Lydia C. duPont, A. Felix duPont and Alice duPont
Mills. D.I. 415-2, Ex. 1, Trust at 1. The Trust authorizes its Trustees to appoint their
successors and to appoint successors for Trustees who die. Id. at 4. Lydia duPont died
in 1958; the remaining Trustees appointed their sister-in-law also a Qualified Employer)
Allaire Crozier duPont as a successor trustee. D.I. 396-2, Ex. 2.
In about 1990, Felix duPont incorporated his family office as Elton Corp. and
employed Mr. Fields as Elton’s business manager, D.I. 396-7, Ex. 6, Deposition of
Gregory Fields at 15-18. Felix duPont was the sole owner of Elton Corp. Id. at 19. Elton
Corp. continued to serve as the family office for Felix duPont and his children, Katharine
“Kitten” duPont Gahagan, Christopher duPont, and Michael duPont. Id. at 34-35. In July
1991, Felix duPont appointed Elton Corp. as his Co-Trustee and successor Trustee of
the Plan and on Felix duPont’s death in 1996, Elton Corp. became the sole Trustee. Id.
at 18-19. Felix’s children, Katherine Gahagan, Christopher du Pont and Michael duPont
became Elton Corp.’s owners, with Katherine Gahagan owning 60% and her brothers
splitting the remaining 40%. Id. at 22-23. Katherine Gahagan also became president of
Elton Corp. and holds that position to this day; her brothers became vice presidents. Id.
at 23-24. Michael duPont died in November 2019. D.I. 167. Elton Corp. served as
Trustee until 2015, when First Republic Trust Company of Delaware took over. D.I. 3969, Ex. 8 at 7. First Republic was selected because an investment manager for the Plan
Christiana was an investment company established in 1915 as a “receptacle for a huge block of Du Pont
common stock” through which the duPont family’s “dominant faction made sure that its massive holdings
in Du Pont would be voted as a block.” See In the Matter of Christiana Sec. Co. E. I. Du Pont De Nemours
& Co., 45 S.E.C. 649, 1974 WL 161445 (Dec. 13, 1974). In 1977, the Supreme Court cleared the way for
Christiana to merge into DuPont and the Trust’s Christiana stock became duPont stock. See E. I. du Pont
de Nemours & Co. v. Collins, 432 U.S. 46, 57 (1977).
3

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had moved from PNC Bank to First Republic Bank, and Mrs. Gahagan wished for the
Plan to follow. Id.; see D.I. 396-7, Ex. 6 at 160-62. In connection with the transition to
First Republic, Elton Corp. requested that each of the still living Qualified Employers
execute an agreement to indemnify First Republic. D.I. 396-8, Ex. 7 at 64-88.
The Trust expressly authorizes the Trustees to “retain any and all stocks, bonds,
notes, securities and/or other property hereby or hereafter transferred to this trust” and to
“accept additions to this trust by way of gift, bequest, or otherwise from any person or
persons whomsoever.” D.I. 415-2, Ex. A, Trust at 6-7. The Trust itself defines the duties
and responsibilities of the trustees as follows: (1) to maintain and invest the assets of the
Trust, (2) to apply the criteria in the Trust to determine whether potential beneficiaries that
seek benefits are entitled to benefits and, if so, (3) to calculate and determine the amount
of such benefits and to pay them to the approved
beneficiary. Id. at 1.
Additional facts are set out in the Court’s earlier orders and need not be repeated
here. See D.I. 132, 280, 176, and 327. The Proposed Pretrial Orders are due March 21,
2022, the Pretrial Conference is set for March 25, 2022, and the case is currently set for
trial in April 2022.
II.

LAW
A.

Summary Judgment

“The court shall grant summary judgment 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). The moving party bears the burden of demonstrating the
absence of a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 n. 10 (1986). A party asserting that a fact cannot be—or,
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alternatively, is—genuinely disputed must be supported either by citing to “particular parts
of materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including those made for the purposes
of the motions only), admissions, interrogatory answers, or other materials,” or by
“showing that the materials cited do not establish the absence or presence of a genuine
dispute, or that an adverse party cannot produce admissible evidence to support the fact.”
Fed. R. Civ. P. 56(c)(1)(A) & (B).

If the moving party has carried its burden, the

nonmovant must then “come forward with specific facts showing that there is a genuine
issue for trial.” Matsushita, 475 U.S. at 587 (internal quotation marks omitted). A factual
dispute is genuine where “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, 247-48
(1986).
B.

ERISA Remedies

One of the stated purposes of the statute is to “assur[e] the equitable character of
[employee benefit] plans.” 29 U.S.C. § 1001(a); see Gallione v. Flaherty, 70 F.3d 724,
727 (2d Cir.1995). “[I]t is well-settled that ERISA grants the court wide discretion in
fashioning equitable relief to protect the rights of pension fund beneficiaries.” Katsaros v.
Cody, 744 F.2d 270, 281 (2d Cir.1984).
Under ERISA § 502(a)(3), a participant, beneficiary, or fiduciary is allowed to
“obtain other appropriate equitable relief” to redress violations of relevant parts of ERISA
“or the terms of the plan.” 29 U.S.C. § 1132(a)(3) (emphasis added). Section 1132(a)(3)
“authorizes the kinds of relief ‘typically available in equity’ in the days of ‘the divided
bench,’ before law and equity merged.” US Airways, Inc. v. McCutchen, 569 U.S. 88, 94–
95 (2013) (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993) (emphasis
8

deleted)). The fact that relief takes the form of a money payment does not remove it from
the category of traditionally equitable relief. CIGNA Corp. v. Amara, 563 U.S. 421, 441–
42 (2011). “Equity courts possessed the power to provide relief in the form of monetary
‘compensation’ for a loss resulting from a trustee's breach of duty, or to prevent the
trustee's unjust enrichment.” Id. (stating “prior to the merger of law and equity this kind
of monetary remedy against a trustee, sometimes called a ‘surcharge,’ was ‘exclusively
equitable’) (quoting Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 464
(1939)). The surcharge remedy extended to a breach of trust committed by a fiduciary
encompassing any violation of a duty imposed upon that fiduciary. Id. (holding that the
types of remedies the district court entered in Amara (reformation, estoppel and
surcharge) “fall within the scope of the term “appropriate equitable relief” in § 502(a)(3).”)
The Supreme Court’s interpretation of § 502(a)(3) promotes ERISA's purposes by
“allocat[ing] liability for plan-related misdeeds in reasonable proportion to respective
actors' power to control and prevent the misdeeds.” Montanile v. Bd. of Trustees of Nat.
Elevator Indus. Health Benefit Plan, 577 U.S. 136, 150 (2016) (quoting Mertens, 508
U.S. at 262).
Under ERISA, the term “employer is defined as “any person acting directly as an
employer, or indirectly in the interest of an employer, in relation to an employee benefit
plan; and includes a group or association of employers acting for an employer in such
capacity.” 29 U.S.C.A. § 1002(C)(5). The term “plan sponsor” means
(i) the employer in the case of an employee benefit plan established or
maintained by a single employer, (ii) the employee organization in the case
of a plan established or maintained by an employee organization, (iii) in the
case of a plan established or maintained by two or more employers or jointly
by one or more employers and one or more employee organizations, the
association, committee, joint board of trustees, or other similar group of
representatives of the parties who establish or maintain the plan, or (iv) in
the case of a pooled employer plan, the pooled plan provider.
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29 U.S.C.A. § 1002(16)(B). An administrator is
(i) the person specifically so designated by the terms of the instrument
under which the plan is operated; (ii) if an administrator is not so designated,
the plan sponsor; or (iii) in the case of a plan for which an administrator is
not designated and a plan sponsor cannot be identified, such other person
as the Secretary may by regulation prescribe.
29 U.S.C. § (16)(B).

“ERISA, however, defines “fiduciary” not in terms of formal

trusteeship, but in functional terms of control and authority over the plan, see 29 U.S.C.
§ 1002(21)(A), thus expanding the universe of persons subject to fiduciary duties—and
to damages—under § 409(a).” Mertens, 508 U.S. at 262. Whether a party is an ERISA
fiduciary is a mixed question of fact and law. David P. Coldesina, D.D.S. v. Estate of
Simper, 407 F.3d 1126 (10th Cir. 2005).
Courts construe ERISA plans, as they do other contracts, by ‘looking to the terms
of the plan’ as well as to ‘other manifestations of the parties' intent.’” McCutchen, 569
U.S. at 102 (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113 (1989)).
“The words of a plan may speak clearly, but they may also leave gaps. And so a court
must often ‘look outside the plan's written language’ to decide what an agreement
means.” Id. (quoting CIGNA Corp. v. Amara, 563 U.S. 421, 436 (2011)).
Under Fed. R. Civ. P. 12(f), courts may strike “from any pleading an insufficient
defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ.
P. 12(f). Courts enjoy liberal discretion to strike pleadings under this provision. BJC
Health System v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007). Striking a party's
pleading, however, is an extreme and disfavored measure.

Id. A motion to strike,

however, is neither an authorized nor a proper way to procure the dismissal of all or part
of a claim. 5C Wright & Miller, Fed. Prac. & Proc. § 1380 (2008). Such motions are

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strongly disfavored under Federal Rule of Civil Procedure 12(f) and may only be granted
to strike “redundant, immaterial, impertinent, or scandalous matter.”
“For convenience, to avoid prejudice, or to expedite and economize, the court may
order a separate trial of one or more separate issues, claims, crossclaims, counterclaims,
or third-party claims.” Fed. R. Civ. P. 42(b).
III.

DISCUSSION
A.

Plaintiff Kimberly Williams’s Motion for summary judgment against
the Trust Defendants and the third-party defendant Grandchildren (D.I.
395); the Trust Defendants’ cross motion for summary judgment (D.I.
399); and the Grandchildren’s motion to strike (D.I. 402)
1.

Parties’ Positions

Williams contends she is entitled to judgment as a matter of law on her claims that
the defendants underfunded the Trust, failed to provide mandated notices to participants,
engaged in prohibited actions, and breached their fiduciary duties.

She seeks a

declaration that the Trust Defendants and the employer/Grandchildren are fiduciaries and
breached their fiduciary duties. She argues that undisputed evidence shows the Trust is
a defined benefit plan and contends she has shown it is significantly underfunded. The
remedy she seeks is for the Court to remove First Republic Trust Company of Delaware
as trustee and appoint an independent fiduciary, she also seeks an accounting and a
surcharge.4
In opposition to Williams’s motion and in their cross-motion, the Trust Defendants
argue that Williams lacks Constitutional standing for all claims other than her claim for
reformation of the trust, that defendants Elton Corp. and First Republic Trust cannot be

In her Second Amended Complaint, Williams requested “equitable relief” on the fiduciary breach and
prohibited transactions claims in the form of an order requiring the Trust Defendants to “repay” to the Trust
“any losses incurred as a result of operating out of compliance with ERISA.” D.I.35. The remedy she now
seeks is compatible with and encompassed in the second amended complaint.
4

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held liable for the duties and obligations of the employers (Plan Sponsors and plan
administrators); that Williams’ claim against defendant Elton Corp is barred by the statute
of limitations; that defendant Gregory fields acted only as an agent and cannot be held
individually responsible; that there is no evidence of damages; that defendants Elton
Corp. and First Republic, as trustees are not required to determine, calculate or otherwise
seek to collect contributions to the trust if is underfunded; that Williams’s demand for
removal of First Republic is incredulous in light of her opposition to its motion for removal;
and that Williams’s belated claim for failing to tax qualify the trust fails to state a claim.
In response to Williams’s motion for summary judgment, the grandchildren move
to strike the motion, alleging that the pleading is improper since Williams has not asserted
any claims against them. The pleading is more properly viewed as an opposition to the
motion for summary judgment. The Grandchildren argue that they are not named as
defendants contend Williams’s motion for summary judgment on the issue of whether
they are employers under ERISA is an end run around the Court’s order denying Williams
leave to amend her complaint to add them as party defendants. They argue that the
plaintiff now seeks judgments against them for millions of dollars based on never-before
asserted claims.
In reply, Williams argues that her motion seeks relief from the third-party
defendants as employers, plan administrators and fiduciaries, consistent with the
complaint and this court’s earlier order. She also argues there is no cause under Rule
12(f) to strike anything in plaintiff’s summary judgment motion.
2.

Discussion

The Court finds the motions for summary judgment and the motion to strike should
be denied. The materials submitted by the parties in support of and opposition to their
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motions does not establish as a matter of law that either party is entitled to judgment as
a matter of law. There are issues of fact that need to be resolved before the Court can
make a finding that ERISA was violated and/or can craft a remedy.
The Trust Defendants, as Trustees, are undoubtedly fiduciaries, but the nature and
extent of their obligations under the trust instrument and the statute remain to be
determined. There is no serious dispute that the Grandchildren are employers, and they
are identified as such in the Trust instrument. They characterize themselves as both plan
sponsors and/or plan administrators.

Whether they are fiduciaries is a mixed question

of law and fact that is determined in functional terms of authority over and control of the
plan.

This is an action in equity and considerations of fairness will require full

development of the record and assessment of credibility and intent.
The Court finds the Trust Defendants’ argument that Williams fails to have
standing, lacks merit. The plaintiff has sufficiently alleged an injury. Whether she can
prove up her damages is an issue for trial.

Similarly, the Court rejects the Trust

Defendants’ statute of limitations argument. Whether the damages, if any, need to be cut
off at some point can be addressed at trial. The issue of defendant Fields’s individual
liability can also be addressed at trial.
The Court’s earlier orders are the law of the case. The Court agrees that the
Grandchildren are certainly aware and cannot be surprised that their status as ERISA
entities, and the responsibilities to fund the Plan that flow from that status, is and has
been directly at issue in the case since its inception. Though the Court denied Williams’s
motion to formally add the Grandchildren as defendants to Williams’s claim, it did so in
the context of the fact that the Grandchildren were defendants to the third-party complaint,
which seeks the same relief and is dependent on the Trust Defendants’ liability. The third13

party claim is in the nature of a claim for indemnity. The Grandchildren remain in the case
by reason of the third-party claim and the Court noted that the plaintiff’s proposed third
amended complaint made no real substantive changes to the operative complaint.
Further, the Court stated that all parties were aware of the claims and defenses. The
remedy of holding the qualified employers accountable for Plan funding obligations is
precisely the relief that the Trust Defendants seek. It is common to revise pleadings to
conform to proof at trial. This is an action in equity and the Court can fashion relief
between the parties.
The Court has reviewed the evidence submitted by the parties and finds that
genuine issues of fact preclude summary judgment. Accordingly, the plaintiff’s motion for
summary judgment, the Trust defendants’ motion for summary judgment, and the
Grandchildren’s motion to strike will be denied.
B.

The Trust Defendants’ and The Grandchildren’s cross motions motion
for summary judgment on the third-party complaint (D.I. 412 and 414)
1.

Parties’ Positions

The Trust Defendants seek a declaratory judgment that the Qualified Employers
are “employers” within the meaning of the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1001, et seq. (“ERISA”) and that each of the Qualified Employers has
an obligation to contribute to the Trust to fund benefits for the participants. They argue
that the Court has already determined in the Court’s earlier order that: 1) the Trust is a
single plan under ERISA; 2) the Trust is a defined benefit plan; and 3) the Qualified
Employers, including the third-party defendants herein, are employers under ERISA.
In response, the grandchildren argue to the contrary—they argue that the Court’s
earlier ruling did not determine, either explicitly or implicitly, that the grandchildren are
employers under ERISA. They contend the Court made no findings and did not address
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the ERISA requirement that the Grandchildren, as the purported ERISA “employers”
under the Trust, must have “established or maintained” the plan and must have engaged
in commerce in employing their domestic employees within the meaning of ERISA. Also,
they contend the Court did not determine whether the Trust is a defined benefit plan or a
defined contribution plan. Accordingly, they argue that the Trust Defendants have not
shown they are entitled to summary judgment.
Conversely, in their cross-motion, the Grandchildren argue they are entitled to
summary judgment for three independent, alternative reasons: First, that ERISA does not
authorize the Trust or Trustee to bring any claims at all against the Grandchildren because
it is not attempting to sue for fiduciary breach under 29 U.S.C. § 1132(a)(2) and because
it does not seek “appropriate equitable relief” under § 1132(a)(3), but rather seeks a
remedy at law. Second, the Grandchildren argue that they have no obligation to make
funding contributions because they are exempt from the statute’s funding requirements
under 29 U.S.C. § 1081(a)(5), which provides that “(5) a plan which has not at any time
after September 2, 1974, provided for employer contributions” is exempt from funding
requirements. They also argue that requiring the Grandchildren to fund the Trust would
negate the express terms of the trust instrument and the Settlor’s intent because the Trust
does not require additional contributions. Third, they argue ERISA’s funding obligations
do not apply because the Grandchildren did not establish or maintain the trust and are
not employers engaged in commerce, in any industry affecting commerce, or in any
activity affecting commerce. See 29 U.S.C. § 1003(a)(1).
In reply, the Trust Defendants argue that the trust is a defined benefit plan and that
the exemption in § 1081(a)(5) applies only to individual accounts plans, not defined
benefit plans. They also argue the Grandchildren are employers under ERISA. They
15

further contend that the Trust defendants’ remaining arguments have already been
impliedly rejected by the Court in the first phase of the action.
2.

Discussion

This Court earlier denied the Trust Defendants’ first motion for summary judgment
on the same issue, finding genuine issues of material fact. D.I. 176 at 9-11. In that order,
the Court concluded that —notwithstanding the finding that the trust was an ERISA plan—
material issues of fact remained in dispute, including “who are the employers[.]” the type
of ERISA plan at issue, funding history, “and so forth.” Id. at 11.
The Trust Defendants now take the same position they took in the earlier motion.
They generally rely only on the trust instrument and the court’s earlier order to support
their position.
The Court first rejects the Grandchildren’s argument that the Trust defendants
cannot maintain an action against them. A fiduciary is allowed to “obtain other appropriate
equitable relief” to redress ERISA violations under § 1132(a)(3). Section 1132(a)(3)
authorizes the kinds of relief typically available in equity and the Plaintiff and third-party
plaintiff seek traditional equitable remedies such as surcharge and reformation.
Because equitable relief is involved, the Court requires full development of the
record to ascertain and understand the relationships, duties, obligations, and
responsibilities of both the trustees and employers. The Court finds there are genuine
issues of fact on whether the qualified employers under the trust and the trustees had
fiduciary duties and breached them. Neither the Trustees nor the Grandchildren have
shown they are entitled to summary judgment on the third-party claim.

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C.

The Trust Defendants’ and Grandchildren’s joint motion to sever the
third-party claim (D.I. 433).

In the joint motion to sever, the Trust Defendants and Grandchildren jointly move
to sever the third-party claim from the trial of plaintiff’s claim for breach of fiduciary duty.
They state:
The Third-Party Plaintiffs and Third-Party Defendants are in agreement that
there are no factual issues in dispute that are material to this Third Party
Complaint. To that end, both parties have filed cross-motions for summary
judgment, which present the necessary legal issues for the Court to decide
based on the undisputed facts. D.I. 399, 414.
D.I. 433 at 2. Further, they contend that “[a]ll that remains on the claim in the Third-Party
Complaint is presentation of oral argument on legal issues by counsel . . .” Id. As noted
above, the Court finds that neither party is entitled to summary judgment based on the
materials submitted to the Court.

The statement that no facts are in dispute is

questionable in view of the parties’ vigorous defense of their respective positions in
summary judgment briefing. Though the third-party claim may ultimately be resolved as
a matter of law, the determination of an appropriate remedy must be based on resolution
of underlying facts and on application of law to those facts. The Court’s interpretation of
the statute also requires examination of the terms of the plan in the context of
manifestations of the parties’ intent. Evidence that relates to the plaintiff’s claim against
the Trust defendants is relevant to the third-party claim. The third-party claim is derivative
of that claim.

The awkward procedural posture of the case mandates careful

consideration of the parties’ positions.5

Weighing of evidence and assessments of

5

The two original plaintiffs in the case, Helena duPont Wright and James Mills, were employers under the
Trust suing trustees for breach of fiduciary duty and prohibited transactions. Their interests in remedying
the breach were aligned with the interests of employee beneficiaries. The procedural conundrum created
by this situation has been obviated to some degree by the joinder of other Grandchildren/employers as
third-party defendants’ complaint and the realignment of the original plaintiffs as third party defendants. As
it stands, all of the interested parties are before the Court.

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credibility are involved.

As the foregoing discussion demonstrates, the issues are

interdependent and intertwined. Because this is a bench trial, the concerns of these
parties can be addressed properly at trial when the Court can sort out conflicting evidence
and competing theories. The Court finds the interest of judicial economy dictates that the
actions should be tried together.
IT IS ORDERED:
1.

Plaintiff Kimberly Williams’s motion for summary judgment (D.I. 395) is

denied.
2.

Counterclaimants/Third Party Complainants First Republic Trust Company

of Delaware LLC, M.C. DuPont Clark Employees’ Pension Trust’s (hereinafter “Trust
Defendants”) motion for summary judgment (D.I. 399) is denied.
3.

Counterclaim-defendants’/third party-defendants’ Katharine D. Gahagan,

James Mills, Mary Mills Abel Smith, Helena Dupont Wright, James B. Wyeth, Phyllis M.
Wyeth, Christopher T. duPont’s (hereinafter, “the Grandchildren’s”) motion to strike
portions of plaintiff Williams’ motion for summary judgment (D.I. 402) is denied.
4.

Counterclaim-defendants’/third party-defendants’ Katharine D. Gahagan,

James Mills, Mary Mills Abel Smith, Helena Dupont Wright, James B. Wyeth, Phyllis M.
Wyeth, and Christopher T. duPont’s motion to expedite and stay interim deadlines (D.I.
404) is denied as moot.
5.

Third Party Plaintiff First Republic Trust Company of Delaware LLC and

M.C. DuPont Clark Employees’ Pension Trust’s cross-motion for summary judgment (D.I.
412) is denied.

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6.

Third party-defendants Katharine D. Gahagan’s, James Mills’s, Mary Mills

Abel Smith’s, Helena Dupont Wright’s, James B. Wyeth’s, Phyllis M. Wyeth’s, and
Christopher T. duPont’s Motion for Summary Judgment (D.I. 414) is denied.
7.

Counterclaimants/Third Party Complainants First Republic Trust Company

of Delaware LLC, M.C. DuPont Clark Employees’ Pension Trust’s and Trust Defendants’
and Third party-defendants’ Katharine D. Gahagan, James Mills, Mary Mills Abel Smith,
Helena Dupont Wright, James B. Wyeth, Phyllis M. Wyeth, and Christopher T. duPont’s
joint motion to sever (D.I. 433) is denied.
Dated this 29th day of March 2022.
BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge

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