SIEFKEN v. GROUP HOME FOUNDATION INC
Filing
21
MEMORANDUM OF DECISION granting 3 Motion for Attachment & Trustee Process By MAGISTRATE JUDGE JOHN C. NIVISON. (CWP)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
HAROLD SIEFKEN,
Plaintiff,
v.
GROUP HOME FOUNDATION INC.,
d/b/a GHF INC,
Defendant
)
)
)
)
)
)
)
)
)
)
1:15-cv-00209-GZS
MEMORANDUM OF DECISION ON MOTION FOR ATTACHMENT AND
ATTACHMNENT ON TRUSTEE PROCESS
In this action, Plaintiff seeks to recover from Defendant funds that Defendant contributed
to a deferred compensation plan for his benefit. Plaintiff’s claims arise under the Employee
Retirement Income Security Act (ERISA).
The matter is before the Court on Plaintiff’s Motion for Attachment and Attachment on
Trustee Process (ECF No. 3), through which motion Plaintiff seeks an attachment in the amount
of $192,859.89.
1
Following a review of the record, and after consideration of the parties’
arguments, the Court grants the motion.
FACTUAL BACKGROUND
According to Plaintiff’s complaint, Plaintiff worked for Defendant as its executive director
continuously from 1978 until October 2013, when Plaintiff retired on goods term. (Complaint ¶
7.) In 2003, Defendant adopted a deferred compensation plan pursuant to section 457(b) of the
Internal Revenue Code. (Id. ¶ 10.) The Plan provides that a “Participant who is in the employment
1
In his motion, Plaintiff asserts the amount as $192,859.89, while in his declaration he states the amount as
$192,859.98.
of the Employer at his Normal Retirement Date shall have a nonforfeitable interest in 100% of his
Account.” (Id. ¶ 15.)
The Plan permits a participant to withdraw the account upon retirement in a single lumpsum payment or in installments. (Id. ¶ 17.) The Plan provides that each participant is a general
creditor of Defendant, with “the status of an unsecured general creditor of the Employer and the
Plan constitutes a mere promise by the Employer to make benefit payments in the future.” (Id. ¶¶
19 – 20.) Additionally, the Plan states that all investments in participants’ accounts are “subject
to the claims of general creditors of the Employer,” and that “[a]ny funds which may be contributed
and invested under the provisions of this Plan shall continue to be subject to the unsecured general
creditors of the Employer.” (Id. ¶ 21.)
Following his retirement, in November 2014, Plaintiff submitted a payment election form
requesting payment in a lump sum. (Id. ¶ 26.) Defendant denied Plaintiff’s claim for benefits in
a letter dated January 2, 2015, stating that Defendant’s contractual obligation to its other
(“primary”) creditors prohibited the disbursement of the funds in Plaintiff’s account without the
approval of the other creditors. (Id. ¶ 30; Complaint Ex. C, ECF No. 1-3.) Plaintiff timely
requested an administrative review of the determination in February 2014. (Complaint ¶¶ 31 – 32.)
Defendant never responded to the request. (Id. ¶ 33.)
Until early 2015, Defendant held Plaintiff’s account funds in a separate 457(b) investment
account. (Id. ¶ 23.) Plaintiff asserts that the value of the 457(b) investment account, as of January
26, 2015, was $192,859.98. (Declaration of Harold Siefkin, ECF No. 4, ¶ 28.) On January 27,
2015, Defendant closed the investment account and transferred the funds to an account securing a
line of credit with Camden National Bank. (Complaint ¶ 34.)2
2
In support of his motion for attachment and attachment on trustee process, Plaintiff filed a declaration in which he
attests to all of the allegations contained in his Complaint. (Declaration of Harold Siefkin, ECF No. 4.) With respect
2
In opposition to the motion for attachment, Defendant maintains that the contributions to
the Plan were inconsistent with the relevant vote of the Board of Directors regarding Plaintiff’s
compensation. According to Salvatore Garozzo, Defendant’s current executive director, by
memorandum dated September 22, 2003, Plaintiff proposed to cap his salary increases at $2,600
per year ($50.00 per week) in exchange for a contribution from Defendant to the nonqualified
deferred compensation plan equal to ten percent of Plaintiff’s annual salary. (Declaration of
Salvatore Garozzo, ECF No. 13-1 ¶ 8.) The proposal was accepted by the Board at the monthly
board meeting on October 20, 2003. (Id. ¶ 9.) Following the Board’s vote, Plaintiff submitted
annual payroll change forms that called for direct contributions from Defendant to the Plan of 10%
of Plaintiff’s annual salary, increased his salary by $50/week ($2,600/year), and also added an
extra 10% to Plaintiff’s salary. (Id. ¶ 10.) The payroll change forms were not subject to direct
oversight by the Board. (Id. ¶ 11.) 3
Mr. Salvatore asserts that when he denied, based on the priority of other creditors,
Plaintiff’s claim for lump-sum payment of the fund in January 2015, he had a good-faith belief
that the Defendant owed the benefit accrued under the 457(b) Plan. (Id. ¶ 12.) However, at the
time, he was unaware that Plaintiff’s payroll change forms were inconsistent with the terms of the
2003 board vote. (Id. ¶ 13.)4
to the assertion that Defendant has transferred the funds in his 457(b) investment account to an account securing a line
of credit with Camden National Bank, Plaintiff’s declaration is made “on information and belief.” (Id. ¶ 29.) Plaintiff
knows of no liability insurance, bond or other security, or of any property or credits attached by other writ of
attachment or by trustee process available to satisfy any judgment he may receive against Defendant in this case. (Id.
¶ 35.)
3
Defendant also offers declarations from two board members, who similarly state that a 10% annual salary increase
was not authorized. (Declaration of Sharon Goguen, ECF No. 13-2; Declaration of William Webb, ECF No. 13-3.)
4
Mr. Salvatore does not assert the existence of any insurance, bond, or other security, or identify any property or
credits attached by other writ of attachment or by trustee process, that would be available to satisfy a judgment.
3
DISCUSSION
Pursuant to Federal Rule of Civil Procedure 64 and Local Rule 64, the Court applies Maine
law when presented with a motion for attachment and attachment on trustee process.5 To obtain
an attachment or an attachment on trustee process, after notice and a hearing, a plaintiff must
demonstrate “that it is more likely than not that the plaintiff will recover judgment in an amount
equal to or greater than the aggregate sum of the attachment and any insurance, bond, or other
security, and any property or credits attached by other writ of attachment or by trustee process
known or reasonably believed to be available to satisfy the judgment.” M. R. Civ. P. 4A(c), 4B(c).
A motion for attachment or an attachment on trustee process must be accompanied by an affidavit
or affidavits setting forth “specific facts sufficient to warrant the required findings and shall be
upon the affiant’s own knowledge, information or belief; and so far as upon information and belief,
shall state that the affiant believes this information to be true.” M. R. Civ. P. 4A(i), 4B(c).
Plaintiff asserts that Defendant’s obligation to pay under the deferred compensation plan
is undisputed. Plaintiff argues that “any private agreement between [Defendant] and a third-party
secured creditor is not a defense to liability that [Defendant] may wield against its general
creditors.” (Motion at 2.) Defendant evidently no longer contends that its denial of payment is
based on its obligations to other creditors. Instead, Defendant maintains that because between
2003 and 2015, Plaintiff increased his salary beyond what Defendant’s Board authorized and
“[t]hose salary increases happened to be equal to the amount of the contributions Defendant made
to the 457(b) Plan” (Opposition at 3, ECF No. 13), Defendant is not obligated to pay to Plaintiff
5
Because this action presents claims against an ERISA fiduciary, a potential issue is whether attachment proceedings
are proper given ERISA preemption principles. The Supreme Court, however, has held that “state-law methods for
collecting money judgments must, as a general matter, remain undisturbed by ERISA; otherwise, there would be no
way to enforce such a judgment won against an ERISA plan.” Mackey v. Lanier Collection Agency & Service, Inc.,
486 U.S. 825, 834 (1988).
4
the funds requested. According to Defendant, because both the increased salary and the plan
contributions were “part of a contract between Defendant and Plaintiff regarding compensation”
(id.), the fact finder should offset the two amounts6 (id. at 4 & n.2).
Upon review of the record, based in part on the fact that for more than a decade,
contributions were made to the Plan without comment by or objection from Defendant, and based
in part on the fact that upon Plaintiff’s request for payment, Defendant did not challenge Plaintiff’s
entitlement to the funds, the Court is persuaded that Plaintiff will more likely than not recover
judgment for the amount that was in the 457(b) Plan before Defendant transferred the funds to an
account securing a line of credit with Camden National Bank. Because the record establishes the
lack of any insurance, bond, or other security, and does not identify any property or credits attached
by other writ of attachment or by trustee process that would be available to satisfy a judgment,
Plaintiff is entitled to an attachment in the amount of $192,859.89.7
CONCLUSION
Based on the foregoing analysis, the Court grants Plaintiff’s Motion for Attachment and
Attachment on Trustee Process (ECF No. 3) and, therefore, the Court grants Plaintiff an attachment
and an attachment on trustee process on Defendant’s property in the amount of $192,859.89.
6
Defendant maintains that there was not a meeting of the minds that Plaintiff would receive 10% annual increases in
addition to the 457(b) plan contributions.
Defendant’s suggestion that an offset is appropriate is unavailing at this stage of the proceedings. If Defendant
contends that Plaintiff was overpaid, Defendant presumably would assert a counterclaim, which has not been filed in
this case. Defendant’s filing of a counterclaim, however, would not affect Plaintiff’s entitlement to an attachment as
an offset based on a counterclaim is not appropriate. Casco N. Bank, N.A. v. New England Sales, Inc., 573 A.2d 795,
797 (Me. 1990) (“While NES might have demonstrated that it was entitled to an attachment against Casco on its own
claim, … it made no motion for an attachment, and even were one made, its possible recovery on that claim could not
be considered as an offset.”).
7
5
CERTIFICATE
Any objections to this order shall be filed in accordance with Fed. R. Civ. P. 72.
/s/ John C. Nivison
U.S. Magistrate Judge
Dated this 4th day of September, 2015.
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?