Perez v. Silva et al

Filing 117

MEMORANDUM AND ORDER GRANTS 96 Motion of Secretary of Labor to the extent it seeks judgment against Silva and HOLDS IN ABEYANCE the Secretarys motion to the extent it seeks judgment against AmeriGuard. Further, on or before March 16, 2018, the Secretary SHALL FILE a new proposed judgment form, only against Silva. Signed by Chief Judge James K. Bredar on 2/23/2018. (c/m 2/26/18 jnls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
*
R. ALEXANDER ACOSTA,

*

Plaintiff

*

v.

*

RICARDO SILVA et al.,

*

Defendants
*
*

CIVIL NO. JKB-15-3484

*
*

*

*

*

*

*

*

*

*

*

MEMORANDUM AND ORDER
I. Background
The Secretary of Labor (“Secretary”) initiated this suit with a complaint of improprieties
under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.
Defendants are Ricardo Silva, Maryland Association of Correctional & Security Employees, Inc.
(“MACSE”), Charles Ezrine, State Employee Benefits, Inc. (“SEBI”), AmeriGuard Security
Services, Inc. (“AmeriGuard”), Maryland Association of Correctional & Security Employees
Health & Welfare Plan (“Health Plan”), and Maryland Association of Correctional & Security
Employees Retirement Plan (“Retirement Plan”). (Compl., ECF No. 1.)
Silva, proceeding pro se, filed an answer to the complaint.1 (ECF No. 28.) After
MACSE failed to answer the complaint, a default judgment was entered against it. (ECF
Nos. 50, 113.)

AmeriGuard was granted leave to file, and did file, a cross-claim against

codefendants MACSE, Silva, Ezrine, and SEBI. (ECF Nos. 81, 82.) Ezrine and SEBI consented
to judgment being entered against them in the Secretary’s favor. (ECF No. 103.) However,
1

Silva’s answer was also purportedly filed on behalf of MACSE, the Health Plan, and the Retirement Plan,
but as to those entities, the Court struck the answer as improperly filed. (ECF No. 43.)

MACSE, Ezrine, and SEBI, while dismissed as defendants, remain in the case as crossdefendants on AmeriGuard’s cross-claim. The Health Plan and the Retirement Plan have not
responded to the Secretary’s complaint, but the Secretary has not requested entry of default or
default judgment as to them.
Several motions are pending. The Secretary has filed a motion for summary judgment
against Silva and AmeriGuard. (ECF No. 96.) AmeriGuard has filed a motion for summary
judgment on its cross-claim against Silva, Ezrine, SEBI, and MACSE. (ECF No. 98.) Ezrine
and SEBI have filed a cross-motion for summary judgment against AmeriGuard on the latter’s
cross-claim.

(ECF No. 105.)

Finally, AmeriGuard has filed a cross-motion for summary

judgment against the Secretary as to the latter’s complaint. (ECF No. 106.) Despite the active
litigation, some of the parties are pursuing the possibility of resolution through negotiation. In
recognition of those efforts, the Court shall address herein only the Secretary’s motion for
summary judgment and only as against Silva, who has not filed any opposition to the motion.
No hearing on the motion is necessary. Local Rule 105.6 (D. Md. 2016). The motion will be
granted as against Silva and will be held in abeyance as against AmeriGuard.
II. Standard for Summary Judgment 2
“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); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to
current Rule 56(a)). The burden is on the moving party to demonstrate the absence of any

2

The Court notes that the Secretary has indicated in its recital of the governing standard that the Court
“must accept well-pleaded factual allegations as true” when deciding a motion for summary judgment. (Mot. 1-2,
ECF No. 96 (citing Tolan v. Cotton, 134 S. Ct. 1861, 1866 (2014).) If this were a ruling on a motion to dismiss for
failure to state a claim for relief, then that would be a correct statement. However, in deciding the propriety of
summary judgment, the Court’s focus is on the evidence of record, not allegations of the complaint.

2

genuine dispute of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). If
sufficient evidence exists for a reasonable jury to render a verdict in favor of the party opposing
the motion, then a genuine dispute of material fact is presented and summary judgment should be
denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). However, the “mere
existence of a scintilla of evidence in support of the [opposing party’s] position” is insufficient to
defeat a motion for summary judgment. Id. at 252. The facts themselves, and the inferences to
be drawn from the underlying facts, must be viewed in the light most favorable to the opposing
party, Scott v. Harris, 550 U.S. 372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir.
2008), who may not rest upon the mere allegations or denials of his pleading but instead must, by
affidavit or other evidentiary showing, set out specific facts showing a genuine dispute for trial,
Fed. R. Civ. P. 56(c)(1). Supporting and opposing affidavits are to be made on personal
knowledge, contain such facts as would be admissible in evidence, and show affirmatively the
competence of the affiant to testify to the matters stated in the affidavit. Fed. R. Civ. P. 56(c)(4).
III. Analysis
With his motion, the Secretary filed a statement of undisputed material facts. (Statement,
ECF No. 97.) The Court has reviewed all of the record evidence highlighted by the Secretary
and has found it to be consistent with the Statement.3 Further, with regard to Silva, the Court
finds no genuine dispute of material fact.
Thus, the Court concludes the Secretary has undisputedly established the following as to
Silva:
3

The Statement is supported by all of the citations to record evidence with one exception: The Secretary
referred in one instance to “Deposition of Department of Labor, hereinafter Ex. 15 pp. 31/3-31, 32/1-12.” (See
Statement ¶ 59.) No such document is in the record. However, because Silva has not disputed any of the facts put
forth by the Secretary, the Court concludes the lack of this document does not create a genuine dispute of material
fact. Also, the Secretary presented an additional citation in support of Paragraph 59, and that citation is to evidence
properly found in the record.

3

The Health Plan and the Retirement Plan (the “Plans”) were established by Silva and
MACSE for the benefit of the security guard personnel employed by AmeriGuard at the Centers
for Medicare and Medicaid Services (“CMS”) in Woodlawn, Maryland.4 The Health Plan has
never had a plan document signed and executed by representatives of AmeriGuard and MACSE
for the purposes of appointing fiduciaries and providing written procedures for the Health Plan’s
administration and management of assets as well as amendments to the Health Plan. The Plans
were funded with employer contributions by AmeriGuard and fall within ERISA’s coverage of
employee benefit plans. 29 U.S.C. § 1003(a).

AmeriGuard was expected to send three checks

to MACSE on a monthly basis: one for union dues, one for Health Plan contributions, and one
for Retirement Plan contributions.

From August 2010 until approximately October 2012,

MACSE deposited all three checks into MACSE’s general operating account, commingling the
Plans’ assets with MACSE’s funds.
Silva was the president and chief executive officer of MACSE, and he was the chief
executive officer of Ricardo Silva & Associates, Inc. Silva was a trustee of both the Retirement
Plan and the Health Plan, and he was an administrator of the Health Plan. He and MACSE were
the Retirement Plan administrators. Silva exercised discretionary authority or discretionary
control respecting the Plans’ management as well as management or disposition of the Plans’
assets. He was a party-in-interest and a fiduciary, as those terms are found in ERISA, with
respect to the Plans. 29 U.S.C. § 1002(14)(A), (21)(A). The same is true of MACSE.
Silva determined that MACSE would charge the Health Plan a fee of five percent of the
monthly Health Plan contributions for MACSE’s administrative services. No written contract

4

MACSE replaced the union that had previously represented AmeriGuard’s employees at CMS. Upon
MACSE’s newly acquired status of representation, MACSE and AmeriGuard entered into a collective bargaining
agreement and a bridge agreement that carried forward the prior union’s rights and obligations.

4

between the Health Plan and MACSE existed for administrative services. In some months,
MACSE received in excess of five percent of the monthly contributions.
Silva hired SEBI, which was owned by Ezrine, to provide day-to-day administrative
services to the Health Plan. This arrangement existed pursuant to an oral contract between Silva
and Ezrine. At Silva’s direction, Health Plan assets were used to pay Retirement Plan expenses,
including administrative costs and an amount owed by the Retirement Plan to the Internal
Revenue Service. Additionally, at Silva’s direction, Health Plan assets were used by MACSE to
pay for union grievances and arbitrations and were also used to repay a loan made by Ricardo
Silva & Associates to MACSE. MACSE did not forward all Health Plan contributions to the
Health Plan. Further, Silva transferred Retirement Plan assets to MACSE; and he did not
forward excess funds from the Health Plan to the Retirement Plan as required by the collective
bargaining agreement when employees requested their optional Health Plan contributions to be
redirected to the Retirement Plan. The total losses to the Health Plan are $263,845. The total
losses to the Retirement Plan are $295,627.
The Secretary’s investigator determined “lost opportunity costs” to the Plans by
calculating interest from the time of each violation of ERISA to the time of filing the Secretary’s
motion for summary judgment on May 26, 2017, using the higher of the Internal Revenue Code
underpayment interest rate established in 26 U.S.C. §§ 6621 and 6622 or the estimated
Retirement Plan rate of return. The total amount of interest owed to the Health Plan for that
period of time was $64,792.5 The total amount of interest owed to the Retirement Plan for the

5

The Secretary will be required to submit a revised calculation of interest as of the date of this
memorandum and order.

5

same period was $83,940.6 The total amount owed to the Plans as of May 26, 2017, was
$705,642, reflecting both losses and interest.7
Having considered the evidence, the Court concludes the following:
Silva violated ERISA Section 402 by failing to execute a plan document for the Health
Plan. He violated ERISA Section 403(a) by failing to ensure that the Health Plan’s assets were
held in trust. He violated ERISA Section 404(a)(1)(A) by failing to discharge his duties to the
Health Plan solely in the interest of its participants and beneficiaries and for the sole purposes of
providing benefits to them and defraying reasonable expenses in the Health Plan’s
administration. He violated ERISA Section 404(a)(1)(B) by failing to discharge those same
duties with the same care, skill, prudence, and diligence that would be used under the prevailing
circumstances by a prudent person acting in a similar capacity and with familiarity with similar
matters in the conduct of a similar enterprise. He violated ERISA Section 406(a)(1)(C) by
causing the Health Plan to engage in transactions that resulted in the furnishing of services
between parties-in-interest. He violated ERISA Section 406(a)(1)(D) by causing Health Plan
assets to be transferred to parties-in-interest. He violated ERISA Sections 406(b)(1), (b)(2), and
(b)(3) by causing the Health Plan to engage in prohibited transactions. In like measure, Silva
committed similar violations of ERISA with respect to the Retirement Plan. Moreover, as a
fiduciary of both Plans, Silva is liable for others’ breaches of ERISA with respect to those Plans;
given the default judgment against MACSE and the consent judgment against Ezrine and SEBI,
Silva is liable for MACSE’s, Ezrine’s, and SEBI’s breaches. 29 U.S.C. § 1105(a)(3).

6
7

See note 5, supra.
See note 5, supra.

6

IV. Conclusion
The Court finds no genuine dispute of material fact as to the Secretary’s complaint
against Silva for violations of ERISA. Further, the Court concludes the Secretary is entitled to
judgment against Silva as a matter of law. The Court hereby GRANTS the Secretary’s motion to
the extent it seeks judgment against Silva and HOLDS IN ABEYANCE the Secretary’s motion
to the extent it seeks judgment against AmeriGuard. Further, on or before March 16, 2018, the
Secretary SHALL FILE a new proposed judgment form, only against Silva, with updated
calculations of interest for both Plans; the Secretary’s calculations shall reflect interest owed as
of this memorandum and order’s date.
DATED this 23rd day of February, 2018.

BY THE COURT:

_____________/s/_____________________
James K. Bredar
Chief Judge

7