Perlman v. Fidelity Investments Institutional Services Company, Inc. et al

Filing 114

MEMORANDUM AND OPINION. For the reasons set forth herein, the Court grants defendants' motions for summary judgment with respect to plaintiff's ERISA and IRC claims and denies plaintiff's cross-motion for summary judgment in its entire ty. The Court declines to exercise jurisdiction over Ameriprise's interpleader counterclaim and cross-claims and, accordingly, does not permit Ameriprise to deposit funds with the Court and declines to discharge Ameriprise from liability pursuan t to that interpleader claim. The Court also declines to exercise supplemental authority over Wendy's state law cross-claims for breach of fiduciary duty and a declaratory judgment regarding whether Blass has standing to defend the testamentary trust and Wendy's state law breach of contract counterclaim, and dismisses those claims without prejudice. Finally, the Court declines to award attorney's fees to any of the parties in this action. The Clerk of the Court shall close the case and enter judgment accordingly. SO ORDERED. Ordered by Judge Joseph F. Bianco on 3/26/2013. (Samplin, Ilissa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 11-CV-0326 (JFB) (ETB)
_____________________

HILDEGARD PERLMAN,
Plaintiff,
VERSUS

FIDELITY BROKERAGE SERVICES LLC ET AL.,
Defendants.
___________________
MEMORANDUM AND ORDER
March 26, 2013
___________________

JOSEPH F. BIANCO, District Judge:
Hildegard Perlman (“plaintiff” or
“Hildegard”) brought this action against
Fidelity Brokerage Services LLC, Fidelity
Management Trust Company (collectively,
“Fidelity”), Ameriprise Financial Services
Inc. (“Ameriprise”), Jonathan Blass
(“Blass”), as Executor and Trustee under the
Last Will and Testament of Norman
Perlman, and Wendy Perlman (“Wendy”)
(collectively,
“defendants”),
alleging
violations of the Employee Retirement
Income Security Act of 1975 (“ERISA”), 19
U.S.C. § 1001 et seq., as to the Individual
Retirement Account (“IRA”) of her late
husband, Norman Perlman (“Norman”).
Specifically, plaintiff claims that, as the
surviving spouse of an ERISA plan
participant, she is entitled to assets that she
alleges were improperly rolled over into an
IRA. Plaintiff asserts that, because she did
not provide formal written authorization, the

transfer of assets from her late husband’s
Keogh plan into an IRA was improper under
ERISA. Accordingly, she claims that
Norman’s beneficiary declaration under the
IRA (entitling her to one-third of the assets)
is invalid, and that she is therefore entitled
to all of the assets in the IRA. Plaintiff seeks
declaratory judgment affirming that she is
entitled to survivorship rights in the IRA,
pursuant to Section 205(a) of ERISA.
Presently before the Court are three
motions made by defendants: (1) a motion
for summary judgment, pursuant to Rule 56
of the Federal Rules of Civil Procedure, and
to deposit funds, pursuant to 28 U.S.C.
§§ 1335 and 2361, by Ameriprise; (2) a
motion for judgment on the pleadings,
pursuant to Rule 12(c) of the Federal Rules
of Civil Procedure, and for summary
judgment, pursuant to Rule 56, by Fidelity
(along with a request that the Court grant
Fidelity leave to move for attorneys’ fees

and costs pursuant to 29 U.S.C. § 1132(g));
and (3) a motion for summary judgment,
pursuant to Rule 56, and to dismiss,
pursuant to Federal Rule of Civil Procedure
12(b)(7)1 by Wendy (along with a request
for attorneys’ fees and costs pursuant to 29
U.S.C. § 1132(g)).

survives summary judgment, she cannot
maintain an action for a declaratory
judgment. Accordingly, the Court denies
plaintiff’s cross-motion for summary
judgment in its entirety.
Additionally, the Court declines to
exercise supplemental jurisdiction over any
remaining state law claims and, in its
discretion, declines to award attorney’s fees
and costs to any party in this litigation.

Because the uncontroverted evidence
shows that ERISA does not govern
Norman’s plan and, even if it did, that
plaintiff’s ERISA claims would otherwise
be barred by the statute of limitations, the
Court grants summary judgment in favor of
defendants on plaintiff’s ERISA claims.
Additionally, because the Internal Revenue
Code (“IRC” or the “Code”) provisions cited
by plaintiff do not create a private right of
action for her, to the extent plaintiff is
seeking relief pursuant to the IRC, the Court
grants summary judgment in favor of
defendants. Finally, for the reasons
discussed in detail below, the Court declines
to exercise jurisdiction over Ameriprise’s
interpleader counterclaim and cross-claims
and, as such, does not permit Ameriprise to
deposit the IRA proceeds with the Court and
declines to discharge Ameriprise from
liability pursuant to 28 U.S.C. § 2361.

I. BACKGROUND
A. Factual Background
The Court has taken the facts set forth
below from the parties’ depositions,
affidavits, exhibits, and respective Rule 56.1
Statements of Facts. Upon consideration of a
motion for summary judgment, the Court
shall construe the facts in the light most
favorable to the non-moving party. See
Capobianco v. City of New York, 422 F.3d
47, 50 (2d Cir. 2005). Unless otherwise
noted, where a party’s 56.1 statement is
cited, that fact is undisputed or the opposing
party has not pointed to any evidence in the
record to contradict it.2
Hildegard and Norman were married on
June 3, 2011. (Pl.’s Ameriprise 56.1 ¶ 1.)
They resided together in Woodmere, New
York. (Ameriprise 56.1 ¶ 2.) Defendant
Wendy Sue Perlman is Norman’s daughter
from a previous marriage. (See Wendy
Perlman 56.1 (“Wendy 56.1”) ¶ 8.) In 2001,
before they married, Norman and Hildegard
entered into a prenuptial agreement.
(Fidelity 56.1 ¶ 6.)3 Approximately two

Also before the Court is a cross-motion
for summary judgment made, pursuant to
Rule 56, by plaintiff. Plaintiff requests a
declaratory judgment (pursuant either to
ERISA or, in the alternative, to the
Declaratory Judgment Act) and any other
“make whole” remedies, including legal
fees, which the Court deems appropriate.
However, as discussed in detail below,
because plaintiff has no federal claim that
1

2

Because the Court, as discussed infra, grants
Wendy’s motion pursuant to Federal Rule of Civil
Procedure 56, the Court does not address Wendy’s
motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(7) for failure to join an indispensible
party.

Although the parties’ Rule 56.1 statements contain
specific citations to the record, the Court cites to the
Rule 56.1 statements, rather than to the underlying
citations.
3
Plaintiff repeatedly highlights a particular portion of
this agreement: under the prenuptial agreement,

2

years after they were married (on
approximately June 10, 2003), Norman set
up a Money Purchase Pension Plan Keogh
account and plan (the “Keogh account” and
the “Keogh plan”), which were maintained
by Fidelity. (Ameriprise 56.1 ¶ 3; Wendy
56.1 ¶ 3.)

Supp. of Pl.’s Cross Mot. for Summ. J.
(“Nicotra Decl.”) Ex. A, at 5.4)
At all times relevant to this action,
Norman was an attorney. (Wendy Perlman
56.1 ¶ 2.) In his Keogh plan documents, as
noted above, Norman identified himself as
his own employer. (Id. ¶ 4.) Indeed, in a
letter dated September 9, 2000, Norman
explicitly references the “solo practitioner
practice” of his that he handed over to his
son eight years earlier, as well as the fact
that, although he worked in the same office
as his son following the transfer, he
remained “totally independent.” (Nicotra
Decl. Ex. Y, at 4.) During his legal career,
Norman had a professional relationship with
Robert D. Rosen (“Rosen”) – a relationship
that Norman described as “essentially a two
man partnership presented to the world as a
solo practice in his name with my own
inclusion as trial counsel.” (Id.) Norman
believed that “upon [his] retirement or
disability [his son] and Robert (Rosen) will
undoubtedly
form
a
conventional
partnership.” (Id.) At his deposition, Rosen
testified that his relationship with Norman
began in about 1992, and that virtually all of
the cases he handled were referred to him by
Norman. (Nicotra Decl. Ex. DD, Dep. of
Robert D. Rosen (“Rosen Dep.”) at 14-15.)
When asked about his fee sharing
arrangement with Norman, Rosen testified
that it was “50/50.” (Id. at 15.) This
professional relationship between Norman
and Rosen continued until approximately
2007, when Norman acted as trial counsel
on one of Rosen’s cases for the final time.
(Id. at 33-34.)

In the Koegh plan documents, Norman
listed himself as the sole employer and sole
plan administrator. (Ameriprise 56.1 ¶ 4.)
Norman also listed himself, and no others,
as a participant in the Keogh plan. (Id. ¶ 5.)
According to Brian Hogan, Director of
Retirement Product Management for
Fidelity, a search was conducted during the
pendency of this action to determine
whether there were participants in the Keogh
plan other than Norman; no evidence of
other participants was found. (Id. ¶ 6.)
Discovery in this action has similarly failed
to produce any evidence of participants
other than Norman (id. ¶ 7), and Hildegard
acknowledged, at her deposition, that she
herself was unaware of any additional
participants in the Keogh plan (id. ¶ 8).
Additionally, Norman signed his own name
in the section titled, “Spousal Consent,”
above the line labeled, “Signature of
Participant’s Spouse.” (Pl.’s Ameriprise
56.1 ¶ 4; see Decl. of Rachel Nicotra in
Opp’n to Defs.’ Summ. J. Mots. and in

Norman agreed to fund his trust with at least three
million dollars, and further agreed that in the event
the trust was not timely funded, plaintiff would have
a claim against his estate for the greater of one
million dollars or plaintiff’s elective share. (See Pl.’s
Wendy 56.1 ¶ 13 (citing relevant provision of the
prenuptial agreement).) Plaintiff claims that, because
Norman did not fund his trust with three million
dollars as required under the prenuptial agreement,
she has a claim against his estate in the amount of
one million dollars. (See Pl.’s Wendy 56.1 ¶ 18.)

4

All exhibits attached to the Nicotra Declaration are
paginated with Bates-stamped numbers (the numbers
used during document production between the parties
in discovery). For ease of reference, the Court refers
to the pages of these exhibits by the page numbers
assigned by ECF.

3

While they were married, Norman and
Hildegard filed joint tax returns, including a
Self Employment Tax Schedule SE and/or
Schedule C reflecting Norman’s self
employment. (Wendy 56.1 ¶ 5.) Hildegard
states, however, that in 2007, one year prior
to Norman’s death, she began filing
individual tax returns. (Pl.’s Decl. in Opp’n
to Summ. J. ¶ 12.)

recalled signing “a spousal consent”
regarding the transfer (id.), although she
testified that she did not read the form, nor
did anyone explain it to her before she
signed it (id. at 105). To date, no written
spousal consent to the transfer of funds
signed by Hildegard has been produced by
any party. (Ameriprise 56.1 ¶ 16.) Fidelity
transferred Norman’s funds from the Keogh
account to Ameriprise on or about January
31, 2007. (Id. ¶ 11.) When the account was
transferred, it was deposited into an IRA.
(See Wendy 56.1 ¶ 12.)

Fidelity managed Norman’s Keogh plan
from December 2004 to January 2007.
(Fidelity 56.1 ¶ 1.) On or about January 22,
2007, Norman sought to transfer all of the
assets from his Keogh plan to an IRA
maintained by Ameriprise. (Ameriprise 56.1
¶ 10.) Whether or not Hildegard knew that
the type of plan was changing during this
transfer, she knew that Norman’s funds were
in fact being transferred from Fidelity to
Ameriprise before that transfer occurred.
(Fidelity 56.1 ¶ 3; see also Wendy 56.1 ¶ 10
(citing Hildegard deposition testimony about
an Ameriprise representative coming to her
home sometime in January 2007 before the
transfer to discuss the transfer).) In fact, at
her deposition, Hildegard recalled that
Norman had asked for her permission to
conduct such a transfer. (Decl. of Virginia T.
Shea in Supp. of Ameriprise’s Mot. for
Summ. J. and to Interplead Funds (“Shea
Decl.”) Ex A., Dep. of Hildegard Perlman
(“Hildegard Dep.”) at 103 (“Q. Did Norman
ever ask for your permission to transfer the
assets from the Fidelity account to
Ameriprise? A. I remember signing
something, a spousal consent. . . . Q. Have
you ever seen a copy of that document? A.
No. Q. But you believe that you signed it?
A. I believe so.”).)5 Indeed, Hildegard

Norman executed his will on February 5,
2007. (Id. ¶ 13.) He established a living trust
that same day, which provides that, upon
Norman’s death, the income from managing,
investing, and reinvesting all trust property
shall be paid one-third to Hildegard and
two-thirds to Wendy for as long as
Hildegard is living. (Id.) Similarly,
according to the IRA Designation of
Beneficiary for the IRA held by Ameriprise,
Norman named “the trust under my last will
Fidelity account to the Ameriprise IRA account? . . .
A. No, not really.” (Hildegard Dep. at 104.)
However, plaintiff fails to acknowledge the line of
questioning that immediately follows, through which
defense counsel attempted to reconcile plaintiff’s
testimony about signing a spousal consent and her
testimony about not consenting to the transfer:
Q. Why do you say ‘not really,’ particularly
if you just told me you believe you signed a
spousal consent? A. Because you’re asking
me if – would you rephrase – repeat the
question. Q. Did you either in writing or
orally consent or agree to Norman’s transfer
of the assets from the Fidelity account to the
Ameriprise IRA? A. By signing the spousal
consent, which I think that’s what it was, I
would say yes.

5

Plaintiff contends that, despite this testimony, she
did not “consent” to the transfer of the assets from
Fidelity to Ameriprise. (Pl.’s Ameriprise 56.1 ¶ 12.)
In support of this contention, plaintiff cites the
following testimony from her deposition: “Q. Did
you consent to the transfer of the assets from the

(Id.) Accordingly, the uncontroverted evidence
shows that, by signing the spousal consent form,
Hildegard agreed to the transfer before it
occurred.

4

In bringing this lawsuit, Hildegard seeks
all assets in the account held by Ameriprise,
attorney’s fees, and “such other legal or
equitable relief as this Court deems
appropriate.” (Pl.’s Fidelity 56.1 ¶ 10.)
Wendy seeks what she contends is her twothirds interest in the income from the
proceeds. (Ameriprise 56.1 ¶ 21.) She also
seeks a determination, by this Court, that
Blass is not fit to serve as trustee over the
trust created under the last will and
testament of Norman. (See Wendy’s Answer
to Second Am. Compl. ¶¶ 16-18 (crossclaim against Blass for declaratory judgment
that Blass lacks standing to defend the
testamentary trust).) The value of the
proceeds in the IRA account has at all times
exceeded $500.00. (Id. ¶ 22.)

and testament for Hildegard Perlman (wife)”
as the beneficiary of 33.3% of the IRA. and
“the trust under my last will and testament
for Wendy Perlman (daughter)” as the
beneficiary of 66.6% of the IRA.
(Ameriprise 56.1 ¶ 17.)
Norman passed away in August of 2010.
(Fidelity 56.1 ¶ 8.) Following his death,
Wendy filed a petition in the Surrogate’s
Court, Nassau County, regarding Norman’s
account. (Id.; see also Shea Decl. Ex. I,
Order to Show Cause.) On November 10,
2010, Hildegard filed a motion to dismiss
that petition for lack of subject matter
jurisdiction, alleging that “federal courts
have exclusive jurisdiction over the matter
because she asserts an ERISA claim based
on her alleged right to those benefits under
ERISA as Norman’s surviving spouse.”
(Fidelity 56.1 ¶ 9.) Upon application, on
March 9, 2011, Blass was appointed trustee
of the trust created by Norman’s will. (See
Decl. of Elizaveta S. Korotkova in Supp. of
Wendy Perlman’s Mot. for Summ. J. (“ESK
Decl.”) Ex 16, Mar. 9, 2011 Surrogate
Court, Nassau County, Order for
Appointment of Trustee.) On December 13,
2011, the Surrogate’s Court, Nassau County,
denied Hildegard’s motion to dismiss. It also
deferred Wendy’s petition (for limited
letters of administration, so that she can
represent the interests of the estate in the
federal action, and for denial of letters of
trusteeship to Blass, because he allegedly
has a conflict of interest, has demonstrated
hostility to petitioner, and has failed to
vigorously defend the estate’s position in the
federal action) pending this Court’s
determination of whether Blass will properly
represent the interests of Norman’s estate
and trust in the federal action. (See ESK
Decl. Ex. 17, Dec. 13, 2011 Surrogate
Court, Nassau County, Order.)

B. Procedural History
Plaintiff filed the complaint in this action
on January 21, 2011. Plaintiff then filed an
amended complaint on February 23, 2011.
Blass filed an answer to the amended
complaint on March 10, 2011, as did
Fidelity Brokerage on March 21, 2011. On
April 8, 2011, Ameriprise filed an answer to
plaintiff’s amended complaint and asserted a
cross-claim against Blass, as well as a
counterclaim
against
plaintiff,
for
interpleader. Blass filed an answer to
Ameriprise’s cross-claim on April 26, 2011.
On May 9, 2011, Wendy filed a motion
to intervene in the action. Blass filed an
opposition to this motion on June 30, 2011,
and Wendy filed a reply in further support of
her motion to intervene on July 14, 2011. On
October 21, 2011, a stipulation was filed
wherein the parties agreed to the filing of
plaintiff’s proposed second amended
complaint (to add Wendy as a defendant and
to add certain provisions of the IRC to the
provisions of ERISA already cited in the
first amended complaint).
5

12, 2012, Wendy Perlman filed a reply in
support of her motion for summary
judgment and motion to dismiss and in
opposition to plaintiff’s cross-motion.
Plaintiff filed a reply in further support of
her cross-motion for summary judgment on
November 13, 2012. Oral argument was
held on December 3, 2012. The Court has
fully considered the submissions of the
parties.

On October 21, 2011, plaintiff filed her
second amended complaint. On December 2,
2011, Fidelity and Blass filed separate
answers to plaintiff’s second amended
complaint, and Ameriprise filed an answer
and cross-claim against Blass and Wendy, as
well as a counterclaim against plaintiff, for
interpleader. On December 7, 2011, Wendy
filed an answer to the second amended
complaint. She also filed cross-claims
against Blass for breach of fiduciary duty
and a declaratory judgment that Blass lacks
standing to defend the testamentary trust
created under the last will and testament of
Norman, as well as a counterclaim for
breach of contract against plaintiff. Plaintiff
filed
an
answer
to
Ameriprise’s
counterclaim on December 23, 2011, as well
as an answer to Wendy Perlman’s
counterclaim. Blass filed an answer to
Ameriprise’s cross-claim on December 26,
2011, and an answer to Wendy Perlman’s
cross-claims on December 27, 2011. The
case then proceeded to discovery under the
direction of Magistrate Judge E. Thomas
Boyle.

II. STANDARD OF REVIEW
The standard for summary judgment is
well settled. Pursuant to Federal Rule of
Civil Procedure 56(a), a court may only
grant a motion for 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).6 The moving
party bears the burden of showing that he or
she is entitled to summary judgment.
Huminski v. Corsones, 396 F.3d 53, 69 (2d
Cir. 2005). “A party asserting that a fact
cannot be or is genuinely disputed must
support the assertion by: (A) citing to
particular parts of materials in the record,
including
depositions,
documents,
electronically stored information, affidavits
or declarations, stipulations (including those
made for purposes of the motion only),
admissions, interrogatory answers, or other
materials; or (B) showing that the materials
cited do not establish the absence or
presence of a genuine dispute, or that an
adverse party cannot produce admissible

On July 16, 2012, Ameriprise filed a
motion for summary judgment and to
deposit funds, Fidelity filed a motion for
judgment on the pleadings and for summary
judgment, and Wendy Perlman filed a
motion for summary judgment and motion
to dismiss. On September 14, 2012, plaintiff
filed an opposition to all three motions for
summary judgment and a cross-motion for
summary judgment. On October 12, 2012,
Fidelity filed a reply in further support of its
motion for judgment on the pleadings and
for summary judgment and a response in
opposition to plaintiff’s cross-motion for
summary judgment. Also on October 12,
2012, Ameriprise filed a reply in further
support of its motion for summary judgment
and in opposition to plaintiff’s cross-motion
for summary judgment. Finally, on October

6

Because the Court has relied, at least in part, on
deposition excerpts and other exhibits submitted by
the parties in conjunction with their moving papers,
the Court treats Fidelity’s motion for judgment on the
pleadings and for summary judgment solely as a
motion for summary judgment. Accordingly, the
standard for summary judgment, pursuant to Federal
Rule of Civil Procedure 56(a), governs the Court’s
review of Fidelity’s motion.

6

Telecomms., Inc. v. W.R. Grace & Co., 77
F.3d 603, 615 (2d Cir. 1996) (quoting
Research Automation Corp., 585 F.2d at
33).

evidence to support the fact.” Fed. R. Civ. P.
56(c)(1). The court “is not to weigh the
evidence but is instead required to view the
evidence in the light most favorable to the
party opposing summary judgment, to draw
all reasonable inferences in favor of that
party,
and
to
eschew
credibility
assessments.” Amnesty Am. v. Town of W.
Hartford, 361 F.3d 113, 122 (2d Cir. 2004)
(quoting Weyant v. Okst, 101 F.3d 845, 854
(2d Cir. 1996)); see Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986)
(summary judgment is unwarranted if “the
evidence is such that a reasonable jury could
return a verdict for the nonmoving party”).

III. DISCUSSION
A. Plaintiff’s Request for Declaratory
Relief Pursuant to ERISA
Plaintiff seeks declaratory relief pursuant
to Section 502(a)(3)(B) of ERISA, “stating
that, as the plan participant’s surviving
spouse, she is entitled to the assets presently
and improperly maintained in the rollover
IRA.” (Pl.’s Second Am. Compl. ¶ 26.)
Additionally, plaintiff seeks injunctive relief
preventing Ameriprise from distributing the
assets maintained in the IRA to anyone other
than plaintiff. (Id. ¶ 39.) As to these ERISA
claims, defendants argue that (1) Title I of
ERISA does not govern Norman’s Keogh
plan, and (2) even if ERISA applied,
plaintiff’s claims are time-barred by the
applicable statute of limitations. As set forth
in detail below, the uncontroverted evidence
shows that Norman’s plan is not an ERISA
plan and, accordingly, ERISA cannot
provide the relief plaintiff seeks. Moreover,
even assuming arguendo that ERISA
applies, plaintiff’s ERISA-related claims are
untimely. Summary judgment on plaintiff’s
ERISA claims is, therefore, granted in
defendants’ favor.

Once the moving party has met its
burden, the opposing party “must do more
than simply show that there is some
metaphysical doubt as to the material
facts. . . . [T]he nonmoving party must come
forward with specific facts showing that
there is a genuine issue for trial.” Caldarola
v. Calabrese, 298 F.3d 156, 160 (2d Cir.
2002) (quoting Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 586-87
(1986)). As the Supreme Court stated in
Anderson, “[i]f the evidence is merely
colorable, or is not significantly probative,
summary judgment may be granted.” 477
U.S. at 249-50 (citations omitted). Indeed,
“the mere existence of some alleged factual
dispute between the parties” alone will not
defeat a properly supported motion for
summary judgment. Id. at 247-48. Thus, the
nonmoving party may not rest upon mere
conclusory allegations or denials but must
set forth “‘concrete particulars’” showing
that a trial is needed. R.G. Group, Inc. v.
Horn & Hardart Co., 751 F.2d 69, 77 (2d
Cir. 1984) (quoting SEC v. Research
Automation Corp., 585 F.2d 31, 33 (2d Cir.
1978)). Accordingly, it is insufficient for a
party opposing summary judgment “merely
to assert a conclusion without supplying
supporting arguments or facts.” BellSouth

1. Whether Norman’s Keogh Plan is
Governed by ERISA
ERISA was enacted to ‘“protect . . . the
interests of participants in employee benefit
plans and their beneficiaries’ by setting out
substantive regulatory requirements for
employee benefit plans and to ‘provid[e] for
appropriate remedies, sanctions, and ready
access to the Federal Courts.’” Aetna Health
Inc. v. Davila, 542 U.S. 200, 208 (2004)
7

(quoting 29 U.S.C. § 1001(b)) (alteration in
original). Accordingly, pursuant to Section
502(a)(1)(B) of ERISA, “a civil action may
be brought – (1) by a participant or
beneficiary - . . . (B) to recover benefits due
to him under the terms of his plan, to
enforce his rights under the terms of the
plan, or to clarify his rights to future benefits
under the terms of plan.” 29 U.S.C.
§ 1132(a)(1)(B).

“Keogh” or “H.R. 10” plan under
which only partners or only a sole
proprietor are participants covered
under the plan will not be covered
under Title I. However, a Keogh plan
under which one or more common
law employees, in addition to the
self-employed
individuals
are
participants covered under the plan,
will be covered under Title I.

However, Title I of ERISA applies only
to an “employee benefit plan.” Id. § 1003(a).
Under the Act, an “employee benefit plan”
is defined as “any plan . . . established or
maintained by an employer . . . [that] (i)
provides retirement income to employees, or
(ii) results in a deferral of income by
employees for periods extending to the
termination of covered employment or
beyond.” Id. § 1002(2)(A) (emphasis
added). The term, “employee,” is defined by
the statute as “any individual employed by
an employer.” Id. § 1002(6).

29 C.F.R. § 2510.3-3(b) (emphasis added).
Thus, the DOL explicitly excluded from
ERISA’s coverage benefit plans maintained
by self-employed individuals that do not
cover any employees.
Indeed, in Schwartz, 761 F.2d 864, the
Second Circuit reiterated this exclusion. In
Schwartz, a case involving the Keogh
retirement plan of a self-employed
physician, the Second Circuit adopted the
DOL’s definition of “employee benefit
plan” and, accordingly, held that a Keogh
retirement plan maintained by a selfemployed individual who is the sole
contributor to and beneficiary of the account
is not subject to Title I of ERISA. Id. at 86566 (affirming district court’s grant of
summary judgment on the basis that the
account in question “did not meet the
definition of an ‘employee benefit plan’
found in Title I of ERISA and that therefore
the fiduciary duties imposed by Title I upon
the managers of such plans did not apply”).
In expounding on the purpose for the
distinction between benefit plans that cover
employees and those that do not for
purposes of ERISA, the Second Circuit
explained the following:

One year after Title I was enacted, the
Department of Labor (“DOL”) issued
regulations that further clarify the definition
of “employee benefit plan.” See Schwartz v.
Gordon, 761 F.2d 864, 867 (2d Cir. 1985)
(explaining that, in 1975, the “Secretary of
Labor promulgated regulations pursuant to
Congress’ express delegation of [ERISA]
rule-making authority to him”). The
regulations provide:
(b) Plans without employees. For
purposes of Title I of the Act and this
chapter, the term “employee benefit
plan” shall not include any plan,
fund or program, other than an
apprenticeship or other training
program, under which no employees
are participants covered under the
plan as defined in paragraph (d) of
this section. For example, a so-called

A self-employed individual who
voluntarily decides to set aside a
portion of his income for his own
retirement,
unlike
a
worker
employed by another, has complete
8

not an “individual employed
employer”). 29 U.S.C. § 1002(6).7

control over the amount, investment
and form of the fund created by him
for his retirement. The remedial
scheme established by Title I for
workers employed by others was
therefore not necessary for the
protection of self-employed persons,
and Congress accordingly has not
changed
the
definition
of
“employee” in that Title to include
self-employed persons.

by

an

Thus, in order for ERISA to apply, one
or more employees would also need to be
participants in Norman’s plan. However,
based on the evidence in the record, no
rational fact finder could conclude that there
were participants in the plan other than
Norman. First, on the plan documents,
Norman listed himself, and no others, as a
participant. (Ameriprise 56.1 ¶ 5.) Second, a
search conducted by Fidelity during the
pendency of this action has produced no
evidence of participants in the plan other
than Norman (id. ¶ 6), and discovery in this
action has similarly failed to produce
evidence of any additional participants (id.
¶ 7). Finally, plaintiff herself acknowledged
that she was unaware of any additional
participants in Norman’s plan. (Id. ¶ 8.) The
fact that no employees were actually
covered by the plan indicates that, in
establishing his Keogh plan, Norman was
seeking to create a personal retirement fund,
not to provide benefits for any employees.
See Rand, 49 F. Supp. 2d at 118 (remanding
case to state court after determining that the
disability insurance policies at issue were
not part of an employee welfare benefit plan
pursuant to ERISA, as they “were for the
sole interest and benefit of the plaintiff, and
not his employees”); see also Slamen, 166
F.3d at 1105 (“Slamen’s disability insurance
policy covered only himself. No employees

Id. at 868; see also In re Lowenschuss, 171
F.3d 673, 680-81 (9th Cir. 1999) (explaining
that “self-employed owners of companies
that sponsor pension plans were deliberately
excluded from ERISA’s protections because
these individuals can protect their own
beneficial interests in the plans”); Slamen v.
Paul Revere Life Ins. Co., 166 F.3d 1102,
1105-06 (11th Cir. 1999) (“ERISA excludes
employer benefit plans from its broad scope
because when the employee and employer
are one and the same, there is little need to
regulate plan administration.” (citation and
internal quotation marks omitted)).
Norman’s plan, like the plan at issue in
Schwartz, is of the type excluded from
ERISA’s coverage. Norman listed himself as
the sole employer in his Keogh plan
documents (Ameriprise 56.1 ¶ 4; Wendy
56.1 ¶ 4), and as self-employed on his tax
returns (see Wendy 56.1 ¶ 5 (stating that
Norman filed a “Self Employment Tax
Schedule SE and/or Schedule C reflecting
Norman’s self employment during all times
relevant to this lawsuit”)). In his plan
documents, Norman also listed himself as a
participant in the plan. (Ameriprise 56.1
¶ 5.) Since Norman, as the employer who
established the plan, was also covered by the
plan, he is not an “employee” as defined by
Title I of ERISA (he is self-employed, and

7

The Court notes that plaintiff’s allegation that
Norman and Rosen maintained an “essential
partnership” does not change this analysis. See
Peterson v. Am. Life & Health Ins. Co., 48 F.3d 404,
407 (9th Cir. 1995) (“Neither an owner of a business
nor a partner in a partnership can constitute an
‘employee’ for purposes of determining the existence
of an ERISA plan.”); Rand v. Equitable Life Assur.
Soc’y of the U.S., 49 F. Supp. 2d 111, 118 (E.D.N.Y.
1999) (explaining that plaintiff’s partner “cannot be
considered an employee for purposes of determining
whether ERISA is applicable”).

9

received any benefits under the plan. . . .
Slamen’s disability insurance policy . . . is
not, by its terms, an ERISA plan . . . .”). It is
quite clear that, under the reasoning of
Schwartz, such a plan falls outside of
ERISA’s scope.8

“exclude[d] from Title I coverage [are] those
plans, such as [plaintiff’s], in which there
are no employees and for which the
fiduciary protections afforded by the Act are
accordingly least important”). Thus, the law
and precedent are clear that, when selfemployed individuals like Norman open
retirement accounts that do not cover any
employees, those accounts are not governed
by Title I of ERISA.

As discussed above, the DOL’s
regulations explicitly exclude benefit plans
with no employee participants from
ERISA’s coverage, and this Court is not in a
position to disturb the DOL’s judgment. See
Chevron, U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837, 843-44
(1984) (“If Congress has explicitly left a gap
for the agency to fill, there is an express
delegation of authority to the agency to
elucidate a specific provision of the statute
by regulation. Such legislative regulations
are given controlling weight unless they are
arbitrary, capricious, or manifestly contrary
to the statute.”); Prince v. Am. Airlines, Inc.,
97 Civ. 7231 (RWS), 1999 U.S. Dist.
LEXIS 15550, at *19 (S.D.N.Y. Oct. 6,
1999) (“[W]here an agency is vested with
policy-making power, as the DOL is with
respect to Title I of ERISA, a court cannot
substitute its judgment for that of the
agency.”). Further, both the Supreme Court
and the Second Circuit have already
considered and deferred to the DOL on this
issue. See Raymond B. Yates, M.D., P.C.
Profit Sharing Plan v. Hendon, 541 U.S. 1,
21 (2004) (“Plans that cover only sole
owners or partners and their spouses, the
regulation instructs, fall outside Title I’s
domain. Plans covering working owners and
their nonowner employees, on the other
hand, fall entirely within ERISA’s
compass.” (footnotes omitted)); Schwartz,
761 F.2d at 869 (finding DOL’s
interpretation reasonable and explaining that

Hildegard argues, however, that because
Norman was a member of an “affiliated
service group,” as that term is defined in
Section 414(m) of the IRC, his Keogh plan
may nevertheless be subject to ERISA. (See
Pl.’s Mem. of Law in Opp’n to Defs.’ Mots.
for Summ. J. and in Supp. of Pl.’s Cross
Mot. for Summ. J. (“Pl.’s Opp’n & Cross
Mot.”) at 10.) Essentially, plaintiff’s
argument is that the definition of “affiliated
service group” used to determine whether
one qualifies for favorable tax treatment
under the Code should also be used to
determine whether one’s plan is subject to
ERISA, and that because Norman was part
of an “affiliated service group,” as defined
by the Code, his Keogh plan is governed by
ERISA. Putting aside the question of
whether Norman was in fact part of an
“affiliated service group,” there is simply no
authority to support plaintiff’s argument that
a definition in the Code used for tax
purposes should be used to determine
whether a plan falls within the ambit of
ERISA.9

9

Indeed, when asked at oral argument whether there
are any cases or authority to support this argument,
plaintiff’s counsel responded, “There aren’t many
cases that deal with this issue, to be totally honest
here.” (Oral Arg. Dec. 3, 2012.) Plaintiff’s counsel
further stated that “in terms of facts necessary to
establish an affiliated service group under ERISA,

8

The Court notes that, in her opposition papers,
plaintiff fails to even address, let alone distinguish,
Schwartz, 761 F.2d 864.

10

Instead, the case law makes clear that
these provisions of the Code do not alter
ERISA’s requirements. See, e.g., West v.
Clarke Murphy, Jr. Self Employed Pension
Plan, 99 F.3d 166, 169 (4th Cir. 1996) (“For
tax purposes, § 414(m) expands the scope of
the term employer by defining affiliated
service groups. These provisions of the Tax
Code, however, do not vary ERISA’s
definition of participant or its requirement of
an employer-employee relationship. . . .
Employee status under ERISA is determined
not by the tax code but by the common law
of agency.” (citations omitted)); see also
Stamper v. Total Petroleum, Inc. Ret. Plan,
188 F.3d 1233, 1238-39 (9th Cir. 1999) (“In
light of the Supreme Court’s observation
that ‘ERISA is a comprehensive and
reticulated statute, which Congress adopted
after careful study of private retirement
pension plans,” Alessi v. RaybestosManhattan, Inc., 451 U.S. 504, 510 (1981)
(quotation and citation omitted), we believe
it would be improper to read into ERISA a
requirement Congress elected to apply only
to the Tax Code.”); Reklau v. Merchants
Nat’l Corp., 808 F.2d 628, 631 (7th Cir.
1986) (“We are convinced that had Congress
intended that § 401 of the I.R.C. be
applicable to ERISA, it would have so stated
in clear and unambiguous language as it did
in 29 U.S.C. § 1202(c) with §§ 410(a), 411
and 412 of the I.R.C. We thus refuse to read
§ 401(a) of the I.R.C. as applicable to
ERISA.” (footnote omitted)). Said another
way, whether or not Norman was a member
of an “affiliated service group,” as the Code
defines that term, has no bearing on the
ERISA inquiry. Thus, even if Norman was a
member of an “affiliated service group”
under the Code, for the reasons discussed
supra, his Keogh plan is not an ERISA plan.

Plaintiff also seems to contend that,
because the Keogh plan documents include
spousal consent language consistent with
ERISA, the plan must be governed by
ERISA. (See Pl.’s Opp’n & Cross Mot. at 9.)
However, spousal consent language does not
turn a plan that is otherwise not subject to
ERISA into an ERISA-governed plan. Thus,
the mere presence of spousal consent
language in plan documents does not render
a Keogh plan established for, and by, a
single, self-employed participant – a plan
that would otherwise fall outside of
ERISA’s scope – subject to ERISA.10
Because the uncontroverted evidence
shows that Norman’s benefit plan did not
cover any “employees” as defined by Title I
of ERISA, it is not an “employee benefit
plan” within the meaning of the Act.
Accordingly, ERISA does not govern
Norman’s Keogh account and plaintiff, in
seeking relief pursuant to ERISA, has
therefore failed to state a claim upon which
relief may be granted.11

10

In fact, one of the cases plaintiff cites in support of
this argument is completely devoid of any reference
to ERISA, see Edelman v. Smith Barney Inc., 55 F.
Supp. 2d 218 (S.D.N.Y. 1999), and the other two
cases she cites are distinguishable because they did
not involve plans established for self-employed
individuals, see Hagwood v. Newton, 282 F.3d 285
(4th Cir. 2002); Boulet v. Fluor Corp., Civ. No. H05-0105, 2005 U.S. Dist. LEXIS 29973 (S.D. Tex.
Oct. 31, 2005).
11
“When a claim allegedly based on a federal statute
must be dismissed because of the statute’s
inapplicability to the facts alleged, the dismissal is
sometimes described as jurisdictional.” Schwartz, 761
F.2d at 867 n.4. However, when, as here, the
“complaint invokes federal jurisdiction to determine
the statute’s applicability, then, unless the question is
insubstantial and frivolous, the dismissal is more
accurately described as based on failure to state a
claim upon which relief may be granted.” Id.

there are no cases directly on point about those
facts.” (Id.)

11

misreading of Second Circuit precedent. In
Caputo v. Pfizer, Inc., the Second Circuit,
for the first time, defined the concept of
“actual knowledge of the breach or
violation” within the meaning of ERISA.
267 F.3d at 193. The Second Circuit held
that a plaintiff has “actual knowledge of the
breach or violation” when “he has
knowledge of all material facts necessary to
understand that an ERISA fiduciary has
breached his or her duty or otherwise
violated the Act.” Id. (citing Maher v.
Strachan Shipping Co., 68 F.3d 951, 954
(5th Cir. 1995) and Gluck v. Unisys Corp.,
960 F.2d 1168, 1177 (3d Cir. 1992)). Thus,
a plaintiff “must have knowledge of all facts
necessary to constitute a claim” to satisfy
the “actual knowledge” requirement. Id.
(emphasis added). However, she “need not
have knowledge of the relevant law.” Id.

2. Whether Plaintiff’s Claims Are
Timely if ERISA Applies
Even assuming arguendo that Norman’s
plan is an ERISA plan, plaintiff’s claims
brought pursuant to ERISA would be barred
by the applicable statute of limitations.
Claims asserting a breach of fiduciary
duty under ERISA must be commenced after
the earlier of:
(1) six years after (A) the date of the
last action which constituted a part of
the breach or violation, or (B) in the
case of an omission, the latest date
on which the fiduciary could have
cured the breach or violation, or
(2) three years after the earliest date
on which the plaintiff had actual
knowledge of the breach or
violation;

Hildegard’s claim is that defendants
allegedly
“breached
their
fiduciary
obligations when, in January 2007, [they]
transferred all of the assets of the Keogh
account to an Ameriprise IRA account
without obtaining the requisite spousal
consent.” (Pl.’s Opp’n & Cross Mot. at 29.)
Under Caputo then, Hildegard obtained
“actual knowledge” of the alleged breach
when she had knowledge of all the facts
necessary to constitute this claim – i.e.,
when she knew that Norman’s assets had
been transferred without her consent. It is
undisputed that Hildegard was not only
aware of, but also agreed to, the transfer of
assets in Norman’s account with Fidelity to
Ameriprise on or about January 22, 2007.
(Fidelity 56.1 ¶ 3; see also Wendy 56.1 ¶ 10;
Hildegard Dep. at 103.) In addition, because
the “spousal consent” at issue for this claim
is Hildegard’s consent, it is uncontroverted
that Hildegard would have known whether
or not she consented to the transfer by the

except that in the case of fraud or
concealment, such action may be
commenced not later than six years
after the date of discovery of such
breach or violation.
29 U.S.C. § 1113. As a preliminary matter,
plaintiff does not assert, nor could she
credibly contend, that defendants “ma[de] a
knowing misrepresentation or omission of a
material fact” or “engaged in acts to hinder
the discovery of a breach of fiduciary duty”
when they effectuated the transfer of
Norman’s Keogh plan. Caputo v. Pfizer,
Inc., 267 F.3d 181, 190 (2d Cir. 2001).
Accordingly, the limitations period for fraud
or concealment cases is not applicable here.
Plaintiff’s argument that a six-year,
rather than a three-year, statute of
limitations should govern is without merit
and, in the Court’s view, is based on a
12

time that transfer was effectuated.12 Thus,
the uncontroverted evidence shows that
Hildegard had knowledge of all facts
necessary to constitute her breach of
fiduciary claim by January 22, 2007.

that “constructive knowledge” does not
satisfy ERISA’s statute of limitations
requirement). Hildegard cites this in her
opposition papers as support for her
argument that she could not have had
“actual knowledge” of defendants’ alleged
breach at the point of transfer. (See Pl.’s
Opp’n & Cross Mot. at 30.) However, this
contention is erroneous because plaintiff’s
situation is distinguishable from that of the
plaintiffs in Caputo.

Hildegard’s argument for a six-year
statute of limitations is that, although she
was made aware of the transfer, and may
even have consented to it before it occurred,
she did not understand the implications of
that transfer and, therefore, did not have
“actual knowledge” of the alleged breach.
(See Pl.’s Opp’n & Cross Mot. at 29-30; see
also Oral Arg. Dec. 3, 2012.) However, as
discussed supra, in Caputo the Second
Circuit makes clear that a plaintiff need not
have knowledge of the relevant law to have
“actual knowledge” for purposes of
ascertaining the limitations period. Caputo,
267 F.3d at 193. Thus, for purposes of the
statute of limitations inquiry, it is no matter
that Hildegard may not have understood
what effect the transfer of Norman’s assets
from Fidelity to Ameriprise would
ultimately have on her survivorship rights.
Instead, to have “actual knowledge,” a
plaintiff need only have knowledge of all
material facts necessary to constitute a
claim, id., which, for the reasons discussed
above, Hildegard acquired on or about
January 22, 2007, if not before.

The alleged breach of fiduciary duty at
issue in Caputo was an employer
misrepresenting facts about plaintiffs’
pension benefits. Caputo, 267 F.3d at 19394. The Second Circuit explained that the
plaintiffs could not have had “actual
knowledge” of the breach at the time that
their
employer
first
provided
the
information, for it was not until later that
they learned new facts which led them to
believe that their employer’s prior
representations had been false. Id. at 194.
Accordingly, the Second Circuit stated, “the
disclosure of a transaction that is not
inherently a statutory breach of fiduciary
duty cannot communicate the existence of
an underlying breach.” Id. at 193
(alterations, citations, and internal quotation
marks omitted); see also Fink v. Nat’l Sav.
& Trust Co., 772 F.2d 951, 957 (D.C. Cir.
1985) (explaining that, because forms
required to be filed with the Department of
Labor do not require information, nor was
any provided in this case, about whether or
not the fiduciary duty of independent
investigation and evaluation of a plan’s
investments was fulfilled, the forms cannot,
standing alone, constitute knowledge of a
breach of that duty). That is simply not the
case here, as it is undisputed that Hildegard
had knowledge of both the fact of the
transfer and whether or not she had
consented to it. Thus, Hildegard had “actual
knowledge of the breach” to trigger the

The Court recognizes that, in Caputo,
the Second Circuit found that the plaintiff
did not have “actual knowledge” on the date
cited by the district court because, at that
point, he only had “constructive knowledge”
of the alleged breach. Id. at 194 (explaining
12

In fact, at her deposition, Hildegard testified that
she remembers signing a “spousal consent” for the
transfer before it occurred. (Hildegard Dep. at 103.)
Although no signed document has turned up during
discovery, it is uncontroverted that Hildegard would
know whether or not she had given “spousal consent”
to the transfer by the time the transfer was made.

13

The sections of the IRC plaintiff points
to, Sections 401 and 417, relate solely to tax
qualification. Section 401 deals with
obtaining tax deferred status of contributions
to a plan, and Section 417 provides
definitions and special rules for purposes of
minimum survivor annuity requirements.
However, these sections do not create a
private right of action for Hildegard. See
e.g., Suozzo v. Bergreen, 00 Civ. 9649
(JGK), 2002 U.S. Dist. LEXIS 25563, at *4
(S.D.N.Y. Feb. 5, 2003) (“[T]here is no
private right of action for an alleged
violation of Section 401, and thus the
plaintiff has no claim based on the alleged
failure of the Plan to comply with Section
401 [of the IRC].”); see also Cowan v.
Keystone Emp. Profit Sharing Fund, 586
F.2d 888, 890 n.3 (1st Cir. 1978)
(“[Plaintiff] has also argued that he has a
cause of action under I.R.C. § 401. . . . This
section does not appear to create any
substantive rights that a beneficiary of a
qualified retirement trust can enforce.”);
Beiliang Loh v. Richardson-Browne, Civ.
No. 10-0054(NLH), 2010 U.S. Dist. LEXIS
128016, at *9 (D.N.J. Dec. 2, 2010)
(“Section 401 of the IRS Code does not
grant Plaintiff a private cause of action . . .
.”); Hall v. Nat’l R.R. Passenger Corp., 559
F. Supp. 2d 38, 54-55 (D.D.C. 2008)
(explaining that “no private cause of action
arises under I.R.C. § 401”).

three-year statute of limitations period at the
point when the transfer was effectuated.
Accordingly, the three-year statute of
limitations governs this action and plaintiff,
in filing her complaint nearly four years
after she obtained “actual knowledge” of the
alleged breach, is untimely even if ERISA
applies.
***
In sum, Norman’s plan is not one that
ERISA governs and, even assuming
arguendo that it was an ERISA plan,
plaintiff’s ERISA claims would be barred by
the statute of limitations. For these reasons,
plaintiff’s ERISA-related claims must fail,
and summary judgment is granted in
defendants’ favor.
B. Plaintiff’s Request for Relief Under
the Internal Revenue Code
Although the claims for relief
enumerated in plaintiff’s second amended
complaint are not made pursuant to the IRC
(rather, plaintiff’s three causes of action
explicitly reference sections of ERISA),
plaintiff alleges, in her opposition papers,
that she “brings her claim in federal court
specifically asserting a violation of Section
417(a)(2) of the Code (which parallels
ERISA § 205).” (Pl.’s Opp’n & Cross Mot.
at 12.) To the extent plaintiff attempts to
bring a claim under the IRC, that claim must
fail, as plaintiff has no private right of action
under the IRC. See e.g., Wiesner v. Romo
Paper Prods. Corp. Emps. Ret. Plan, 514 F.
Supp. 289, 291 n.2 (E.D.N.Y. 1981) (“The
[IRC] sections relied on, 26 U.S.C. §§ 401,
404 and 503, do not create a substantive
right that a beneficiary, participant or
fiduciary could enforce.”).

Moreover, as stated in Wendy’s reply
papers, “IRC § 417(a) does not address any
substantive right Hildegard may have but
rather, at most, relates to Norman’s tax
liability or his right to defer reporting
income for contributions to the plan not in
issue in this action,” and “[n]othing in the
pleadings suggests that Hildegard’s claim is
dependent on, or even related to, the
qualification of Norman’s contributions to
the account for tax deferment purposes.”
(Reply Mem. of Law in Supp. of Wendy
14

Perlman’s Mot. for Summ. J. & in Opp’n to
Pl.’s Cross Mot. at 5.) Accordingly, any
claims based on these IRC sections cannot
survive summary judgment.

to issue the declaratory judgment sought
and, as such, denies Hildegard’s crossmotion for summary judgment in its
entirety.

C. Plaintiff’s Cross-Motion for
Summary Judgment

D. Ameriprise’s Motion to Deposit
Funds with a Discharge of Liability

Hildegard’s cross-motion for summary
judgment seeks declaratory relief pursuant
to ERISA or, in the event the Court finds
that ERISA does not apply, pursuant to 28
U.S.C. § 2201. (See Pl.’s Opp’n & Cross
Mot. at 34-37.)

Ameriprise has asserted a counterclaim
for interpleader, pursuant to the Federal
Interpleader Act, 28 U.S.C. § 1335.
Ameriprise seeks to deposit the IRA
proceeds with the Court, pursuant to 28
U.S.C. § 1335, with a discharge of liability,
pursuant to 28 U.S.C. § 2361.

For the reasons discussed supra,
Hildegard is not entitled to relief pursuant to
ERISA. Thus, Hildegard’s cross-motion for
summary judgment is essentially a request
that the Court declare her to be the proper
beneficiary of Norman’s IRA assets.
However, because Hildegard has no
underlying federal cause of action (as
discussed supra, her ERISA claims cannot
survive summary judgment, and she has no
cause of action under the IRC), she cannot
maintain an action for a declaratory
judgment. See Springfield Hosp. v.
Hofmann, 488 F. App’x 534, 535 (2d Cir.
2012) (“[Plaintiff] cannot maintain an action
for a declaratory judgment without an
underlying federal cause of action. . . . A
prayer for relief, standing alone, simply does
not satisfy the requirement that a case or
controversy exist.”); In re Joint E. & S. Dist.
Asbestos Litig., 14 F.3d 726, 731 (2d Cir.
1993) (“[A] court may only enter a
declaratory judgment in favor of a party who
has a substantive claim of right to such
relief.”).13 Accordingly, the Court declines

Interpleader is designed to “protect
stakeholders from undue harassment in the
face of multiple claims against the same
fund, and to relieve the stakeholder from
assessing which claim among many has
merit.” Fidelity Brokerage Servs., LLC v.
Bank of China, 192 F. Supp. 2d 173, 177
(S.D.N.Y. 2002) (citing Washington Elec.
Coop. v. Paterson, Walke & Pratt, P.C., 985
F.2d 677, 679 (2d Cir. 1993)). Interpleader
actions normally proceed in two stages: first,
the court “determines whether the
interpleader action is appropriate and the
stakeholder is entitled to bring the action,”
and second, the court determines “the rights
of the competing claimants to the fund.” Id.;
see also N.Y. Life Ins. Co. v. Apostolidis,
841 F. Supp. 2d 711, 716-17 (E.D.N.Y.
2012) (“In the first step, the Court
determines whether the jurisdictional
requirements of Section 1335 have been met
and, if it finds they have been, the Court
discharges the plaintiff from liability. In the
second step, the Court adjudicates the claims
among the remaining adverse parties.”
(internal citations omitted)).

13

Plaintiff’s argument that this case requires an
interpretation of the IRC that only a federal court can
provide is unpersuasive. (See Pl.’s Reply Mem. of
Law in Supp. of Pl.’s Cross Mot. for Summ J. at 4-5.)
As discussed supra, the IRC provisions cited by

plaintiff relate to tax qualification, and that is not at
issue in this case.

15

funds – namely, the claims of Hildegard and
Wendy. Finally, Ameriprise has requested
permission to deposit the relevant funds with
the Court.

As to the first stage, the interpleader
statute applies only where there is “minimal
diversity,” i.e., “where there are two or more
adverse claimants, of diverse citizenship,”
Union Cent. Life Ins. Co. v. Berger, 10 Civ.
8408 (PGG), 2012 U.S. Dist. LEXIS
135102, at *19 n.9 (S.D.N.Y. Sept. 20,
2012) (alteration, citation, and internal
quotation marks omitted), and when money
or property worth $500 or more is involved,
see Feehan v. Feehan, 09 Civ. 7016
(DAB)(THK), 2011 U.S. Dist. LEXIS
14047, at *9 (S.D.N.Y. Jan. 10, 2011). In
addition, to determine whether an
interpleader action is appropriate, a court
must assess “whether the stakeholder
legitimately fears multiple liability directed
against a single fund, regardless of the
merits of the competing claims.” Fidelity
Brokerage Servs., LLC, 192 F. Supp. at 178
(alterations, citation, and internal quotation
marks omitted); see also Marcus v. Dufour,
796 F. Supp. 2d 386, 390 (E.D.N.Y. 2011)
(“[T]he [interpleader] plaintiff must allege a
real and reasonable fear of double liability
or vexatious conflicting claims against the
single fund, regardless of the merits of the
competing claims.” (internal citations and
quotation marks omitted)). Finally, an
interpleader plaintiff “must state that he has
deposited or is depositing the fund with the
court.” Marcus, 796 F. Supp. 2d at 390.

However, the Second Circuit has held
that “the availability of interpleader
jurisdiction does not require its exercise, and
the district court acts within its discretion to
decline adjudicating issues raised in an
interpleader action that can be ‘fairly
adjudicated’ in state court.” Nat’l Union
Fire Ins. Co. v. Karp, 108 F.3d 17, 21 (2d
Cir. 1997) (finding that district court did not
err in applying discretionary standard when
determining whether to abstain from
adjudicating
an
insurance
policy’s
coverage); see also Truck-A-Tune, Inc. v.
Re, 23 F.3d 60, 63 (2d Cir. 1994)
(“Interpleader is an equitable proceeding,
and the District Court acted well within its
discretion in determining that the equities
did not warrant further federal court
adjudication.” (internal citation omitted));
Am. Airlines, Inc. v. Block, 905 F.2d 12, 14
(2d Cir. 1990) (per curiam) (“[I]t is well
recognized that interpleader is an equitable
remedy, and a federal court may abstain
from deciding an interpleader action if
another action could adequately redress the
threat that the stakeholder might be held
doubly liable.”). In so holding, the Second
Circuit explicitly stated that the rationale
underlying the Supreme Court’s holding in
Wilton v. Seven Falls Co., 515 U.S. 277
(1995) – that the district court in that case
properly abstained, as a matter of discretion,
from hearing a case brought under the
Declaratory Judgment Act where a parallel
or concurrent action in state court was
already proceeding – is “equally applicable
to a claim for a declaration of non-coverage
under an insurance policy raised in the
context of a statutory impleader, as it is to a
claim for declaratory relief raised in any
other context.” Nat’l Union Fire Ins. Co.,

Here, the Court finds that Ameriprise
has satisfied all of the requirements of the
first stage of an interpleader action. First,
there is “minimal diversity” because Wendy
is a citizen of California and both Hildegard
and Blass are citizens of New York. Second,
it is undisputed that the value of the
proceeds in the IRA account has at all times
exceeded $500.00. (Ameriprise 56.1 ¶ 22.)
Third, Ameriprise is a neutral party that
takes no position as to the proper
disbursement of the IRA funds against the
multiple and competing claims to those
16

weigh in favor of abstention in this case.14
The question of who is entitled to the IRA
proceeds at the heart of the interpleader
action is also one of the many issues before
the Surrogate’s Court, and in that sense, the
interpleader action is parallel to the state
proceeding. See id.; see also Dore v.
Wormley, 690 F. Supp. 2d 176, 191
(S.D.N.Y. 2010) (“Suits are parallel when
substantially the same parties are
contemporaneously litigating substantially
the same issue in another forum.” (citation
and internal quotation marks omitted)). The
fact that the interpleader action “is merely a
subset, rather than exact duplicate of the
state court proceeding does not diminish
[their] concurrent nature.” Glenclova Inv.
Co., 874 F. Supp. 2d at 307 (citation and
internal
quotation
marks
omitted).
Additionally, because both this Court and
the Surrogate’s Court are located in the
same state, the fora are equally convenient
for these parties. Finally, there is clearly a
need to avoid the duplicative litigation that
has already arisen in this case. Now that the
Court has determined, as discussed supra,
that ERISA does not govern Norman’s
assets, there is no reason why all remaining
claims to the IRA cannot be adjudicated
fully in the proceeding already ongoing in
state court.

108 F.3d at 21; see also NYLife Distribs.,
Inc. v. Adherence Grp., Inc., 72 F.3d 371,
372 (3d Cir. 1995) (holding that “a motion
to dismiss a federal statutory interpleader
action during the pendency of a parallel state
court proceeding is addressed to the sound
discretion of the district court”).
In Wilton, the Supreme Court explained
that in determining whether to exercise such
discretion, district courts should consider
“whether the questions in controversy
between the parties to the federal suit . . .
can better be settled in the proceeding
pending in the state court.” 515 U.S. at 282
(internal citation and quotation marks
omitted). In terms of factors to consider as
part of this analysis, the Wilton Court
pointed to the non-exclusive list of factors
set forth in Brillhart v. Excess Ins. Co., 316
U.S. 491 (1942):
(1) The scope of the pending state
proceeding and the nature of the
defenses available there; (2) whether
the claims of all parties in interest
can satisfactorily be adjudicated in
that proceeding; (3) whether the
necessary parties have been joined;
and (4) whether such parties are
amenable to process in that
proceeding; (5) avoiding duplicative
proceedings; (6) avoiding forum
shopping;
(7)
the
relative
convenience of the fora; (8) the order
of filing; and (9) choice of law.

Thus, in its discretion, the Court abstains
from
exercising
jurisdiction
over
Ameriprise’s interpleader counterclaim and
cross-claims (asserted against Hildegard,
Wendy,
and
Blass).
Accordingly,
Ameriprise is not permitted to deposit the
IRA proceeds with the Court, and the Court

Glenclova Inv. Co. v. Trans-Resources, Inc.,
874 F. Supp. 2d 292, 307 (S.D.N.Y. 2012)
(citation omitted).
Given the proceedings that are pending
in the Surrogate’s Court of the State of New
York, Nassau County, all of these factors

14

Indeed, in her moving papers, Wendy argues that
“there are proceedings pending in New York
Surrogate’s Court, Nassau County in which the rights
and obligations of the parties can and should be fully
resolved.” (Mem. of Law in Supp. of Wendy’s Mot.
for Summ. J. at 12.)

17

clearly inappropriate for the district court to
retain jurisdiction over the state law claims
when there is no basis for supplemental
jurisdiction.”); Karmel v. Claiborne, Inc.,
No. 99 Civ. 3608 (WK), 2002 U.S. Dist.
LEXIS 12842, at *11-12 (S.D.N.Y. July 15,
2002) (“Where a court is reluctant to
exercise supplemental jurisdiction because
of one of the reasons put forth by § 1367(c),
or when the interests of judicial economy,
convenience, comity and fairness to litigants
are not violated by refusing to entertain
matters of state law, it should decline
supplemental jurisdiction and allow the
plaintiff to decide whether or not to pursue
the matter in state court.”).

declines to discharge Ameriprise from
liability pursuant to its interpleader claims.
E. Remaining State Law Claims
Wendy has filed two cross-claims
against Blass, for breach of fiduciary duty
and for declaratory judgment that he lacks
standing to defend the testamentary trust
created under Norman’s last will and
testament. Wendy has also filed a
counterclaim against plaintiff for breach of
contract.
Having determined, as discussed supra,
that plaintiff’s federal claims do not survive
summary judgment, the Court concludes that
retaining jurisdiction over any state law
claims is unwarranted. 28 U.S.C.
§ 1367(c)(3); United Mine Workers of Am.
v. Gibbs, 383 U.S. 715, 726 (1966). “In the
interest of comity, the Second Circuit
instructs
that
‘absent
exceptional
circumstances,’ where federal claims can be
disposed of pursuant to Rule 12(b)(6) or
summary judgment grounds, courts should
‘abstain
from
exercising
pendent
jurisdiction.’” Birch v. Pioneer Credit
Recovery, Inc., 06-CV-6497T, 2007 U.S.
Dist. LEXIS 41834, at *15 (W.D.N.Y. June
8, 2007) (quoting Walker v. Time Life Films,
Inc., 784 F.2d 44, 53 (2d Cir. 1986)).

Accordingly, pursuant to 28 U.S.C.
§ 1367(c)(3), the Court declines to retain
jurisdiction over Wendy’s cross-claims
against Blass and her counterclaim against
Hildegard, and dismisses such state claims
without prejudice.15
F. Attorneys’ Fees and Costs
Each of the moving defendants (Fidelity,
Ameriprise, and Wendy) seeks attorney’s
fees incurred in connection with this action.
Plaintiff similarly claims that she is entitled
to attorney’s fees.
“A district court reviewing a claim under
ERISA may, in its discretion, ‘allow a
reasonable attorney’s fee and costs of action
to either party.’” Connors v. Conn. Gen. Life
Ins. Co., 272 F.3d 127, 137 (2d Cir. 2001)
(quoting Jones v. UNUM Life Ins. Co. of
Am., 223 F.3d 130, 138 (2d Cir. 2000)).

Therefore, in the instant case, the Court,
in its discretion, ‘“decline[s] to exercise
supplemental jurisdiction’” over any
remaining state law claims because “it ‘has
dismissed all claims over which it has
original jurisdiction.’” Kolari v. N.Y.
Presbyterian Hosp., 455 F.3d 118, 122 (2d
Cir. 2006) (quoting 28 U.S.C. § 1367(c)(3));
see also Cave v. E. Meadow Union Free
Sch. Dist., 514 F.3d 240, 250 (2d Cir. 2008)
(“We have already found that the district
court lacks subject matter jurisdiction over
appellants’ federal claims. It would thus be

15

To the extent Wendy’s cross-claim against Blass
regarding whether he has standing to defend the
testamentary trust created by Norman’s last will and
testament seeks a declaration that Blass is not fit to
serve as trustee in connection with this action, that
claim is moot given the Court’s dismissal of
plaintiff’s federal claims.

18

factors: (1) the degree of the offending
party’s culpability or bad faith, (2) the
ability of the offending party to satisfy an
award of attorney’s fees, (3) whether an
award of fees would deter other persons
from
acting
similarly
under
the
circumstances, (4) the relative merits of the
parties’ positions, and (5) whether the action
conferred a common benefit on a group of
pension plan participants.” Chambless v.
Masters, Mates & Pilots Pension Plan, 815
F.2d 869, 871 (2d Cir. 1987).

Under Section 1132(g)(1) of ERISA, a
district court has ‘“discretion’ to award
attorney’s fees ‘to either party.”’ Hardt v.
Reliance Standard Life Ins. Co., 130 S. Ct.
2149, 2156 (2010) (quoting 29 U.S.C.
§ 1132(g)) (explaining that claimant need
not be a “prevailing party” to receive
attorney’s fees pursuant to Section
1132(g)(1)). However, before a court may
award attorney’s fees to a claimant under
1132(g)(1), he or she “must show some
degree of success on the merits.” Id. at 2158
(citation omitted) (explaining that “[a]
claimant does not satisfy that requirement by
achieving ‘trivial success on the merits’ or a
‘pure procedural victory’” (alteration and
citation omitted)).

As the Second Circuit has explained, the
Chambless test will “very frequently suggest
that attorney’s fees should not be charged
against ERISA plaintiffs.” Salovaara v.
Eckert, 222 F.3d 19, 28 (2d Cir. 2000)
(citation and quotation marks omitted). This
“favorable slant toward ERISA plaintiffs is
necessary to prevent the chilling of suits
brought in good faith – the purpose of
ERISA being to promote the interests of
plan beneficiaries and allow them to enforce
their statutory rights.” Id. (quoting Jones v.
O’Higgins, 736 F. Supp. 1243, 1245
(N.D.N.Y. 1990)); see also Meredith v.
Navistar Int’l Transp. Corp., 935 F.2d 124,
128-29 (7th Cir. 1991) (“[W]e must keep in
mind ERISA’s essential remedial purpose:
to protect beneficiaries of pension plans.
Adherence to this policy often counsels
against charging fees against ERISA
beneficiaries since private actions by
beneficiaries seeking in good faith to secure
their rights under employee benefit plans are
important mechanisms for furthering
ERISA’s remedial purpose.” (internal
citation and quotation marks omitted)). “For
this reason, when determining whether
attorney’s fees should be awarded to
defendants, [courts] focus on the first
Chambless factor: whether plaintiffs brought
the complaint in good faith.” Toussaint, 648
F.3d at 111.

Given that Hildegard has not achieved
“some degree of success on the merits,” the
Court cannot award her attorney’s fees in
this action. See id.; see also Katzenberg v.
Lazzari, 406 F. App’x 559, 563 (2d Cir.
2011) (finding that district court’s decision
not to award attorney’s fees was not an
abuse of discretion because plaintiff
achieved no success on the merits).
Defendants, on the other hand, have
prevailed on summary judgment. The Court,
therefore, looks to the Chambless test used
by courts in this Circuit to “channel[] their
discretion when awarding fees under
§ 1132(g)(1).” Levitian v. Sun Life & Health
Ins. Co., 486 F. App’x 136, 141 (2d Cir.
2012) (alteration, citation, and internal
quotation marks omitted) (explaining that,
pursuant to Hardt, a court must first
consider whether a fees claimant has shown
“some degree of success on the merits,” but
then may apply the Chambless factors to
determine whether to award fees); Toussaint
v. JJ Weiser, Inc., 648 F.3d 108, 110 (2d
Cir. 2011) (“A court may apply – but is not
required to apply – the Chambless factors . .
. .”). The Chambless test consists of “five
19

Although Hildegard failed to prove any
of her claims, the Court cannot conclude that
her claims were frivolous or that they were
made in bad faith. In essence, the Court
concludes that Hildegard genuinely believed
that Norman’s plan was an ERISA plan (and
that claims made pursuant to ERISA would
be timely), and further believed that
discovery would prove that theory.
Moreover, overwhelming is the concern that
awarding fees in a case like this will “deter
beneficiaries and trustees from bringing
suits in good faith for fear that they would
be saddled with their adversary’s fees in
addition to their own in the event that they
failed to prevail,” thus serving to
“undermine ERISA’s essential remedial
purpose of protecting beneficiaries of
pension plans.” Salovaara, 222 F.3d at 31
(citing Gibbs v. Gibbs, 210 F.3d 491, 505
(5th Cir. 2000)).16 Accordingly, the Court
also declines to award attorney’s fees to
defendants.17

entirety. The Court declines to exercise
jurisdiction over Ameriprise’s interpleader
counterclaim
and
cross-claims
and,
accordingly, does not permit Ameriprise to
deposit funds with the Court and declines to
discharge Ameriprise from liability pursuant
to that interpleader claim. The Court also
declines to exercise supplemental authority
over Wendy’s state law cross-claims – for
breach of fiduciary duty and a declaratory
judgment regarding whether Blass has
standing to defend the testamentary trust –
and Wendy’s state law breach of contract
counterclaim, and dismisses those claims
without prejudice. Finally, the Court
declines to award attorney’s fees to any of
the parties in this action. The Clerk of the
Court shall close the case and enter
judgment accordingly.
SO ORDERED.

______________________
JOSEPH F. BIANCO
United States District Judge

IV. CONCLUSION
For the foregoing reasons, the Court
grants defendants’ motions for summary
judgment with respect to plaintiff’s ERISA
and IRC claims and denies plaintiff’s crossmotion for summary judgment in its

Dated: March 26, 2013
Central Islip, NY
***

16

The Court has also considered the other three
Chambless factors – the ability of plaintiff to satisfy
an award of attorney’s fees, the relative merits of the
parties’ positions, and whether the action conferred a
common benefit on a group of pension plan
participants – and finds that they similarly do not
weigh in favor of awarding defendants fees and, even
if they did, do not outweigh the other factors cited
above.
17
Because, as discussed supra, the Court declines to
exercise jurisdiction over Ameriprise’s interpleader
counterclaim, the Court similarly declines to grant
Ameriprise attorney’s fees against the interpleader
fund or taxed against one of the parties, as requested.
(See Ameriprise Br. in Supp. of Mot. for Summ. J.
and to Deposit Funds at 21.)

Plaintiff is represented by Amalia
Goldvaser, Rachel Dara Nicotra, and Steven
Jay Hyman of McLaughlin & Stern, LLP,
260 Madison Avenue, New York, N.Y.
10016. Fidelity is represented by Andrew
Evan Rice of Proskauer Rose LLP, Eleven
Times Square, New York, N.Y. 10036,
Charles F. Seeman, Howard Shapiro, and
Kara L. Lincoln of Proskauer Rose LLP,
650 Poydras Street, Suite 1800, New
Orleans, L.A. 70130, and Ana Shields of
Jackson Lewis LLP, 58 South Service Road,
20

Suite 410, Melville, N.Y. 11747. Ameriprise
is represented by Michael J. Zaretsky of
Chorpenning, Good, Carlet & Garrison
Esqs., 645 Fifth Avenue, Suite 703, New
York, N.Y. 10022 and Virginia T. Shea of
Carlet, Garrison, Klein & Zaretsky, LLP,
1135 Clifton Avenue, Clifton, N.J. 07013.
Wendy Perlman is represented by Phillip C.
Landrigan of McCarthy Fingar LLP, 11
Martine Avenue, White Plains, N.Y. 10606.
Jonathan Blass is represented by Craig A.
DiPrima of The Law Office of Craig A.
DiPrima LLC, 211 Oakwood Road,
Huntington, N.Y. 11743 and Eric Wilen
Penzer of Farrell Fritz, PC, EAB Plaza, 14th
Floor, Uniondale, N.Y. 11566.

21