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Perez v. Buckingham

United States District Court, Fourth Circuit

January 24, 2014

THOMAS E. PEREZ SECRETARY OF LABOR U.S. DEPARTMENT OF LABOR Plaintiff,
v.
ESTATE OF JOHN D. BUCKINGHAM, SR., et Ill. Defendant.

MEMORANDUM OPINION

PAUL W. GRIMM, District Judge.

This Memorandum and Order addresses the Motion for Default Judgment, ECI No. 21, and Memorandum in Support ("Default Mem."), ECF No. 21-1, tiled by Plaintiff Thomas E. Perez, United States Secretary of Labor. Defendants Thomas Buckingham and Sun Control Systems, Inc. ('"Sun Control") have not responded, and the time to do so has passed. See Loc. R. 105.2.a.[1]

Having reviewed the filings, I find that a hearing is not necessary. See Loc. R. 105.6. For the reasons stated herein, Plaintiffs' Motion for Default Judgment is GRANTED.

I. FACTUAL AND PROCEDURAL HISTORY

Original Plaintiff Secretary of Labor Hilda L. Solis[2] filed a Complaint under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), in a civil enforcement action for breaches of fiduciary duty, seeking relief pursuant to Sections 409 and 502 of ERISA, 29 U.S.C. §§ 1109 and 1132.

The Complaint alleges that Sun Control Systems, Inc. Profit Sharing Plan and Trust ("Plan I"), is a single-employer. profit sharing, defined benefit plan that is administered in Rockville, Maryland, and that was established on or about January 1, 1985. Compl. ¶¶ 3, 15. ECF No. 1. Sun Control Systems, Inc. Profit Sharing Plan II ("Plan II") is a defined-benefit plan with a 401 (k) component that is administered in Rockville, Maryland and that was established on or about January 1, 1992. Id. ¶¶ 4, 16. Sun Control Systems, Inc. 401(k) Plan and Trust ("Plan III" and, collectively with Plan I and Plan II, the "Plans") is a 401(k) benefit plan providing retirement benefits to employees that is administered in Rockville, Maryland and that was established on or about January 1, 2004. All three of the Plans are employee benefit plans within the meaning of Section 3(3) of ERISA, 29 U.S.C. § 1002(3), and therefore all are subject to ERISA pursuant to Section 4(a), 29 U.S.C. § 1003(a). Id. ¶¶ 3-5.

Sun Control was the Plan Administrator for the Plans. Id. ¶ 11. At all relevant times prior to January 21, 2010, John Buckingham was the President and majority shareholder of Sun Control and trustee of the plans, performing the duties and functions of the Plan Administrator. Id. ¶ 12. Up until his death on October 17, 2012, John Buckingham was a majority owner of Sun Control and therefore was a party in interest. See 29 U.S.C. § 1002(14)(E). Id. Beginning January 21, 2010, Thomas Buckingham, the son of John. has been President and a minority shareholder of Sun Control and trustee of the Plans, performing the duties and functions of the Plan Administrator. Id. ¶ 13. He also is a party in interest by virtue of being John Buckingham's son, 29 U.S.C. § 1002(14)(F), and a fifteen percent owner, 29 U.S.C. § 1002(14)(H). Id.

On or about December 6, 2007, John Buckingham and Sun Control authorized plan assets to be transferred from Plan II to a Sun Control bank account. Id. ¶ 19. On or about February 6, 2008, John Buckingham and Sun Control executed a counter debit, causing plan assets to be removed from a Plan I bank account and deposited into a Sun Control bank account. Id. ¶ 20. On or about July 14, 2009, John Buckingham and Sun Control caused an agent-assisted transfer of plan assets out of a Plan I bank account and into a Sun Control bank account. Id. ¶ 21. On or about December 24, 2009, John Buckingham and Sun Control permitted the Virginia Commerce Bank to take plan assets from a Plan II bank account to satisfy a tax levy placed on Sun Control by the Internal Revenue Service despite having been notified by the bank on December 7, 2009 that such plan assets had been placed on hold and would be released to satisfy Sun Control's tax debt if no further action was taken by December 24, 2009. Id. ¶ 22.

On or about October 29, 2010, Thomas Buckingham and Sun Control permitted Bank of America to take plan assets out of a Plan I bank account and a Plan II bank account to satisfy an August 24, 2010 Writ of Garnishment of Property issued for a Sun Control debt despite their having been notified by the bank on September 3, 2010 that such plan assets had been placed on hold and would be released to satisfy the Sun Control debt if no further action was taken. The bank also notified Thomas Buckingham and Sun Control of an appeals process that could have been used to reverse the transaction. Id. ¶ 23.

John Buckingham, Thomas Buckingham, and Sun Control deducted money from the participants' pay as employee elective salary deferrals to Plan III. On or about April 14, 2006, some of these salary deferral contributions were not remitted to the Plan. In addition, between January 1, 2006 and November 15, 2010, many salary deferral contributions were remitted late without interest. Id. ¶ 24. Defendants John Buckingham, Thomas Buckingham, and Sun Control failed to segregate the Plan assets from the general assets of Sun Control. Id. ¶ 25.

Defendant Thomas Buckingham was served personally by a private process server on April 7, 2013. Aff. of Service. ECF No. 7. Defendant Sun Control was served personally via its statutory agent, Thomas Buckingham, on April 7, 2013. All of Service, ECF No. 7. Neither Thomas Buckingham nor Sun Control has filed an Answer, a Motion to Dismiss, or a Motion for Summary Judgment. On May 9, 2013, Plaintiff moved for Entry of Default as to Thomas Buckingham, Sun Control, and the Plans, [3] ECF No.9, and the Clerk entered an Order of Default on May 10, 2013, ECF No. 10.

Plaintiff filed the pending Motion for Default Judgment on August 20, 2013, seeking a judgment removing Thomas Buckingham and Sun Control as fiduciaries, appointing an independent fiduciary, and requiring Thomas Buckingham and Sun Control to restore all losses caused by their misconduct. See Proposed Default J., ECF No. 21-3.

At that time, default judgment was not proper because claims remained pending against Defendant Estate of John D. Buckingham, Sr., who had appeared and had filed an Answer. Ans., ECF No. 18; see also 10A Charles Alan Wright et al., Civil Practice & Procedure, § 2690 (hereinafter "Wright & Miller") ("As a general rule then. when one of several defendants who is alleged to be jointly liable defaults, judgment should not be entered against that defendant until the matter has been adjudicated with regard to all defendants, or all defendants have defaulted."). However, on November 13, 2013, Plaintiff and the Estate filed a Motion to Approve and Enter Consent Judgment, ECF No. 28, seeking to resolve such claims as were brought against the Estate, and consenting to the relief sought in the ...


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