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Assurances of Repayment May Be Sufficient to Toll ERISA

Assurances of Repayment May Be Sufficient to Toll ERISA's Statute of Limitation for Breach of Fiduciary Duty Claim

ERISA and Life Insurance News
(December 21, 2012)

D.E.W. Plumbing sponsored a defined contribution pension plan, of which Fishman was the plan administrator. It was undisputed that Fishman loaned $45,000 of the plan’s assets to Domestic Mortgage, a company owned and controlled by Fishman and his children.

Further, Fishman “took affirmative steps to conceal the prohibited transaction … by reviewing, signing and approving false financial statements and Form 5500 tax returns prepared by his accounting firm ….”

D.E.W. Plumbing sued Fishman and Domestic Mortgage for breach of fiduciary duty, based on a prohibited transaction between the plan and a “party in interest,” in violation of ERISA, 29 U.S.C. § 1106(a).

The only issue before the district court on a motion for partial summary judgment was whether the claim was time-barred under 29 U.S.C. § 1113, which provides a three-year statute of limitation for breach of fiduciary duty claims, “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.”

Because the complaint was filed on August 19, 2010, the court said, “the earliest possible date that the Plaintiffs could have acquired actual knowledge of the breach and still not have been barred by the statute of limitations is August 19, 2004.” The parties disputed whether D.E.W. Plumbing had actual knowledge of the breach “in late 2004 or as early as February 2001.” The district court assumed for the purpose of the motion that D.E.W. Plumbing had actual notice in February 2001 in order to address the “equitable tolling doctrine that is read into every federal statute of limitations, which may halt the statute of limitations while the defendant conceals his bad behavior.”

Fishman had acknowledged his liability and had assured D.E.W. Plumbing of repayment if it refrained from suing him in 2005, in August 2008, and in January 2009. The court found that “[t]his may be enough to toll the statute of limitations,” but declined to decide the issue on summary judgment because it had been raised for the first time in D.E.W. Plumbing’s reply brief.

Click here to view the full December 2012 Edition of the ERISA and Life Insurance News.

H. Sanders Carter
T (404) 962-1015
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Kenton J. Coppage
T (404) 962-1065
F (404) 962-1256
Kip D. Nelson
T (336) 378-5206
F (336) 433-7443

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