Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-00460/USCOURTS-casd-3_16-cv-00460-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Civil Enforcement of Employee Benefits

---

1

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

THOMAS F. FORD, et al.,

Plaintiff,

v.

ADRIANA LAURA BONHOMMECAHN, in her individual capacity and as 

executor of the Estate of Pete Carl Cahn,

Defendant.

Case No.: 3:16-cv-00460-L-WVG

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANT’S 

MOTION FOR SUMMARY 

JUDGMENT

Pending before the Court is Defendant Adriana Laura Bonhomme-Cahn’s 

(“Defendant”) motion for summary judgment. (MSJ [Doc. 29].) Pursuant to Civil Local 

Rule 7.1(d)(1), the Court decides the matter on the papers submitted and without oral 

argument. For the reasons stated below, the Court GRANTS IN PART AND DENIES

Defendant’s motion.

// 

//

//

//

//

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 1 of 10
2

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

I. BACKGROUND

This case arises out of the alleged looting of an ERISA governed Employee 

Welfare Benefit Plan (the “Plan”) by Plan fiduciaries. In 1989, Pete Cahn, an accountant, 

created a company called the Association of Civil Employers (“ACE). ACE then 

established the Plan. To participate in the Plan, Adopting Employers signed Adoption 

Agreements (Docs. 29-3 Exs. E, J) and paid actuarially determined contributions into the 

fund on an annual basis. In consideration for these contributions, Employees of the 

Adopting Employers became Participants in the Plan. A Plan Document (Doc. 29-3 Ex. 

J), which was incorporated by reference into the Adoption Agreements, explains the 

benefits of participation. In short, participation entitles employees to defined benefits 

such as payments in the event of severance, disability, and death. (Plan Doc.) 

Participation does not entitle Adopting Employers to a residual interest in their 

contributions. (Id.) 

In 1989, Plaintiffs Thomas F. Ford (“Ford”), Thomas F. Ford Inc. (“Ford”), and 

Ronald P. Hempel (“Hempel”) (collectively, “Plaintiffs”) signed Adoption Agreements 

and thereby became Adopting Employers. (Ford Adoption Agreement [Doc. 29-3 Ex. I]; 

Hempel Adoption Agreement [Doc. 29-3 Ex. E].) From 1989 until 1996, Plaintiffs made 

annual payments to the Plan. Ford claims to have contributed a total of $624,150 into the 

Plan. (Ford Decl. [Doc. 30-2] ¶ 8.) Hempel claims to have contributed a total of 

$367,013 into the Plan. (Hempel Decl. [Doc. 30-1] ¶8.) In addition to Ford and Hempel, 

at least eight other entities became Adopting Employers. (Doc. 30-26.) There are 

currently as many as sixty six additional Employees that may qualify for Plan benefits. 

(Ford. Decl. ¶ 23; Hempel Decl. ¶ 23.) Ford and Hempel’s contributions appear to 

account for more than 96% of total Plan contributions. (Doc. 30-26.) 

In February of 2015, Pete Cahn committed suicide. (JSUF [Doc. 31] 4.) 

Following Pete Cahn’s suicide, Plaintiffs hired an attorney, who commissioned a forensic 

accountant. After reviewing Plan documents with the help of their attorney and forensic 

accountant, including documents provided by Defendant, Plaintiffs discovered evidence 

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 2 of 10
3

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

suggesting that Defendant was appointed to a fiduciary role as a member of the Plan’s 

Benefits Committee in 2001, a role she seemingly never resigned (Doc. 29-3 Ex. I.) 

Plaintiffs also discovered evidence suggesting that, whereas Pete Cahn and Defendant 

purported to be drawing only modest amounts of money from the fund for expenses 

(Doc. 30-25), Pete Cahn and Defendant were in fact withdrawing staggering amounts of 

money from the fund for expenses. (Docs. 30-12; 30-13.) Specifically, Plaintiffs allege 

that Defendant and Pete Cahn improperly siphoned around $1.4 million in funds from the 

Plan. 

Accordingly, Plaintiffs, who became Plan fiduciaries after Pete Cahn’s death, filed 

a First Amended Complaint against Defendant, both in her individual capacity and as 

executor of Pete Cahn’s estate. (FAC [Doc. 14].) In the FAC, Plaintiffs allege that 

Defendant and Pete Cahn breached their fiduciary duties to the Plan in violation of the 

Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. 1104. 

Defendant now moves for summary judgment as to all claims against her. (MSJ.) 

Plaintiffs oppose. (Opp’n [Doc. 30].) 

II. LEGAL STANDARD

Summary judgment is appropriate under Rule 56(c) where the moving party 

demonstrates the absence of a genuine issue of material fact and entitlement to judgment 

as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986). A fact is material when, under the governing substantive law, it could affect the 

outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A 

dispute about a material fact is genuine if “the evidence is such that a reasonable jury 

could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248.

The party seeking summary judgment bears the initial burden of establishing the 

absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving party 

can satisfy this burden in two ways: (1) by presenting evidence that negates an essential 

element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving party 

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 3 of 10
4

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

failed to make a showing sufficient to establish an element essential to that party’s case 

on which that party will bear the burden of proof at trial. Id. at 322–23. “Disputes over 

irrelevant or unnecessary facts will not preclude a grant of summary judgment.” T.W. 

Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987).

“[T]he district court may limit its review to the documents submitted for the 

purpose of summary judgment and those parts of the record specifically referenced 

therein.” Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1030 (9th Cir. 

2001). Therefore, the court is not obligated “to scour the record in search of a genuine 

issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (citing 

Richards v. Combined Ins. Co. of Am., 55 F.3d 247, 251 (7th Cir. 1995). If the moving 

party fails to discharge this initial burden, summary judgment must be denied and the 

court need not consider the nonmoving party’s evidence. Adickes v. S.H. Kress & Co., 

398 U.S. 144, 159–60 (1970).

If the moving party meets this initial burden, the nonmoving party cannot defeat 

summary judgment merely by demonstrating “that there is some metaphysical doubt as to 

the material facts.” Matsushita Elect. Indus. Co., Ltd. v Zenith Radio Corp., 475 U.S. 

574, 586 (1986). Rather, the nonmoving party must “go beyond the pleadings” and by 

“the depositions, answers to interrogatories, and admissions on file,” designate “specific 

facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324 (quoting 

Fed. R. Civ P. 56(e)). 

When making this determination, the court must view all inferences drawn from 

the underlying facts in the light most favorable to the nonmoving party. See Matsushita, 

475 U.S. at 587. “Credibility determinations, the weighing of evidence, and the drawing 

of legitimate inferences from the facts are jury functions, not those of a judge, [when] he 

[or she] is ruling on a motion for summary judgment.” Anderson, 477 U.S. at 255.

//

//

//

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 4 of 10
5

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

III. DISCUSSION

In her motion for summary judgment, Defendant argues (1) that Plaintiffs lack 

Article III standing; (2) that Plaintiffs’ claims are barred by a three year statute of 

limitations and a six year statute of repose; and (3) that Plaintiffs are not entitled to 

individual recovery.

1

 The Court will address these arguments in turn. 

A. Standing

The doctrine of standing is rooted in the “cases or controversies” requirement of 

Article III § 2, Cl. 1 of the U.S. Constitution. To establish standing, a plaintiff must 

demonstrate an injury in fact, that is fairly traceable to the challenged conduct of the 

defendant, and that is likely to be redressed by a favorable judicial decision. Lujan v. 

Defenders of Wildlife, 504 U.S. 560, 560–561 (1992). Defendant presents several 

arguments to the effect that Plaintiffs lack standing because the alleged looting of the 

Plan did not cause them any harm. 

First, Defendant argues that Hempel lacks standing because his retirement 

terminated his participation in the Plan—meaning a Plan default would not harm him 

because he is no longer entitled to Plan benefits. In support of this argument, Defendant 

cites to Hempel’s Adoption Agreement. Hempel’s Adoption Agreement states that “[a]

participant shall terminate participation in the Plan on ... the day he . . . terminates 

employment ... whether by reason of retirement, disability, layoff, or otherwise...” 

(Hempel Adoption Agreement §6.) If this provision governs, Defendant’s argument 

would be persuasive and Hempel would not have standing based on being a Plan 

Participant. However, there is some ambiguity as to whether the parties intended for 

retirement to terminate Plan participation. 

 

1 For the first time in her Reply, Defendant argues that the administrative costs and fees levied against 

the Plan assets were legitimate and Plaintiffs did not exercise due diligence. Because Defendant 

neglected to raise these arguments in her opening brief, Plaintiffs had no opportunity to respond. The 

Court therefore declines to consider these arguments. Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 

2007) (“The district court need not consider arguments raised for the first time in a reply brief”). 

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 5 of 10
6

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

To wit, the Adoption Agreement incorporates the Plan Document by reference

(Hempel Adoption Agreement Premises I – III.) The Plan Doc.’s definition of

“Participant” appears inconsistent with the Adoption Agreement’s provision that

retirement terminates participation. Specifically, the Plan Doc. defines a Participant as an 

“Employee” or an employee’s dependent. (Plan Doc. § 2.17.) Furthermore, the Plan 

Doc. defines an Employee in a manner that includes a person “who has terminated 

employment with the Adopting Employer by reason of retirement or disability on or after 

the Effective Date.” (Id. § 2.12(b).) Because Hempel terminated employment by reason 

of retirement, he seems to trigger the Plan Doc.’s definition of “Employee”, which in turn 

triggers the Plan Doc’s definition of “Participant.” Thus, Hempel would appear to be a 

“Participant” under the Plan Doc., but not under the Adoption Agreement. This 

inconsistency between the two operative documents creates a triable issue as to whether 

the parties, at time of contracting, intended that retirement terminate Plan participation. 

Second, Defendant argues that Plaintiffs lack standing because the Plan cannot go 

into default. The premises of this argument are (1) that all Participant’s benefits are 

capped at their unappreciated contribution amounts and (2) the Plan contains more than 

enough funds to pay back all Participant’s unappreciated contributions. The first premise 

is based on a Frequently Asked Question (“FAQ”) document allegedly sent out to 

Plaintiffs at or around the time they signed their respective Adoption Agreements. (FAQ 

[Doc. 29-3 Ex. F].) Two questions on the FAQ document read as follows: 

Q. How much generally can the employee get out of the ACE Welfare Benefit Trust?

A. What you pay for is what you can get. (i.e. cash, investments, and insurance 

coverage is generally the most that can be collected). 

Q. Can another employer [sic] claims affect my funds in the ACE Welfare Benefit: 

[sic] Trust?

A. Employers, by the adoption agreement and trust documents, are limited to the 

monies put in and the insurance coverages bought with this money... (FAQ [Doc. 29-3 

Ex. F].) 

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 6 of 10
7

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Defendant argues that these questions and answers establish that a Participant’s 

benefits are capped at the amount of their contributions. The Court disagrees. The main 

problem with Defendant’s argument is the lack of any evidence suggesting that the FAQ 

document is legally operative in the sense that it defines the parties’ respective 

contractual rights under the Plan. It is true that Hempel and Ford both acknowledge 

having probably received the FAQ document around the time of contracting. (Ford Dep.

[Doc. 29-3 Ex. B] 135; Hempel Dep. [Doc. 29-3 Ex. C] 26-27.) However, Defendant 

cites no evidence showing that either plaintiff agreed to any provisions of the FAQ 

Document. Rather, the evidence shows only that, in entering the contract, Plaintiffs 

agreed to the terms and conditions set forth in the Adoption Agreements and the Plan 

Document. Because Defendant fails to cite to any provision in the Plan Document or 

either Adoption Agreement that caps benefits at contribution levels, the Court finds, for 

purposes of this motion, that benefits are not thus capped. 

From this finding, it follows that Plaintiffs have made a sufficient demonstration of 

standing to survive this motion for summary judgment. Indeed, the Plan’s funding 

currently sits at only about $1.1 million. (JSUF 42.) It appears that the payment of a

death benefit2to Ford could easily exhaust these funds and send the Plan into default 

such that both Ford and Hempel would receive less benefits than they could have

received had Defendant and her late husband not (allegedly) looted $1.4 million dollars 

from the Plan. Even more so is there a likelihood of injury to Plaintiffs when considering 

that (1) Ford is entitled to more than just a death benefit; (2) Hempel may be a Plan 

Participant who is also entitled to full benefits under the Plan, and (3) Defendants have 

not submitted any evidence proving that the alleged sixty six other Plan Participants 

could not later come forward with valid claims

// 

 

2 The Plan Document provides for a death benefit of ten times previous year’s earnings. (Plan Doc. Ex. 

A.) In 2016, Ford earned $200,000. (Ford. Decl.¶ 22.) 10 x $200,000 = $2,000,000 death benefit. 

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 7 of 10
8

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

B. Statutes of Limitations and Repose

An ERISA plaintiff alleging breach of fiduciary duty must bring his claims within 

three years of gaining actual knowledge of the breach, and within six years of the last 

date upon which an act or omission that constituted the breach occurred. 29 U.S.C. § 

1113. The three-year restriction is the statute of limitations and the six year restriction is 

the statute of repose. Moyle v. Liberty Mutual Ret. Benefit Plan, 263 F. Supp. 3d 999, 

1010 (S.D. Cal. 2017). “Actual knowledge” for purposes of the statute of limitations 

refers to knowledge of the actions that constituted breach. Blanton v. Anzalone, 760 F.2d 

989, 992 (9th Cir. 1985). To trigger the statute of limitations period, it is not necessary 

that the plaintiff also be aware that the defendant’s actions violated the law. Id. 

Defendant contends that the statute of limitations should bar all claims based upon

alleged breaches that occurred on or before February 19, 2013 (three years prior to the 

filing of Plaintiffs’ Complaint) because Plaintiffs had actual knowledge of the alleged 

breaches. To establish actual knowledge, Defendant cites to deposition testimony in 

which both Ford and Hempel acknowledge having occasionally received reports showing

that ACE had withdrawn some funds for Plan administration expenses. (Ford. Dep. 12, 

39, 48–49; Hempel Dep. 20–22.) 

The Court finds Defendant has failed to carry her burden of showing actual 

knowledge. Defendant neglected to submit any reports that detail the Plan administration 

expense deductions allegedly disclosed to Plaintiffs. Further, Plaintiffs submitted 

declaration testimony stating that the correspondence received from ACE suggested only 

about $700 to $800 in annual administration fees. (Ford Decl. ¶ 20; Hempel Decl. ¶ 20; 

Doc. 30-25.) From the fact that Plaintiffs may have had knowledge of $700 to $800 a 

year in administration fees, it plainly does not follow that Plaintiffs were aware that ACE 

was actually withdrawing as much as $22,701 a month (Doc. 30-13, p. 83 of 84) under 

the guise of ‘manager expenses.”

Generally speaking, actual knowledge is not a requirement of the six year statute of 

repose. However, if a plaintiff shows that a fiduciary hid a breach through fraud or 

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 8 of 10
9

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

concealment, the statute of repose is tolled until the plaintiff gains actual knowledge of 

the breach. Moyles, 263 F. Supp. 3d at 1011–12 (citing 29 U.S.C. § 1113). Plaintiff’s 

argue that Defendant and Pete Cahn fraudulently concealed the actual amount they were 

withdrawing from the Plan by submitting invoices that grossly understated the actual 

amount being withdrawn for administrative expenses. 

In support of this argument, Plaintiffs submitted evidence showing that, whereas 

ACE provided Plaintiffs with invoices indicating very modest annual administration fees

(Doc. 30-25), Defendant and Pete Cahn were actually withdrawing substantially larger 

amounts than invoiced. (Docs. 30-12; 30-13.) The Court finds this evidence sufficient to 

trigger the fraud / concealment exception to 29 U.S.C. § 1113. Accordingly, the Statute 

of Repose is tolled until actual discovery of the breach. Plaintiffs testify that they did not 

discover the breach until after Pete Cahn’s suicide in 2015. (Ford Decl. ¶ 24; Hempel 

Decl. ¶ 24.) Because Plaintiffs filed their complaint well within the six year period 

beginning in 2015, the statute of repose does not bar any of their claims.3

C. Individual Recovery

Plaintiffs’ complaint suggests that Plaintiffs may be seeking to personally recover 

from Defendant, as opposed to any recovery going only to the Plan, or going to all Plan 

Participants. (FAC Prayer ¶¶ 3, 4, 6.) Defendant contends that individualized recovery

of ill-gotten profits is improper under ERISA. Defendant is correct. Under ERISA, Illgotten profits, obtained through a fiduciary’s breach of duty, accrue directly to the plan or 

to all plan participants/beneficiaries by way of a constructive trust. Massachusetts Mut. 

Life Ins. Co. v. Russel, 473 U.S. 134, 144 (1985); Amalgamated Clothing & Textile 

 

3 This holding also applies to claims against Defendant in her personal capacity. Additionally, the 

evidence shows that Defendant was appointed to the Benefits Committee on April 26, 2001. (Doc. 29-3 

Ex. I.) The appointing document indicates the appointment shall last until such time as a successor is 

appointed. (Id.) Because Defendant has submitted no subsequent appointing document showing that 

she was succeeded in her role as a member of the Benefits Committee, the Court finds that Defendant

has failed to establish that she ceased her role as a fiduciary at any time prior to her late husband’s death. 

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 9 of 10
10

3:16-cv-00460-L-WVG

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Workers Union, AFL-CIO v. Murdock, 861 F.2d 1406, 1414-15 (9th Cir. 1988) (citing 29 

U.S.C. § 1109(a)). ERISA does not appear to provide for individual damages or a 

constructive trust that does not benefit all plan participants. Id. Accordingly, the Court 

GRANTS Defendant’s motion for summary judgment as to Plaintiff’s prayer for 

individual relief. 

IV. CONCLUSION & ORDER

For the foregoing reasons, Defendant’s motion for summary judgment is 

GRANTED IN PART AND DENIED IN PART as follows:

 All of Plaintiffs’ claims may proceed. 

 Plaintiffs are not entitled to individual relief. 

Dated: April 25, 2018

Case 3:16-cv-00460-L-WVG Document 36 Filed 04/25/18 PageID.<pageID> Page 10 of 10