Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-02722/USCOURTS-caed-2_02-cv-02722-5/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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28 SETTLEMENT AGREEMENT AND 

CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY

CIV.S-02-2722 LKK KJM

W. IRIS BARBER (DC SBN 436398) 

Senior Trial Attorney 

CATHERN H. SMITH (DC SBN 475586) 

Trial Attorney 

U.S. Department of Labor 

Office of the Solicitor 

Plan Benefits Security Division 

P.O. Box 1914 

Washington, DC 20013 

Telephone (202) 693-5600 

Facsimile (202) 693-5610 

COUNSEL FOR THE SECRETARY 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA

ELAINE L. CHAO, Secretary, 

United States Department of 

Labor, 

 Plaintiff, 

 v. 

MARK S. SINGLETON, an 

individual; JILL SINGLETON, an 

individual; CAROLYN B. BENNETT, 

an individual; JENNIFER DOWNER, 

an individual; WESTERN SPRAY 

PAINTING, INC., a California 

Corporation; WESTERN SPRAY 

PAINTING INC. AMENDED EMPLOYEE 

STOCK OWNERSHIP PLAN AND TRUST, 

an employee benefit plan; and 

any parent, predecessor, 

successor, or subsidiaries of 

Western Spray Painting, Inc., 

 Defendants. 

_______________________________

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Civil Action No. CIV.S-02-2722 

LKK KJM 

SETTLEMENT AGREEMENT AND 

CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY 

Hearing Date: SUBMITTED ON 

Hearing Time: THE PAPERS 

Location: 

Judge: Hon. Lawrence K. Karlton

 

 Plaintiff Elaine L. Chao, Secretary of the United States 

Department of Labor ("Secretary"), and defendant Carolyn B. 

Bennett (the "settling defendant") have negotiated an agreement 

to settle all civil claims and issues between them in this 

action, and each consents to the entry of this Settlement 

Case 2:02-cv-02722-LKK -KJM Document 173 Filed 05/30/06 Page 1 of 10
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CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY

 CIV.S-02-2722 LKK KJM 2 

Agreement and Consent Order ("Order") by the Court as the sole 

and complete memorialization of the terms of such agreement. 

1. This action was filed by the Secretary pursuant to her 

authority under Title I of the Employee Retirement Income 

Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., as 

amended. 

2. The Secretary's complaint alleged, among other things, 

that the settling defendant and others failed to discharge their 

fiduciary duties with respect to the Western Spray Painting, Inc. 

("WSP") Amended Employee Stock Ownership Plan and Trust (the 

"Plan") solely in the interests of the Plan's participants, and 

with the care, skill, prudence, and diligence required of them, 

and that they failed to act in accordance with the documents and 

instruments governing the Plan, in violation of sections 

404(a)(1)(A),(B) and (D) of ERISA, 29 U.S.C. § 1104(a)(1)(A),(B) 

and (D). 

3. The Secretary's complaint further alleged that the 

settling defendant and others, as fiduciaries with respect to the 

Plan, engaged in a transaction which consisted of causing the 

Plan to purchase 10,500 shares of WSP stock from the settling 

defendant and her late husband, Lonnie Bennett, on December 20, 

1996, when they knew or should have known that that transaction 

constituted the sale or exchange of property between the Plan and 

parties in interest, the lending of money or other extension of 

credit between the Plan and a party in interest, and also 

constituted a direct or indirect transfer of assets of the Plan 

to, and use by and for the benefit of persons and entities each 

Case 2:02-cv-02722-LKK -KJM Document 173 Filed 05/30/06 Page 2 of 10
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28 SETTLEMENT AGREEMENT AND 

CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY

 CIV.S-02-2722 LKK KJM 3 

of whom was a party in interest with respect to the Plan, in 

violation of sections 406(a)(1)(A),(B) and (D) of ERISA, 29 

U.S.C. § 1106(a)(1)(A),(B) and (D), resulting in losses, 

including lost opportunity income, for which the Secretary claims 

that the defendants are jointly liable under section 409 of 

ERISA, 29 U.S.C. § 1109. 

4. The settling defendant admits that the Court has 

jurisdiction over the parties to this Order and the subject 

matter of this action. 

5. The Secretary and the settling defendant expressly waive 

Findings of Fact and Conclusions of Law as to the extent of 

alleged losses resulting from the transactions for which the 

Secretary claims that the settling defendant is liable. Without 

admitting or denying any liability, the settling defendant 

voluntarily enters into this Order in order to resolve disputed 

matters, to avoid the expense and burden of further litigation, 

and to put to rest fully and finally all claims that the 

Secretary has asserted, or could have asserted, against the 

settling defendant, arising out of the facts alleged in the 

complaint. The Secretary and the settling defendant consent to 

the entry of this Order as a full and complete resolution of all 

of the civil claims and issues which were alleged in this action, 

or which the Secretary could have asserted in this action, 

without trial or final adjudication of any issue of fact or law 

raised in the complaint. 

Accordingly, it is ORDERED, ADJUDGED, AND DECREED that: 

1. The Court has jurisdiction over the parties to this 

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28 SETTLEMENT AGREEMENT AND 

CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY

 CIV.S-02-2722 LKK KJM 4 

Order and the subject matter of this action and is empowered to 

provide the relief herein. 

2. The settling defendant is hereby permanently enjoined 

from: 

(a) Serving or acting, directly or indirectly, for 

compensation or otherwise, as a trustee, fiduciary, 

service provider, investment manager, agent, consultant 

or representative with respect to any employee benefit 

plan subject to ERISA or to any other entity subject to 

ERISA because it holds or controls the assets of an 

employee benefit plan; 

(b) Occupying any position that involves, directly or 

indirectly, decision making authority with respect to, 

or custody or control of, the assets or administration 

of any employee benefit plan subject to ERISA; 

(c) Committing or participating in any violation of ERISA; 

and 

(d) Promoting, selling, marketing or engaging, directly or 

indirectly, in any enterprise, including an employee 

leasing company that offers, provides, or administers 

employee benefits. 

3. The Secretary agrees, in reliance on the financial 

information provided to the Secretary by the settling defendant 

during the course of the settlement negotiations and in reliance 

on the notarized asset affidavit that the Secretary received from 

the settling defendant on May 11, 2006, that the settling 

defendant will pay $1,083,333 (one million, eighty three 

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CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY

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thousand, three hundred thirty three dollars) to fully settle the 

Secretary's claims against settling defendant as described above, 

upon which will be assessed the statutory penalty set forth in 

ERISA § 502(l), 29 U.S.C. § 1132(l). Pursuant to ERISA § 502(l), 

29 U.S.C. § 1132(l), and the regulations thereunder, the 

Secretary has determined that the statutory penalty is $216,667 

(two hundred sixteen thousand, six hundred sixty-seven dollars). 

4. The Secretary agrees to accept the settling defendant's 

payment in two installments. The first installment in the amount 

of $541,666.50 is due on July 11, 2006, to be tendered by the 

settling defendant payable to "Western Spray Painting, Inc. 

Employee Stock Ownership Plan," at the address for the Secretary 

provided for in the Notice section herein, or as otherwise shall 

be directed by counsel for the Secretary by July 1, 2006. The 

second installment, for the remaining liability, is due on 

July 11, 2011, to be tendered pursuant to instructions to be 

provided in writing to the settling defendant by the Secretary or 

the Independent Fiduciary to be appointed as set forth in 

paragraph 8. In the event that the settling defendant 

predeceases the July 11, 2011 date, without having made any 

further payment on her remaining monetary liability, the settling 

defendant expressly agrees to the imposition of a first priority 

lien against her estate for the balance of her remaining monetary 

liability. No other lien shall be imposed by the Secretary on 

the settling defendant's assets without her prior written 

consent. 

5. The settling defendant and the Secretary expressly 

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28 SETTLEMENT AGREEMENT AND 

CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY

 CIV.S-02-2722 LKK KJM 6 

understand and agree that the Secretary's agreement to accept 

payment as described above is based upon the financial 

information made available to the Secretary during the course of 

settlement negotiations and the notarized asset affidavit 

received by the Secretary's counsel on May 11, 2006, and that the 

Secretary has agreed not to seek any additional monetary relief 

to the extent that such financial information is materially true 

and accurate to the best of the settling defendant's knowledge at 

the time such information was provided. 

6. If at any time the Secretary determines that the 

settling defendant transferred assets for the purpose of avoiding 

disclosure, for the purpose of avoiding making full payment as 

agreed under this Order, or materially misrepresented her 

financial status in her notarized asset affidavit submitted to 

the Secretary's counsel, the Secretary, by appropriate noticed 

motion served on the settling defendant and her counsel, may seek 

to reopen the case against the settling defendant prior to entry 

of a dismissal with prejudice in order to seek restitution to the 

full extent of the Secretary's claim of the settling defendant's 

liability to the Plan. 

7. The settling defendant expressly waives any and all 

monetary recovery or benefit to which she may become entitled 

from the Plan or any other WSP employee benefit plan or account. 

8. The settling defendant expressly consents to the 

appointment of an Independent Fiduciary, selected by the 

Department of Labor, with full discretionary authority to 

administer the Plan, marshal all of its assets, undertake 

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CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY

 CIV.S-02-2722 LKK KJM 7 

distribution of the Plan's assets to appropriate participants and 

beneficiaries, undertake the orderly termination of the Plan and 

any other necessary actions required by ERISA, the Plan's 

governing documents, and the Court's Order. 

9. Prior to obtaining payment for services and expenses 

authorized pursuant to this Order, the Independent Fiduciary 

shall present to the Court an itemized fee application, 

accompanied by a description of work performed, as well as an 

itemized statement of expenses. The Independent Fiduciary shall 

provide to the Secretary of Labor at the address in the Notice 

section herein a copy of said fee application when it is filed 

with the Court. Absent objection by the Secretary within fifteen 

(15) business days, the fee application shall be deemed approved. 

If the Secretary objects, the Court will decide whether the 

request of the Independent Fiduciary should be granted. 

10. The settling defendant expressly consents to 

cooperate with the Independent Fiduciary with respect to her 

obligations under this Order. 

11. The settling defendant expressly waives any and all 

claims of whatsoever nature which she has or may have against the 

Secretary and any of her officers, agents, employees, or 

representatives, arising out of or in connection with the filing, 

prosecution, and maintenance of this civil action or any other 

proceeding and investigation incident thereto. 

12. This Order represents the final and complete 

judicial resolution of all claims between the Secretary and the 

settling defendant contained in this action, and within ten (10) 

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28 SETTLEMENT AGREEMENT AND 

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court days of receipt of full payment required under this Order, 

the Secretary's claims against the settling defendant shall be 

fully released and dismissed with prejudice by the Secretary's 

filing with this Court a dismissal with prejudice as to the 

settling defendant. This Order is binding upon the United States 

Department of Labor only and not upon any other agency of the 

United States. 

 13. Provisions of this Order requiring notice shall be 

satisfied by delivery, in writing, via facsimile transmission or 

reliable overnight express courier service, as set forth in this 

paragraph. The parties to this Order may, as they deem 

necessary, change from time to time the designation of persons to 

receive notice on their behalf by filing with the Court 

notification of such change and serving a copy hereof on the 

other party to this Order and to the Independent Fiduciary, by 

delivery to the address to which notice would be sent. 

 To the Secretary: 

 Mr. Francis C. Clisham 

 Regional Director 

 U. S. Department of Labor 

 Employee Benefits Security Administration 

 71 Stevenson Street, Suite 915 

 San Francisco, CA 94105 

 Phone: (415) 975-4600 

 Fax: (415) 975-4589 

To the settling defendant: 

 Ms. Carolyn B. Bennett 

 2023 Edgewater Court 

 Stockton, CA 95204 

 Phone: (209) 948-6566 

 Fax: (209) 948-4434 

Case 2:02-cv-02722-LKK -KJM Document 173 Filed 05/30/06 Page 8 of 10
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CONSENT ORDER AS TO DEFENDANT 

CAROLYN B. BENNETT ONLY

 CIV.S-02-2722 LKK KJM 9 

 With a copy to: 

 Gilda R. Turitz, Esq. 

 Sideman & Bancroft LLP 

 One Embarcadero Center, 8th Floor 

 San Francisco, CA 94111 

 Phone: (415) 392-1960 

 Fax: (415) 392-0827 

14. Each party to this Order shall bear his or her own 

costs, expenses, and attorneys' fees incurred in connection with 

this action and all matters relating thereto. 

15. By entering into this Order, the settling defendant 

represents that she has been informed by counsel of the effect 

and purpose of this Order and agrees to be bound by its terms. 

16. The Court shall retain such jurisdiction over the 

parties hereto as may be necessary to enforce the executory 

provisions of this Order. 

 17. The Court, finding that there is no just reason to 

delay the entry of the Order, expressly directs the entry hereof 

as a final Order, pursuant to Rule 54(b) of the Federal Rules of 

Civil Procedure. 

DATED: May 26, 2006

 

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CAROLYN B. BENNETT ONLY

 CIV.S-02-2722 LKK KJM 10 

The Secretary, by her authorized counsel, and the settling 

defendant together with her counsel, consent to the entry of the 

foregoing Order. 

FOR PLAINTIFF SECRETARY OF LABOR: 

HOWARD M. RADZELY 

Solicitor of Labor 

TIMOTHY D. HAUSER 

Associate Solicitor 

LESLIE C. PERLMAN 

Counsel for Fiduciary Litigation 

/signature on original DATE__________________________ 

W. IRIS BARBER 

Senior Trial Attorney 

CATHERN H. SMITH 

Trial Attorney 

U.S. Department of Labor 

Office of the Solicitor 

Plan Benefits Security Division 

P.O. Box 1914 

Washington, DC 20013 

COUNSEL FOR THE SECRETARY 

THE SETTLING DEFENDANT: 

/signature on original DATE_________________________ 

CAROLYN B. BENNETT 

APPROVED AS TO FORM: 

/signature on original DATE_______________________ 

GILDA R. TURITZ, ESQ. 

Counsel for Carolyn B. Bennett 

Case 2:02-cv-02722-LKK -KJM Document 173 Filed 05/30/06 Page 10 of 10