Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-02569/USCOURTS-caed-2_08-cv-02569-9/pdf.json

Parties Involved:
David Barboza
Plaintiff
Kenneth Blanton
Defendant
California Administration Insurance Services, Inc.
Defendant
California Association of Professional Firefighters
Defendant
Dennis Campanale
Defendant
Gene Dangel
Defendant
James Floyd
Defendant
Charles Gluck
Defendant
Brian Pinomaki
Defendant
William Soqui
Defendant

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

DAVID BARBOZA,

NO. CIV. S-08-02569 FCD/GGH

Plaintiff,

v. MEMORANDUM AND ORDER

CALIFORNIA ASSOCIATION OF

PROFESSIONAL FIREFIGHTERS, a

California corporation;

CALIFORNIA ASSOCIATION 

OF PROFESSIONAL FIREFIGHTERS

LONGTERM DISABILITY PLAN;

CALIFORNIA ADMINISTRATION

INSURANCE SERVICES, 

INC., a California

corporation; and KENNETH

BLANTON, DENNIS CAMPANALE,

GENE DANGEL, JAMES 

FLOYD, CHARLES GLUCK, BRIAN

PINOMAKI, and WILLIAM SOQUI, 

individually and as Plan

Directors, 

Defendants.

----oo0oo----

This matter is before the court on (1) defendants California

Association of Professional Firefighters (“CAPF”), California

Administration Insurance Services, Inc. (“CAISI”), and Kenneth

Blanton, Dennis Campanale, Gene Dangel, Brian Pinomaki, Charles

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Gluck, William Soqui, and James Floyd’s (collectively

“defendants”) motion for summary judgment, pursuant to Federal

Rule of Civil Procedure (“Rule”) 56; (2) plaintiff David

Barboza’s (“plaintiff”) cross-motion for summary judgment; (3)

defendants’ motion for sanctions pursuant to Rule 11; and (4)

plaintiff’s cross-motion for Rule 11 sanctions.1 The court heard

oral argument on the motions on December 3, 2010. Based upon the

submissions of the parties and the arguments made by counsel, and

for the reasons set forth below, (1) defendants’ motion for

summary judgment is GRANTED in part and DENIED in part; (2)

plaintiff’s motion for summary judgment is GRANTED in part and

DENIED in part; (3) defendants’ motion for sanctions is DENIED;

and (4) plaintiff’s motion for sanctions is DENIED.

BACKGROUND2

A. Defendants

Defendant CAPF is a non-profit mutual benefit corporation

that sponsors the California Association of Professional

Firefighters Long-Term Disability Plan (the “Plan”). (DUF ¶ 1.) 

Defendant CAISI administers the Plan and is responsible for

making determinations regarding participants’ disability and

benefits. (DUF ¶ 3; PUF ¶ 4; Answer ¶ 6.) Individual Defendants

1 Defendants also filed a motion to modify the pretrial

scheduling order to reopen discovery pursuant to Rule 16. 

Because, as set forth infra, the court concludes that the

litigation is resolved by the pending motions, defendants’ Rule

16 motion is DENIED as moot. 

2 Unless otherwise noted, the facts contained herein are

undisputed. (See Defs.’ Response to Pl.’s Separate Statement of

Undisputed Facts (“PUF”), filed Aug. 6, 2010; Defs.’ Reply

Statement of Undisputed Facts (“DUF”), filed Sept. 20, 2010;

Answer to Complaint (“Answer”), filed Feb. 13, 2009.)

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Kenneth Blanton, Dennis Campanale, Gene Dangel, and Brian

Pinomaki are Directors and Executive Board members of CAPF and

are “fiduciaries” within the meaning of 29 U.S.C. §§ 1002(14) and

(21). (Answer ¶¶ 7-9, 12.) Plaintiff alleges that defendants

Charles Gluck and William Soqui are also Directors, Executive

Board members, and fiduciaries of CAPF.3 (Complaint ¶ 11, 13;

Answer ¶¶ 11, 13.) Defendant James Floyd is the owner of

defendant CAISI. (Answer ¶ 10.)

B. Plan Operations

The Plan is an ERISA welfare benefit plan that receives its

funding exclusively from Plan participants, as opposed to

employers, and pays all benefits solely from Plan assets. (DUF ¶¶

2, 4; PUF ¶ 5.) Participant contributions are deposited into a

Wells Fargo Bank checking account (the “Account”). (PUF ¶ 20.) 

The signatories on the Account are officers of CAISI. (PUF ¶

22.) In accordance with the administrative services agreement

between CAPF and CAISI, CAISI pays benefit claims and Plan

expenses by writing checks from the Account on behalf of CAPF. 

(Administrative Services Agreement § 3.2, Ex. 4 to Decl. of

Geoffrey V. White in Support of Pl.’s Mot. for Summ. J.) CAISI

also writes checks from the Account to remunerate CAISI for its

fees and expenses. (PUF ¶ 25.) CAISI does not provide CAPF with

invoices of its administrative expenses; however CAISI provides

CAPF with quarterly financial statements that detail the Plan’s

fees and expenses. (PUF ¶ 26; 28.) 

3 In their Answer, Gluck and Soqui denied that they were

Directors or Board members, or that they owed CAPF fiduciary

duties. However, defendants do not raise this issue in their

motion for summary judgment.

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Beginning in 1994, CAPF agreed to pay CAISI an

administrative services fee of $3.65 per Plan participant, per

month. (DUF ¶¶ 33, 35; Decl. of Dennis Campanale (“Campanale”) ¶

7, filed July 30, 2010.) This fee remained steady until the

parties agreed to raise it to $3.75 per Plan participant, per

month, beginning in April of 2009. (DUF ¶ 33.)

CAPF and CAISI are not run by ERISA lawyers, actuaries, or

accountants. (Decl. of Campanale ¶ 18.) Rather, CAPF and CAISI

are controlled by active and retired firefighters. (Id.) As

such, defendants assert that they consult with appropriate

experts for advice on matters requiring specialized knowledge or

experience. For example, defendants assert that when CAPF’s

Board of directors (the “Board”) needed to decide whether CAPF

was required to file Form 990 with the Internal Revenue Service

(“IRS”), they relied on the advice of an accountant and legal

counsel. (Id. ¶ 16.) CAPF has not filed Form 990 since 2002. 

(PUF ¶ 9.) Defendants also testify that they consulted with the

United States Department of Labor (“DOL”) and the California

Department of Insurance (“DOI”) to determine whether CAPF’s

corporate status could satisfy 29 U.S.C. § 1103’s “held in trust”

requirement. (Decl. of Chris Chediak (“Chediak”) ¶ 3, filed July

30, 2010; Dep. of Richard Floyd, at 14-15.)

CAPF’s bylaws also require the Board to hire professionals

for certain tasks. For instance, the bylaws require that the

Plan’s benefit reserves undergo annual actuarial review to ensure

that CAPF’s funds are properly managed. (PUF ¶ 41.) Defendants

assert that they complied with this requirement by hiring

actuaries J. Paul Dorris and his partner Ken Vance to perform

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this task. (Decl. of Campanale ¶ 5.) However, these actuaries

“closed their doors” for a period beginning in 2006 and ending in

2009, resulting in an “interruption” in actuarial review of

CAPF’s funds between June 21, 2006 and July 2, 2009. (Dep. of

Gene Dangel (“Dangel”), at 114-116; Dep. of Richard Floyd, at 97-

98.) 

C. Plaintiff’s Claims

Plaintiff was a participant in the Plan. (Answer ¶ 14.) On

approximately May 31, 2006, plaintiff applied to the Plan for

long-term disability benefits. (Answer ¶ 15.) CAISI initially

denied plaintiff’s application in a letter dated May 18, 2007. 

(Id.) After receiving additional medical evidence, CAISI heard,

and granted, plaintiff’s appeal. (Id.) The parties dispute

whether plaintiff has received all of the benefits that he is

entitled to under the Plan. This dispute was the subject of a

separate action before this court. (Id.) This action was

dismissed without prejudice for failure to exhaust administrative

remedies.4

In the present action, plaintiff brings suit against

defendants, the Plan, the Plan Administrator (CAISI), and the

individual board members of CAPF and CAISI, alleging numerous

breaches of fiduciary duties under Part 4 of Title I of ERISA. 

(Compl., filed Oct. 28, 2008, ¶ 5.) Plaintiff alleges that

defendants breached their fiduciary duties by: (1) failing to

/////

/////

4 Barboza v. California Ass’n of Professional

Firefighters, et al., Civ. No. 08-0519 FCD/GGH.

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distribute a Summary Annual Report (“SAR”) to plan participants5;

(2) unlawfully refusing to file Form 990 with the IRS; (3)

unlawfully failing to hold Plan assets in trust; (4) engaging in

unlawful self-dealing and prohibited transactions by coming to an

agreement that allows CAISI to use fees and expenses; (5)

engaging in prohibited transactions by renewing the

administrative services agreement between CAPF and CAISI,

including authorizing an administrative services fee increase,

agreeing to an unreasonably lengthy term, and including an

indemnity clause; and (6) failing to obtain actuarial review as

required by Plan bylaws.6 (Id.)

Based on these alleged breaches, plaintiff seeks injunctive

relief to compel defendants to distribute the SAR and to file

Form 990. Additionally, plaintiff requests that the court

appoint an independent Trustee/Receiver to remedy defendants’

alleged breaches and to conduct an accounting of the Plan. 

(Complaint, at 7.)

STANDARD

I. Summary Judgment

The Federal Rules of Civil Procedure provide for summary

judgment where “the movant shows that there is no genuine dispute

5 CAPF has not distributed a SAR to plan participants

since 2002. (PUF ¶ 7.)

6 Plaintiff’s complaint alleged several other breaches of

fiduciary duties, including causing Plan investments to incur

substantial losses by imprudently delegating investment authority

and paying unlawful kick-backs to CAPF directors. In his

opposition to defendants’ Motion for Summary Judgment, plaintiff

concedes that he is no longer pursuing these claims. (Pl.’s

Memorandum in Opposition to Defs.’ Motion for Summary Judgment

and Reply in Support of Pl.’s Motion for Summary Judgment, 2.)

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as to any material fact and the movant is entitled to judgment as

a matter of law.” Fed. R. Civ. P. 56(a). The evidence must be

viewed in the light most favorable to the nonmoving party. See

Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc).

The moving party bears the initial burden of demonstrating

the absence of a genuine issue of fact. See Celotex Corp. v.

Catrett, 477 U.S. 317, 325 (1986). If the moving party fails to

meet this burden, “the nonmoving party has no obligation to

produce anything, even if the nonmoving party would have the

ultimate burden of persuasion at trial.” Nissan Fire & Marine

Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir. 2000). 

However, if the nonmoving party has the burden of proof at trial,

the moving party only needs to show “that there is an absence of

evidence to support the nonmoving party’s case.” Celotex Corp.,

477 U.S. at 325.

Once the moving party has met its burden of proof, the

nonmoving party must produce evidence on which a reasonable trier

of fact could find in its favor viewing the record as a whole in

light of the evidentiary burden the law places on that party. 

See Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th

Cir. 1995). The nonmoving party cannot simply rest on its

allegations without any significant probative evidence tending to

support the complaint. See Nissan Fire & Marine, 210 F.3d at

1107. Instead, the nonmoving party must cite to “particular

parts of materials in the record,” or show that moving party’s

cited materials “do not establish the absence or presence of a

genuine dispute, or that an adverse party cannot produce

admissible evidence to support the fact.” Fed. R. Civ. P.

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56(c)(1).

II. Rule 11

Pursuant to Fed. R. Civ. P. 11(b), when an attorney presents

a pleading or motion to the court, the attorney certifies that,

after reasonable inquiry, to the best of his or her knowledge,

information, and belief: 

(1) it is not being presented for any improper purpose,

such as to harass, cause unnecessary delay, or

needlessly increase the cost of litigation; (2) the

claims, defenses, and other legal contentions are

warranted by existing law or by a nonfrivolous argument

for extending, modifying, or reversing existing law or

for establishing new law; (3) the factual contentions

have evidentiary support.

“Rule 11 is an extraordinary remedy, one to be exercised with

extreme caution.” Conn v Borjorquez, 967 F.2d 1418 (9th Cir.

1992). Rule 11 “must be read in light of concerns that it will .

. . chill vigorous advocacy.” Cooter & Gell v. Hartmax Corp.,

496 U.S. 384, 405 (1990).

ANALYSIS

I. Cross-Motions for Summary Judgment

The statutory framework for breach of fiduciary duty claims

brought by plan beneficiaries under ERISA implicate sections 404,

409, and 502, of ERISA, 29 U.S.C. §§ 1104, 1109, and 1132. See

Quan v. Computer Sciences Corp., 623 F.3d 870, 878 (9th Cir.

2010). 

29 U.S.C. § 1104 requires plan fiduciaries to act on behalf

of the plan as a prudent person would. Specifically, 29 U.S.C. §

1104(a)(1)(A) imposes a duty upon a plan fiduciary to, “discharge

his duties with respect to a plan solely in the interest of the

participants and their beneficiaries and . . . for the exclusive

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purpose of: providing benefits to participants and their

beneficiaries; and defraying reasonable expenses of administering

the plan.” See Friend v. Sanwa Bank California, 35 F.3d 466, 468

(9th Cir. 1994). Further, “a fiduciary must discharge these

duties with the care, skill, prudence, and diligence under the

circumstances then prevailing that a prudent man acting in a like

capacity and familiar with such matters would use in the conduct

of an enterprise of a like character and with like aims.” 29

U.S.C. § 1104(a)(1)(B). In evaluating fiduciaries’ compliance

with the prudent person standard, a court’s task is to consider

whether individual fiduciaries appropriately investigated the

merits of each disputed transaction at the time that the

fiduciaries were engaging in the transaction. See Donovan v.

Mazzola, 716 F.2d 1226 (9th Cir. 1983); see also Wright v. Oregon

Metallurgical Corp. 360 F.3d 1090, 1097 (9th Cir. 2004).

29 U.S.C. § 1109 imposes liability upon a plan fiduciary for

breach of fiduciary duty. 29 U.S.C. § 1109(a); see Quan, 623

F.3d at 878. A fiduciary can only be held personally liable for

a breach of fiduciary duty to the extent that losses to the plan

result from the breach. 29 U.S.C. s 1109(a); see Sanwa Bank

California, at 468 (citing Brandt v. Grounds, 687 F.2d 895, 898

(7th Cir. 1982) (stating that the language of 29 U.S.C. § 1109(a)

“clearly indicates that a causal connection is required between

the breach of fiduciary duty and the losses incurred by the

plan.”)). However, loss causation is not required in an action

for breach of fiduciary duty seeking injunctive relief. See

Shaver v. Operating Eng’r Local 428 Pension Trust Fund, 332 F.3d

1198, 1203 (9th Cir. 2003) (“Indeed, the Ninth Circuit has

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rejected the argument that there must be a loss to the plan in

order to bring an action for breach of fiduciary duty seeking

injunctive relief.”) Such a requirement would leave a plan’s

beneficiaries “powerless to rein in the fiduciaries’ imprudent

behavior until some actual damage has been done.” Id.

Finally, 29 U.S.C. § 1132 provides for civil enforcement,

stating, in pertinent part, that a civil action for breach of

fiduciary duty may be brought “by a participant or beneficiary . .

. to recover benefits due to him under the terms of his plan [or]

to enforce his rights under the terms of the plan.” 29 U.S.C. §

1132(a)(2). “To establish an action for equitable relief under .

. . 29 U.S.C. § 1132(a)(3), the defendant must be an ERISA

fiduciary acting in its fiduciary capacity, and must violate

ERISA-imposed fiduciary obligations.” Ford v. MCI Communications

Corp. Health and Welfare Plan, 399 F.3d 1076, 1083 (9th Cir. 2005)

(quoting Mathews v. Chevron Corp., 362 F.3d 1172, 1178 (9th Cir.

2004)).

A. Summary Annual Report

Plaintiff alleges that defendants breached their fiduciary

duties by failing to provide Plan participants with a Summary

Annual Report (“SAR”). Plaintiffs assert that defendants are

required to do so because 29 C.F.R. 2520.104b-10 requires

administrators of an employee welfare plan to provide Plan

participants with a SAR. Defendants contend that the Plan did

not have to comply with the SAR distribution requirement because

they were exempt from 29 C.F.R. 2520.104b-10 as an “unfunded”

plan.

/////

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Pursuant to 29 C.F.R. 2520.104b-10(a), the administrator of

an employee benefit plan must distribute a SAR to participants of

the plan, unless an exemption applies. 29 C.F.R. 2520.104b-10(a)

provides:

“Except as otherwise provided in paragraph (g) of this

section, the administrator of any employee benefit plan

shall furnish annually to each participant of such plan

and to each beneficiary receiving benefits under such

plan (other than beneficiaries under a welfare plan) a

summary annual report conforming to the requirements of

this section.”

29 C.F.R. 2520.104b-10(g)(1) exempts a totally unfunded

welfare plan as described in 29 C.F.R. 2520.104-44(b)(1)(I) from

filing a SAR.7

 29 C.F.R. 2520.104-44(b)(1)(I) describes a

totally unfunded welfare plan as an “employee welfare benefit

plan under the terms of which benefits are to be paid . . .

solely from the general assets of the employer or employee

organization maintaining the plan.” Neither party disputes that

CAPF is an employee welfare benefit plan that receives its

funding exclusively from participants and pays benefits solely

from its general assets. (DUF ¶¶ 2, 4; PUF ¶ 5.) 

However, the DOL8 and IRS have clarified that plans that

receive employee contributions or pay benefits from a trust9

 are

7 “Notwithstanding the provisions of this section, a

summary annual report is not required to be furnished with

respect to . . . [a] totally unfunded welfare plan described in

29 C.F.R. 2520.104-44(b)(1)(I).” 29 C.F.R. 2520.104b-10(g)(1).

8 The DOL regulates Title I of ERISA and is responsible

for defining ERISA terms. See 29 U.S.C. § 1135, Am. Jur. 2d

Pensions § 767. Accordingly, DOL opinions interpreting ERISA are

persuasive.

9 Indeed, while CAPF is not set up in trust format, as

set forth infra, defendants assert the Plan’s corporate structure

is functionally equivalent to a trust.

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not paying benefits “solely from the general assets of the

employer or employee organization maintaining the plan” for

purposes of the regulation. In technical release 92-01, the DOL

explained that “the relief afforded by . . . 2520.104-44 is not

available to any welfare plan with respect to which benefits or

premiums are paid from a trust.” (Id.) The technical release

further noted that 

“a welfare plan that applies participant contributions

directly to the payment of benefits . . . would not

qualify for exemptive relief because the benefits under

such a plan could not be considered paid solely from

the general assets of the employer. Once the

participant contributions are used, directly or

indirectly, to pay benefits, they are, by definition,

segregable from the employer’s general assets.”

 (Id.) 

DOL Opinion No. 94-31(A) provided further clarification,

acknowledging that while a welfare plan can be maintained without

identifiable plan assets “by paying plan benefits exclusively

from the general assets of the employer,” the exemption does not

apply once the “employer takes steps that cause the plan to gain

a beneficial interest in particular assets, under ordinary

notions of property rights.” (Id.) Once the plan obtains a

beneficial interest, such assets become plan assets rather than

employer assets. (Id.) The DOL explained that “a welfare plan

will generally have a beneficial interest in particular assets if

[an entity] establishes a trust on behalf of the plan, sets up a

separate account with a bank or with a third party in the name of

the plan, or specifically indicates in the plan documents or

instruments that separately maintained funds belong to the plan.” 

(Id.)

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Finally, the instructions on IRS Form 5500 are consistent

with the DOL letters in noting that a Plan is not unfunded and

does not qualify for an exemption where contributions are placed

in either a trust or a separately maintained fund. Specifically,

under the Who Must File section, Form 5500 states that “[p]lans

that are NOT unfunded include those plans that received employee

. . . contributions during the plan year and/or used a trust or

separately maintained fund . . . to hold plan assets . . . .” 

These instructions are consistent with DOL Advisory Opinion No.

92-24(A), which provides, in relevant part:

As explained in the instructions to the Form 5500

series, a plan seeking to rely on this first prong of

the exemption cannot pay benefits from participant

contributions . . . from a trust . . . that holds plan

assets. In other words the application of this prong

of the exemption to a given plan turns, as a threshold

matter, on whether any of the amounts used to pay

benefits constitute plan assets.

The evidence is undisputed that CAPF pays its premiums from

a corporation that serves the function of a trust and applies

participant contributions directly to the payment of benefits. 

Pursuant to the guidance provided in DOL Opinion No. 94-31(A),

once CAPF takes contributions and deposits them into the Plan’s

corporate account, the plan gains a “beneficial interest” in

those funds, and the contributions become “plan assets.” 

Accordingly, because CAPF is not a totally unfunded welfare plan

under 29 C.F.R. 2520.104-44(b)(1)(I), it is not exempt from 29

C.F.R. 2520.104b-10’s SAR distribution requirement. 

Therefore, because it is undisputed that defendants have

failed to distribute a SAR since 2002 and because CAPF is not

entitled to an exemption, there is no genuine issue of material

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fact as to whether defendants unlawfully failed to distribute a

SAR to Plan participants. Thus, as to defendants’ alleged breach

of fiduciary duty for failure to distribute a SAR to Plan

participants, defendants’ motion for summary adjudication is

DENIED and plaintiff’s motion for summary adjudication is

GRANTED. 

The court notes that plaintiff has failed to present

evidence of any monetary loss as a result of defendants’ failure

to distribute SARs. However, loss causation is not required in

an action for breach of fiduciary duty seeking injunctive relief. 

See Shaver, 332 F.3d at 1203. Accordingly, defendants are

directed to furnish SARs from 2002 to date to all participants in

accordance with 29 C.F.R. 2520.104b-10.

B. Form 990

Plaintiff next alleges that defendants breached their

fiduciary duties by unlawfully failing to file Form 990 with the

IRS. Defendants argue that they discharged their fiduciary

duties regarding the filing of Form 990 with the required

prudence by seeking the advice of qualified experts. 

As fiduciaries, defendants are required to comport with the

prudent person standard of care. 29 U.S.C. § 1104(a)(1)(B). 

Securing an independent assessment from a financial advisor or

legal counsel provides evidence of a thorough investigation in

defense of a charge of imprudence. Howard v. Shay, 100 F.3d

1484, 1489 (9th Cir. 1996)(citations omitted). 

However, demonstrating that independent expert advice has

been sought is not determinative. Donovan v. Bierwirth, 680 F.2d

263, 272 (2d Cir. 1982). A fiduciary is not justified in relying

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wholly upon the advice of others. Donovan v. Mazzola, 716 F.3d

1226, 1234 (9th Cir. 1983). In Mazzola, individual trustees of a

union pension fund appealed a district court judgment finding

that they breached their fiduciary duties under ERISA. Id. at

1227-28. The Ninth Circuit found that the defendants imprudently

discharged their duties when they selected an acquaintance, Dr.

Schwartz, to perform a feasibility study on behalf of the plan. 

Upon finding that defendants never inquired into Dr. Schwartz’s

qualifications and that Dr. Schwartz had never conducted a

similar study in the past, the court concluded that defendants

breached their fiduciary duties by failing to comply with

accepted industry standards. Id. at 1229-30. As such, the court

held that a fiduciary has a duty to exercise his own judgment in

the light of the information and advice he receives. Id.

In order to exercise reasonable prudence in seeking expert

advice, a fiduciary must (1) investigate the expert’s

qualifications, (2) provide the expert with complete and accurate

information, and (3) make certain that reliance on the expert’s

advice is reasonably justified under the circumstances. Howard,

at 1489. As such, the fiduciary’s duty is to ensure that the

expert is qualified and reliable, not to investigate the accuracy

of the expert’s advice. Id.

Defendants present evidence that they discharged their

fiduciary duties with prudence by seeking professional counsel to

determine whether CAPF was required to file Form 990 with the

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IRS.10 Specifically, defendant and CAPF Executive Board member,

Dennis Campanale declared that “CAPF relied on the advice of its

legal counsel . . . and its CPA . . . in deciding whether Form

990 was required to be submitted to the Internal Revenue

Service.” (Decl. of Campanale, ¶ 16.) There is no evidence that

defendants failed to reasonably investigate their legal counsel’s

or their CPA’s qualifications or that their experts were not

sufficiently qualified. Nor does plaintiff assert that

defendants failed to provide their experts with complete and

accurate information. Accordingly, defendants have submitted

undisputed evidence that they reasonably relied on the advice of

qualified experts.11 

Plaintiff asserts that defendants were required to consult

with competitor plans in deciding whether they need to file Form

990; however, plaintiff’s assertion suggests a standard that

exceeds the requirements imposed upon a fiduciary in the Ninth

10 Defendants concede that, as former and current

firefighters, not legal or accounting experts, prudence requires

them to seek the advice of professionals on legal or accounting

issues. (Decl. of Campanale ¶ 18.) 

11 Plaintiff argues that defendants have not sufficiently

demonstrated that they obtained proper expert advice. However,

defendants have submitted admissible evidence from a witness with

personal knowledge stating that defendants sought advice from

their CPA and legal counsel. Plaintiff has not presented any

evidence in contravention of this statement.

Plaintiff attempts to discredit defendant Campanale’s

testimony by citing the testimony of board member, Gene Dangel. 

Plaintiff asserts that Dangel’s statement that he was unaware of

CAPF seeking professional advice on filing Form 990 contradicts

Campanale’s testimony. (Deposition of Gene Dangel, 130-131.)

However, one board member’s lack of awareness regarding the

pursuit of professional advice does not demonstrate that another

board member’s testimony that professional advice was sought is

either false or inaccurate.

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Circuit. See Howard, 100 F.3d at 1489. The Ninth Circuit’s

decision in Howard expressly holds that a fiduciary’s duty is

fulfilled by investigating the qualifications and reliability of

an expert under all the relevant circumstances. Defendants have

presented evidence that they did so.

Therefore, plaintiff has failed to demonstrate a genuine

issue of material fact as to whether defendants’ conduct

constitutes compliance with 29 U.S.C. § 1104’s prudent person

standard. Thus, with respect to plaintiff’s claim that

defendants breached their fiduciary duty by unlawfully refusing

to file Form 990 with the IRS, defendants’ motion for summary

adjudication is GRANTED, and plaintiff’s motion for summary

adjudication is DENIED.

C. Plan Assets

Plaintiff also alleges that defendants breached their

fiduciary duties by unlawfully failing to hold Plan assets in

trust, in violation of 29 U.S.C. § 1103. Defendants admit that

CAPF does not have a trust or a trust document. (Defendants’

response to PUF ¶ 11, 13.) Nonetheless, defendants assert that

CAPF is compliant with 29 U.S.C. § 1103 because they relied upon

the advice of qualified experts that a corporate structure, such 

as CAPF’s, satisfies 29 U.S.C. § 1103’s “held in trust”

requirement. 

Defendants present undisputed evidence that they relied upon

advice from the DOL and the DOI that they satisfied the

requirements of § 1103 by holding plan assets in a corporate

structure. Specifically, defendants present evidence that “CAPF

was informed by the DOL that a corporation can satisfy the hold17

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in-trust requirements under ERISA section 403(a).”12

Additionally, defendants were advised by the DOI that CAPF should

be structured as a corporation rather than a trust. (Dep. of

Richard Floyd, at 14-15.) As such, defendants’ decision

regarding the corporate structure of the Plan was based upon

expert advice.13 

Plaintiff asserts that, even if defendants did receive

advice from the DOL, defendants were not reasonably justified in

relying on the DOL’s advice.14 Specifically, plaintiff states

that any advice provided by the DOL in 1987 could not have been

reasonably relied upon because it was superseded by DOL

regulation 29 C.F.R. 2510.3-102 that became effective on February

3, 1997. (See DUF ¶ 24.) Specifically, plaintiff asserts that

29 C.F.R. 2510.3-102 requires that “participant contributions

12 As discussed supra, reliance upon DOL advice regarding

ERISA requirements is reasonable because the DOL regulates Title

I of ERISA and defines ERISA’s terms. 

13 Defendants’ belief that CAPF’s corporate structure

fulfills 29 U.S.C. § 1103’s “held in trust” requirement is also

based on Treas. Reg. 1.501(c)(9)-2(c)(1) which states that “a

voluntary beneficiary association must be an entity, such as a

corporation or trust established under applicable local law,

having an existence independent of the member-employees of their

employer.” Because the issue at hand is defendants’ compliance

with the prudent person standard of care, rather than the

accuracy of defendants’ or defendants’ professional advisors

statutory interpretation, the court’s analysis focuses on

defendants’ prudence in seeking advice rather than the

applicability of Treas. Reg. 1.501(c)(9)-2(c)(1). 

14 Plaintiff objects to Chediak’s testimony, arguing that

his statement is “entirely without foundation and hearsay, made

by a ‘percipient expert’ witness never designated as such.” 

(Pl.’s Me. in Opp. to Defs.’ Mot. for Summ. J. and Reply in

Support of Pl.’s Mot. for Summ. J., at 8.) Chediak’s testimony

is offered for the purpose of demonstrating that defendants

sought advice, a matter which he testifies that he has personal

knowledge of. Accordingly, plaintiff’s objection is overruled.

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become ‘plan assets’ as soon as they can reasonably be segregated

from the employer’s assets.” (Pl.’s Mem. in Opp’n to Defs.’ Mot.

for Summ. J. and Reply in Support of Pl.’s Mot. for Summ. J.,

filed Sept. 10, 2010, at 9.) Plaintiff further asserts that the

participant contributions that become plan assets “must be held

in trust.” (Id.) 

However, plaintiff’s interpretation of 29 C.F.R. 2510.3-102

does not raise a material issue of fact regarding defendants’

reasonable reliance upon expert advice. 29 C.F.R. 2510.3-102

does not include language that would lead a fiduciary to

reevaluate prior DOL advice regarding a plan’s ability to satisfy

29 U.S.C. § 1103’s “held in trust” requirement with a corporation

rather than a trust. Rather, the regulation defines plan assets

and clarifies when funds become plan assets rather than employer

assets. The regulation does not discuss where plan assets must

be held. As such, it does not provide any guidance regarding

whether the assets need to be held in a trust as opposed to in a

corporation. Accordingly, the language of 29 C.F.R. 2510.3-102

would not cause a reasonable fiduciary who had previously sought

and received expert advice authorizing CAPF’s corporate structure

to reevaluate whether it was meeting the requirements of § 1103.

Accordingly, with respect to plaintiff’s claim that

defendants breached their fiduciary duty by failing to hold Plan

assets in trust in violation of 29 U.S.C. § 1103, defendants’

motion for summary adjudication is GRANTED, and plaintiff’s

motion for summary adjudication is DENIED.

/////

/////

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D. Payment of CAISI’s Fees Directly from Plan Assets

Plaintiff further alleges that defendants breached their

fiduciary duties by engaging in unlawful self-dealing and

prohibited transactions under 29 U.S.C. 1106(b) by coming to an

agreement that allows CAISI to use Plan assets to pay its own

fees and expenses. Defendants argue that the manner in which

CAISI receives its administrative fees is not prohibited because

it does not constitute unlawful self-dealing. 

Transactions between a plan and its fiduciary that implicate

self-dealing are prohibited by 29 U.S.C. 1106(b). Specifically,

29 U.S.C. 1106(b)(1) prohibits a fiduciary from “deal[ing] with

the assets of the plan in his own interest or for his own

account.” 29 U.S.C. 1106(b)(2) prohibits a fiduciary from

engaging in any transaction involving the plan on behalf of a

party whose interests are adverse to the interests of the plan or

its participants.

Defendants submit undisputed evidence to show that the

fiduciaries exercised prudent care in developing their payment

structure and ensuring that the payment structure never resulted

in any financial irregularities. CAPF and CAISI negotiated and

mutually agreed upon CAISI’s fees, rather than CAISI determining

them unilaterally. (DUF ¶ 33.); cf. Patelco Credit Union v.

Sahni, 262 F.3d 897 (9th Cir. 2001) (holding that the defendants

breached fiduciary duties where, inter alia, the plan

administrator unilaterally determined his own fee); Chao v. Graf,

No. 01-0698, 2002 WL 1611122, (D. Nev., Feb. 1, 2002) (same). 

CAPF also hired a qualified accountant who approved of the

structural controls that the Plan had in place to prevent CAISI

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from engaging in self-dealing. (DUF ¶ 31.) The same accountant

performs annual audits of the Plan. (DUF ¶ 30.) None of the

accountant’s annual audits have revealed any financial

irregularities or indications of self-dealing by CAISI. (DUF ¶

32.) Accordingly, defendants have demonstrated that they

exercised prudent care in structuring CAPF and CAISI’s

transactions in a manner that did not involve self-dealing in

violation of ERISA.

Nonetheless, plaintiff asserts that CAISI’s transactions are

prohibited because case law has deemed such conduct per se

unlawful. However, plaintiff’s reliance on Patelco Credit Union

v. Sahni, 262 F.3d 897 (9th Cir. 2001), for the proposition that

an administrator’s payment of its own fees out of Plan funds is a

per se violation of 29 U.S.C. 1106(b) is misplaced. In Patelco,

the plaintiff alleged that the defendant breached his fiduciary

duties by engaging in prohibited self-dealing in violation of 29

U.S.C. 1106(b). The defendant managed the Patelco Credit Union

Health Plan, controlled its assets, and selected the plan’s

insurance provider. Id. at 901. Each month, the plaintiff paid

the defendant the amount that the defendant estimated was

necessary to cover benefits to participants, insurance premiums,

and his administrative fee. Id. The defendant received these

funds from Patelco, and commingled these funds with the assets

from other plans that he administered. Id. The Ninth Circuit

described the defendant’s accounting for these plans as “sloppy”

and found that the defendant received commissions from the

insurance company that he hired, determined and collected

administrative fees from the Plan’s funds by himself, and marked

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up the amount that he reimbursed himself for the plan’s premiums. 

Id. at 911. Under these facts, the Ninth Circuit held that the

defendant breached his fiduciary duties by engaging in prohibited

self-dealing.

Unlike the circumstances in Patelco, the facts in this case

do not provide a basis for a conclusion that CAISI engaged in

self-dealing. Unlike in Patelco, there are no allegations that

CAISI received commissions from a third party, no evidence that

CAISI “marked up” any of their contractually agreed-upon charges,

nor is there evidence that defendants determined their own

administrative fees. Indeed, it is undisputed that CAISI and

CAPF contractually agreed upon CAISI’s administrative fee. (DUF

¶ 33.) Therefore, because the Ninth Circuit’s finding of selfdealing in Patelco was based upon vastly dissimilar conduct to

that of CAISI, Patelco does not provide a basis for finding that

defendants engaged in prohibited transactions.

Plaintiff’s reliance on Chao v. Graf, No. 01-0698, 2002 WL

1611122, (D. Nev., Feb. 1, 2002) for the proposition that writing

checks from a trust account to oneself or other entities that one

controls constitutes a per se violation is similarly misplaced. 

In Chao, the Secretary of the DOL brought an ERISA action for

breaches of fiduciary duties against an organization that oversaw

the management of employee benefit plans and the individuals

responsible for running this organization. Chao at *1. The

defendants in Chao were involved in “numerous transactions

involving . . . examples of self-dealing.” Id. at *10. These

defendants “set their own compensation and determined their own

expenses from plan assets, and used their discretionary authority

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and control to cause the [benefit plans] to contract with . . .

entities owned and controlled by these defendants." Id.

Contrary to the facts in Chao, CAISI’s actions at issue in

this case do not rise to the level of self-dealing. Unlike the

defendants in Chao, CAISI’s compensation was authorized by CAPF

in agreeing to CAISI’s administrative services agreement. There

is no evidence that CAISI “set their own compensation” or

“determined their own expenses.” Accordingly, Chao does not

provide a basis for finding that defendants engaged in prohibited

transactions.15

Therefore, plaintiff has failed to raise a genuine issue of

material fact with respect to whether CAISI’s conduct constitutes

self-dealing in violation of 29 U.S.C. § 1106(b). Accordingly,

on this matter, defendants’ motion for summary adjudication is

GRANTED, and plaintiff’s motion for summary adjudication is

DENIED.

E. Renewal of CAPF and CAISI’s Administrative Services

Agreement

1. Administrative Services Fee

Plaintiff alleges that CAPF’s directors violated their

fiduciary duty to Plan participants by authorizing an increase in

15 Finally, plaintiff’ reliance upon Briscoe v. Preferred

Health Plan, Inc., 3:02-264, 2008 WL 4146381 (W. D. Ky.,

September 3, 2008), raised for the first time at the December 3,

2010 hearing, is also misplaced. In Briscoe, the defendant-plan

administrator wrote itself a check from the plan to account for

unpaid administrative fees. The court in Briscoe found “that

there is no contract provision which permits [defendant] to

simply pay itself an administrative services fee from the Plan

account.” Id., at *2. Thus, the actions of the defendant in

Briscoe are dissimilar to CAISI’s actions, because the

administrative services agreement permits CAISI to write checks

on CAPF’s behalf to pay for administrative fees.

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CAISI’s administrative service fee. Plaintiff asserts that

defendants failed to comport with their duty of prudence by

failing to investigate the reasonableness of the per participant

fee increase, by failing to seek independent expert advice on

this matter, and failing to conduct arms length negotiations of

the contract terms. Defendants argue that they acted prudently

in renewing this contract by conducting an appropriate

investigation under the circumstances. 

The undisputed evidence reveals that defendants conducted a

reasonable investigation regarding the fee increase under all the

circumstances. While CAPF’s Board did not undertake a full-scale

investigation, they did conduct a brief review of whether the

proposed price increase was in the Plan’s best interest. In

December of 2008, CAISI owner Jerry Floyd met with CAPF Board

member Gene Dangel, who informally cited increased operating

costs, then proposed a ten (10) cent per member, per month

administrative fee increase for the following year. (Dep. of

Gene Dangel, at 60-61.) CAPF’s Board discussed at length the

work that CAISI does in administering the plan, then determined

that the proposed increase was “more than reasonable for the work

that they do.” (Id. at 62-63.) CAPF was satisfied with CAISI’s

services throughout their long-standing relationship. (Decl. of

Dennis Campanale, ¶ 12.) Further, the Board did not feel the

need to shop around for another administrator because, in the

Board’s opinion, CAISI kept premiums low by outperforming its

competitors in marketing the Plan and recovering third-party

benefits. (Id. ¶ 13.) Moreover, the renewed contract called for

an increase in administrative fees of less than three percent

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after it had operated without a fee increase for fourteen (14)

years.16 Under the circumstances, prudence does not call for an

investigation beyond CAPF’s discussion of the reasonableness of

the increase and consultation with counsel.

Based on the above factors, CAPF’s informal investigation

into the propriety of the proposed increase was sufficient to

fulfill their fiduciary duty of prudence. Accordingly, there is

an absence of a genuine issue of material fact as to plaintiff’s

claim that defendants breached their fiduciary duty by agreeing

to the administrative services fee increase in CAPF and CAISI’s

renewed contract. Therefore, on this matter, defendants’ motion

for summary adjudication is GRANTED, and plaintiff’s motion for

summary adjudication is DENIED.

2. Contract Term

Plaintiff also claims that the one-year term of the renewed

contract violates the “reasonably short notice” termination

provision of 29 C.F.R. 2550.408b-2(c). Plaintiff argues that, “a

one-year term is not short”; defendant counters that the term of

the contract is not unreasonably long.

29 C.F.R. 2550.408b-2(c) states that “[n]o contract or

arrangement is reasonable . . . if it does not permit termination

by the plan without penalty to the plan on reasonably short

notice . . . to prevent the plan from becoming locked into an

arrangement that has become disadvantageous.” 

The court concludes that under the circumstances of this

case, plaintiff has failed to demonstrate that the one-year term

16 Additionally, CAPF sought advice from legal counsel

regarding this matter. (Dep. of Campanale, at 65). 

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was unreasonable. Indeed, plaintiff has failed to present any

evidence that the one-year term locked CAPF into an arrangement

that became disadvantageous for the Plan. Further, plaintiff

fails to support his assertion that a one-year contract term is

per se unreasonable. Plaintiff relies solely on cases that

involve substantially longer terms of service. International

Union of Bricklayers and Allied Craftsmen v. Gallante, 912 F.

Supp. 695 (S.D.N.Y., 1996) (three years); Gilliam v. Edwards, 492

F. Supp. 1255 (D.N.J., 1980) (ten years). 

Accordingly, plaintiff has failed to raise a genuine issue

of material fact as to whether defendants breached their

fiduciary duty based on the term of CAPF and CAISI’s renewed

contract. Therefore, on this matter, defendants’ motion for

summary adjudication is GRANTED, and plaintiff’s motion for

summary adjudication is DENIED.

3. Indemnity Clause

Plaintiff further claims that 29 U.S.C. § 1110 voids the

indemnity clause in CAPF and CAISI’s renewed agreement. 

Defendants’ argue that plaintiff’s have not introduced any

evidence that this clause has ever been invoked.

29 U.S.C. § 1110(a) states that “any provision in an

agreement or instrument which purports to relieve a fiduciary

from responsibility or liability for any responsibility,

obligation, or duty under this part shall be void as against

public policy.” Thus, the plain language of 29 U.S.C. § 1110(a)

expressly prohibits the indemnity clause in the renewed contract. 

However, plaintiff has presented no evidence of monetary

loss arising from the presence of the indemnity clause. Indeed,

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there is no evidence that the indemnity clause has ever been

invoked. Accordingly, there is no evidence to support the award

of damages in this case. 

Thus, as to plaintiff’s claim that the indemnity clause

within the administrative services agreement is void pursuant to

29 U.S.C. § 1110(a), defendants’ motion for summary adjudication

is DENIED, and plaintiff’s motion for summary adjudication is

GRANTED. Because plaintiff is not required to demonstrate loss

causation in order to be entitled to injunctive or declaratory

relief, the court declares that the indemnity clause portion of

the administrative services agreement is unenforceable. See

Shaver, 332 F.3d 1198, 1203. 

F. Actuarial Review of Plan Reserves

Finally, plaintiff alleges that defendants have breached

their fiduciary duty by failing to exercise prudent care in

ensuring that the Plan has adequate reserves for incurred benefit

claims. Specifically, plaintiff alleges that defendant has

failed to seek professional, actuarial advice often enough to

comply with 29 U.S.C. § 1104’s prudent person standard.

Defendant argues that they have sufficiently sought actuarial

review in compliance with 29 U.S.C. § 1104.

ERISA fiduciaries must comply with the requirements imposed

by the Plan itself. The Ninth Circuit has held that failure to

comply with the Plan’s written statements constitutes a breach of

fiduciary duty. See California Ironworkers Field Pension Trust

v. Loomis Sayles & Co., 259 F.3d 1036, 1042 (9th Cir. 2001)

(citing Dardaganis v. Grace Capital, Inc., 889 F.2d 1237, 1241-42

(2d Cir. 1989) (providing that a fiduciary’s failure to act in

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accordance with plan documents “is not merely evidence of

imprudent action but may, in itself, be a basis for liability

under section 1109”)); see also Tibble v. Edison Intern., 639 F.

Supp. 2d 1074 (C.D. Cal. 2009) (noting that “[a] fiduciary’s

failure to discharge its duties in accordance with the plan

documents is an independent basis for finding a breach of

fiduciary duty under § 1104(a)(1).”) The CAPF Plan document

requires the Plan to “retain a licensed actuarial firm to conduct

actuarial reviews on a periodic basis, but no less than annually,

regarding the reserves maintained for the payment of Benefits.” 

(CAPF Plan document ¶ 5.2.)

Plaintiff submits undisputed evidence that defendants failed

to comply with the Plan’s requirement of annual actuarial review. 

Defendant and CAPF Executive Board member, Gene Dangel, testified

that there was an “interruption” in CAPF receiving actuarial

reports between June 21, 2006 and July 2, 2009. (Dep. of Gene

Dangel, at 114-116.) Richard Floyd, owner of CAISI, testified

that CAPF’s actuaries “closed their doors” for health reasons for

the period of 2006 through 2009. (Dep. of Richard Floyd, at 97-

98.) Richard Floyd also testified that the actuary “put [CAPF]

off for a long time” by saying that he was physically able to

complete the review, then delaying doing so. (Id.) 

However, plaintiff has not submitted evidence that

defendants’ conduct resulted in loss to the plan. As such,

plaintiff has failed to present evidence that he is entitled to

an award of damages. 

Accordingly, there is an absence of a genuine issue of

material fact as to whether defendants breached their fiduciary

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duty by failing to comply with the Plan’s annual actuarial review

requirement. Thus, defendants’ motion for summary adjudication

is DENIED and plaintiff’s motion for summary adjudication is

GRANTED. Because plaintiff is not required to demonstrate loss

causation in order to be entitled to injunctive or declaratory

relief, the court orders defendants to obtain actuarial studies

for each year that the plan has not undergone actuarial review. 

See Shaver, 332 F.3d 1198, 1203. 

II. Cross-Motions for Rule 11 Sanctions

Defendants move for sanctions pursuant to Federal Rule of

Civil Procedure 11, asserting that plaintiff’s complaint in this

case is factually unsupported and was filed for an improper

purpose. Plaintiff opposes this motion, arguing that his

complaint contains sufficient factual support and was brought for

a proper purpose. In his opposition, plaintiff filed a crossmotion to recover sanctions under Rule 11, in the amount of fees

required to respond to defendants’ motion for sanctions, arguing

that defendants’ motion is frivolous and was filed for an

improper purpose.

Defendants do not meet Rule 11's high burden in

demonstrating that plaintiff’s allegations do not have

evidentiary support. Indeed, defendants do not necessarily

dispute the factual underpinnings of plaintiff’s claims, but

assert that such facts do not give rise to a claim for relief. 

For example, plaintiff alleged that defendants breached their

fiduciary duties by failing to file SARs. Defendants did not

dispute that they had failed to file SARs, but rather argued that

they were exempt from the filing requirements. As such, the

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factual allegations were supported by evidence. Similarly,

plaintiff alleged that defendants’ breached their fiduciary

duties by structuring CAPF as a corporation rather than a trust. 

While, as set forth supra, the court concluded that defendants

fulfilled their fiduciary duties regarding the structure of

CAPF’s Plan assets, the factual allegations regarding CAPF’s

corporate structure were true; defendants admit that CAPF is a

corporation without a trust or a trust document. (Defendants’

response to PUF ¶ 11, 13.) Finally, plaintiff claims that

defendants breached their fiduciary duty by failing to obtain

actuarial review as required by the Plan document. The evidence

was undisputed that defendants failed to file the requisite

actuarial review for several years. Accordingly, this claim also

had evidentiary support. 

Defendants also fail to submit sufficient evidence that

plaintiff’s complaint was brought for an improper purpose. While

plaintiff’s current suit was filed after his suit for damages

arising out of his personal benefit claim was dismissed, the

timing is consistent with plaintiff’s assertion that he learned

of the factual basis of the current suit while conducting

discovery in the prior suit.

Similarly, there is no basis to award sanctions to plaintiff

against defendants. While defendants’ motion is not persuasive,

the court cannot conclude on the record before it that the filing

was frivolous or submitted with an improper purpose. 

Accordingly, defendants’ motion for Rule 11 sanctions is

DENIED, and plaintiff’s cross-motion for Rule 11 sanctions is

DENIED.

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CONCLUSION

For the foregoing reasons, the court finds that defendants’

motion for summary judgment is DENIED in part and GRANTED in

part, and plaintiff’s motion for summary judgment is DENIED in

part and GRANTED in part. Specifically, with respect to

plaintiff’s claim of breach of fiduciary duty:

(1) for failing to distribute a SAR to Plan participants,

defendants’ motion for summary adjudication is DENIED, and

plaintiff’s motion for summary adjudication is GRANTED; 

(2) for unlawfully refusing to file Form 990 with the IRS,

defendants’ motion for summary adjudication is GRANTED, and

plaintiff’s motion for summary adjudication is DENIED; 

(3) for violating 29 U.S.C. § 1103 by failing to hold Plan assets

in trust, defendants’ motion for summary adjudication is

GRANTED, and plaintiff’s motion for summary adjudication is

DENIED;

(4) for engaging in unlawful self-dealing and prohibited

transactions under 29 U.S.C. 1106(b) by coming to an

agreement, wherein CAISI uses Plan assets to pay its own fees

and expenses, defendants’ motion for summary adjudication is

GRANTED, and plaintiff’s motion for summary adjudication is

DENIED; 

(5) for authorizing the administrative services fee in renewing

the administrative services agreement between CAPF and CAISI,

defendants’ motion for summary adjudication is GRANTED, and

plaintiff’s motion for summary adjudication is DENIED; 

(6) for agreeing to a one-year term of the renewed contract,

defendants’ motion for summary adjudication is GRANTED, and

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plaintiff’s motion for summary adjudication is DENIED; 

(7) for including an indemnity clause in the renewed contract,

defendants’ motion for summary adjudication is DENIED, and

plaintiff’s motion for summary adjudication is GRANTED; and

(8) for failing to obtain actuarial review for a period of

approximately three years, defendants’ motion for summary

adjudication is DENIED, and plaintiff’s motion for summary

judgment is GRANTED.

In accordance with these conclusions, defendants are ordered

to distribute SARs from 2002 to date to all participants in

accordance with 29 C.F.R. 2520.104b-10 and to obtain actuarial

studies for each year that the plan has not undergone actuarial

review. Further, the indemnity clause in CAPF and CAISI’s

administrative services agreement is declared void and

unenforceable. Additionally, for the reasons set forth above,

defendants’ motion for sanctions is DENIED and plaintiff’s crossmotion for sanctions is DENIED.

This case is Closed. The Clerk of Court is directed to Close

this case.

IT IS SO ORDERED.

DATED: January 25, 2011

 FRANK C. DAMRELL, JR.

UNITED STATES DISTRICT JUDGE

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