Opinion ID: 451609
Heading Depth: 1
Heading Rank: 2

Heading: the prohibited transaction issue

Text: 6 The defendants' attempt to void the transaction that placed a one-half interest in the building in Dr. Blanton's account is barred by ERISA's statute of limitations. Section 413(a)(2)(A) of ERISA, 29 U.S.C. Sec. 1113(a)(2)(A) (1982), bars an action for a violation of section 406 three years after the plaintiff has actual knowledge of the violation. For purposes of their counterclaim, Drs. Anzalone and Slebir are in the position of plaintiffs. The transaction that placed a one-half interest in the building in Dr. Blanton's account took place on September 6, 1977. This action was filed more than three years later, on June 8, 1981. Drs. Anzalone and Slebir had actual knowledge of the transaction at the time it took place because they, as trustees, were parties to the transaction, and they, along with Dr. Blanton, actually made the decision to undertake the transaction. 7 To avoid the limitations bar, the defendants argue (1) that Mrs. Blanton did not raise the statute of limitations in her pleadings, (2) that payment of rent from the building to Dr. Blanton's account was a continuing violation of ERISA section 406 which continued up until the time that this action was filed, and (3) that they did not have actual knowledge of the violation until their attorney advised them that the transaction was prohibited. 8 These arguments are without merit. First, Mrs. Blanton could not have raised the statute of limitations in her pleadings because the defendants did not raise the prohibited transaction issue in theirs. Assuming, arguendo, that Mrs. Blanton implicitly consented to trial of the prohibited transaction issue, she did not thereby waive her right to raise the statute of limitations, which she raised in her motion for summary judgment and her trial brief. The defendants' second argument also fails. Once the interest in the building was in Dr. Blanton's account, it was not a violation of ERISA section 406 to pay rent into that account. The defendants' third argument fails as well. The statute of limitations is triggered by the defendants' knowledge of the transaction that constituted the alleged violation, not by their knowledge of the law. Cf. United States v. Kubrick, 444 U.S. 111, 118-25, 100 S.Ct. 352, 357-61, 62 L.Ed.2d 259 (1979); NLRB v. Don Burgess Construction Corp., 596 F.2d 378, 382 (9th Cir.), cert. denied, 444 U.S. 940, 100 S.Ct. 293, 62 L.Ed.2d 306 (1979). 9 Finally, it is necessary to point out that the prohibited transaction issue does not affect the liability of the defendants for undercharging themselves rent. Even if Dr. Blanton's account did not hold a one-half interest in the building, Drs. Anzalone and Slebir would still be liable to the plan for their breach of fiduciary duty.