Opinion ID: 202339
Heading Depth: 2
Heading Rank: 2

Heading: The Business Breakup and the Benefits Dispute

Text: In July of 2000, Janeiro gave notice that he intended to leave the USPA. Thereafter, the relationship between Janeiro and Chibaro was, in the district court's words, cold and at times very contentious. In October of 2000, Janeiro terminated his employment. The next valuation date, which would apply in the ordinary course, was December 31, 2000. The district court found that both before and after December 31, 2000, Janeiro clearly and repeatedly communicated his intention to Dr. Chibaro . . . to withdraw his plan assets as soon as they could be withdrawn. In addition, several other terminated employees and Chibaro's ex-wife, claiming by way of a recent divorce, sought to obtain their share of assets as of the December 31, 2000 valuation date. In all, Chibaro knew that as of that date roughly 70% of the plan's assets would be departing. Of the 30% remaining, 92% belonged to Chibaro. The district court further found that the USPA had Fecteau's 2000 annual census form in early January of 2001, but did not complete and return it to Fecteau until March 12, 2001. -6- Fecteau completed the valuation for December 31, 2000 (the first valuation) and transmitted it to Chibaro by letter dated June 19, 2001. Janeiro's share of assets as of December 31, 2000 was valued at $651,680. Importantly, between December of 2000 and June of 2001, the market value of the plan assets declined. The district court found that Chibaro became concerned because . . . he didn't want to make money for other people that were leaving the plan, and in effect if Dr. Janeiro were to be paid the valuation as of December 31, 2000, he would receive a greater percentage of the plan assets than he would be entitled to if a new valuation was conducted. Chibaro, who was determined to have the assets revalued, directed Fecteau to revalue the assets, this time as of June 30, 2001 (the second valuation). Fecteau did so, conveying the results to Chibaro on August 10, 2001. This time, Janeiro's share was valued at $603,052. As the district court explained, the effect of the revaluation was to transfer a loss that otherwise would have been born[e] by the parties whose assets remained in the plan to the parties who were leaving. At some point after August 10 and before September 11, 2001, consent-to-distribution forms were distributed to Janeiro and the other claimants. Janeiro returned his completed form on September 17, 2001. By then, the market had further declined, most notably after September 11, 2001. Chibaro had Fecteau perform -7- another revaluation, this time as of October 31, 2001 (the third valuation); the results were communicated to him on November 5, 2001. He did not notify the terminated employees about this revaluation until November 30, and he did not provide them with consent-to-distribution forms (which would have specified the value of their shares). December 31, 2001 was the end of the plan year, and so was a valuation date. The valuation as of December 31, 2001 (the fourth valuation) was transmitted to Chibaro on April 30, 2002.1 In April of 2002, consent-to-distribution forms were distributed, but this time Janeiro did not sign or return his. On July 19, 2002, Fecteau transmitted to Chibaro a valuation as of June 30, 2002 (the fifth valuation). Consent-todistribution forms were sent to the departing employees; Janeiro completed his and returned it on August 11, 2002. The value of Janeiro's share, as of this valuation, was $456,644. He received this sum -- $195,036 less than the first valuation -- by late fall of 2002, nearly two years after the first valuation date of December 31, 2000. He unsuccessfully sought to recover this $195,036 amount through administrative means. 1 Defendants emphasize one incident that occurred in the meantime: in mid-January 2002, Janeiro directed Smith Barney, the custodian of the plan assets, not to make further distributions. The assets remained frozen until mid-April 2002. Whether or not the freeze might in other circumstances have justified a delay in distribution and even revaluation, it came too late here: defendants' case founders at the very first revaluation. -8- Janeiro then sued the USPA, the two plans, and Chibaro. He asserted four claims. The first two, for benefits, see 29 U.S.C. § 1132(a)(1)(B), and for equitable relief and restitution for breach of fiduciary duty, see id. § 1132(a)(3), were essentially theories of recovery for the $195,036. The third was for prejudgment interest, and the fourth was for attorneys' fees.