Court Opinion

ID: 2962330
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:56:27.426097+00
Date Added: 2024-06-11T11:42:28.461061
License: Public Domain

USCA1 Opinion

	

          December 30, 1993     [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ___________________          No. 93-1585                         PENSION ADMINISTRATION COMMITTEE OF THE SHERATON CORPORATION                       RETIREMENT PLAN FOR SALARIED EMPLOYEES,                                 Plaintiff, Appellee,                                          v.                WILLIAM J. CARROLL D/B/A CARROLL CONSULTING ACTUARIES,                                Defendant, Appellant.                                  __________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                       [Hon. Rya W. Zobel, U.S. District Judge]                                           ___________________                                 ___________________                                        Before                                 Breyer, Chief Judge,                                         ___________                         Torruella and Selya, Circuit Judges.                                              ______________                                 ___________________               William J. Carroll on brief pro se.               __________________               Jerome P. Facher, Peter A. Spaeth and Hale and Dorr on brief               ________________  _______________     _____________          for appellee.                                  __________________                                  __________________                      Per Curiam.  This appeal arises from a civil action                      __________            brought by the  named fiduciary of a pension  plan to recover            certain  assets  alleged   to  be  wrongfully  held   by  the            administrator of another pension plan.   The plaintiff is the            Pension Administration Committee of the Sheraton  Corporation            Retirement  Plan for  Salaried Employees  ("the  PAC").   The            defendant  is William  J.  Carroll  d/b/a Carroll  Consulting            Actuaries (Carroll).  Pursuant  to Fed. R. Civ. P.  37(b)(2),            the district court entered a default judgment against Carroll            for his  failure to  comply with  multiple orders  compelling            discovery.   Carroll now  appeals from the  default judgment.            We affirm.                                       Background                                      __________                 The PAC  commenced this  action by  filing a  five-count            complaint which stated  claims for relief under  the Employee            Retirement Income Security  Act of 1974 ("ERISA"),  29 U.S.C.             1001  et.  seq.,  the Declaratory  Judgment  Act,  28 U.S.C.                   ___  ____             2201,  federal  common law,  and state  law.   The complaint            alleged the following facts.                 PGA Resort  Ltd. (PGA),  a Florida limited  partnership,            owned  the  former Sheraton  PGA  Resort Hotel  in  West Palm            Beach,  Florida.   In 1980,  PGA  began providing  retirement            benefits for its salaried and hourly employees.  PGA provided            those  benefits by becoming  a participating employer  in the            Pension Plan and Trust for  Hotels and Motor Inns  Associated                                         -2-            With  The  Sheraton Corporation  (Plan  I).    Under Plan  I,            individual  owners  of hotels  associated  with  the Sheraton            Corporation (Sheraton)  adopted  as their  pension plans  the            terms of  two "master" documents  - a Pension  Plan Agreement            and a  Pension Trust Agreement  (the Plan Documents).   These            documents  provided  that  a   participating  employer  could            withdraw  from  Plan  I and  establish  a  separate qualified            pension  or  retirement  plan  provided  that  the  new  plan            provided   equal  or  greater  rights  and  benefits  to  the            employees covered by Plan I.                   Under  Plan I,            PGA and other participating employers made contributions to a            common  trust fund which  was held by  the Bank of  Boston as            trustee.  The  Plan Documents further provided  that, upon an            employer's   withdrawal  from  Plan  I,  the  assets  in  the            participating  employer's   account  in   Plan  I   shall  be            transferred to the trustee designated by the employer.                 Carroll is  the administrator  for Plan I.   He  has the            duty  to  account  separately for  the  Plan  assets of  each            participating  employer   and  exclusive  control   over  the            disposition of Plan  I's assets.  The  complaint alleged that            as  a result  of  the  following  events,  Carroll  continued            improperly  to  exercise  control over  the  assets  in PGA's            account in Plan I.                  In 1986, PGA  decided to participate  in a new  pension            plan (Plan II) that preserved  the rights and benefits of all                                         -3-            PGA employees  covered by  Plan I, in  addition to  providing            other benefits.1   PGA informed  Carroll of its  intention to            withdraw from  Plan I.   Carroll informed PGA and  its agent,            the  actuarial firm  of  Towers,  Perrin,  Forster  &  Crosby            (TPF&C), that  a new pension  plan and trust approved  by the            Internal  Revenue Service (IRS) was the only authorization he            required to transfer  PGA's assets to the trustee  of the new            pension plan.  PGA subsequently adopted Plan II and requested            a ruling from  the IRS that  Plan II was a  qualified pension            plan under 26 U.S.C.  401(a).   The IRS issued such a  ruling            in  1988.  Thereafter,  TPF&C instructed Carroll  to transfer            PGA's assets in  Plan I to the Shawmut  Bank, the trustee for            Plan II.  The complaint alleged that despite PGA's compliance            with the requirements  for transferring the assets  set forth            in Plan I  and Carroll's own  conditions, Carroll refused  to            transfer PGA's assets without justification.2                   Effective January  1, 1989,  PGA discontinued  providing            retirement  benefits  to  its  employees.    Pursuant  to  an            agreement between  PGA  and  Sheraton,  the  liabilities  and            assets of Plan II were merged into a third pension  plan, the                                            ____________________            1.  Plan II is also known as the Sheraton Salaried and Hourly            Retirement Plans and Trusts for Managed Hotels.            2.  The  complaint further  alleged that  TPF&C made  further            demands  on Carroll  to  transfer  PGA's  assets  during  the            remainder  of 1988.  Carroll continued to retain control over            the  assets.   In December,  1988, Carroll  urged the  IRS to            rescind its  favorable determination letters  concerning Plan            II.  The IRS did not do so.                                          -4-            Sheraton Corporation  Retirement Plan for  Salaried Employees            (Plan  III).   The  PAC  is  the  administrator and  a  named            fiduciary of Plan III.  See 29 U.S.C.   1102(16)(A), 1102(a).                                    ___            The  complaint alleged  that  at the  time  this merger  took            place, PGA's  assets in  Plan I were  the lawful  property of            Plan II and thus  should have been received by Plan  III as a            result  of the merger.  However, Carroll improperly continued            to  refuse  to  transfer PGA's  assets  to  Plan  III despite            multiple  demands by  PGA,  its  agents, and  the  PAC.   The            complaint alleged  that PGA's  assets in  Plan I  (hereafter,            "the Assets") have been the lawful property of Plan III since            January  1, 1989  and that  Carroll's  improper retention  of            control over the Assets is  in derogation of Plan III's right            to possession and control.   The PAC commenced this action to            compel Carroll to  transfer the Assets to Plan III. According            to the complaint, Carroll's most  recent accounting indicated            that the Assets were worth at least $230,000.                   The  first  two  counts of  the  complaint  alleged that            Carroll's improper refusal to transfer the Assets constituted            a breach of his fiduciary duty to act solely in  the interest            of the participants and beneficiaries of Plan I in  violation            of 29 U.S.C.  1104(a)(1), and  a breach of his fiduciary duty            to  act  in  accordance with  the  documents  and instruments                                         -5-            governing Plan I  in violation of 29  U.S.C.  1104(a)(1)(D).3            Carroll's refusal  to transfer  the Assets  also was  said to            violate of the terms of  Plan I.  These violations were  said            to  entitle the  PAC to  an order  compelling Carroll  to (1)            direct the Bank of Boston, the trustee of Plan I, to transfer            all assets in PGA's account in Plan I to the trustee for Plan            III, Northern Trust Company, and,  (2) provide the PAC with a            final accounting  of the assets  in PGA's account in  Plan I.            The PAC claimed  this relief under ERISA's  civil enforcement            provision,  29  U.S.C.  1132(a)(3).4      Count  II sought  a                                            ____________________            3.  29 U.S.C.  1104(a) provides, in relevant part, that:                 (1) Subject to sections 1103 (c) and (d), 1342, and                 1344 of this title, a fiduciary shall discharge his                 duties  with  respect  to  a  plan  solely  in  the                 interest of the participants and beneficiaries and                                *      *      *                      (D) in accordance with the documents  and                      instruments governing the plan insofar as                      such   documents   and   instruments  are                      consistent  with the  provisions of  this                      subchapter  and  subchapter III  of  this                      chapter.                 4.  29 U.S.C.  1132(a) provides that,                       A civil action may be brought -                                *    *    *                      (3)  by  a participant,  beneficiary,  or                      fiduciary  (A)  to  enjoin  any  act   or                      practice which violates  any provision of                      this subchapter or the terms of the plan,                      or  (B)   to  obtain   other  appropriate                      equitable  relief  (i)  to  redress  such                      violations   or  (ii)   to  enforce   any                      provisions  of  this  subchapter  or  the                      terms of the plan; ....                                               -6-            declaratory  judgment that the PAC, not Carroll, was entitled            to possession  and control of  the Assets in addition  to the            aforementioned  equitable relief. Counts four and five of the            complaint  stated common law  claims for breach  of fiduciary            duty and conversion and claimed damages in an amount not less            than the market value of the Assets.5                                  Procedural History                                  __________________                 Throughout the course of  the proceedings below, Carroll            maintained that since  the summons  and complaint  identified            him   as  "William  J.   Carroll  d/b/a   Carroll  Consulting            Actuaries," he had been sued in his individual capacity only,            and therefore lacked the ability to respond to the  complaint            and  the PAC's  discovery  requests in  his  capacity as  the            administrator of Plan I.   Thus, the PAC filed a request  for            production of documents shortly after it filed its complaint.            That  request  sought  all  correspondence, notes  and  files            relating to PGA, its pension plans, or the Assets, as well as            all  correspondence between Carroll  and any other  person or            entity relating  to Carroll's  role as  the administrator  of            Plan I.                 Carroll  initially did  not  file  a  response  to  this            request for production of documents.  Instead, proceeding pro                                                                      ___            se, he  filed an "Objection  to Complaint and Motion  to Stay            __                                            ____________________            5.  The complaint  also  claimed attorney's  fees  and  costs            under 29 U.S.C.  1132(g).                                         -7-            Proceedings."   This document  alleged, inter alia,  that the                                                    _____ ____            PAC lacked the standing to bring this action and that Carroll            lacked the capacity to defend it since he  had been sued only            in  his individual capacity.6   Carroll withdrew  this motion            before it was heard.  On  June 5, 1992, an initial scheduling            conference  (ISC) was held before  the district court.  After            explaining to Carroll that the  PAC was entitled to  discover            the  documents it had  requested, the district  judge ordered            Carroll to produce the  requisite documents by June  26, 1992            and to submit  to a deposition on August 10th and 11th, 1992.            A  written order embodying  these requirements was  issued on            June 10, 1992.                 On June 26, 1992, Carroll  filed a response to the PAC's            request for production of documents.  For the most part, that            response  denied   that  Carroll   possessed  the   requested            documents in his individual capacity  and expressly disavowed            the capacity or authority to  respond to the PAC's request as            the  administrator of  Plan I.7   On  July  2, 1992,  the PAC                                            ____________________            6.  We  note that attached to this motion were twelve letters            and an incomplete list of other documents in Carroll's files.            These  appear  to be  responsive  to  the PAC's  request  for            production of documents, albeit incomplete.              7.  Several letters between Carroll  and various parties were            attached  to the  response, as  well as  accountings for  the            Hourly and  Salaried Pension  Plans from  1983 through  1990.            These  documents and those that were  attached to his initial            objection to the complaint indicate that Carroll's claim that            he did not possess the documents is disingenuous.                                                       -8-            filed  a motion  to compel  production  of documents  and for            sanctions.   The motion  stated that  Carroll had  refused to            produce   documents  based  on   his  meritless   attempt  to            distinguish documents he possessed in an individual  capacity            and documents he  possessed in his capacity  as administrator            of Plan  I.8  On  August 14, 1992, the  district court denied            Carroll's motion  for disqualification and allowed  the PAC's            motion to compel production  of documents.  The court  issued            an order that required Carroll to produce all documents which            he held in his individual or representative capacity.9                   By  letter dated  August  20, 1992,  plaintiff's counsel            notified Carroll to produce the requisite documents by August            24th  and to appear for his deposition  on August 28th.  Once            again, Carroll did not comply. On  August 31,  1992, the  PAC            filed a motion  for sanctions based  on Carroll's failure  to            comply  with the district  court's August  14, 1992  order to            produce documents and on his subsequent failure to appear for            his deposition on August 28th.   The PAC also filed  a motion            for summary judgment on August 31,  1992.  In support of this            motion,  the PAC filed multiple affidavits, including that of                                            ____________________            8.  Carroll filed  a rambling  and prolix  opposition to  the            PAC's  motion to compel  which raised no  meritorious issues.            He also filed a motion to disqualify the district judge based            on her alleged pro-plaintiff bias.            9.  Carroll  appealed  the   order  denying  his  motion   to            disqualify the district judge and the order compelling him to            produce the requested  documents.  This court  dismissed both            appeals on October 29, 1992.                                         -9-            Kathy  Bascik,  Sheraton's  Director  of  Employee  Benefits.            Bascik averred that  after Plans II and III  merged, Plan III            began  paying  claims  submitted  by  the   participants  and            beneficiaries  of PGA's pension  plans.  She  further averred            that  Plan III  would continue  to  pay all  valid claims  of            participants  and  beneficiaries  of   PGA's  pension  plans,            although Plan  III  had been  deprived  of the  assets  which            correspond  to these  liabilities as  a  result of  Carroll's            refusal to transfer PGA's assets in Plan I.                The district court  did not rule on the  PAC's motion for            sanctions  while its  motion  for summary  judgment  remained            under advisement.   On November 3,  1992, the district  court            denied  that motion  on  the ground  that  genuine issues  of            material fact remained about the validity of the amendment to            Plan  I and  the validity  of Plan II.   Thereafter,  the PAC            resumed its efforts to secure discovery from Carroll.                 On   December  18,  1992,   the  PAC  noticed  Carroll's            deposition  for January 5,  1993.  Anticipating  that Carroll            would not comply on the ground that he could not do so in his            individual capacity,  plaintiff's counsel  subpoenaed Carroll            for this  deposition in his capacity as  the administrator of            Plan I.   The subpoena  also required Carroll to  produce the            previously  requested documents by January 4,  1993.  The PAC            also requested  a ruling  on its August  31, 1992  motion for            sanctions.     On   December   29,  1992,   Carroll  informed                                         -10-            plaintiff's  counsel  that  counsel   was  being  engaged  to            represent  Plan I and that he would  be unable to comply with            the subpoena for his deposition.10                 On January 5, 1993, the district court allowed the PAC's            motion for sanctions.  The court ordered Carroll to pay $2000            to  the plaintiff forthwith  as partial compensation  for the            costs  it  had  incurred  in  its  unsuccessful  attempts  to            discover documents  and depose him.11   On January  13, 1993,            having received no  payment from  Carroll, the  PAC moved  to            default Carroll  pursuant to Fed.  R. Civ. P. 37(b)  and (d).            The motion was based on Carroll's willful refusal to obey the            district court's orders to produce documents and submit to  a            deposition as well as the order compelling Carroll to pay the            $2000 sanction for his past misconduct.12                 On March 10, 1993, the  district court held a hearing on            the PAC's motion for a  default judgment.  Despite  Carroll's                                            ____________________            10.  We note  that Carroll  has proceeded  pro se  throughout                                                       ___ __            this litigation and never secured counsel.            11.  On  January 25, 1993,  Carroll filed a  notice of appeal            from the sanction  order.  We dismissed that  appeal for lack            of jurisdiction on March 17, 1993.            12.  On January 18, 1993, Carroll forwarded a $2000 check  to            the  Senior Counsel  for ITT  Corporation (Sheraton's  parent            corporation) in New  York.  While the check  was made payable            to  the  PAC,  it included  a  list  of conditions  seemingly            designed to render it non-negotiable.  For example, the check            indicated that it was good for 30 days only.  An accompanying            document  provided that the PAC's  deposit of the check would            constitute   an  admission   against   its  interest.   Thus,            plaintiff's counsel was unable to use this check.                                          -11-            obstinacy, the court  deferred ruling on the motion  and gave            Carroll one last chance.  The court ordered Carroll to appear            for  his deposition  on March  15,  1993 and  to produce  the            requested  documents at  his  deposition.    In  making  this            ruling,  the court explained to Carroll  that he was required            to  appear and  answer  questions  in  whatever  capacity  he            thought  he was acting  with respects  to the  pension plans.            (Supp. App.  pp. 255-60).   Carroll responded, "I  don't know            what you mean by me[,]"  and repeatedly protested that he was            not  able to  comply with  discovery in  his capacity  as the            administrator  of Plan  I  because  he had  been  sued as  an            individual.   The court  specifically  instructed Carroll  to            answer "whatever  question is put  to you" and to  "have with            you all  the documents that  pertain to the pension  plan. It            doesn't matter  whether you are William  Carroll, personally,            William    Carroll,    trustee,   William    Carroll,    plan            administrator,  you  will  appear  with  all the  documents."            (Supp. App. pp.  260, 272).  When Carroll  protested, "I hear            the words,  but I  don't understand the  meaning," the  court            urged him to try, noting that, "[i]f you don't succeed, there            will be  further sanctions against you Mr.  Carroll."  (Supp.            App. p.  273). The court  further ordered Carroll to  issue a            $2000 check  to  plaintiff's  counsel  without  restrictions.            (Supp. App. p. 278).                                           -12-                 On March 11,  1993, the district court issued  a written            order  embodying  its  oral orders  from  the  previous day's            hearing.  Carroll failed to appear for his deposition and did            not pay the $2000 sanction.  On March 17, 1993, the PAC filed            a  renewed  motion   to  default  Carroll  and   for  further            sanctions.  Carroll  filed a response  in which he  indicated            that he  agreed that a  default was "the desired  solution of            the moment" because he wanted to get this case before another            court.  The  court scheduled a hearing on  the renewed motion            to default Carroll  for April 27, 1992.   In response  to the            hearing  notice, Carroll  filed  another rambling  and prolix            document generally protesting  his treatment in  the district            court while  announcing that  he would  not be  attending the            hearing  on the  default  motion.   On  April  27, 1993,  the            district court defaulted  Carroll under Fed.  R. Civ. P.  37.            The  court  specifically  found  that Carroll  willfully  and            persistently  refused to obey  the court's  orders, including            the August 14, 1992 order to produce documents, the March 10-            11,  1993  oral   and  written  orders  to  appear   for  his            deposition,  and the January  5, 1993 sanction  order. (Supp.            App.  pp. 285-86).    The  court  also  required  plaintiff's            counsel to prepare a proposed judgment.   On May 5, 1993, the            district court entered a judgment against Carroll on counts I            through V of  the complaint.  The judgment  declared that the            PAC had the right to possession and control  of the assets in                                         -13-            the  account(s) of  PGA in  Plan I,  and ordered  Carroll, in            whatever capacity necessary,  to forthwith  direct the  First            National Bank of  Boston (the trustee of Plan  I) to transfer            all  assets in  PGA's account(s)  in Plan  I to  the Northern            Trust Company,  the trustee of  Plan III.  The  judgment also            required Carroll to  provide plaintiff's counsel with  a full            and complete accounting of the assets in  PGA's account(s) in            Plan  I and  to  personally pay  plaintiff's  costs under  29            U.S.C.  1132(g).   (Supp. App. pp. 288-89).   Carroll filed a            timely notice of appeal.13                                       Analysis                                       ________                 "Federal Rule 37 empowers a district court to make  such            orders as  'are just'  when a  party fails  to comply with  a            discovery order, placing the court's handling of such matters            beyond  appellate  review when  there  has been  no  abuse of            discretion." Local Union No. 251  v. Town Line Sand & Gravel,                         ___________________     ________________________            Inc.,  511 F.2d 1198, 1199 (1st  Cir. 1975).  On this record,            ____                                            ____________________            13.  Carroll  filed a  motion for  reconsideration before  he            filed his notice of appeal.  The motion did not object to the            entry  of the  default per  se.   Rather,  Carroll sought  to            revise the substance of the judgment.  On June 11, 1993, this            court ordered  Carroll to show  cause why this  appeal should            not  be  dismissed   for  lack  of  jurisdiction   given  the            outstanding motion for reconsideration.  In response, Carroll            filed  a notice  withdrawing his  motion for  reconsideration            with the district  court.  We allowed this  appeal to proceed            and directed both parties to brief the jurisdictional issues.            Regrettably, neither party has done  so.  As we conclude that            Carroll is not entitled to relief on the merits, we  need not            address  the jurisdictional issues.   See Norton  v. Mathews,                                                  ___ ______     _______            427 U.S. 524, 530-32 (1976).                                                       -14-            we have no  hesitation in concluding that the  district court            did not abuse its discretion  in defaulting Carroll.  In view            of Carroll's  repeated violations  of the  court's orders  to            produce documents and submit to  a deposition, not to mention            his  failure to  pay the  $2000 sanction,  we think  that the            district court exhibited extraordinary patience.  The default            judgment was wholly justified.                 On  appeal, Carroll  argues that  the orders  compelling            discovery were erroneous because they directed him to provide            information  in his capacity  as the administrator  of Plan I            when  he  had only  been  sued  in his  individual  capacity.            Carroll  claims that  this alleged  technical  defect in  the            summons and  complaint disabled  him from  responding to  the            PAC's  discovery  efforts.  He   contends  that  the  default            judgment sanctioned him for the conduct of a non-party - i.e.                                                                     ____            - William J. Carroll, Administrator of Plan  I, and therefore            is not "just" within the meaning of Fed. R. Civ. P. 37(b)(2).                 Like  the district court,  we refuse to  indulge in such            willful  blindness.     Carroll  concedes  that  he   is  the            administrator of  Plan I  and  the record  discloses that  he            possesses numerous documents responsive  to the PAC's request            for production.   Carroll's  feigned inability  to comply  is            indicative of bad faith, which further justifies the default.            See  Eisler  v.  Stritzler,  535  F.2d  148,  153  (1st  Cir.            ___  ______      _________                                         -15-            1976)(upholding default judgment where defendant acted in bad            faith throughout litigation).                 Carroll  also assails the  default judgment under ERISA,            raising a host of arguments.  He claims that the amendment to            Plan I which  created Plan II is invalid, thus  Plan II never            acquired a  right to  PGA's assets.   Carroll further  argues            that  ERISA  does  not recognize  mergers  of  pension plans,            therefore the merger of Plans II  and III also is invalid and            the PAC  has no  right to  PGA's assets  as a  result of  the            merger, apart from  the invalidity of Plan II.   Carroll also            contends that the PAC lacks standing to sue because it is not            a  "person"  and therefore  cannot  be a  fiduciary  under 29            U.S.C.   1002(9) and 21(A).    Each of these claims have been            waived by Carroll's accession to the default.  "[A]n entry of            default  against  a  defendant  establishes  the  defendant's            liability."    Goldman,  Antonetti, Ferraiuo-Li,  Axtmayer  &                           ______________________________________________            Hertell v. Medfit International, Inc., 982 F.2d 686, 693 (1st            _______    __________________________            Cir. 1993)(citations omitted).  Insofar as these  contentions            attack the liability finding, they come too late.                 Carroll's remaining arguments are equally without merit,            and  largely unintelligible.   We particularly note  that the            district  judge did  not  abuse  her  discretion  in  denying            Carroll's multiple  motions to disqualify  her.   It is  well            established  that "[p]rior adverse  rulings alone  cannot, of            course,  be the  basis for  a motion  to recuse."   Panzardi-                                                                _________                                         -16-            Alvarez v. United States, 879  F.2d 975, 984 (1st Cir. 1989),            _______    _____________            cert. denied, 493  U.S. 1082 (1990).   Given Carroll's wholly            _____ ______            unjustified refusal  to comply  with the  court's orders,  no            appearance of bias arises from this record.                 Judgment affirmed.                  _________________                                         -17-                                         -18-