United States District Court, D. Connecticut
RULING ON DEFENDANT KAREN RICHARD'S MOTION TO
DISMISS AND/OR STAY
A. BOLDEN UNITED STATES DISTRICT JUDGE.
Manufacturing Company, Inc., (“Plaintiff “) filed
this Complaint for Interpleader and Declaratory Relief,
“seek[ing] clarity” as to payments for an
executive compensation plan it had put in place for its
former president against Karen Richard, Joel Richard, and
Kimberly Chernecky (collectively
“Defendants”). Compl. ¶ 25, ECF No. 1.
Richard, in her individual capacity, moves to dismiss or, in
the alternative, stay the proceedings, arguing that the Court
should abstain given the pendency of three state court
lawsuits addressing similar question of law. See
Karen Richard's Mot. to Dismiss and/or Stay, ECF No. 17;
Karen Richard's Mem. of Law in Support (“Richard
Mem.”), ECF No. 18.
reasons stated below, the motion to dismiss is
DENIED, as is any request to stay these
FACTUAL AND PROCEDURAL BACKGROUND
case addresses an executive compensation plan for Mr. Edward
Richard, the now-deceased former president of Richard
Manufacturing Company, Inc. (“RMCO”). Compl.
¶¶ 2, 6. RMCO is a Connecticut corporation, with
its principal place of business in Milford, Connecticut.
Id. ¶ 1. Joel Richard, a citizen and resident
of California, and Kimberly Chernecky, a citizen and resident
of Florida, are Mr. Edward Richard's children.
Id. ¶¶ 3-4, 7. Karen Richard is Edward
Richard's widow and a citizen and resident of Florida.
Id. ¶¶ 2, 6. Both Karen Richard and Joel
Richard are co-executors of Edward Richard's estate and
sued in their individual and representative capacities.
Id. ¶ 5.
Richard served as president of RMCO until his retirement on
April 30, 2009. Compl. ¶ 2. At retirement, Mr. Richard
allegedly sold his stock to his replacement, James
Steponavich, and RMCO and Mr. Richard executed a
“Supplemental Executive Retirement Plan and
Agreement” (“SERP”) to provide him with
additional supplemental deferred compensation. Id.
¶¶ 2-3. Under the SERP, Mr. Richard allegedly
received monthly payments, use of a car - including
insurance, maintenance, and repair expenses - and enrollment
in RMCO's health plan. Id. ¶ 5. Mr. Richard
allegedly had a defined contribution plan and a defined
benefit plan, in addition to the SERP. Id. ¶ 7.
SERP provided that, if Edward Richard died before the end of
the plan, all amounts would be “shall be payable in
accordance with the terms thereof to such beneficiary or
beneficiaries as Executive may have designated in writing and
filed with Company . . . .” Id. ¶ 9. If
Mr. Richard did not designate a beneficiary, the plan
allegedly provided that “Executive's spouse, if
any, shall be entitled to purchase the automobile” and
“shall receive COBRA benefits for the maximum statutory
period at Company's expense.” Id.
Richard allegedly died in Florida on May 9, 2012.
Id. ¶ 6. RMCO claims that Karen Richard
received funds from both the defined contribution and defined
benefit plans as a named beneficiary. Id. ¶ 8.
She also allegedly purchased Mr. Richard's vehicle.
Id. ¶ 10. For the SERP benefits, however, RMCO
alleges that Mr. Richard did not name a beneficiary and,
instead, the payments since his death have been made to his
estate. Id. ¶ 11. “At no time, ”
Plaintiff maintains, “did Karen Richard file a claim
with RMCO with respect to the SERP.” Id.
¶ 17. RMCO alleges that such a claim would now be
untimely under the SERP's claim procedure. Id.
to RMCO, Edward Richard's will was admitted to probate in
Florida in 2012. Id. ¶ 13. Both Karen Richard
and Joel Richard are co-executors of the estate. Id.
¶ 5. Karen Richard allegedly filed a claim against the
Estate, claiming that she was entitled to be a beneficiary of
the SERP under her prenuptial agreement. Id. ¶
15. The probate court, however, struck the claim as untimely.
Id. ¶ 16.
August 25, 2017, Plaintiff filed the Complaint for
Interpleader and Declaratory Relief, “seek[ing] clarity
as to whom future SERP payments should be directed, as well
as confirmation that the prior SERP payments were correctly
distributed to the Estate.” Compl. ¶ 25. RMCO
noted two pending lawsuits, and additional
“correspondence to counsel for the Estate indicated
[Karen Richard's] intention to file suit against RMCO,
James Steponavich and the Estate” regarding SERP funds.
Id. ¶¶ 16, 21-22.
result of the litigation, RMCO claims it has “no
personal interest in the SERP payments” but
“seek[s] to avoid multiple liability due to conflicting
claims against the SERP payments that have been made, as well
as the future SERP payments.” Id. ¶ 26.
“Plaintiff seeks clarity as to whom future SERP
payments should be directed, as well as confirmation that the
prior SERP payments were correctly distributed to the
Estate.” Plaintiff requests “each Defendant be
restrained from commencing or pursing any further
action” against RMCO, ” and that the Court
clarify who has access to proceeds from the SERP.
See Compl. at 6.
originally sued Karen Richard, as well as Joel Richard and
Kimberly Chernecky. Other than Karen Richard, “[t]he
remaining defendants in this action are representatives
and/or heirs” that “believe all prior SERP
payments were properly paid . . . and should be continued to
be paid to the Estate . . . .” Id. ¶ 24.
November 29, 2017, Joel Richard filed an Answer and
counter-claim in his capacity as co-executor of the Estate.
See Def. Joel Richard Answer and Counterclaim, ECF
No. 16. In his counterclaim, he alleged breach of contract
claims against RMCO. Id. at 6. He maintains that
RMCO had “made monthly payments to the Estate of the
payments due under the SERP in the amount of $20, 833.33 each
month, but recently ceased making those payments.”
Id. He alleges that the Estate has been damaged by
the cessation of payment, and requests a declaration that the
Estate is entitled to all payments under the SERP and
damages. Id. at 7.
Richard moved to dismiss the Complaint under Rule 12(b)(1)
and 12(b)(6) of the Federal Rules of Civil Procedure. She
argues that this Court should decline to exercise its
jurisdiction under the abstention doctrine described in
Wilton v. Seven Falls Co., 515 U.S. 277 (1995), and
Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491
(1942). See generally Def. Mem in Support
(“Def. Mem.”), ECF No. 17.
Richard claims there are currently three matters pending in
Connecticut state court. First, Karen Richard filed a lawsuit
against Mario Zangari and Zangari Cohn Cuthbertson in the
Superior Court for the Judicial District of New Haven on June
8, 2016. See Compl., Richard v. Zangari et
al, Richard Mem., Ex. 1, ECF No. 18-1. Karen Richard
alleges that she had retained defendants “for the
purposes of protecting her rights under Mr. Richard's
Estate . . . .” Id. ¶ 10. She alleges
that they “negligently and carelessly, failed to file
any claim on her behalf against the Estate for the profit
sharing and pension benefit plan funds within the time
prescribed by the Probate Division” and she seeks
damages. Id. ¶¶ 15-17.
Karen Richard sued RMCO and James Steponavich in the Superior
Court for the Judicial District of New Haven on August 2,
2017. See Compl., Richard v. Richard
Manufacturing, Co. Inc. and James Steponavich, Richard
Mem., Ex. 2, ECF No. 18-2. She alleges six counts of
violations of common law and Connecticut statutes by RMCO,
all related to the defendants' failure to pay Ms. Richard
the retirement benefits owed under the SERP. See
after the filing of this lawsuit, Karen Richard filed a
declaratory judgment action in state court on October 12,
2017 against all the defendants in this case: Joel Richard,
both individual and as a representative of the estate,
herself, as representatives of the estate, RMCO, and Kim
Chernecky. See Compl., Richard v. Richard et
al., Richard Mem., Ex. 3, ECF No. 18-3. She also
included as defendants Mario Zangari, James Steponavich, and
Zangari Cohn Cutherbertson, P.C., and Zangari Cohn
Cuthbertson Duhl & Grello, P.C. Id. Karen
Richard alleges that her deceased husband had designated her
a beneficiary of the retirement plan in 2010. Id.
¶ 17. As a result of this designation, Ms. Richard
alleges she had “a legal right of possession, dominion
and ownership with respect to the retirement benefits owed
and due to her pursuant to the terms of the SERP and the 2010
beneficiary designation, which was effective at the time of
Edward Richard's death.” Id. ¶ 18.
She seeks a declaratory judgment stating she “is owed
and due the retirement benefits under the SERP, ” as
well as injunctive relief addressing future payments to the
estate and compelling all future payments to her.
Id. at 6.
Richard argues that would each of these three cases require
the courts in those cases to determine liability under the
SERP. See, e.g., Id. at 5 (noting that “the
same principal question is now at the core of [two of the
lawsuits]: Whether the 2010 beneficiary designation is
applicable to the SERP funds.”). She argues that,
because it is primarily a declaratory judgment action, the
Brillhart and Wilton abstention standard
applies, and it is appropriate here to avoid inconsistent
judgments and because the three cases in state court ensure
determination of each parties' liabilities. Id.
at 13, 17.
Richard, in his capacity as representative of the Estate,
objected to the motion to dismiss. See Def. Joel
Richard, As Representative of the Estate of Edward A.
Richard's, Obj. to Mot. to Dismiss And/Or Stay
(“Estate Obj.”), ECF No. 24. RMCO did not file
separate briefing arguing that the motion should be denied,
but rather stated that it had “reviewed the opposition
filing of the defendant, Joel Richard . . . and hereby
concurs with and adopts the arguments, positions, and
supporting authority cited therein in opposition to the