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Richard Manufacturing Company, Inc. v. Richard

United States District Court, D. Connecticut

July 30, 2018

RICHARD MANUFACTURING COMPANY, INC., Plaintiff,
v.
KAREN RICHARD, individually and as representative of the Estate of Edward A. Richard, and JOEL RICHARD, as representative of the Estate of Edward A. Richard, Defendants.

          RULING ON DEFENDANT KAREN RICHARD'S MOTION TO DISMISS AND/OR STAY

          VICTOR A. BOLDEN UNITED STATES DISTRICT JUDGE.

         Richard 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”).[1] Compl. ¶ 25, ECF No. 1.

         Karen 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.

         For the reasons stated below, the motion to dismiss is DENIED, as is any request to stay these proceeding.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         This 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.

         A. Factual Background

         Edward 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.

         The 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.

         Mr. 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. ¶ 18.

         According 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.

         B. Procedural History

         On 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.

         As a 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.

         RMCO 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.

         On 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.

         Karen 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.

         Karen Richard claims there are currently three matters pending in Connecticut state court.[2] 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.

         Second, 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 generally id.

         Finally, 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.

         Ms. 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.

         Joel 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 ...


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