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BROWER v. COMARK MERCHANDISING

November 27, 1996

SONDRA BROWER, Plaintiff
v.
COMARK MERCHANDISING, INC., RICHARD KRAUTSACK, KENNETH O. MCNERNEY, JOHN DOE # 1 AND JOHN DOE # 2, Defendants.



The opinion of the court was delivered by: WALLS

 Walls, District Judge

 This matter arises on the motion of plaintiff Sondra Brower ("Brower") for summary judgment on her complaint against her former employer. Comark Merchandising, Inc. ("Comark") is a national supplier of in-store marketing and promotional systems. Richard Krautsack ("Krautsack") and Kenneth McNerney ("McNerney") were, at the time the acts at issue took place, administrators of Comark's employee benefit plan. *fn1" The defendants (collectively "Comark") file a cross-motion for summary judgment. The Court has jurisdiction pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1132 (West Supp. 1996).

 I. Standard for Summary Judgment

 Summary judgment is appropriate where the moving party establishes that "there is no genuine issue of material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the non-moving party to carry its burden of proof. Celotex v. Catrett, 477 U.S. 317, 318, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts in question." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Sound Ship Building Co. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir. 1976), cert. denied, 429 U.S. 860, 50 L. Ed. 2d 137, 97 S. Ct. 161 (1976).

 At the summary judgment stage the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In doing so, the court must construe the facts and inferences in the light most favorable to the non-moving party.

 II. Background

 This action arises from Comark's refusal to release to Brower the vested portions of her 401(k) and rollover retirement accounts. Brower was employed at Comark from October 1986 through March 1990 as a sales and marketing manager.

 During the course of her employment at Comark, Brower received money that she characterized as bonuses. However, Comark maintained that these payments were advances because Brower's profitability fell below the minimum standard required to receive bonuses. Brower had signed an agreement indicating her understanding that if her performance continued to be below standard, any payments she received would be considered advances which she would be obligated to repay if she left the company. Def. Exh. A.

 On March 9, 1990, Brower resigned her position at Comark and accepted employment with a company deemed by Comark to be a competitor. Before leaving Comark, Brower requested that her account balances in the 401(k)/Profit Sharing Plan (the "plan") be turned over to her. Brower's plan account was subdivided into four accounts: (1) employee 401(k); (2) rollover; (3) profit sharing; and (4) employer match. Stipulation of 11/14/96, Exh. A. The monies she sought were those in the employee 401(k) account and rollover account. Those accounts were funded solely by Brower's contributions and the amount of money "rolled over" from her previous employer, plus interest and earnings. *fn2" See Stipulation at PP 9-11. By the terms of the plan, these funds were "fully vested at all times." Pl. Exh. F at 8. In a letter dated February 27, 1990, Comark's human resources department informed her that it would take eight to twelve weeks for her to receive the distribution check. Pl. Exh. B.

 On March 15, 1990, following her resignation, Brower received a letter from McNerney. He stated that Brower was required to repay the company $ 8,632.53 of "advances" because her profitability had fallen below the level required to characterize them as bonuses. McNerney further declared:

 
Comark expects you to leave your pension/401(k) funds invested with Connecticut General, as they currently are, to secure the amount currently due. You continue to earn interest, market gains or losses on those amounts in conjunction with these investments. Upon receipt of the total amount due, you are free to do whatever you would like with these funds.

 Pl. Exh. D. He requested that Brower sign the letter to demonstrate her assent and agreement to its payment terms; however, there is no evidence in the record that she signed it.

 III. Procedural History

 On March 5, 1993, Comark filed a complaint against Brower in state court, in which it sought repayment of the sums it alleged Brower owed. In her counterclaim against Comark, Brower argued that Comark was wrongfully withholding the 401(k) funds to secure repayment of her debt.

 On October 31, 1995, the state court entered a final judgment for Comark in the total amount of $ 9,560.86, a sum which included prejudgment interest. Def. Exh. D. On that same day, the court issued an order granting leave to Brower to amend her counterclaim to allege that the terms of the plan violated ERISA. The court also severed her ERISA counterclaim because it determined that it lacked jurisdiction to hear it. Its order acknowledged:

 
... The Defendant has preserved her rights to remove the amended claim to the United States District Court or in the alternative to file suit in the United States District Court, and nothing contained in this Order shall otherwise affect or prejudice the Defendants [sic] right to maintain such action in the United State [sic] District Court but the United States District Court must determine its jurisdiction[.]

 Def. Exh. E.

 On December 1, 1995, Brower filed an action in this Court asserting that Comark has wrongfully withheld her 401(k) funds and seeking their release. She now moves for summary judgment on her complaint and Comark cross-moves for summary judgment.

 IV. Analysis

 In her moving papers, Brower makes four claims: (1) that Comark has restrained her 401(k) funds in contravention of ERISA; (2) that Comark has commingled her 401(k) funds in violation of ERISA, 29 U.S.C.A. § 1106 (West Supp. 1996); (3) that Comark breached its fiduciary duty by allowing Brower's trust funds to be used for the benefit of Comark in violation of ERISA, 29 U.S.C.A. § 1103 (West Supp. 1996); and (4) that Krautsack and McNerney, the plan administrators, are jointly and severally liable for the actions of one another.

 Comark denies these allegations and asserts as an affirmative defense that Brower's action violates New Jersey's entire controversy doctrine.

 A. Whether the Entire Controversy Doctrine Bars Brower's Claim.

 New Jersey's entire controversy doctrine is predicated on the notion that the adjudication of a legal controversy should occur in one litigation in only one court. Esoldi v. Esoldi, 930 F. Supp. 1015, 1025 (D.N.J. 1996); DiTrolio v. Antiles, 142 N.J. 253, 267-68, 662 A.2d 494, 502 (1995). Thus, all parties involved in a litigation should at the very least present in that proceeding all of their claims and defenses that are related to the underlying controversy. Id. Accordingly, the doctrine prevents a plaintiff from litigating claims that were or could have been litigated in a prior proceeding and also bars claims against parties who should and could have been named in the prior proceedings. Itzkoff v. F & G Realty of New Jersey, 890 F. Supp. 351, 355 (D.N.J. 1995); Cogdell v. Hospital Ctr. at Orange, 116 N.J. 7, 26, 560 A.2d 1169, 1178 (1989).

 Comark argues that the present action is barred by the doctrine. There is no question that Brower raised her claims against Comark in the prior proceeding. Nevertheless, Comark asserts that Brower's failure to remove the entire state action to federal court, as was her right, precludes her from raising her ERISA claims now in a separate federal action. It cites in its favor Peduto v. City of North Wildwood, 878 F.2d 725 (3d Cir. 1989), in which an appellant who pursued both state and federal claims in state court and received an unfavorable judgment was later barred from reasserting the federal cause of action in federal court because of the entire controversy doctrine. Id. at 729. Comark also relies upon Rodziewicz v. Beyer, 809 F. Supp. 1164 (D.N.J. 1992), in which a plaintiff who ...


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