United States District Court, D. New Jersey
JENNIFER A. GALLAGHER, Plaintiff,
JOHN M. MAKOWSKI, et al., Defendants.
POLINO AND PINTO, P.C., Joseph M. Pinto, Esq., Moorestown, New Jersey, Counsel for Plaintiff.
JOHN M. MAKOWSKI, ESQ., pro se, Greentree Executive Campus, Marlton, New Jersey, Counsel for Defendant Makowski.
Liam Y. Braber, Esq., JACOBY DONNER, PC, Philadelphia, Pennsylvania, Counsel for the Fund Defendants
JOSEPH E. IRENAS, District Judge.
This suit arises out of Plaintiff Gallagher's divorce in 2011. Shortly after the divorce, Gallagher's ex-husband, Gary Brooks, withdrew money from his union's Supplemental Retirement Plan ("SRP") account which Gallagher asserts was legally hers pursuant to the terms of their divorce decree.
Gallagher asserts a malpractice claim against her divorce attorney, Defendant Makowski, for allegedly failing to adequately protect her interest in the money.
Gallagher also asserts ERISA claims against the Fund Defendants-- Plumbers Local Union 690 Supplemental Retirement Plan; the plan's Administrator, Thomas J. McNulty; and Trustees John I. Kane, Thomas J. Crowther, Timothy J. Brink, Howard Weinstein, and John J. Bee-asserting that they breached the Plan provisions and their fiduciary duties when they erroneously allowed Brooks to withdraw the money.
Presently before the Court are: (1) Makowski's Motion for Summary Judgment; (2) the Fund Defendants' Motion for Summary Judgment; and (3) Gallagher's Cross-Motion for Summary Judgment against the Fund Defendants.
For the reasons stated herein, Makowski's motion will be denied in part and denied without prejudice in part; the Fund Defendants' motion will be granted in part and denied in part; and Gallagher's cross-motion will be granted in part and denied in part.
In August, 2010, Gallagher retained Makowski to represent her in her divorce suit against her husband, Gary Brooks. (SUF ¶ 2) Over four days in June, 2011, the case was tried before the Honorable Charles M. Rand, P.J.F.P. (SUF ¶ 3). On the last day of trial, Judge Rand rendered an oral decision on the record. (Id.) That same day the judge signed a Judgment for Divorce, which was drafted by Defendant Makowski. (Makowski Ex. A; SUF ¶ 6)
According to Makowski, the court "required that a Judgment of Divorce limited to dissolution and name change be signed the day the divorce is made final[, ] with an Amended Judgment of Divorce on all remaining issues prepared and entered on a later date." (Makowski Moving Brief, p. 1) A month later, on July 26, 2011, Judge Rand signed the Amended Judgment of Divorce, which was also drafted by Makowski. (Makowski Ex. B; SUF ¶ 6) The relevant portion of the Amended Judgment provides,
13. The date of complaint balance and all accrued interest in the Defendant's Local 640 Supplemental [Retirement] Plan ["SRP"] with his union will be divided equally between the parties utilizing a Qualified Domestic Relations Order. The cost of the QDRO will be divided equally between the parties. The Defendant's one half interest in this plan will be frozen by the Plan Administrator pursuant to the provisions of this Order until further order of the Court.
(Makowski Ex. B)
Unfortunately, in the interim between the entry of the Judgment of Divorce and the Amended Judgment of Divorce, Gary Brooks withdrew his half of the SRP funds, which the parties do not dispute, was supposed to be frozen.
When Brooks made his request to withdraw, Defendant Thomas McNulty, the Plan Administrator, responded by letter dated July 6, 2011:
Dear Mr. Brooks:
Thank you for furnishing us with your Divorce Decree... effective June 27, 2011. We understand that you are seeking to make a withdrawal from the Plumbers Local Union No. 690 Supplemental Retirement Plan (SRP).
We are prepared to allow you to make this withdrawal, consistent with the terms of the SRP, provided that you confirm that there is no property settlement agreement in effect, or other understanding, by which your former spouse, Jennifer A. Brooks [Gallagher], is entitled to receive some or all of your account balance in the SRP and which might limit the amount you can withdraw from the SRP at this time.
On the line indicated below, please confirm that your former spouse is not entitled to an assignment of any portion of your SRP as a result of your divorce proceeding. After you confirm this by signing and dating below, we will initiate the withdrawal process. Thank you.
(Fund Defs' Ex. B) Brooks signed the letter and dated it July 8, 2011.
He also completed the Plan's "Supplemental Retirement Special Hardship Withdrawal Additional Information Form." (Fund Defs' Ex. B) The form specifies, "hardship withdrawals may be given only for the following reasons (must check one)." (Id.) Brooks checked the box corresponding to "medical expenses... incurred by... any dependents of the participant." (Id.) The form further directed, "PLEASE EXPLAIN IN THE SPACE BELOW THE FINANCIAL CONDITION WHICH REQUIRES YOU TO RECEIVE AN IMMEDIATE HARDSHIP WITHDRAWAL FROM THE [SRP]." (Id.; caps in original) Brooks did not explain; the space for explanation was left blank. (Id.) The form is stamped "received" by the Fund on July 11, 2011. (Id.)
On July 13, 2011, the Funds issued a check payable to Gary Brooks in the amount of $19, 884.80, which represented half of his account balance less 20% federal income tax withholding and the applicable early withdrawal fee. (Fund Defs' Ex. B)
Sometime prior to August 16, 2011, Makowski learned of Brooks' withdrawal. (Makowski Ex. C) In response to Makowski's inquiry to the Funds, the Funds' attorney, William Denmark, wrote to Makowski on August 24, 2011, explaining the circumstances under which Brooks' withdrawal occurred and stating that the remaining one-half balance was available for distribution to Gallagher upon submission of the appropriate documentation, including an appropriate QDRO. (Id.)
On October 3, 2011, Judge Rand signed the QDRO "resolv[ing] and specif[ing] the extent of [Gallagher's] interest in [the SRP]." (Makowski Ex. F) The QDRO directs the Funds to "segregate and pay a portion of [Brooks'] account under the [SRP] to [Gallagher] equal to one half or fifty (50%) percent ...