United States District Court, D. New Jersey
GEORGE R. LAUFENBERG, Plaintiff,
NORTHEAST CARPENTERS PENSION FUND, NORTHEAST CARPENTERS ANNUITY FUND, NORTHEAST CARPENTERS HEALTH FUND, NORTHEAST CARPENTERS APPRENTICE FUND, and the BOARD OF TRUSTEES FOR THE NORTHEAST CARPENTERS PENSION, ANNUITY, HEALTH, AND APPRENTICE FUNDS, Defendants
Michael A. Hammer United States Magistrate Judge.
civil action concerns a dispute over Plaintiff George R.
Laufenberg's collection of retirement benefits during his
tenure as the Plan Administrator for the Northeast Carpenters
Pension Fund, Northeast Carpenters Annuity Fund, Northeast
Carpenters Health Fund, and Northeast Carpenters Apprentice
Fund (“Benefit Fund Defendants”). Following his
termination, Plaintiff filed this action to recover certain
sums that the Boards of Trustees (“Trustee
Defendants”) have allegedly withheld from him based on
their belief that Plaintiff engaged in self-dealings in
violation of the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. § 1001 et
seq. This matter now comes before the Court on
Defendants' Motion for Judgment on the Pleadings pursuant
to Federal Rule of Civil Procedure 12(c). Specifically,
Defendants seek the dismissal of the Third Amended Complaint
and the entry of partial judgment in their favor on their
First Counterclaim. For the reasons that follow,
Defendants' motion is granted in part and denied in part.
Plaintiff's Employment 
Benefit Fund Defendants are Taft-Harley multiemployer
employee benefit plans within the meaning of the ERISA.
See Third Am. Compl. ¶ 3, D.E. 145; Answer to
Third Am. Compl. with Affirmative Defenses and Am.
Countercls. (“Answer & Countercls.”), ¶
14, D.E. 146. The Trustee Defendants are responsible for the
management and administration of each Fund's assets.
See Answer & Countercls. ¶ 163. “The
collective purpose of the Benefit Funds is to provide
retirement benefits and various fringe benefits to eligible
employees on whose behalf employers contribute to the Benefit
Funds, pursuant to collective bargaining agreements between
certain employers in the construction industry and the
Northeast Carpenters Union.” Third Am. Compl. ¶
14; see also Answer & Countercls. ¶ 14.
served as the Plan Administrator for the funds from 1984
until his termination in December 2016. Third Am.
Compl. ¶¶ 5; Answer & Countercls.
¶ 5. In 1984, the Trustees of the New Jersey Carpenters
Benefit Funds-the predecessor to the Benefit Fund Defendants-
“delegated to Plaintiff the responsibility for and
authority over the day-to-day administration of the Benefit
Funds.” Answer & Countercls. ¶ 164. Following
a merger effective January 1, 2016 between the New Jersey
Carpenter Benefit Funds and the Empire State Carpenters
Funds, Plaintiff assumed the role of Plan Administrator for
the Benefit Fund Defendants. See id. ¶ 165;
Third Am. Compl. ¶ 9.
employment was governed by successive contracts entered into
in 1985, 1990, 1993, and 1998 with the Trustees of the New
Jersey Pension Fund. Third Am. Compl. ¶ 6; Answer &
Countercls. ¶ 168. The 1998 contract, titled
“Employment and Deferred Compensation Agreement”
(“Employment Contract”), confirmed
Plaintiff's employment until December 2005, at which time
the agreement would automatically be renewed for additional
five-year terms absent written notice. Answer &
Countercls., Ex. A., D.E. 146-1 at 14, 20. The parties
renewed the Employment Contract in 2015. See Third
Am. Compl. ¶¶ 52-54. Following the merger,
Plaintiff became an employee of the Northeast Health Fund.
Answer & Countercls. ¶ 176.
Employment Contract provided Plaintiff an annual salary of
$286, 845.00 at the time of his termination; a “Base
Pension” of approximately $10, 000 per month along with
additional benefits pursuant to his participation in the
benefit plans; and a separate retirement benefit
(“Deferred Pension Supplement”) of approximately
$14, 000 per month. See id., D.E. 146-1 at 14-15;
Third Am. Compl. ¶¶ 4-13, 53-58. Paragraph Three of
the Employment Contract prescribes the parties' rights
and obligations pertaining to the benefit funds:
In addition to his cash compensation, contributions shall
continue to be made by the Trustees on the Employee's
behalf to such employee benefit funds . . . as are presently
in effect together with any increases in contribution amounts
as may be mutually agreed upon and/or as may be required to
maintain the same level of benefits as presently in effect or
as may be required by other agreements governing such
contributions. The Employee shall be entitled to all benefits
provided by such employee benefit funds and there shall be no
reduction of any such benefits because of any benefit
provided for, or received under this Agreement except in the
amount and manner as specifically provided herein for the
offset of such benefits against the retirement benefits
provided under this Agreement.
Answer & Countercls., Ex. A., D.E. 146-1 at 15.
Jersey Carpenters Pension Plan, effective January 1, 2014,
set forth the requirements to retire on a pension prior to
the merger. See Answer & Countercls., Ex. I.,
D.E. 146-9 at 19-20. Article III prescribed that a qualifying
employee “shall be eligible to retire on a [Base
Pension] commencing on the first day of the month following
his last Hour of Service” provided that:
(a) he files with the Trustees, on or before the first day of
the month of the first pension payment applied for, an
application for retirement on a form provided by the
(b) he submits to the Trustees proof satisfactory to the
Trustees of his date of birth and, if married, his
Spouse's date of birth and their marriage; and
(c) he ceases all work in the Industry.
Id., D.E. 146-9 at 19. Article III further provided
that “[a] Pensioner shall receive pension payments
monthly beginning on the first day of the month coinciding
with or next following the date that he fully meets the
requirements set forth in this Article.” Id.
at 19. With respect to the operation, administration, and
interpretation of the plan, Article XII granted the Trustees
the authority “to designate an administrative manager
for such purposes.” Id., D.E. 146-9 at 54.
the merger, the Northeast Carpenters Pension Plan prescribes
that “[a] Participant may Retire on a [Base Pension] on
or after January 1, 2016 with respect to his Pre-January 1,
2016 Accrued Benefit and any Post-January 1, 2016 Accrued
Benefit if the Participant has attained Normal Retirement
Age.” Answer & Countercls., Ex. I-2, D.E. 146-10 at
19. It further provides that “[n]o pension shall be
granted unless a properly completed application is made in
writing and received by the Trustees.” Id.,
D.E. 146-10 at 43.
is also entitled to receive benefits from the Northeast
Carpenters Annuity Fund (“Annuity
Fund”). See Third Am. Compl. ¶¶
9-11. The Annuity Fund “is a defined contribution plan
that provides retirement, deferred compensation, disability
retirement, and termination of employment benefits to
participants and beneficiaries . . . .” Answer &
Countercls. ¶ 11. Employers are required to make
contributions to the Annuity Fund on behalf of participants,
which are credited to the participant's individual
account and become payable upon retirement or the occurrence
of certain triggering events. See Answer &
Countercls., Ex. I-3, D.E. 146-11 at 40-42. Employer
contributions to the Annuity Fund are tied to the
participant's income; however, both the Annuity Plan and
Section 401(a)(17) of the Internal Revenue Code cap the
annual compensation to be considered for contributions at
$265, 000 plus cost-of-living adjustments. See id.,
D.E. 146-11 at 36-37; 26 U.S.C. § 401(a)(17). A
participant in the Annuity Plan is eligible for benefits
upon, inter alia, certification that he or she has
attained the age of fifty-five and “ceased all work in
the Industry.” See id., D.E. 146-11 at 43.
With respect to the employer contributions attributed to a
participant's account, the Annuity Plan prescribes that
“[a] Participant is fully and immediately 100% vested
in the value of his or her Account.” Id., D.E.
146-11 at 42.
4 of the Employment Contract governs the Deferred Pension
A. If the Employee continues in the employ of the Trustees
until the retirement age as herein defined, the Trustees
shall provide the Employee with a retirement benefit
calculated and determined as follows and subject to the
i. a monthly benefit, commencing on the first day of the
month following retirement, in an amount equal to:
 4% of his average monthly compensation received during the
three consecutive years of employment at his highest
compensation multiplied by his years (and fraction thereof)
of employment by the Trustees since March 1, 1984, less the
portion of his monthly pension received from the New Jersey
Carpenters Pension Fund attributable to years of service
under the rules of such Pension Fund after March 1, 1984.
ii. “Retirement Age” as used herein shall mean
the then current normal retirement age as provided in the
Pension Plan of the New Jersey Carpenters Pension Fund.
iii. There shall be no compulsory retirement under this
Agreement except as may be required by applicable federal
B. If at any time during the term of Employee's
employment by the Trustees, his employment is severed,
regardless of cause of such severance, the Employee may elect
to receive the retirement benefit as hereinabove provided,
either as a monthly benefit or as a lump sum payment. . . .
Id., D.E. 146-1 at 15-16. On March 17, 2005, the
Trustee Defendants amended the Employment Contract to allow
Plaintiff's Deferred Pension Supplement “to accrue
up to one hundred percent (100%) of his annual salary at a
rate of four percent (4%) per year.” Id., D.E.
146-1 at 21.
alleges that, on December 20, 2016, Defendants
“confronted the Plaintiff and accused him of
self-dealing.” Third Am. Compl. ¶¶
22-26. Specifically, Defendants questioned Plaintiff about
whether he had been collecting his Base Pension and Deferred
Pension Supplement since October 2015. Id. ¶
23. “Plaintiff responded that as and because he was
then sixty-five . . . years old, he commenced collection of
his pension, to which he believed he was entitled and also
continued working.” Id. According to
Plaintiff, the Benefit Funds' accountant addressed
whether Plaintiff could collect his pension at the September
2015 Board of Trustees meeting. Id. ¶ 27.
Plaintiff avers that he only proceeded to collect his pension
upon receiving no response from the Benefit Funds attorney.
Id. ¶ 28. Plaintiff also stated that
“since 2001 he was in receipt of, on a quarterly basis,
cash in lieu of his annuity contribution for which taxes were
paid.” Id. ¶ 25.
demanded Plaintiff refund the pension and annuity payments.
Id. ¶¶ 24, 26. Plaintiff requested that
Trustee Defendants set forth their proposed resolution of the
dispute in writing. Id. ¶ 30. The Trustee
Defendants responded with an “ultimatum” on
December 21, 2016: Plaintiff was to retire on December 29,
2016 or be terminated. Id. ¶ 31. According to
Plaintiff, acceptance of the ultimatum would have resulted in
the forfeiture of over $1, 000, 000 in compensation owed
under the Employment Contract. Id. ¶ 32.
Plaintiff avers that he never received an adequate
explanation of the purported self-dealing and submits that
“it is now clear that a deliberate pre-judgment had
been reached.” Id. ¶¶ 46-47. In
Plaintiff's view, he “responded without reservation
[to the allegations] and with full clarity about the proper
exercise of his rights . . . .” Id. ¶ 47.
Consequently, Plaintiff declined to retire. Id.
December 22, 2016, the Trustee Defendants' attorney
directed Plaintiff “to clear out his office that night
. . . and not return.” Id. ¶ 36. Since
that date, Defendants have withheld various forms of
compensation owed to Plaintiff. Specifically, Defendants
froze payment of Plaintiff's Deferred Pension Supplement,
“denied [him] access to his annuity account under the
New Jersey Carpenters' Annuity Plan, ” and denied
him continued payment of his salary and other benefits owed
under the Employment Contract. Id. ¶¶ 38-40;
see also Id. ¶¶ 52-55, 57-59.
submits that he has satisfied all administrative requirements
to receive his retirement benefits, “and such action
has been confirmed in writing by the Funds[']
attorney.” Id. ¶ 56; see also
Id. ¶ 81. Notwithstanding his applications for
benefits, Defendants have ignored the relevant claims
procedures “by admitting that [Plaintiff] was entitled
to his benefits and illegally withholding same for which
there is no provision under ERISA which allows the [Trustee
Defendants] to withhold the benefits.” Id.
¶ 78. In sum, Plaintiff asserts that the Trustee
Defendants' accusations and denial of benefits were
fraudulent, malicious, and illegal. Id. ¶¶
48, 58-59, 97, 121. Plaintiff calculates his losses to exceed
$1, 900, 000. Id. ¶ 59.
tell a very different story. They submit that Plaintiff
admitted at the December 20, 2016 meeting that he
“unilaterally concluded that he was entitled to begin
collecting his Base Pension” upon turning sixty-five
and “used his authority as Administrator to cause the
[Benefit Fund Defendants] to begin the distribution of his
Base Pension in October 2015, without seeking or obtaining
the approval of the Board of Trustees.” Answer &
Countercls. ¶ 23. Defendants allege that that the
distribution of the Base Pension prior to Plaintiff's
retirement violated the express terms of the New Jersey
Carpenters and Northeast Carpenters Pension Plans. See
Id. ¶¶ 4, 177-78. With respect to the Deferred
Pension Supplement, Defendants aver that “Plaintiff
also admitted . . . that he unilaterally construed his
Employment Agreements to entitle him to [the Deferred]
Pension Supplement in the amount of $14, 729 per month and
used his authority as Administrator to cause the [Benefit
Fund Defendants] to begin the distribution of the Pension
Supplement on October 1, 2015.” Id. ¶ 23;
see also Id. ¶¶ 179-80. Finally,
Defendants allege that
Plaintiff also admitted . . . that for many years, he used
his authority as Administrator . . . to unilaterally increase
his monthly pay by the amount of contributions that should
have been made by the N.J. Pension Fund to the N.J. Annuity
Fund on his behalf under his Employment Agreements
plus an amount equal to the amount of contributions
that would not have been made to the Annuity Fund
because of the cap imposed by Section 401(a)(17) of the
Internal Revenue Code.
Id. ¶ 23; see also Id. ¶ 181-82.
of the “ultimatum” dated December 21, 2019,
Defendants informed Plaintiff that the aforementioned
self-dealing violated ERISA, the terms and conditions set
forth in the Employment Contract, and the terms of relevant
benefit plans. See Id. ¶¶ 31, 177-82; Ex.
B, D.E. 146-2. Defendants submit that “the Trustee
Defendants had the right to terminate Plaintiff's
employment with or without cause, at any time, and were
required as fiduciaries to terminate Plaintiff's
employment once Plaintiff admitted to the self-dealing
transactions . . . .” Id. ¶ 32.
terminating Plaintiff for cause, the Trustee Defendants
approved the distribution of his Base Pension “but
without waiver of [their] right to a set-off against
Plaintiff's Base Pension equal to the amount of Base
Pension payments that Plaintiff impermissibly received from
October 2015 to December 2016.” Id. ¶ 4.
Conversely, “the Board of Trustees suspended the
payment of the [Deferred] Pension Supplement effective
December 20, 2016, in light of Plaintiff's admissions of
self-dealing transactions . . . and pending further review of
the enforceability of the Employment Agreements and the
legality of the Pension Supplement, as well as this
Court's approval of a set off against the Pension
Supplement.” Id. ¶ 38. With respect to
the annuity account, the Trustee Defendants suspended the
distribution of payments pending Plaintiff's repayment of
his excessive payments pursuant to Section 206(d)(4) of
ERISA. Id. ¶ 39.
Trustee Defendants also retained a forensic accountant to
further investigate Plaintiff's suspected self-dealings.
Id. ¶ 183. Following the investigation,
Defendants determined that Plaintiff collected unauthorized
automobile bonuses, holiday bonuses, and other non-specific
bonuses; extended pensions and benefits coverage to
unqualified persons; and retained an Apprentice Fund master
cabinetmaker to construct two dining room tables for his home
without Trustee approval. See Id. ¶¶
also contest the validity of the Employment Contract and
Deferred Pension Supplement. See Id. ¶¶
170-76. Defendants assert “Plaintiff knowingly and
intentionally failed to disclose the existence of the 1998
Agreement” during the 2016 merger negotiations between
the New Jersey Carpenters Funds and the Empire State
Carpenters Funds. Id. ¶ 176. Defendants thus
[t]he Northeast Health Fund Trustees failed to assume or
agree to the [Employment Contract] . . . nor did the Merger
Agreement . . . require the Northeast Pension Fund [to]
assume and become bound by the Pension Supplement provisions
in the 1998 Agreement, as amended by the 2005 Amendment.
Id. In regard to the Deferred Pension Supplement,
Defendants submit “Plaintiff requested and regularly
received reports from the actuary for the New Jersey Pension
Benefit Fund disclosing the value of his Pension Supplement
and the financial impact on his Pension Supplement of an
increase in his salary.” Id. ¶ 170.
According to Defendants, Plaintiff had an obligation to
disclose the financial terms of his employment to the Trustee
Defendants whenever he requested or negotiated an increase in
salary, but consistently failed to do so. See Id.
¶¶ 171-74. Defendants aver that
“Plaintiff's concealment [of those details] caused
the Trustees to ...