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Wright v. Elton Corp

United States District Court, D. Delaware

May 31, 2019

HELENA DUPONT WRIGHT, JAMES MILLS, JOSEPH WRIGHT, and T. KIMBERLY WILLIAMS, Plaintiffs/Counter-defendants,
v.
ELTON CORPORATION, GREGORY FIELDS, FIRST REPUBLIC TRUST COMPANY OF DELAWARE LLC, and M.C. DUPONT CLARK EMPLOYEES PENSION TRUST, Defendants/Counter-claimants/Third-party Plaintiffs,
v.
JAMES B. WYETH, Solely as Executor and Personal Representative of the Estate of Phyllis M. Wyeth, MARY MILLS ABEL SMITH, CHRISTOPHER T. DUPONT, and MICHAEL DUPONT, Third-party defendants.

          MEMORANDUM AND ORDER

          JOSEPH F. BATAILLON, SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the Court on the parties' cross-motions for summary judgment on Count I of the plaintiffs' second amended complaint (D.I. 120 and D.I. 124).[1] This is an action for declaratory and injunctive relief involving an employee benefit trust, allegedly governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. In this action, the plaintiffs seek (1) a declaratory judgment that the trust at issue is an ERISA Pension Plan subject to federal law and (2) an injunction ordering defendants to bring the plan into compliance with ERISA. The action has been bifurcated for a determination of the threshold issue of whether or not the trust at issue is governed by ERISA. See oral order dated June 14, 2017.

         In their cross-motions for summary judgment, plaintiffs seek an order that the trust at issue is an ERISA-governed plan and defendants' and third-party defendants (hereinafter, collectively, “defendants”) jointly move for a declaration that the trust at issue is not subject to ERISA.[2]

         I. BACKGROUND

         A. Procedural History

         This action for declaratory and equitable relief under 29 U.S.C. § § 1132(a)(3) was originally commenced by plaintiffs Helena duPont Wright and James Mills against Elton Corporation (“Elton Corp.”) and Gregory Fields, alleged fiduciaries of the Mary Chichester duPont Clark Employee Pension Trust (“the Trust”) (D.I. 1). The plaintiffs each employed domestic employees who are allegedly entitled to benefits under the Trust (D.I. 35).

         In their complaint, the plaintiffs sought a determination that the Trust is governed by ERISA and an order requiring the defendants to comply with the statute. Plaintiffs Wright and Mills are the grandchildren of Mary Chichester duPont, the settlor of the Trust at issue. The defendants moved to dismiss for lack of subject matter jurisdiction, lack of statutory standing under ERISA, and improper venue. Thereafter, the plaintiffs filed an amended complaint, adding the Mary Chichester DuPont Clark Employee Pension Trust (the “Trust”) and First Republic Trust Company of Delaware LLC, the current trustee of the Trust, (hereinafter, collectively, “First Republic”) as party defendants (D.I. 8). First Republic moved to dismiss (D.I. 37) and also filed a counterclaim against the plaintiffs and a third-party complaint against third-party defendants Mary Mills Abel Smith, Christopher T. duPont, Michael duPont, Phyllis M. Wyeth, and Katharine D. Gahagan, who are also grandchildren of Mary Chichester duPont Clark.[3] D.I. 61. The plaintiffs thereafter filed a second amended complaint, adding T. Kimberly Williams and Joseph Wright, alleged to be employees covered by the Trust, as parties plaintiff. Defendants again moved to dismiss on substantially similar grounds. The District Court of Maryland granted the motion to dismiss on grounds of improper venue and transferred the case to this Court (D.I. 45). Resolution of other issues has been deferred pending resolution of the cross-motions for summary judgment on the ERISA coverage issue.

         B. Facts

         The record shows that Mary Chichester DuPont created the Mary Chichester DuPont Clark Employee Pension Trust (the “Trust”) on September 11, 1947. The Trust was initially funded with 50 shares of the common stock of Christiana Securities Company. D.I. 125-1, Ex. 1, Affidavit of Katherine Gahagan (“Gahagan Aff.”) at 1. The Trust provides that every qualified beneficiary “shall be entitled to an annual pension for the life of such Pensioner or during the continuance of this trust whichever is shorter, at the rate of sixty percent (60%) of the annual money wages or salary at which such Pensioner was employed . . . .” D.I. 125-1, Gahagan Aff., Exhibit (Ex.) A, Trust Instrument. The Trust defines its beneficiaries as

any domestic employee or any employee rendering secretarial, accounting, or other assistance in the management of his employer's private, financial, and social affairs who may be employed by any one or more of Mary Chichester DuPont, A. Felix DuPont, Jr., Lydia C. DuPont, Alice DuPont Mills, Allaire Crosier DuPont and/or any grandchild of the Trustor.

Id. at 2, ¶ 1.

         The Trust uses the term “Qualified Employer” to refer to family members whose employees are entitled to pensions under the Trust. Id. The Trust is managed and controlled by its trustee or trustees. D.I. 125-1, Ex. 1 Gahagen Aff. at 2. The initial trustees of the Trust were Lydia C. duPont, A. Felix duPont, Jr. and Alice duPont Mills. Id. In 1958, Lydia C. duPont died and Allaire C. duPont was appointed as a trustee. Id. In 1989, trustees Alice duPont Mills and Allaire C. duPont resigned. Id.; Ex. C. Thereafter, A. Felix duPont, Jr., then the sole trustee, appointed Elton Corp. as co-trustee of the Trust. Id. at 3; Ex. D. A. Felix DuPont, Jr. died on December 30, 1996 leaving Elton Corp. as the sole trustee. Id. Effective on August 7, 2015, Elton Corp. resigned as a trustee of the Trust and appointed First Republic as successor trustee. Id.

         Elton Corp. is a corporation established by A. Felix duPont, to administer various DuPont family trusts, including the Trust at issue. D.I. 122, Ex. B, Deposition of Katharine Gahagen (“Gahagen Dep.”) at 14. As trustee, Elton Corp. determined whether an employee of a DuPont family member was entitled to a pension under the terms of the Trust. Id. at 15. It determined whether such employee: (1) had reached the age of 65; (2) had been working for an applicable DuPont family member for ten years, and (3) was still working for such family member at the time he or she turned 65. Id. A. Felix duPont, and later his daughter, Katharine Gahagen, served as the President of Elton Corp. At the time he took over as sole trustee, A. Felix duPont stated that his plans were “to establish a pension plan for [his] employees and to appoint a successor trustee for the Trust.” D.I. 125-1, Ex. C.

         The Trust provides that the trustee's duties are:

To hold, manage, invest and reinvest the same, to collect the income arising therefrom, to pay out of such income all charges and expenses, properly payable thereout, including reasonable compensation to my said Trustees, and to pay over from income or principal in the manner and amounts at the times hereinafter set forth unto the Pensioner or Pensioners as hereinafter defined annual pensions so long as any funds remain in the hands of my said Trustees, and to ...

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