United States District Court, W.D. Virginia, Abingdon Division
Lucas Hobbs, Elliott Lawson & Minor, P.C., Bristol,
Virginia, for Plaintiff.
Bradford Stallard, Penn, Stuart & Eskridge, Abingdon,
Virginia, for Defendant.
OPINION AND ORDER
P. JONES, UNITED STATES DISTRICT JUDGE
case governed by the Employee Retirement Income Security Act
of 1974, 29 U.S.C. §§ 1001-1461
(“ERISA”), I previously denied the
defendant's Motion for Judgment on the Pleadings and
granted the plaintiff's Motion for Judgment on the
Pleadings. Op. and Order, Jan. 6, 2017, at 10, ECF No. 22;
Op. and Order, Feb. 14, 2017, at 3, ECF No. 31. I held that
defendant Universal Fibers, Inc. Associates Savings Plan
(“Plan”) should have paid the death benefit of
the decedent's retirement account to his widow rather
than to his parents.
widow, plaintiff Polly Roark, has now moved for an award of
attorneys' fees and prejudgment interest. With their
briefs in support of and in opposition to Polly's motion,
the parties submitted conflicting affidavits on the issue of
the Plan's good faith and the extent to which Polly's
actions may have contributed to a delay in payment. I held an
evidentiary hearing to determine whether Polly is entitled to
attorneys' fees, whether she is entitled to prejudgment
interest, and the appropriate rate of prejudgment interest.
The Plan does not contest the amount of attorneys' fees
and costs requested.
on the evidence presented at the hearing, as well as
uncontested matters of record, I make the following findings
her husband Steven's death, Polly received a letter from
the Social Security Administration notifying her of the
existence of Steven's Plan retirement account and that
she may be entitled to its proceeds. At the time, Polly did
not intend to withdraw the funds. She preferred to keep them
invested in the account and allow them to continue to grow
until she needed them.
Steven's death, Polly and Robert Roark, Steven's
father, had a dispute about the ownership of a garage that
was located between their houses. Polly hired attorney Ralph
Dillow to represent her in that dispute. In the course of
that representation, Robert mentioned to Dillow that he had
received the proceeds from Steven's Plan account. Polly
first learned from Dillow that the funds from the retirement
account had been distributed.
contacted Universal Fibers, Inc. (“Universal
Fibers”), the successor to Steven's former
employer, and spoke to Judy Shumate, who was temporarily
acting as human resources manager while that position was
vacant. Shumate confirmed that the money from Steven's
account had been distributed to Robert and Joan Roark.
Shumate told Polly that the Plan had not been aware of
Steven's marriage to Polly and that the funds should have
been distributed to Polly. Polly expected that Shumate would
work on the issue and that Polly would eventually receive the
account proceeds. After a second phone conversation, Polly
received a letter from Shumate dated June 14, 2013, that
To confirm my phone call to you today, as Steven's
surviving spouse, we need to inform you of the rights given
you by a federal law (ERISA). The Employee Retirement Income
Security Act (ERISA) governs 401(k) employee savings plans.
ERISA rules and guidelines require that a surviving spouse
has the primary right to any assets in the account, unless
the spouse has signed a waiver consenting in writing to the
naming of anyone other than the spouse as primary
beneficiary. No such waiver was produced. Accordingly, the
401(k) funds actually belong to you, Steven's spouse.
The company was not aware that Steven had married. He was
single when he resigned from Universal Fibers and had not
updated his beneficiary form. Now that we have knowledge of a
surviving spouse, we are taking action to correct the
inappropriate distribution. Therefore, Universal Fibers is
contacting his designated beneficiaries, Robert L. and Joan
C. Roark, to alert them to this fact and asking that the
death benefit distribution received by them be returned to
the American Funds 401(k) account. The amount distributed was
Once the funds are returned, we will so notify you and advise
you of your options regarding a rollover or distribution.
Pl.'s Ex. 1, ECF No. 42-1.
weeks after she received the letter from Shumate, Polly asked
Dillow to work on the matter. Dillow obtained from the Plan
copies of several emails related to the account. On June 5,
2013, Shumate had emailed Monica Stolte, a retirement plan
coordinator at American Funds,  about the situation. On June 10,
2015, Stolte replied that “the spouse is the
beneficiary if a participant is married at the time of death,
regardless of any previous designation.” Pl.'s Ex.
4 at 2, ECF No. 42-4. Stolte instructed Shumate,
The assets should be requested back from the parents and
re-deposited into the account. The spouse can then claim the
assets. If the assets are not returned to the account/plan,
Universal Fibers should restore the assets (amount at the
time of the death distribution) to the ...