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Roark v. Universal Fibers, Inc. Associates Savings Plan

United States District Court, W.D. Virginia, Abingdon Division

May 9, 2017

POLLY ROARK, Plaintiff,

          R. Lucas Hobbs, Elliott Lawson & Minor, P.C., Bristol, Virginia, for Plaintiff.

          W. Bradford Stallard, Penn, Stuart & Eskridge, Abingdon, Virginia, for Defendant.



         In this 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.

         The 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.


         Based on the evidence presented at the hearing, as well as uncontested matters of record, I make the following findings of fact.

         After 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.

         Following 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.

         Polly 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 stated:

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 $54, 257.90.
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.

         Several 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, [1] 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 ...

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