Solis v. Barringer et al
Filing
18
CONSENT JUDGMENT AND ORDER signed by Judge Garland E. Burrell, Jr on 6/21/11: This Court retains jurisdiction of this action for purposes of enforcing compliance with the terms of this Consent Judgment & Order. The Court directs the entry of this Consent Judgment & Order as a final order. (Kaminski, H)
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UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF CALIFORNIA
HILDA L. SOLIS, Secretary of Labor,
UNITED STATES DEPARTMENT OF
LABOR,
Case No.: 2:11-CV-00307-GEB-DAD
Plaintiff,
CONSENT JUDGMENT & ORDER
v.
AC GENERAL ENGINEERING, INC.;
CHRISTOPHER BARRINGER; ATILANO
ALCALA; AC General Engineering, Inc.
401(k) Profit Sharing Plan,
Defendants.
Plaintiff HILDA L. SOLIS, Secretary of Labor, United States Department of Labor
(“Secretary”) under the authority granted to her by §§ 502(a)(2) and (5) of the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1132(a)(2) and (5), has filed a
Complaint against AC GENERAL ENGINEERING, INC. (“ACGE”), CHRISTOPHER
BARRINGER (“Barringer”), individually, ATILANO ALCALA (“Alcala”), individually, and
the AC GENERAL ENGINEERING, INC. 401(K) PROFIT SHARING PLAN (the “Plan”), an
employee benefit plan within the meaning of Section 3(3) of ERISA, 29 U.S.C. § 1002(3).1
A.
The Secretary, ACGE, Barringer, Alcala, and the Plan (collectively, the “parties”)
admit that the Court has jurisdiction over this action under ERISA § 502(e)(1), 29 U.S.C. §
1132(e)(1), and that venue lies in the Eastern District of California under ERISA § 502(e)(2), 29
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The Plan is named in the Secretary’s Complaint as a party necessary for complete relief under Fed. R. Civ. P.
19(a).
CONSENT JUDGMENT & ORDER
1
U.S.C. § 1132(e)(2).
B.
Defendants ACGE, Barringer, Alcala and the Plan (collectively “Defendants”)
waive filing of an Answer and further waive entering any affirmative defense, counterclaim, or
third-party complaint, or any other defenses that they may have in this case.
C.
The parties agree to the entry of this Consent Judgment & Order. The parties
further agree that this Consent Judgment & Order shall fully settle all claims of the Secretary
asserted in the Complaint filed in this matter.
D.
All parties expressly waive Findings of Fact and Conclusions of Law.
IT IS HEREBY ORDERED, ADJUDGED, and DECREED that:
1.
Defendants ACGE, Barringer and Alcala are jointly and severally liable for
$46,868.81 in losses plus lost-opportunity costs caused to the Plan (“Loss Amount”), and
judgment is hereby entered against them in that amount. Lost-opportunity costs are calculated
applying the rate set forth in 26 U.S.C. § 6621.
2.
Defendant Alcala agrees that, in the event that he files for bankruptcy protection
under any chapter of the United States Bankruptcy Code, within thirty (30) calendar days of
filing a petition in any U.S. Bankruptcy Court, he will (i) notify the Secretary of his bankruptcy;
and (ii) execute a stipulation with the Secretary and consent to the entry of an Order that the
identified Loss Amount plus lost-opportunity costs calculated through the date on which he files
for bankruptcy is a nondischargeable debt pursuant to section 523(a)(4) of the U.S. Bankruptcy
Code, 11 U.S.C. § 523(a)(4) (“Stipulation”). The Stipulation and entry of a subsequent Order
shall further provide that lost-opportunity costs will continue to accrue at the rate set forth in 26
U.S.C. § 6621 from the date the relevant nondischargeability Order is issued until such time as
the Loss Amount is paid to the Plan in full.
3.
Defendant ACGE is hereby removed as Plan Administrator and fiduciary of the
4.
Defendants Barringer and Alcala are permanently enjoined and restrained from
Plan.
violating the provisions of Title I of ERISA, 29 U.S.C. §§ 1001-1191c.
CONSENT JUDGMENT & ORDER
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5.
Defendants Barringer and Alcala are permanently enjoined and restrained from
future service as a fiduciary of, or service provider to, any ERISA-covered employee benefit
plan, subject to the exceptions set forth below in Paragraphs 15, 16 and 17.
6.
In reliance on the Declaration of Financial Status, submitted under oath to the
Secretary by Barringer on March 17, 2011, and by Alcala on March 18, 2011, the Secretary
declines to seek collection of the Loss Amount at this time. The Secretary reserves the right to
bring a collection action against Barringer, Alcala and/or ACGE for the Loss Amount, or a
portion thereof, at any time. Prior to initiating a collection action, the Secretary shall send
Barringer and Alcala a written demand letter (“Secretary’s Demand Letter”) to the last home
address that they provided to the Secretary. Within fifteen (15) calendar days of receiving the
Secretary’s Demand Letter, Barringer and Alcala shall separately and individually provide the
Secretary with financial documents including, but not limited to, tax returns (for the three most
recent years), bank statements, investment statements, and other similar financial statements
relevant to his ability to restore the Plan’s losses. If the documents submitted to the Secretary
demonstrate that Barringer’s and/or Alcala’s gross individual household income and other
earnings as defined in Paragraph 9 below, exceed $100,000.00 (one-hundred thousand dollars) in
any twelve-month period, he will pay on behalf of the Plan within fifteen (15) calendar days of
receipt of a notice from the Secretary, a sum equal to 50 percent (50%) of his gross income in
excess of $100,000.00 (one-hundred thousand dollars).
7.
Barringer and Alcala expressly agree that for the next seven (7) years, at the same
time that each makes his personal income taxes filings with the Internal Revenue Service, he will
concurrently provide copies of the following documents to the Secretary:
(i)
True and accurate copies of tax returns filed in that year, and any requests for
extensions;
(ii)
Payroll wage statements, for the last four (4) paychecks; and
(iii)
A notarized statement made under penalty of perjury detailing any newly-
acquired real or personal property, life insurance, lottery winnings or other gambling income.
CONSENT JUDGMENT & ORDER
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8.
Barringer and Alcala further agree that for the next seven (7) years, to the extent
that their gross individual household income and other earnings as defined in Paragraph 9 below,
exceed $100,000.00 (one-hundred thousand dollars) in any twelve-month period, they will pay
on behalf of the Plan within fifteen (15) calendar days of receipt of a notice from the Secretary, a
sum equal to 50 percent (50%) of their gross income in excess of $100,000.00 (one-hundred
thousand dollars).
9.
For the purposes of this order and Paragraphs 6 and 8 above, gross household
income and other earnings shall include property of Barringer’s and Alcala’s households,
separately and individually, whether acquired through income gifts, inheritance, life insurance,
lottery winnings or other gambling income.
10.
Barringer and Alcala further agree that that for the next seven (7) years, they will
(i) maintain records of the last known home and/or business address for all eligible Plan
participants, as of the date that the Court approves this Consent Judgment & Order, and (ii)
provide this information to the Secretary or the Plan’s third-party administrator, Polycomp
Administrative Services (“Polycomp”) within ten (10) days of receipt of a request from the
Secretary or Polycomp.
11.
Should Barringer or Alcala change his home address or telephone number at any
time within the next seven (7) years, he shall notify the Secretary of the change, in writing,
within fifteen (15) calendar days.
12.
The parties expressly understand and agree that the Secretary’s agreement to
decline to bring a collection action at this time against Barringer, Alcala and/or ACGE is based
upon all of the financial information available, including statements made under penalty of
perjury by Barringer and Alcala, to the Secretary during the course of the negotiation of this
Consent Judgment & Order and that the Secretary has agreed not to seek any additional
monetary relief to the extent that such information is materially true and accurate to the best of
Barringer’s and Alcala’s knowledge at the time such information was provided.
13.
If at any time the Secretary determines that Barringer and/or Alcala transferred
CONSENT JUDGMENT & ORDER
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assets for the purpose of avoiding disclosure or making full repayment to the Plan as set forth in
this Consent Judgment & Order, or materially misrepresented their financial condition in their
Declarations of Financial Status submitted to the Secretary in March 2011 or any other financial
documents submitted to the Secretary at any time in the future, the Secretary, by appropriate
motion, may reopen her case against Defendants and seek restitution to the full extent of their
liability to the Plan.
14.
Within fifteen (15) calendar days following the Court’s entry of this Consent
Judgment & Order, Barringer and Alcala shall provide a copy of this Consent Judgment & Order
to Polycomp.
15.
Within thirty (30) calendar days following the Court’s entry of this Consent
Judgment & Order, Defendants Barringer and Alcala shall direct Polycomp to take all steps to:
(i)
Initiate the orderly termination of the Plan by, among other things, causing the
Plan’s remaining assets to be distributed or rolled over to all remaining eligible participants
and/or beneficiaries in accordance with each such participant’s or beneficiary’s instructions; and
(ii)
File on the Plan’s behalf a terminal Internal Revenue Form 5500 (“Annual
Return/Report of Employee Benefit Plan”) for the final Plan year.
Barringer and Alcala represent that the fees required to perform the services described above in
(i) and (ii) have been paid to Polycomp. Barringer and Alcala further agree that to the extent
Polycomp requires additional fees to perform those services, Barringer and Alcala will remain
jointly and severally liable for those amounts, if any.
16.
Within fifteen (15) calendar days of completing the actions set forth above in
Paragraph 15, Defendants Barringer and Alcala shall provide proof in writing to the Secretary of
the Plan’s termination.
17.
Any and all future payment made by the Defendants on behalf of the Plan after
the 30-day period described above in Paragraph 15 and within the next seven (7) years shall be
distributed to all former Plan participants and/or beneficiaries in a manner to be determined and
agreed upon by the parties.
CONSENT JUDGMENT & ORDER
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18.
Defendants Barringer and Alcala acknowledge that they have never participated
in the Plan and hereby forfeit any interest either may have in any amounts owed to the Plan as a
result of the Secretary’s Complaint and/or this Consent Judgment & Order.
19.
Each time a submission to the Secretary is required under this Consent Judgment
& Order, the submission shall be made by reliable overnight delivery AND facsimile to:
Jean Ackerman
Regional Director
United States Department of Labor
Employee Benefits Security Administration
90 7th Street, Suite 11-300
San Francisco, CA 94103
Fax: 415-625-2499
20.
Once Defendants have restored the full Loss Amount (including any lost-
opportunity costs) to the Plan, they shall be assessed a penalty under ERISA § 502(1), 29 U.S.C.
§ 1132(1) in the amount of twenty percent (20%) of the Loss Amount. Upon assessment,
payment of the penalty shall be made immediately unless Defendants file a petition for waiver or
reduction of the penalty as provided for in 29 C.F.R. §§ 2570.83–2570.87 and the Secretary
agrees to waive or reduce the penalty. In the event that the Secretary does not agree to waive or
reduce the penalty, Defendants shall remit the penalty amount to the Secretary within sixty (60)
calendar days of receipt of the Secretary’s decision denying Defendants’ petition. Defendants
may not challenge the applicable recovery amount, the validity of the violations alleged, or their
liability for the violations.
21.
Once Defendants have restored the full Loss Amount (including any lost-
opportunity costs) to the Plan and paid any applicable penalty, Defendants Barringer and Alcala
shall immediately be removed as fiduciaries of the Plan.
22.
Defendants expressly waive any and all claims of any nature which they have or
may have against the Secretary, the Department of Labor, or any of its officers, agents, attorneys,
employees or representatives, arising out of or in connection with the allegations contained in the
Complaint on file in this action, any other proceedings or investigation incident thereto or based
CONSENT JUDGMENT & ORDER
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on the Equal Access to Justice Act, as amended.
23.
The parties shall each bear their own costs, expenses, and attorneys’ fees incurred
to date in connection with any stage of this proceeding, including but not limited to attorneys’
fees which may be available under the Equal Access to Justice Act, as amended.
24.
Nothing in this Consent Judgment & Order is binding on any governmental
agency other than the United States Department of Labor, Employee Benefits Security
Administration.
25.
This Court retains jurisdiction of this action for purposes of enforcing compliance
with the terms of this Consent Judgment & Order.
26.
By signing their names to this Consent Judgment & Order, the parties represent
that they are informed and understand the effect and purpose of this Consent Judgment & Order.
The Court directs the entry of this Consent Judgment & Order as a final order.
IT IS SO ORDERED.
Date: 6/21/2011
_________________________
GARLAND E. BURRELL, JR.
United States District Judge
DEAC_Sig nature-END:
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CONSENT JUDGMENT & ORDER
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