Opinion
03-CV-6248T.
August 27, 2004
DECISION and ORDER
INTRODUCTION
For determination are five motions: (1) third-party plaintiff Honeywell International, Inc.'s motion for summary judgment against third-party defendant Purolator Products Company on the basis of a 1976 indemnification agreement (Doc. No. 306); (2) third-party defendant Motor Components, LLC's motion for partial summary judgment dismissing plaintiffs' claims for emotional distress (Doc. No. 411); (3) plaintiffs' motion to amend their complaint to eliminate their promissory estoppel count (Doc. No. 426); (4) plaintiffs' motion for a permanent injunction and for appointment of a special master to determine damages (Doc. No. 402); and (5) third-party defendant Mark IV Industries, Inc.'s motion for reconsideration of this Court's August 7, 2003 Decision and Order granting summary judgment in favor of plaintiffs against Honeywell (Doc. No. 246). For the reasons set forth below: (1) Honeywell's motion for summary judgment against Purolator is granted; (2) Motor Components' motion for partial summary judgment dismissing plaintiffs' claims for emotional distress is granted; (3) plaintiffs' motion to amend their complaint to eliminate their promissory estoppel count is denied; (4) plaintiffs' motion for a permanent injunction and to appoint a special master is denied; and (5) Mark IV's motion for reconsideration is denied as moot.
I. Honeywell's Motion For Summary Judgment Against Purolator
By Decision and Order dated August 11, 2003, this Court found that Honeywell International, Inc. ("Honeywell") is obligated under a 1976 Bendix Corporation Guaranty to provide or cause to be provided certain retiree health insurance and prescription drug benefits to qualified former employees of Facet Enterprises, Inc. ("Facet"). Honeywell now moves for summary judgment against Purolator Products Company ("Purolator"), claiming that under a 1976 indemnification agreement Purolator is obligated to reimburse Honeywell for all payments made pursuant to the 1976 Bendix Guaranty. The parties do not dispute that Facet was responsible for reimbursing Bendix for any payments made under the 1976 Guaranty. However, Purolator argues that it is not responsible for Facet's obligations under the 1976 Agreement, and that Honeywell's motion for summary judgment is premature because numerous issues of material fact preclude summary judgment at this time.
A. Background
1. The 1976 Agreement
Prior to 1976, Bendix owned three manufacturing divisions located in Madison Heights, Michigan, Detroit, Michigan and Elmira, New York. On April 1, 1976, in light of a Federal Trade Commission ("FTC") anti-trust claim lodged against it, Bendix divested itself of these three manufacturing divisions, and transferred them to a newly-formed spin-off corporation, named Facet Enterprises, Inc. ("Facet"). Many of the employees of these divisions expressed fear that their accumulated retirement benefits from Bendix would be in jeopardy because of the potential instability of the new corporation, and threatened to take early retirement in order to safeguard their retirement benefits. To assuage the employees' fears, Bendix made a formal guaranty ("Guaranty") to the employees that it would accept responsibility for providing a certain level of health insurance and pension benefits to certain eligible employees, should Facet fail to do so.
Prior to the effective date of the Guaranty, Bendix, seeking to limit its liability under the Guaranty, entered into an indemnification agreement with Facet whereby Facet would reimburse Bendix for any monies expended pursuant to the Guaranty ("1976 Agreement"). The 1976 Agreement states, in relevant part:
If Bendix makes, or causes to be made, any payments pursuant to the Guaranty . . ., Facet will reimburse Bendix for such payments and for any and all expenses incurred in making such payments.
¶ 1, 1976 Agreement, Appendix to Purolator Products Company's Response to Honeywell's Statement of Material Facts, Ex. E (Doc. No. 334).
The 1976 Agreement also contains a non-assignment clause which states:
This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns; provided, however, that Facet may not assign its obligations hereunder without the prior written consent of Bendix.
¶ 2, 1976 Agreement, Appendix to Purolator Products Company's Response to Honeywell's Statement of Material Facts, Ex. E (Doc. No. 334).2. The 1979 Agreement
In 1979, Bendix and Facet entered into a separate agreement in order to resolve several disputes concerning, inter alia, Facet's responsibility to fund certain pension and insurance obligations owed to former employees of Bendix ("1979 Agreement"). The 1979 agreement was in satisfaction of litigation initiated by Facet against Bendix in Delaware State Court. In that 58-page document, the 1976 Agreement is referenced only once:
Facet hereby (a) reaffirms, accepts the validity of and covenants that it has performed or will perform (and cause any Facet subsidiary which is a party to perform) in accordance with their respective terms and all agreements listed in Exhibit VII attached hereto entered into prior to April 1, 1976 between Facet (or a Facet subsidiary) and Bendix (or a Bendix subsidiary), including without limitation the indemnity agreement dated February 16, 1976 relating to Bendix' guarantee of certain pension benefits and insurance premium payments, and (b) agrees not to challenge the validity of any such agreements and to use its best efforts to defend (and to assist Bendix, if either is a party, in defending) all of such agreements from attack by any person. . . .
Section 7.02, 1979 Agreement, Appendix to Purolator Products Company's Response to Honeywell's Statement of Material Facts, Ex. I (Doc. No. 334).
The 1979 Agreement also contained a non-assignment clause, which is a less restrictive prohibition on assignment than is contained in the 1976 Agreement. It provides that "a successor in interest by merger, by operation of law, or assignment, purchase or other form of transfer of substantially all the business of a party shall acquire all interest of such party." Section 9.02, 1979 Agreement, Appendix to Purolator Products Company's Response to Honeywell's Statement of Material Facts, Ex. I (Doc. No. 334).
Honeywell alleges that Purolator, as successor to Facet, previously acknowledged its indemnification obligation under the 1976 and 1979 Agreements in filings with the Securities and Exchange Commission ("SEC") made in 1993 and 1994. Honeywell also alleges that Purolator previously honored its indemnification obligation under the 1976 and 1979 Agreements by defending Honeywell's predecessor, Allied Signal, against a suit brought pursuant to the Guaranty in 1993.
3. The Present Controversy
By Stipulation filed August 25, 2003, Purolator was joined as a third-party defendant to this action. The stipulation provides that "[n]othing in this Stipulation shall be construed as an admission by Mark IV, ArvinMeritor or Purolator as to the merits of the Third-Party Complaint." (Stipulation, Doc. No. 260, p. 3).
According to Purolator, there were two conditions to the execution of the Stipulation: (1) that it not be construed as an admission (as is set forth in the Stipulation); and (2) that it be allowed adequate time to complete discovery. The second condition does not appear in the text of the stipulation, however, there is a provision by which Honeywell and Purolator were to meet to discuss what discovery Purolator needed in order to support its defenses. According to Purolator, Honeywell backed out of this meeting at the last minute and has yet to meet with Purolator. Nonetheless, the Court granted Purolator several extensions to conduct additional discovery. First, after initial argument on this motion on November 24, 2003, the Court withheld making its decision for six months so that Purolator could conduct further discovery. Upon expiration of the six months, the parties submitted to the Court supplemental materials covering the additional discovery and re-argument was conducted on June 9, 2004. At a conference following re-argument, Purolator was granted an additional two-week extension to review "newly found" documents that it claimed related to the instant motion. Purolator timely reported its findings, and Honeywell responded. The Court reviewed the latest supplemental submissions, but finds that they contribute little to the arguments previously submitted to the Court.
Purolator's Answer to Honeywell's Third-Party Complaint was filed on September 25, 2003. Just eight days later, on October 3, 2003, Honeywell filed this motion for summary judgment against Purolator.
B. Discussion
Honeywell moves for summary judgment against Purolator on the basis of the indemnity aspect of the 1976 Agreement, arguing that Purolator's obligations under that contract are clear and unambiguous. Purolator argues that it owes no obligation to Honeywell under the 1976 Agreement because it is not a successor to Facet, and if it ever owed an obligation to indemnify, it was effectively assigned to Motor Components. In any event, Purolator maintains that numerous genuine issues of material fact exist, and that summary judgment at this time is inappropriate. Specifically, it identifies the following issues of material fact which preclude the grant of summary judgment: (1) the "legality" of the 1976 Agreement; (2) whether Bendix "coerced" Facet into signing the 1976 Agreement; (3) whether Bendix "defrauded" Facet with respect to the 1976 Agreement; (4) whether the 1976 Agreement was supported by adequate consideration; (5) whether Purolator is a "successor" with respect to the 1976 Agreement; (6) whether Bendix's consent was necessary for the transfer of liabilities, including the 1976 and 1979 Agreements, to Motor Components and Facet Holding; (7) if consent is necessary, whether non-consent would "void" the assignment or instead give rise to a claim for damages; and (8) discovery is not yet complete.
Purolator identified two additional issues of material fact which by virtue of this Court's Decision and Order dated November 25, 2003, are now immaterial: (1) whether Honeywell has made any payments that would require reimbursement; and (2) whether Honeywell can seek indemnification for actions which violate a Court order and therefore are in contempt of Court.
Rule 56 of the Federal Rules of Civil Procedure provides that a party is entitled to summary judgment as a matter of law only where, "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact. . . ." F.R.C.P. 56(c) (2003). The party seeking summary judgment bears the burden of demonstrating that no genuine issue of material fact exists, and in making the decision the court must draw all reasonable inferences in favor of the party against whom summary judgment is sought. Ford v. Reynolds, 316 F.3d 351, 354 (2d Cir. 2003) (citing Marvel Characters v. Simon, 310 F.3d 280, 285-86 (2d Cir. 2002)). "Summary judgment is improper if there is any evidence in the record that could reasonably support a jury's verdict for the non-moving party." Id. 1. Choice of Law
While this action is before the Court by virtue of federal question jurisdiction (plaintiffs' LMRA and ERISA claims), the present motion requires application of state contractual law. Honeywell invites the Court to apply Michigan choice of law rules in determining the proper state law to apply, while Purolator insists that the New York State choice of law rules should govern.
Generally, in a diversity case the applicable state law is determined by reference to the forum state's choice of law rules.Klaxon Co. v. Stentor Electric Manufacturing Company, 313 U.S. 487, 496 (1941). However, where a case has been transferred pursuant to 28 U.S.C. § 1404(a), the transferor forum's choice of law rules determine the appropriate state law to apply. Ferens v. John Deere Company, 494 U.S. 516 (1990); Sheldon v. PHH Corporation, 135 F.3d 848, 852 (2d Cir. 1998).
By Decision and Order filed May 8, 2003, Judge Lawrence Zatkoff of the United States District Court for the Eastern District of Michigan determined that, for the convenience of the parties and witnesses and in the interest of justice, the instant action should be transferred to the Western District of New York pursuant to 28 U.S.C. § 1404(a). (Doc. No. 150, pp. 28 35). Accordingly, this Court is bound to apply Michigan State law in determining the present motion.
Under Michigan's choice of law rules, a court is required to "balance the expectations of a party to a contract with the interests of the states involved to determine which state's laws to apply." Equitable Life Assurance Society of the United States v. Poe, 143 F.3d 1013, 1016 (6th Cir. 1998). In making that determination, the court should consider the specific facts of the case, including: the place of contracting; the place of negotiation of the contract; the place of performance; the location and the subject matter of the contract; and the place of incorporation of the disputing businesses. Mill's Pride, Inc. v. Continental Insurance Company, 300 F.3d 701, 705-706 (6th Cir. 2002). The applicable choice of law rule is that of the state with the most significant relationship to the dispute. Id. at 708.
I find that the laws of the State of Michigan should govern the present contract dispute. First, the 1976 Agreement was negotiated and executed in Michigan. Second, Bendix's principal place of business was located in Michigan. Third, the subject matter of the contract dealt with a promise to be performed in Michigan, namely the 1976 Guaranty. Therefore, Michigan state contractual law will govern the determination of Honeywell's motion for summary judgment against Purolator.
2. Purolator As Successor to Facet
Purolator first asserts that it is not responsible for Facet's obligations under the 1976 Agreement because it is not a successor to Facet. However, its corporate history and previous assumption of duties under the 1976 Agreement belie this assertion.
Facet's transition into the corporation now known as Purolator Products Company is complex. As its history is presented by Purolator, Facet was created in 1976 after Bendix spun-off certain divisions, including its motor components division. In February of 1987, Facet entered into a stock purchase agreement with Purolator Carrier Corporation for the purchase of Purolator Products, Inc., which became a wholly-owned subsidiary of Facet. At the same time, Facet created a second wholly-owned subsidiary named Facet Automotive Filter Company. In May, 1988, Facet (and its two wholly-owned subsidiaries) were acquired by Pennzoil Corporation by tender offer, and became a wholly-owned subsidiary of Pennzoil. In August 1989, Facet Automotive Filter Company merged into Purolator Products, Inc., leaving Facet with only one wholly-owned subsidiary remaining — Purolator Products, Inc. On November 13, 1989, Facet legally changed its name to Purolator Products Company ("Purolator") and it's only wholly-owned subsidiary, Purolator Products, Inc., changed its name to Purolator Products, NA, Inc. In 1992 Purolator (formerly Facet) became publicly traded. In 1994, Mark IV Acquisitions (a wholly-owned subsidiary of Mark IV Industries) purchased all of Purolator's outstanding stock, thus resulting in Purolator becoming a wholly-owned subsidiary of Mark IV Acquisitions. On December 23, 1998, Purolator formed a second wholly-owned subsidiary named Facet Holding Company, and on January 28, 1999, it formed a third whollyowned subsidiary named Motor Components. At the same time, several transfers occurred which resulted in Motor Components acquiring all the assets of Purolator Products, NA, Inc., and Facet Holding Company acquiring all membership interests in Motor Components. Thus, Purolator owned only one wholly-owned subsidiary — Facet Holding Company, which owned all the membership interest in Motor Components, which in turn, owned all the assets of Purolator Products, NA, Inc.
On February 16, 1999, Purolator transferred all its stock in Facet Holding Company to Mark IV Industries and on February 26, 1999, Mark IV transferred all its stock in Purolator to Arvin Industries. On July 7, 2000, Arvin Industries merged into ArvinMeritor, Inc. and that entity now owns all the stock in Purolator.
Purolator attempts to portray itself as a corporation, which after a long and complicated metamorphosis, shed any identity with Facet. However, its history demonstrates that it is still an independent entity and successor to Facet's obligations. Although Purolator sold many, if not most, of its assets once owned by the corporation while it was known as Facet, it never divested itself of Facet's obligations. Thus, since Purolator is the successor in interest to Facet and because (as explained below), Purolator was never relieved of Facet's obligations under the 1976 Agreement, Purolator is liable for monies expended by Honeywell under the 1976 Guaranty.
3. Purolator's Purported Assignment of Liability Under the 1976 Agreement to Motor Components
Purolator argues that even if it was once responsible for Facet's obligations under the 1976 Agreement, it disposed of those obligations either: (1) by transferring the assets once owned by Facet to Motor Components, since the 1976 Agreement liability "follows" those assets; or (2) executing a 1999 Assignment and Assumption Agreement with Motor Components. However, Honeywell argues that Purolator's purported assignment of Facet's obligations under the 1976 Agreement to Motor Components in 1999 is invalid because it never obtained Bendix's consent to the assignment. Honeywell also contends that even if the 1999 assignment was valid, Purolator, as successor to Facet, could not completely relieve itself of those obligations by simply assigning them to a third party.
First, Purolator argues that it is not responsible for Facet's obligations under the 1976 agreement because those obligations would only attach to those core assets which it previously owned and which have since been transferred. That argument is without merit. Facet's promise to indemnify Bendix for any monies it may have to expend under the 1976 Guarantee did not attach to a certain body or inventory of tangible assets. The assets did not make the guarantee — the corporation owning those assets made the guarantee. Purolator (as explained above) notwithstanding the complicated history of ownership succession, is the successor to Facet and responsible for its obligations with reference to the 1976 agreement.
Second, under Michigan law, where a contract contains a provision under which the obligor must first obtain the beneficiary's consent prior to assignment of its obligations under that contract to a third party, renders such an assignment invalid absent the beneficiary's consent. Hy King Associates, INc. v. Versatech Manufacturing Industries, Inc., 826 F. Supp. 231, 238-39 (E.D.Mich. 1993).
The 1976 Agreement clearly provides that, "Facet may not assign its obligations hereunder without the prior written consent of Bendix." 1976 Agreement, ¶ 2, Appendix to Purolator Products Company's Response to Honeywell's Statement of Facts Not In Dispute (Doc. No. 334). The contract unambiguously provides that in order for Facet to effect a valid assignment of its obligations under the 1976 Agreement, it would first need to obtain Bendix's consent. It is undisputed that no such consent was offered by Bendix or its successors, and thus not given. As such, any attempt by Purolator, as successor to Facet, to assign its obligations under the 1976 Agreement is invalid.
Moreover, it is well-established within Michigan law that "a party to a contract cannot relieve itself of its obligations in the contract by assigning the contract to a third party."Daenzer v. Wayland Ford, Inc., 210 F.R.D. 202, 206 (W.D.Mich. 2002). Unless the obligee agrees otherwise, a delegation of the duties under a contract does not discharge any duty or liability of the delegating obligor. Armbruster v. K-H Corporation, 206 F.Supp. 2d 870, 885 (E.D.Mich. 2002). Again, the parties do not dispute that neither Bendix nor its successors agreed to the assignment of Facet's duties under the 1976 Agreement. Therefore, any attempted assignment of those duties is invalid.
Lastly, the 1979 Agreement does not act as a novation of Facet's obligations under the 1976 Agreement. Under Michigan law there are four elements to a valid novation: (1) parties capable of contracting; (2) a valid obligation to be displaced; (3) the consent of all parties to the substitution based upon sufficient consideration; and (4) the extinction of an old obligation and the creation of a valid new one. Macklin v. Brown, 111 Mich.App. 110 (1981). The 1979 Agreement references the 1976 Agreement only once, and only to reaffirm Facet's obligations under that contract. As such, the 1979 Agreement does not extinguish the rights and obligations outlined in the 1976 Agreement, and therefore cannot stand as a novation of that contract. 4. Purolator's Enforceability Defenses
Purolator next asserts four enforceability defenses in opposition to Honeywell's motion for summary judgment, claiming that the 1976 Agreement is invalid and unenforceable because it is: (1) illegal since it is on contravention of the 1974 FTC Order prohibiting Bendix from doing anything that would impair Facet's ability to compete with Bendix; (2) the product of coercion, because Facet executed it while under the dominion and complete control of Bendix, its parent corporation at that time; (3) the product of fraud, because Bendix was "uncooperative in providing Facet with information prior to the execution of the 1976 Agreement", (Purolator Products' Brief in Opposition to Honeywell's Motion for Summary Judgment under the February 16, 1976 Agreement, Doc. No. 329, p. 15); and (4) not supported by adequate consideration because Bendix was under a pre-existing duty to provide the Guaranty. Even with the benefit of hindsight, none of these arguments creates a genuine issue of material fact sufficient to defeat Honeywell's present motion.
Facet expressly waived several of its supporting arguments when it executed the 1979 Agreement. Specifically, in the 1979 Agreement Facet promised not to challenge the validity of the 1976 Agreement. Section 7.02(b), 1979 Agreement, Appendix to Purolator Products Company's Response to Honeywell's Statement of Material Facts, Ex. I (Doc. No. 334). Also, by reaffirming the 1976 Agreement in § 5.02 of the 1979 Agreement, Facet eliminated many of the circumstances Purolator claims contributed to the 1976 Agreement's unenforceability. Finally, the Guaranty was executed on April 1, 1976 — well after the 1976 Agreement was executed. Thus, at the time the 1976 Agreement was executed on February 16, 1976, Bendix was under no legal obligation to provide the Guaranty. In fact, the 1976 Agreement explicitly recognized the benefit Facet would receive from the 1976 Guaranty, stating, "the Guaranty and the Letter Guaranty are beneficial to Facet." 1976 Agreement, p. 1, Appendix to Purolator Products Company's Response to Honeywell's Statement of Material Facts, Ex. E (Doc. No. 334). Moreover, Purolator offers no evidence, aside from bald assertions, that Facet received no consideration for the obligations it assumed by executing the 1976 Agreement. As such, Purolator's claim that the 1976 Agreement is unenforceable is without merit and cannot defeat Honeywell's motion for summary judgment.
5. The Indemnification Provision and ERISA
Lastly, Purolator argues that the 1976 Agreement is unenforceable because it violates ERISA. By Decision and Order dated December 11, 2003, this Court found that the 1976 Guaranty constitutes a "welfare benefit plan" within the meaning of ERISA and granted summary judgment in favor of plaintiffs on their Count 2 ERISA claim. (Doc. No. 378). In light of that Decision, Purolator now asserts that the indemnification agreement contained in the 1976 Agreement violates § 410 of ERISA.
Purolator also argues that the 1979 Agreement as well is unenforceable because it violates ERISA. However, this argument is inapplicable to the current controversy because the 1976 Agreement is the operative document, and the basis for Honeywell's present motion for summary judgment.
Section 410(a) of ERISA provides, in relevant part "any provision in an agreement or instrument which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty under this part shall be void as against public policy." 29 U.S.C. § 1110(a). Purolator argues that this section prohibits Bendix, as fiduciary of the welfare benefit plan established by the 1976 Guaranty, from relieving itself of liability under that Guaranty through the 1976 Agreement.
However, § 410(b) expressly allows a plan or a fiduciary to purchase insurance to protect itself against liability. 29 U.S.C. § 1110(b). In addition, 29 C.F.R. § 2905.75-4, which codifies a Department of Labor Interpretive Bulletin concerning indemnification of fiduciaries, provides that, "[i]ndemnification provisions which leave the fiduciary fully responsible and liable, but merely permit another party to satisfy any liability incurred by the fiduciary in the same manner as insurance purchased under section 410(b)(3), are . . . not void under section 410(a)." 29 C.F.R. § 2905.75-4 (2004). Similarly, the Second Circuit Court of Appeals interprets § 410 to allow a plan to indemnify a fiduciary. State Street Bank and Trust Co. v. Salovaara, 326 F.3d 130, 137-38 (2d Cir. 2003).
I find that the 1976 Agreement in which Facet obligates itself to reimburse Bendix for any sums expended as a result of the 1976 Guaranty is similar to a permitted insurance policy. ERISA itself expressly permits a fiduciary to purchase insurance to protect against liability. Also, the Department of Labor and the Second Circuit Court of Appeals support the proposition that a plan may indemnify a fiduciary for liability under an ERISA-protected welfare benefit plan. Accordingly, I find that the 1976 Agreement is not void and not in violation of ERISA.
6. Breach and Damages
Motor Components and BAM concur in Purolator's opposition to Honeywell's motion for summary judgment. Nonetheless, they file a separate brief to contest the extent of damages, if any, to which Honeywell is entitled under the 1976 Agreement. The 1976 Agreement provides that Facet will reimburse Bendix if Bendix "makes, or causes to be made, any payments pursuant to the Guaranty or Letter Guaranty. . . ." (Appendix to Purolator Products Company's Response to Honeywell's Statement of Material Facts, Doc. No. 334, Ex. E). Honeywell contends that if successful in enforcing their rights under the 1976 Agreement, they are entitled to damages incurred as a result of: (1) complying with this Court's previous preliminary injunction, including administrative fees; (2) defending against plaintiff's LMRA and ERISA claims; and (3) enforcing their rights under the 1976 Agreement. Motor Components and BAM insist that the terms of the 1976 Agreement limit Honeywell's recovery, if any, only to those damages incurred in complying with the Court's previously issued preliminary injunction and related administrative fees.
Under Michigan law, in the absence of an express and unequivocal contract to the contrary, each party is responsible for its own attorneys' fees, regardless of the outcome of the litigation. Redfern v. Wayne County, 146 Mich. App. 8, 19 (1985). Indemnity contracts are to be strictly construed against the drafter and indemnitee. Skinner v. D-M-E Corp., 134 Mich App. 580, 585 (1983).
Here, the plain language of the 1976 Agreement does not provide that Facet is obligated to pay any attorneys' fees Bendix incurred as a result of payments it makes because of the Guaranty. Honeywell argues that language in the 1979 Agreement provides that attorneys' fees are covered by the 1976 Agreement. However, Honeywell presently moves for summary judgment only on the 1976 Agreement. As such, Honeywell is not entitled to recover attorneys' fees for: (1) defending against plaintiffs' LMRA and ERISA claims; or (2) enforcing its rights under the 1976 Agreement.
II. Motor Components' Motion for Summary Judgment Seeking to Dismiss Plaintiffs' Request for Damages for Emotional Distress
In bringing the instant action to assert their rights under ERISA §§ 502(a)(1)(B) and 502(a)(3) and LMRA § 301, plaintiffs allege that they are entitled to monetary damages for "mental distress and anguish suffered by class members" as a result of the termination of their retiree health and life insurance benefits. (Plaintiffs' First Amended Complaint, Doc. No. 3, p. 11). Third-party defendant Motor Components moves for summary judgment dismissing this request for relief by plaintiffs, arguing that such damages are unavailable under ERISA and LMRA. Third-party defendants Mark IV and ArvinMeritor concur in Motor Components' motion. (Doc. No. 427).
Pursuant to Federal Rule of Civil Procedure 14(a) any "third-party defendant may assert against the plaintiff any defenses which the third-party plaintiff has to the plaintiff's claim." Fed.R.Civ.Pro. 14(a).
Plaintiffs bring this action pursuant to, inter alia, § 502(a)(1)(B) of ERISA, which enables a participant or a beneficiary to "recover benefits due him under the terms of his plan, to enforce rights under the terms of his plan, or to clarify his rights to future benefits under his plan." 29 U.S.C. § 1132(a)(1)(B). It is well-established that damages for emotional distress are unavailable under this section. Lupo v. Human Affairs International, Inc., 28 F.3d 269, 272 (2d Cir. 1994).
Plaintiff's complaint also invokes § 502(a)(3), which allows a participant, beneficiary or fiduciary to:
(A) enjoin any act or practice which violates any provision of [ERISA], or (B) obtain any other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of [ERISA] or the terms of the plan29 U.S.C. § 1132(a)(3).
While plaintiffs contend that "other appropriate equitable relief" may include monetary damages for emotional distress, the Second Circuit Court of Appeals has expressly held that no claim for monetary damages for emotional distress may lie under § 502(a)(3) of ERISA. Lee v. Burkhart, 991 F.2d 1004, 1011 (2d Cir. 1993) ("the plain language of the statute does not provide for monetary relief and a review of the legisaltive history confirms that Congress did not contemplate that ["other appropriate equitable relief'] would include an award of money damages).
Plaintiffs are also unable to recover a monetary award for emotional distress under § 301 of the LMRA. Generally, punitive damages and recovery for emotional distress are unavailable under LMRA. Monaco v. Smith, 2004 WL 203009 at *5 (S.D.N.Y. 2004). However, a court may invoke state law in order to complement § 301 and best effectuate federal policy. Textile Workers Union v. Lincoln Mills of Alabama, 353 U.S. 448, 457 (1957). Nonetheless, New York State law does not allow a plaintiff to recover damages for emotional distress resulting from breach of contract.Wehringer v. Standard Security Life Insurance Company of New York, 57 N.Y.2d 757, 759 (1982). Moreover, allowing a plaintiff who pleads violations of both ERISA and LMRA to recover for emotional distress under the LMRA would defeat the precise statutory construction of ERISA which excludes recovery for emotional distress.
While plaintiffs present a compelling argument that the unique facts of the instant action warrant the recovery of monetary damages for emotional distress under their ERISA and LMRA claims, the statutory construction of the relevant statutes does not provide such a remedy. As such, I find that plaintiffs are not entitled to damages for emotional stress under their ERISA and LMRA claims. Therefore, Motor Components' motion for summary judgment in its favor, dismissing plaintiff's request for relief in the form of monetary damages for mental distress is granted.
III. Plaintiffs' Motion to Amend Their Complaint to Eliminate Their Promissory Estoppel Claim
Plaintiffs seek leave of this Court to amend their complaint to eliminate Count III, which seeks relief on the basis of promissory estoppel. They contend that such relief should be granted without prejudice so that they may reassert such claims should the Court's previous decisions granting summary judgment in their favor be overturned. However, since the Second Circuit Court of Appeals affirmed this Court's previous grant of summary judgment in plaintiffs' favor on their contract claim, there is no need for plaintiffs to reassert their promissory estoppel claim at a later time. See Laforest v. Former Clean Air Holding Company, Inc., 376 F.3d 48 (2d Cir. 2004). Thus, in order to avoid any prejudice to defendants that may result from a re-filing of plaintiffs' promissory estoppel claim, that claim is hereby dismissed with prejudice pursuant to Federal Rule of Civil Procedure 41(a). IV. Plaintiffs' Motion for Permanent Injunction and for Appointment of a Special Master
By Decision and Order dated September 19, 2003, this Court issued a preliminary injunction requiring Honeywell to provide or cause to be provided to plaintiffs certain retiree health insurance benefits and prescription drug coverage. (Doc. No. 283). On October 1, 2003, Joseph Costello, Esq., Honeywell's attorney, filed an affidavit informing the Court that Honeywell complied with that Order. Since that time, Honeywell has continued to honor Bendix's obligations under the 1976 Guaranty, and now acknowledges its legal obligation to do so. Nonetheless, plaintiffs move the Court for an order converting the September 19, 2003 preliminary injunction into a permanent injunction, and for appointment of a special master to determine damages.
By virtue of the Second Circuit Court of Appeals's decision issued July 15, 2004, plaintiff's application for a permanent injunction is rendered moot. While the Second Circuit found that this Court did not err when granting the preliminary injunction, it did remand the case for clarification and modification of that injunction. Id. at 60. Plaintiffs have yet to request such relief from this Court, and the preliminary injunction can not be converted into a permanent injunction until the requirements of the mandate are satisfied, specifically determining precisely who and what is covered by the Guaranty. Id. As such, plaintiffs' request for a permanent injunction is denied.
Consequently, plaintiffs are not entitled to the appointment of a special master to determine the issue of damages. Since plaintiffs condition their request for a special master on the issuance of a permanent injunction, it follows that since this Court can not issue a permanent injunction on the status of an incomplete record, a special master can not be appointed as well. Moreover, Federal Rule of Civil Procedure 53, which allows for the appointment of a special master, provides that, "a court may appoint a special master only to perform duties consented to by the parties." FED.R.CIV.PRO. 53(a)(1)(A). Since Honeywell objects to the appointment of a special master, such relief is inappropriate. Accordingly, plaintiffs' motion for the appointment of a special master also is denied.
V. Mark IV's Motion for Reconsideration
Lastly, Third-Party defendants Mark IV Industries, Inc. ("Mark IV") and ArvinMeritor, Inc. ("ArvinMeritor") bring a motion for reconsideration of this Court's August 7, 2003 Decision and Order, granting summary judgment in favor of plaintiffs on their contract law claim. However, the decision of the Second Circuit Court of Appeals, issued July 15, 2004, affirming this Court's August 7, 2003 grant of summary judgment in plaintiffs' favor renders the motion for reconsideration moot. Laforest 376 F.3d 48 (2d Cir. 2004). Accordingly, the motion brought by Mark IV and ArvinMeritor for reconsideration is denied.
CONCLUSION
For the reasons set forth above, I find that despite a series of corporate maneuvers, Purolator is the successor to Facet, and is therefore obligated, as set forth in the 1976 Agreement, to indemnify Honeywell for expenditures made pursuant to the Guaranty. I further find that by the terms of the 1976 Agreement, Purolator is liable to reimburse Honeywell only for expenditures made in fulfilling the promises made in the Guaranty and not for attorneys' fees associated with defending against plaintiffs' claims or in enforcing its rights under the 1976 Agreement. Accordingly, Honeywell's motion for summary judgment is granted. In addition, Motor Components' motion for partial summary judgment dismissing plaintiff's claims for emotional distress is granted; plaintiffs' motion to amend their complaint to eliminate their promissory estoppel counts is denied, but those counts are dismissed with prejudice pursuant to Federal Rule of Civil Procedure 41(a); plaintiffs' motion for a preliminary injunction and to appoint a special master is denied; and Mark IV's and ArvinMeritor's motion for reconsideration of this Court's August 7, 2003 grant of summary judgment in favor of plaintiffs is denied.ALL OF THE ABOVE IS SO ORDERED.