Appeals Court Rules VA Firm Still on the Hook for Plan Shortfall

April 14, 2005 ( - A federal appeals court has refused to overturn a lower court ruling that the nation's insurer of private-sector pension plans was within its rights in pursuing a Virginia couple's assets to help pay the shortfall in their terminated plan.

The US 4 th Circuit Court of Appeals upheld a decision by US District Judge James Spencer of the US District Court for the Eastern District of Virginia that the Pension Benefit Guaranty Corporation (PBGC) properly pursued Donald and Martha Beverley in the courts for the $358,044 to cover the shortfall in the Beverleys’ company pension. Their firm, Don’s Trucking’ had a defined benefit pension plan that was terminated in August 1997 with insufficient assets.

Writing for the appeals court panel, Circuit Judge Roger Gregory found that the couple, the company, and the business that leased property to the company all were liable to the PBGC for the plan’s post-termination unfunded liability.

According to Gregory, the case began when the PBGC sued Donald Beverley, alleging he breached his Employee Retirement Income Security Act Section (ERISA) fiduciary duties in running the plan. The agency got a court order for the $358,044 judgment in April 2001. PBGC then sued the Beverleys, the Beverley Partnership, which leased real estate to Don’s Trucking, and Don’s Trucking, asserting that Don’s Trucking as a contributing plan sponsor was liable to the PBGC under ERISA.

Spencer found that all the defendants were jointly and severally liable to the PBGC and the couple appealed. Spencer said that regardless of whether the PBGC’s underlying purpose was the same in each lawsuit, appearing in the first action in its capacity as plan trustee did not bar the PBGC from appearing in the second action in its corporate capacity, the court said.

The case is PBGC v. Beverley, 4th Cir., No. 04-1371, 4/12/05. The opinion is  here .