Pension Benefit Guaranty Corp. v. Kaye

MEMORANDUM & ORDER Plaintiff Pension Benefit Guaranty Corporation (“PBGC”), as statutory trustee of the Kaye Refining Corporation Defined Benefit Pension Plan (the “Plan”), commenced the abovecaptioned action on September 21, 2023, against Defendant Alan Kaye, asserting claims pursuant to the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1101 et seq. (“ERISA”). Plaintiff alleges that Defendant violated his fiduciary duty of loyalty under 29 U.S.C. §1104(a)(1)(A) and his duty of prudence under 29 U.S.C. §1104(a)(1)(B) by executing multiple transfers of funds from the Plan to an individual who was neither a participant nor beneficiary of the Plan and did not provide any services for the Plan, and in doing so also engaged in transactions prohibited under 29 U.S.C. §§1106(a)(1)(D) and (b)(1). (Compl., Docket Entry No. 1.) On January 12, 2024, Plaintiff moved for default judgment, seeking damages in the amount of $29,000.00 and costs of $175.00. (Pl.’s Mot. for Default J. (“Pl.’s Mot.”), Docket Entry No. 17; Pl.’s Mem. in Supp. of Pl.’s Mot. (“Pl.’s Mem.”), Docket Entry No. 17-1.) For the reasons set forth below, the Court grants Plaintiff’s motion. I. Background a. Factual background Plaintiff is a wholly-owned United States Government corporation, and a federal agency responsible for, among other things, guaranteeing the payment of benefits earned by participants in covered terminated pension plans. See 29 U.S.C. §§1302(a), 1322(a); (Compl. 9). Plaintiff became the statutory trustee¹ of the Plan on October 26, 2020, after the Plan terminated on September 30, 2020.² (Compl. 15.) At all relevant times, the Plan was a pension plan covered under ERISA. 29 U.S.C. §1321; (Compl. 14). Defendant was the owner and chief executive officer (“CEO”) of the Plan’s sponsor, Kaye Refining Corporation, a company that recovered and recycled metals from catalytic converters. (Compl.

11, 13.) At all relevant times, Kaye was a trustee and thus a named fiduciary³ of the Plan, and also had discretionary authority in the management and disposition of the Plan’s assets and administration of the Plan. (Id. 11.) Plaintiff alleges that Defendant authorized and caused the Plan to make seven separate transfers of funds totaling $29,000⁴ to Samantha Kaye, who Plaintiff alleges is not a participant in the Plan and did not perform any services for the Plan. (Id.