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ARAKELIAN v. NATIONAL WESTERN LIFE INS. CO.

October 12, 1990

ROBERT ARAKELIAN, et al., Plaintiffs,
v.
NATIONAL WESTERN LIFE INSURANCE CO., et al., Defendants



The opinion of the court was delivered by: HARRIS

 STANLEY S. HARRIS, UNITED STATES DISTRICT JUDGE

 This matter is before the Court on the motion for summary judgment of the three trustees (trustees) of the National Western Builders, Contractors, and Employees Retirement Trust and Pension Plan (Plan), namely, Andrews, Boswell, and Howard, plaintiffs' opposition, defendant trustees' reply and supplement, plaintiffs' response to the trustees' supplement, and the entire record. The Court grants defendant trustees' motion in part and denies it in part.

 Background

 National Western established a pension plan which was marketed primarily to non-union contractors who worked on projects affected by the Davis-Bacon Act. 40 U.S.C. § 276 et seq. [For a more in-depth background of the Plan, see Arakelian v. National Western Life Insurance Co., 724 F. Supp. 1033 (D.D.C. 1989); Arakelian v. National Western Life Insurance Co., 126 F.R.D. 1 (D.D.C. 1989); Arakelian v. National Western Life Insurance Co., 680 F. Supp. 400 (D.D.C. 1987).] Plaintiffs allege in their complaint that National Western and its three trustees violated the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., in structuring, marketing, investing, and administering the Plan. The complaint names three other defendants who are not important in terms of the motion under consideration herein.

 The trustees previously filed a motion for summary judgment in combination with National Western which was resolved by this Court's October 1987 Memorandum Opinion. See Arakelian, 680 F. Supp. 400 (D.C. Cir. 1987) (granting in part and denying in part defendants' motion). Defendant trustees are interpreting that Opinion in a fashion to argue that the Court should grant summary judgment as to all of plaintiffs' claims against the trustees.

 Discussion

 In the October 1987 Opinion, the Court held that "the trustees are not fiduciaries so far as investment decisions and surrender charges are concerned." Id. at 404. The Court held that the trustees were partially excluded from liability because of the definition of a fiduciary set forth in 29 U.S.C. § 1002(21)(A). Section 1002(21)(A) provides:

 
. . . a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in administration of such plan.

 The Court found that the Plan instrument does not accord the trustees any discretionary authority over investment decisions, inasmuch as the Plan requires the trustees to invest all funds in National Western annuity contracts. In addition, the Plan does not name the trustees as fiduciaries, and the plaintiffs did not produce evidence showing that the trustees benefited financially from their roles. For these reasons, the Court held that the trustees were not liable for certain fiduciary breaches involving surrender charges and investment decisions. *fn1" The Court did not intend to absolve the trustees of all responsibility by that ruling. The Court therefore now addresses each count in the complaint.

 Count One

 Count One alleges that the trustees violated the exclusive purpose rule by investing all of the Plan's assets in group annuity contracts underwritten and issued by National Western. (Complaint para. 23). The Court holds that since the Plan required the investment of all assets in National Western annuities, and the trustees had no discretion as to that decision, they are not liable for violating the exclusive purpose rule. See Bogert, Trusts and Trustees § 555 (2d ed. rev. 1980, Supp. 1988) (stating that when an instrument gives complete or partial management powers to a named fiduciary or trustee, "these provisions ...


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