On February 28, 2017, the U.S. District Court for the Eastern District of New York denied the Motion for Summary Judgment filed by Defendants John Sipala and Saddle Creek LLC in Kindle v. Dejana, Case No. 14-cv-6784 (SJF)(ARL). The Sipala Defendants argued that their retention of a qualified independent appraiser and review of the appraiser’s report satisfied the fiduciary requirements of the Employee Retirement Income Security Act (ERISA). The Court rejected this argument. Among other things, the Court cited evidence showing the Sipala Defendants did not provide prior appraisal reports to their independent appraiser even though the independent appraiser had requested these reports. Moreover, the Sipala Defendants did not spot a valuation error in their appraiser’s report. Sipala Defendants’ expert witness conceded that the independent appraisal contained a valuation error which reduced the value of the Atrium ESOP’s stock by about $1.7 million. For more information, contact Dan Feinberg at dan@feinbergjackson.com. A copy of the Motion for Summary Judgment Order is here.
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