PADDOCK POOL CONSTRUCTION COMPANY v. Monseur , 23 Ariz. App. 451 ( 1975 )

OPINION

DONOFRIO, Judge.

This is an appeal by Paddock Pool Construction Company from a judgment against it and in favor of Joseph Monseur for the sum of $2,853.25. Monseur had sought certain monies from his former employer, Paddock Pool, and its trustee, American Industries Retirement Co. under Paddock’s deferred profit-sharing plan. The case was tried without a jury, and at the conclusion' of the trial the court made findings of fact and conclusions of law and rendered its judgment against Paddock. The trustee, American Industries Retirement Co., is not a party to this appeal, but has agreed to abide by whatever decision is reached by this Court. Its position is merely as custodian of the funds in question.

We are called upon to determine whether the record contains sufficient evidence on which to support the trial court’s finding that the administrative committee of the Paddock profit-sharing plan did not comply with the terms of the forfeiture of the profit-sharing plan, and acted in bad faith in its determination to forfeit Monseur’s vested interest in the plan.

The facts indicate that Monseur was employed by Paddock as a swimming pool salesman for approximately 12 years prior to the time that he voluntarily quit on December 9, 1971. His reason for leaving Paddock was a disagreement with the management over a newly instituted method of compensating the pool salesmen. Thereafter on December 21, 1971, Monseur became an employee of Master Pools, a competitor of Paddock.

The Paddock profit-sharing plan which was in effect provided for contributions from the employees and the employer, Paddock, to a savings account type of arrangement managed by the Trustee. That portion of the account contributed by Monseur was returned to him by the Trustee of the account after he left Paddock, but the portion contributed by Paddock on behalf of Monseur was declared forfeited. The forfeiture decision was made by the committee set up under the plan to administer it. The committee, which consisted of officers of the corporation and certain employees, found that Monseur forfeited this company-contributed portion of the account due to alleged violation of Article 8A(J)(1) of the plan which stated, in part:

“If a Participant’s employment is terminated for the purpose of engaging in a business . . . which is in direct competition with the Employer in such manner as to threaten economic loss to the Employer as a result of such Participant’s activity, . . . then . any such Participant shall forfeit his entire interest in the trust fund save and except any amounts which may be credited to him ... by reason of his personal contributions. . . . ”

In his findings of fact and conclusions of law the trial judge found that Monseur had not terminated his employment with Paddock for the purpose of engaging in a competitive business, but had voluntarily terminated his employment because of a dispute over a new method of compensation. The trial judge also found that the determination by the administrative committee that Monseur’s account should be forfeited was not made in good faith.

We hold that the record supports the findings and conclusions of the trial court and that they were reasonably made.

We think that forfeiture provisions in a pension and profit-sharing plan such as those in Article 8A(J)(1) should be liberally interpreted in favor of the employee and against the employer. See 60 Am.Jur.2d, Pension and Retirement Funds, Section 75, page 952; Russell v. Princeton Laboratories, Inc., 50 N.J. 30, 231 A.2d 800 (1967). In the instant case the trial court found that Monseur did not leave for the purpose of engaging in competitive employment with Paddock, but it seems he was incidentally offered the job with Master Pools later. In any case, the record indicates that the committee did not determine that he left for the purpose of competing with Paddock, nor did the committee determine that Monseur’s actions were done “in such manner as to threaten economic loss to the employer” as required by Article 8A(J)(1) of the plan. We see no reason to substitute our analysis of the record for that of the trial judge who considered all the evidence and observed the witnesses as they testified at trial, especially where his analysis was reasonably made as was done in the instant case.

Although not necessary for our determination of this matter, we find that the record amply supports the trial court’s finding that the committee’s actions toward Monseur were not made in good faith.

There seemed to be conflict of testimony (or at least confusion) as to 1), when the meeting of the committee was held where the forfeiture was determined; 2), who attended the meeting; and 3), what discussions were held. There was ample evidence to support the trial court’s finding that the purpose of Monseur’s leaving Paddock was because of a dispute with management over a new method of compensation. We also think it important that one of the members of the committee was not given notice of the meeting, nor did he attend; also that no written minutes of the meeting were made. We think that the plain language of the plan required the committee to make. a determination that Monseur left for the purpose of competing with Paddock. The committee seemingly interpreted the plan to mean that any subsequent employment of Monseur with a competitor of Paddock would be enough to cause a forfeiture. We find that this interpretatiqn made by the committee is unreasonable and contrary to the plain language of the plan. The trial court was correct, in light of the record, in finding a lack of good faith exercised by the committee, and the record clearly shows no basis upon which the committee could order Monseur’s interest forfeited.

Affirmed.

OGG, P. J., concurring.