Bryant v. Matrix Trust Company, LLC
Filing
62
ORDER granting 37 defendant's Renewed Motion to Dismiss the Complaint and Brief In Support. Plaintiff's claims are dismissed with prejudice. Within 14 days of the entry of judgment, defendants may have their costs by filing a bill of costs with the Clerk of the Court. This case is closed, by Chief Judge Philip A. Brimmer on 3/25/19. (sgrim)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Philip A. Brimmer
Civil Action No. 18-cv-00749-PAB-NYW
JEANNE B. BRYANT, in her capacity as court-appointed Independent Fiduciary for
Retirement Security Plan and Trust,
Plaintiff,
v.
MATRIX TRUST COMPANY, LLC (f/k/a MG Trust Company, LLC), a Colorado limited
liability company,
Defendant.
ORDER
This matter comes before the Court on defendant Matrix Trust Company, LLC’s
Renewed Motion to Dismiss the Complaint and Brief in Support [Docket No. 37]. The
Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367.
I.
BACKGROUND
The allegations in plaintiff’s Complaint [Docket No. 1] are to be taken as true in
considering a motion to dismiss. Brown v. Montoya, 662 F.3d 1152, 1162 (10th Cir.
2011). The Court will also consider attached exhibits and documents incorporated into
the complaint by reference. Smith v. United States, 561 F.3d 1090, 1098 (10th Cir.
2009).
This case arises out of misfeasance by a plan trustee. Plaintiff is the courtappointed fiduciary for Retirement Security Plan and Trust (“RSPT”), a trust comprised
of various retirement plans. Docket No. 1 at 2, ¶ 1-2. RSPT’s original named trustee
was Matthew D. Hutcheson (“Hutcheson”). Id. at 3, ¶ 8. RSPT’s sponsor and
administrator was Hutcheson Walker Advisors, LLC (“HWA”) and its third-party
administrator was ASPire Financial Services (“ASPire”). Id., ¶¶ 8, 11, 13. Defendant,
doing business as “MG Trust Company, LLC,” entered into a Custodial Account
Agreement (the “Custodial Agreement”) with HWA and Hutcheson in 2009. Docket No.
1-2. Under the Custodial Agreement, defendant agreed to “take, hold, invest, and
distribute all of the assets of [RSPT] . . . as a non-discretionary, directed custodian.” Id.
at 7. The Custodial Agreement provided for a Designated Representative – here,
ASPire – who would “provide direction to [defendant]” by “provid[ing] [i]nstructions” on
behalf of RSPT. Id. at 8.1 The instructions provided by ASPire could include “plac[ing]
orders for the purchase and sale of securities” and authorizing disbursement of funds
on RSPT’s behalf. Id. The Custodial Agreement provided that defendant “shall be
under no duty to make an investigation with respect to any [i]nstructions received from
[ASPire].” Id. The Custodial Agreement also provides that Hutcheson, as Trustee, “has
the power to delegate trading authorization to [ASPire] and has done so by executing
[the Custodial Agreement].” Id. at 14.
On December 21, 2010, Hutcheson emailed ASPire, instructing it to make a
request to defendant to transfer $275,000 of RSPT assets to an account which later
turned out to be controlled by Hutcheson. Docket No. 1 at 6, ¶ 28. ASPire m ade the
request to defendant. Id., ¶ 29. Upon receipt of the instructions, defendant transferred
1
The Custodial Agreement is signed by “Michael Gottfried” as the Designated
Representative, who signed on behalf of “401k ASP, Inc.” See Docket 1-2 at 6, 17.
Plaintiff does not allege that any other party was the Designated Representative.
2
the funds. Id. On December 23, 2010, Hutcheson instructed ASPire to have defendant
transfer $3,001,000 of RSPT assets to a real estate title company in order to purchase
a bank note. Id., ¶ 30. Again, ASPire did so, and defendant followed the instructions.
Id., ¶ 32. Hutcheson used the $3,276,000 to purchase the bank note f or the benefit of
a company owned or controlled by Hutcheson. Id., ¶ 33. Hutcheson gave a promissory
note to RSPT. Id., ¶ 34. Because the transaction between RSPT and a company
owned or controlled by Hutcheson was a “prohibited transaction,” the United States
Department of Labor began an investigation. Id. at 8, ¶¶ 43-44. The Department of
Labor removed Hutcheson as trustee and appointed plaintif f as his replacement. Id.,
¶ 46. Hutcheson was eventually charged with crimes related to the transfer of funds.
Id., ¶ 47. A jury found Hutcheson guilty of wire fraud. Id., ¶ 49.
On December 30, 2016, plaintiff filed this lawsuit in the District of Idaho. Docket
No. 1. Plaintiff asserts five claims for relief: (1) breach of fiduciary duty under the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.,
to prudently manage RSPT’s assets; (2) breach of fiduciary duty under ERISA to
administer RSPT in accordance with its terms; (3) professional negligence; (4) state law
breach of fiduciary duty; and (5) attorney’s fees and costs. Id. at 9-16, ¶¶ 52-84.
Defendant moved to dismiss under Fed. R. Civ. P. 12(b)(3) and 12(b)(6), arguing that
(1) venue was improper in the District of Idaho and (2) plaintiff failed to state a claim
upon which relief could be granted. Docket No. 10-1. The Idaho court granted the
motion to dismiss in part and denied it in part, concluding that venue was not proper in
Idaho and transferring the case to this Court. Docket No. 30 at 13. T he Idaho court did
3
not reach the question of whether plaintiff had stated a claim under Fed. R. Civ. P.
12(b)(6). Docket No. 27 at 19 n.4 (report and recommendation of magistrate judge).
Defendant subsequently filed a renewed motion to dismiss. Docket No. 37.
Defendant argues that: (1) plaintiff’s claims under ERISA fail because she does not
allege facts that plausibly show that defendant was an ERISA fiduciary with respect to
RSPT; (2) plaintiff’s claim for professional negligence is barred by the statute of
limitations, the economic loss rule, and waiver; and (3) plaintiff’s state law claim for
breach of fiduciary duty is preempted by ERISA or is otherwise barred. Id. at 8-16.
II.
LEGAL STANDARD
To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, a complaint must allege enough factual matter that, taken as true, makes
the plaintiff’s “claim to relief . . . plausible on its face.” Khalik v. United Air Lines, 671
F.3d 1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “[W]here the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged–but it has not shown–that the
pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal
quotation marks and alteration marks omitted); see also Khalik, 671 F.3d at 1190 (“A
plaintiff must nudge [his] claims across the line from conceivable to plausible in order to
survive a motion to dismiss.” (quoting Twombly, 550 U.S. at 570)). If a complaint’s
allegations are “so general that they encompass a wide swath of conduct, much of it
innocent,” then plaintiff has not stated a plausible claim. Khalik, 671 F.3d at 1191
(quotations omitted). Thus, even though modern rules of pleading are somewhat
4
forgiving, “a complaint still must contain either direct or inferential allegations respecting
all the material elements necessary to sustain a recovery under some viable legal
theory.” Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (alteration m arks
omitted ).
III.
ANALYSIS
A.
ERISA Claims
Defendant argues that plaintiff’s ERISA claims fail because she has not plausibly
alleged that defendant is a fiduciary under ERISA with respect to RSPT. Docket No. 37
at 8.
“ERISA designates as fiduciaries not only those persons expressly named by a
plan, but also those persons who exercise control over the management and
administration of the plan and the distribution of its assets [and] individuals who provide
investment advice for a fee or other compensation.” Reich v. Stangl, 73 F.3d 1027,
1029 (10th Cir. 1996) (internal citations and quotations omitted).2 If a person is not a
“named fiduciary” under 29 U.S.C. § 1102(a), he or she may nevertheless be a
functional fiduciary. 29 U.S.C. § 1102(a); Reich, 73 F.3d at 1029. As the statute
explains,
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
2
“Whether a party is an ERISA fiduciary is a mixed question of fact and law.”
David P. Coldesina, D.D.S., P.C. v. Estate of Simper, 407 F.3d 1126, 1131 (10th Cir.
2005). However, when the facts are not in dispute, “a party’s status as an ERISA
fiduciary is purely a question of law.” Hamilton v. Carell, 243 F.3d 992, 997 (6th Cir.
2001) (cited approvingly by Coldesina, 407 F.3d at 1131).
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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 the administration of such plan.
29 U.S.C. § 1002(21)(A). Courts conduct a “functional analysis” to determine whether
an entity is a fiduciary under the statute. Coldesina, 407 F.3d at 1132. “The threshold
question is . . . whether [the person] was acting as a fiduciary (that is, was performing a
fiduciary function) when taking the action subject to complaint.” Pegram v. Herdrich,
530 U.S. 211, 226 (2000).
Plaintiff’s complaint alleges that “[defendant] exercised some degree of authority
or control over the management and disposition of RSPT assets.” Docket No. 1 at 5,
¶ 24. Defendant, however, argues that the allegations in the complaint only state that
defendant was an “asset custodian with possession and custody of certain RSPT
assets,” and that as such it did not have the requisite “authority or control” to be an
ERISA fiduciary. Docket No. 37 at 8.
Although the Tenth Circuit has not addressed whether an asset custodian has
“authority and control,” other circuit courts have. In McLemore v. Regions Bank, 682
F.3d 414, 423 (6th Cir. 2012), the Sixth Circuit concluded that a bank did not qualify as
an ERISA fiduciary because “[c]ustody of plan assets alone cannot establish control
sufficient to confer fiduciary status.” The bank “facilitated” the plan’s third-party
administrator’s “withdrawals and transfers, received . . .deposits for plan accounts, and
held plan assets,” performing the functions of “an ordinary depositary bank.” Id. at 418.
The Sixth Circuit emphasized that the statute requires courts to “focus on the extent of
[the alleged fiduciary’s] control over plan assets, rather than on what [he or she] knew
6
or should have known.” Id. at 423. Because the trustee and the third-party
administrator “maintained the accounts and directed all account activ ity” while the bank
“merely held the funds on deposit,” the Sixth Circuit concluded that the bank did not
have the requisite “control” over plan assets to confer fiduciary status under ERISA. Id.
Ninth Circuit precedent points in the same direction. In IT Corp. v. General
American Life Ins. Co., 107 F.3d 1415, 1419 (9th Cir. 1997), def endant was a thirdparty administrator responsible for processing claims under plaintiff’s ERISA plan and
paying or denying the claims. Defendant also had checkwriting authority. Id. The court
concluded that defendant was not entitled to summary judgment on the issue of
fiduciary status because defendant’s “authority to instruct the plan’s bank to pay money
. . . cannot be reconciled with holding that it is a non-fiduciary as a matter of law.” Id. at
1422. Further, the court concluded that an entity avoids fiduciary responsibility if it
performs “purely ministerial duties,” based on “what [the duties] are” rather than “how
the duties are characterized.” Id. at 1419. Observing that “authority over a plan’s
money is not the same thing as being a depository of the money,” the court contrasted
defendant’s position with that of a bank, which has “no authority or control entitling it to
pay anyone but payees and endorsees on checks.” Id. at 1422 (citing Ariz. State
Carpenters Pension Trust Fund v. Citibank (Ariz.), 96 F.3d 1310, 1317 (9th Cir. 1996)).
Here, the question is whether plaintiff’s complaint alleges sufficient facts about
defendant’s authority and control over plan assets to entitle her to relief. Plaintiff
alleges that defendant served as the plan’s “asset custodian,” who contracted with
HWA and Hutcheson to provide “custodial services” to RSPT through a Custodial
7
Agreement. See Docket No. 1 at 4, ¶¶ 14, 16. The complaint makes various
allegations regarding the discretion exercised by defendant, but those examples are of
a type different from the transfers at issue. Plaintiff alleges that, under the Custodial
Agreement, defendant was to “purchase or sell only securities that comply with
[defendant’s] and/or its affiliate’s policies and procedures relating to acceptable
securities.” Docket No. 1 at 4, ¶ 17. Plaintiff further alleges that defendant would “hold
only those categories of assets mutually agreed to between [RSPT] and [defendant].”
Id., ¶ 20. Plaintiff claims that, as a result, defendant had “some amount of discretionary
authority or control” regarding management of RSPT assets, and “some degree of
authority or control” over the disposition of RSPT assets. Id. at 5, ¶¶ 23-24.
These allegations are all contradicted by the text of the Custodial Agreement,
which a court can consider on a motion to dismiss because plaintiff has attached it to
the complaint. See Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009). The
Custodial Agreement states that “[n]othing in this [a]rticle shall be construed to impose
investment discretion on [defendant] or its affiliates.” See Docket No. 1-2 at 10. This
provision is consistent with the Custodial Agreement as a whole, which provides that
HWA would “control and manage the investment” of the account, except to the extent
that it delegated authority to participants and beneficiaries, investment managers, or
designated representatives (such as ASPire). See id. at 9. The Custodial Agreement
states that defendant had “no responsibility to see that any investment directions
comply with the terms of [RSPT].” See id. Nothing in the Custodial Agreement
indicates that defendant had anything more than ministerial authority to purchase and
8
sell securities. Even if defendant did have investment discretion, however, the case law
is clear that the relevant discretion in determining whether it is an ERISA fiduciary is
discretion to make transfers. See McLemore, 682 F.3d at 423; IT Corp., 107 F.3d at
1422.
The transfers at issue in this case also do not reflect the exercise of any
discretion. Plaintiff alleges that Hutcheson instructed ASPire to have defendant transfer
RSPT assets to an account controlled by Hutcheson. Docket No. 1 at 6, ¶ 28.
Defendant followed the instruction. Id., ¶ 29. Plaintiff also alleges that Hutcheson
instructed ASPire to liquidate RSPT assets and purchase a fixed-income bank note with
the funds raised. Id., ¶ 30. Defendant followed this instruction. Id., ¶ 32. Defendant’s
actions reflect adherence to the Custodial Agreement, which provides that ASPire is
authorized to instruct defendant on HWA’s behalf and that defendant had no duty to
investigate those instructions. See Docket No. 1-2 at 8. While plaintiff says these
provisions are void, see Docket No. 38 at 12-13, that argument holds true only if the
Court assumes that defendant is a fiduciary. Plaintiff provides no authority suggesting
that a custodian such as defendant cannot define its role through a written contract that
disclaims fiduciary status when, in practice, the nature of its duties is consistent with a
lack of control over plan assets.
Applying the fiduciary test, the Court concludes that defendant had no discretion
regarding ASPire’s instructions. The Custodial Agreement is clear that defendant
serves as a “non-discretionary, directed custodian.” See Docket No. 1-2 at 7. The
parties to the Custodial Agreement agreed that defendant could rely on instructions
9
from ASPire and would be under “no duty to make an investigation” of instructions
received from ASPire. See id. at 8. Further, the agreement states that HWA is “solely
responsible for managing the investment of the [a]ccount and for the direction and
supervision of” ASPire. See id. The Custodial Agreement, therefore, establishes that
defendant’s role was merely to hold RSPT’s accounts in custody. This is insufficient to
confer fiduciary status. See McLemore, 682 F.3d at 423 (a bank is not a fiduciary
where the trustee and third-party administrator direct all account activity); IT Corp., 107
F.3d at 1419 (an entity avoids fiduciary responsibility if it performs “purely ministerial
duties”).
Plaintiff argues that guidance issued by the Department of Labor says that a
“directed trustee” has a duty to question, to investigate, and to refuse to follow
directions if it has reason to believe such directions are not consistent with the plan or
ERISA. See Docket No. 38 at 9-10 (citing DOL Advisory Opinion 1992-23A (Oct. 27,
1992) and DOL Field Assistance Bulletin 2004-3 (Dec. 17, 2004)). How ever, as
defendant points out, this guidance applies only if the party is a “directed trustee” in the
first place. A directed trustee is a fiduciary. An ERISA trustee must be “either named in
the trust instrument or in the plan instrument” or “appointed by a person who is a
named fiduciary.” 29 U.S.C. § 1103(a). Neither the Plan Agreement nor the Custodial
Agreement states anywhere that defendant is a “trustee.” See Docket No. 1-1 and 1-2.
Therefore, plaintiff’s argument fails.
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The Court concludes that plaintiff’s complaint fails to plausibly allege that
defendant is a fiduciary under ERISA. Therefore, the Court will grant defendant’s
motion to dismiss with respect to plaintiff’s first two claims.
B.
State Law Claims
1.
Subject Matter Jurisdiction
Before the Court proceeds to plaintiff’s state law claims, the Court must be
satisfied that it has jurisdiction to hear the remaining claims. Plaintiff alleges that the
Court has jurisdiction pursuant to 28 U.S.C. § 1331 and § 1367 (f ederal question
jurisdiction over the ERISA claims and supplemental jurisdiction over the related
claims). Docket No. 1 at 2, ¶ 5. Alternatively, plaintiff alleges that the Court has
jurisdiction pursuant to 28 U.S.C. § 1332 (diversity jurisdiction). Id. at 2, ¶ 6.
Plaintiff’s remaining claims arise under state law. Although the Court may
exercise supplemental jurisdiction over state law claims if there is a jurisdictional basis
for doing so, 28 U.S.C. § 1367(c)(3) provides that a district court “may decline to
exercise supplemental jurisdiction over a claim . . . if . . . the district court has dismissed
all claims over which it has original jurisdiction.” The Tenth Circuit has instructed that,
“if federal claims are dismissed before trial, leaving only issues of state law,” courts
should “decline to exercise pendent jurisdiction . . . absent compelling reasons to the
contrary.” Brooks v. Gaenzle, 614 F.3d 1213, 1229-30 (10th Cir. 2010) (brackets,
internal citations, and internal quotation marks omitted). Since the state law claims are
subject to dismissal without prejudice if federal question jurisdiction was the only basis
for jurisdiction, the Court must satisfy itself that diversity jurisdiction exists over plaintiff’s
11
state-law claims. Section 1332(a)(1) states: “The district courts shall have original
jurisdiction of all civil actions where the matter in controversy exceeds the sum or value
of $75,000, exclusive of interest and costs, and is between [] citizens of different
States.” The complaint states that plaintiff is “a citizen of Tennessee” and that
defendant is “a foreign company incorporated in Colorado with its principal place of
business in Colorado.” Docket No. 1 at 2, ¶¶ 1, 6. T herefore, the Court is satisfied that
it has jurisdiction under 28 U.S.C. § 1332 and proceeds to plaintif f’s state law claims.
2.
Professional Negligence
Plaintiff’s third claim is for professional negligence. Plaintiff alleges that
defendant owed a duty of care to RSPT and that defendant’s breach of that duty
caused damages to RSPT. Docket No. 1 at 15, ¶¶ 75-78. Defendant, in response,
argues that: (1) this claim is barred by the statute of limitations; (2) the claim is barred
by the economic loss rule; and (3) plaintiff waived any claims for negligence. Docket
No. 37 at 11-14.
First, the Court must decide which state’s law applies. Plaintiff originally filed this
case in Idaho, and her complaint alleges that the source of defendant’s professional
duty is Idaho law. Docket No. 1 at 15, ¶ 80. The district court in Idaho found that it did
not have personal jurisdiction over defendant and transferred the case to Colorado
pursuant to 28 U.S.C. § 1406(a). Docket No. 30 at 11-12. In a situation w here the
transferor court lacks personal jurisdiction, “the choice of law rules of the transferee
court apply.” Doering ex rel. Barrett v. Copper Mountain, Inc., 259 F.3d 1202, 1209
(10th Cir. 2001). Therefore, the Court applies Colorado’s choice of law rules. “In
resolving choice of law issues in tort actions, Colorado follows the ‘most significant
12
relationship’ approach of the Restatement (Second) of Conflict of Laws (1971).” Hawks
v. AGRI Sales, Inc., 60 P.3d 714, 715 (Colo. App. 2001) (citing First National Bank v.
Rostek, 514 P.2d 314 (Colo. 1973)). Courts applying this test evaluate where the injury
occurred; where the injury-causing conduct occurred; the residence, place of
incorporation, and place of business of the parties; and where the parties’ relationship
is centered. Restatement (Second) of Conflict of Laws § 145(2).
On review of the complaint and attached exhibits, the Court concludes that
Colorado law applies. The Custodial Agreement states that “[a]ll contributions to, and
payments from, the [a]ccount shall be deemed to take place in . . . Colorado.” See
Docket No. 1-2 at 15. Therefore, the parties to that agreement intended that the
injuries here – loss of RSPT assets – be considered to have occurred in Colorado and
were caused by injury in Colorado. The complaint also states that defendant is
incorporated and has its principal place of business in Colorado. See Docket No. 1 at
2, ¶ 6. Finally, the Custodial Agreement indicates that the agreement “shall be
construed and interpreted according to the laws of . . . Colorado.” See Docket No. 1-2
at 15. Although RSPT was not a party to the Custodial Agreement, plaintiff offers no
evidence or argument based on the Custodial Agreement or anything else that another
state’s law should apply to her state law claims. See Docket No. 38.
“While the statute of limitations is an affirmative defense, when the dates given
in the complaint make clear that the right sued upon has been extinguished, the plaintiff
has the burden of establishing a factual basis for tolling the statute.” Aldrich v.
McCulloch Props., Inc., 627 F.2d 1036, 1041 n.4 (10th Cir. 1980). Under Colorado law ,
13
a tort action for negligence “must be commenced within two years after the cause of
action accrues.” Colo. Rev. Stat. § 13-80-102. This action commenced on December
30, 2016. Docket No. 1. The complaint states that the transactions that allegedly
constituted professional negligence occurred in December 2010. Id. at 6, ¶¶ 29, 32.
Plaintiff argues that the cause of action accrued in 2012, when she was appointed as
fiduciary. Docket No. 1 at 8, ¶ 46; Docket No. 38 at 16. However, as this was more
than two years before the complaint was filed, plaintiff has the burden of establishing a
“factual basis” for tolling the statute. See Aldrich, 627 F.2d at 1041 n.4. Plaintiff states
in her response that she entered into tolling agreements with defendant in the
intervening years, preserving the applicable statute of limitations. Docket No. 38 at 16.
Defendant disputes plaintiff’s summary of the agreements, arguing that more than two
years elapsed while the tolling agreements did not apply. Docket No. 45 at 7-8. 3 As
plaintiff has not offered the text of these agreements in support of her argument, the
Court finds that she has not established a factual basis to support tolling the statute of
limitations. Accordingly, the Court will dismiss her claim for professional negligence as
barred by the statute of limitations.
3
Plaintiff’s complaint does not state a specific date when she was appointed as
fiduciary, only stating that Hutcheson was indicted in April 2012. See Docket No. 1 at 8,
¶ 47. Defendant offers two agreements indicating that the statute of limitations period
was tolled from May 17, 2013 to July 31, 2014, and from March 3, 2016 to the time the
complaint was filed. See Docket No. 45-2 & 45-3. Even giving plaintiff the benefit of
calling the accrual date April 30, 2012, more than a year elapsed before the first tolling
period began, and more than a year elapsed between the expiration of the first tolling
period and the start of the second.
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3.
State Law Breach of Fiduciary Duty
Plaintiff makes a claim for breach of fiduciary duty “under Idaho (and other state)
laws.” Docket No. 1 at 15, ¶ 80. Defendant argues that plaintiff’s failure to plausibly
allege a fiduciary relationship between defendant and RSPT is fatal to her claim and
that the “economic loss rule” separately bars the claim. Docket No. 37 at 16. As
discussed above, the Court applies Colorado law.
“The breach of fiduciary duty cause of action is a tort to remedy economic harm
suffered by one party due to a breach of duties owed in a fiduciary relationship.”
Accident & Injury Med. Specialists, P.C. v. Mintz, 279 P.3d 658, 663 (Colo. 2012).
Here, the Custodial Agreement regulates the relationship between defendant and the
trustee; therefore, defendant claims that the agreement controls the scope of the
parties’ relationship.
In order to maintain a distinction between tort and contract law, the Colorado
Supreme Court has adopted the “economic loss rule.” See Town of Alma v. AZCO
Const., Inc., 10 P.3d 1256, 1262 (Colo. 2000). Under this rule, “a party suffering only
economic loss from the breach of an express or implied contractual duty may not assert
a tort claim for such a breach absent an independent duty of care under tort law.” Id. at
1264. However, under the “special relationships” exception, “some special
relationships by their nature automatically trigger an independent duty of care that
supports a tort action even when the parties have entered into a contractual
relationship.” Id. at 1263. Special relationships exist where there is a “risk of damages
to interests that contract law is not well suited to protect.” A Good Time Rental, LLC v.
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First Am. Title Agency, Inc., 259 P.3d 534, 540 (Colo. App. 2011). Colorado courts
have recognized six types of special relationships: (1) common carrier/passenger, (2)
innkeeper/guest, (3) possessor of land/invited entrant, (4) employer/employee, (5)
parent/child, and (6) hospital/patient. Univ. of Denver v. Whitlock, 744 P.2d 54, 58
(Colo. 1987).
Plaintiff alleges that defendant was a fiduciary under state law and that RSPT
suffered only economic loss. See Docket No. 1 at 15-16, ¶¶ 79-82. As the Custodial
Agreement, a contract, appears to regulate the relationship between defendant an
RSPT, a straightforward application of the economic loss bars plaintiff’s claim unless
she identifies an independent duty of care owed by the defendant under tort law. Town
of Alma, 10 P.3d at 1262. Plaintiff suggests two possible sources for an “independent
duty of care” under tort law not arising from the Custodial Agreement: ERISA and a
“special relationship.” For the reasons discussed in § III.A of this order, the Court
concludes that ERISA does not give rise to a fiduciary duty on behalf of defendant.
Further, the Court declines to extend the special relationship exception to include the
relationship between a trustee and an asset custodian, given that a trustee’s interests
can be adequately protected through either contract law or tort law without a special
relationship.
Given that the complaint does not contain plausible allegations to support
plaintiff’s theory that defendant was a state-law fiduciary, the Court will dismiss her
Fourth Claim.4
4
Plaintiff’s Fifth Claim requests reasonable attorney’s fees for prosecution of the
action under 29 U.S.C. § 1132(g) and Fed. R. Civ. Proc. 54. Docket No. 1 at 16, ¶¶ 8316
IV.
CONCLUSION
For the foregoing reasons, it is
ORDERED that defendant’s Renewed Motion to Dismiss the Complaint and Brief
In Support [Docket No. 37] is GRANTED. It is further
ORDERED that plaintiff’s claims are dismissed with prejudice. It is further
ORDERED that, within 14 days of the entry of judgment, defendants may have
their costs by filing a bill of costs with the Clerk of the Court. It is further
ORDERED that this case is closed.
DATED March 25, 2019.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
Chief United States District Judge
84. “[A] fees claimant must show some degree of success on the merits before a court
may award attorney’s fees under § 1132(g)(1).” Hardt v. Reliance Standard Life Ins.
Co., 560 U.S. 242, 255 (2010). Since plaintif f’s other claims have not survived, this
claim must also be dismissed.
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