Schoen v. Health Management Associates, Inc.

Filing 41

OPINION AND ORDER granting in part and denying in part 27 Motion to Dismiss. The motion is granted as to Count III, and otherwise denied. Signed by Judge John E. Steele on 8/25/2015. (RKR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
WILLIAM J. SCHOEN,
Plaintiff,
v.

Case No: 2:14-cv-411-FtM-29CM

HEALTH
MANAGEMENT
ASSOCIATES, INC., a Delaware
corporation,
Defendant.

OPINION AND ORDER
This matter comes before the Court on review of defendant’s
Motion to Dismiss Plaintiff's Amended Complaint (Doc. #27) filed
on September 22, 2014.

Plaintiff filed a Response in Opposition

(Doc. #28) on October 13, 2014.

With leave of Court, defendant

also filed a Reply (Doc. #29) and plaintiff filed a Sur-Reply (Doc.
#33).
I.
Under Federal Rule of Civil Procedure 8(a)(2), a Complaint
must contain a “short and plain statement of the claim showing
that the pleader is entitled to relief.”

Fed. R. Civ. P. 8(a)(2).

This obligation “requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(citation
omitted).

To survive dismissal, the factual allegations must be

“plausible” and “must be enough to raise a right to relief above
the speculative level.”

Id. at 555.

See also Edwards v. Prime

Inc., 602 F.3d 1276, 1291 (11th Cir. 2010).
than

an

unadorned,

This requires “more

the-defendant-unlawfully-harmed-me

accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(citations
omitted).
In deciding a Rule 12(b)(6) motion to dismiss, the Court must
accept all factual allegations in a complaint as true and take
them in the light most favorable to plaintiff, Erickson v. Pardus,
551 U.S. 89 (2007), but “[l]egal conclusions without adequate
factual support are entitled to no assumption of truth,”
v.

Berzain,

omitted).

654

F.3d

1148,

1153

(11th

Cir.

Mamani

2011)(citations

“Threadbare recitals of the elements of a cause of

action, supported by mere conclusory statements, do not suffice.”
Iqbal, 556 U.S. at 678.
consistent

with

a

facially plausible.”
1337

(11th

omitted).

Cir.

“Factual allegations that are merely

defendant’s

liability

fall

short

of

being

Chaparro v. Carnival Corp., 693 F.3d 1333,

2012)(internal

quotation

marks

and

citations

Thus, the Court engages in a two-step approach: “When

there are well-pleaded factual allegations, a court should assume
their veracity and then determine whether they plausibly give rise
to an entitlement to relief.”

Iqbal, 556 U.S. at 679.

2

II.
Count I of the Amended Complaint (Doc. #20) alleges a breach
of the Employment Agreement entered into between plaintiff William
J. Schoen (plaintiff) and Health Management Associates, Inc. (HMA
or defendant).

Count II of the Amended Complaint asserts a

wrongful

of

denial

benefits

under

the

Supplemental

Executive

Retirement Plan (SERP) pursuant to the Employee Retirement Income
Security Act (ERISA), § 502(a)(1)(B).

Count III of the Amended

Complaint seeks a declaratory judgment with regard to plaintiff’s
health benefits under the Employment Agreement detailed in Count
I as HMA takes the position that the Employment Agreement expired
on or about January 1, 2004.

Count IV of the Amended Complaint is

alleged in the alternative to Count I, and alleges that plaintiff
and HMA entered into an implied in fact contract through the date
of his termination on August 25, 2013.

A summary of the background

in Counts I and II follows.
1. Count I
In February 1983, plaintiff joined the Board of Directors of
Hospital

Management

Associates,

Inc.

in

Fort

Myers,

Florida.

Plaintiff later became the President and Co-CEO, and in this
capacity moved Hospital Management Associates, Inc. to Naples,
Florida.

In

1986,

plaintiff

became

Chairman

of

the

Board,

President and CEO, and took the company public under a new name,
Health Management Associates, Inc. (HMA or defendant).

3

After two

years, plaintiff took HMA back to the status of a private, nonpublic company.

In 1991, plaintiff once again took HMA public on

the NYSE by a second public stock offering and continued in his
role as President, CEO, and Chairman of the Board.

During the

1990s, HMA’s stock grew exponentially and maintained consistent
profitability.
In 2001, at the age of 66, plaintiff stepped down as President
and CEO of HMA, but remained Chairman of the Board.

Effective

January 2, 2001, plaintiff entered into a written Employment
Agreement (Doc. #2-2, Exh. A) with HMA to serve as Chairman of HMA
and its Board of Directors.

The Employment Agreement references

an annual retirement benefit to plaintiff for life under HMA’s
Supplemental

Executive

Retirement

Plan

(SERP),

additional 10 years if his spouse survives him.

and

up

to

an

The Employment

Agreement further entitles plaintiff and his spouse with coverage
under one of HMA’s executive medical plans until November 30, 2006,
and with Medicare supplemental insurance after that date.

The

Employment Agreement contains an expiration date of January 1,
2004.

Plaintiff continued in his position as Chairman until his

termination without cause and removal from the Board of Directors
on August 15, 2013.

HMA abided by the terms of the Employment

Agreement, including paying plaintiff’s yearly salary and health
care premium payments, providing automobile and club expenses,
office and secretarial assistance, and 150 hours of personal use

4

of HMA’s Falcon 50 or equivalent aircraft, until plaintiff’s August
15, 2013 termination and removal from the Board of Directors.
On February 6, 2007, the parties signed a First Amendment to
Employment Agreement (Doc. #2-4, Exh. C) to amend the “Health Plan”
paragraph (paragraph 7), effective November 30, 2006, to continue
coverage under one of HMA’s executive medical plans, provided
however that if plaintiff or his spouse elects Medicare, HMA could
provide Medicare supplemental insurance.

No other terms of the

Employment Agreement were amended.
In early 2013, Glenview Capital Management Company, LLC, a
hedge fund and HMA’s largest shareholder, began a campaign to
replace HMA’s Board of Directors, including plaintiff as Chairman.
At the same time, Community Health Systems, Inc., a Delaware
corporation (CHS) continued negotiations to acquire HMA.

On or

about July 29, 2013, CHS and its wholly owned subsidiary entered
into a merger agreement with HMA and affirmed that all material
contracts were valid and binding, including plaintiff’s Employment
Agreement.
On or about August 7, 2013, after learning that Glenview had
the requisite number of votes, plaintiff composed a letter to HMA’s
Board of Directors stating his intent to retire as of September 1,
2013, or when Glenview seated a new Board of Directors, whichever
occurred

first.

The

letter

was

not

accepted

and

continued as Chairman of the Board until he was removed.

5

plaintiff

On August 15, 2013, plaintiff was notified by Senior Vice
President and General Counsel of HMA of the certified results of
the vote, and the removal of the Board and plaintiff as Chairman
of the Board. A Form 8-K was filed with the Securities and Exchange
Commission detailing the removal and the vote tally.

(Doc. #2-5,

Exh. D.)
On January 10, 2014, plaintiff e-mailed Steve Clifton, Senior
Vice President and General Counsel of HMA demanding severance pay
in compliance with the Employment Agreement.

On January 23, 2014,

plaintiff sent a letter to Wayne Smith, Chairman of the Board and
CEO of CHS, stating that HMA has owed him $3,239,261 since August
15, 2013.

In the letter, plaintiff states that he was replaced as

Chairman without cause and therefore, pursuant to the Employment
Agreement, he was entitled to receive a lump-sum payment equal to
the gross income paid to the Executive of HMA for each of three
calendar years preceding the termination as severance.

Plaintiff

also mentions a “gross up” provision for an additional payment of
80% in taxes.

(Doc. #2-6, Ex. E.)

No such severance payment was

paid despite plaintiff’s demands.
Under the same Employment Agreement, HMA was also obligated
to provide plaintiff with personal use of a Falcon 50 Aircraft, or
equivalent, for 150 hours of air time per calendar year during his
employment, and for 15 years thereafter with any unused hours to
be carried over to future years.

6

HMA abided by the terms of the

Employment Agreement during his employment and until CHS acquired
HMA in 2013, but HMA has refused to provide the aircraft at least
twice after January 2014. As a result, plaintiff incurred expenses
for use of a substitute aircraft and elects the annual operating
benefit equal to the cost that HMA would have expended to carry
out the fractional ownership program for 15 years.

The failure to

provide the aircraft benefit constitutes a breach of the Employment
Agreement.
2. Count II
Effective
Executive
retirement

May

Retirement

1,

and

1990,
Plan

survivor

HMA

(SERP)
benefits.

established
for

a

Supplemental

executives
(Doc.

#2-8,

to

receive

Exh.

G.)

Plaintiff’s benefits were to be payable for his life with 120
payments guaranteed at a rate of $25,000 a month.

(Id. at p. 21.)

SERP was amended effective December 13, 1993 (First Amendment, id.
at p. 19), effective September 17, 1996 (Second Amendment, id. at
p. 28), effective December 5, 2000 (Third Amendment, id. at p.
30), and last amended effective January 1, 2009 (Fourth Amendment
and Restatement, id. at p.35), and plaintiff was an eligible
participant in the Plan at the time of his termination on August
15, 2013.

The Fourth Amendment to the SERP specifically names

plaintiff as a participant, and the SERP provides that plaintiff
would be entitled to payment from HMA if a change of ownership
occurred. A change of ownership did occur after plaintiff’s normal

7

retirement

date,

immediate

and

single

therefore

cash

sum

plaintiff
“Actuarial

was

entitled

Equivalent

to

of

an
the

Participant’s Retirement Benefit” which took into account his
spouse’s 10 year survivorship annuity right and the obligation to
pay plaintiff for any tax impact. Pursuant to the Fourth Amendment
to the SERP, a schedule was established for plaintiff’ life and
for the life of plaintiff’s spouse if she survives him in the
amount of $83,333.33 per month, not to exceed 120 payments.
On February 21, 2014, plaintiff made a demand for the single
cash sum to HMA’s counsel as there was no plan administrator.
Counsel responded that it would consider the request but stated
nothing further.

Plaintiff sent a second demand letter for $14.4

million and a lump sum after-tax amount, and stated that it was
not intended to be a settlement offer and that plaintiff was not
requesting a negotiated amount.

On April 25, 2014, HMA, by and

through CHS, made a partial payment of $6,104,267.00 to plaintiff
despite the demand.
January

27,

2014,

The amount subtracted the present value as of
in

the

amount

of

$9,945,254,

and

excluded

payments made from January 27, 2014 to April 30, 2014, and federal
income taxes.

After the payment, plaintiff made another demand

for additional information but was denied benefits.

Plaintiff

states that he has exhausted his administrative remedies or they
would be futile.

Plaintiff argues that HMA materially breached

the terms of the SERP and violated ERISA.

8

III.
Count I - Employment Agreement
Defendant

argues

that

the

breach

of

contract

claim

is

preempted by the Employee Retirement Income Security Act of 1974
(ERISA), and the annual retirement benefit of $1 million in the
Employment Agreement for plaintiff’s life “relates to” the SERP,
a “top-hat plan” under ERISA.

Defendant further argues that no

severance is owed because the Employment Agreement expired in 2004,
long before the necessary preconditions were in place requiring
any severance payment.
any

continuing

action

In the alternative, defendant argues that
by

the

parties

under

the

Employment

Agreement, or any amendments of certain provisions, are otherwise
barred by the statute of frauds.

Defendant further argues that

plaintiff’s unused hours towards use of an aircraft only rolled
over to the next calendar year, and therefore the almost 1500 hours
suggested by plaintiff is without basis.

Defendant also argues

that plaintiff is not entitled to an annual stipend because two
conditions must be met before it would become available, and the
plain

language

of

the

Employment

Agreement

fails

to

support

plaintiff’s position.
Preemption
“Complete preemption is a narrow exception to the wellpleaded complaint rule and exists where the preemptive force of a
federal statute is so extraordinary that it converts an ordinary

9

state law claim into a statutory federal claim.”

Conn. State

Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1343
(11th Cir. 2009) (citing Caterpillar, Inc. v. Williams, 482 U.S.
386, 393 (1987)).

ERISA is a statute which can completely preempt

a state law claim, is jurisdictional in nature, and applies where
plaintiff asserts a state law claim that seeks relief available
under ERISA’s civil enforcement provision, 29 U.S.C. § 1132(a).
Id. at 1344 (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58,
65-66 (1987)).
Under Section 1132, a participant or beneficiary may bring a
civil action “to recover benefits due to him under the terms of
his plan, to enforce his rights under the terms of the plan, or to
clarify his rights to future benefits under the terms of the plan.”
29 U.S.C. § 1132(a)(1)(B).
such

‘extraordinary’

This civil enforcement provision “has

preemptive

power

that

it

‘converts

an

ordinary state common law complaint into one stating a federal
claim for purposes of the well-pleaded complaint rule.’”

Conn.

State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d at 1344
(quoting Taylor, 481 U.S. at 65-66).
Whether complete preemption 1 exists under ERISA is governed
by Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004).

1This

Ehlen

is not to be confused with the form of ERISA preemption known
as defensive preemption. Jones v. LMR Int’l, Inc., 457 F.3d 1174,
1179 (11th Cir. 2006).

10

Floor Covering, Inc. v. Lamb, 660 F.3d 1283, 1287 (11th Cir. 2011).
“The Davila test asks (1) whether the plaintiff[] could have ever
brought [its] claim under ERISA § 502(a) and (2) whether no other
legal duty supports the plaintiff[’s] claim.”
one

of

Davila

entails

two

inquiries:

Id. at 1287.

first,

“Step

whether

the

plaintiff[’s] claims fall within the scope of ERISA § 502(a), and
second, whether ERISA grants the plaintiff[] standing to bring
suit.”

Id. (citing Conn. State Dental Ass’n, 591 F.3d at 1350).

Section 1109 allows recovery against, “‘[a]ny person who is a
fiduciary

with

respect

to

a

plan

who

breaches

any

of

the

responsibilities, obligations, or duties imposed upon fiduciaries
by this subchapter.’

29 U.S.C. § 1109(a).”

Ehlen Floor Covering,

Inc., 660 F.3d at 1287.
Count I relates to the provisions of the Employment Agreement
guaranteeing

certain

benefits

separate

and

distinct

from

the

benefits provided under the SERP, which is indeed administered by
the Board of Directors of HMA.

The Court finds that plaintiff’s

claims with regard to severance for termination without cause and
aircraft personal use fall outside the scope of ERISA.

Because

plaintiff’s claim is supported by an independent legal duty under
the Employment Agreement terms, the second prong of the Davila
test is also not satisfied.

The Court finds that Count I is not

preempted by ERISA.

11

Expiration
The Employment Agreement was entered into and effective as of
January 2, 2001, and sets forth a term as follows:
The term of employment of the Executive under
this Agreement (“Employment Term”) shall
commence as of the Effective Date and, unless
sooner terminated pursuant to Paragraph 10
hereof, shall continue until January l, 2004
(“Expiration Date”).
(Doc. #2-2, Exh. A.)

“It is a question of law as to whether or

not the term is one of definite or indefinite duration. It is the
plaintiff's burden to prove that the contract is not one terminable
at will.”

Olsen v. Allstate Ins. Co., 759 F. Supp. 782, 786 (M.D.

Fla. 1991). In reviewing an employment contract, the Court applies
the “most commonly understood meaning with respect to the subject
matter and circumstances of the contract”, and according to its
plain language.

St. Johns Inv. Mgmt. Co. v. Albaneze, 22 So. 3d

728, 731 (Fla. 1st DCA 2009) (citations omitted).

In giving

meaning to a specific provision, the Court must consider it in the
context of the entire contract.

Id. at 732.

The Employment

Agreement contains a clearly defined duration and expiration date
in paragraph 2.
Under Florida law, if an employee continues employment after
a definite period of time without a new contract, the presumption
is that the employment continues under the same terms of the
original contract but without a new written contract.

12

Barraza v.

Pardo, 985 F. Supp. 2d 1369, 1372 (S.D. Fla. 2013); In re Port-APit, Inc., 138 B.R. 624, 627 (Bankr. M.D. Fla. 1992).

The

“presumption may be rebutted by evidence showing a change of the
terms of the contract or by proof of facts and circumstances
showing that the parties understood that the terms of the old
contract were not to apply to the continued service.”

Sultan v.

Jade Winds Constr. Corp., 277 So. 2d 574, 576 (Fla. 3d DCA 1973).
The

Employment

Agreement

was

entered

into

in

2001,

and

plaintiff served as Chairman of HMA and the Board of Directors
until his termination in 2013, well beyond the 3 year term of the
Employment Agreement.

Plaintiff alleges that HMA continued to

abide by all of the terms of the Employment Agreement during the
additional years and through his termination in 2013, including
paying

his

annual

salary,

automobile and club expenses.

allowing

use

of

the

aircraft,

and

In his Amended Complaint, plaintiff

alleges that HMA, by its conduct and actions, confirmed that the
Employment Agreement continued beyond January 1, 2004, and both
parties adhered to all of the terms of the Employment Agreement.
(Doc. #20, ¶¶ 14-21.)

Plaintiff further alleges that HMA amended

the Employment Agreement after the Employment Agreement is alleged
to have expired.

(Doc. #2-4, Exh. C.)

The Termination Without Cause or After a Change in Control
clause of the Employment Agreement provides, “[i]in the event
[plaintiff’s] employment is terminated by [HMA] without Cause”,

13

which is what plaintiff alleges, HMA shall pay plaintiff his
accrued and unpaid salary through plaintiff’s termination date,
and a lump sum amount equal to the gross income paid to him for
the “three completed calendar years immediately preceding the date
of such termination.”
Termination

clause

(Doc. #20, ¶ 32; Doc. #2-2, ¶ 11c.)

does

not

specifically

limit

the

The

severance

package to termination without cause within the employment term,
and a provision for 3 completed years of service implies that the
parties intended to could continue the relationship at-will.

The

Court finds that the Amended Complaint plausibly presents a claim
in Count I, and the motion to dismiss the breach of contract claim
will be denied on the basis that the Employment Agreement expired.
Statute of Frauds
“The statute of frauds was enacted to prevent fraud and the
enforcement of claims based on loose verbal statements made faulty
by the lapse of time”.

LaRue v. Kalex Const. & Dev., Inc., 97 So.

3d 251, 253 (Fla. 3d DCA 2012).
132, 138 (Fla. 1937).

See also Yates v. Ball, 132 Fla.

“Under the statute of frauds, any agreement

that is not to be performed within the space of one year from its
making must be reduced to writing in order to be enforceable.”
Sanz v. R.T. Aerospace Corp., 650 So. 2d 1057, 1060 (Fla. 3d DCA
1995) (citing Fla. Stat. § 725.01 (1991); Tanenbaum v. Biscayne
Osteopathic Hosp., Inc., 190 So. 2d 777 (Fla. 1966)).
contract

could

fully

be

performed

14

within

one

year

If an oral
from

its

inception, it falls outside the statute of fraud.

Browning v.

Poirier, 165 So. 3d 663, 666 (Fla. 2015).
In this case, the Employment Agreement expired after 3 years,
with the exception of specific clauses that explicitly survived
beyond the 3 year expiration date.

After expiration, the parties

continued to operate under the same terms and conditions of the
expired written Employment Agreement for an undefined period of
time.

“Florida

adheres

strongly

to

the

principle

that

an

employment contract requires definiteness and certainty in its
terms and that an employment contract without a definite term of
employment is terminable at the will of either party without
cause.”

Hesston Corp. v. Roche, 599 So. 2d 148, 151 (Fla. 5th DCA

1992).
Plaintiff does not allege an oral agreement of any kind in
the Amended Complaint, but rather plaintiff alleges that the
parties continued to operate under the same Employment Agreement
as if it renewed.

Plaintiff also does not clearly allege whether

the renewal was for life or simply an indefinite period of time.
Assuming the statute of frauds applies, it does not bar enforcement
of an employment agreement for an indefinite duration, and there
are no allegations that plaintiff could not have been terminated
within the first year of its stated expiration.

LaRue v. Kalex

Constr. & Dev., Inc., 97 So. 3d 251, 255 (Fla. 3d DCA 2012) (when
an agreement is susceptible to performance within a year, it is

15

not barred by the statute of frauds); Browning v. Poirier, 165 So.
3d 663, 666 (Fla. 2015) (if an agreement could be performed within
one year, it falls outside of the statute of frauds).

On the other

hand, there are portions of the Employment Agreement that were
explicitly for a longer duration than the 3 year employment term,
and therefore the Employment Agreement as a whole could not be
performed within one year.

The intent of the parties to continue

employment annually, indefinitely, or for life is unclear, and
therefore the Court cannot make a determination on this defense
while the facts remain in dispute.

See, e.g., Hope v. Nat'l

Airlines, Inc., 99 So. 2d 244, 246 (Fla. 3d DCA 1957); All Brand
Importers, Inc. v. Tampa Crown Distributors, Inc., 864 F.2d 748,
749 (11th Cir. 1989).

The motion will be denied on this basis.

Aircraft Use and Annual Stipend
In

the

Amended

Complaint,

plaintiff

alleges

that

HMA

continued to offer the Falcon 50 or equivalent to plaintiff after
his termination on August 15, 2013, and until January 27, 2014,
but after CHS acquired HMA, it failed to do so.

Plaintiff alleges

that he requested use of an aircraft at least twice after January
27, 2014, and was refused resulting in considerable expenses for
use

of

a

substitute

aircraft.

(Doc.

#20,

¶¶

45-47.)

Employment Agreement provides as follows:
During the period of [plaintiff’s] employment
with [HMA] and for fifteen (l5) years
thereafter, [plaintiff] shall be entitled to

16

The

the personal use of [HMA’s] Falcon 50 or
equivalent aircraft for 150 hours for each
calendar year (and a pro rata amount for any
portion of a calendar year during such
period), provided [plaintiff’s] right to
personal use shall terminate upon [plaintiff’s
death or his engaging in competitive activity
by
performing
services
for
any
direct
competitor of [HMA].
. . .
Any unused hours of personal use for any
calendar year shall be carried forward to and
added to [plaintiff’s] entitlement to hours of
personal use for the next calendar year. [HMA]
may satisfy its obligations to [plaintiff]
under this Paragraph after his termination of
employment through a fractional ownership
arrangement
reasonably
satisfactory
to
[plaintiff].
[Plaintiff] acknowledges and
agrees
that
NetJet’s
current
fractional
ownership program with respect to a Falcon 50
or better aircraft is reasonably satisfactory.
Instead of accepting a fractional ownership
arrangement, [plaintiff] shall have the right
to purchase [HMA’s] Falcon 50 (or its
equivalent
replacement,
as
accepted
by
[plaintiff]) at its then market value.
At
[plaintiff’s] option, either (i) the purchase
price of the aircraft shall be reduced (but
no~ below zero) by the present value of
[plaintiff’s] right to l5 years personal use,
including any carryover of unused hours
accumulated during his employment, or (ii)
[HMA] shall pay to [plaintiff] an annual
operating benefit equal to the cost that [HMA]
would have expended from time to time to carry
on the fractional ownership program for 15
years.
The present value of [plaintiff’s]
entitlement to personal use of the aircraft
shall be calculated by using the applicable
federal rate for federal income tax purposes
and by assuming [plaintiff] does not engage in
competitive activity and fully utilizes all
hours of personal use.

17

(Doc. #2-2, ¶ 9d.)

Plaintiff alleges a breach of the aircraft

provision in the Employment Agreement because HMA refused access
to an aircraft when it was requested.

Defendant does not argue

that the provision was expired or invalid, or that HMA was no
longer required to provide aircraft use.

Defendant simply argues

that the terms do not provide 1,300 hours of unused flight time
and that plaintiff has no right to a stipend unless certain
preconditions are met.

As plaintiff has stated a plausible claim

for breach of the provision, the motion to dismiss will be denied.
Count II – SERP Agreement
Defendant seeks to dismiss Count II for failure to exhaust
administrative remedies pursuant to the SERP, and as required
before pursuing an ERISA claim in federal court.

The motion to

dismiss on this basis will be denied.
The SERP does indeed require that any claim for benefits be
made in writing, and to the named fiduciary, who is listed as the
Secretary of HMA.

(Doc. #2-8, Exh. G, § 2.11.)

The SERP further

provides that if any part of a claim is denied, the same named
fiduciary shall provide written notice and set forth the steps to
be taken if a review of the denial is desired.
G, art. V, § 5.2.)

(Doc. #2-8, Exh.

Defendant is also correct that a plaintiff in

an ERISA action must exhaust available administrative remedies
before suing in federal court, and the failure to take advantage
of an available appeal process in compliance with the Plan will be

18

considered a failure to exhaust administrative remedies barring
review.

Perrino v. S. Bell Tel. & Tel. Co., 209 F.3d 1309, 1315

(11th Cir. 2000); Watts v. BellSouth Telecomms., Inc., 316 F.3d
1203, 1206 (11th Cir. 2003).
The

Amended

Complaint

contains

the

following

allegations:
68. As a result of the acquisition of HMA by
CHS on January 27, 2014, there was no known
named plan administrator, and thus the First
Demand Letter by Schoen was sent directly to
HMA's counsel and directed HMA’s counsel to
“let us know if this is as acceptable as formal
notice under such Agreements, and to the
extent that it is not, please provide us with
the proper names addresses of such parties.”
69. HMA’s responded on March 7, 2014 by
indicating that it would “consider” paying a
cash single sum for the value of Schoen's
benefit, but provided no specific response to
his demand pursuant to Section 4.4 (a) for a
single lump sum cash benefit payment pursuant
to the Change of Ownership.
70. Moreover, HMA’s response did not state
that any future notice or communication under
the SERP should be directed to any other
address, nor did it identify any other
individual to make such demand upon, and
therefore waived any requirement to send
demand to the named plan administrator.
. . .
73. On April 25, 2014 HMA,
made a partial payment
$6,104,267.00 to Schoen,
for $14.7 million under
4.4(d) of the SERP.
. . .

19

by and through CHS,
in the amount of
despite his demand
Section 4.4(a) and

relevant

76. Despite three (3) demands for benefits,
Schoen has been denied benefits under Section
4.4(a)
and
(b)
and
has
exhausted
his
administrative remedies with respect the cash
payout benefit.
77.
Moreover,
any
further
demand
or
administrative procedure would be futile
because:
(a) HMA failed to provide written notice
within ninety (90) days in compliance with
Section 5.2 of the SERP regarding its denial
of benefits; and
(b) HMA has failed to detail the manner in
which the cash benefit was calculated, to wit,
whether or not his spouse’s life was included
in the calculation, precluding Schoen from any
meaningful
benefit
denial
appellate
procedure.
. . . .
(Doc. #20, pp. 11-13.)

The Court maintains discretion to excuse

an exhaustion requirement when exhaustion would be futile, the
remedy inadequate, or if a claimant is denied “meaningful access”
to the review process.

Perrino, 209 F.3d at 1315.

At this stage

of the proceedings, the Court finds that plaintiff has adequately
pled exhaustion and alternatively asserted futility such that the
motion to dismiss must be denied.
Count III – Declaratory Judgment
Plaintiff alleges that a declaration is required because
defendant’s position is that the Employment Agreement expired, and
therefore

plaintiff

insurance coverage.

is

uncertain

as

to

his

right

to

medical

Defendant does not dispute the existence or

20

applicability of Sections 7 and 8 of the Employment Agreement as
confirmed by a letter from defendant’s Compensation Committee and
based on the First Amendment to Employment Agreement.
4, Exh. C.)

(Doc. #2-

In response, plaintiff suggests that judgment should

issue in his favor as the issue is undisputed, and defendant filed
a reply arguing that there exists no case or controversy justifying
the entry of judgment.
“Under Article III of the Constitution, federal courts may
adjudicate only actual, ongoing cases or controversies.”
Cont'l Bank Corp., 494 U.S. 472, 477 (1990).

Lewis v.

The Court has no

authority to grant declaratory relief unless a controversy exists.
Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 272 (1941).
“Basically, the question in each case is whether the facts alleged,
under all the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance of a
declaratory judgment.”

Id. at 273.

In the Amended Complaint, plaintiff seeks a declaration as to
the validity of the Employment Agreement as it relates to Sections
7 and 8, as amended, obligating HMA to provide medical insurance
to plaintiff and his wife.

Defendant argues that Count III is

unnecessary as it agrees that the health benefits survive the
expiration of the Employment Agreement by its explicit terms and

21

by amendment.

The Court finds no controversy, and therefore the

motion to dismiss will be granted as to Count III.
Count IV – Quantum Meruit
Defendant

argues

that

an

implied-in-fact

contract

claim

cannot exist because plaintiff has alleged the existence of an
express contract.

Count IV is pled in the alternative to Count I

to the extent that HMA takes the position that the Employment
Agreement expired in 2004, despite the parties abiding by the terms
of the Employment Agreement through 2013.
Under Florida law, “a contract implied in fact
is one form of an enforceable contract; it is
based on a tacit promise, one that is inferred
in whole or in part from the parties' conduct,
not solely from their words.”
[ ] “The
enforceability of this obligation turns on the
implied promise, not on whether the defendant
has received something of value. A contract
implied in fact can be enforced even where a
defendant has received nothing of value.” [
] “In these contracts, the parties have in
fact entered into an agreement but without
sufficient clarity, so a fact finder must
examine and interpret the parties' conduct to
give definition to their unspoken agreement.”
[ ]
Tara Prods., Inc. v. Hollywood Gadgets, Inc., No. 09-CV-61436,
2010

WL

1531489,

citations omitted).

at

*6

(S.D.

Fla.

Apr.

16,

2010)

(internal

For the reasons previously stated, the Court

finds that the intent of the parties cannot be determined at this
stage.

The motion to dismiss will be denied.

Accordingly, it is now

22

ORDERED:
Defendant’s Motion to Dismiss Plaintiff's Amended Complaint
(Doc. #27) is GRANTED IN PART AND DENIED IN PART.

The motion is

granted as to Count III of the Amended Complaint and otherwise
denied.
DONE AND ORDERED at Fort Myers, Florida, this
August, 2015.

Copies:
Counsel of record

23

25th

day of