Martone Construction Management, Inc. v. Thomas A. Barrett, Inc. d/b/a National Employers Retirement Trust et al

Filing 36

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 11/13/2023. (sat, Chambers)

17IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:

MARTONE CONSTRUCTION MANAGEMENT,
INC.
:
v.

:

THOMAS A. BARRETT, INC., d/b/a
National Employers Retirement
Trust, et al.

Civil Action No. DKC 23-450

:
:

MEMORANDUM OPINION
Martone Construction Management Inc., as Plan Administrator
for the Martone Construction Management, Inc. Defined Benefit
Benefit Pension Plan and the Martone Construction Management, Inc.
401(k) Profit Sharing Plan (“Martone”), filed a complaint pursuant
to the Employee Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. § 1001 et seq, against Thomas F. Barrett, Inc. (“Barrett”),
National Employers Retirement Trust (“NERT”), Sandy Spring Bank
(“Sandy Spring”), and Acorn Financial Advisory Services (“Acorn”).
Presently pending and ready for resolution are (1) a motion to
dismiss filed by Sandy Spring; (2) a motion to dismiss filed by
Barrett and NERT; and (3) a motion to dismiss filed by Acorn
(collectively, “NERT Defendants”).

(ECF Nos. 11, 16, 19).

The

issues have been briefed, and the court now rules, no hearing being
deemed necessary.

Local Rule 105.6.

For the following reasons,

the motions will be granted in part and denied in part.

I.

Background
The following facts are alleged in the complaint.

Martone,

a commercial general contractor, created a 401(k) Plan in 2006 and
a Defined Benefit Plan in 2009 (“the Plans”) for its employees.
It engaged Barrett and NERT to provide employee retirement plan
administration

services.

Barrett

provided

administrative functions for the Plans.

recordkeeping

and

Barrett and Sandy Spring

were responsible for making trades with the investment funds of
the Plans at the direction of Martone or 401(k) Plan participants.
Barrett

sent

Martone

periodic

invoices

listing

the

services

provided and the amounts owed, which only included administration
fees.
Martone alleges that on February 21, 2020, Thomas F. Barrett
(“Mr. Barrett”) at Barrett informed Martone that NERT Defendants
had been charging investment fees to Martone since Martone engaged
them, in the amount of 0.85% of the Plans’ assets.
fees,

Martone

asserts,

had

not

been

listed

on

The investment
any

invoice,

statement, or other document that Martone received from Barrett,
Acorn, or Sandy Spring.
Martone demanded that Barrett refund the investment fees
(estimated to total approximately $350,000 to $400,000).

In

response, also on February 21, 2020, Mr. Barrett sent a document,
dated July 15, 2019, captioned “408(b)2 Plan Sponsor Disclosure”
(“the Disclosure”).

Martone alleges upon information and belief
2

that NERT Defendants did not provide the Disclosure to Martone at
any time before February 21, 2020.
record

of

receiving

the

Disclosure

It asserts that it has no
before

that

date.

The

Disclosure included lists of services provided by Barrett, Sandy
Spring, and Acorn, and fees related to each service.

Martone

alleges that before receiving the Disclosure, it had no knowledge
of any services provided by Acorn and had never received any
communication from either Acorn or Sandy Spring. Martone requested
an accounting from Barrett of all fees since the Plan’s inception,
and Mr. Barrett responded that Barrett did not keep a record of
such fees and transactions.
Martone alleges that NERT Defendants did not provide any
investment advice to Martone or the Plans.

For instance, NERT

Defendants did not inform Martone until February 2020 that they
provide a self-directed Key Advisor account through TD Ameritrade,
which would have allowed Martone the ability to control its own
trades and provided additional access to Acorn’s services.

When

Martone asked to register for this account, Barrett allegedly
ignored its requests.
Martone asserts that Barrett failed to communicate in a timely
manner,

failed

to

communicate

the

availability

of

investment

options, and ignored many of Martone’s requests regarding timing
of trades.

For instance, on February 28, 2020, Martone instructed

Barrett to trade certain investment funds.
3

When Barrett had still

not replied a week later, on March 6, 2020, Martone directed
Barrett to “[p]lease get me out today.”

When Barrett had not

replied three days later on March 9, 2020, Martone again requested
the trade.

Barrett told Martone that NERT Defendants only conduct

trades on Wednesdays.

The Disclosure provides that Sandy Spring

will make investments as directed by the Plan and will “[v]erify
and settle nightly NSCC trades by the following business day.”
Martone asserts that based upon the failure of NERT Defendants to
execute the requested trades, NERT’s website showed a loss of
almost $800,000 on March 15, 2020.
In April 2020, July 2020, and December 2020, as well as on
three occasions in December 2022-January 2023, Martone requested
that NERT Defendants transfer the Defined Benefit Plan funds to
another service provider (first Benetech Inc. (“Benetech”) and
later Charles Schwab Corporation (“Schwab”)).

On April 29, 2020,

July 31, 2020, and January 9, 2023, Barrett informed Martone that
it denied the request to transfer the assets because the Defined
Benefit Plan and the 401(k) plan were “paired” or “dual”—meaning
Martone could not transfer the Defined Benefit Plan without also
transferring the 401(k) funds and completing a 30-day blackout
notice.

Martone alleges that it requested a blackout notice

between August 2020 and December 1, 2020.

Martone asserts that

the Plan documents do not reference a pairing of the Plans and
that each Plan filed separate Form 5500s every year.
4

On January

10, 2023, Martone asked Barrett to justify why it had not made the
transfer, and Barrett did not respond.
On February 3, 2023, Martone’s counsel sent Barrett a letter
demanding that NERT Defendants transfer the assets of the Defined
Benefit Plan to Schwab, provide a copy of any contract between
Martone and NERT Defendants, provide an accounting of all fees
paid by Martone or the Plans to NERT Defendants, and refund all
investment fees paid by Martone to NERT Defendants.
On

February

7,

2023,

Barrett

informed

Martone

“transfer of plans assets are being processed.”

that

the

That same day,

Martone’s counsel reiterated that Martone had only authorized the
transfer of the Defined Benefit Plan assets.

On February 8, 2023,

Barrett informed Martone that the Defined Benefit Plan assets had
been wired to Schwab.

On February 9, 2023, without a blackout

notice and allegedly without authorization, NERT Defendants sent
a

check

made

payable

to

“Larry

Martone,

Trustee,

Martone

Construction Management, Inc. 401(k) PS Plan” and a letter to
Benetech stating that Barrett determined it could no longer serve
as custodian of the 401(k) Plan.

On February 10, 2023, Martone’s

counsel requested an accounting of fees and refund of investment
fees, which Barrett did not provide.

(ECF No. 1 ¶¶ 15-72).

Martone brings claims for (1) breach of fiduciary duty under
ERISA, 29 U.S.C. § 1132(a)(2) and 29 U.S.C. § 1109; (2) equitable

5

relief under ERISA, 29 U.S.C. § 1132(a)(3); (3) common law breach
of fiduciary duty; (4) unjust enrichment; and (5) negligence.
II.

Standard of Review
A 12(b)(6) motion tests the sufficiency of the complaint.

Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir.
2006).

“[T]he district court must accept as true all well-pleaded

allegations

and

draw

plaintiff’s favor.”
2021).

all

reasonable

factual

inferences

in

Mays v. Sprinkle, 992 F.3d 295, 299 (4th Cir.

A plaintiff’s complaint need only satisfy the standard of

Fed.R.Civ.P. 8(a)(2), which requires a “short and plain statement
of the claim showing that the pleader is entitled to relief[.]”
Rule

8(a)(2)

“showing”

still

requires

more

than

“a

A

blanket

assertion[ ] of entitlement to relief,” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 n.3 (2007), or “a formulaic recitation of the
elements of a cause of action[.]”

Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (quoting Twombly, 550 U.S. at 545).

“A claim has

facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that defendant
is liable for the misconduct alleged.”

Mays, 992 F.3d at 299-300

(quoting Iqbal, 556 U.S. at 663).
III. Analysis
A. ERISA Fiduciary Claims
Section 409(a) of ERISA imposes liability for breach of
fiduciary duty:
6

Any 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
shall be personally liable to make good to
such plan any losses to the plan resulting
from each such breach, and to restore to such
plan any profits of such fiduciary which have
been made through use of assets of the plan by
the fiduciary, and shall be subject to such
other equitable or remedial relief as the
court may deem appropriate, including removal
of such fiduciary.
29 U.S.C. § 1109(a).

Accordingly, to state a claim for breach of

fiduciary duty under ERISA, plaintiffs must allege “1) that a
defendant was a fiduciary of the ERISA plan, 2) that a defendant
breached its fiduciary responsibilities under the plan, and 3)
that the participant is in need of injunctive or other appropriate
equitable relief to remedy the violation or enforce the plan.”
Mahoney v. iProcess Online, Inc., No. 22-cv-0127-JKB, 2022 WL
17585160, at *3 (D.Md. Dec. 12, 2022) (citing Adams v. Brink’s
Co., 261 F.App’x. 583, 589-90 (4th Cir. 2008)).

“[T]he threshold

question is whether the plaintiff has sufficiently alleged that
the defendant was a ‘fiduciary.’”

Moon v. BWX Techs., Inc., 577

F.App’x 224, 229 (4th Cir. 2014) (quoting Coleman v. Nationwide
Life Ins. Co., 969 F.2d 54, 60–61 (4th Cir. 1992)).
“ERISA . . . defines

‘fiduciary’

not

in

terms

of

formal

trusteeship, but in functional terms of control and authority over
the plan.”

Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993).

“ERISA contemplates two general types of fiduciaries.
7

The first

type is a ‘named fiduciary,’ which — as the term suggests — is ‘a
fiduciary who is named’ in the plan documents.”

Dawson-Murdock v.

Nat’l Counseling Grp., Inc., 931 F.3d 269, 275 (4th Cir. 2019)
(internal citations omitted).

The second type is a functional

fiduciary, which is an individual or entity that “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.”
(citing 29 U.S.C. § 1002(21)(A)).

Id. at 276

“Accordingly, a party need not

be listed in a plan instrument to owe fiduciary duties in the
plan’s administration.”

Acosta v. WH Admins., Inc., 449 F.Supp.3d

506, 516 (D.Md. 2020). Rather, “[t]he concept of a fiduciary under
ERISA . . . includes . . . any individual who de facto performs
specified discretionary functions with respect to the management,
assets, or administration of a plan.”

Custer v. Sweeney, 89 F.3d

1156, 1161 (4th Cir. 1996) (internal citations and quotation marks
omitted).
“Under

ERISA’s

functional

fiduciary

standard,

‘being

a

fiduciary under ERISA is not an all-or-nothing situation.’” Peters
v. Aetna Inc., 2 F.4th 199, 228 (4th Cir. 2021), cert. denied sub
nom. OptumHealth Care Sols. v. Peters, 142 S.Ct. 1227 (2022)
(quoting Gordon v. CIGNA Corp., 890 F.3d 463, 474 (4th Cir. 2018)).
Instead, courts “must ask whether a person is a fiduciary with
respect to the particular activity at issue.”
8

Coleman, 969 F.2d

at 61.

“The definition of fiduciary is limited to the extent a

person exercises discretion.”

NARDA, Inc. v. Rhode Island Hosp.

Tr. Nat. Bank, 744 F.Supp. 685, 690 (D.Md. 1990).
The United States Court of Appeals for the Fourth Circuit has
“consistently utilized an interpretive bulletin published by the
Department

of

Labor”

to

assess

“whether

qualifies as a fiduciary under ERISA.”

a

person

or

entity

Dawson-Murdock, 931 F.3d

at 276 (citing 29 C.F.R. § 2509.75-8; Sweeney, 89 F.3d at 1162;
Coleman, 969 F.2d at 61-62). “The bulletin emphasizes that ‘[s]ome
offices or positions of an employee benefit plan by their very
nature require persons who hold them to perform one or more [of
the] functions’ described in ERISA’s definition of a ‘fiduciary,’”
such as a “plan administrator.”

Id. at 276 (citing 29 C.F.R.

§ 2509.75-8 (D-3)). In contrast, the bulletin also
suggests that “a person who performs purely
ministerial
functions . . . within
a
framework
of
policies,
interpretations,
rules, practices and procedures made by other
persons,” such as applying “rules determining
eligibility for participation or benefits,”
“advising participants of their rights and
options under the plan,” and collecting
“contributions . . . as
provided
in
the
plan,” is not acting in a fiduciary capacity.
Id. (citing 29 C.F.R. § 2509.75-8 (D-2)).
Martone alleges that NERT Defendants were fiduciaries of the
Plans, that they breached their fiduciary duties, and that the

9

breach resulted in losses to the Plans.

Specifically, Martone

alleges:
Each of the NERT Defendants was a fiduciary
with respect to the Plans under ERISA.
[Acorn]
purportedly
rendered
investment
advice for a fee or other compensation, direct
or indirect, with respect to any moneys or
other property of the Plans. [Sandy Spring]
was a fiduciary because it was a trustee.
[Barrett] was also a fiduciary because it
exercised discretionary authority or control
respecting management of the Plans and the
administration of the Plans, and it exercised
authority or control respecting management or
disposition over Plan assets, as evidenced by
[Barrett] deducting fees from the Plans’
assets.
(ECF No. 1 ¶ 75) (internal citations omitted).

Martone next

alleges that NERT Defendants breached their fiduciary duties:
•

•

•

•

Barrett and Sandy Spring “failed to follow
Martone’s instructions with respect to Plan
assets,
including
with
respect
to
rebalancing the Plans’ assets and making
trades as instructed by Martone in a timely
manner, resulting in market losses;”
Barrett and Sandy Spring “failed to make
trades within one business day, as set forth
in NERT Defendants’ own document and in
accordance with a reasonable standard of
care, resulting in market losses;”
Barrett
and
Sandy
Spring
“failed
to
transfer the Defined Benefit Plan assets to
Schwab as requested, and retain[ed] those
assets from the time of Martone’s original
transfer request until February 8, 2023;”
“NERT Defendants charged investment fees to
the Plans, when no investment advisory
services or other services were provided
beyond those that appeared on [Barrett’s]
invoices and such fees were not timely and
properly disclosed as required by 29 CFR
§ 2550.408b-2,
and
Martone
reasonably
10

•

•

•

•

•

believed that the only fees the Plans paid
were those that appeared on the invoices
sent by [Barrett], and the NERT Defendants
did not display any investment fees on any
of the Plans’ statements;”
“Upon
information
and
belief,
NERT
Defendants continued to charge investment
fees from the time that Martone requested
that NERT Defendants transfer the Defined
Benefit Plan funds until the time the funds
were actually transferred, almost three
years later;”
Acorn “did not provide any investment
advice to Martone, the Plan, or Plan
participants, despite apparently receiving
investment
advisory
fees
for
such
services;”
“NERT Defendants failed to facilitate,
communicate, or allow Martone and the Plan
to fully invest in and participate in the
market, such as through having a selfdirected Key Advisor account through TD
Ameritrade,
which
would
have
allowed
Martone to select from a wider selection of
investments and allowed Martone to trade at
any time (while NERT Defendants purported
to make trades only on Wednesdays) and would
have provided additional access to [Acorn]
– despite having charged the Plans a fee
that should purportedly have included this
and other services;”
Barrett and Sandy Spring “liquidated and
transferred the 401(k) Plan Assets, which
was not authorized by Martone and contrary
to Martone’s instructions;” and
Barrett “failed to timely communicate with
Martone
or
respond
to
Martone’s
communications
and
follow
Martone’s
instructions.”

(ECF No. 1 ¶ 78).

Finally, Martone alleges that NERT Defendants’

conduct resulted in losses:
As a result of the NERT Defendants’ actions
and breaches, Plaintiff and the Plans have
11

incurred losses, including but not limited to
the decrease in value of Plan assets and
improper
payments
out
of
Plan
assets,
resulting in a loss to the Plans and causing
injury to participants and beneficiaries.
(ECF No. 1 ¶ 80).
requiring

Consequently, Martone requests (1) orders

Defendants

to

“make

good

to

the

Plans

all

losses

resulting from their breaches” and “restore to the Plans any
profits which have been made through use of Plan assets;” (2) “[a]n
accounting of, inter alia, all direct and indirect compensation
charged to Martone and/or the Plans, all transactions with respect
to Plan assets, and a valuation of investment funds that NERT did
not trade as instructed;” (3) “other equitable relief or remedial
relief as the Court may deem appropriate;” (4) “[a]ny other damages
or relief in an amount according to proof;” (4) “[a]n award of
punitive damages;” (5) “[p]re and post judgment interest, as
afforded by law;” (6) “reasonable attorneys’ fees and costs;” and
(7) “[s]uch other equitable and legal relief as is appropriate.”
(ECF No. 1, at 27-28).
1. ERISA Fiduciary Claim Against NERT
Barrett and NERT request that the court dismiss all counts
against NERT because as a trust, it is not a person or entity
capable of being sued.

(ECF No. 16-1, at 28).

Martone submits

that “[b]ased upon the representations by Barrett, NERT, and their
joint counsel that NERT is only a trust and is not a legal entity
or an employee benefit plan, Martone would not oppose the dismissal
12

of NERT as a separate defendant from this lawsuit.”
at 28).

(ECF No. 25,

Because “the trust estate is not a person in the eyes of

the law and does not have the capacity to be sued as an entity,”
all counts against NERT will be dismissed.

Limouze v. M. M. & P.

Mar. Advancement, Training, Ed. & Safety Program, 397 F.Supp. 784,
789 (D.Md. 1975).
2. ERISA Fiduciary Claim Against Barrett
Conceding that Martone itself is the Plan’s named fiduciary,
Martone contends that Barrett is a functional fiduciary because it
“exercised

discretionary

authority

or

control

respecting

management of the Plans and the administration of the Plans, and
it

exercised

authority

or

control

respecting

management

or

disposition over Plan assets, as evidenced by NERT Administrator
deducting fees from the Plans’ assets.”

(ECF No. 1 ¶¶ 4, 75).

Barrett maintains that it is not a functional fiduciary because it
only

“provided

certain

administrative

services

to

the

Plans”

including “recordkeeping and executing investment orders at the
direction of Martone or its employee participants”—essentially,
that it provided only ministerial, not discretionary, functions.
(ECF No. 16-1, at 18) (citing ECF No. 1 ¶¶ 9, 18, 19).

Barrett

argues that “[t]he one factual allegation concerning Barrett’s
fiduciary status is that Barrett deducted fees from the Plans’
assets.

Deducting a fee for services from plan assets pursuant to

a previously established structure, however, is not a fiduciary
13

function.” (Id. at 18) (citing ECF No. 1 ¶ 75; McLemore v. Regions
682

Bank,

omitted).

F.3d

414,

424

Cir.

(6th

2012))

(internal

citation

Martone responds that “Barrett’s deduction of its fees

from the Plans’ assets is ‘evidence[ ]’ that Barrett exercised
discretionary

authority

or

control

respecting

management

or

administration of the Plan and authority or control respecting
management or disposition over Plan assets.”
15).

(ECF No. 25, at 14-

To support the proposition that Barrett acted as a fiduciary

by deducting fees from the Plans’ assets, Martone cites Perez v.
Chimes

Dist.

of

Columbia,

Inc.,

No.

15-cv-3315-RDB,

2016

WL

6124679, at *5 (D.Md. Oct. 20, 2016), where the court deemed the
defendant

a

fiduciary

grant[ed]

[Defendant]

because

“Plan

documents

control

over

making

argues

that

Perez

specifically

payments

with

Plan

“concerned

an

ERISA

assets.”
Barrett,

however,

trustee who controlled plan money by exercising her judgment to
write unauthorized checks on plan assets.

It does not concern the

provision of administrative investing services, like investment
order

execution

account.”

and

providing

(ECF No. 30, at 15).

access

to

a

certain

style

of

Barrett asserts that “[d]educting

a fee for services from plan assets pursuant to a previously
established structure . . . is not a fiduciary function.”
No. 16-1, at 18) (citing McLemore, 682 F.3d at 424).

(ECF

Instead,

Barrett contends, citing only out-of-circuit authorities, “[a]n
14

agent with an established commission rate is not, without other
indicia, a fiduciary to the plan by deducting his commission from
plan assets.”

(ECF No. 16-1, at 18) (citing United States v.

Glick, 142 F.3d 520, 528 (2d Cir. 1998); United Teamster Fund v.
MagnaCare Admin. Servs., LLC, 39 F.Supp.3d 461, 470 (S.D.N.Y.
2014)).
“Fourth Circuit decisions strongly support the conclusion
that [a] plaintiff[ ] must do more than quote the statutory
language regarding ‘discretionary control’ to plead adequately
that a given defendant is a de facto ERISA fiduciary.”

In re Mut.

Fund Inv. Litig., 403 F.Supp.2d 434, 446 (D.Md. 2005). Here, while
Martone’s allegations are brief, the complaint does allege that
Barrett acted as a fiduciary by deducting fees from the Plans’
assets,

thereby

“exercis[ing]

authority

or

management or disposition over Plan assets.”

control

respecting

(ECF No. 1 ¶ 75).

At this stage—in which the court must assume the truth of the
factual allegations and construe them favorably to Martone—it
suffices to state a facially plausible claim that Barrett acted as
a fiduciary by deducting fees from the Plans’ assets.

See Boyd v.

Coventry Health Care Inc., 828 F.Supp.2d 809, 818 (D.Md. 2011).
Barrett contends that its deduction of fees is not “fiduciary
in nature” because it deducted “a fee for services from plan assets
pursuant

to

a

previously

established

structure”

that

was

“established by agreement,” and that Barrett is not a fiduciary
15

where it “fully and repeatedly disclosed the fee” and “Martone
authorized the fee.”

(ECF No. 16-1, at 18-19).

Martone, however,

correctly asserts that the court cannot on a motion to dismiss
consider the extrinsic documents Barrett provided to support its
assertion that Martone had notice of the fees.

(ECF No. 25, at

10-11) (citing Zak v. Chelsea Therapeutics Int’l, Ltd., 780 F.3d
597, 606 (4th Cir. 2015)).
consider

the

extrinsic

Barrett argues that the court can

documents

because

“Martone

not

only

references the [quarterly] statements, but it relies on them for
the material contention that the statements contained no notice of
the fee,” and thus they are “integral to the Complaint.”
No. 30, at 6-7).
Alston

v.

(ECF

As Martone points out, this court’s reasoning in

Citibank,

N.A,

No. 14-cv-3199-DKC,

2015

WL

2227930

(D.Md. May 11, 2015) is relevant:
Defendant asserts that the “[t]he notice of
denial, or lack thereof, is clearly integral
to
the
Complaint
and
relied
upon
by
Plaintiff.” This argument is misplaced. In
the complaint, Plaintiff asserts that he
did not receive any notice from Defendant
denying his credit card application, which he
submitted in February 2013. In other words,
the ECOA claim relies on the absence of a
letter, not its issuance, and whether or
not Citibank indeed gave proper notice under
ECOA creates a factual dispute inappropriate
for resolution at the motion to dismiss stage.
Alston, 2015 WL 2227930, at *4 (internal citation omitted).
Martone

similarly

contends—upon

information

and

Here,

belief—that

Barrett did not provide notice of the fees until February 21, 2020.
16

Thus,

the

statement,

ERISA
not

claim
its

relies

on

the

issuance.

authenticity of the documents.

absence

Martone

of

also

a

quarterly

disputes

(ECF No. 25, at 12).

the

As in Alston,

“the facts alleged in the complaint must be taken as true at this
stage and the court cannot rely on documents whose authenticity
Plaintiff

challenges.”

2015

Alston,

WL

2227930,

at

*4.

Accordingly, Martone has plausibly alleged that Barrett was a
fiduciary for the purposes of an ERISA action.
Martone has also adequately pled that Barrett breached its
fiduciary duties. In response to Martone’s allegation that Barrett
breached its duties by deducting a fee without providing notice,
Barrett argues that (1) the fee was not an investment fee; (2) the
allegation that Martone, upon information and belief, did not
receive the Disclosure is insufficient to state a claim; and (3)
the allegations that the Disclosure was addressed to all NERT
participants and do not indicate which services are provided to
which Plan sponsors do not state a claim.
22).

(ECF No. 16-1, at 20-

Martone replies, first, that it “specifically alleges that

on February 21, 2020, Mr. Thomas Barrett ‘informed Mr. Martone
that NERT Defendants had been charging investment fees.’”

(ECF

No. 25,

term

at

19).

Whether

or

not

Mr.

Barrett

“investment fees” is a factual dispute.

used

the

Assuming the truth of

Martone’s factual allegation, Martone has adequately pled that
Barrett

charged

investment

fees
17

without

providing

investment

advisory services.

In response to Barrett’s second point, Martone

argues that it “affirmatively pled that [Mr. Martone] did not
receive these documents, alleging: ‘Martone has no record of
receiving the Plan Sponsor Disclosure on July 15, 2019 or at any
time prior to February 21, 2020.’”

(Id. at 20).

Instead, Martone

argues, “[t]he only thing [it] pled ‘upon information and belief’
was whether or not Barrett sent the documents[.]”
citation

omitted).

Barrett

is

correct

that

(Id.) (internal
“Martone

cannot

establish nonreceipt by pleading it did not get [the Disclosures]
‘upon information and belief.’”
No. 1 ¶ 30).

(ECF No. 16-1, at 21) (citing ECF

Plaintiffs, however, are “generally permitted to

plead facts [upon information and belief] if the necessary evidence
is controlled by the defendant.”

Adobe Sys. Inc. v. Gardiner, 300

F.Supp.3d 718, 728 n.5 (D.Md. 2018) (citing Ridenour v. Multi–
Color Corp., 147 F.Supp.3d 452, 456 (E.D. Va. 2015)).
question

of

whether

Barrett

sent

the

Disclosures

Here, the
constitutes

evidence controlled by Barrett, so it is permissible to plead upon
information and belief.

Martone does not plead upon information

and belief that it “has no record of receiving the Plan Sponsor
Disclosure on July 15, 2019 or at any time prior to February 21,
2020.”

(ECF No. 1 ¶ 30).

Thus, Martone has adequately pled that

Barrett did not provide the Disclosure before February 21, 2020,
and that it has no record of receiving the Disclosure before that
date.

That Martone does not respond to Barrett’s third point is
18

inconsequential because it has plausibly alleged that Barrett
charged an investment fee without providing notice.
Martone has also adequately stated a claim that Barrett’s
failure

to

follow

instructions

with

constitutes a breach of fiduciary duty.
fiduciary

duty

of

prudence

carrying out instructions.”

does

not

respect

to

investments

Barrett argues that “the
apply

to

functions

(ECF No. 16-1, at 24).

like

The duty of

prudence, it contends, “traditionally arises in deciding which
investment options to make available to the ERISA plan,” and
Barrett had only “administrative responsibility and authority to
process Martone’s securities buy-sell orders for the Plans.”
at

25).

Martone

responds

that

Barrett’s

“failure

to

(Id.

follow

Martone’s instructions with respect to Plan assets is a ‘fiduciary
function’” and that Barrett breached that duty by failing to
“follow[ ] the Plan administrator’s instructions” and “failing to
follow the reasonable standard of care, including failing to make
trades every day and within one business day—especially at a time
‘when the market was in volatile decline’ and Martone expressed
the urgency of his instructions to ‘Please get me out today[.]’”
(ECF No. 25, at 22).

The Perez court found that the plaintiff had

properly stated a claim for breach of fiduciary duty under ERISA
by alleging that a defendant “fail[ed] to follow . . . proper
directions.”

Perez, 2016 WL 6124679, at *4.

Here, similarly,

Martone has plausibly alleged that Barrett breached its fiduciary
19

duties by failing to follow Martone’s instructions such as making
trades, transferring funds, and transferring the funds of the
401(k) Plan contrary to instructions.
3. ERISA Fiduciary Claim Against Sandy Spring
In the complaint, Martone alleges that Sandy Spring was a
fiduciary of the Plan.

First, it contends that Sandy Spring,

together with Barrett, was “responsible for making trades with the
investment funds of the Plans at the direction of Martone or 401(k)
Plan participants.”

(ECF No. 1 ¶ 19).

Second, it argues that

Sandy Spring controlled payment of improperly charged investment
fees. (ECF No. 1-1, at 5 (“NERT Administrator receives an indirect
asset-based fee . . . which is deducted by [Sandy Spring] from the
assets of each of the Fund option that you designate to be
investment alternatives offered under your Plan.”)).
attaches

a

Disclosure

to

the

complaint

that

Third, it

states:

“[A]s

Nondiscretionary Directed Trustee, [Sandy Spring] is a fiduciary
to your Plan solely to the extent of its responsibilities as
described in DOL Field Assistance Bulletin 2004-03.”

(Id. at 2).

The Bulletin, in turn, “specifically recognizes the fiduciary duty
of a directed trustee under ERISA.”

(ECF No. 20, at 7).

Sandy Spring asserts that it is not a fiduciary because it
had no discretionary authority over the Plans’
assets.
Indeed,
[Sandy
Spring]
had
no
authority of any kind with respect to the
Plans. [Sandy Spring] served as a “directed
trustee” for NERT, not Martone. In that
20

capacity, [Sandy Spring] invested NERT’s
assets based upon instructions that [Sandy
Spring] received from Barrett/NERT. Not only
did [Sandy Spring] have no discretion with
respect to the instructions that it received
from Barrett, but it also had no control over
how NERT’s assets were invested.
(ECF No. 11-1, at 12).

Sandy Spring adds that it “did not have

any duties and responsibilities of an ERISA fiduciary as the Fourth
Circuit has described them” in DiFelice v. U.S. Airways, Inc., 497
F.3d 410, 417 (4th Cir. 2007); namely, that it was not responsible
for “the proper management, administration and investment of plan
assets, the maintenance of proper records, the disclosure of
specific
interest.”

information,

[or]

the

avoidance

of

conflicts

of

(ECF No. 11-1, at 13, 15).

Martone responds that directed trustees can be held liable as
ERISA fiduciaries “where [they] fail[ ] to follow proper directions
or compl[y] with directions that are improper, or contrary to the
Plan or ERISA.”

(ECF No. 20, at 11) (citing Perez, 2016 WL

6124679, at *4).

Martone’s allegations raise factual disputes

whether Sandy Spring had discretionary authority over the Plans’
assets and whether it complied with improper instructions from
Barrett.

Accordingly, Martone has plausibly alleged that Sandy

Spring was a fiduciary for the purposes of an ERISA action.
Because Martone alleges Sandy Spring acted in concert with Barrett
in many of Barrett’s alleged breaches of fiduciary duty, it has
also adequately alleged that Sandy Spring breached its fiduciary
21

duties under ERISA for the same reasons as those pertaining to
Barrett (explained above).
4. ERISA Fiduciary Claim Against Acorn
Martone
“purportedly

alleges
rendered

that

Acorn

investment

is

a

advice

fiduciary
for

a

because

fee

or

it

other

compensation, direct or indirect, with respect to any moneys or
other property of the Plans.”

(ECF No. 1 ¶ 75).

Acorn argues

that
a plaintiff alleging that a defendant is a
fiduciary because it rendered investment
advice for a fee “must plead that (1) the
defendant provided individualized investment
advice; (2) on a regular basis; (3) pursuant
to a mutual agreement, arrangement, or
understanding that (4) the advice would serve
as a primary basis for the plan’s investment
decisions; and (5) the advice was rendered for
a fee.
(ECF No. 19-2, at 14) (citing Walker v. Merrill Lynch & Co. Inc.,
181 F.Supp.3d 223, 231 (S.D.N.Y. 2016)).

According to Acorn,

Martone fails to “plead the elements necessary to support its
suspicion that Acorn is a Plan fiduciary.”

(ECF No. 19-2, at 14).

It is undisputed that Acorn did not provide investment advice
to the Plan.

ERISA, however, provides that an investment advisor

is a fiduciary if it “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.”

29 U.S.C. § 1002(21)(A)(ii) (emphasis added).
22

Martone

alleges that Acorn had the authority or responsibility to provide
investment advice because the Disclosure provides that Acorn “is
responsible for . . . recommending alternatives and executing Key
Advisor brokerage instructions as directed by you and the Plan’s
participants[.]”

(ECF No. 1-1, at 2).

Consequently, Martone has

adequately alleged that Acorn is a fiduciary.
It is also undisputed that Acorn only agreed to provide
investment advice if the Plan enrolled in a Key Advisor program,
and that the Plan had not enrolled.

Martone, however, alleges

that the NERT Defendants deprived Martone of the ability to enroll
in the Key Advisor program by failing to notify Martone that it
was available.

(ECF No. 1 ¶ 27).

Martone does not allege that

Acorn knew Martone was not aware of the Key Advisor program.
Nevertheless, it has adequately stated a claim that Acorn breached
its fiduciary duties by alleging that Acorn received a fee in
exchange for the authority to render investment advice.
B. ERISA Co-Fiduciary Claims
In paragraph 83 of the complaint, Martone alleges that
each Defendant is liable for the breaches of
each other Defendant as co-fiduciary, insofar
as each knowingly participated in the acts or
omissions of the other fiduciaries, knowing
such acts or omissions were a breach; each
Defendant,
by
failing
to
comply
with
§ 1104(a)(1) in the administration of its
specific responsibilities which give rise to
its status of fiduciary, enabled such other
fiduciaries to commit a breach; and/or each
Defendant had knowledge of the breach by such
23

other fiduciaries and did not make reasonable
efforts to remedy the breach.
(ECF No. 1, at 18).

ERISA provides:

[A] fiduciary with respect to a plan shall be
liable
for
a
breach
of
fiduciary
responsibility of another fiduciary . . . if
he participates knowingly in, or, knowingly
undertakes to conceal, an act or omission of
such other fiduciary, knowing such act or
omission is a breach; . . . if, by his failure
to comply with section 1104(a)(1) . . . in the
administration
of
his
specific
responsibilities which give rise to his status
as a fiduciary, he has enabled such other
fiduciary to commit a breach; or . . . if he
has knowledge of a breach by such other
fiduciary, unless he makes reasonable efforts
under the circumstances to remedy the breach.”
29

U.S.C.

§ 1105(a).

“[L]iability

for

participation

in,

concealment of, or failure to remedy a breach by a cofiduciary is
contingent upon a finding that the fiduciary knew that the other
individual was a fiduciary, that the cofiduciary participated in
the act constituting the breach, and that the act constituted a
breach.”

Brink v. DaLesio, 496 F.Supp. 1350, 1383 (D.Md. 1980),

aff’d in part, rev’d in part, 667 F.2d 420 (4th Cir. 1981), and
aff’d in part, rev’d in part and remanded, (4th Cir. 1982).
Martone alleges that Barrett and Sandy Spring participated in
each other’s breaches of fiduciary duty.

It contends that Barrett

and Sandy Spring: (1) “failed to follow Martone’s instructions
with respect to Plan assets;” (2) “failed to make trades within
one business day;” (3) “failed to transfer the Defined Benefit
24

Plan assets to Schwab as requested;” and (4) “liquidated and
transferred the 401(k) Plan Assets.”

(ECF No. 1 ¶ 78).

Martone

also alleges that “[a]ll of Martone’s dealings were directly with
[Barrett].

Martone

never

communicated

directly

with

[Sandy

Spring] or [Acorn], and relied upon [Barrett] notwithstanding how
[Barrett]

may

Defendants.”

have

delegated

these

(ECF No. 1 ¶ 34).

duties

to

the

other

NERT

Assuming the truth of these

factual allegations and construing them favorably to Martone, they
suffice to show that Barrett and Sandy Spring knew the other was
a fiduciary, participated in the acts constituting the other’s
breaches, and that each engaged in acts that constituted a breach.
Thus, Martone has plausibly alleged that Barrett and Sandy Spring
are subject to co-fiduciary duty for their participation in the
other’s alleged breaches. 1
While Sandy Spring does not address Martone’s co-fiduciary
liability claim, Barrett asserts that Martone has not stated a
claim for co-fiduciary liability because Martone used “‘and/or’
formulaic pleading of the elements of a cause of action.”
No. 16-1, at 26).

(ECF

As Martone points out, however, “a pleading of

elements (1), (2) ‘or’ (3) of [ERISA] would suffice to state a
claim.”

(ECF No. 25, at 25).

Thus, “there is no reason that

Martone does not specifically allege that Acorn participated
in another NERT Defendant’s breach of fiduciary duty.
1

25

Martone cannot state a claim by alleging that elements (1), (2),
‘and/or’ (3) were met.”

(Id. at 25).

C. ERISA Equitable Relief Claims
Martone seeks equitable relief under § 1132(a)(3) to “redress
the NERT Defendants’ violations of ERISA and of the terms of the
Plans and to enforce the provisions of ERISA and the terms of the
Plans.”

(ECF No. 1, at 18).

Martone requests equitable relief

including:
an accounting, an order that NERT Defendants
disgorge any ill-gotten gains or payments they
received, equitable restitution, an equitable
surcharge holding NERT Defendants liable for
the loss to the Plans and for any profits the
Plans would have accrued in the absence of
such breach, and any other remedies to put
Plaintiff in the position it would have
attained
but
for
the
NERT
Defendants’
breaches.
(ECF No. 1, at 20).
ERISA

authorizes

plaintiffs

to

bring

suit

relief against defendants who are not fiduciaries.

for

equitable

See 29 U.S.C.

§ 1132(a)(3); Harris Tr. & Sav. Bank v. Salomon Smith Barney, Inc.,
530 U.S. 238, 247 (2000) (“[D]efendant status . . . does not turn
on whether the defendant is expressly subject to a duty under one
of ERISA’s substantive provisions.”).
as

equitable,

Martone seeks “remed[ies]

traditionally

viewed

restitution.”

Mertens, 508 U.S. at 255 (internal quotation marks

omitted).
26

such

as

injunction

[and]

None

of

the

NERT

Defendants

address

relief claim in their motions to dismiss.

Martone’s

equitable

In its reply, however,

Barrett states that it “did not devote unique attention to Count
II in the Motion because it appears to duplicate Count I.”
No. 30, at 21).

(ECF

A claim for equitable relief under § 1132(a)(3),

however, is separate from a claim for breach of fiduciary duty
under § 1132(a)(2). 2

Also in its reply, Barrett argues that

“[o]ther than breaches of fiduciary duty alleged in Count I,
Martone makes no factual allegation concerning the transgression
or enforcement of any term of ERISA or the Martone Plans.”
No. 30, at 21-22).
authorize

(ECF

Barrett is correct that § 1132(a)(3) “does not

appropriate

equitable

relief

at

large,

but

only

appropriate equitable relief for the purpose of redress[ing any]
violations or enforc[ing] any provisions of ERISA or an ERISA
plan.”

(ECF No. 30, at 21) (citing Harris Trust, 530 U.S. at 239)

(internal quotation marks omitted).
that

equitable

relief

would

Martone, however, has alleged

“redress

the

NERT

Defendants’

violations of ERISA and of the terms of the Plans and to enforce
the provisions of ERISA and the terms of the Plans.”
at 18).

(ECF No. 1,

Thus, Barrett’s arguments for dismissal of Count II fail.

Whether or not NERT Defendants have admitted the point by
failing to respond is irrelevant because the court finds that
Martone has properly stated a claim for equitable relief.
2

27

D. Group Pleading
Acorn

contends

that

Martone

improperly

employs

“group

pleading” by “avoid[ing] making any specific reference to Acorn—
distinct from the other Defendants—at all in the Complaint.”
No. 19-2, at 9).

(ECF

To support the proposition that Martone “has not

specifically alleged Acorn’s involvement in any of the conduct
purportedly giving rise to Martone’s causes of action,” Acorn cites
McPherson v. Baltimore Police Dep’t, 494 F.Supp.3d 269 (D.Md.
2020), in which the court determined that “[w]hile group pleading
can be permissible in certain circumstances, it must be ‘plausible
that each defendant was involved in all of the facts as alleged.’”
McPherson, 494 F.Supp.3d at 280 (quoting Sprint Nextel Corp. v.
Simple Cell, Inc., No. 13-cv-617-CCB, 2013 WL 3776933, at *2 (D.Md.
July 17, 2013)).

Martone responds that the complaint included

specific allegations against Acorn and its group pleading is proper
because

it

“alleges

that

all

of

the

NERT

Defendants

responsible for charging and receiving investment fees.”

were
(ECF

No. 27, at 10-12).
Here, Martone has alleged facts that make it plausible that
Acorn “was involved in all of the acts as alleged.”
2013 WL 377693, at *2.

Sprint Nextel,

It is plausible that Acorn, together with

the other NERT Defendants, was responsible for charging investment
fees to the Plans without providing investment services. Martone’s
inclusion

of

allegations

that
28

only

address

one

particular

defendant

helps

Defendants,

it

collectively.
834-RDB,

establish
is

that

alleging

when

that

it

the

references

NERT

all

Defendants

NERT
acted

See Burgess v. Baltimore Police Dep’t, No. 15-cv-

2016

WL

795975,

at

*10

(D.Md.

Mar. 1,

2016).

Consequently, Martone has not engaged in improper group pleading.
E. Common Law Claims
In Counts III, IV, and V of the complaint, Martone asserts
claims for common law breach of fiduciary duty, unjust enrichment,
and

negligence

respectively.

(ECF

No. 1,

at

21-27).

NERT

Defendants argue that the common law counts are preempted by ERISA.
(ECF Nos. 11-1, at 17; 16-1, at 22; 19-2, at 16).
ERISA’s preemption provision provides, “the provisions of
[ERISA] shall supersede any and all State laws insofar as they now
or hereafter relate to any employee benefit plan.”
§ 1144(a).

29 U.S.C.

ERISA’s preemption is “deliberately expansive, and

designed to ‘establish pension plan regulation as exclusively a
federal concern.’”

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41,

45-46 (1987) (quoting Alessi v. Raybestos-Manhattan, Inc., 451
U.S. 504, 523 (1981)).

“A law ‘relates to’ an employee benefit

plan, in the normal sense of the phrase, if it has a connection
with or reference to such a plan.”
463 U.S. 85, 96-97 (1983).
preemptive

scope

is

not

Shaw v. Delta Air Lines, Inc.,

It is well settled that ERISA’s

limited

to

“state

designed to affect employee benefit plans.”
29

laws

specifically

Pilot Life, 481 U.S.

at 47-48 (quoting Shaw, 463 U.S. at 98); see also Aetna Health
Inc. v. Davila, 542 U.S. 200, 209 (2004) (“[A]ny state-law cause
of action that duplicates, supplements, or supplants ERISA’s civil
enforcement remedy . . . is pre-empted.”).
Yet, ERISA’s preemptive scope has limits. “Some state actions
may affect employee benefit plans in too tenuous, remote, or
peripheral a manner to warrant a finding that the law ‘relates to’
the plan.”

Shaw, 463 U.S. at 100 n.21.

Courts must look “to the

objectives of the ERISA statute as a guide to the scope of the
state law that Congress understood would survive.”

Wilmington

Shipping Co. v. New England Life Ins. Co., 496 F.3d 326, 342 (4th
Cir. 2007).

The Fourth Circuit explained,

[c]onsidering ERISA’s objectives set forth in
29 U.S.C.A. § 1001(b), the Supreme Court has
explained that Congress intended ERISA to
preempt at least three categories of state
law: (1) laws that “mandate[ ] employee
benefit structures or their administration”;
(2)
laws
that
bind
employers
or
plan
administrators
to
particular
choices
or
preclude uniform administrative practice; and
(3) “laws providing alternate enforcement
mechanisms” for employees to obtain ERISA plan
benefits. A key feature of these categories
of laws is that they “implicate the relations
among the traditional ERISA plan entities.”
Id. (internal citations omitted).

While “Congress intended to

preempt ‘state laws providing alternate mechanisms’ for employees
to obtain ERISA plan benefits,” the Fourth Circuit has held that
“Congress did not intend to preempt ‘traditional state-based laws
30

of general applicability [that do not] implicate the relations
among

the

traditional

ERISA

plan

entities,’

including

the

principals, the employer, the plan, the plan fiduciaries and the
beneficiaries.”

Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1468-

69 (4th Cir. 1996) (emphasis added) (citing New York State Conf.
of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S.
645, 658 (1995); Sweeney, 89 F.3d at 1167).
Barrett argues that the breach of fiduciary duty, unjust
enrichment,

and

negligence

state

common

law

claims

“would

represent an enforcement mechanism alternative to ERISA,” thus
implicating the third Wilmington category of state law.

(ECF

No. 16-1, at 27).
1. Common Law Breach of Fiduciary Duty Claim
Martone asserts a common law breach of fiduciary claim “[i]n
addition and in the alternative to its claims under ERISA[.]” (ECF
No. 1 ¶ 93).

It argues NERT Defendants owed a fiduciary duty to

Martone and the Plans because they “did not deal on equal terms
with

Plaintiff,”

“occupied

a

position

of

special

trust

and

confidence with respect to Plaintiff,” and “exercised control and
discretion over the funds in the Plans, including the investment
thereof.”

(Id. at ¶ 94).

Martone adds that “NERT Defendants had

duties to Plaintiff to manage and invest the Plans’ funds, at the
direction of Plaintiff, reasonably and prudently with due care and
in accordance with the Plans, contracts, and applicable law.” (Id.
31

at ¶ 95).

Martone employs the same language as to why each NERT

Defendant was a fiduciary and how each NERT Defendant breached
their fiduciary duties as it did in its ERISA claim.

(Id. at

¶¶ 75, 78, 94, 96).
Like

Martone’s

ERISA

claims,

its

common

law

breach

of

fiduciary duty claim references NERT Defendants’ failures to make
trades within one business day, transfer the Plan assets to Schwab
as instructed, allow the Plan to fully invest in the market, and
follow Martone’s instructions, as well as charging investment fees
when

no

investment

liquidating
authorization.

and

advisory

services

transferring

the

(ECF No. 1, at ¶ 96).

were

Plan

provided,
assets

and

without

Martone’s common law breach

of fiduciary duty claim is not based on any state laws of general
applicability;

rather,

it

implicates

the

relations

among

traditional ERISA plan entities including the Plan fiduciaries
(allegedly Barrett, Sandy Spring, and Acorn) and beneficiaries.
See Coyne & Delany, 98 F.3d at 1471.

It therefore would represent

an alternative enforcement mechanism to ERISA.

In fact, Martone

seems to admit that the parallels between the ERISA and state
common law claims are deliberate.

It states it pled the common

law claim breach of fiduciary duty claim “[i]n addition and in the
alternative to its claims under ERISA[.]”

(ECF No. 1 ¶ 93).

Martone cites cases holding that it would be “premature to
dismiss the common law claims based upon ERISA preemption at the
32

motion to dismiss stage.”

(ECF No. 25, at 26) (citing England v.

Marriott Int’l, Inc., 764 F.Supp.2d 761, 781 (D.Md. 2011); Moore
v. Life Ins. Co. of North Am., 278 F.App’x 238, 241–42 (4th Cir.
2008)).
In

Martone’s cases are distinguishable from the one at hand.

England,

“the

central

dispute . . . [was]

applie[d] to the Retirement Awards.

whether

ERISA

Only if and when the Court

decides that ERISA does apply to the Retirement Awards would
dismissal of the breach of contract claims . . . be appropriate.”
764 F.Supp.2d at 781.

Here, however, NERT Defendants do not

dispute that ERISA governs the Plans; rather, they argue that they
are not fiduciaries under the Plans and if they are fiduciaries,
that they did not breach their fiduciary duties.

And in Moore,

the plaintiff had “contended from the outset that her claims did
not fall within ERISA, asserted the ERISA claim only in the
alternative, and argued that the alternative count should not be
considered an acknowledgment of the policy’s status as an ERISA
plan.”

278 F.App’x at 240.

Here, on the other hand, Martone’s

primary allegations arise under ERISA, not state law, and it is
the state law claims that are pled in the alternative.
Courts
alternative
Commc’ns,

regularly
to

ERISA

dismiss

state

claims.

No. 07-cv-501-DKC,

See,
2008

WL

law

claims

e.g.,

pled

O'Brien

11509720,

at

v.
*3

in

the

Verizon
(D.Md.

Feb. 21, 2008) (“Courts have found that such arguments in the
alternative

are

‘precisely

the
33

kind

of

alternate

enforcement

mechanism to obtain ERISA plan benefits that the Fourth Circuit
deemed appropriate for preemption in Coyne & Delany.’”) (citing
Wilmington, 496 F.3d at 343 (upholding preemption where plaintiffs
“candidly characterize their state-law claims as ‘alternatives’ to
[defendant’s] ERISA claim, a good tip off that they seek the kind
of ‘alternate enforcement mechanism[ ]’ that ERISA preempts”);
Kress v. Food Emps. Lab. Rels. Ass'n, 217 F.Supp.2d 682, 686 (D.Md.
2002) (preempting claim that “[i]n effect . . . is an insurance
policy guarding against the failure of [plaintiff’s] ERISA claims
against the Fund”)); see also Ingersoll-Rand Co. v. McClendon, 498
U.S. 133, 140 (1990) (determining that a state law cause of action
should be preempted when a “court’s [state law] inquiry must be
directed to the plan” because the “judicially created cause of
action relate[s] to an ERISA plan”) (internal quotation marks
omitted). Martone’s state common law claim for breach of fiduciary
duty relates to the employee benefit plan within the meaning of 29
U.S.C. § 1144(a).

Accordingly, ERISA preempts it, and Count III

will be dismissed.
2. Common Law Unjust Enrichment Claim
Martone argues that “Plaintiff is entitled to a money judgment
against NERT Defendants because Plaintiff conferred the benefit of
payment to NERT Defendants for services, which Defendants failed
to perform.”

(ECF No. 1 ¶ 101).

“payment

certain

of

fees

The alleged benefits include the

for
34

services

including

investment

advisory services, but [Barrett] and [Acorn] did not provide
investment

advice

Plaintiff.”

or

perform

(Id. ¶ 102).

any

other

such

services

for

The alleged benefits also include

Barrett’s and Sandy Spring’s
obligation to follow Plaintiff’s instructions
to make trades on a timely basis by the
following business day, transfer[ ] the Plan
assets as instructed, allow[ ] access to a
self-directed TD Ameritrade account, and
otherwise communicat[e] with Plaintiff and
follow[
]
Plaintiff’s
instructions
with
respect to the management of the Plan and Plan
assets, but NERT Administrator and NERT
Trustee did not perform these services.
(Id. ¶ 103).

Finally, Martone alleges that it is inequitable for

NERT Defendants to accept and retain such payments and benefits
because

“NERT

services.”

Defendants

(Id. ¶ 104).

did

not

perform

the

aforementioned

Thus, Martone has pled specific facts

alleging that it is entitled to recover under an unjust enrichment
theory.
Martone’s unjust enrichment claim does not relate to the
employee benefit plan within the meaning of 29 U.S.C. § 1144(a).
While the ERISA claims allege that NERT Defendants were fiduciaries
to the Plans and breached their fiduciary duties, the unjust
enrichment claim alleges that Martone conferred a benefit upon
NERT Defendants for services that NERT Defendants did not provide.
(ECF No. 1 ¶¶ 102, 103).

The unjust enrichment claim would not

35

represent an alternative enforcement mechanism to ERISA.

Thus,

ERISA does not preempt Martone’s unjust enrichment claim.
3. Common Law Negligence Claim
Martone asserts a common law negligence claim “[i]n addition
and in the alternative to its claims under ERISA[.]”

(Id. ¶ 107).

Martone alleges that NERT Defendants breached their duties “to
hold, manage, and invest the Plans’ assets with the care, skill,
prudence and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with
such matters would use in the matter.”

(Id. ¶ 108).

Like its common law breach of fiduciary duty claim, Martone’s
negligence claim repeats the same language as to what actions
constitute a breach of duty as in its ERISA claim.
109).

(Id. ¶¶ 78,

Because the negligence claim would represent an alternative

enforcement mechanism to ERISA, it is preempted by ERISA.
IV.

Conclusion
For

the

foregoing

reasons,

NERT

Defendants’

dismiss will be granted in part and denied in part.

motions

to

A separate

order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

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