Metropolitan Life Insurance Company v. Sicoli and Massaro Inc. Pension Trust et al
MEMORANDUM OPINION & ORDER re: 32 LETTER MOTION for Oral Argument on Defendants' Motion to Dismiss and Motion to Transfer Venue addressed to Judge Paul G. Gardephe from Michael H. Bernstein dated 03/15/16, filed by Metropol itan Life Insurance Company; re: 27 MOTION to Dismiss/change venue, filed by Dominic P. Massaro, As Trustee of the Sicoli and Massaro Inc. Pension Trust and Plan Administrator of the Sicoli and Massaro Inc. Pension Trust Plan, Sico li and Massaro Inc., as Plan Administrator For the Sicoli and Massaro Inc. Pension Trust Plan, Sicoli and Massaro Inc. Pension Trust Plan, Sicoli and Massaro Inc. Pension Trust. For the reasons stated above, Defendants' motion to dismiss is granted, and Defendants' motion to transfer this action to the Western District of New York is denied as moot (Dkt. No. 27). Defendants' motion for oral argument is denied as moot (Dkt. No. 32). The Clerk of the Court is directed to terminate the motions (Dkt. Nos. 27, 32). Any Amended Complaint will be filed by October 30, 2016. (As further set forth in this Opinion) (Amended Pleadings due by 10/30/2016.) (Signed by Judge Paul G. Gardephe on 9/26/2016) (kl)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
METROPOLITAN LIFE INSURANCE
15 Civ. 7141 (PGG)
- against SICOLI AND MASSARO INC. PENSION
TRUST, SI COLI AND MASSARO INC.
PENSION TRUST PLAN, SICOLI AND
MASSARO INC., AS PLAN
ADMINISTRATOR FOR THE sicqu
AND MASSARO INC. PENSION 'fRUST
PLAN, and DOMINIC P. MASSARO, AS
TRUSTEE OF THE SI COLI AND
MASSARO INC. PENSION TRUST AND
PLAN ADMINISTRATOR OF THE SICOLI
AND MASSARO INC. PENSION TRUST
OPINION & ORDER
PAULG. GARDEPHE, U.S.D.J.:
Plaintiff Metropolitan Life Insurance Company ("MetLife") brings this action
pursuant to Section 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"),
29 U.S.C. § 1132, against Defendants Sicoli and Massaro Inc. Pension Trust (the "Trust"); Sicoli
and Massaro Inc. Pension Trust Plan ("the Plan"); Sicoli and Massaro, Inc., as plan administrator
for the Plan; and Dominic P. Massaro, as trustee of the Trust and administrator for the Plan.
MetLife claims that Defendants breached their fiduciary duty to MetLife by refusing to return an
overpayment that MetLife erroneously made to Defendants in connection with a life insurance
policy. (Cmplt. (Dkt. No. 1)) Defendants have moved to dismiss the Complaint or, in the
alternative, to transfer this action to the Western District of New York. (Dkt. No. 27)
For the reasons stated below, Defendants' motion to dismiss will be granted, and
Defendants' motion to transfer will be denied as moot.
On May 1, 1973, Sicoli and Massaro, Inc. established the Sicoli and Massaro Inc.
Pension Trust for the benefit of its employees. (Cmplt. (Dkt. No. I) ifif 2, 12) The Trust, in turn,
established the Sicoli and Massaro Inc. Pension Trust Plan, a pension plan organized under
ERISA, 29 U.S.C. § I 001 et seq. (Id. ~if 3, 13) Sicoli and Massaro, Inc. is the administrator for
ilih if 4)
Dominic P. Massaro is both a principal of Sicoli and Massaro, Inc., and a
trustee of the Trust.
ilih ~ 5)
On June 1, 1999, the Trust - on behalf of the Plan -purchased a life insurance
policy (the "Policy'') from New England Life Insurance Company2 insuring the life of Dominick
C. Massaro, an employee of Sicoli and Massaro, Inc.
administered by MetLife.
ilih if 19)
ilih ~ 16)
Claims under the Policy are
The Policy has a face amount of $690,500.
Dominick C. Massaro designated the Trust as the beneficiary of the Policy.
ilih ~~ 20-21)
ilih if 29)
Policy obligates MetLife to pay the Trust the face amount of the Policy -$690,500 - upon
Dominick C. Massaro's death. @
ifif 23-25, 28)
Dominick C. Massaro died on June 4, 2012 ilib if 27), and the Trust submitted a
claim to MetLife under the Policy at that time. (Id.
The following facts are drawn from the Complaint and are presumed true for purposes of
resolving Defendants' motion to dismiss. See Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d
229, 237 (2d Cir. 2007).
New England Life Insurance Company is a MetLife affiliate. ilil ~ 16)
On June 18, 2012, MetLife erroneously paid the Trust $1,174,060.36$481,237.21 more than the correct amount due to the Trust under the Policy. 3 (Id. ii~ 31-32)
The overpayment was the result of MetLife having inadvertently included benefits under an
inapplicable rider, as well as corresponding interest.
On August 23, 2012, MetLife wrote to Dominic P. Massaro - as trustee of the
5)- and asked him to return the $481,237.21 overpayment. (Id.
20, 2012, the Trust informed MetLife that it would not return the money unless MetLife provided
documentation demonstrating that the $481,237.21 was, in fact, an erroneous overpayment. (IQ_,
36) MetLife thereafter sent additional letters and documentation to Dominic P. Massaro
demonstrating that the $481,237.21 was an overpayment. (Id.~ 37) Defendants have refused to
return the alleged overpayment, however. (Id.
Under the Policy, the Trust was entitled to $692,823 .15. This amount is comprised of the
$690,500 face amount, a $1.261.82 cost of insurance refund, and interest of $1,061.33. (Id.~ 34)
RULE 12(b)(6) STANDARD4
"To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Igbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "In
considering a motion to dismiss ... the court is to accept as true all facts alleged in the
complaint," Kassner, 496 F.3d at 23 7 (citing Dougherty v. Town of N. Hempstead Bd. of Zoning
Although Defendants contend that this Court lacks subject matter jurisdiction (see Def. Br.
(Dkt. No. 33) at 2), that contention is premised entirely on Defendants' argument that the
Complaint does not state a claim under ERISA. See id. ("because Defendants did not owe
MetLife a fiduciary duty, MetLife's ERISA claim for breach of fiduciary duty is untenable.
Without MetLife' s breach of fiduciary duty claim, there is no federal question for this Court to
adjudicate; therefore, this Court has no subject matter jurisdiction over this matter."); see also id.
at 4 ("This Court lacks subject matter jurisdiction because [Defendants] did not owe MetLife a
fiduciary duty, and thus could not have breached a fiduciary duty to MetLife."))
"'[Where] a federal statute upon which a claim is premised is interpreted to be inapplicable, it
could be argued that the plaintiff has failed to present a federal question and thus subject matter
jurisdiction is absent."' Vacca v. Trinitas Hosp., No. 05-CV-0368 JFB AKT, 2006 WL
3314637, at *2 n.2 (E.D.N.Y. Nov. 14, 2006) (quoting Nowak v. Ironworkers Local 6 Pension
Fund, 81 F.3d 1182, 1188-89 (2d Cir. 1996)). '" [C]ourts have uniformly held[, however,] that in
such situations the preferable practice is to assume that jurisdiction exists and proceed to
determine the merits of the claim pursuant to [Rule 12(b)(6)]."' Vacca, 2006 WL 3314637, at *2
n.2 (quoting Nowak, 81 F.3d at 1189); see Da Silva v. Kinsho Int'l Corp., 210 F. Supp. 2d 241,
248 (S.D.N.Y.), aff'd, 229 F.3d 358 (2d Cir. 2000) (where "the inquiry ... necessary to assess
[subject matter jurisdiction over] [p ]laintiff's ... claim [is] ... bound up in the merits of the
claim," the motion to dismiss should be decided "under Fed. R. Civ. P. 12(b)(6) for failure to
state a claim [rather] than under Fed. R. Civ. P. 12(b)(l) for lack of subject matter jurisdiction");
see also Via Christi Reg'l Med. Ctr., Inc. v. Blue Cross & Blue Shield of Kansas, Inc., 361 F.
Supp. 2d 1280, 1285 (D. Kan. 2005) (where "[a] determination of whether [defendants] are
fiduciaries within the meaning of ERISA ... would effectively be a ruling on the merits[,] ...
[t]he Court will use the standards under Rule 12(b)(6) to analyze [the] motion.").
Here, because Defendants' argument as to subject matter jurisdiction is "bound up in the merits
of the claim," any "dismissal should be under 12(b)(6) for failure to state a claim, rather than
under 12(b)(l)." Nowak, 81 F.3d at 1191. Accordingly, Defendants' motion will be construed as
a motion to dismiss under fed. R. Civ. P. 12(b)(6) for failure to state a claim.
Appeals, 282 F.3d 83, 87 (2d Cir. 2002)), and must "draw all reasonable inferences in favor of
the plaintiff." Id. (citing Fernandez v. Chertoff, 471 F.3d 45, 51 (2d Cir. 2006)).
"In considering a motion to dismiss for failure to state a claim pursuant to Rule
12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to
the complaint as exhibits, and documents incorporated by reference in the complaint." DiFolco,
622 F.3d at 111 (2d Cir. 2010)(citing Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.
2002); Hayden v. County of Nassau, 180 F.3d 42, 54 (2d Cir. 1999)). Additionally, "[w]here a
document is not incorporated by reference, the court may never[the]less consider it where the
complaint 'relies heavily upon its terms and effect,' thereby rendering the document 'integral' to
the complaint." Id. (quoting Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir. 2006)).
Defendants argue that MetLife has not stated a claim for breach of fiduciary duty
under ERISA, because "Defendants did not owe MetLife a fiduciary duty." (Def. Br. (Dkt. No.
33) at 2). 5 Defendants further contend that MetLife cannot obtain equitable relief pursuant to
ERISA § 502(a)(3), because MetLife's underlying ERISA claim for breach of fiduciary duty
fails. (Id. at 10)
Breach of Fiduciary Duty under ERISA
All of MetLife's claims in this action are explicitly premised on Defendants'
alleged breach of fiduciary duty under ERISA. 6 (See Cmplt. (Dkt. No. 1) at 5-6 ("First Cause of
All page citations are as reflected on this District's Electronic Case Filing system.
Plaintiff's "Fourth Cause of Action" is a "Claim for Attorney's Fees Against All Defendants."
(See Cmplt. (Dkt. No. 1) ifif 78-79). A request for an award of attorney's fees seeks a remedy; it
does not plead a cause of action. See Hutson v. Notorious B.I.G., LLC, No. 14-CV-2307 (RJS),
2015 WL 9450623, at *8 (S.D.N.Y. Dec. 22, 2015) (requests for "attorneys' fees ... are
remedies, not causes of action") (citing Mercer v. Mercer, No. 13-cv-4192 (SJF) (WDW), 2014
WL 3652698, at *7 (E.D.N.Y. July 21, 2014)).
Action" for "Breach of Fiduciary Duty, Unjust Enrichment and Surcharge" brought under
"ERISA § 502(a)(3)"); id. at 8 ("Second Cause of Action" for "Breach of Fiduciary Duty and
Equitable Restitution" brought under "ERISA § 502(a)(3)"); id. at 8-9 ("Third Cause of Action"
for "Breach of Fiduciary Duty and Constructive Trust" brought under "ERISA § 502(a)(3)")
Indeed, the Complaint's sole theory of recovery is that "the Defendants breached their fiduciary
duties to MetLife ... and to the [T]rust [under ERISA] by improperly retaining ... the erroneous
overpayment of death benefits in the amount of$481,237.21."
ilib ~ 53; see id. i;~ 62, 71)
"ERISA is a comprehensive statute designed to promote the interests of
employees and their beneficiaries in employee benefits plans." Bendik v. Credit Suisse First
Boston (USA), Inc., No. 02 CIV. 9554 (CBM), 2004 WL 736852, at *7 (S.D.N.Y. Apr. 5, 2004)
(citing Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983)). "'ERISA's central purpose is to
protect beneficiaries of employee benefits plans."' Trustees of Upstate New York Engineers
Pension Fund v. Ivy Asset Mgmt., 131 F. Supp. 3d 103, 121(S.D.N.Y.2015) (quoting Gedek v.
Perez, 66 F.Supp.3d 368, 373 (W.D.N.Y. 2014) (internal quotation marks and citation omitted));
see John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86, 114 (1993)
("ERISA's focus [is] on protecting plan participants and their beneficiaries" (citations omitted)).
Under Section 409 of ERISA,
[a]ny person who is a fiduciary with respect to a plan who breaches any of the
responsibilities, obligations, or duties imposed upon fiduciaries ... 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).
"To state a claim for breach of fiduciary duty under ERISA, a plaintiff must allege
facts which, if true, would show that the defendant acted as a fiduciary, breached its fiduciary
duty, and thereby caused a loss to the plan at issue." Pension Ben. Guar. Corp. ex rel. St. Vincent
Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 730 (2d Cir.
2013) (citing 29 U.S.C. § 1109(a); Pegram v. Herdrich, 530 U.S. 211, 225-26 (2000)). "As [the
Second Circuit] has observed, 'a person may be an ERISA fiduciary with respect to certain
matters but not others, for he has that status only to the extent that he has or exercises the
described authority or responsibility."' Trustees of Upstate New York Engineers Pension Fund
v. Ivy Asset Mgmt., 131 F. Supp. 3d 103, 127 (S.D.N.Y. 2015) (quoting Harris Trust & Sav.
Bank v. John Hancock Mut. Life Ins. Co., 302 F.3d 18, 28 (2d Cir. 2002) (internal quotation
marks and citation omitted)). Thus, '"[i]n every case charging breach of ERISA fiduciary duty
... the threshold question is ... whether [the defendant] was acting as a fiduciary (that is, was
performing a fiduciary function) when taking the action subject to complaint."' Coulter v.
Morgan Stanley & Co. Inc., 753 F.3d 361, 366 (2d Cir. 2014) (quoting Pegram, 530 U.S. at 226);
see F.W. Webb Co. v. State St. Bank & Trust Co., No. 09 CIV. 1241RJH,2010 WL 3219284, at
*4 (S.D.N.Y. Aug. 12, 2010) ("The threshold issue in this case, like in any ERISA case, is
whether and to what extent defendants were fiduciaries .... Unless defendants' [challenged
actions] fell within the scope of fiduciary responsibilities[,] ... plaintiffs have no claim [for
breach of fiduciary duty] under ERISA." (citing Harris Trust and Savings Bank, 302 F .3d 18, 28
(2d Cir. 2002); Pegram, 530 U.S. at 226)).
Here, Defendants argue that "MetLife cannot sue [Defendants] for breach of
fiduciary duty, as [Defendants] did not owe MetLife a fiduciary duty." (Def. Br. (Dkt. No. 33) at
5) MetLife contends, however, that Defendants owed fiduciary duties to MetLife because
MetLife and Defendants are "co-fiduciaries of the Plan." (Pltf. Br. (Dkt. No. 31) at 17; see
Cmplt. (Dkt. No. I) if 53 ("as fiduciaries under ERISA, the Defendants breached their fiduciary
duties to MetLife, as co-fiduciary")) Case law indicates that while both MetLife and Defendants
owe a fiduciary duty to Plan participants, Defendants do not owe a fiduciary duty to MetLife
In Sharp Elecs. Corp. v. Metro. Life Ins. Co., 578 F.3d 505 (7th Cir. 2009), for
example, a participant in Sharp Electronics Corp.' s group disability ERIS A plan sued MetLife which had underwritten the plan - alleging that MetLife had wrongfully denied her benefits.
Sharp Electronics Corp., 578 F.3d at 507. After MetLife informed the plan participant that "one
reason it had refused to pay her any long-term [disability] benefits was that Sharp had failed to
make required [premium] payments ... on her behalf," the plan participant added Sharp - the
plan administrator - as a defendant in that action.
ilih at 507-08)
Sharp then filed a cross-claim
against MetLife, alleging that MetLife had breached its fiduciary duty to Sharp by informing the
plan participant that Sharp's non-payment of the premium had influenced MetLife's decision to
deny disability benefits.
ilih at 507, 509)
Sharp sought to recover from MetLife, inter alia, the
cost of defending itself against the claim brought by the plan participant. @. at 511) The
Seventh Circuit affirmed the dismissal of Sharp's cross-claim for breach of fiduciary duty
against MetLife, finding that MetLife did not owe a fiduciary duty to Sharp:
We can assume that MetLife was a fiduciary with respect to the Plan, and we can
also assume that Sharp was a fiduciary with respect to the Plan. But this does not
mean that either one was a fiduciary with respect to the other. Their relationship
was purely contractual: MetLife agreed to perform certain services for Sharp,
with respect to this benefits plan. See 29 U.S.C. § 1002(21)(A) (defining
circumstances in which "a person is a fiduciary with respect to a plan" without
any mention of fiduciary relationships arising between parties who contract for
plan-related services); cf. Johnson v. Georgia-Pacific Corp., 19 F.3d 1184, 1188
(7th Cir. 1994) ("This definition [in 29 U.S.C. § 1002(21)(A)] does not make a
person who is a fiduciary for one purpose a fiduciary for every purpose. A person
is a fiduciary to the extent that he performs one of the described duties; people
may be fiduciaries when they do certain things but be entitled to act in their own
interests when they do others."). Put a little differently, Sharp is not the kind of
entity that Congress had in mind for the protections it created in ERIS A. Sharp's
argument based on a direct fiduciary duty therefore must be rejected.
Id. at 512. 7
Similarly, in First Nat. Life Ins. Co. v. Sunshine-Jr. Food Stores, Inc., 960 F.2d
1546 (11th Cir. 1992), the Eleventh Circuit concluded that "although [an employer] was a
fiduciary with respect to [a] plan [organized under ERISA], it was not a fiduciary with respect to
[the insurer it had retained to provide health benefits to its employees]." First Nat. Life Ins. Co.,
960 F.2d at 1550. In that action, First National Life Insurance Company ("FNL") had issued a
group life and health insurance policy for an employee welfare benefit plan established by
employer Sunshine-Jr. Food Stores, Inc. ("Sunshine") under ERISA. Id. at 1548. After
Sunshine terminated FNL and obtained coverage frorr: another insurer, FNL brought suit against
Sunshine under ERISA § 502. (lgJ FNL sought, inter alia, an order requiring Sunshine to
render an accounting, so that FNL could "determine if Sunshine [had] complied with the
insurance agreement. FNL contend[ ed] that Sunshine stood in a fiduciary capacity as to FNL
and is therefore obligated to render an accounting." (Id. at 1550)
MetLife argues that Sharp Elecs. Corp. is distinguishable, because in that action "the losses the
plaintiff sought to recover were not incurred by the plan and thus, could not be recovered in a
claim for breach of fiduciary duty." (Pltf. Br. (Dkt. No. 31) at 19) The Complaint here does not
plead that the Plan or Trust suffered any loss, however. To the contrary, the Complaint pleads
that MetLife suffered a loss and that the Trust and Plan received an overpayment, and were
thereby "unjustly enriched." (See Cmplt. (Dkt. No. 1) iI 54 (alleging that "[t]he $481,237.21
amount overpaid to the Trust belongs to MetLife, and the Trust has improperly retained these
funds causing injury to MetLife"); id. iI 55 (alleging that the "Defendants have been unjustly
enriched in the amount of $481,23 7 .12, plus interest, as a result of their refusal to return the
overpaid benefits"); id. ~ 73 ("The Defendants, which are not entitled to keep the overpaid funds
under the clear terms of the Policy, have been unjustly enriched as a result of MetLife's
overpayment. ...") ).
"The district court concluded that although Sunshine was a fiduciary with respect
to the plan, it was not a fiduciary with respect to FNL" (kl), and the Eleventh Circuit agreed:
Clearly, the fiduciary duties outlined in ERISA are designed to protect the plan
and its beneficiaries rather than those who administer the plan. See~' 29
U.S.C. § 1002(2l)(A) (defining "fiduciary" with respect to a plan). See also§§
1104 and 1109. Appellant has not pointed to any ERISA provision that would
impose a fiduciary duty upon Sunshine with respect to FNL. Cf. Massachusetts
Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 139 (1985) (Under§ 1109(a), the
relevant fiduciary relationship is one with respect to the plan.). Nor was the
relationship between FNL and Sunshine such that Sunshine could be held
accountable as a fiduciary. FNL entered into the policy with Sunshine as part of
an arm's-length transaction. FNL was free to negotiate such terms as it thought
necessary for its protection.
Id. at 1550-51; see also Washington Nat. Ins. Co. v. Hendricks, 855 F. Supp. 1542, 1553-55
(W.D. Wis. 1994) (concluding in an insurer's action against employer to recover premiums owed
in connection with an ERISA plan that the insurer "has no cause of action under [ERISA §
502 ]"; noting that "actions under [ERISA § 502] are generally permitted to benefit the plan itself
rather than a fiduciary and generally, a fiduciary owes no duty to another fiduciary, but only to
the plan"; permitting "plaintiff [insurer] [to] maintain an action for breach of contract under the
federal common law ofERISA" (citing First Nat. Life Ins. Co., 960 F.2d at 1551)). 8
Here, even accepting MetLife' s allegation that MetLife and Defendants both owe
a fiduciary duty to the Plan (see Cmplt. (Dkt. No. I) ilil 43-45),9 "this does not mean that either ..
The district court in Washington Nat. Ins. Co. went on to "note" that "parenthetically ... none
of the defendants in this case qualify as fiduciaries [of the plan]." Washington Nat. Ins. Co., 855
F. Supp. at 1553. The district court did not rely on that finding, however, in reaching the
conclusions cited above.
9 MetLife argues that Defendants are bound by admissions they made in a state court proceeding
in which they allegedly acknowledged that MetLife is a fiduciary of the Plan. (Pltf. Br. (Dkt.
No. 31) at 15-17) Defendants state that it is "debatable" whether MetLife is a fiduciary of the
Plan, but go on to argue that - even if this Court "presume[s] [MetLife] to be a plan fiduciary" "MetLife cannot sue [Defendants] for breach of fiduciary duty, as [Defendants] did not owe
MetLife a fiduciary duty." (Def. Br. (Dkt. No. 33) at 4-5) For purposes of resolving
Defendants' motion to dismiss, this Court has assumed that MetLife owes a fiduciary duty to the
. was a fiduciary with respect to the other." Sharp Elecs. Corp., 578 F.3d at 512. Moreover, the
Complaint does not plead facts demonstrating that Defendants owed a fiduciary duty to MetLife.
To the contrary, the Complaint pleads facts demonstrating that MetLife and the Defendants'
"relationship was purely contractual," Sharp Elecs. Corp., 578 F.3d at 512: the Trust purchased
a life insurance policy from a MetLife affiliate and paid the insurer monthly premiums, in
exchange for which the insurer agreed to pay Defendants the face amount of the policy upon
Dominick C. Massaro's death. (Cmplt. (Dkt. No. 1) ifif 16, 22, 25) These facts provide no basis
for this Court to find that Defendants owed MetLife a fiduciary duty.
Because all of MetLife's causes of action are founded on the claim that
Defendants breached a fiduciary duty they owed to MetLife under ERISA, Defendants' motion
to dismiss will be granted. See Jander v. lnt'l Bus. Machines Corp., No. 15CV3781, 2016 WL
4688864, at *3 (S.D.N.Y. Sept. 7, 2016) (granting motion to dismiss claims brought under
ERISA § 502 where "Plaintiffs ... do not sufficiently plead that [defendant] was a ...
fiduciary"); Util. Audit Grp. v. Capital One, N.A., No. 14-CV-0097 SJF GRB, 2015 WL
1439622, at *12 (E.D.N.Y. Mar. 26, 2015) (because defendant was not acting as a fiduciary
when taking the actions at issue, "plaintiffs' ERISA breach of fiduciary claims ... are dismissed .
. . for failure to state a claim for relief'); Severstal Wheeling Inc. v. WPN Corp., 809 F. Supp. 2d
245, 261(S.D.N.Y.2011), affd, No. 15-2866, 2016 WL 4543094 (2d Cir. Aug. 30, 2016)
(dismissing claims for breach of fiduciary duty under ERIS A where complaint failed to
adequately allege defendant's status as a fiduciary).
MetLife also argues, however, that the Complaint asserts that "Defendants
breached their fiduciary duty to the Plan by refusing to return [the] overpaid funds." (Pltf. Br.
(Dkt. No. 31) at 8; see Cmplt. (Dkt. No. 1) ~ 52 (alleging that "Defendants' refusal to return the
overpaid proceeds ... is a clear violation of the terms of the [life insurance] [pJolicy, a Plan
asset, and thus of the prudent man standard [for fiduciaries] under ERISA")) MetLife contends
that it is entitled to bring such a claim because it is a Plan fiduciary. (Pltf. Br. (Dkt. No. 31) at
"Under section 502 ofERISA, ... fiduciaries ... may commence an action for
breach of a fiduciary duty on behalf of a pension plan." H & R Convention & Catering Corp. v.
Somerstein, No. 12-CV-1425, 2013 WL 1911335, at *7 (E.D.N.Y. May 8, 2013) (citing 29
U.S.C. § 1132(a)); Ello v. Singh, 531 F. Supp. 2d 552, 564 (S.D.N.Y. 2007) ("Section 502 names
three classes of persons who may commence an action for breach of a fiduciary duty: (1) a
participant or beneficiary, (2) the Secretary of Labor, and (3) a fiduciary"). A plaintiff bringing a
breach of fiduciary duty on behalf of an ERISA plan must show, however, that the defendant's
breach of fiduciary duty "caused a loss to the plan at issue." Pension Ben. Guar. Corp. ex rel. St.
Vincent Catholic Med. Ctrs. Ret. Plan v., 712 F.3d at 730 (c;itations omitted); see Haddock v.
Nationwide Fin. Servs., Inc., 570 F. Supp. 2d 355, 366 (D. Conn. 2008) ("to survive a motion to
dismiss, a plausible claim for breach of fiduciary duty must allege some type of actual harm or
loss to the Plan";"[plaintiffj cannot plead a plausible claim for breach of fiduciary claim where,
even taking the allegations ... as true, no loss to the Plan[J ... occurred" (citing Iqbal, 490 F.3d
at 157-58)); Proujansky v. Blau, No. 92 CIV. 8700 (CSH), 2000 WL 98382, at *9 (S.D.N.Y. Jan.
28, 2000) ("to the extent that plaintiff sues for [defendant's J breach of fiduciary duties under
ERISA ... she must demonstrate a loss [to the Plan] under ERISA").
Here, the Complaint does not allege that the Plan suffered any loss as a result of
Defendants' alleged breach of fiduciary duty. Instead, the Complaint alleges that MetLife
suffered a loss of $481,23 7.21 as a result of its overpayment to Defendants. (See Cmplt. (Dkt.
No. I)~ 54 ("[tJhe $481,237.21 amount overpaid to the Trust belongs to MetLife, and the Trust
has improperly retained these funds causing injury to MetLife")). Accordingly, MetLife is not
suing here "on behalf of [an ERISA] plan." H & R Convention & Catering Corp., 2013 WL
1911335, at *7. Instead, MetLife is suing an ERISA plan to recover money it claims the plan
This type of claim will not support a breach of fiduciary duty cause of action
under ERISA § 502. See Sharp Elecs. Corp., 578 F.3d at 512 (rejecting employer's argument
that, as an ERIS A plan fiduciary, "it could assert a claim to relief [for breach of fiduciary duty]
... on behalf of the Plan" where the employer was not actually "su[ing] to recover anything on
behalf of the Plan; rather, it [wasJ suing to recover [on its own behalf].") Here, as in fil1ill:Q
Elecs. Corp., the breach of fiduciary duty claim fails because plaintiff is suing solely to recover
money on its own behalf, and has not "explain[ ed J how the alleged breach of fiduciary duty
imposed (or could have imposed) a loss on the Plan." Id. at 513.
Coyne & Delany Co. v. Selman, 98 F.3d 1457 (4th Cir. 1996), cited by MetLife
(Pltf. Br. (Dkt. No. 31) at 18), is not to the contrary. In that case, the Fourth Circuit concluded
that the ERISA plan at issue had suffered a loss, having erroneously paid out $160,000 more than
it should have. Coyne & Delany Co., 98 F.3d at 1466 ("the Plan paid $160,000 to cover a part of
a non-participant's medical bills"). There is no such loss to the Plan here. 10
MetLife also argues that Defendants' actions have harmed the Plan by "artificially inflating
the value of the Trust and the Plan due to improper retention of funds," and by "exposing the
Plan to additional costs and expenses related to MetLife and the Trust's own costs and attorney's
fees" in connection with this litigation. (Pltf. Br. (Dkt. No. 31) at 18)
As to the artificial inflation point, such an allegation provides the basis for a breach of fiduciary
duty claim only where there is evidence that the artificial inflation ultimately caused a loss to an
ERISA plan. See, ~, In re Pfizer Inc. Erisa Litig., No. 04CIV.10071 (LTS) (JFE), 2009 WL
749545, at *1, 3 (S.D.N.Y. Mar. 20, 2009) (denying motion to dismiss ERISA breach of fiduciary
duty claims where "Defendants either knew or should have known" that the value of plan assets
Accordingly, to the extent that MetLife is attempting to assert a claim for breach
of fiduciary duty on behalf of the Plan, that claim will also be dismissed on the grounds that the
Complaint has not sufficiently alleged a loss to the Plan resulting from Defendants' actions. See
Sharp Elecs. Corp., 578 F.3d at 512-13 (rejecting claim for breach of fiduciary duty where
employer did not "explain how the alleged breach of fiduciary duty imposed (or could have
imposed) a loss on the Plan," and the losses alleged were "plainly damages and expenses to [the
employer] ... not to the Plan"); Haddock, 570 F. Supp. 2d at 365 (claim for "breach of fiduciary
duty ... fails to state a claim for relief' because the claim "does not allege any losses or harm [to
an ERJSA plan] arising from the ... alleged breach").
Equitable Relief under ERISA § 502(a)(3)
MetLife also seeks equitable relief pursuant to ERJSA § 502(a)(3), 29 U.S.C. §
l 132(a)(3), arguing that this provision provides a cause of "action to prevent a Plan trustee
and/or fiduciary's unjust enrichment." (Pltf. Br. (Dkt. No. 31) at 22). Defendants argue that
"[b]ecause MetLife's breach of fiduciary duty claims fail, and because§ 502(a)(3) [does not
provide] a standalone cause of cause of action under ERISA, MetLife fails to state a claim upon
which relief can be granted." (Def. Br. (Dkt. No. 33) at 12)
were "artificially inflated" and "the Plans ultimately lost hundreds of millions of dollars"); In re
Xerox Corp. Erisa Litig., 483 F. Supp. 2d 206, 211 (D. Conn. 2007) (denying motion to dismiss
ERJSA breach of fiduciary duty claims where fiduciaries failed to disclose that the value of a
plan asset was "artificially inflat[ ed]" and the plans incurred "substantial losses" as a result).
Here, as discussed above, the Complaint pleads no actual loss to the Plan resulting from
MetLife's legal fees argument is likewise unpersuasive, because it would nullify the loss
requirement for a breach of fiduciary duty claim. If the expenditure of legal fees sufficed to
demonstrate a cognizable loss to an ERJSA plan, the loss requirement would be established in
every action involving a breach of fiduciary duty claim.
"ERISA § 502(a)(3) ... provides for 'appropriate equitable relief' to redress
ERISA violations." Demopoulos v. Anchor Tank Lines, LLC, 117 F. Supp. 3d 499, 512-13
(S.D.N.Y. 2015) (quoting 29 U.S.C. § 1132(a)(3)). "While ERlSA § 502(a)(3) provides a vehicle
for seeking equitable relief, in order to bring a claim pursuant to this Section, a plaintiff must
also allege an underlying violation of some substantive provision of ERIS A." Miller v. Int 'l
Paper Co., No. 12 Civ. 7071 (LAK), 2013 WL 3833038, at *4 (S.D.N.Y. July 24, 2013); see
Demopoulos, 117 F. Supp. 3d at 512-13 (ERISA § 502( a)(3) "does not provide equitable relief
'at large,' but only for the purpose of redressing ERlSA violations." (quoting Peacock v.
Thomas, 516 D.S. 349, 353 (1996))); Gates v. United Health Grp. Inc., No. II CIV. 3487 KBF,
2012 WL 2953050, at *11 (S.D.N.Y. July 16, 2012) (''[the fact] that under Section 502(a)(3),
plaintiff is entitled to pursue equitable relief against any defendant for violation of ERlSA does
not relieve her from having to establish an underlying violation of the statute" (citing 29 U.S.C. §
I 132(a)(3); Harris Trust and Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 239
Here, as noted above, all of the Complaint's causes of action are explicitly
premised on Plaintiff's claim that Defendants committed a breach of fiduciary duty under ERlSA
§ 502. (See Cmplt. (Dkt. No. 1) First, Second, and Third Causes of Action) For the reasons
discussed above, Plaintiff's claims for breach of fiduciary duty fail to state a claim under Fed. R.
Civ. P. 12(b)(6). Because a claim for equitable relief under Section 502(a)(3) must be based on
an underlying ERISA violation, Plaintiff's claims for equitable relief under Section 502(a)(3)
will be dismissed. See Gates, 2012 WL 2953050, at* 11 (dismissing claim for equitable relief
under § 502(a)(3) where "plaintiff cannot establish an underlying [ERISA] violation").
LEAVE TO AMEND
District courts "ha[ ve] broad discretion in determining whether to grant leave to
amend." Gurary v. Winehouse, 235 F.3d 793, 801 (2d Cir. 2000). Leave to amend may properly
be denied in cases of "'undue delay, bad faith, or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the
opposing party by virtue of the allowance of the amendment, futility of amendment, etc."'
Ruotolo v. City ofN.Y., 514 F.3d 184, 191 (2d Cir. 2008) (quoting Forman v. Davis, 371 U.S.
178, 182 (1962)); see Murdaugh v. City ofN.Y., No. 10 Civ. 7218(HB), 2011 WL 1991450, at *2
(S.D.N.Y. May 19, 2011) ("Although under Rule 15(a) of the Federal Rules of Civil Procedure
leave to amend complaints should be 'freely given,' leave to amend need not be granted where
the proposed amendment is futile." (citations omitted)).
MetLife requests that, if this Court grants the motion to dismiss, leave to amend
be given, so that MetLife can "clarify its causes of action and allegations." (Pltf. Br. (Dkt. No.
31) at 25) Defendants argue that leave to amend should be denied, because "it is unclear how a
Complaint which fails to establish subject matter jurisdiction can be altered to suddenly provide
this Court with subject matter jurisdiction." (Def. Reply Br. (Dkt. No. 35) at 10)
"Where the possibility exists that [a] defect can be cured," leave to amend "should
normally be granted." Wright v. Ernst & Young LLP, No. 97 CIV. 2189 (SAS), 1997 WL
563782, at *3 (S.D.N.Y. Sept. 10, 1997), aff'd, 152 F.3d 169 (2d Cir. 1998) (citing Oliver Sch.,
Inc. v. Foley, 930 F.2d 248, 253 (2d Cir. 1991)). Moreover, where a claim is dismissed as
"inadequate[ly] pled," there is "a strong preference for allowing [a] plainti:ftl] to amend." In re
Bear Steams Companies, Inc. Sec., Derivative, & ERISA Litig., No. 07 CIV. 10453, 2011 WL
4072027, at *2 (S.D.N.Y. Sept. 13, 2011) (citing Ronzani v. Sanofi S.A., 899 F.2d 195, 198 (2d
Cir. 1990)). Accordingly, leave to amend is granted.
For the reasons stated above, Defendants' motion to dismiss is granted, and
Defendants' motion to transfer this action to the Western District of New York is denied as moot
(Dkt. No. 27). Defendants' motion for oral argument is denied as moot (Dkt. No. 32). The Clerk
of the Court is directed to terminate the motions (Dkt. Nos. 27, 32). Any Amended Complaint
will be filed by October 30, 2016.
Dated: New York, New York
September 26, 2016
United States District Judge
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