Schmelzer et al v. Huntington Bancshares Financial Corporation
OPINION AND ORDER granting 3 Motion to Dismiss for Failure to State a Claim. Signed by Judge James L. Graham on 6/29/2017. (ds)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
Steve Schmelzer, et al.,
Case No. 2:16-cv-134
OPINION AND ORDER
This is an action brought under the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. §1001 et seq., by
plaintiffs BBU Environmental Services Cash Balance Plan (“the
Plan”) and Steve Schmelzer (“Schmelzer”), a participant in and
fiduciary of the Plan, against Huntington Bancshares Financial
Plaintiffs allege that the Plan is a
Services, LTD (“BBU”), and that the Plan is an ERISA plan which
went into effect on January 1, 2010.
Complaint, ¶ 4.
further allege that Huntington is a plan trustee and fiduciary;
that Huntington exercises discretionary authority and control with
respect to Plan management and the distribution of Plan assets; and
that Huntington renders investment advice for a fee.
Huntington extended a loan to Ben Cook (“Cook”), a BBU employee and
The Huntington National Bank states in its motion to dismiss
that it served as a trustee of the Plan, not Huntington Bancshares
Financial Corporation, the entity erroneously styled as the
defendant in the complaint. See Doc. 3, p. 2 n.1.
Plan fiduciary, in the amount of $50,000.
Complaint, ¶¶ 12, 14.
This loan of funds from Plan assets was made pursuant to the terms
of a Plan amendment which also took effect on December 28, 2012.
Complaint, Ex. D.
The terms of the loan required sixty monthly
payments of $926.48.
Complaint, ¶ 16.
The loan was secured by an
assignment executed by Cook, pledging fifty percent of the present
value of his vested accrued benefit to the Plan.
Complaint, ¶ 17.
Cook made loan payments through April of 2013.
Complaint, ¶ 18.
Plaintiffs further allege that later in 2013, Cook requested to
withdraw his benefits from the Plan in a lump sum payment upon his
separation from his employment, and that Huntington distributed the
sum of $359,325.20 to Cook on June 3, 2013.
Complaint, ¶ 20-21.
In Count 1 of the complaint, plaintiffs allege prior to the
distribution of the funds in Cook’s account, Huntington should have
deducted $46,986.45, the amount owed on the loan at that time, from
the lump sum withdrawal.
Complaint, ¶¶ 24-25.
that the failure to do so constituted a breach of Huntington’s
fiduciary duty to the Plan in violation of 29 U.S.C. §1104(a), and
that Huntington is liable to plaintiffs for the loss of principal,
interest and costs.
Complaint, ¶¶ 28-31.
In Count 2 of the
complaint, plaintiffs allege that Huntington had knowledge of the
loan to Cook, a co-fiduciary.
further allege that Huntington had knowledge of a breach of
fiduciary duty by Cook, and is liable for that breach under 29
U.S.C. §1105(a)(1)-(3) as a co-fiduciary.
In Count 3, plaintiffs
seek to remove Huntington as a Plan fiduciary pursuant to 29 U.S.C.
Complaint, ¶¶ 38-39.
recover attorney fees.
In Count 4, plaintiffs seek to
Complaint, ¶ 42.
This matter is before the court on Huntington’s motion to
dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state
a claim for which relief may be granted.
I. Motion to Dismiss Standards
In ruling on a motion to dismiss under Rule 12(b)(6), the
court must construe the complaint in a light most favorable to the
plaintiff, accept all well-pleaded allegations in the complaint as
true, and determine whether plaintiff undoubtedly can prove no set
of facts in support of those allegations that would entitle him to
Erickson v. Pardus, 551 U.S. 89, 94 (2007); Bishop v.
Lucent Technologies, Inc., 520 F.3d 516, 519 (6th Cir. 2008);
Harbin-Bey v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005).
survive a motion to dismiss, the “complaint must contain either
direct or inferential allegations with respect to all material
elements necessary to sustain a recovery under some viable legal
Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005).
supported by mere conclusory statements, do not suffice.” Ashcroft
v. Iqbal, 556 U.S. 662, 679 (2009)
allegations, the “[f]actual allegations must be enough to raise the
claimed right to relief above the speculative level[.]”
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
must contain facts sufficient to “state a claim to relief that is
plausible on its face.” Id. at 570. “The plausibility standard is
not akin to a ‘probability requirement,’ but it asks for more than
Ashcroft, 556 U.S. at 678.
Where the facts pleaded do not permit
the court to infer more than the mere possibility of misconduct,
the complaint has not shown that the pleader is entitled to relief
as required under Fed.R.Civ.P. 8(a)(2).
Id. at 679.
In ruling on a motion to dismiss, the court may consider
documents which are attached to the complaint.
10(c)(“[a] copy of any written instrument which is an exhibit to a
pleading is a part thereof for all purposes.”); Commercial Money
Center, Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335 (6th
Cir. 2007)(documents attached to the pleadings become part of the
pleadings and may be considered on a motion to dismiss).
“‘[W]hen a written instrument contradicts allegations in the
Williams v. CitiMortgage, Inc., 498 F. App’x 532,
536 (6th Cir. 2012)(quoting N. Indiana Gun & Outdoor Shows, Inc. v.
City of S. Bend, 163 F.3d 449, 454 (7th Cir. 1998)).
factual assertion in the pleadings is inconsistent with a document
attached for support, the Court is to accept the facts as stated in
the attached document[.]’”
Id. (quoting Nat’l Assoc. of Minority
Contractors, Dayton Chapter v. Martinez, 248 F.Supp.2d 679, 681
(S.D. Ohio 2002)).
See also Harper v. U.S. Attorney for Eastern
Dist. of Tenn., 802 F.2d 458 (table), 1986 WL 16081 (6th Cir.
1986)(affirming dismissal of action where exhibit attached to
complaint was contrary to allegations in the complaint and defeated
the claim for relief); Consolidated Jewelers v. Standard Financial
Corp., 325 F.2d 31, 36 (6th Cir. 1963)(upholding dismissal where
pleadings were inconsistent with the clear and unambiguous language
of the contract attached to the complaint as an exhibit); Mengal
Co. v. Nashville Paper Products and Specialty Workers Union, No.
513, 221 F.2d 644, 647 (6th Cir. 1955)(where inconsistent with the
allegations of the complaint, the exhibit, a collective bargaining
allegations in the complaint which are contradicted by a document
properly before the court on a motion to dismiss “are not wellpleaded facts that the court must accept as true.”
GFF Corp. v.
Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1385 (10th Cir.
These cases are particularly apropos in the context of an
ERISA “is built around reliance on the face of
written plan documents.”
US Airways, Inc. v. McCutchen,
, 133 S.Ct. 1537, 1548 (2013)).
“A primary purpose of ERISA is
to ensure the integrity and primacy of the written plans.”
Cost Controls v. Isbell, 139 F.3d 1070, 1072 (6th Cir. 1997).
written ERISA plan documents govern the rights and benefits of
ERISA plan beneficiaries. Girl Scouts of Middle Tennessee, Inc. v.
Girl Scouts of the U.S.A., 770 F.3d 414, 425 (6th Cir. 2014).
Thus, it is appropriate to “recognize the superiority of the
written plan documents[,]” id., in ruling on a motion to dismiss.
See Kling v. Fidelity Management Trust Co., 270 F.Supp.2d 121, 128
(D. Mass. 2003)(plan documents could be considered in ruling on
motion to dismiss breach of fiduciary claim, noting that “ERISA’s
provisions relating to fiduciary duty make explicit and repeated
reference to plan documents”).
II. Plaintiffs’ Claims
A. Breach of Fiduciary Duty Claim
In Count 1, plaintiffs allege that Huntington breached a
fiduciary duty by distributing the entire amount of Cook’s Plan
account instead of withholding funds sufficient to cover the amount
owed by Cook on his loan.
Huntington argues that the complaint
fails to allege facts sufficient to show that it had any fiduciary
responsibilities with regard to administering the loan program,
including ensuring that sufficient account assets remained to serve
as collateral for the loan.
Huntington further contends that
provisions in the Plan documents contradict the allegations in the
complaint and show that it is not a fiduciary of the Plan’s loan
2. Standards for Breach of Fiduciary Duty
a person is a fiduciary with respect to a plan to the
extent (I) he exercises any discretionary authority or
discretionary control respecting management of such plan
or exercises any authority or control respecting
management or disposition of its assets, (ii) he renders
investment advice for a fee or other compensation, direct
or indirect, with respect to any moneys or other property
of such plan, or has any authority or responsibility to
do so, or (iii) he has any discretionary authority or
discretionary responsibility in the administration of
29 U.S.C. §1002(21)(A). A fiduciary within the meaning of ERISA is
someone acting in the capacity of manager, administrator, or
financial adviser to a plan. Pegram v. Herdrich, 530 U.S. 211, 222
A functional test is employed to determine fiduciary status.
Briscoe v. Fine, 444 F.3d 478, 486 (6th Cir. 2006); see also
Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993)(ERISA “defines
‘fiduciary’ not in terms of formal trusteeship, but in functional
terms of control and authority over the plan”); DeLuca v. Blue
A person deemed to be a fiduciary is not a fiduciary
for every purpose but only to the extent that he performs one of
the described functions.
Hamilton v. Carell, 243 F.3d 992, 998
(6th Cir. 2001); see also Pfahler v. National Latex Products Co.,
517 F.3d 816, 830 (6th Cir. 2007)(for a fiduciary to be held
liable, he must have been acting in a fiduciary capacity when
taking the challenged action).
The threshold question is not
whether the actions of a person employed to provide services under
a plan adversely affected a plan beneficiary’s interest, but
whether that person was acting as a fiduciary, that is, was
performing a fiduciary function, when taking the action subject to
Pegram, 530 U.S. at 226.
The same entity may
function as an ERISA fiduciary in some contexts but not in others.
Darcangelo v. Verizon Communications, Inc., 292 F.3d 181, 192 (4th
Cir. 2002). An administrator or manager of the plan is a fiduciary
only “to the extent” that he exercises discretionary authority,
control, or responsibility respecting the management of the plan,
the disposition of its assets, or the administration of the plan.
Pegram, 530 U.S. at 225-226; §1002(21)(A).
Thus, it is necessary
to ask whether a person is a fiduciary with respect to the
particular activity in question.
Briscoe, 444 F.3d at 486.
Persons performing administrative and ministerial functions
administrative and ministerial tasks that did not involve the
exercise of discretionary authority was not a fiduciary). See also
Flacche v. Sun Life Assur. Co. of Canada (U.S.), 958 F.2d 730, 734
(6th Cir. 1992)(mere payment of claims is insufficient to give
discretionary control over the management of plan assets or the
administration of the plan; defendant company which performed only
ministerial functions for the plan was not acting as a fiduciary
when it mistakenly calculated plaintiff’s retirement benefits);
Baxter v. C.A. Muer Corp., 941 F.2d 451, 455 (6th Cir. 1991)(person
without power to make plan policies or interpretations and who
performs purely ministerial functions such as processing claims,
applying plan eligibility rules, communicating with employees, and
calculating benefits is not a fiduciary under ERISA).
Department of Labor regulations provide that persons who have
no power to make any decisions as to plan policy, interpretations,
functions such as “(6) [c]alculation of benefits[,]” and “(10)
Only persons who perform the functions described
in §1002(21)(A) with respect to an employee benefit plan are
3. Plan Documents and Exhibits to the Complaint
The Plan, Complaint Exhibit A, is an agreement between BBU
(referred to as the “Employer”) and Schmelzer and Cook (referred to
as the “Trustee[s]”), which was effective January 1, 2010.
“Administrator” is defined as the “Employer,” and
“Employer” is defined as BBU.
Plan, §§1.4, 1.18.
of the term “Fiduciary” tracks the language of §1002(21)(A). Plan,
§1.19. The term “Trustee” is defined as the person or entity named
as trustee in the Plan (Schmelzer and Cook), or in any separate
trust forming a part of the Plan.
The Plan Summary
also identifies Cook and Schmelzer as the Plan’s Trustees.
Plan, §2.2; Plan Summary, PAGEID 121.
provides that “[b]enefits under this Plan will be paid only if the
Administrator decides in its discretion that the applicant is
entitled to them.”
The Administrator is charged with
the duties of the general administration of the Plan, including:
“(a) the discretion to determine all questions relating to the
eligibility of Employees to receive benefits under the Plan;” ...
“(c) to compute, certify, and direct the Trustee with respect to
the amount and the kind of benefits to which any Participant shall
be entitled hereunder; [and] (d) to authorize and direct the
Trustee with respect to all discretionary or otherwise directed
disbursements from the Trust.”
Plan §2.3(a), (c) and (d).
The Plan states that the Trustee shall have the responsibility
to manage and control the Plan assets, and “[a]t the direction of
the Administrator, to pay benefits required under the Plan to be
paid to Participants[.]”
Plan §7.1(a)(1) and (2).
further provides, “At the direction of the Administrator, the
Trustee shall, from time to time, in accordance with the terms of
the Plan, make payments out of the Trust Fund.
The Trustee shall
payments.” Plan, §7.4. The Plan also states, “The Employer agrees
to indemnify and hold harmless the Trustee against any and all
claims, losses, damages, expenses and liabilities the Trustee may
incur in the exercise and performance of the Trustee’s power and
duties hereunder, unless the same are determined to be due to gross
negligence or willful misconduct.”
The Plan also permits the Employer to appoint a custodian of
A custodian has the same powers, rights and duties as a
nondiscretionary Trustee also is a reference to a
custodian unless the context of the Agreement indicates
otherwise. A limitation of the Trustee’s liability by
Plan provision also acts as a limitation of the
custodian’s liability. The Custodian will be protected
from any liability with respect to actions taken pursuant
to the direction of the Trustee, Plan Administrator, the
Employer, an investment Manager, a Named Fiduciary or
other third party with authority to provide direction to
The Plan contains a procedure for amending the Plan. Although
the Employer has the right to amend the Plan, “any amendment which
affects the rights, duties or responsibilities of the Trustee or
Administrator’s written consent.”
A resolution adopting Huntington as a Trustee/Custodian of the
Plan was executed on March 9, 2011, by Schmelzer as a vice
president of BBU. Complaint, Ex. C. The service agreement between
Huntington and BBU, signed by a representative of Huntington and
Schmelzer on March 9, 2011, states that the services provided by
Huntington will include active investment management, custodial
services and trustee services.
Complaint, Ex. B, PAGEID 127.
agreement states that “Huntington Bank will process distributions
pursuant to written instructions.”
To fulfill its responsibilities, Huntington Bank needs
accurate and complete data regarding plan participants in
pay status including the dates when a series of payments
begins and stops.
By signing this form, you are agreeing that Huntington
Bank will not begin making a series of payments in the
absence of this data, that it may rely on the data
furnished by the entity responsible and it has no
responsibility for verifying their accuracy.
Further, the Plan Sponsor releases and holds Huntington
Bank harmless from any liability, cost or expense
resulting from its compliance with these instructions
regarding accuracy and completeness of data.
Ex. B, PAGEID 128.
An amendment to the Plan concerning loans to participants was
added by a resolution dated December 28, 2012, which was signed by
Cook as a vice president of BBU.
provides that the Trustee may, in the Trustee’s discretion, make
loans to participants and beneficiaries if certain requirements are
The amount of the loan cannot exceed the present value
of the participant’s vested accrued benefit.
Exhibit D to the complaint includes a modification of the plan
summary which addresses loans from the Plan.
The summary provides
that the Plan Administrator (BBU) determines whether the loan
request meets Plan requirements.
Exhibit D includes a document describing the loan program
(presumably the “separate written document” required under §10.2(f)
of the amendment, see PAGEID 79).
provides that the “Plan Administrator [BBU] is authorized to
Because the amendment document was not signed by Huntington,
and because there are no factual allegations in the complaint
indicating that Huntington otherwise gave its written consent to
the amendment as required by Plan §8.1(a), the use of the term
“Trustee” here cannot refer to Huntington. Schmelzer and Cook are
the only other persons identified as a “Trustee” of the Plan.
administer the Participant loan program.”
applications are made to the Plan Administrator, which determines
whether the participant qualifies for a loan, the term of the loan,
and the amount of security required for the loan.
document further states, “If the loan remains in default, the Plan
Administrator will offset the Participant’s vested account balances
by the outstanding balance of the loan to the extent permitted by
Also attached to the complaint as Exhibit D is
a letter to Kathy Chapin at Huntington from James L. McLain II,
CPA, which includes an application by Cook dated December 28, 2012,
for a participant loan of $50,000.00 from the Plan. Complaint, Ex.
The loan was secured by Cook’s vested interest in the Plan.
Exhibit F is a statement of Cook’s Plan benefits for the
period from January 1, 2013, through December 31, 2013, showing the
distribution of $359,325.20 from the account and a zero balance at
the end of the period.
Exhibit G is a letter dated
June 1, 2015, to Mr. McLain from Kathleen Chapin at Huntington,
noting that Huntington was requesting the return of $46,986.45 plus
interest, the amount Cook still owed on the loan, “that was
erroneously distributed to Mr. Cook as part of a lump sum payment
under the Plan.”
Exhibit H is a letter to Cook from
Ms. Chapin, dated August 31, 2015, reminding him that he was still
responsible for his loan balance which, with interest, was then
4. Sufficiency of the Complaint
The above documents indicate that, although Huntington was a
Plan fiduciary insofar as it provided investment advice, it also
acted in a purely ministerial capacity as a “custodian” of funds
(described in the Plan as nonfiduciary trustee) when disbursing
Plan funds at the instruction of BBU, the Plan Administrator. Plan
§§7.1(a)(1) and (2), 7.4, and 7.12.
When acting as a nonfiduciary
custodian, Huntington meets the requirements for an entity which is
not a fiduciary under the Department of Labor regulations.
Although plaintiffs note that §1.4 of the Plan
permits the Administrator (BBU) to designate another person or
entity to administer the Plan, there are no allegations in the
Huntington’s agreement with BBU states that “Huntington Bank
will process distributions pursuant to written instructions.”
Plaintiffs note that the complaint does not allege
that Huntington distributed the balance of Cook’s account upon the
instructions of BBU or someone authorized by BBU to request
distributions from the Plan. However, such an allegation would not
further plaintiffs’ breach of fiduciary duty claim.
More to the
point, even assuming arguendo that Huntington would have acted in
a fiduciary capacity in making a distribution from the Plan funds
Administrator, the complaint contains no allegations indicating
that Huntington distributed the funds in Cook’s account without
instructions from BBU or some other agent authorized by BBU to
request the distribution.
It is plaintiffs’ obligation to include
factual allegations in the complaint which are sufficient to state
a claim for relief.
Plaintiffs’ allegation that Huntington breached a fiduciary
duty by failing to withhold the amount owed on Cook’s loan also
conflicts with the Plan terms.
The Plan, Section
responsibilities of a Trustee may only be made with the Trustee’s
There are no allegations in the complaint or
information in the exhibits indicating that Huntington agreed in
writing to the Plan amendment authorizing loans from the Plan or
Although plaintiffs alleged in the complaint, ¶15, that
Huntington extended a loan to Cook, the Plan documents show that
loan applications are made to the Plan Administrator (BBU), which
determines whether the participant qualifies for a loan, the term
of the loan, and the amount of security required for the loan.
The Plan documents also establish that it is the Plan
Administrator which “will offset the Participant’s vested account
balances by the outstanding balance of the loan to the extent
Huntington no responsibility to calculate the balance owed by Cook
or to ensure that adequate collateral remained in his account.
Plaintiffs now ingeniously characterize the disbursal of funds
by Huntington to Cook as an unauthorized loan.
However, there are
no facts alleged in the complaint which would indicate that
Huntington regarded the disbursal of funds from Cook’s account as
a loan, or that any other indicia of a loan, such as the execution
of a promissory note and an assignment of security, were completed
as part of the distribution of funds.
Calling the distribution of
the funds in Cook’s account a loan would contradict the Plan
provisions, which give the Plan Administrator (BBU) the sole
authority to approve loans from the Plan.
every mistaken payment of money from a plan fund as an illegal loan
resulting in fiduciary liability would also conflict with and
considerably undermine the regulations and other authorities which
do not assign fiduciary responsibility to ministerial functions
such as the payment of claims.
Plaintiffs also note the June 1, 2015, letter from Kathleen
Chapin at Huntington to Mr. McLain, which stated that the amount
due on the Cook loan “was erroneously distributed to Mr. Cook as
part of a lump sum payment under the Plan[.]”
See PAGEID 150.
admission by Huntington that it was responsible as a fiduciary for
This argument reads too much into the language of the
letter, which merely states that the funds were “erroneously
distributed” but does not indicate which person or entity was
responsible for the error.
The letter does not admit that the
error was on Huntington’s part, nor does it concede fiduciary
Huntington sent this letter over one-and-a-half years after the
distribution of Cook’s account.
Plaintiffs’ argument is further
provides that Huntington may rely on data furnished by BBU in
fulfilling its responsibilities, and that BBU “holds Huntington
Bank harmless from any liability, cost or expense resulting from
its compliance with these instructions regarding accuracy and
completeness of data.”
Even assuming that Huntington
committed some error in disbursing Cook’s account funds due to
insufficient to allege that Huntington was acting as a fiduciary in
disbursing the funds.
See Flacche, 958 F.2d at 734 (company which
performed only ministerial functions for the plan was not acting as
a fiduciary when it mistakenly calculated plaintiff’s retirement
Plaintiffs’ conclusory allegations that Huntington is a Plan
trustee and fiduciary, that Huntington exercises discretionary
authority and control over the distribution of Plan assets, and
that Huntington breached a fiduciary duty by not withholding the
amount still owed by Cook on the loan are insufficient to factually
particularly in light of the conflicting language of the Plan and
other documents attached to the complaint.
Count 1 fails to state
a claim for which relief may be granted.
B. Breach of Co-Fiduciary Duty
1. Legal Standards
Under 29 U.S.C. §1105(a), a “fiduciary with respect to a plan”
is liable for a breach of fiduciary responsibility of another
fiduciary with respect to the same plan
(1) 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;
(2) if, by his failure to comply with section 1104(a)(1)
of this title 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
(3) 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)(1)-(3).
Liability under §1105(a) requires that the defendant be a
§1105(a)(“a fiduciary with respect to a plan shall be
fiduciary with respect to the same plan”).
Subsections (a)(1) and
(3) also require that the defendant had actual knowledge that the
other person is a fiduciary with respect to the plan, that the
breach, or undertook to conceal the breach by the co-fiduciary, and
that the defendant knew that the co-fiduciary’s act was a breach.
See Donovan v. Cunningham, 716 F.2d 1455, 1475 (5th Cir. 1983).
The plaintiff must adequately plead the existence of the underlying
fiduciary breach by a co-fiduciary with respect to the same plan.
In re Huntington Bancshares Inc. ERISA Litigation, 620 F.Supp.2d
842, 856 (S.D. Ohio 2009).
2. Plaintiffs’ Claim - Count 2
In Count 2 of the complaint, plaintiffs allege that Huntington
had knowledge of the loan to Cook, a co-fiduciary, knowledge of a
breach of fiduciary duty by Cook, and that Huntington is liable for
that breach under 29 U.S.C. §1105(a)(1)-(3) as a co-fiduciary.
These allegations basically track the language of §1105(a), and
contain little in the way of supporting facts.
that in 2013, Cook requested to withdraw his benefits from the Plan
in a lump sum payment upon his separation from his employment, and
that Huntington distributed the sum of $359,325.20 to Cook on June
Complaint, ¶ 20-21.
Plaintiffs allege in Count 2 of the
complaint that Huntington had knowledge of the loan to Cook, a cofiduciary.
Plaintiffs further allege that
Huntington had knowledge of a breach of fiduciary duty by Cook, and
§1105(a)(1)-(3) as a co-fiduciary.
First, the complaint fails to allege a claim for breach of cofiduciary duty because, as discussed above in relation to Count 1,
the complaint fails to allege sufficient facts to show that
Huntington was acting as “a fiduciary with respect to a plan” as
required under §1105(a), in disbursing account funds from the Plan,
or that Huntington had any role in the management of the Plan
Participant Loan Program.
The Plan documents show that Huntington
had no responsibility to administer the requirements of the loan
program, and that Huntington acted in a purely ministerial capacity
as a custodian when distributing Plan funds in accordance with the
instructions of the Plan Administrator.
The complaint contains no
facts describing the circumstances surrounding Cook’s request for
Plan funds, nor does it allege to which entity Cook made his
request for funds.
The complaint includes no allegation that
Huntington did not receive instructions from an authorized person
to distribute Cook’s funds.
The lack of facts in the complaint
documents are fatal to plaintiffs’ §1105(a) claims.
Liability under §1105(a) also requires that Cook breached a
fiduciary duty owed by him to the Plan.
The Plan states that Cook
is a “Trustee” of the Plan. However, the complaint does not allege
how Cook was acting in his capacity as a Plan Trustee rather than
as a Plan participant in requesting a distribution from his
The complaint contains only conclusory allegations that
Cook breached a fiduciary duty, and gives no explanation or
description of the nature of that duty or how it was breached.
Liability under §1105(a)(1) and (3) requires that Huntington
was aware of a breach of fiduciary duty by Cook.
alleges that Huntington was aware of the Plan’s loan to Cook, which
is substantiated by McLain’s letter requesting the distribution of
the loan proceeds to Cook.
However, the complaint does not allege
that Huntington was aware that Cook was a Plan Trustee, or that
Huntington knew what, if any, duties that Cook owed to the Plan as
a Plan Trustee.
The conclusory allegations in the complaint
concerning Huntington’s knowledge contain no facts explaining how
Huntington knew about the unspecified breach of fiduciary duty by
Cook, or why Huntington should have known that any of Cook’s
actions, including his request for distribution of his Plan assets,
constituted a breach of Cook’s fiduciary duties.
The complaint fails to state a claim under §1105(1) because it
contains no facts indicating how Huntington knowingly participated
in any act by Cook which constituted a breach of Cook’s fiduciary
duty, how Huntington undertook to conceal a breach of fiduciary
duty by Cook, or how Huntington breached a fiduciary duty to the
Plan which enabled Cook to commit his own breach of fiduciary duty
to the Plan.
By failing to state sufficient facts to describe how
Huntington had knowledge of a breach of fiduciary duty by Cook, the
complaint also fails to state a claim under §1105(a)(3), which
would impose liability only if Huntington, while acting as a
fiduciary, had knowledge of a breach of fiduciary duty by Cook and
failed to make reasonable efforts under the circumstances to remedy
In summary, the complaint does not state a claim under
§1105(a), and the motion to dismiss that claim is granted.
C. Removal of Huntington as a Fiduciary
In Count 3, plaintiffs seek to remove defendant as a Plan
fiduciary pursuant to 29 U.S.C. §1109(a).
Complaint, ¶¶ 38-39.
Because the complaint fails to state a claim for relief for breach
of fiduciary duty, it also fails to advance grounds for removal of
Huntington as a fiduciary.
In any event, Huntington has indicated
in it’s motion to dismiss that it no longer serves as the trustee
of the Plan.
Doc. 3, p. 11, n. 2.
Therefore, this claim for
relief is probably moot.
D. Claim for Attorney’s Fees
Count 4 of plaintiffs’ complaint is a claim for attorney’s
Technically, this is not another substantive theory of
liability to be advanced as a separate count in the complaint.
Rather, it is a component of the prayer for relief.
plaintiffs have not prevailed on the motion to dismiss, plaintiffs
are not entitled to attorney’s fees.
In accordance with the foregoing, Huntington’s motion to
dismiss pursuant to Rule 12(b)(6) (Doc. 3) is granted.
Date: June 29, 2017
s/James L. Graham
James L. Graham
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?