Smoak et al v. Cangioalosi et al
ORDER AND OPINION denying 17 ADP Defendant's Motion to Dismiss Signed by Honorable Richard M Gergel on 10/5/2017.(sshe, )
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
J. William Smoak, III, and Smoak's Air
Conditioning Co., Inc.,
Elizabeth Cangialosi, ADP Totalsource,
Inc., Automatic Data Processing, Inc.,
Automatic Data Processing Insurance
Agency, Inc., and Aetna Life Insurance
Civil Action No. 2:17-1709-RMG
ORDER AND OPINION
This matter is before the Court on Defendants Elizabeth Cangialosi, ADP Totalsource, Inc.,
Automatic Data Processing, Inc., and Automatic Data Processing Insurance Agency, Inc.'s
(collectively, the "ADP Defendants") motion to dismiss the amended complaint. For the reasons
set forth below, the Court denies the motion.
Plaintiffs allege Defendants failed to pay death benefits for decedent Helen B. Smoak as
agreed under a group life policy issued by Aetna.
According to Plaintiffs, Smoak's Air
Conditioning used ADP services for payroll processing. In late 2015 or early 2016, Defendant
Elizabeth Cangialosi, an employee of one of the Defendant ADP entities, made a sales presentation
to Plaintiffs regarding worker's compensation coverage. Plaintiffs agreed to purchase worker's
compensation coverage and health insurance benefits from ADP entities. Plaintiffs further allege
that during the process of converting their existing coverage, Ms. Cangialosi sold Plaintiffs
executive life insurance covering Mr. Smoak's wife, Helen Smoak.
Plaintiffs allege Ms.
Cangialosi represented that Ms. Smoak would qualify for a $300,000 death benefit without any
reduction due to her age.
Based on that representation, Plaintiff purchased from the ADP
Defendants a life insurance policy issued by Defendant Aetna covering Ms. Smoak. Ms. Smoak
died in October 2016. Aetna then provided a benefit payment of $60,000, not $300,000, stating
that Ms. Smoak' s coverage was subject to a reduction due to her age.
Plaintiffs filed suit in the Charleston County Court of Common Pleas on May 22, 2017.
Defendants were served between May 30, 2017 and June 4, 2017, and this action was timely
removed on June 29, 2017. The original complaint asserted various state-law causes of action
Defendants moved to dismiss the complaint, arguing the Employment
Retirement Income Security Act of 1974 ("ERISA") preempted all Plaintiffs' state-law claims and
provided the exclusive remedy available to Plaintiffs. The Court granted the motions to dismiss
but granted leave to file an amended complaint asserting claims under ERISA. On September 5,
2017, Plaintiffs filed an amended complaint. Aetna has answered the amended complaint; the
ADP Defendants have moved to dismiss claims against them.
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits the dismissal of an action if
the complaint fails "to state a claim upon which relief can be granted." Such a motion tests the
legal sufficiency of the complaint and "does not resolve contests surrounding the facts, the merits
of the claim, or the applicability of defenses. . . . Our inquiry then is limited to whether the
allegations constitute 'a short and plain statement of the claim showing that the pleader is entitled
to relief. '" Republican Party ofN. C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (quotation marks
and citation omitted). In a Rule 12(b)( 6) motion, the Court is obligated to "assume the truth of all
facts alleged in the complaint and the existence of any fact that can be proved, consistent with the
complaint's allegations." E. Shore Mlcts., Inc. v. JD. Assocs. Ltd. P 'ship, 213 F.3d 175, 180 (4th
Cir. 2000). However, while the Court must accept the facts in a light most favorable to the non-2-
moving party, it "need not accept as true unwarranted inferences, unreasonable conclusions, or
To survive a motion to dismiss, the complaint must state "enough facts to state a claim to
relief that is plausible on its face. " Bell At!. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although
the requirement of plausibility does not impose a probability requirement at this stage, the
complaint must show more than a "sheer possibility that a defendant has acted unlawfully."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint has "facial plausibility" where the
pleading "allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged." Id.
The amended complaint asserts a single cause of action against the ADP Defendant under
29 U.S.C . §§ 1132(a)(3) & 1132(g). Title 29 U.S .C. § 1132(a)(3) is a " catchall" provision that
provides "a safety net, offering appropriate equitable relief for injuries caused by violations that
[29 U.S.C. § 1132] does not elsewhere adequately remedy." Varity Corp. v. Howe , 516 U.S. 489,
512 (1996). Under 29 U.S.C. § 1132(a)(3), " [a] civil action may be brought ... by a participant,
beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this title
or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such
violations or (ii) to enforce any provisions of this title or the terms of the plan." In Harris Trust
and Savings Bank v. Salomon Smith Barney, the Supreme Court provided that non-fiduciaries can
be liable as knowing participants in fiduciary breaches under 29 U.S.C. § 1132(a)(3). 530 U.S.
238, 246 (2000) (noting that 29 U.S.C. § 1132(a)(3) "admits of no limit ... on the universe of
possible defendants"); see also Daniels v. Bursey, 313 F .Supp.2d 790, 808 (N.D . Ill. 2004)
(concluding that to state a claim under 29 U.S .C. § 1132(a)(3), "the plaintiff must allege only that
a fiduciary violated a substantive provision of ERIS A and the nonfiduciary knowingly participated
in the conduct that constituted the violation"). Title 29 U.S.C. § l 132(g) provides for the recovery
of attorney' s fees . Relief under 29 U.S .C. § 1132(a)(3), however, is limited to "other appropriate
equitable relief. " " [O]ther appropriate equitable relief' incorporates limits from the common law
of trusts. Harris Tr., 530 U.S . at 250. Typical equitable relief against a party that knowingly
participates in a fiduciary breach would be an order requiring the party to return whatever plan
assets it obtained in the transaction. See, e. g. , Landwehr v. DuPree, 72 F.3d 726, 735 (9th Cir.
The ADP Defendants argue that claim should be dismissed for three reasons, none of which
is persuasive. First, the ADP Defendants argue they may not be sued under 29 U.S.C. § l 132(a)(3)
because they are not BRISA fiduciaries. (Dkt. No. 17-1 at 3- 6.) The Supreme Court, however,
has stated 29 U.S.C. § 1132(a)(3) "admits of no limit ... on the universe of possible defendants."
Harris Tr., 530 U.S. at 246.
Second, the ADP Defendants argue relief under ERISA' s catchall provision of 29 U.S .C.
§ 1132(a)(3) is unavailable to Plaintiffs because 29 U.S.C. § l 132(a)(l)(B) provides an adequate
remedy. It is true that 29 U.S.C. § 1132(a)(3) is unavailable for claims seeking recovery of
wrongfully denied benefits. E. g., Korotynska v. Metropolitan Life Ins. Co., 474 F.3d 101 , 106- 07
(4th Cir. 2006). But whether adequate legal relief is available is not an issue ripe for adjudication
at the pleading stage.
When a matter is in the pleading stage, a plaintiff may plead alternative legal and
equitable theories ofrelief because it is unclear which remedy will be supported by
the evidence. A party must elect between inconsistent forms of relief when both
forms of relief become ripe to choose between them. The axiomatic rule that
equitable relief may not be granted when adequate legal relief exists does not affect
the viability of either type of claim at the pleading stage
The Pantry, Inc. v. Stop-N-Go Foods, Inc., 777 F. Supp. 713, 718 (S.D. Ind. 1991), opinion
modified on denial ofreconsideration sub nom. Pantry, Inc. v. Stop-N-Go Foods, Inc., 796 F. Supp.
1164 (S.D. Ind. 1992).
Moreover, it is possible that ADP Defendants' alleged inequitable conduct does not make
Aetna's application of an age reduction to Ms. Smoak's benefits the denial of "benefits due ...
under the terms of [the] plan." The Fourth Circuit has held ERISA preempts claims seeking to
enforce representations made regarding the establishment of a benefit plan. See Elmore v. Cone
Mills Corp., 23 F.3d 855 , 863 (4th Cir. 1994); see also Hobson v. Robinson, 75 F. App'x 949, 954
n.9 (5th Cir. 2003) (collecting cases showing a circuit split on whether ERISA preempts state-law
misrepresentation claims against insurance agents). But that does not mean Plaintiffs have no
remedy for alleged misrepresentations. Title 29 U.S.C. § 1132(a)(3) provides for equitable relief
to redress any act which violates any ERISA provision, including ERISA's reporting and
disclosure requirements. E.g., 29 U.S.C. §§ 1021, 1022, 1102. It is not certain that Plaintiffs have
an adequate remedy under ERISA without resort to that catchall provision.
Third, the ADP Defendants argue that payment of money is not a remedy available in
equity. (See Dkt. No. 17-1 at 8-9.) That argument is without merit. Although money damages
are considered a legal remedy, not an equitable one, many equitable remedies may require a party
to remit money to another party-e.g., quantum meruit, restitution and disgorgement, and
constructive trust. Again, whether Plaintiffs ultimately have a remedy in equity is not a question
the Court will decide at the pleading stage.
For the foregoing reasons, the Court DENIES the ADP Defendant's motion to dismiss
(Dkt. No. 17).
AND IT IS SO ORDERED.
United States District Court Judge
Charleston, South Carolina
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