MBA Engineering Inc v. Vantage Benefits Administrators Inc et al

Filing 150

MEMORANDUM OPINION AND ORDER: The Court DENIES the 107 plaintiffs' motion for partial summary judgment, GRANTS Matrix's 116 motion for summary judgment, and DISMISSES WITH PREJUDICE all of the plaintiffs' claims against Matrix. Bec ause the Court's opinion does not depend on either party's expert witness testimony or any objected to evidence, the Court DISMISSES AS MOOT the parties 113 , 115 motions to exclude and the plaintiffs' 134 objections. And because t he Court's opinion moots Matrix's fourth and fifth counterclaims against the plaintiffs, the Court DISMISSES AS MOOT both counterclaims four and five and the plaintiffs' 124 motion to dismiss them. (Ordered by Judge Brantley Starr on 8/3/2022) (mla)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
MBA ENGINEERING INC., as
Sponsor and Administrator of the
MBA Engineering Inc Employees
401(k) Plan and the MBA
Engineering Inc Cash Balance Plan,
and CRAIG MEIDINGER, as
Trustee of the MBA Engineering, Inc.
Employees 401(k) Plan and the MBA
Engineering, Inc. Cash Balance
Plan,
Plaintiffs,
v.
VANTAGE BENEFITS
ADMINISTRATORS, INC.,
JEFFREY RICHIE; WENDY K.
RICHIE; and MATRIX TRUST
COMPANY,
Defendants.

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Civil Action No. 3:17-CV-03300-X

MEMORANDUM OPINION AND ORDER
Before the Court are Plaintiffs MBA Engineering Inc.’s (MBA) and Craig
Meidinger’s motion for partial summary judgment [Doc. No. 107] and Defendant
Matrix Trust Company’s (Matrix) motion for summary judgment [Doc. No. 116]. For
the reasons explained below, the Court DENIES the plaintiffs’ motion for partial
summary judgment, GRANTS Matrix’s motion for summary judgment, and
DISMISSES WITH PREJUDICE all of the plaintiffs’ claims against Matrix.
Because the Court’s opinion does not depend on either party’s expert witness

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testimony or any objected to evidence, the Court DISMISSES AS MOOT the parties’
motions to exclude [Doc. Nos. 113 and 115] and the plaintiffs’ objections [Doc. No.
134]. And because the Court’s opinion moots Matrix’s fourth and fifth counterclaims
against the plaintiffs, the Court DISMISSES AS MOOT both counterclaims four
and five and the plaintiffs’ motion to dismiss them [Doc. No. 124].
I.

Factual Background

MBA is an engineering firm specializing in industrial process control systems.
This lawsuit stems from the theft of more than $2 million from MBA’s Employees
401(k) Plan and Cash Balance Plan in 2016 and 2017 by Jeffrey and Wendy Richie,
the principals of Vantage, the third-party administrator of the Plans. In October
2017, the FBI raided Vantage’s offices. Thereafter, the Richies were indicted for
stealing from several plans for which Vantage served as third-party administrator.
They pleaded guilty and were sentenced in 2020. In December 2017, MBA and Craig
Meidinger, MBA’s president and the Plans’ trustee, brought this lawsuit on behalf of
the Plans in their capacities as sponsor and administrator of the Plans and as trustee
of the Plans, respectively, against the Richies and Vantage. To date, neither the
Richies nor Vantage have appeared in this case, and the clerk entered default against
them in July 2018. 1

1

Doc. No. 37.

2

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In March 2018, the plaintiffs filed an amended complaint that added Matrix 2
as a defendant. 3 Matrix provides custody and directed services to clients for which
its sister corporation, Matrix Settlement and Clearance Services, LLC (MSCS)
“provides automated mutual fund trade execution and settlement services.” 4 Those
clients include third-party administrators of retirement plans, of which Vantage was
one.

Matrix enters into the same Services Agreement with each of its third-party

administrator clients.

Under this contract, Matrix agrees to provide custodial

services described in Matrix’s Custodial Account Agreement under the terms set forth
therein, which is contained as an exhibit to the Services Agreement. According to
Matrix, it “agrees to provide its custodial services only pursuant to the terms of the
[Custodial Account Agreement] because the [Custodial Account Agreement] provides
certain protections and limitations of liability as to Matrix. For the modest fees it
charges for its automated services, Matrix is not willing to provide its services
without the protections set out in the [Custodial Account Agreement].” 5
Matrix and MSCS entered into the Services Agreement with Vantage in
September 2012. 6 In this agreement, Vantage represents that it “has, and at all times
during the term of this Agreement will have, the requisite authority from each of its

2 Matrix was known as MG Trust Company, LLC, until 2016. For the sake of simplicity, the
Court refers to it as Matrix throughout this opinion.
3

Doc. No. 14.

4

Doc. No. 119 at 3.

Doc. No. 119 at 11. Indeed, Matrix received less than $3,000 in compensation for the several
years of custodial services it rendered here. Id. at 16.
5

6

Doc. No. 117-1 at 6.

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Customers to act on their behalf in connection with this Agreement.” 7 It further
represents that it “will retain absolute and complete responsibility for the supervision
of all of its representatives, employees or other agents, and [Matrix] will have no
supervisory, compliance or other responsibility as to the actions of such
representatives, employees or agents of [Vantage].” 8 And the agreement provides
that Matrix “shall not be liable for undertaking any act on instructions from
[Vantage] or for failing to act in the absence of such instructions” and that Matrix
“shall be entitled to conclusively rely on the authenticity of any notice or other
communication received from [Vantage] so long as [Matrix] reasonably believe[s] the
notice or other communication to be genuine.” 9
After initiating a search for a new third-party administrator for the MBA Plan,
Meidinger engaged Vantage in 2014. Matrix argues that Vantage and MBA entered
into a Master Services Agreement, under which the plaintiffs also appointed Matrix
custodian of the Plan and authorized Matrix to perform the custodial services
described in the Custodial Account Agreement. Additionally, the Master Services
Agreement purportedly included an acknowledgment by MBA that it had received
and agreed to be bound by the terms of the Custodial Account Agreement. The
plaintiffs contend, however, that neither the Master Services Agreement nor the
Custodial Account Agreement were in effect here.

Rather, in their amended

complaint, they allege that “Matrix took possession and control of millions of dollars
7

Id. at 12.

8

Id.

9

Id. at 14.

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of assets of the Plans without there being any written, or even oral, agreement
between Matrix and the Plaintiffs or the Plans.” 10
In any event, in November of 2014, as part of the transition from MBA’s old
third-party administrator, Fidelity, to Vantage, Meidinger ordered Fidelity to wire
all Plan assets to Matrix’s JP Morgan Chase bank account. From that point, Matrix
provided custodial services for the MBA Plans—receiving less than $3,000 in total
compensation for doing so—until the FBI raid on Vantage in October 2017. In its
capacity as a custodian, Matrix—upon the directions of Vantage—ordered JP Morgan
Chase to make thirty-five transfers to an account at Bank of America in the name of
Vantage Benefit Administrators, among other things.

In the plaintiffs’ words,

“Matrix unilaterally completed each fraudulent transfer of assets of the Plans into
the Vantage Benefits bank account solely at the instruction and direction of the
Vantage Defendants.” 11 These transfers serve as the basis for the plaintiffs’ various
Employment Retirement Income Security Act (ERISA) claims and common-law
negligence claims against Matrix.
In the meantime, the plaintiffs loaned $2,173,544.40 to the Plans to cover the
losses incurred by the Richies’ theft. These loans only require repayment from any
proceeds acquired on behalf of the Plans in litigation.

10

Id. at 2; see also id. at 3, 9, 20, 24, 30.

11

Doc. No. 14 at 3.

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II.

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Procedural Background

As described above, the plaintiffs originally sued only Vantage, the Richies,
and ten John Doe defendants, who the plaintiffs could not identify but explained were
“fiduciaries to the Plans and/or individuals or entities that (i) were complicit in
Defendants’ fraudulent scheme, or (ii) failed to stop Defendants’ fraudulent scheme
despite knowing or having reason to know that Defendants were engaging in this
fraudulent conduct.” 12 Those original defendants never appeared, and the plaintiffs
added Matrix as a defendant in their amended complaint.
Matrix filed a motion to dismiss the plaintiffs’ claims against it.

Among

Matrix’s arguments for dismissal were that the claims were foreclosed by the terms
of their Custodial Account Agreement, discussed in detail below. Although Judge
Lindsay 13 “agree[d] that the Plaintiffs appear[ed] to have amended their Complaint
to strategically avoid the terms of this and another agreement that the parties to this
action may or may not have executed,” he concluded “that the issue of whether any
such agreements were executed or are binding is best left for summary judgment
practice after discovery.” 14 Discovery has now occurred, and both the plaintiffs and
Matrix have filed motions for summary judgment.

12

Doc. No. 1 at 5.

13

The case was subsequently transferred to the undersigned Judge. Doc. No. 57.

14

Doc. No. 48 at 5 n.4.

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III.

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Legal Standards

“Summary judgment is appropriate if, viewing the evidence in the light most
favorable to the non-moving party, 15 “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” 16 “A fact is material if it ‘might affect the outcome of the suit’” and “[a] factual
dispute is genuine ‘if the evidence is such that a reasonable jury could return a verdict
for the nonmoving party.’” 17
IV.
A.

Analysis

The plaintiffs’ claims are not moot as to at least $96,109.97, and the
plaintiffs have standing to bring this action.
As a threshold matter, the Court must consider whether the plaintiffs’ claims

are moot, and, relatedly, whether the plaintiffs have standing to pursue this action.
Congress imposes liability on a breaching ERISA fiduciary “to make good to such plan
any losses to the plan resulting from [the breach], and to restore to [the] plan any
profits” gained by the fiduciary “through use of assets of the plan by the fiduciary.” 18
Further, a breaching fiduciary “shall be subject to such other equitable or remedial
relief as the court may deem appropriate, including removal of such fiduciary.” 19
Matrix argues that, by virtue of the loans the plaintiffs’ made to the Plans to cover
the losses incurred through the transfers in question, which require repayment only
15

Howell v. Town of Ball, 827 F.3d 515, 522 (5th Cir. 2016).

16

FED. R. CIV. P. 56(a).

17 Thomas v. Tregre, 913 F.3d 458, 462 (5th Cir. 2019) (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)).
18

29 U.S.C. § 1109(a).

19

Id.

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from any proceeds recovered from litigation, 20 the Plans have already been made
whole for the losses in question and that this action is therefore moot. But, as the
plaintiffs point out in their response brief, the loans totaled $2,173,544.40, and the
total amount taken by Vantage and the Richies was $2,269,653.47. 21 So, even if
Matrix’s legal argument about such loans is correct, the claims here are not moot, as
$96,109.07 remains outstanding.
Relatedly, Matrix argues that the plaintiffs lack statutory standing to bring
their ERISA claims against Matrix. According to Matrix, this action “is effectively
an action for contribution against an alleged co-fiduciary” 22 because “any recover the
Plaintiff’s obtain here will ultimately be used to reimburse themselves for funds that
they provided to the MBA Plans and their participants.” 23 But, as discussed above,
the loans from the plaintiffs did not cover $96,109.07 that Vantage and the Richies
took from the Plans. So, even if Matrix is correct that the plaintiffs would lack
standing if any recovery for the Plans would in the end flow entirely to the plaintiffs
themselves, the plaintiffs here do have standing because $96,109.07 is still needed to
“make good” to the Plans the losses they suffered from the alleged breach of fiduciary
duty. 24

20

Doc. No. 14 at 17.

21

Doc. No. 132 at 31.

22

Doc. No. 119 at 28.

23

Id. at 19–20.

24 29 U.S.C. § 1109(a). Because, as explained below, the Court concludes that the plaintiffs’
claims against Matrix are subject to dismissal, the Court need not consider whether the plaintiffs’
potential recovery in this action would be capped at $96,109.07.

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B.

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The Plan Documents and Custodial Account Agreement both
expressly bar the plaintiffs’ claims against MBA.

Satisfied that the plaintiffs’ claims are not moot and that they have statutory
standing to bring this action, the Court turns to Matrix’s arguments that the Court
should grant summary judgment to Matrix on the plaintiffs’ claims against them.
First, Matrix points out that the Plan documents themselves, by authorizing MBA to
“appoint a Custodian of the Plan assets” such as Matrix, provide that “[t]he Custodian
will be protected from any liability with respect to actions taken pursuant to the
direction of the Trustee, Administrator, the Employer, and Investment Manager, a
named Fiduciary or other third party with authority to provide direction to the
Custodian.” 25 The 401(k) Plan document in particular further provides that “[t]he
[Custodian] 26 is not obligated to inquire as to whether [a distribution directed by the
Administrator] is proper or within the terms of the Plan, or whether the manner of
making any payment or distribution is proper.” 27 Further, the Plan documents state
that “[t]o the extent permitted by the Code and the Act, [MBA] agrees to indemnify
and hold harmless [Matrix] against any and all claims, losses, damages, expenses and

25 Doc. No. 117-8 at 60 (401(k) Plan Document); Doc. No. 117-9 at 43 (Cash Balance Plan
Document). The Court addresses below the plaintiffs’ argument that the portions of the Plan
Documents discussed here are void under ERISA.

While, as Matrix explains, this provision refers to the “Trustee” rather than the “Custodian,”
the Plan documents elsewhere explain that “[a]ny reference in the Plan to a Trustee also is a reference
to a Custodian unless the context of Plan indicates otherwise.” Doc. No. 117-8 at 60 (401(k) Plan
Document); Doc. No. 117-9 at 43 (Cash Balance Plan Document). And here, the context does not
indicate otherwise. MBA does not dispute this interpretation.
26

27 Doc. No. 117-8 at 56 (401(k) Plan Document); see also 117-9 at 40 (Cash Balance Plan
Document). While the Cash Balance Plan documents do not appear to contain an identical provision,
the plaintiffs do not argue that this represents any meaningful distinction between the Plan
documents and the protections afforded by them to the Custodian.

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liabilities [Matrix] may incur in the exercise and performance of [Matrix’s] powers
and duties hereunder, unless the same are determined to be due to gross negligence
or willful misconduct.” 28 So, because in the plaintiffs’ own words, Matrix completed
each of the wire transfers in question “solely at the instruction and direction of
Vantage,” 29 Matrix argues that the Plan documents bar the plaintiffs’ claims against
Matrix.
Second, Matrix points to the Services Agreement between it and Vantage and
the Custodial Account Agreement between Matrix, Vantage, and MBA. 30 When MBA
engaged Vantage as its third-party administrator and made Vantage the Plan
Administrator of the Plans, MBA engaged Matrix as a custodian as permitted by the
provisions of the Plan documents just described.

Matrix enters into a Services

Agreement with each of its third-party administrator clients, of which Vantage was
one. That Services Agreement—which Matrix entered into with Vantage here 31—
specifies that Vantage “has, and at all times during the term of this Agreement will
have, the requisite authority from each of its Customers to act on their behalf in
connection with this Agreement.” 32 It defines “Customer” as “an employer for which
[Vantage] has entered into an agreement to provide record keeping services and

28 Doc. No. 117-8 at 63 (401(k) Plan Document); see also Doc. No. 117-9 at 43 (Cash Balance
Plan Document). The plaintiffs do not argue that the slightly different wording of this provision in the
Cash Balance Plan document has any significance here.
29

Doc. No. 14 at 3, 10.

30 The Court address below the plaintiff’s arguments that the Custodial Account Agreements
terms are void under ERISA and that there is a genuine dispute as to whether the Custodial Account
Agreement was in effect here.
31

Doc. 117-1 at 6.

32

Id. at 12.

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[Matrix] has entered into an agreement to provide custody . . . services . . . subject to
the terms of this Agreement.” 33 Further, the Services Agreement provides that
Vantage “will retain absolute and complete responsibility for the supervision of all of
its representatives, employees or other agents, and . . . [Matrix] will have no
supervisory, compliance or other responsibility as to the actions of such
representatives, employees or agents of [Vantage.]” 34 Relatedly, it provides that
Matrix “shall not be liable for undertaking any act or instructions from [Vantage] or
for failing to act in the absence of such instructions” and that Matrix “shall be entitled
to conclusively rely on the authenticity of any notice or other communication received
from [Vantage] so long as . . . [Matrix] reasonably believe[s] the notice or other
communication to be genuine.” 35
The Services Agreement further specifies that Matrix will provide the custodial
services described in its Custodial Account Agreement and that Vantage’s customers
“shall be subject” to that agreement. 36 This Custodial Account Agreement is an
agreement between the third-party administrator, its plan sponsor customer, the
plan’s trustee, and Matrix. The Custodial Account Agreement contains numerous
provisions indicating that Matrix was entitled to rely conclusively on Vantage’s
instructions:

33

Id. at 7.

34

Id. at 12.

35

Id. at 14.

36

Id. at 8.

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[Vantage] 37 shall provide direction to [Matrix] on behalf of [MBA].
[Matrix] shall have no duty to take any action other than as specified in
this Agreement unless [Vantage] provides [Matrix] with Instructions
. . . . [Matrix] may conclusively rely upon, and be indemnified by [MBA]
when in acting in good faith upon, any Instruction from [Vantage] or
[MBA], or any other notice, request, consent, certificate, or other
instrument or paper believed by [Matrix] to be genuine and properly
executed, or any instrument or paper if [Matrix] believes the signature
thereon to be genuine. 38
It further provides that “[MBA] hereby designates and authorizes [Vantage] to
provide Instructions to [Matrix] on behalf of [MBA] . . . and authorizes [Matrix] to
disburse funds on behalf of the [MBA] upon Instruction from [Vantage]”; 39 “[MBA]
agrees that [Matrix] may rely on Instructions from [Vantage] . . . and [MBA] agrees
that [Matrix] shall be under no duty to make an investigation with respect to any
Instructions received from [Vantage]”; 40 “[MBA] is solely responsible . . . for the
direction and supervision of [Vantage] . . . . All Instructions, directions, and/or
confirmations received by [Matrix] from [Vantage] . . . shall be deemed to have been
authorized by [MBA].” 41
The Custodial Account Agreement contains numerous relevant provisions
indemnifying Matrix and protecting it from liability:
[MBA] hereby agrees to indemnify, defend and hold [Matrix] . . .
harmless from and against any and all loss, costs, damages, liability,
expenses or claims of any nature whatsoever . . . arising, directly or
indirectly thereof resulting from their reliance upon and any action that
37 Vantage was the “designated representative” within the meaning of this agreement. The
plaintiffs do not dispute this.
38

Id. at 28.

39

Id.

40

Id.

41

Id.

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it takes in good faith in accordance with any certificate, notice,
confirmation, or Instruction, purporting to have been delivered by
[Vantage]. 42
This agreement further provides that “[MBA] agrees to indemnify and hold
[Matrix] harmless for all costs, penalties, interest, and fees, including attorneys[’]
fees, it incurs with respect to any contention or allegation that the Custodian engaged
in a prohibited transaction,” 43 and that “[MBA] waives any and all claims of any
nature it now has or may have against [Matrix] . . . which arise, directly or indirectly,
from any action that it takes in good faith in accordance with any certificate, notice,
confirmation, or Instruction from [Vantage].” 44
In summary, these provisions from both the Plan documents and the Custodial
Account Agreement appear to expressly and unambiguously bar all of the plaintiffs’
claims against Matrix by excusing them from liability, waiving any claims, and

42

Id. at 34.

43

Id.

44 Id. The agreement contains numerous additional relevant provisions. See, e.g., id. (“[MBA]
and [Meidinger] also hereby agree to indemnify, defend and hold [Matrix] . . . harmless from and
against any and all loss, costs, damages, liability, expenses or claims of any nature whatsoever . . .
directly or indirectly, out of any . . . action taken in reliance, on Instructions from [MBA], [Vantage] .
. .; any other act or failure to act by [MBA], [Vantage] . . .; or any other act [Matrix] takes in good faith
hereunder that arises under this Agreement or the administration of the Fund.”); id. (“[Matrix] shall
have no liability for making any distribution or transfer pursuant to the Instruction of [Vantage] . . .
and shall be under no duty to make inquiry as to whether any distribution or transfer directed by
[Vantage] is made pursuant to the provisions of the Plan or any applicable law, or as to such
Instruction’s effect for tax purposes or otherwise.”); id. at 34–35 (“[Matrix] shall not be liable to [MBA]
for any act, omission, or determination made in connection with this Agreement except for its gross
negligence or willful misconduct. Without limiting the generality of the foregoing, [Matrix] shall not
be liable for any losses arising from its compliance with Instructions from [MBA], [Vantage] . . .; or
executing, failing to execute, failing to timely execute or for any mistake in the execution of any
Instructions, unless such action or inaction is by reason of the gross negligence or willful misconduct
of [Matrix]. [Matrix] shall not be responsible for any lost profits or any special, indirect or
consequential damages in respect of any breach or wrongful conduct in any way related to this
Agreement.”); id. at 35 (“[Meidinger] acknowledges that [MBA’s] duties under the Agreement are
ministerial and do not relieve the Trustee of any of the duties set forth in the documents comprising
the Qualified Plan and any related Trust.”).

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indemnifying them. Apparently recognizing this, the plaintiffs offer no meaningful
argument against their applicability based on the terms of these documents
themselves. 45 Rather, they argue that the parties did not actually enter into the
Custodial Account Agreement, and that, even if they did, those provisions from both
the Custodial Account Agreement and the Plan documents that purport to indemnify
or relieve Matrix from liability are void under ERISA.
C.

There is no genuine dispute over whether the Custodial Account
Agreement was in effect here.
The Court first addresses the plaintiffs’ argument that the parties never

entered into the Custodial Account Agreement. The plaintiffs argue that they “never
received nor executed it on behalf of either plan” and that “[t]here is no evidence to
support a finding [that] any of the Plaintiffs entered into the [Custodial Account
Agreement].” 46

And Meidinger says he does not remember ever seeing this

document. 47 However, while it is true that discovery apparently failed to yield a
signed copy of the Custodial Account Agreement, MBA did produce an addendum to
the Master Services Agreement MBA entered with Vantage, which Meidinger
45 The plaintiffs do not, for example, suggest that Matrix did not believe that the instructions
it received from Vantage were genuine, or that any of Matrix’s actions were not in good faith. The
plaintiffs do summarily argue that, because “the plan document language Matrix relies on only
purports to relieve Matrix from liability for following direction of an ‘administrator . . . or other third
party with authority to provide direction to the Custodian,’” and the transactions here “were in fact
not authorized,” and “Matrix cannot rely on a [Custodial Account Agreement] or other sources to argue
that [Vantage] or the Richies had any authority to direct Matrix’s disposition of Plaintiffs’ assets.”
Doc. No. 132 at 22. While the Court does not entirely understand what the plaintiffs mean by this,
the whole point of the Plan documents and Custodial Account Agreement was to establish that
Vantage did have the authority to direct Matrix’s disposition of Plan funds and that Matrix was
entitled to rely on directions from Vantage as genuine, and that Matrix cannot be held liable for doing
so in good faith.
46

Doc. No. 132 at 22.

47

Doc. No. 133-4 at 2–3.

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signed. 48 Meidinger says he does not remember ever seeing the Master Services
Agreement either, 49 and discovery has failed to yield a signed copy of the Master
Services Agreement. But the addendum states that “[t]his Addendum is made part
of the Master Services Agreement . . ., and the Master Services Agreement is
incorporated herein as if fully set forth.” 50 And the Master Services Agreement, the
form of which MBA did produce in discovery, states that
[MBA] hereby appoints [Matrix] as custodian of the plan account
established by this Application and Agreement and authorizes [Matrix]
and its agents to perform the custodial services as described in the
custodial agreement. The undersigned also acknowledges receipt of a
copy of the custodial agreement (see Exhibit B) and agrees to be bound
by the terms of the custodial agreement . . . . 51
Exhibit B to this Master Services Agreement is the Custodial Account
Agreement. 52

As the Supreme Court of Texas has explained, “[d]ocuments

incorporated into a contract by reference become part of that contract.” 53 And “an
unsigned paper may be incorporated by reference in the paper signed by the person
sought to be charged. The language used is not important provided the document
signed plainly refers to another in writing.” 54 So, this signed addendum—which both
acknowledges that the parties had already entered into the Master Services

48

Doc. No. 117-7.

49

Doc. No. 133-4 at 2.

50

Id.

51

Doc. No. 117-6 at 18.

52

Id. at 20.

53

In re 24R, Inc., 324 S.W.3d 564, 567 (Tex. 2010).

54 In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004) (quoting Owen v. Hendricks,
433 S.W.2d 164, 166 (Tex. 1968)).

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Agreement and expressly incorporates it—indicates that the Master Services
Agreement and, in turn, the Custodial Account Agreement, was agreed to and in force
here. 55 Nonetheless, despite repeatedly pointing to the Master Services Agreement
in their original complaint, the plaintiffs now argue that the apparent non-existence
of signed copies of the Master Services Agreement and the Custodial Account
Agreement undermines Matrix’s claim that those agreements were in force here to
the point of creating a genuine dispute of fact. Further, they claim, without pointing
to any authority or explaining the logical basis for this contention, that the idea that
the signed addendum demonstrates that the plaintiffs had entered into the Master
Services Agreement and Custodial Account Agreement is “tenuous and legally
insupportable.” 56
The Court disagrees.

The signed addendum expressly acknowledges the

existence of the Master Services Agreement and incorporates it, and the plaintiffs
offer no alternative interpretation of or explanation for its terms. So, the lack of
signed copies of these agreements does not create a genuine dispute of fact where the
signed addendum, the plaintiffs’ own production of the form Master Services
Agreement, Matrix’s agreements with Vantage, 57 and the parties’ conduct combine

55 That the addendum itself is specifically related to the Cash Balance Plan is of no
consequence, as it references and incorporates the Master Services Agreement as a whole.
56

Doc. No. 132 at 23.

57 As Matrix points out, even if the plaintiffs had not directly entered into the Master Services
Agreement and the Custodial Account Agreement, they would likely still be bound to these agreements
by virtue of its agent Vantage’s agreements with Matrix. Doc. No. 119 at 16–17. The plaintiffs do not
appear to offer any response to this agency argument beyond their contention that they never agreed
to the Master Services Agreement with Vantage.

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to indicate that the Master Services Agreement and the Custodial Account
Agreement were agreed to and in effect here.
D.

MBA was not an ERISA Fiduciary.

Next, the plaintiffs point to 29 U.S.C. section 1110(a), under which “any
provision in an agreement or instrument which purports to relieve a fiduciary from
responsibility or liability for any responsibility, obligation, or duty under this part
shall be void as against public policy.” Because, according to the plaintiffs, Matrix
was a fiduciary under ERISA, Section 1110(a) voids those provisions discussed above
that appear to relieve Matrix from liability. So, the Court must consider whether
Matrix was in fact an ERISA fiduciary. 58
Under ERISA, a fiduciary may be either a “named” fiduciary or a “functional”
fiduciary. Here, the plaintiffs argue that Matrix is a functional fiduciary. Title 29,
section 1002(21)(A) of the United States Code sets out the standard for determining
whether a person is functional fiduciary:
[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 such
plan. Such term includes any person designated under section
1105(c)(1)(B) of this title.

58 Because, as explained below, the Court concludes that Matrix was not an ERISA fiduciary,
it need not consider Matrix’s arguments that indemnification provisions and allocations of fiduciary
responsibilities, at least in plan documents, are permissible under section 1110(a). See Doc. No. 119
at 9–10.

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As the Fifth Circuit has explained, “A person is a fiduciary only with respect
to those portions of a plan over which he exercises control.” 59 And courts are to
determine whether a purported fiduciary in fact is a fiduciary “without succumbing
to the improper influence of titles and labels.” 60

Rather, “Section 1002(21)(A)

provides a functional definition of a fiduciary which depends, in part, upon whether
a person ‘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.’” 61
“While some courts have indicated that literally any authority or control
respecting management or disposition of plan assets, without reference to whether
any discretion is involved, will support a finding that an entity is a fiduciary, . . . the
Fifth Circuit is not among them.” 62 Rather, “[t]o be fiduciaries, [the persons in
question] must exercise discretionary authority and control that amounts to actual
decision making power.” 63 So, even when an entity “assumes discretionary authority
or control over plan assets, [it] will not be considered a fiduciary if that discretion is
sufficiently limited by a pre-existing framework of policies, practices and

59

Am. Fed’n of Unions Loc.al 102 v. Equitable Life Assurance Soc’y, 841 F.2d 658, 662 (5th Cir.

60

Reich v. Lancaster, 55 F.3d 1034, 1048 (5th Cir. 1995) (citing 29 U.S.C. § 1002(21)(A)).

61

Id. (quoting Kayes v. Pac. Lumber Co., 51 F.3d 1449, 1459 (9th Cir. 1995)) (cleaned up).

62

Tower Loan of Miss. v. Hosp. Benefits, Inc., 200 F. Supp. 2d 642, 648–49 (S.D. Miss. 2001).

63

Reich, 55 F.3d at 1049.

1988).

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procedures.” 64 So, for example, “[a] third-party administrator who merely performs
ministerial duties or processes claims is not a fiduciary.” 65
Here, in the plaintiffs’ own words, Matrix completed each of the wire transfers
in question “solely at the instruction and direction of [Vantage].” 66 After all, Matrix
was engaged by Vantage and MBA to do just this. And Matrix’s Services Agreement
with Vantage specified that Vantage “has, and at all times during the term of this
Agreement will have, the requisite authority from each of its Customers to act on
their behalf in connection with this Agreement.” 67 It furthers provides that Matrix
“shall not be liable for undertaking any act on instructions from [Vantage]” and that
Matrix “shall be entitled to conclusively rely on the authenticity of any notice or other
communication received from [Vantage] so long as [Matrix] reasonably believe[s] the
notice or other communication to be genuine.” 68
The plaintiffs argue that Matrix was a fiduciary because it exercised control
over the fund assets in question by “holding the assets in its own account, one subject
to the control of no person except Matrix, and [by directing] JPMorgan Chase to make
the illegal payments.” 69 According to the plaintiffs, this was sufficient to make Matrix
a fiduciary, because an ERISA fiduciary is “one who exercises any control of plan

Id. at 1047 (quoting Useden v. Acker, 947 F.2d 1563, 1575 (11th Cir. 1991), cert. denied, 508
U.S. 959 (1993).
64

65

Id.

66

Doc. No. 14 at 3.

67

Doc. No. 117-1 at 12.

68

Id. at 14.

69

Doc. No. 132 at 25 (emphasis omitted).

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assets,” 70 and “discretion is not required.” 71 But such an argument is flatly at odds
with section 1002(21)(A), from which plaintiffs purportedly draw this minimal “any
control” standard, and with the standards set out in the Fifth Circuit caselaw
discussed above. Specifically, section 1002(21)(A)(i) states that a person is a fiduciary
if “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.” Read as a whole, the provision requires
that to be considered a fiduciary, a person must “exercise discretionary authority and
control that amounts to actual decision making power” 72 over what is done with plan
assets to be considered a fiduciary. 73 In merely providing custodial services and
initiating the transfers in question as ordered by Vantage, Matrix exercised no such
power. 74 And the plaintiffs point to nothing else to suggest that Matrix did in fact

70

Id. at 24.

71

Id. at 25.

72

Reich, 55 F.3d at 1049.

73 While the plaintiffs claim support from out-of-circuit David P. Coldesina, D.D.S. v. Estate of
Simper, 407 F.3d 1126 (10th Cir. 2005), in that case the Tenth Circuit’s conclusion that the individual
in question was exercising sufficient control to be a functional fiduciary hinged on the fact that the
individual “assumed control over disposition of the funds by exercising his own judgment rather than
acting at the plan’s direction” by changing the entity to whom they would make plan checks payable.
Id. at 1134. While the individual claimed that he was only acting at the direction of the plan’s
investment advisor, this argument was unavailing: after all, he “[was] hired by the plan, not [the
investment advisor], and [was] entrusted with the plan’s money not [the investment advisor’s]. They
simply cannot avoid this fact by asserting that the devil made them do it.” Id. at 1135. Here, Matrix’s
contracts required it to assume that Vantage “has, and at all times during the term of this Agreement
will have, the requisite authority from each of its Customers to act on their behalf in connection with
this Agreement.” Doc. No. 117-1 at 12. So, Matrix did not “assume[] control over disposition of the
funds by exercising its own judgment rather than acting at the plan’s direction,” because it was entitled
to treat the instructions it received regarding the transfers in question as directions from MBA itself.
See Coldesina, 407 F.3d at 1134.

After all, if such custody and actions constituted adequate power to be considered a fiduciary,
it appears that JPMorgan Chase itself would qualify as a fiduciary here as it was the entity that
actually held the funds in question and transferred the funds based on the directions it received. See,
74

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exercise such power, nor that it did anything here other than follow Vantage’s
directions in completing the ministerial tasks assigned to it. Accordingly, Matrix was
not a functional fiduciary under ERISA. 75 So, the provisions from both the plan
documents and the Custodial Account Agreement 76 that relieve Matrix from liability
are not void under Section 1100(a), and they relieve Matrix from liability here from
both the negligence and ERISA claims. 77 And of course, even in the absence of such
provisions, Matrix’s non-fiduciary status means the plaintiffs’ ERISA claims against
Matrix that may only be brought against a fiduciary would still be subject to
dismissal.
V.

Conclusion

For the foregoing reasons, the Court DENIES the plaintiffs’ motion for partial
summary judgment [Doc. No. 107], GRANTS Matrix’s motion for summary judgment

e.g., Nagy v. DeWese, 771 F. Supp. 2d 502, 515–16 (E.D. Pa. 2011) (“[T]the mere practical ability to act
against an account holder’s instructions to prevent fraud cannot constitute authority or control over
plan assets; otherwise, any bank holding plan funds would become a fiduciary by virtue of its ability
to place restrictions on an account in cases of potential fraud.”); see also, e.g., In re Nighthawk Oilfield
Servs. Ltd., No. H-11-0079, 2012 WL 13156742, at *5 (S.D. Tex. Mar. 23, 2012) (“[A] bank does not
assume fiduciary status by either holding plan assets in an account or by exercising its rights as a
lender and seizing an account that is used as collateral and that includes plan assets. . . . Neither its
possession of [such an account] nor its sweeping of that account make [a bank] a fiduciary under
ERISA.”).
75 See, e.g., Turner v. Talbert, No. 04-450-JJB-DLD, 2011 WL 44797966, at *2 (M.D. La. Sept.
27, 2011) (concluding that an entity analogous to Matrix was not an ERISA fiduciary because it
“merely exercised physical control [of plan assets] for the performance of mechanical administrative
tasks” and “never exercised discretionary control, authority, or responsibility such that it amounted to
the actual decision maker regarding plan management or administration.”), aff’d sub nom, Turner v.
Pan Am. Life Ins. Co., 478 F. App’x 915 (5th Cir. 2012).

Because the Plan documents themselves require summary judgment in Matrix’s favor,
summary judgment on those claims would be appropriate even if there were a genuine dispute of
material fact as to whether the Custodial Account Agreement were in effect here.
76

77 Because the Court has concluded that the negligence claims are barred by both the Plan
documents and the parties’ agreements, it need not consider Matrix’s additional arguments for their
dismissal.

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[Doc. No. 116], and DISMISSES WITH PREJUDICE all of the plaintiffs’ claims
against Matrix. Because the Court’s opinion does not depend on either party’s expert
witness testimony or any objected to evidence, the Court DISMISSES AS MOOT the
parties’ motions to exclude [Doc. Nos. 113 and 115] and the plaintiffs’ objections [Doc.
No. 134].

And because the Court’s opinion moots Matrix’s fourth and fifth

counterclaims against the plaintiffs, the Court DISMISSES AS MOOT both
counterclaims four and five and the plaintiffs’ motion to dismiss them [Doc. No. 124].

IT IS SO ORDERED this 3rd day of August, 2022.

BRANTLEY STARR
UNITED STATES DISTRICT JUDGE

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