Board of Trustees of Cedar Rapids Pediatric Clinic, P.A. v. Continental Assurance Co.

690 F. Supp. 792
CourtDistrict Court, W.D. Arkansas
DecidedJune 27, 1988
DocketNos. Civ. 86-5192, Civ. 87-5091
StatusPublished
Cited by18 cases

This text of 690 F. Supp. 792 (Board of Trustees of Cedar Rapids Pediatric Clinic, P.A. v. Continental Assurance Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Board of Trustees of Cedar Rapids Pediatric Clinic, P.A. v. Continental Assurance Co., 690 F. Supp. 792 (W.D. Ark. 1988).

Opinion

MEMORANDUM OPINION

MORRIS SHEPPARD ARNOLD, District Judge.

The plaintiffs1 are various employers who had pension plans that were arranged [794]*794with defendant Continental Assurance Company in 1974.2 The intermediaries in the transactions were William Morton, George Morton, and several insurance agencies owned or operated by them. In actuality, William Morton siphoned off much of the money that the employers thought they were contributing to the pension plans. The scheme was discovered in 1986, when the employers requested an accounting statement directly from Continental Assurance Company and were shocked to learn that only $3,678.04 had been credited to their accounts.

The plaintiffs have sued Continental Assurance Agency, the Mortons, and the Morton agencies,3 alleging violations of the federal Employer Retirement Income Security Act (ERISA) and common-law claims based on breach of contract, fraud, conversion, negligence, breach of fiduciary duty, right to an accounting, and conspiracy. Continental Assurance Company has moved to dismiss several counts of the plaintiffs’ first amended complaint, to dismiss several paragraphs of one intervening plaintiff’s complaint, and to dismiss entirely the plaintiffs’ complaint as to one plaintiff. Continental Assurance Company has also moved for judgment on the pleadings as to several counts of the other intervening plaintiff’s complaint. The motions will be granted in part and denied in part.

I.

Defendant Continental Assurance Company first moves to dismiss counts 4-11 of the plaintiffs’ complaint and to dismiss paragraphs 30-43 of the complaint of intervening plaintiff F & M Bank Pension Plan. These are the counts alleging common-law claims. The basis for defendant Continental Assurance Company’s motion is its contention that the provisions of ERISA preempt any claims under state law that relate to employer benefit plans.

As part of ERISA, Congress declared that “the provisions of [the subchapters on protection of employee benefit rights and on plan termination insurance] shall supersede any and all State laws insofar as they may ... relate to any employee benefit plan.” 29 U.S.C. § 1144(a). This preemptive effect extends not only to state statutes that would regulate employee benefit plans, Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 98, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983), but also to state common-law claims that would relate to employee benefit plans. Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, - - -, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987).

The plaintiffs make two arguments on this point. They first argue that whether their state claims “relate to any employee benefit plan,” see 29 U.S.C. § 1144(a), is a question of fact, and they suggest therefore that the court should delay a ruling on the preemption issue until the close of discovery. In support, they cite Dedeaux, in which the Supreme Court described the issue as having arisen on a motion for summary judgment at “the close of discovery.” Dedeaux, -, 107 S.Ct. at 1551-52.

Nothing in Dedeaux indicates that resolution of this question must be deferred until the close of discovery, however, and in Shaw, in fact, the issue was raised and decided on a motion to dismiss. See Shaw, 463 U.S. at 93 n. 9, 103 S.Ct. at 2897 n. 9, and Delta Air Lines, Inc. v. Kramarsky, 485 F.Supp. 300, 302 (S.D.N.Y.1980) (one of the cases decided on the appeal in Shaw). There is not one assertion in any of the plaintiffs' complaints that would lead the court to conclude that the injuries alleged relate to anything other than an employee [795]*795benefit plan, as that term is defined by ERISA. See 29 U.S.C. § 1002(1), § 1002(2)(A), § 1002(3), and § 1003(a). The court therefore sees no reason why it should delay a ruling on the preemption argument.

The plaintiffs’ second argument is more subtle. Essentially, the plaintiffs contend that what might ordinarily be considered state common-law claims are in fact now federal common-law claims, having been incorporated into the federal common law because of the “comprehensive” protection intended by ERISA “to promote the interests of employees and their beneficiaries in employee benefit plans.” Shaw, 463 U.S. at 90, 103 S.Ct. at 2896. In support, they cite Kuntz v. Reese, 760 F.2d 926 (9th Cir.1985), vacated on other grounds, 785 F.2d 1410 (9th Cir.1986) (per curiam), cert. denied, 479 U.S. 916, 107 S.Ct. 318, 93 L.Ed.2d 291 (1986).

In Kuntz, the court found that a state common-law claim for misrepresentation was preempted by ERISA. Id. at 935. See also Anderson v. John Morrell and Co., 830 F.2d 872, 875 (8th Cir.1987), and Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208, 1215 (8th Cir.1981), cert. denied, 454 U.S. 968, 102 S.Ct. 512, 70 L.Ed.2d 384 (1981). The court also found, however, that the plaintiffs’ allegations of misrepresentation stated a claim for breach of fiduciary duty under ERISA. Kuntz, 760 F.2d at 935; see also 29 U.S.C. § 1104(a)(1).

As a practical matter, the effect of finding certain state common-law causes of action preempted but then holding that the allegations as to those causes of action are sufficient to state a claim under ERISA seems to be only that the number of separate fact questions to be answered at trial would be reduced. Certainly the court in Kuntz did not hold that the allegations in question stated federal causes of action separate from those stated under ERISA, and if that is the argument the plaintiffs are making here, this court declines to accept it.

However, following the reasoning used in Kuntz, this court finds that the plaintiffs’ allegations as to common-law claims based on breach of contract4 and negligence state a claim under ERISA for breach of fiduciary duty. See 29 U.S.C. § 1104(a). The court further finds that the plaintiffs’ allegations as to common-law claims based on fraud, conversion, breach of fiduciary duty, right to an accounting,5 and conspiracy state a claim under ERISA either for breach of fiduciary duty, taking into consideration the plaintiffs’ allegations as to agency, see 29 U.S.C. § 1104(a), or for breach of duty by a co-fiduciary, see 29 U.S.C.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Noel v. Laclede Gas Co.
612 F. Supp. 2d 1061 (E.D. Missouri, 2009)
In Re Snyder
206 B.R. 347 (M.D. Pennsylvania, 1996)
Forbau Ex Rel. Miller v. Aetna Life Insurance Co.
876 S.W.2d 132 (Texas Supreme Court, 1994)
Slice v. Sons of Norway
866 F. Supp. 397 (D. Minnesota, 1993)
Robert E. Slice v. Sons of Norway
978 F.2d 1045 (Eighth Circuit, 1992)
Powell v. Bob Downes Chrysler-Plymouth, Inc.
763 F. Supp. 1023 (E.D. Missouri, 1991)
In Re Locke
120 B.R. 563 (D. Montana, 1990)
Davis v. John Alden Life Insurance
746 F. Supp. 44 (D. Kansas, 1990)
Baker Hospital v. Isaac
391 S.E.2d 549 (Supreme Court of South Carolina, 1990)
In Re Ewell
104 B.R. 458 (M.D. Florida, 1989)
HealthAmerica v. Menton
551 So. 2d 235 (Supreme Court of Alabama, 1989)
In Re Martin
102 B.R. 639 (E.D. Tennessee, 1989)
In Re Atallah
95 B.R. 910 (E.D. Pennsylvania, 1989)
CEDAR RAPIDS PED. CL. PP v. Continental Assur. Co.
690 F. Supp. 792 (W.D. Arkansas, 1988)

Cite This Page — Counsel Stack

Bluebook (online)
690 F. Supp. 792, Counsel Stack Legal Research, https://law.counselstack.com/opinion/board-of-trustees-of-cedar-rapids-pediatric-clinic-pa-v-continental-arwd-1988.