Opinion
Civil Action 20-11860-MLW[1]
01-10-2022
ESTATE OF MANUEL ROSENBERG and AUDRAY ROSENBERG, Plaintiffs, v. MACY'S, INC., FEDERATED DEPARTMENT STORES, INC. and BRIGHTHOUSE LIFE INSURANCE COMPANY, Defendants.
REPORT AND RECOMMENDATION ON MACY'S INC.'S AND FEDERATED DEPARTMENT STORES, INC.'S MOTION FOR JUDGMENT ON THE PLEADINGS (#32) AND BRIGHTHOUSE LIFE INSURANCE COMPANY'S MOTION FOR JUDGMENT ON THE PLEADINGS (#42)
M. Page Kelley Chief U.S. Magistrate Judge
I. Introduction.
From 1957 to 1973, Manuel Rosenberg was employed by Federated Department Stores, Inc., where he was a participant in Federated's Retirement Income and Thrift Incentive Plan (the Plan). (#29 ¶¶ 12, 24-25, 28.) When he left Federated, Mr. Rosenberg was paid his contributions to the Plan; he chose to apply the balance of the Plan to purchase a "10 Years Certain & Life Annuity" provided by Travelers Insurance Company (the Annuity). Mr. Rosenberg designated his wife, Audray, as the beneficiary of the Annuity. Monthly Annuity payments should have commenced on May 1,1995. Id. ¶¶ 2-3, 12-13,27, 30-31, 33,40.
Mr. Rosenberg passed away in 2017. (#29-9 at 2; #37 at 7.) Plaintiffs, his estate and Mrs. Rosenberg, allege that neither he nor Mrs. Rosenberg ever received monthly Annuity payments. (#29 ¶ 45.) Plaintiffs filed their original complaint on October 15, 2020 (#1) and their amended complaint on May 3, 2021. (#29.) In the amended complaint, plaintiffs bring claims against Federated, Macy's, Inc. (as Federated's successor (#29 ¶ 26)) and Brighthouse Life Insurance Company (as Traveler's successor, id. ¶ 37) to recover benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (Count I) (id. ¶¶ 66-70); for breach of fiduciary duty under ERISA § 502(a)(2), 29 U.S.C.§ 1132(a)(2) (Count II) (id. ¶¶ 71-76); and for equitable relief under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3) (Count III) (id. ¶¶ 77-83.) In the alternative, plaintiffs bring claims for breach of contract (Count IV) and equitable relief at common law (Count V). Id. ¶¶ 84-89.
The Employee Retirement Income Security Act of 1974, ?,9 V.S.C § 1001 et seq.
Federated and Macy's have moved for judgment on the pleadings under Fed. Civ. P. 12(c). (#32.) Brighthouse has also moved for judgment on the pleadings. (#42.) Plaintiffs oppose. (#37; #46.)
Defendants argue that plaintiffs' claims are time-barred. (#33 at 5-9; #43 at 4-13.) For the reasons set out below, the court agrees and recommends that defendants' motions for judgment on the pleadings be granted and plaintiffs' claims be dismissed.
Given its recommendation, the court need not reach the other arguments raised by defendants, including Federated and Macy's arguments that the Plan fulfilled its obligations when it purchased the Annuity (#33 at 9-10) and that Federated is not a proper party (#33 at 11-12), as well as Brighthouse's argument that plaintiffs' claims are duplicative. (#43 at 14, 14 n.9.)
II. The Legal Standard.
On motions for judgment on the pleadings under Fed.R.Civ.P. 12(c), the court applies essentially the same standard it applies to motions to dismiss for failure to state a claim under Fed R. Civ. P.12(b)(6) except that Rule 12(c) motions, unlike Rule 12(b)(6) motions, "implicate[] the pleadings as a whole." Aponte-Torres v. Univ. of P.R., 445 F.3d 50. 54-55 (1st Cir. 2006). The court may supplement the facts from the pleadings by considering documents fairly incorporated into them. R.G. Fin. Corp. v. Vergara-Nunez, 446 F.3d 178, 182 (1st Cir. 2006); see Curran v. Cousins, 509 F.3d 36.44 (1st Cir. 2007).
The well-pleaded facts and the reasonable inferences drawn from them are viewed in the light most favorable to non-movants. Kando v. Rhode Island State Bd. of Elections, 880 F.3d 53. 5£ (1st Cir. 2018); see Zipperer v. Raytheon Co., 493 F.3d 50. 53 (1st Cir. 2007); Aponte-Torres, 445 F.3d at 54. To survive a Rule 12(c) motion, plaintiffs must plead enough facts to state a claim that is "plausible" on its face. Gray v. Evercore Restructuring L.L.C, 544 F.3d 320. 324 (1st Cir. 2008) (citation omitted); see Doe v. Brown Univ., 896 F.3d 127, 130 (1st Cir. 2018); Citibank Global Markets, Inc. v. Rodriguez Santana, 573 F.3d 17.23 (1st Cir. 2009). See generally Bell All. Corp. v. Twombly, 550 U.S. 554. 570 (2007). Rule 12(c) does not permit resolution of factual disputes; the court may enter judgment on the pleadings "only if the uncontested and properly considered facts conclusively establish [defendants'] entitlement to a favorable judgment." Zipperer, 493 F.3d at 53 (quoting Aponte-Torres, 445 F.3d at 54).
Generally, if the court enters judgment on the pleadings based on an affirmative defense, the facts establishing the affirmative defense "must: (1) be 'definitively ascertainable from the complaint and other allowable sources of information,' and (2) 'suffice to establish the affirmative defense with certitude.'" Gray, 544 F.3d at 324 (quoting Nisselson v. Lernout, 469 F.3d 143. 150 (1st Cir. 2006)); see Citibank, 573 F.3d at 23. The statute of limitations is an affirmative defense. Fed.R.Civ.P. 8(c)(1). Judgment on the pleadings based on the statute of limitations is appropriate only if the record, viewed in the light most favorable to plaintiffs, "leaves no plausible basis for believing that the claim may be timely." Erlich v. Ouellette, Labonte, Roberge and Allen, P.A., 637 F.3d 32. 35 & n.4 (1st Cir. 2011) (quoting Gonzalez Figneroa v. J.C. Penney Puerto Rico, Inc., 568 F.3d 313.318 (1st Cir. 2009)) (citing Twombly, 550 U.S. at 555-556)).
III. The Facts.
The following facts are drawn from plaintiffs' amended complaint and attached exhibits. Mr. Rosenberg was an employee of Federated from 1957 to 1973. (#29 ¶ 24.) He was an Executive Vice President for Filene's in Boston; he left to become the Chief Executive Officer of Gimbel's in Philadelphia. (#29-9 at 2.) He passed away in 2017. Id.
Federated established the Plan for its employees effective January 25, 1953. Id. ¶ 25. Exhibit A to the amended complaint includes Federated's Plan effective January 25, 1953, with amendments through January 11, 1968 (#29-1 at 2-34); a description of Federated's "Restated" Plan effective January 1, 1976, id. at 175-205, with an incorporated copy of that plan, id. at 205-246; a description of Federated's Plan effective January 1, 1982, id. at 247-284, with an incorporated copy of that plan, id. at 285-333; and Federated's Plan effective January 1, 1987, with amendments through January 1,1995, id. at 35-174. Federated established a group annuity contract for the Plan with Travelers. (#29 ¶ 27.) Exhibit C is a certificate pertaining to a group annuity contract issued by Travelers to First National Bank of Chicago as trustee for the Plan, (#29-3 at 3-18), with riders, id. at 20-63.
When he left Federated, Mr. Rosenberg was a fully vested participant in the Plan with an unpaid balance; after he left, he continued to be a participant in the Plan. (#29 ¶ 29.) Around the time he left, Mr. Rosenberg was paid his own contributions to the Plan with investment earnings. Id. ¶ 30. The remaining balance in the Plan, $44,642.58, was applied to purchase the Annuity, which plaintiffs describe as a "10 Year Certain & Life Annuity." Id. ¶ 31; see Id. at ¶¶2, 3,13.
Exhibits D, E, F and G are documents pertaining to the distribution of contributions and purchase of the Annuity. Exhibit D consists of two forms. The first is an "Annuity Purchase Form," discussed below. (#29-4 at 2.) The second is a form of computations, which appear to have been completed at least in part by a Plan representative. Id. at 3. On this computations form, in the "REASON FOR TRANSACTION" section, the boxes for "Termination of Employment" and "Other" are marked. In the "METHOD OF DISTRIBUTION" section, the boxes for "10 Years Certain and Life Annuity," "Life Annuity," "Joint & Survivor Annuity," "Full Cash Refund Annuity," "Lump Sum Cash," "Lump Sum In Cash & Stock" and "Installments" are not marked. Rather, the box for "Other" is marked. The "COMMENTS" section reads: "VESTED TERMINATION OF EMPLOYMENT. Pay own savings [handwritten sum] and accretions immediately; balance to be paid in a [handwritten sum] deferred annuity." Id. Although not entirely clear, the handwritten sum after "savings" appears to be $26,474.46 and the handwritten sum before "deferred" appears to be $44,642,58. Id. The "Effective date of Transaction" is October 15, 1973, although the date under the signature indicating that the "Administrative Committee directed] and authorize[d] the transaction" is November 5, 1973. Id.
Adding $26,474.46 to $44,642.58 yields the handwritten sum that appears in the "Amount of Distribution" section next to "Total Cash": $71,117.04. Id.
Much of the information on the "Annuity Purchase Form" is difficult to decipher.However, in the "Form of Annuity Elected" section, the boxes for "10 Years Certain and Life Annuity," "Full Cash Refund Annuity," "Life Annuity (no death benefit)" and "Joint and Survivor Annuity" are not marked. (#29-4 at 2.) However, two hand drawn boxes are marked. Words appear next to both hand drawn boxes. Id.
Copies of the "Annuity Purchase Form" also appear in the record at Exhibit H to plaintiffs' amended complaint (#29-9 at 7) and Exhibit A to Brighthouse's answer (#41-1 at 5). The copy appended to Brighthouse's answer, which has been redacted and does not show the handwritten number or highlighting shown at Exhibit D, is somewhat clearer, although still difficult to decipher.
The sections for information about a "Joint Annuitant" are not completed. Id. The sections for information about a "Beneficiary" are completed. Id. Although not clear, the "Beneficiary" appears to be listed as "Audray Rosenberg, wife, [indecipherable] surviving the Participant; otherwise the lawful surviving children of the Participant in equal [indecipherable], if any." Id.The "Premium Applied to Purchase Annuity" appears to be $44,642 and change; the "Annuity Purchase Date" is November 1, 1973; the "Annuity Commencement Date" is May 1, presumably 1995; and the "Approx. Amount Mo. Annuity" appears to be $ 1,468 and change. Id.
Plaintiffs allege that Mrs. Rosenberg was the beneficiary of the Annuity (#29 ¶ 13) and defendants do not seriously contest that allegation.
In the "Mailing Instruction" section, there appears to be an address in Philadelphia. IdIn the "Employer has given Annuitant the letter" section, there appears to be a faded "X" in the box for "Yes." Id. Mr. Rosenberg signed the form on February 20, 1974. In March 1974, a "Division Representative" and an "Administrative Committee Representative" signed the form indicating, among other things, that "[t]he purchase of the Annuity is in accordance with the terms of the Plan and Contract and is hereby authorized." Id.; see also #29 ¶¶ 33-35.
On the computation form, the "Mailing Address" is listed as "c/o Gimbal's, 8th and Market Sts., Philadelphia, Pa." (#29-4 at 3.)
Exhibit E is an "Annuity Worksheet." (#29-5 at 2.) In the "Type of Annuity" section, the box for "10 Years Certain & Life" is marked. The "Annuity Commencement Date" is November 1, 1973. Id. The "Participant's credits applied toward purchase of annuity" is $44,642.58; the "Rate purchased per $1,000 of annuity premium" is 32.893; and the "Total monthly premium" is $1,468.43. Id.
Exhibit F is a "Participant's Authorization, Election, or Request." (#29-6 at 2.) In the "RETIREMENT DISTRIBUTION" section, the date "10/10/73" and the initials "MBR" appear next to "Deferred Annuity" and "Please pay own savings and accretions immediately." Id. Mr. Rosenberg and a witness signed the form on October 10, 1973. Id. In signing the form, Mr. Rosenberg "agree[d] that [he] accepted] sole responsibility for the above request" and "indicate[d] [his] ... desire to make the authorization, election, or request described alongside the box which [he] dated and initialed." Id.
Exhibit G is a list of "1973 - DEFERRED ANNUITANTS" including Mr. Rosenberg, with a purchase date of November 1, 1973, and commencement date of May 1,1995. (#29-7 at 2); see #29 ¶ 33.
Around June 14,2019, Brighthouse confirmed that the payment of $44,642.58 was applied to purchase the Annuity on November 1, 1973, and that monthly Annuity payments of $1,468.43 were to commence on May 1, 1995. (#29 ¶ 40). Brighthouse also stated that the Annuity was canceled on June 1,1990. Id. ¶ 41. Exhibit H includes a letter from a Senior Compliance Associate at Brighthouse Financial to plaintiffs' counsel dated June 14, 2019. (#29-8 at 2.) It reads, in part:
After research, we have determined that this annuity benefit was issued on September 1,1973. An initial payment of $44,642.58 was applied on November 1, 1973, with a monthly benefit of $1,468.43 to commence on the normal retirement date of May 1,1995. However, records show that this benefit was canceled on June 1,1990.Id. See also #29-2, Exhibit B, at 2.
Exhibit H also includes an email from the Senior Compliance Associate to plaintiffs' counsel dated September 24,2019. (#29-8 at 3.) It reads, in part: "As referenced in my prior email from June 21, 2019, we have no record of such contract." Id. A June 21, 2019 email from the Senior Compliance Associate to plaintiffs' counsel appears below the September 24, 2019 email. Id. In the June 21, 2019 email, the Senior Compliance Associate explained to plaintiffs' counsel that the contract was issued by Travelers in 1973 and that MetLife acquired Travelers in 2005. Id. He also explained that the name of the issuing company was changed to MetLife Insurance Company of Connecticut (MICC); that, in November 2014, MICC changed its name to MetLife Insurance Company USA; that, in August 2017, MetLife completed the separation of a substantial portion of its U.S. retail business, which is now operating as Brighthouse Financial; and that Brighthouse Financial is a separate, publicly traded company comprised of three issuing companies that were formerly part of the MetLife enterprise, one being Brighthouse Life Insurance Company (formerly MetLife Insurance Company USA). Id. The Associate also wrote:
As the acquisition included the administrative systems, we have visibility into the status of contracts that pre-date MetLife's acquisition of Travelers. In this case, the system shows this contract was canceled in 1990, which was 15 years before MetLife acquired Travelers. Therefore, this contract is not serviced by MetLife or Brighthouse, nor do we have the records needed to answer your questions below.Id.
Macy's and Brighthouse have not provided proof of any notice informing Mr. Rosenberg that the Annuity would be canceled or replaced, nor have they provided a reason for the cancelation. (#29 ¶¶ 42-43.) Mr. and Mrs. Rosenberg did not cancel the Annuity or instruct defendants to do so. Id. ¶ 49.
Neither Mr. nor Mrs. Rosenberg received any payments from the Annuity. (#29 ¶ 45.) Mr. Rosenberg's tax returns from 1995 and subsequent years are consistent with the fact that he did not receive any payments. Id. ¶ 46. Defendants have been unable to produce any records of payments. Id. ¶¶ 47-48. Plaintiffs allege that,
[u]pon information and belief, at no time after Mr. Rosenberg's purchase of the annuity did either Defendant provide him, or Plaintiffs, with information or notices related to the annuity or its alleged cancellation, and Plaintiffs only learned recently of information indicating its existence or its alleged cancellation.Id. ¶ 52.
Demands for payment were made and administrative remedies exhausted. (#29 ¶ 51.) Exhibit I includes three letters: a letter from plaintiffs' counsel to Macy's dated October 25,2018, (#29-9 at 2-4); another from plaintiffs' counsel to MetLife with enclosures dated May 16, 2019, id. at 5-9; and another from plaintiffs' counsel to the Senior Compliance Associate dated October 3, 2019, id. at 9-10.
IV. Discussion.
A. Preliminary Matters.
1. Mrs. Rosenberg.
Defendants argue that Mrs. Rosenberg does not have standing to bring this action. (#33 at 10-11; #40 at 7-8; #43 at 14-15.) Brighthouse points to language in Exhibit C, the Travelers certificate, indicating that the first monthly payment would be due on the annuitant's (Mr. Rosenberg's) normal annuity commencement date and that payments would terminate with the last monthly payment before the annuitant's death provided that, if the annuitant died after payments of the annuity commenced (after May 1, 1995) and before 120 monthly payments had been made (before May 1, 2005), then the remainder of the 120 monthly payments would be made to the beneficiary designated by the annuitant (Mrs. Rosenberg). (#43 at 15 (citing #29-3, Exhibit C, at 4).) Mr. Rosenberg did not pass away before May 1, 2005; he passed away in 2017. (#29-9, Exhibit I, at 2; #37 at 7.) Thus, defendants argue, as the beneficiary, Mrs. Rosenberg would not have received any Annuity payments.
There is no dispute that Mr. Rosenberg's normal annuity commencement date would have been May 1, 1995, the first month after he turned 65. (#29 ¶ 33; #29-9, Exhibit I, at 2; #33 at 11; #43 at 15.)
Mrs. Rosenberg points to language in Exhibit A, the version of the Plan with amendments through January 11, 1968, see #37 at 19 (citing #29-1 at 26), which indicates that a participant in the Plan may designate a beneficiary "to whom in the event of his death his interest or any undistributed balance thereof shall be paid." (#29-1, Exhibit A, at 26). Mrs. Rosenberg asserts that she was designated as the beneficiary "under the Plan." Id. (citing #29 113).) She argues that benefits due under any ERISA plan must be paid in accordance with such a beneficiary designation. (#46 at 23-26.)
[10] Paragraph 13 does not expressly allege that Mrs. Rosenberg was designated the beneficiary under the Plan. It alleges that Mrs. Rosenberg was designated the beneficiary of "inter alia" the Annuity. (#29 ¶ 13.)[11] Defendants cite two cases in support of their argument. (#33 at 11; #43 at 15 (citing Smith v. Rockwell Automation, Inc., No. 19-C-0505, 2020 WL 7714663 (E.D. Wis. Dec. 29, 2020); Harms v. Cavenham Forest Indus., Inc., Civ. A. 87-4068, 1991 WL 280084 (E.D. La. Dec. 18, 1991)).) Only one involves standing - constitutional. Smith, 2020 WL 7714663. at *2.[12] Brighthouse raised this argument. (#43 at 14 n.9.) Plaintiffs did not respond. See #46.[13] Eight courts of appeals apply the "clear repudiation" rule; none have expressly rejected it. Faciane v. Sun Life Assurance Co. of Canada, 991 F.3d 412, 418 n.7 (5th Cir. 2019) (collecting cases).[14] Judge Sorokin held that plaintiffs ERISA claim also failed on the merits. Id. at *2-3. On appeal, the First Circuit agreed with him on the merits issue and did not reach the statute of limitations issue. Kingsbury v. Marsh & McLennan Co., Inc., 462 Fed.Appx. 10. 12 (1st Cir. 2012) (per curiam).[15] Plaintiffs' insistence in their briefing that plaintiffs, i.e., the estate and Mrs. Rosenberg, lacked knowledge of the Annuity and its purported cancellation, see, e.g., #37 at 7, 11, and that the clear repudiation must have been made known to them, see, e.g., Id. at 8-9, is wholly unsupported and would yield absurd results. Mr. Rosenberg's estate stands in his shoes; his knowledge, actual and constructive, is the estate's knowledge. See McDaniel v. Johns-Manville Sales Corp., 542 F.Supp. 716. 719-720 (N.D. Ill. 1982). Plaintiffs cannot seriously contend that the estate should be able bring an ERISA claim that Mr. Rosenberg himself would not be able to bring, were he living. With respect to the state of Mrs. Rosenberg's knowledge, as defendants argue, see infra, under the terms of the Travelers certificate, she would not have received Annuity benefits because Mr. Rosenberg did not pass away before May 1, 2005. Even if her knowledge were relevant, the clear repudiation was made known to her, as well. By the first nonpayment in 1995, Mr. and Mrs. Rosenberg had been married for 22 years or more and can fairly be presumed to have discussed the Annuity. Any failure to communicate on their part should not disadvantage defendants. McDaniel, 542 F. Supp, at 719. As noted, Exhibit A includes multiple versions of the Plan with multiple effective dates. Mrs. Rosenberg also points to language in the most recent version. (#37 at 19 (quoting #29-1 at 111).) Yet the significance of the most recent version is not explained by plaintiffs nor is it immediately clear to the court. Mr. Rosenberg left Federated and the Annuity was purchased in 1973. (#29 ¶¶ 24, 29-35); see #29-1, Exhibit A, at 205 ("Restated" Plan effective January 1, 1976 expressly states that provisions "shall apply only to an employee who terminates employment on or after the Effective Date of the Restated Plan. The rights and benefits, if any, of a former employee shall be determined in accordance with the prior provisions of the Plan in effect on the date his employment terminated"); see also Id. at 285 (Plan effective January 1,1982, same).
Defendants seem to be challenging Mrs. Rosenberg's constitutional standing. In any event, constitutional standing is the only type the court is obligated to address. Merrimon v. Unum Life Ins. Co. of Am., 7SR F.3d 46. 52-53 & n.3 (1st Cir. 2014) (arguments based on constitutional standing implicate subject matter jurisdiction, which must be addressed even if not raised, while arguments based on statutory standing under ERISA may be waived). The record here suffices to plausibly establish the "injury," "causation," and "redressability" necessary for constitutional standing. See Id. at 52 (elements); see also Hochendoner v. Genzyme Corp., 823 F.3d 724. 730-731 (1st Cir. 2016) (standard). Mrs. Rosenberg does not have to prove that her rights were actually violated; such a requirement would conflate the issue of standing with the merits. Merrimon, 758 F.3d at 52. She need only show a "colorable claim" to those rights. Id. Nevertheless, the court views Mrs. Rosenberg's presence in this action with the estate to be redundant. Plaintiffs are not allowed double recovery. See Estate of Smith v. Raytheon Co., No. 19-cv-10328-DPW, 2021 WL 5605125. at *5 (D. Mass. Nov. 30, 2021) (allowing estate and spouse to remain parties while noting that only one would obtain recovery if their suit was successful).
2. Count II.
Plaintiffs bring Count II pursuant to ERISA § 502(a)(2), alleging that defendants breached fiduciary duties under ERISA §§ 404 and 409, 29 U.S.C. §§ 1104. 1109, and that, as a result, they "have suffered damages in the amount of the policy, lost earnings and interest on that amount, attorney's fees and any other losses, harms or damages." (#29 ¶¶ 71-76.)
Count II fails to state a claim. ERISA § 502(a)(2) claims are brought on behalf of the plan, see Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134. 140.144 (1985); Evans v. Akers, 534 F.3d 65. 70 n. 4 (1st Cir. 2008), which "does not provide a remedy for individual injuries distinct from plan injuries." LaRue v. DeWolff, Boberg & Assocs., Inc., 55?, US. 248.256 (2008). Because Count II is not brought on behalf of the Plan and expressly seeks remedy for individual injuries, it should be dismissed. See Stahl v. ExteNet Systems, Inc., No. 20-CV-0557-JL, 2021 WL 493426, at *3-5 (D.N.H. Feb. 10, 2021) (plaintiff-beneficiary's allegations centered on alleged breaches of fiduciary duties by, inter alia, accepting premiums from participant for supplemental life insurance coverage without obtaining evidence of insurability; reviewing complaint defining damages in substantively identical language to that used here and dismissing ERISA § 502(a)(2) claims); see also Estate of Smith, 7-021 WL 5605125. at *4,8-9 (same, where plaintiff-beneficiary did not allege loss to plan and sought to recover surviving spouse benefit that participant would have elected but for alleged breaches of fiduciary duty).
B. Primary Dispute.
1. Count I is time-barred.
The parties agree that a six-year statute of limitations applies to Count I, a benefits claim under ERISA § 502(a)(1)(B) (#29 ¶¶ 66-70; #33 at 5; #37 at 6; #43 at 4; #46 at 15.) ERISA does not set forth a statute of limitations for benefits claims under § 502(a)(1)(B) and the "most closely analogous" statute of limitations is the six-year statute of limitations for claims of breach of contract under Massachusetts law, Mass. Gen. Laws ch. 260, § 2. Riley v. Metro. Life Ins. Co., 744. F.3d 241, 244 (1st Cir. 2014); see also Kingsbury v. Marsh & McLennan Co., No. 10-cv-l 1279-LTS, 2011 WT. 344746. at * 1 (D. Mass. Feb. 1, 2011). The parties do not, however, agree as to when the six-year clock started to tick.
Massachusetts law determines the length of the statute of limitations, but federal law determines when it begins to run. Riley, 744 F.3d at 244. A statute of limitations generally begins to run when the ERISA claim accrues. Heimeshoff v. Hartford Life & Ace. Ins. Co., 571 U.S. 99. 106 (2013); see Riley, 744 F.3d at 244. According to defendants, Count I accrued in 1995, when monthly Annuity payments should have commenced but allegedly did not. If defendants are right, then the six-year clock expired in 2001 and plaintiffs' action is nearly two decades too late. (#33 at 5-6; #43 at 5-9.)
According to plaintiffs, Count I accrued when plaintiffs' counsel started investigating and, in 2018-2019, learned that the Annuity existed but had allegedly been canceled in 1990. If plaintiffs are right, then the six-year clock is unexpired. (#37 at 8,9; #46 at 18.)
Defendants are right. As stated by the First Circuit in Riley, ERISA claims accrue "when, after a claim for benefits is made and a specific sum is sought, the ERISA plan repudiates the claim or the sum sought, and that rejection is clear and made known to the beneficiary." 744 F.3d at 245 (citations omitted). The "clear repudiation" rule evolved from the general "discovery rule" that governs when a federal claim accrues, pursuant to which "a plaintiffs cause of action accrues when he discovers, or with due diligence should have discovered, the injury that is the basis of the litigation." Carey v. Int'l Broth. of Elec. Workers Local 363 Pension Plan, 201 F.3d 44, 47-48 (2d Cir. 1999) (citing Union Pac. R.R. v. Beckham, 138 F.3d 325. 330 (8th Cir. 1998)); see Faciane, 931 F.3d at 418-419: see also Laurenzano v. Blue Cross and Blue Shield of Massachusetts, Inc. Retirement Income Trust, 134 F.Supp.2d 189. 208-209 (D. Mass. 2001). Neither a complete repudiation nor a formal denial is required. See Riley, 744 F.3d at 245. A formal application is not required. See Carey, 201 F.2d at 47-48 (citing, inter alia, Beckham, 138 F.3d at 330-331). Actual knowledge of a clear repudiation is not required; constructive knowledge is enough. See Id. at 48 & n.4 (citing, inter alia, Beckham, 138 F.3d at 330).
In Riley, MetLife approved plaintiffs' claim for long-term disability (LTD) benefits. 744. F.3d at 243. At that time, plaintiff, through counsel, argued that the monthly payments should be calculated using his managerial salary. Id. at 243-244. Instead, MetLife used his non-managerial salary and issued a first payment in April 2005. Id. at 244. Plaintiff did not cash that or subsequent checks, returning them to MetLife. Id. Although plaintiff sued MetLife over their benefits dispute in 2007 and 2011, it wasn't until 2012 that plaintiff filed the suit that would be the subject of the appeal. Id. Judge Woodlock allowed limited discovery on the statute of limitations and then granted summary judgment. Riley v. Metro. Life Ins. Co., 971 F.Supp.2d 186,189, 122 (D. Mass. 2013). The First Circuit affirmed. Riley, 744 F.3d at 250.
The Riley court recognized that, "[o]rdinarily, a cause of action for ERISA benefits accrues 'when a fiduciary denies a participant benefits.'" 744 F.3d at 244-245 (quoting Cottrill v. Sparrow, Johnson & Ursillo, Inc., 10nF.3d220.223 (1 st Cir. 1996)). Although MetLife allowed the plaintiff benefits, "with its first check for $50, [it] denied his explicit assertion that any award of that sum was inaccurate. This was not a complete repudiation or a formal denial of all LTD benefits. But it was a clear repudiation of [plaintiffs] assertion that he was entitled to more than the amount MetLife actually awarded." Id. at 245. Moreover, the facts showed that plaintiff "certainly was aware of his claim for underpayment when he received his first $50 check in April 2005." Id. In short, the underpayment was a clear repudiation and made known to plaintiff. The six-year clock started to tick in April 2005, when the first underpayment was made. Id.
In articulating the clear repudiation rule, the Riley court adopted the rationale of other courts of appeals, including the Third Circuit in Miller v. Fortis Benefits Ins. Co., 475 F.3d 516. (3d Cir. 2007). 744 F.3d at 245. The First Circuit observed that other provisions of ERISA supported the clear repudiation rule, noting that it had already applied the discovery rule to claims under ERISA § 510, holding that, for statute of limitations purposes, plaintiffs in that earlier case had "discovered the supposed miscalculation of their status when they were hired." Id. (discussing Edes v. Verizon Commc'ns, Inc., 417 F.3d 133. 139 (1st Cir. 2005)).
The Riley court rejected plaintiffs' argument that the ERISA plan must be treated as an "installment contract," with a new accrual and statute of limitations arising for each "continuing violation" by underpayment. 744 F.3d at 245-246. In so ruling, the Riley court joined other circuits, noting,
[l]ike the Third Circuit in Miller,. we agree that:
an underpayment can qualify as a repudiation because a plan's determination that a beneficiary receive less than his full benefits is effectively a partial denial of benefits. Like a denial, an underpayment is adverse to the beneficiary and therefore repudiates his rights under a plan. Cf. 29 C.F.R. § 2560.503-1 (m)(4) (defining "adverse benefit determination" to include "a denial, reduction, or termination of, or a failure to provide or make payment (in whole or in part) for, a benefit" (emphasis added)).
Id. at 521. We also agree that "repudiation by underpayment should ordinarily be made known to the beneficiary when he first receives his miscalculated benefit award." Id.Riley, 744 F.3d at 246-247 (further emphasis added).
The Riley court reasoned that rejection of the accrual theory was consistent with policies underlying ERISA, including the promotion of predictability. "Allowing beneficiaries to challenge alleged miscalculations on which the statute of limitations has already run by limiting the challenge to recent and future payments would undermine the predictability interest." Id. at 248; accord Miller, 475 F.3d at 522 (rejection of accrual theory promoted traditional aims of statutes of limitations, including "rapid resolution of disputes, repose for defendants, and avoidance of litigation involving lost or distorted evidence" (citation omitted)). See generally Rotella v. Woods, 528 U.S. 549, 555 (2000) (listing "basic policies of all limitations provisions: repose, elimination of stale claims, and certainty about a plaintiffs opportunity for recovery and a defendant's potential liabilities").
Significantly, in Miller, unlike in Riley, plaintiff made no pre-underpayment argument in favor of higher payment. Rather, plaintiff began receiving miscalculated monthly LTD payments in 1987 and did not recognize the miscalculation until 2002. Miller, 475 F.3d at 518. Nevertheless, the Third Circuit applied the clear repudiation rule to hold that the underpayment, based upon a simple calculation of sixty percent of his salary, was a repudiation that "should have been" clear to plaintiff in 1987, when the first underpayment was made. Id. at 520-522. The Third Circuit put the onus on plaintiff to "exercise reasonable diligence to ensure the accuracy of his award." Id. at 522; cf. Faciane, 931 F.3d at 419 (stating that "courts guard against potential unfairness through a 'case-by-case reasonableness inquiry,' refusing to find clear repudiation when plan communications involve information or formulae too complex or obscure for the layperson to decipher") (collecting cases).
Shortly after Riley, the Eleventh Circuit, relying on Riley, Miller, and other cases, applied the clear repudiation rule to hold a plaintiffs benefits claim time-barred. Witt v. Metro. Life Ins. Co., 772 F.3d 1269- 1274-1278 (11th Cir. 2014). There, plaintiff received monthly LTD payments until they were terminated by MetLife because he did not provide medical records. Id. at 1271-1272. Plaintiff denied receiving the May 1997 termination letter. Id. at 1272. Nonpayment continued for 12 years. Id. In 2009, plaintiffs' counsel finally contacted MetLife. Id. The Eleventh Circuit found that MetLife's conduct was a "clear and continuing" repudiation that plaintiff "would undoubtedly have had reason to know of at least in May 1998, after 12 months of nonpayment. Id. at 1278.
Several years before Riley, then-Magistrate Judge Sorokin found a benefits claim time-barred in circumstances similar to those presented here. In Kingsbury, 2011 WL 344746, plaintiff filed suit to recover the pension benefits of her late sister, an employee of Marsh & McLennan Co., Inc. (MMC) from 1956 to 1977. There were no records indicating that the decedent sought or received her pension benefits after she turned 65 years old, in 2000. Id. at *1. In 2007, plaintiffs husband finally contacted MMC on behalf of the decedent, who was terminally ill. Her claim for pension benefits was denied. Id.
Judge Sorokin found that plaintiffs benefits claim accrued when MMC "clearly repudiated" the decedent's claim for pension benefits by not paying her a pension in 2000, after she turned 65. Id. (citing, inter alia, Ozarowsky v. Owens-Illinois, Inc., No. 09-cv-1622, 2010 WL 2696789. at *5-6 (W.D. Pa. July 6, 2010)). Judge Sorokin rejected plaintiffs argument that the benefits claim accrued in 2010, at the conclusion of the administrative process. Such a finding, he reasoned, would allow plaintiffs to create "indefinite" statutes of limitations. Id. at *2 (quoting Ozarowsky, 9010 WT .2696789. at *6).
In line with the above precedent, the court finds that nonpayment of the Annuity was a clear repudiation and that the clear repudiation should have been made known to Mr. Rosenberg in 1995, on the first nonpayment. At least, the clear repudiation should have been made known to Mr. Rosenberg in 1996 or 1997 or 1998. Many years passed as monthly payments became due, yet were not made.
Mr. Rosenberg was an employee of Federated for 16 years. He held the role of Executive Vice President at Filene's and departed to become the Chief Executive Officer at Gimbel's. (#29 ¶24; see #29-2, Exhibit 1, at 2.) He signed the "Participant's Authorization, Election, or Request" on October 10, 1973, and the "Annuity Purchase Form" on February 20, 1974. (#29-6, Exhibit F, at 2; #29-4, Exhibit D, at 2). The "Annuity Purchase Form" listed the commencement date and monthly payment amount. Federated apparently provided him a copy. (#29-4, Exhibit D, at 2.) Mr. Rosenberg was, in sum, a high-level executive who must have understood the Annuity, which specifically had his attention at least twice over the course of four months. Moreover, he should have been aware of his own finances, including whether monthly Annuity payments were deposited or not.
As they must, plaintiffs acknowledge Miller, Riley, and Witt, as well as Kingsbury, among other cases. (#37 at 6-9; #46 at 15-20.) With respect to Kingsbury, they assert that Judge Sorokin's reasoning did not reflect "the test for accrual that would later be established by the First Circuit in Riley.... The First Circuit established an entirely different test in Riley under which the cause of action accrues when a clear repudiation is communicated to the plaintiff." (#46 at 19.) This is wrong for two reasons. First, Judge Sorokin applied the test for accrual that would later be established by the First Circuit in Riley:
Case law indicates that a cause of action accrues when "a plan clearly and unequivocally repudiates the plaintiffs claim for benefits and that repudiation is known, or should be known, to the plaintiff."Kingsbury, 2011 WL 344746. at * 1 (quoting Carey, 201 F.3d at 49-50). Judge Sorokin even cited Miller. Id. The case upon which Judge Sorokin chiefly relied, Ozarowsky, analyzed Miller at length in holding that nonpayment of pension benefits when plaintiff turned 65 "easily" constituted a clear repudiation and that the clear repudiation should have been made known to plaintiff at the first nonpayment. Ozarowsky, 2010 WL 2696789. at *5.
Second, the First Circuit Riley did not hold that the clear repudiation must have been directly communicated to Mr. Rosenberg in express terms; indeed, such a holding would be inconsistent with the discovery rule from which the clear repudiation rule evolved, which requires no more than constructive knowledge. Under Riley, the clear repudiation must be made known and "repudiation by underpayment should ordinarily be made known to the beneficiary when he first receives his miscalculated benefit award." Riley, 744 F.3d at 244, 247 (emphasis added) (quoting Miller, 475 F.3d at 521).
This court recognizes that Miller, Riley and Witt involved interactions between plaintiffs and their employers or administrators prior to the clear repudiation by underpayment (Riley and Miller) and nonpayment (Witt). Each of these plaintiffs applied for LTD benefits. Riley, 744 F.3d at 244: Miller, 475 F.3d at 518: Witt; 772 F.3d at 1271. Here, plaintiffs point to no Annuity or Plan document that required Mr. Rosenberg to apply for Annuity benefits after it was purchased. From all that appears, monthly payments should have commenced automatically. In this regard, however, the present case is on par with Kingsbury and Ozarowksy, involving nonpayment of pension benefits after the decedent and plaintiff, respectively, turned 65. Kingsbury, 2011 WL 344746. at *1; Ozarowsky, 2020 WL 2696789. at *5. In any case, Mr. Rosenberg did interact with Federated prior to the clear repudiation by nonpayment: he chose to purchase the Annuity, executing the forms necessary to do so.
The decisions of other judges in this circuit cited by plaintiffs do not convince the court that departure from Riley and related cases is warranted. (#37 at 9 (citing White v. Chase, No. 15-cv-40013-TSH, 2015 WL 13715329 (D. Mass. Oct. 28, 2015) (Hennessy, M.J.), report and recommendation adopted, No. 15-cv-40013-TSH, 2016 WL 347040 (D. Mass. Jan. 27, 2016) (Hillman, D.J.) (as to Counts III and IV); Walsh v. Gillette Co., No. 03-cv-l1557-REK, 2005 WL 2977426 (D. Mass. Sept. 13, 2005)); #46 at 17 (citing Laurenzano, 134 F.Supp.2d 189))- Long before Riley, in Walsh v. Gillette Co. Judge Keeton announced: "When the consequences of an earlier action on the plaintiffs benefits are not explicitly made clear to the plaintiff, this court finds that a cause of action for recovery of benefits under ERISA accrues when an application for benefits is formally denied." 2005 WL 2977426. at *4. Applying that standard, Judge Keeton found that the six-year clock did not start to tick when plaintiff, upon hiring, was classified as an independent contractor because Gillette did not notify him of the impact of that classification on his retirement benefits. Instead, it started to tick when Gillette formally denied his application for benefits. Id. There is no allegation that Federated failed to notify Mr. Rosenberg of the purchase of the Annuity or its commencement date and the amount of monthly payments; nor could there be. Plaintiffs allege that defendants failed to notify Mr. Rosenberg that the Annuity was canceled in 1990. (#29¶52.) But they also allege that Mr. and Mrs. Rosenberg never received any Annuity payments. Id. ¶45. Nonpayment was information clear and simple enough that they should have spotted the problem immediately. Information about the cancelation was unnecessary. In White, Magistrate Judge Hennessy quoted the standard announced by Judge Keeton. But he did so in dicta. 215 WL 13715329. at *4 (".. .the court need not resolve the somewhat muddled issue of what is required to trigger the statute of limitations...."). Finally, in Laurenzano, Judge Young declined to find that non-fiduciary claims accrued when participants joined the illegal plan because, at that point, "it was totally speculative whether or not [they] would be eligible for, much less receive, a lump sum distribution, given the particular limitations the Plan places on lump sum distributions." 134 F.Supp.2d at 209. Defendants do not argue that plaintiffs' benefits claim accrued when Mr. Rosenberg chose to apply the balance remaining in the Plan to the purchase of the Annuity; they argue that it accrued when monthly Annuity payments should have commenced but did not. The first and subsequent nonpayments were not "totally speculative."
Notwithstanding Riley and the rest, plaintiffs argue that nonpayment was insufficiently clear repudiation. Plaintiffs essentially argue: Mr. Rosenberg could have forgotten about the Annuity and, if so, the first and many subsequent nonpayments would not have alerted him to any problem. (#37 at 8.) They ignore that Mr. Rosenberg, a high-level executive, signed the requisite forms. They also ignore his obligation to "exercise reasonable diligence." Miller, 475 F.3d at 522. In any event, the factual support for this argument is lacking. Plaintiffs assert that the Annuity was purchased 22 years before Mr. Rosenberg turned 65 as he left Federated and that the purchase would only have been one part of retirement benefits processing. (#37 at 8.) These circumstances are hardly unique to Mr. Rosenberg.
Plaintiffs also assert that "most" of the Plan was distributed to Mr. Rosenberg in cash. That is simply not so. Mr. Rosenberg received $26,474.65, while $44,642.58 was applied to purchase the Annuity. (#29-4, Exhibit D, at 3.)
Plaintiffs further assert that, according to Federated and Macy's, the former, Mr. Rosenberg's employer, no longer exists and the Annuity was transferred among various servicing companies. (#37 at 8.) Yet, according to Federated and Macy's answer to plaintiffs' amended complaint, Federated did not change its name to Macy's until 2007. (#31 U 16.) Moreover, from the Senior Compliance Associate's representations to plaintiffs' counsel, MetLife did not acquire Travelers until 2005. (#29-8, Exhibit H, at 3.)
To cinch matters, the court's finding is consistent with policies underlying ERISA, including the promotion of predictability. See Riley, 744 F.3d at 348 (citation omitted). It is also consistent with the traditional aims of statutes of limitations, including "rapid resolution of disputes, repose for defendants, and avoidance of litigation involving lost or distorted evidence." See Miller, 475 F.3d at 522 (citation omitted); see also Witt, 772 F.3d at 1278- A contrary finding would open the door to a 25-year statute of limitations and beyond.
In short, because the record leaves no plausible basis for believing that it is timely, the court recommends granting defendants' motions for judgment on the pleadings with respect to Count I.
2. Count HI is time-barred.
a. ERISA § 413 generally.
In Count III, defendants invoke ERISA § 413 (#33 at 7; #43 at 9), which provides that
No action may be commenced under this subchapter with respect to a fiduciary's breach of any responsibility, duty, or obligation under this part, or with respect to a violation of this part, after the earlier of-
(1) six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission the latest date on which the fiduciary could have cured the breach or violation, or
(2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation;
except that in the case of fraud or concealment, such action may be commenced not later than six years after the date of discovery of such breach or violation.
The parties agree that ERISA § 413 would apply to Count II. (#33 at 6; #37 at 9; #43 at 9; #46 at 20.) The court concurs. If Count II were not dismissed for failure to state a claim, it would be time-barred for the reasons below.
Plaintiffs deny that ERISA § 413 applies to Count III but do not suggest an alternative statute of limitations. (#37 at 14; #46 at 21.) There is ample authority to support application of ERISA § 413 to claims under ERISA § 502(a)(3) that, like Count III, see #29 ¶¶ 79-82, focus on alleged breaches of fiduciary duty. See Radford v. Gen. Dynamics Corp., 151 F.3d 396, 399 (5th Cir. 1998); see also Perez v. Chimes District of Columbia, Inc.,No. RDB-15-3315, 2016 WL 5938827. *7-8 (D.Md. Oct. 12, 2016); Cherochak v. Unum Life Ins. Co. of Am., 586 F.Supp.2d 522. 529-530 (D.S.C. 2008).
ERISA § 413 establishes three different time periods within which a claim for breach of fiduciary duty must be brought, each with a different starting point. Intel Corp. Investment Policy Committee v. Sulyma, 140 S.Ct. 768. 774 (2020). The earliest time period, not the latest, applies. See. 29 U.S.C. § 1113.
Under ERISA § 413(1), the claim must be brought within six years of "the date of the last action which constituted a part of the breach or violation" or, in the case of a breach of fiduciary duty by omission, "the latest date on which the fiduciary could have cured the breach or violation." 29 U.S.C. § 1113(1). ERISA § 413(1) is a statute of repose, which "effects a legislative judgment that a defendant should be free from liability after the legislatively determined period of time." Intel Corp., 140 S.Ct. at 774 (citation and punctuation omitted).
ERISA § 413(2) is a statute of limitations which accelerates § 413(1)'s statute of repose and "encourages plaintiffs to pursue diligent prosecution of known claims." Intel Corp., 140 S.Ct. at 774 (citation and punctuation omitted). Under ERISA § 413(2), a claim must be brought within three years of "the earliest date on which the plaintiff had actual knowledge of the breach or violation." 29 U.S.C. § 1113(2). As the Supreme Court recently made clear, "actual knowledge" under § 413(2) does not include constructive knowledge. Intel Corp., 140 S.Ct. at 776-777. For § 413(2), the time period "begins only when a plaintiff actually is aware of the relevant facts, not when he should be." Id. at 778.
ERISA § 413(3) applies "in the case of fraud or concealment" and begins when plaintiff discovers the alleged breach. Intel Corp., 140 S.Ct. at 774. In such cases, the claim must bebrought within six years of "the date of discovery." See 29 U.S.C. § 1113; see also Intel Corp., 140 S.Ct. at 774.
b. Plaintiffs failed to adequately plead fraud or concealment.
In their opposition to Federated and Macy's motion, plaintiffs invoke ERISA § 413's "fraud or concealment" provision, alleging that defendants engaged in "multiple corporate transactions that effectively 'buried' the [A]nnuity in a byzantine corporate history" and that, once counsel began investigating, they "actively misrepresented" the status of the Annuity. (#37 at 12-13.) According to plaintiffs, defendants "contradicted themselves" in correspondence by stating the Annuity existed and had been canceled and that they had no records of the Annuity. Id. at 3 (citing #29 ¶¶ 40-41 (citing Exhibit H, #29-8)).
The First Circuit has held that § 413 incorporates the common law "fraudulent concealment" doctrine. J. Geils Band Employee Ben. Plan v. Smith Barney Shearson, Inc., 76 F.3d 1245, 1253 (1st Cir. 1996). Plaintiffs must show that "(1) defendants engaged in a course of conduct designed to conceal evidence of their alleged wrong-doing and that (2) the plaintiffs were not on actual or constructive notice of that evidence, despite (3) their exercise of reasonable diligence." Id. at 1255 (punctuation omitted) (quoting Larson v. Northrop Corp., 21 F.3d 1164, 1172 (D.C. Cir. 1994)). "Concealment by mere silence is not enough." Larson, 21 F.3d at 1173 (citation and punctuation omitted).
Under Fed.R.Civ.P. 9(b) plaintiffs must plead the facts giving rise to a claim of fraudulent concealment with particularity. J. Geils Band, 76 F.3d at 1255. Here, plaintiffs failed to do so. The amended complaint indicates that Federated became Macy's and that Travelers became Brighthouse. (#29 ¶¶ 18-19, 26, 37.) It alludes to, and attaches, the June 14, 2019 letter and the September 24,2019 and June 21,2019 emails, among other correspondence.Id. ¶¶ 40-41; see #29-2, Exhibit-B; #29-8, Exhibit H; #29-9, Exhibit I. It baldly asserts that: "...Defendants have engaged in conduct intended to prevent the provision of benefits to Plaintiffs. Defendants have breached their duty of loyalty to Plaintiffs in this respect." Id. ¶ 62.
But nowhere in the amended complaint do plaintiffs characterize these corporate transactions or recent correspondence as facts giving rise to a claim of fraudulent concealment. Rather, plaintiffs first articulated the theory in opposition to Federated and Macy's motion, where defendants observed that plaintiffs had not alleged fraud or concealment, see #33 at 7. See Cinecoe v. Boeing Co., No. 16-CV-8443, 2017 WT. 3872459. at *3 (N.D. Ill. Sept. 5, 2017) (declining to infer fraudulent concealment given Rule 9(b), where "neither [first amended complaint nor proposed second amended complaint] mentioned] the word fraud or concealment, any combination thereof, nor any relevant synonym"); White, 2015 WL 13715329, at *5-6 (finding threadbare recitals of fraudulent concealment and exercise of reasonable diligence insufficient under Rule 9(b)) (Hennessy, M.J.), report and recommendation adopted, 2016 WL 347040, at *4 (Hillman, D.J.) (as to Counts III and IV).
Although unnecessary to its finding, the court notes that allegations of fraudulent concealment do not eliminate the requirement that plaintiffs must exercise reasonable diligence. Salois v. Dime Sav. Bank of N.Y., FSB, 128 F.3d 20, 26 (1st Cir. 1997). Plaintiffs do not explain how they exercised reasonable diligence in attempting to unravel the "byzantine corporate history." What's more, as noted, MetLife apparently did not acquire Travelers until 2005. (#29-8, Exhibit H, at 3). By then, a decade had elapsed since the first non-payment. The alleged misrepresentations and contradictions in correspondence after plaintiffs' counsel began investigating in 2018-2019 could not have prevented Mr. Rosenberg from exercising reasonable diligence in the 22 years between the first non-payment and his death.
c. ERISA § 413(2) does not apply.
Defendants invoke ERISA § 413(2), arguing that Mr. Rosenberg had "actual knowledge" of the alleged breaches of fiduciary duty in 1995, when the monthly Annuity payments should have commenced but did not. (#33 at 6-7; #43 at 9-12), meaning that § 413(2)'s three-year statuteof limitations accelerated § 413(1)'s six-year statute of repose. The court agrees that the record conclusively establishes that Mr. Rosenberg had actual knowledge of the Annuity in 1973-1974 and actual knowledge that monthly payments should have commenced in 1995.
However, the court cannot find that the record conclusively establishes that Mr. Rosenberg had actual knowledge of nonpayment in 1995 or thereafter. To be sure, plaintiffs' amended complaint alleges that "Mr. Rosenberg's tax returns for 1995 and subsequent year are consistent with the fact that he did not receive any payments." (#29 ¶ 46.) But it is not clear that Mr. Rosenberg's tax returns were self-prepared or that the failure to list any payment evinces actual knowledge of nonpayment. Furthermore, plaintiffs' complaint alleges, upon information and belief, that Mr. Rosenberg never received any notices about the Annuity. (#29 ¶ 52.) No doubt, Mr. (and Mrs.) Rosenberg had constructive knowledge of the nonpayment in 1995 and thereafter. But constructive knowledge is not enough under ERISA § 413(2). See Intel Corp., 140 S.Ct. At 776-778.
Brighthouse invokes the doctrine of "willful blindness." (#43 at 10, 11.) Intel Corp. "does not preclude defendants from contending that evidence of 'willful blindness' supports a finding of 'actual knowledge.'" 140 SO. at 779 (citing Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754,769 (2011)). But the record does not conclusively establish that Mr. (or Mrs.) Rosenberg took "deliberate actions to avoid learning of the nonpayment. Global-Tech, 563 U.S. at 769.
d. ERISA § 413 (1) applies.
Plaintiffs argue that Federated and Macy's waived an argument under the statute of repose, ERISA § 413(1), by relying on the accelerated statute of limitations, § 413(2), in their opening memorandum. (#37 at 12.) Plaintiffs cite no case law in support of this argument. Id. Answering plaintiffs' original and amended complaints, Federated and Macy's invoked the statute of limitations; Brighthouse invoked the statutes of limitations and repose. (#12 at 9 ¶ 7; #21 ¶ 27; #31 ¶ 35; #41 at 10 ¶ 6.) In opposition to Federated and Macy's motion, plaintiffs actually addressedthe merits of an argument under § 413(1), see #37 at 12, and could have addressed the merits of that argument in opposition to Brighthouse's motion.
Federated and Macy's developed their argument under § 403(1) in reply, asserting that the same event that constitutes a clear repudiation constitutes the last action which constituted a part of the breach or violation and marks the latest date on which the fiduciary could have cured the breach or violation-i.e., the first nonpayment. (#40 at 4.) The court can discern no prejudice to plaintiffs from its consideration of this argument and exercises its discretion to do so. See generally Echevarria v. AstraZeneca Pharm. LP, 856 F.3d 119, 133 n. 18 (1st Cir. 2017) ("Although it's true that courts routinely preclude a litigant from raising new arguments in a reply brief, this rule is not inflexible; courts retain discretion to excuse parties from procedural gaffes such as this"); cf. Cleveland Air Service, Inc. v. Pratt & Whitney Canada, No. 13-cv-161-DMB-DAS, 2016 WL 7634674. *2-3 (N.D. Miss. July 29, 2016).
Brighthouse, like Federated and Macy's, relied on § 413(2) in its opening memorandum. (#43 at 9-12.) But, unlike Federated and Macy's, it did not develop an argument under § 413(1) in its reply. See #49. Nevertheless, the court considers this argument as to Brighthouse, which pled the statute of repose and, in its opening memorandum, argued that nonpayment was the event that constitutes the breach. (#43 at 11.)
Plaintiffs argue that since defendants had a continuing fiduciary duty to keep track of annuity payments, make annuity payments, and locate participants and beneficiaries, including Mr. and Mrs. Rosenberg, and advise them that annuity payments were overdue, breaches of that continuing fiduciary duty were ongoing, and could have been fixed, "all the way up until suit was filed." (#37 at 5, 12); see # 46 at 21. Plaintiffs appear to be relying on a continuing violationstheory. Neither plaintiffs nor Federated and Macy's cite relevant authority. See id.; see also #40 at 4. In Riley, the First Circuit rejected an accrual theory based upon an installment contract or continuing violations under § 413(2). 744 F.3d at 246-248 & n. 5. The following year, in Tibble v. Edison Intern., the Supreme Court held that, so long as the alleged breach of the continuing fiduciary duty to monitor and remove imprudent investments occurred within six years, the claim is timely under § 413(1). 575 U.S. 523. 530 (2015).
Plaintiffs' allegations regarding defendants' continuing duty to locate and advise them of Annuity obligations primarily derive from guidance from the Department of Labor's Employee Benefits Security Administration issued on January 12, 2021. That guidance, which expressly does not have the force or effect of law, "outlines best practices that the fiduciaries of defined benefit and defined contribution plans, such as 401(k) plans, can follow to ensure that plan participants and beneficiaries receive promised benefits when they reach retirement age." U.S. Department of Labor, Employee Benefits Security Administration, "Missing Participants - Best Practices for Pension Plans," Jan. 12, 2021, available at https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/retirement/missing-participants-guidance/best-practices-for-pension-plans (last visited Jan. 3, 2022).
Before and after Tibble, whether allegations of a continuing violation weigh in the determination of the date of the last action which constituted a part of the breach or violation or the latest date on which the fiduciary duty could have cured the breach or violation depends on the nature of those allegations. See Tibble, 575 U.S. at 530 (under § 413(1), court must "consider[] the contours of the alleged breach of fiduciary duty"); cf. Edes, 417 F.3d at 139 (considering plaintiffs' allegations in rejecting continuing tort theory; "While Plaintiffs may have felt the ongoing effects of their ineligibility for ERISA benefits every time they received a paycheck from a third-party payroll agency, Plaintiffs' own allegations make clear that Defendants' wrongful conduct, if any, involved the misclassification of Plaintiffs as off-payroll employees at their time of hire in April 1994"). In this case, plaintiffs did not plead this continuing violation theory. They alleged that defendants breached their fiduciary duties by cancelation and nonpayment.
See #29 ¶ 3 ("In cancelling the 10 Year Certain & Life Annuity, the plan fiduciaries breached their fiduciary duties under ERISA..."); ¶59 ("Here, Defendants did not take even minimal steps to meet their fiduciary duties under ERISA. Defendants, as noted above, have unilaterally allowed for the cancellation and denial of benefits owed to the Plaintiffs..."); ¶60 ("As ERISA fiduciaries, therefore, with all attendant fiduciary obligations, Defendants were required as a matter of law to provide Mr. Rosenberg and Plaintiff Audray Rosenberg, as beneficiary, the retirement benefits due under the Plan and the Plan Annuity. Defendants did not."); ¶ 61 ("Defendants have failed to comply with their fiduciary duties of prudence and loyalty, and, in particular, have mismanaged the retirement account at issue with the intent, outcome or both of evading their obligations under ERISA."); ¶ 62 ("Among other violations and breaches, Defendants have failed to manage the retirement account of Mr. Rosenberg and Plaintiff Audray Rosenberg, as beneficiary, for the exclusive purpose of providing benefits to Plan participants. In fact, Defendants have engaged in conduct intended to prevent the provision of benefits to Plaintiffs. Defendants have breached their duty of loyalty to Plaintiffs in this respect."); ¶ 63 ("Further, by failing to provide the retirement benefits required by the annuity, Defendants have failed to administer the Plan consistent with its governing documents. Defendants have thereby violated their fiduciary obligations."); ¶ 64 (".. .Defendants' fiduciary breaches continue to this date, as they have never paid the benefits due under the Plan Annuity, nor have they taken any action to remedy their mishandling of the Plan and the Plan Annuity set forth above. Defendants' breaches continue and they have taken no action to remedy those breaches.").
Even if plaintiffs had pled this continuing violation theory, the court would reject it. Allegations that defendants failed to locate Mr. and Mrs. Rosenberg to notify them that annuity payments were overdue are more aptly characterized as a single breach, not a continuing one. See, e.g., Cinecoe, 2017 WL 3872459. at *3-4 (involving claim that, inter alia, Boeing's failed to notify plaintiff that it sold former employer to another corporation and to follow proper procedure in maintaining records and ensuring that his account information accurate and properly transferred; allegations more aptly characterized as single breach: "The breaches Cinecoe alleges are not continuing, they occurred sometime in the past."); Hartquist v. Emerson Electric Co., No. 11-cv-1067, 2016 WL 1312028. at *7 (M.D. N.C. Mar. 31, 2016) (under 29 U.S.C. § 1132(c); "a failure to provide notice or provide information or documents as required is not treated as a continuing violation" (collecting cases)).
Based on plaintiffs' allegations, the court finds that the date of the last action which constituted a part of the breach or violation and the latest date on which the fiduciary could have cured the breach or violation was in 1995, on the first nonpayment. Because the record leaves noplausible basis for believing that it is timely, the court recommends granting defendants' motions on Count III, as well.
3. Counts IV and V.
Count IV alleges common law breach of contract. (#29 ¶¶ 84-86.) A six-year statute of limitations applies. Mass. Gen. Laws ch. 260, § 2. In Massachusetts, the general rule is that the claim accrues when the contract is breached. Flannery v. Flannery, 429 Mass, 55.58 (2001). Under the discovery rule, however, the claim accrues when plaintiffs "discover[] or with reasonable diligence should have discovered" that they suffered harm caused by defendants' conduct. Harrington v. Costello, 467 Mass. 720. 727 (2014). The court's recommendation that Count I be found time-barred supports the recommendation that Count IV be found time-barred, too.
As a final matter, the court agrees with defendants, see #33 at 8-9; #43 at 9 n.4, that the claim for equitable relief at common law is time-barred. (#29 ¶¶ 87-89.) In substance, Count V is a claim for breach of contract and fiduciary duty, and applicable statutes of limitations cannot be avoided by "creative labelling." Gilbert v. City of Cambridge, 932 F.2d 51, 57 (1st Cir. 1991) (to prevent plaintiffs "from making a mockery of time bars, court must focus on substance of claim, not form; ".. .where legal and equitable claims coexist, equitable remedies will be withheld if an applicable statute of limitations bars the concurrent legal remedy").
V. Recommendation.
For the reasons set forth above, the court RECOMMENDS that defendants' motions for judgment on the pleadings (#32; #42) be GRANTED.
VI. Review by District Judge.
The parties are hereby advised that any party who objects to this report and recommendation must file written objections thereto with the Clerk of this Court within fourteendays of service of this report and recommendation. The written objections must specifically identify the portion of this report and recommendation to which objection is made and the basis for such objections. The parties are further advised that the United States Court of Appeals for this Circuit has repeatedly indicated that failure to comply with Fed.R.Civ.P. 72 (b) shall preclude further appellate review. See Keating v. Sec'y of Health & Human Servs., 848 F.2d 271 (1st Cir. 1988); U.S. v. Emiliano Valencia-Copete, 792 F.2d 4 (1st Cir. 1986); Scott v. Schweiker, 702 F.2d 13, 14 (1st Cir. 1983); U.S. v. Vega, 678 F.2d 376, 378-79 (1st Cir. 1982); Park Manor Mart, Inc. v. Ford Motor Co., 616 F.2d 603 (1st Cir. 1980); see also Thomas v. Am, 474 U.S. 140 (1985).