Opinion
Action No. 4:03-CV-237-Y.
September 7, 2004
ORDER DENYING MOTION TO DISMISS AND GRANTING REQUESTS FOR LEAVE TO AMEND COMPLAINTS
Pending before the Court is the Motion to Dismiss filed by defendants RBC Dain Rauscher, Inc. ("Rauscher") and J. Everett Airington ("Airington") (collectively, "Defendants"). In the motion, Defendants seek dismissal of Plaintiff's claim and defendant Melillo's cross-claim against them. After review of the motion and all of the briefs related thereto, the Court is inclined to agree with Defendants that the complaint and cross-claim are deficient in certain respects. For example, neither plaintiff has adequately alleged the grounds upon which they contend that Defendants acted as fiduciaries under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. Furthermore, Plaintiff has not alleged that defendant Rauscher actively and knowingly participated in the alleged breach of fiduciary duties by defendant Airington, which is required to give rise to respondeat superior liability under ERISA. See Am. Fed'n of Unions Local 102 Health Welfare Fund v. Equitable Life Assurance Soc'y of the U.S., 841 F.2d 658, 665 (5th Cir. 1988). Finally, to the extent Melillo asserts a claim for co-fiduciary liability under ERISA section 405(a), 29 U.S.C. § 1105(a), the Court concludes that he has failed to allege that Defendants knew the acts or omissions in which they allegedly knowingly participated were breaches of fiduciary duties, as is required under that provision.
Although the Court agrees with Plaintiff that notice pleading, rather than fact pleading, is all that is required in federal court, a plaintiff must nevertheless specify the nature of his claim and the grounds upon which it depends. See FED. R. CIV. P. 8(a) (2); Conley v. Gibson, 355 U.S. 47 (1957). Plaintiff's response to Defendants' motion contends that his complaint alleges Defendants acted as fiduciaries under 29 U.S.C. § 1002(21) (A) (i) by "'exercis[ing] any authority or control respecting management or disposition' of plan assets." (Pl.'s Resp. at 7 (emphasis added).) Plaintiff's complaint does not, however, adequately state such allegations, inasmuch as it alleges only in conclusory terms that defendant Airington "exercised control over Plan assets" and that Defendants "made investment decisions for and on behalf of the Plan." (Pl.'s Compl. at ¶ 19.) Similarly, Melillo contends that Defendants acted as fiduciaries under 29 U.S.C. § 1002(21)(A)(ii), which provides that "a person is a fiduciary with respect to a plan to the extent . . . 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." The Court discerns no specific allegation in either the complaint or the cross-claim that Defendants rendered investment advice to the plan for a fee or other compensation.
Additionally, the Court is somewhat perplexed by Plaintiff's invocation of ERISA § 502 (a) (1), 29 U.S.C. 1132(a) (1). Defendants contend that because Plaintiff seeks benefits under this provision, "Plaintiff is 'precluded from simultaneously pursuing a breach of fiduciary duty claim.'" (Defs.' Mot. at 8 (quoting Newell v. Aetna Life Ins. Co., No. CIV. A. 302-CV-0475M, 2002 WL 1840925, at *2 (N.D. Tex. Aug. 8, 2002)). Plaintiff counters that "[a] reading of paragraph 10 of the Complaint . . . shows that it does not seek recovery of individual benefits for [Plaintiff]." The Court does not find paragraph ten quite so elucidating, however. Nevertheless, none of the actual counts of the complaint reference section 502(a)(1) or seek benefits under the Plan, but instead complain of breaches of fiduciary duties under ERISA section 409, 29 U.S.C. § 1109. These claims appear to brought on behalf of the Plan presumably pursuant to section 502(a) (2) of ERISA, 29 U.S.C. § 1132(a)(2). As a result, it is unclear to the Court whether Plaintiff intended to invoke section 502(a)(1) and, if so, why.
Defendants also seek dismissal of Plaintiff's and Melillo's claims under ERISA section 502(a)(3), citing cases that indicate such claims cannot be maintained where the plaintiff has a pending claim for benefits under 502(a) (1). See Def.'s Reply Br. at 6-7 (citing Constantine v. Am. Airlines Pension Benefit Plan, 162 F. Supp. 2d 552, 557-58 (N.D. Tex. 2001) (Mahon, J.), and Blum v. Spectrum Rest. Group-Employees Group Life and Supplemental Life Plan, Nos. 4:02-CV-92, 4:02-CV-98, 2003 WL 302218 (E.D. Tex. Feb. 10, 2003)). Because the Court questions whether Plaintiff truly seeks relief under that provision, and because Melillo has not sought relief under that provision, the Court finds Defendants' argument unavailing, at least at this juncture.
Nevertheless, both Plaintiff and Melillo have requested leave to amend their complaints if the Court finds them deficient. Generally, this Court permits plaintiffs an opportunity to amend prior to dismissing claims for failure to adequately state a claim. See U.S. ex rel. Coppock v. Northrop Grumman Corp., No. Civ. A. 398CV2143D, 2002 WL 1796979, at 15, n. 29 (N.D. Tex. Aug 1, 2002) (Fitzwater, J.) (noting that "this and other courts typically give a plaintiff at least one opportunity to cure pleading defects that the court has identified before dismissing the case, unless it is clear that the defect is incurable or the plaintiff advises the court that he is unwilling or unable to amend in a manner that will avoid dismissal"). Because the Court is not yet persuaded that the defects in the pleadings are incurable, the Court is inclined to permit Plaintiff and Mellilo an opportunity to amend their complaints, if they can do so within the confines of Federal Rule of Civil Procedure 11.
It is, therefore, ORDERED that defendants Rauscher and Airington's Motion to Dismiss [document number 32] is DENIED at this time. Plaintiff shall have fifteen days from the date this order is filed to file an amended complaint rectifying the deficiencies noted in this order. Melillo shall have fifteen days thereafter to file an answer to Plaintiff's amended complaint and an amended cross-claim against defendants Rauscher and Airington rectifying the deficiencies noted in this order. Defendants' answer or other response to these amended pleadings shall be filed within thirty days after the filing of Plaintiff's amended complaint.