United States District Court, D. South Carolina, Charleston Division
J. William Smoak, III, and Smoak's Air Conditioning Co., Inc., Plaintiffs,
Elizabeth Cangialosi, ADP Totalsource, Inc., Automatic Data Processing, Inc., Automatic Data Processing Insurance Agency, Inc., and Aetna Life Insurance Company, Defendants.
ORDER AND OPINION
RICHARD MARK GERGEL UNITED STATES DISTRICT COURT JUDGE
matter is before the Court on Defendants Elizabeth
Cangialosi, ADP Totalsource, Inc., Automatic Data Processing,
Inc., and Automatic Data Processing Insurance Agency,
Inc.'s (collectively, the "ADP Defendants")
motion to dismiss the amended complaint. For the reasons set
forth below, the Court denies the motion.
allege Defendants failed to pay death benefits for decedent
Helen B. Smoak as agreed under a group life policy issued by
Aetna. According to Plaintiffs, Smoak's Air Conditioning
used ADP services for payroll processing. In late 2015 or
early 2016, Defendant Elizabeth Cangialosi, an employee of
one of the Defendant ADP entities, made a sales presentation
to Plaintiffs regarding worker's compensation coverage.
Plaintiffs agreed to purchase worker's compensation
coverage and health insurance benefits from ADP entities.
Plaintiffs further allege that during the process of
converting their existing coverage, Ms. Cangialosi sold
Plaintiffs executive life insurance covering Mr. Smoak's
wife, Helen Smoak. Plaintiffs allege Ms. Cangialosi
represented that Ms. Smoak would qualify for a $300, 000
death benefit without any reduction due to her age. Based on
that representation, Plaintiff purchased from the ADP
Defendants a life insurance policy issued by Defendant Aetna
covering Ms. Smoak. Ms. Smoak died in October 2016. Aetna
then provided a benefit payment of $60, 000, not $300, 000,
stating that Ms. Smoak's coverage was subject to a
reduction due to her age.
filed suit in the Charleston County Court of Common Pleas on
May 22, 2017. Defendants were served between May 30, 2017 and
June 4, 2017, and this action was timely removed on June 29,
2017. The original complaint asserted various state-law
causes of action against Defendants. Defendants moved to
dismiss the complaint, arguing the Employment Retirement
Income Security Act of 1974 ("ERISA") preempted all
Plaintiffs' state-law claims and provided the exclusive
remedy available to Plaintiffs. The Court granted the motions
to dismiss but granted leave to file an amended complaint
asserting claims under ERISA. On September 5, 2017,
Plaintiffs filed an amended complaint. Aetna has answered the
amended complaint; the ADP Defendants have moved to dismiss
claims against them.
12(b)(6) of the Federal Rules of Civil Procedure permits the
dismissal of an action if the complaint fails "to state
a claim upon which relief can be granted." Such a motion
tests the legal sufficiency of the complaint and "does
not resolve contests surrounding the facts, the merits of the
claim, or the applicability of defenses. . . . Our inquiry
then is limited to whether the allegations constitute 'a
short and plain statement of the claim showing that the
pleader is entitled to relief" Republican Party of
N. C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)
(quotation marks and citation omitted). In a Rule 12(b)(6)
motion, the Court is obligated to "assume the truth of
all facts alleged in the complaint and the existence of any
fact that can be proved, consistent with the complaint's
allegations." E. Shore Mkts., Inc. v. J.D. Assocs.
Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000).
However, while the Court must accept the facts in a light
most favorable to the non- moving party, it "need not
accept as true unwarranted inferences, unreasonable
conclusions, or arguments." Id.
survive a motion to dismiss, the complaint must state
"enough facts to state a claim to relief that is
plausible on its face." BellAtl. Corp. v.
Twombly, 550 U.S. 544, 570(2007). Although the
requirement of plausibility does not impose a probability
requirement at this stage, the complaint must show more than
a "sheer possibility that a defendant has acted
unlawfully." Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). A complaint has "facial plausibility"
where the pleading "allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged." Id.
amended complaint asserts a single cause of action against
the ADP Defendant under 29 U.S.C. §§ 1132(a)(3)
& 1132(g). Title 29 U.S.C. § 1132(a)(3) is a
"catchall" provision that provides "a safety
net, offering appropriate equitable relief for injuries
caused by violations that [29 U.S.C. § 1132] does not
elsewhere adequately remedy." Varity Corp. v.
Howe, 516 U.S. 489, 512 (1996). Under 29 U.S.C. §
1132(a)(3), "[a] civil action may be brought... by a
participant, beneficiary, or fiduciary (A) to enjoin any act
or practice which violates any provision of this title or the
terms of the plan, or (B) to obtain other appropriate
equitable relief (i) to redress such violations or (ii) to
enforce any provisions of this title or the terms of the
plan." In Harris Trust and Savings Bank v. Salomon
Smith Barney, the Supreme Court provided that
non-fiduciaries can be liable as knowing participants in
fiduciary breaches under 29 U.S.C. § 1132(a)(3). 530
U.S. 238, 246 (2000) (noting that 29 U.S.C. § 1132(a)(3)
"admits of no limit ... on the universe of possible
defendants"); see also Daniels v. Bursey, 313
F.Supp.2d 790, 808 (N.D. Ill. 2004) (concluding that to state
a claim under 29 U.S.C. § 1132(a)(3), "the
plaintiff must allege only that a fiduciary violated a
substantive provision of ERISA and the nonfiduciary knowingly
participated in the conduct that constituted the
violation"). Title 29 U.S.C. § 1132(g) provides for
the recovery of attorney's fees. Relief under 29 U.S.C.
§ 1132(a)(3), however, is limited to "other
appropriate equitable relief." "[O]ther appropriate
equitable relief incorporates limits from the common law of
trusts. Harris Tr., 530 U.S. at 250. Typical
equitable relief against a party that knowingly participates
in a fiduciary breach would be an order requiring the party
to return whatever plan assets it obtained in the
transaction. See, e.g., Landwehr v. DuPree, 72 F.3d
726, 735 (9th Cir. 1995).
Defendants argue that claim should be dismissed for three
reasons, none of which is persuasive. First, the ADP
Defendants argue they may not be sued under 29 U.S.C. §
1132(a)(3) because they are not ERISA fiduciaries. (Dkt. No.
17-1 at 3-6.) The Supreme Court, however, has stated 29
U.S.C. § 1132(a)(3) "admits of no limit... on the
universe of possible defendants." Harris Tr.,
530 U.S. at 246.
the ADP Defendants argue relief under ERISA's catchall
provision of 29 U.S.C. § 1132(a)(3) is unavailable to
Plaintiffs because 29 U.S.C. § 1132(a)(1)(B) provides an
adequate remedy. It is true that 29 U.S.C. § 1132(a)(3)
is unavailable for claims seeking recovery of wrongfully
denied benefits. E.g., Korotynska v. Metropolitan Life
Ins. Co., 474 F.3d 101, 106-07 (4th Cir. 2006). But
whether adequate legal relief is available is not an issue
ripe for adjudication at the pleading stage.
When a matter is in the pleading stage, a plaintiff may plead
alternative legal and equitable theories of relief because it
is unclear which remedy will be supported by the evidence. A
party must elect between inconsistent forms of relief when
both forms of relief become ripe to choose between them. The
axiomatic rule that equitable relief may not be granted when
adequate legal relief exists does not affect the viability of
either type of claim at the pleading stage
The Pantry, Inc. v. Stop-N-Go Foods, Inc., 777
F.Supp. 713, 718 (S.D. Ind. 1991), opinion modified on
denial of reconsideration sub nom. Pantry, Inc. v. Stop-N-Go
Foods, Inc., ...