62 F.3d 1493 (9th Cir. 1995), 93-55478, Concha v. London

Docket Nº:93-55478, 93-55695.
Citation:62 F.3d 1493
Party Name:95 Daily Journal D.A.R. 10,955, Pano CONCHA, M.D. and Marta Concha, as fiduciaries and on behalf of all the participants and beneficiaries of The Pano Concha, M.D., a Professional Corporation Defined Benefit Pension Plan; The Pano Concha, M.D., a Professional Corporation Defined Benefit Plan, Plaintiffs-Appellants, v. Philip D. LONDON; London & Lic
Case Date:August 15, 1995
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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62 F.3d 1493 (9th Cir. 1995)

95 Daily Journal D.A.R. 10,955,

Pano CONCHA, M.D. and Marta Concha, as fiduciaries and on

behalf of all the participants and beneficiaries of The Pano

Concha, M.D., a Professional Corporation Defined Benefit

Pension Plan; The Pano Concha, M.D., a Professional

Corporation Defined Benefit Plan, Plaintiffs-Appellants,

v.

Philip D. LONDON; London & Lichtenberg, an accountancy

corporation; Matthew Lichtenberg; London, Caldwell &

Lewinson; Alan B. Lewinson; Thomas F. Caldwell, Jr.;

London & Lewinson; Caldwell & Lewinson; Michael

Weatherford; Southland Pension Services, Inc., William A.

Saborsky; Daniel J. Van Mieghem, Integrated Pension

Services, Inc.; David L. Brady, a professional corporation;

King, Brady & Bazar, a law corporation; Marc Paul Jacobs;

Wood, Lucksinger & Epstein; Jerry L. Freeman; King &

Brady, a law corporation; and Does 1 through 1000,

inclusive, Defendants-Appellees.

Pano CONCHA, M.D. and Marta Concha, Plaintiffs-Appellants,

v.

Philip D. LONDON; London & Lichtenberg, an accountancy

corporation; Matthew Lichtenberg; London, Caldwell &

Lewinson; Alan B. Lewinson; Thomas F. Caldwell, Jr.;

London & Lewinson; Caldwell & Lewinson; Michael

Weatherford; David L. Brady, a professional corporation;

King, Brady & Bazar, a law corporation; Marc Paul Jacobs;

Wood, Lucksinger & Epstein; Jerry L. Freeman; King &

Brady, a law corporation; and Does 1 through 1000,

inclusive, Defendants-Appellees.

Nos. 93-55478, 93-55695.

United States Court of Appeals, Ninth Circuit

August 15, 1995

Argued and Submitted Oct. 5, 1994.

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Philip W. Boesch, Jr., Alan R. Kossoff, Stephen L. Raucher, Kinsella, Boesch, Fujikawa & Towle, Los Angeles, CA, for plaintiffs-appellants.

Dean B. Herman, John H. Odendahl, Gabriel, Herman & Peretz, Los Angeles, CA, for defendants-appellees Philip D. London; London & Lichtenberg, an Accountancy Corp.; Matthew Lichtenberg; London, Caldwell & Lewinson; Alan B. Lewinson; Thomas F. Caldwell, Jr.; London & Lewinson; Caldwell & Lewinson; and Michael Weatherford.

Wayne S. Grajewski, Kim W. West, Martin L. Togni, Arter, Hadden, Lawler, Felix & Hall, Los Angeles, CA, for defendants-appellees Southland Pension Services, Inc.; William A. Saborsky; Daniel J. Van Mieghem; and Integrated Pension Services, Inc.

Jan Copley, Pasadena, CA, for defendants-appellees David L. Brady and David L. Brady, a Professional Corp.

Jerry Edelman, Warren K. Miller, Los Angeles, CA, for defendants-appellees Marc Paul Jacobs and King, Weiser, Edelman & Bazar, a Law Corp.

Appeals from the United States District Court for the Central District of California.

Before: WALLACE, Chief Judge, REINHARDT, Circuit Judge, and TANNER, [*] District Judge.

Opinion by Judge REINHARDT; Partial Concurrence and Partial Dissent by Chief Judge WALLACE.

REINHARDT, Circuit Judge:

Pano Concha, M.D. and his ex-wife Marta Concha ("the Conchas"), on behalf of the Pano Concha, M.D., Professional Corporation Defined Benefit Plan ("the Plan"), appeal the district court's decisions in two separate actions. In Appeal No. 93-55478 ("Concha I "), the Conchas appeal the district court's dismissal of their complaint, which alleged that the defendants violated their duties to the Plan under the Employee Retirement Income Security Act ("ERISA") and under state law. We affirm the dismissal of the Conchas' state law claims, but reverse the part of the dismissal of their ERISA claims that is challenged on appeal. We conclude that the Conchas have standing under ERISA and that they have stated claims against all the defendants.

After the dismissal of the Conchas' state law claims in Concha I, the Conchas filed a new complaint in state court. When the defendants removed that action to federal court and the district court refused to remand, the Conchas filed a notice purporting to dismiss the action without prejudice. The district court subsequently entered an order dismissing with prejudice as to some of the defendants. In Appeal No. 93-55695 ("Concha II "), the Conchas seek to challenge the district court's refusal to remand the second complaint. We first conclude that the action should be treated as having been dismissed with prejudice as to all defendants. We thus have jurisdiction over this appeal. Next, we conclude that the Conchas' motion to remand was properly denied.

I. BACKGROUND

Dr. Concha is a heart surgeon. At all relevant times, he and his wife were employees of Pano Concha, M.D., A Professional Corporation ("the Corporation"). In addition, Dr. and Mrs. Concha allege that they are participants, beneficiaries, and fiduciaries with respect to the Corporation's pension plan. The Conchas allege that they entrusted control and management over the Plan to their longtime accountant, Philip London of the London & Lichtenberg accountancy corporation. The London Defendants (London and his firm) were given and accepted "the discretion necessary to administer the Plan on a day-to-day basis." The Southland Defendants are actuaries who were given and accepted "the discretion necessary to administer

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the Plan." The Brady and Jacobs Defendants are attorneys who were retained by and acted as attorneys for the Plan. Dr. and Mrs. Concha allege that all these defendants mismanaged the Plan's assets, thereby breaching their duties under ERISA and state law.

II. CONCHA I

  1. Facts and Proceedings

    The Conchas filed their complaint in Concha I in the district court for the Central District of California. The Conchas alleged that, at all relevant times, they were employees of the Corporation and participants in the Plan. Their complaint contains seven claims: (1) breach of ERISA fiduciary duty; (2) state law breach of fiduciary duty; (3) state law negligence; (4) state law fraud; (5) state law breach of contract; (6) state law negligent misrepresentation; and (7) equitable relief under ERISA.

    In response to the Conchas' original complaint, the defendants moved for dismissal pursuant to Fed.R.Civ.P. Rule 12(b)(6). Defendants asserted that all the state laws claims (counts two through six) should be dismissed, because they are preempted by ERISA. They also argued that the state law fraud claim (count four) should be dismissed on the ground that the Conchas had failed to plead with specificity any facts relating to the alleged fraud or misrepresentation, as required by Rule 9(b). While some of the defendants argued that the Conchas' claim for equitable relief under ERISA (count seven) should be dismissed for failure to state a claim, others conceded that this count stated a claim on which relief could be granted. 1 The district court dismissed the complaint with leave to amend.

    The Conchas subsequently filed a first amended complaint in Concha I. This complaint was virtually identical to the original complaint. Each group of defendants again moved to dismiss, on grounds similar to those stated in their prior motions. In addition, the London Defendants moved to dismiss the claim for breach of ERISA fiduciary duty (count one), on the ground that the Conchas lacked standing. This time, the district court dismissed counts two through seven with prejudice on the ground that these counts were preempted by ERISA. 2 The court also granted the London Defendants' motion to dismiss count one, but with respect to this count provided the Conchas with leave to amend.

    In their second amended complaint, the Conchas restated their seven claims against each group of defendants. While essentially repeating the allegations contained in the prior complaint regarding the state-law claims, the Conchas amended their allegations with respect to ERISA standing. The second amended complaint stated:

    At all relevant times, plaintiffs Pano Concha and Marta Concha (collectively "Conchas") were employees of The Pano Concha, M.D., a Professional Corporation,

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    and thus were participants and beneficiaries of The Pano Concha, M.D., a Professional Corporation Defined Benefit Plan (the "Plan"). At all relevant times, the Conchas were also fiduciaries of the Plan.

    The complaint alleged the following breaches of duty under ERISA:

    All defendants, and each of them, breached their ERISA fiduciary duties to the Plan, by, among other things:

    a. Paying out assets of the Plan which were neither for the benefit nor for the reasonable expense of administering the Plan, all in violation of 29 U.S.C. Sec. 1104(a)(1)(A) and related statutes, including, without limitation, the taking of Plan assets for the defendants' personal use;

    b. Engaging in self-dealing and prohibited transactions with Plan;

    c. Loaning out Plan assets in amounts and on terms inconsistent with law;

    d. Causing excess assets to be contributed to Plan, jeopardizing and threatening tax-exempt status; and

    e. Failing to discharge their duties with respect to Plan:

    (i) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity, and familiar with such matters would use in the conduct of an enterprise of like character and with like aims;

    (ii) by diversifying the investments of Plan so as to minimize the risk of large losses, where no circumstances existed under which it was not prudent to do so;

    (iii) in accordance with the documents and instruments governing the Plan.

    The complaint further alleged that the defendants had been unjustly enriched, and that they should be held personally...

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