Asociacion De Enfermeria Visitante Auffant Inc. v. Great–west Life, Civil No. 09–1514 (GAG).

• Decision Date: 27 January 2011
• Docket Number: Civil No. 09–1514 (GAG).
• Citation: 775 F.Supp.2d 333
• Parties: ASOCIACION DE ENFERMERIA VISITANTE AUFFANT, INC., et al., Plaintiffs,v.GREAT–WEST LIFE AND ANNUITY INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

775 F.Supp.2d 333

ASOCIACION DE ENFERMERIA VISITANTE AUFFANT, INC., et al., Plaintiffs,

v.GREAT–WEST LIFE AND ANNUITY INSURANCE COMPANY, et al., Defendants.

Civil No. 09–1514 (GAG).

United States District Court, D. Puerto Rico.

Jan. 27, 2011.

Luis Vivaldi–Oliver, Luis Vivaldi Oliver Law Office, Mayaguez, PR, for Plaintiffs.Salvador Antonetti–Zequeira, Carlos J. Ruiz–Irizarry, Fiddler Gonzalez & Rodriguez, P.S.C, Alfredo Fernandez–Martinez, Elias Correa–Menendez, Delgado & Fernandez, San Juan, PR, for Defendants.

OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE BRUCE J. McGIVERIN

GUSTAVO A. GELPÍ, District Judge.

On December 6, 2010, Magistrate Judge Bruce J. McGiverin filed a report and recommendation (Docket No. 80) regarding two motions to dismiss (Docket Nos. 45 & 66) filed in the instant case. The motion to dismiss at Docket No. 45 was filed by defendant Caribbean Pension Consultants, Inc. (“CPC”). The motion to dismiss at Docket No. 66 was filed by various defendants, referred to collectively as the “Metropolitan defendants.” ¹ In his report, Magistrate Judge McGiverin recommends that the court grant CPC's motion and grant in part and deny in part the Metropolitan defendants' motion. After reviewing Judge McGiverin's report and considering the plaintiff's objections (Docket No. 83) as well as the Metropolitan defendants' response to these objections (Docket No. 89) the court ADOPTS Judge McGiverin's recommendation in whole and accordingly GRANTS CPC's motion to dismiss and GRANTS in part and DENIES in part Metropolitan defendants' motion to dismiss.

In his report, Judge McGiverin recommends that plaintiffs' breach of contract claims must be dismissed as they are preempted by ERISA. ( See Docket No. 80 at 6–8.) As to plaintiff's claims under the Puerto Rico Uniform Securities Act (“PRUSA”), Judge McGiverin recommends these claims be dismissed as to co-defendants Great–West Life and Annuity Insurance Company, Metropolitan Life Insurance, and MetLife Securities, for plaintiff's failure to sufficiently plead a cause of action against these defendants under PRUSA. ( See id. at 10–15.)

Plaintiffs oppose Judge McGiverin's findings on three grounds: (1) that the Metropolitan defendants' improper administration of the contracts does not incorporate fiduciary duties, and therefore these claims are not preempted by ERISA; (2) that they successfully alleged that CPC breached the contract entered into in connection with the administration of the plans; and (3) that in finding plaintiffs' had sufficiently pled a violation of PRUSA § 871, Judge McGiverin failed to consider General American's actions with respect to the United States Securities Act of 1933. The court will respond to each objection in turn.

With respect to plaintiffs' first grounds for objection, Judge McGiverin addressed these contentions in his report. The report points to specific allegations in plaintiff's complaint that allege breaches of fiduciary duties on behalf of entities acting as fiduciaries for ERISA purposes. ( See id. at 7–8.) Judge McGiverin states that because “[p]laintiffs' breach of contract claim is premised upon defendants' conduct in administering the Plans ... ERISA's full preemptive force must apply.” ( See Docket No. 80 at 8.) Judge McGiverin supports his reading of the complaint with applicable First Circuit precedent. See Dudley Supermarket, Inc. v. Transamerica Life Ins. and Annuity Co., 302 F.3d 1, 3 (1st Cir.2002). The court therefore agrees with Judge McGiverin's analysis of plaintiffs' complaint and adopts the same.

As to plaintiffs' second objection, the support cited does not sufficiently oppose Judge McGiverin's recommended grounds for dismissal. As grounds for his recommendation of dismissal of the PRUSA claims against CPC, Judge McGiverin highlights plaintiffs' failure to allege any facts pertaining to CPC's violations of PRUSA. ( See id. at 17, n. 7.) Plaintiffs attempt to oppose this recommendation by citing to CPC's answer to the complaint as well as to uncontested facts supporting plaintiffs' motion for partial summary judgment. ( See Docket No. 83 at 5.) This cited support clearly does not cure plaintiffs' failure to satisfy pleading requirements in their complaint. As the complaint was never amended to include these allegations, this court agrees with Judge McGiverin's recommendation.

Finally, plaintiffs object to Judge McGiverin's report by insisting that he did not consider how General American's failure to register the contracts violated the United States Securities Act of 1933. However, as identified in Judge McGiverin's report, plaintiffs have never amended their original complaint to include a Securities Act cause of action. ( See Docket No. 80 at 11, n. 8.) This claim is mentioned for the first time in plaintiffs' opposition to the Metropolitan defendants' motion to dismiss. Therefore, the court agrees with Judge McGiverin's recommendation not to consider plaintiffs' complaint as alleging a cause of action under the Securities Act of 1933.

For the foregoing reasons, the court ADOPTS Judge McGiverin's recommendation in whole and accordingly GRANTS CPC's motion to dismiss and GRANTS in part and DENIES in part Metropolitan defendants' motion to dismiss.

SO ORDERED.

REPORT AND RECOMMENDATION

BRUCE J. McGIVERIN, United States Magistrate Judge.

Before the court are two motions to dismiss the complaint filed by plaintiffs Asociación de Enfermería Visitante Gregoria Auffant, Inc. (“AEVGA”) and Plan de Beneficios Definidos de AEVGA (“Pension Plan”) (collectively, “AEVGA” or “plaintiffs”) against defendants Great–West Life and Annuity Insurance Company (“Great West”), Metropolitan Life Insurance (“Metropolitan”), MetLife Securities, Inc. (“Metlife”), General American Life Insurance Company (“General American”) (collectively, the “Metropolitan defendants”), Caribbean Pension Consultants, Inc. (“CPC”), Fascore LLC (“Fascore”), and GWFS Equities, Inc. (“GWFS”) (collectively, “defendants”).¹ The Metropolitan defendants removed plaintiffs' complaint, which alleges breach of contract and violation of the Puerto Rico Uniform Securities Act (“PRUSA”), as amended, 10 L.P.R.A. §§ 851 et seq. (Docket Nos. 1–5, 1–6), from the Puerto Rico courts to this court before defendant CPC had been served. (Docket No. 1). The Metropolitan defendants and CPC filed motions to dismiss the complaint (Docket Nos. 45, 66, 68), and plaintiffs have opposed. (Docket Nos. 57, 74). The case was referred to me by the presiding judge for disposition as to the Metropolitan defendants and for a report and recommendation as to defendant CPC.² (Docket Nos. 15, 79). 28 U.S.C. § 636. After careful consideration, I recommend that the court grant CPC's motion to dismiss and grant in part and deny in part the Metropolitan defendants' motion to dismiss.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff AEVGA is a non-profit organization headquartered in Hato Rey, Puerto Rico, that offers in-home care and health services. AEVGA offers its employees various employment benefits, including an annuity program (the “Annuity Plan”), whose benefits are provided under the terms of an annuity contract (the “Annuity Contract”) in which the Annuity Plan's funds are invested. (Docket No. 1–6, ¶¶ 1, 10, 12, 14). Plaintiff Pension Plan is the AEVGA employees' retirement pension plan. The Pension Plan, which has been frozen since November 1, 1998, covers AEVGA employees, all of whom are Puerto Rico residents. ( Id., ¶ 2).

Defendants have been AEVGA's financial planning advisors and have jointly provided the administrative services for employee benefits offered by AEVGA. ( Id., ¶ 11). The Annuity Contract was issued by defendant General American and maintained by defendants Metropolitan, MetLife, Great West, and Fascore. ( Id., ¶ 12). Defendant General American is an insurance company incorporated in Missouri and authorized to do business in Puerto Rico. General American issued the Annuity Contract, contract number 454137–P 1, to AEVGA, and contract number 454136–P 1 (the “Pension Contract”) (together, the “Contracts”) to the Pension Plan.³ ( Id., ¶¶ 1, 3). General American is affiliated with defendant Metropolitan, an insurance company headquartered in New York and authorized to do business in Puerto Rico. Metropolitan manages the Annuity and Pension Contracts. ( Id., ¶ 4). Defendant MetLife, a corporation headquartered in New York, is a subsidiary of Metropolitan. ( Id., ¶ 5). Defendant Fascore is a corporation headquartered in Colorado that provides services on behalf of Metropolitan and General American. ( Id., ¶ 9). Defendant Great West, an investment company headquartered in Colorado, acquired the Contracts, which were offered through Great West's subsidiary, defendant GWFS, a corporation headquartered in Colorado. ( Id., ¶¶ 6–7). Defendant CPC is an investment firm headquartered in Florida dedicated to offering consulting and employment benefit administration services. CPC was acquired by Oriental Bank and Trust (“OBT”) to offer its retirement plan administration services to its customers. ( Id., ¶ 8).

According to the complaint, General American and Metropolitan sold the Annuity Contract to AEVGA without registering that contract with the Puerto Rico Office of the Commissioner of Financial Institutions (“OCFI”) or providing AEVGA's officers a copy of the Annuity Contract's prospectus with information on the contract's details. Furthermore, General American and Metropolitan did not designate a duly authorized, registered representative to provide AEVGA's officers the orientation, information, and financial assistance necessary to make decisions relating to the Annuity Contract's management and administration. Likewise, when Great West took over administration of the Contracts, it did not designate an authorized representative to offer plaintiffs financial assistance and advice regarding administration of the Contracts' funds. De...