Batal-Sholler v. Batal

Decision Date15 August 2022
Docket Number2:21-cv-00376-NT
PartiesNANCY BATAL-SHOLLER, Plaintiff, v. MARILYN BATAL, et al., Defendants.
CourtU.S. District Court — District of Maine

ORDER ON DEFENDANTS' MOTIONS TO DISMISS

Nancy Torresen, United States District Judge

Before me are three motions by the Defendants to dismiss the Complaint. For the reasons stated below, the motions are GRANTED IN PART and DENIED IN PART.

FACTUAL BACKGROUND

Edward B. Batal, Sr., founded an insurance agency in Sanford, Maine in the 1960s, Batal Corp. (the Agency). Compl. ¶ 17 (ECF No. 1). In 1983, Ed[1] asked his daughter, Nancy Batal-Sholler the Plaintiff, to move back to Maine and help out with the Agency. Compl. ¶¶ 16, 19. In conjunction with this request, Ed promised Nancy that he would retire around the age of sixty-two and that she would then take over the business. Compl. ¶ 20.

Beginning in the early 1990s, Ed began traveling a lot and left Nancy in charge to run the Agency and develop business. Compl. ¶ 25. Nancy became the only significant producer of business and the only person performing substantive work for the Agency. Compl. ¶ 26. But Ed continued to handle the Agency's bookkeeping and finances, and he refused to let Nancy exercise financial control over the Agency. Compl. ¶¶ 63-65.

In late 2002, in preparation for Ed's upcoming sixty-second birthday the following year, Ed and/or Nancy prepared a letter for their clients letting them know that Nancy was going to be taking over the Agency. Compl. ¶¶ 28-29. But, in April 2003, Ed told Nancy that he had changed his mind about retiring and that he wanted to continue receiving income from the Agency. Compl. ¶ 31. Ed apologized for changing his mind but promised Nancy that he would gift her forty percent of the company stock and, if she continued to work at the Agency, that she would own it someday, once he no longer needed the income. Compl. ¶¶ 33-34, 36, 43-44.

The Agency had a retirement plan, the Edward B. Batal Defined Contribution Plan (the Plan) for which Ed was the Plan administrator from 2009 until 2018. Compl. ¶¶ 102, 114. In 2019, Ed's wife (and Nancy's stepmother), Marilyn Batal, became the Plan administrator. Compl. ¶¶ 11, 115; Defs.' Mot. to Dismiss (Defs.' Mot.) 12 (ECF No. 11)[2]. Ed and Marilyn were also the trustees of the Plan. Compl. ¶ 116. Ed allowed Marilyn to participate in the Plan even though she was not an Agency employee. Compl. ¶ 117. Meanwhile, Marilyn encouraged or demanded that Ed not allow Nancy to participate in the Plan. Compl. ¶ 79.

Ed, Marilyn, and the Agency also misclassified Nancy as an independent contractor, which deprived her of overtime and benefits, including retirement plan compensation. Compl. ¶¶ 75, 78. Relatedly, the Agency engaged in mail fraud and/or wire fraud by filing tax returns and processing Forms W-2 for Agency employees that misrepresented Nancy as an independent contractor. Compl. ¶ 77. Nancy did not learn that she was being improperly classified as an independent contractor until mid-2017. Compl. ¶ 92. When she found this out, she called the Agency's payroll company and changed her classification to that of an employee. Compl. ¶ 92.

Marilyn also took other steps to deprive Nancy of profits, earnings, and benefits that she was owed from the Agency and to get Ed to pay Nancy less money. Compl. ¶¶ 69, 79, 91, 130. Marilyn would tell Ed that Nancy was on vacation all the time or was not working hard enough. Compl. ¶ 130. She asked another Agency employee to keep track of Nancy's vacations, days off, and lunch breaks, as well as the hours Nancy worked and the amount of time she spent in the office. Compl. ¶ 70. Marilyn also tried to get Ed to sell the Agency to someone other than Nancy. Compl. ¶¶ 79, 130.

By early 2017, Nancy and Ed's relationship was strained. Compl. ¶ 130. Ed's health was declining, as was his mental capacity. Compl. ¶¶ 130, 132, 137. By mid-2017, Ed and Nancy's communications had broken down, and Ed had mostly stopped speaking to her. Compl. ¶ 88. Marilyn controlled what little communication they had. Compl. ¶ 90.

Ed had also grown too ill to continue managing the Agency. Compl. ¶ 86. Despite not being an employee or officer of the Agency, Marilyn began doing the bookkeeping, and she was paid by the Agency. Compl. ¶¶ 87, 134.

On May 3, 2017, Marilyn suggested to Nancy that she make amends with her father and talk about selling the business. Compl. ¶ 138. The Complaint alleges that this was an effort by Marilyn to get Nancy to agree to let Ed sell the Agency to a third party. Compl. ¶ 139.

In August of 2017, Nancy received an anonymous letter (seemingly from an Agency customer) inquiring about rumors that the letter writer had heard that the Agency was going to be shutting its doors. Compl. ¶ 143.

In November of 2017, Marilyn informed Nancy that there were potential buyers for the Agency. Compl. ¶ 145. Although Marilyn claimed she was “in the middle” of a dispute between Ed and Nancy, the Plaintiff alleges that Marilyn was manipulating Ed to ensure that Nancy would not be able to purchase the Agency. Compl. ¶¶ 145-46. By that point in time, Marilyn knew that Ed was either considering selling the Agency, planning to sell it (at Marilyn's behest), or was in the process of selling it. Compl. ¶ 146. Marilyn told Nancy she should meet with Ed soon about buying the Agency. Compl. ¶ 147.

Nancy subsequently asked Marilyn for a proposed price and the terms of sale. Compl. ¶ 148. And when Nancy asked what was being offered to other potential buyers, Marilyn misled Nancy into believing that no price had been set. Compl. ¶ 149. On November 28, 2017, Marilyn told Nancy that Ed was feeling better and was no longer sure he wanted to sell. Compl. ¶ 150. However, she said that Ed had decided that the business could no longer afford Nancy's salary and that she should start looking for a new job. Compl. ¶ 150. Two weeks later, Marilyn confirmed to Nancy that she was being terminated effective December 31, 2017. Compl. ¶ 157. And she was so terminated. Compl. ¶ 24.

By this point-as early as December of 2017-Ed had begun negotiations with Timothy Curley (from another insurance agency called Curley Associates) about Mr. Curley purchasing the Agency. Compl. ¶¶ 164, 171, 197. At the time she left the Agency, Nancy was not aware that Ed was planning to sell the Agency to a third party, and she expected either that Ed would want her to come back to the Agency or that he would soon die. Compl. ¶¶ 158-59.

On March 21, 2018, Ed, Marilyn, and the Agency transferred most of their real estate into the Batal Family Living Trust (the Trust) in order to shield these assets from Nancy. Compl. ¶¶ 174, 175, 177, 191(A). That same day, Ed signed a new will, which left Nancy out of the Trust. Compl. ¶ 176.

On March 22, 2018, Ed and Mr. Curley agreed on the terms of the sale of the Agency, including that Mr. Curley would purchase the Agency for $335,000 but that Ed and Marilyn would finance the sale. Compl. ¶¶ 178-79. On April 6, 2018, Ed's attorney called Nancy to ask her to sign a non-compete agreement in order to “fast track” the sale of the Agency and asked her whether she planned to work for the Agency after it was purchased by Mr. Curley. Compl. ¶¶ 160, 182. That same day, Ed and Marilyn sold additional property to the Trust. Compl. ¶¶ 191(B), (C), (E), (G).

On April 13, 2018, the sale of the Agency closed, and on April 25, the Agency sent out a letter to its clients notifying them that it was merging with Curley Associates. Compl. ¶¶ 164, 185. It appears that this may have been when Nancy found out that the sale was a done deal. See Compl. ¶ 164. It also appears that this letter went out to Nancy's client list, which Ed, Marilyn, and the Agency had sold to Mr. Curley. See Compl. ¶¶ 26, 164, 166-67. Nancy spent thirty years building this client list, and she developed and owned it. Compl. ¶¶ 140, 165-67. Nancy alleges that she could have left the Agency and taken all of her clients with her at any time. Compl. ¶ 60.

On July 20, 2018, Nancy sued Ed in York County Superior Court, alleging various state law contract claims. Compl. ¶ 192. Three days later, Nancy obtained an ex parte order of attachment in the amount of $500,000 against some of the properties that Ed, Marilyn, and the Agency had previously transferred to the Trust. Compl. ¶¶ 193-94.

On March 24, 2019, Ed died. Compl. ¶ 113. And at some point later on in 2019, Marilyn liquidated the Plan, transferring the remaining assets to Ed's estate and the Trust, in order to shield these assets from Nancy. Compl. ¶¶ 119-20.

Around early 2020, counsel for Ed's estate filed a motion to vacate the attachment that had been issued by arguing that Nancy had committed a fraud on the court when she had redacted a portion of a document that she had attached to her state-court complaint and motion for attachment. Compl. ¶¶ 200, 204. The state court subsequently vacated the attachment order. Compl. ¶ 206. On October 7, 2020, after the attachment was vacated, the Trust sold off two of its properties to RBBJM Realty Trust. Compl. ¶¶ 191(D), (F), (H). Eight days later, Marilyn sold a condo to Lion Holdings, LLC. Compl. ¶ 191(I).

PROCEDURAL BACKGROUND

In December of 2021, Nancy filed this action against Marilyn (both in her individual capacity and as the representative of Ed's estate), the Agency,[3] the Trust, and the Plan. The Plaintiff brings two types of federal claims, four claims under the Racketeer Influenced and Corrupt Organizations (RICO) Act and four claims under the Employee Retirement Income Security Act (ERISA). The four RICO claims are brought against all of the Defendants (Counts I-IV). Compl. 39-44. The ERISA claims are as follows: an ERISA interference claim pursuant to ...

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