Costley v. Thibodeau, Johnson & Feriancek, Pllp

Decision Date07 December 2001
Docket NumberNo. Civ.01-602(RLE).,Civ.01-602(RLE).
Citation189 F.Supp.2d 938
PartiesTimothy A. COSTLEY, Plaintiff, v. THIBODEAU, JOHNSON & FERIANCEK, PLLP, and David M. Johnson and J.D. Feriancek, individually and in their capacity as Trustees, Defendants.
CourtU.S. District Court — District of Minnesota

Norman J. Baer, Gena Anne Braaten, Anthony Ostlund & Baer, Minneapolis, MN, for plaintiff.

Mark Anthony Fredrickson, Doreen A. Mohs, Rider Bennett Egan & Arundel, Minneapolis, MN, for Thibodeau, Johnson & Feriancek, PLLP, David M. Johnson, defendants.

Doreen A. Mohs, Rider Bennett Egan & Arundel, Minneapolis, MN, for J.D. Feriancek, defendant.

MEMORANDUN ORDER

ERICKSON, United States Magistrate Judge.

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to the consent of the parties, as authorized by Title 28 U.S.C. § 636(c), upon the Defendants' Motion to Dismiss, under Rule 12(b)(6), Federal Rules of Civil Procedure, and upon their Motion for Attorney's Fees. A Hearing on the Motions was conducted on August 23, 2001, at which time, the Plaintiff Timothy A. Costley ("Costley") appeared by Gena A. Braaten, Esq., and the Defendants Thibodeau, Johnson & Feriancek, PLLP ("the Law Firm"), and David M. Johnson, and J.D. Feriancek, both individually, and in their capacities as Trustees, appeared by Mark A. Fredrickson, Esq. For reasons which follow, we grant the Defendants' Motion to Dismiss in part, and we deny the Defendants' Motion for Attorney's Fees.

II. Factual and Procedural History

Costley was formerly a partner in the Law Firm, which was formed on January 1, 2000. Prior to that time, the four named partners had worked together in another firm—Johnson, Killen, Thibodeau & Seiler, P.A. ("Johnson Killen"). On December 15, 2000, the Law Firm established a pension and profit-sharing plan ("the Plan"), which was made retroactive to January 1, 2000—the date on which the Law Firm was formed. Vesting under the Plan is "graded," with the percentage of vesting increasing as the years with the Law Firm increased, and with a participant becoming 100% vested after six or more years of "service."1

On February 16, 2001—approximately two months after the Plan was adopted— Costley resigned his employment with the Law Firm. Upon his resignation, he demanded that the Defendants transfer to him the amounts allegedly allocated to his account under the Plan which, he claims, approximates $24,300.00. Costley contends that he is entitled to the funds because he had six years of service under the Plan, which was comprised of the five years he had worked for Johnson Killen, and the one year he had worked for the Law Firm. The Defendants refused to award such a payment, however, and they deny that Costley has satisfied the vesting requirements of the Plan, since he had only worked at the Law Firm for a little over one year. The Defendants further deny that the Plan allows a crediting, toward vesting, of the time that Costley worked at Johnson Killen.

As a consequence of that denial of benefits, Costley commenced this lawsuit against the Defendants. Specifically, in Count I of his Complaint, Costley alleges that he has been denied benefits, which are owing to him under the Plan, thereby violating the Employee Retirement Income Security Act, Title 29 U.S.C. §§ 1001 et seq. ("ERISA"). In Count II, he alleges that, under ERISA, the Defendants owed him a fiduciary duty, which they breached by failing to distribute the contributions which were allocated to him under the Plan. In the alternative, in Counts III and IV, Costley claims that, if the Plan is not an ERISA qualified plan, then the Defendants have breached a unilateral contract under Federal and State common law.

In lieu of an Answer, the Defendants have moved to dismiss Costley's Complaint, as they claim that, under the unambiguous terms of the Plan, Costley was not vested at the time he resigned from the Law Firm and, therefore, he was not entitled to the funds that he has demanded. Furthermore, they claim that the Federal and State common law claims, which Costley alternatively asserts, are preempted by ERISA. Lastly, the Defendants seek an award of attorney's fees arising from their Motion to Dismiss.

III. Discussion

A. Standard of Review. In bringing their Motion to Dismiss, the Defendants contend that Costley's Complaint fails to state a claim upon which relief can be granted. See, Rule 12(b)(6), Federal Rules of Civil Procedure. In reviewing a Complaint under a Rule 12(b)(6) Motion, we must consider all of the facts alleged in the Complaint as true, and construe the pleadings in a light most favorable to the plaintiff. See, e.g., Brotherhood of Maintenance of Way Employees v. Burlington Northern Santa Fe Railroad, 270 F.3d 637, 638 (8th Cir.2001). "A complaint shall not be dismissed for its failure to state a claim upon which relief can be granted unless it appears beyond a reasonable doubt that plaintiff can prove no set of facts in support of a claim entitling him to relief." Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir.2001), citing Breedlove v. Earthgrains Baking, 140 F.3d 797, 799 (8th Cir.1998); Helleloid v. Independent School Dist. No. 361, 149 F.Supp.2d 863, 866-67 (D.Minn.2001).

"Nevertheless, dismissal under Rule 12(b)(6) serves to eliminate actions which are fatally flawed in their legal premises and deigned to fail, thereby sparing litigants the burden of unnecessary pretrial and trial activity." Young v. City of St. Charles, supra at 627, citing Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989). "To avoid dismissal, a complaint must allege facts sufficient to state a claim as a matter of law and not merely legal conclusions." Id., citing Springdale Educ. Ass'n v Springdale Sch. Dist., 133 F.3d 649, 651 (8th Cir.1998).

B. Legal Analysis. Since they involve different considerations, we separately address Costley's ERISA claims, from those he asserts under Federal and State common law, and we then proceed to the Defendants' request for an award of attorneys' fees and costs.

1. Costley's ERISA Claims. By filing a preemptive Motion to Dismiss, the Defendants frame the issues presented as involving a construction of the Plan and, particularly, the portions of the Plan which explicate a participant's vesting of benefits. Accordingly, the Defendants emphasize the "graded vesting" provisions, and the fact that Johnson Killen is not a "predecessor," or an "affiliated" employer, as those terms are defined in the Plan. The Defendants then invite us to review their denial of Costley's benefit claim under the indulgent light of an abuse-of-discretion standard of review, anticipating that such a review would favor their effort to dismiss Costley's ERISA allegations.

In contrast, Costley opposes a dismissal by framing the issues presented as involving the intent of the authors of the Plan, particularly as that intent relates to the crediting, for vesting purposes, of service before the Law Firm created the Plan. While the arguments, which the parties have so framed, tangentially meet on occasion, in many ways they are "two ships passing in the night." For example, Costley contends that the Plan does not instill any discretion in the Trustees to interpret the meaning of the Plan's provisions, and that, even if such discretion were afforded, the Trustees labored under a conflict of interest which would create a heightened standard of review, that they generally ascribe as being de novo. The Defendants heartily disagree, and encourage the deployment of a highly deferential, abuse-of-discretion standard. While the respective arguments of the parties are intriguing— or, perhaps, beguiling—properly framed, we must construe the allegations of Costley's Complaint, and then determine whether those allegations will support a viable claim which could entitle Costley to relief.

As an attachment to his Complaint, Costley has attached the "Adoption Agreements," which contain certain portions of the Plan. In particular, Costley relies on that portion of the Adoption Agreements which records the Law Firm's affirmative response to the following question:

Vesting Service: Will Vesting Service include years before the Employer first maintained the Plan (or predecessor plan)?

Costley contends that, by assenting to this question, the Law Firm was agreeing to credit the years that any Plan participant had served at Johnson Killen for vesting purposes. As alleged in Costley's Complaint:

The defendant law firm checked "Yes" because the partners intended years of service for purposes of vesting to include years of service at the prior law firm. The purpose of including years of service at the prior law firm was to make sure that the partners, especially Thibodeau, who was close to retirement age, would be 100% vested at the inception of the Plan. The graded vesting was chosen so that new employees would not be fully vested until they had been employed with the firm for six years.

Complaint, at p. 13, ¶ 16.

In accepting this assertion as true, as we must, we are also instructed, by the governing law of this Circuit, to construe "the complaint liberally in the light most favorable to the plaintiff." Carpenter Outdoor Advertising Co. v. City of Fenton, 251 F.3d 686, 688 (8th Cir.2001).

Drawing reasonable inferences from the facts alleged by Costley, we have an assertion of drafting intent, as expressed by one of the Plan's Trustees, who also served as one of the creators of the Plan, and who filed his claim for benefits, predicated on that asserted intent, no more than a couple of months after the Plan was formally adopted. Given these facts, the Defendants' Motion to Dismiss can only be successful if we conclude that it appears, beyond a reasonable doubt, that Costley can prove no set of facts that would entitle him to relief. See, Anderson v. Franklin County, 192 F.3d 1125, 1131 (8th Cir.1999), citing Springdale Educ....

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  • Costley v. Thibodeau, Johnson & Feriancek, Pllp
    • United States
    • U.S. District Court — District of Minnesota
    • 27 février 2003
    ...law. However, Counts III and IV were dismissed, pursuant to the Defendants' previous Motion to Dismiss. See, Costley v. Thibodeau, Johnson & Feriancek, PLLP, 189 F.Supp.2d 938, 944^5 (D.Minn.2001). The Defendants have now moved for Summary Judgment on the remaining claims in Costley's Compl......

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