Ellis v. Rycenga Homes, Inc.

• Decision Date: 15 March 2007
• Docket Number: No. 1:04-cv-694.,1:04-cv-694.
• Citation: 484 F.Supp.2d 694
• Parties: David ELLIS, Successor Plan Administrator and Successor Plan Trustee for the Rycenga Homes, Inc. Profit-Sharing 401(k) Plan, Plaintiff, v. RYCENGA HOMES, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

484 F.Supp.2d 694

David ELLIS, Successor Plan Administrator and Successor Plan Trustee for the Rycenga Homes, Inc. Profit-Sharing 401(k) Plan, Plaintiff, v. RYCENGA HOMES, INC., et al., Defendants.

No. 1:04-cv-694.

United States District Court, W.D. Michigan, Southern Division.

March 15, 2007.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Gregory N. Longworth, Stephen D. Turner, Clark Hill PLC, Grand Rapids, MI, for Plaintiff.

Miles T. Macik, Dennis Egan, Butzel Long, Bloomfield Hills, MI, for Defendants.

OPINION

SCOVILLE, United States Magistrate Judge.

This is a civil action brought by the successor trustee of a profit-sharing plan pursuant to the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001-1461. The plan was established by Rycenga Homes, Inc. for the benefit of its employees. Plaintiff's claims, brought on behalf of the plan and its participants, arise from improper loans made from plan assets to Rycenga Homes, under the direction of Ronald J. Retsema, the former trustee of the plan. All parties agree that the loans were prohibited transactions under section 406(a)(1) of ERISA, 29 U.S.C. § 1106(a)(1). Default judgments have already been entered against Rycenga Homes, Inc. and Retsema. The only remaining defendant is Edward D. Jones & Co., L.P. (Edward Jones), a securities broker who maintained accounts for the plan from 1984 through 2004. Plaintiff contends that Edward Jones was a fiduciary and is liable for Retsema's wrongdoing under the provisions of ERISA governing fiduciary liability. Alternatively, plaintiff contends that Edward Jones, even if not a fiduciary, is liable under common-law principles.

The time for completion of discovery is expired, and both parties have now moved for summary judgment. Plaintiff's motion (docket # 127) seeks a partial summary judgment concluding that Edward Jones was a fiduciary of the plan and that it is liable either directly or under the co-fiduciary provisions of ERISA. Defendant's motion (docket # 125) raises the following contentions: (1) Edward Jones was not a fiduciary under ERISA; (2) even assuming fiduciary status, Jones did not breach any of its limited fiduciary duties to the plan; (3) plaintiff's claims based on actions occurring before October 18, 1998, are barred under the ERISA statute of limitations, 29 U.S.C. § 1113; and (4) plaintiff's common-law claims are preempted by ERISA or fail to state a claim upon which relief can be granted. The parties have consented to the dispositive jurisdiction of a magistrate judge. (See Consents and Orders of Reference, docket #'s 33, 34, 46, 101). The court conducted a hearing on both motions on February 1, 2007. For the reasons set forth below, the court concludes that defendant Edward Jones acted as a plan fiduciary under ERISA as a matter of law. The court further concludes that defendant is entitled to summary judgment on certain theories of ERISA liability, but that genuine issues of material fact preclude a summary judgment for either party on the question whether defendant is liable under two theories of direct liability and under the co-fiduciary section of ERISA and whether the six-year statute of limitations bars any part of plaintiff's claim. Finally, the court concludes that plaintiff's common-law claim in count II is preempted.

Applicable Standard

When reviewing cross-motions for summary judgment, the court must assess each motion on its own merits. See Federal Ins. Co. v. Hartford Steam Boiler Inspection & Ins. Co., 415 F.3d 487, 493 (6th Cir.2005); Spectrum Health Continuing Care Group v. Anna Marie Bowling Irrevocable Trust, 410 F.3d 304, 309 (6th Cir. 2005). "`[T]he filing of cross-motions for summary judgment does not necessarily mean that an award of summary judgment is appropriate.'" Bowling Irrevocable Trust, 410 F.3d at 309 (quoting Beck v. City of Cleveland, 390 F.3d 912, 917 (6th Cir.2004), cert. denied, 545 U.S. 1128, 125 S.Ct. 2930, 162 L.Ed.2d 867 (2005)); see Appoloni v. United States, 450 F.3d 185, 189 (6th Cir.2006).

Summary judgment is appropriate when the record reveals that there are no genuine issues as to any material fact in dispute and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Tysinger v. Police Dep't of City of Zanesville, 463 F.3d 569, 572 (6th Cir. 2006); Briggs v. Potter, 463 F.3d 507, 511 (6th Cir.2006). The standard for determining whether summary judgment is appropriate is "whether `the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Swiecicki v. Delgado, 463 F.3d 489, 492 (6th Cir.2006) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The court must consider all pleadings, depositions, affidavits, and admissions on file, and draw all justifiable inferences in favor of the party opposing the motion. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Twin City Fire Ins. Co. v. Adkins, 400 F.3d 293, 296 (6th Cir.2005).

When the party without the burden of proof (generally the defendant) seeks summary judgment, that party bears the initial burden of pointing out to the district court an absence of evidence to support the nonmoving party's case, but need not support its motion with affidavits or other materials "negating" the opponent's claim. See Morris v. Oldham County Fiscal Court, 201 F.3d 784, 787 (6th Cir.2000); see also Minadeo v. ICI Paints, 398 F.3d 751, 761 (6th Cir.2005). Once the movant shows that "there is an absence of evidence to support the nonmoving party's case," the nonmoving party has the burden of coming forward with evidence raising a triable issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To sustain this burden, the nonmoving party may not rest on the mere allegations of his pleadings. FED. R. CIV. P. 56(e); see Pack v. Damon Corp., 434 F.3d 810, 814 (6th Cir.2006). The motion for summary judgment forces the nonmoving party to present evidence sufficient to create a genuine issue of fact for trial. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir.1990). "A mere scintilla of evidence is insufficient; `there must be evidence on which a jury could reasonably find for the [non-movant].'" Daniels v. Woodside, 396 F.3d 730, 734 (6th Cir. 2005) (quoting Anderson, 477 U.S. at 252, 106 S.Ct. 2505); see Kessler v. Visteon Corp., 448 F.3d 326, 329 (6th Cir.2006); Amini v. Oberlin College, 440 F.3d 350, 357 (6th Cir.2006). "A nonmoving party may not avoid a properly supported motion for summary judgment by simply arguing that it relies solely or in part on credibility considerations. Instead, the nonmoving party must present evidence to defeat a properly supported motion for summary judgment. The party opposing summary judgment must be able to point to some facts which may or will entitle him to judgment, or to refute the proof of the moving party in some material portion, and the opposing party may not merely recite the incantation, `credibility,' and have a trial on the hope that a jury may disbelieve factually uncontested proof." Fogerty v. MGM Holdings Corp., Inc., 379 F.3d 348, 353 (6th Cir.2004), cert. denied, 543 U.S. 1120, 125 S.Ct. 1064, 160 L.Ed.2d 1068 (2005).

A moving party with the burden of proof (typically the plaintiff) faces a "substantially higher hurdle." Arnett v. Myers, 281 F.3d 552, 561 (6th Cir.2002); Cockrel v. Shelby County Sch. Dist., 270 F.3d 1036, 1056 (6th Cir.2001). As shown above, the moving party without the burden of proof needs only show that the opponent cannot sustain his burden at trial. "But where the moving party has the burden — the plaintiff on a claim for relief or the defendant on an affirmative defense — his showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986) (quoting W. SCHWARZER, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 487-88 (1984)). The United States Court of Appeals for the Sixth Circuit has repeatedly emphasized that the party with the burden of proof faces "a substantially higher hurdle" and "`must show that the record contains evidence satisfying the burden of persuasion and that the evidence is so powerful that no reasonable jury would be free to disbelieve it.'" Arnett, 281 F.3d at 561 (quoting 11 JAMES WILLIAM MOORE, ET AL., MOORE'S FEDERAL PRACTICE § 56.13[1], at 56-138 (3d ed.2000)); Cockrel, 270 F.3d at 1056 (same). Accordingly, a summary judgment in favor of the party with the burden of persuasion "is inappropriate when the evidence is susceptible of different interpretations or inferences by the trier of fact." Hunt v. Cromartie, 526 U.S. 541, 553, 119 S.Ct. 1545, 143 L.Ed.2d 731 (1999).

Findings of Fact

1. Rycenga Homes, Inc. created a 401(k) profit-sharing plan for the benefit of its employees on or about April 1, 1984. (Retsema Dep., 12). Ronald Retsema, the President of the corporation, served as the sole trustee of the plan from 1984 through 2004. (Id., 12-13). It is undisputed that in 1984, the plan opened an account with Edward Jones by executing a standard retirement trust form and corporate account form. These forms authorized Edward Jones to open an account in the name of the plan and authorized Retsema, as the trustee, to issue instructions to Edward Jones regarding the purchase of securities for the account.¹ No document identifies Edward Jones as a plan fiduciary. At all relevant times, Thomas Baetens, an Investment Representative in the Grand Haven office of Edward Jones, was assigned responsibility for this account. (Retsema Dep., 15-16).

2. At no time did Edward Jones act as a third-party administrative (TPA) for the plan....