Grund v. Del. Charter Guarantee & Trust Co. D/B/A Principal Trust Co.
| Decision Date | 26 May 2011 |
| Docket Number | No. 09 Civ. 8025.,09 Civ. 8025. |
| Court | U.S. District Court — Southern District of New York |
| Parties | Robert GRUND, Susan Grund, on behalf of themselves and all others similarly situated, Plaintiffs,v.DELAWARE CHARTER GUARANTEE & TRUST COMPANY d/b/a Principal Trust Company, and Principal Financial Group, Inc., Defendants. |
OPINION TEXT STARTS HERE
Lovell Stewart Halebian Jacobson LLP, by: Christopher Lovell, Esq., Zamansky & Associates LLC, by: Jacob H. Zamansky, Esq., New York, NY, for Plaintiffs.Sidley Austin LLP, by: Joel S. Feldman, Esq., New York, NY, for Defendants.
Defendants Principal Financial Group, Inc. (“Principal Financial”) and Delaware Charter Guarantee & Trust Company d/b/a Principal Trust Company (“Principal Trust”) (collectively, the “Defendants”) have moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss the Consolidated Amended Complaint (“CAC”) filed by Plaintiffs Robert Grund, Susan Grund, Jeffrey Golden, Victoria Golden, Stephanos Papademetriou, Vaciliki Papademetriou, and Eleni Papademetriou (“Plaintiffs”), Upon the conclusions set forth below, the motion is granted in part and denied in part.
The Plaintiffs and the Defendants entered into Self–Directed Individual Retirement Trust Agreements (“SIRTA”) to establish traditional individual retirement accounts (“IRAs”). The Plaintiffs directed investment in the Westgate Fund which proved to be a Ponzi scheme operated by James Nicholson (“Nicholson”), At issue is the adequacy of the twenty-six claims set forth in the CAC, alleging breach of contract, negligence, breach of fiduciary duty, unjust enrichment, and violations of ERISA duties in its 229 paragraphs.
The Plaintiffs filed their putative class action complaint on September 18, 2009 alleging breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, breach of contract, unjust enrichment, negligence, and conversion. The Defendants moved to dismiss the complaint, and on April 16, 2010 the Plaintiffs filed the CAC, The instant motion of the Defendants to dismiss the CAC was heard and marked fully submitted on December 8, 2010.
The CAC alleges twenty-six claims for relief as follows:
According to the CAC, the Plaintiffs entered into a standardized form contract for a self-directed IRA that was drafted by Defendants, which in turn was copied in part from a federal form contract created by the Internal Revenue Service (“IRS”). See IRS Form 5305A; CAC ¶¶ 48–50. The form, as promulgated by the IRS, sets forth a number of provisions which must be included to create a valid “Traditional Individual Retirement Custodial Account” under § 408 of the Internal Revenue Code (“IRC”). CAC ¶ 48. Under IRC § 408, the custodian/trustee has a duty to acquire and hold particular investments; to keep custody of investments; to refrain from commingling the investments of each account with any other property; to deposit assets of accounts requiring safekeeping in an adequate vault; to determine the assets held by it in trust and the value of such assets at least once in...
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...in part and denied in part a similar motion to dismiss in the related case of Grund v. Delaware Charter Guarantee & Trust Co., No. 09 Civ. 8025, 788 F.Supp.2d 226, 2011 WL 2118754 (S.D.N.Y. May 26, 2011). According to the AC, the Plaintiffs entered into a standardized form contract for a se......
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