Nill v. Essex Group, Inc.
| Decision Date | 10 January 1994 |
| Docket Number | No. 1:93-CV-307.,1:93-CV-307. |
| Citation | 844 F. Supp. 1313 |
| Parties | Richard G. NILL, Plaintiff, v. ESSEX GROUP, INC., Defendant. |
| Court | U.S. District Court — Northern District of Indiana |
Edward L. Murphy, Jr., Miller Carson Boxberger and Murphy, Fort Wayne, IN, for plaintiff.
Steven L. Jackson, Michael J. Nader, Baker and Daniels, Fort Wayne, IN, for defendant.
This matter is before the court on plaintiff's Motion to Remand Case to State Court filed on December 7, 1993. For the following reasons the motion is GRANTED.
On October 27, 1993, plaintiff, Richard G. Nill (hereinafter: "Nill"), filed a malicious prosecution Complaint against defendant, Essex Group, Inc. (hereinafter: "Essex"), in the Allen Superior Court, in Allen County, Indiana. Nill's malicious prosecution Complaint arises out of various state court law-suits and appeals therefrom concerning Essex's administration of an ERISA pension plan from which Nill was entitled to benefits. The events leading up to the Complaint filed in the Allen Superior Court are as follows.
Nill was the original founder and part owner of a company known as Fort Wayne Tool & Die, Inc. (hereinafter: "Fort Wayne Tool"). In 1961, a trust agreement was executed on behalf of Fort Wayne Tool naming Indiana Bank & Trust Company of Fort Wayne (hereinafter: "Bank") as trustee. The purpose of the trust was to provide a pension plan for all full-time salaried employees of Fort Wayne Tool, including Nill. The trust agreement provided that the pension benefits would come from two funds. Fort Wayne Tool would contribute to a General Fund and an Auxiliary Fund for each participating employee.
In 1969, the stock of Fort Wayne Tool was sold to Essex. As part of the terms of sale, Essex agreed to act as the pension plan sponsor of the 1961 trust agreement and to enter into an employment agreement with Nill whereby Nill would remain employed as the President and Chief Executive Officer of Fort Wayne Tool after the sale.
After the sale, Nill and Essex had a falling out which lead to the early retirement of Nill in 1976. Instead of receiving an annuity as called for in the trust agreement, Nill requested the Bank to make a lump-sum distribution to him of his accumulated retirement benefits. The Bank made a lump sum payment of $117,536.35 to Nill, which was the amount of funds the Bank deemed necessary to purchase a retirement annuity at that time for Nill. There remained $55,244.44 in Nill's Auxiliary Fund. Nill requested the remaining funds, but Essex objected to any further disbursements.
The Bank instituted a declaratory judgment action on or about October 31, 1977, naming Nill and Essex as defendants and requested the court to make a determination whether any further disbursements should be made to Nill.
Nill claimed entitlement to the monies in his auxiliary fund under two separate theories. First, that the drafter of the trust agreement had omitted a provision, due to a scrivener's error, which would have authorized the lump-sum payment to Nill. Second, as the plan was written, Employee Retirement Income Security Act (ERISA) provisions applied and mandated disbursement of the auxiliary funds to Nill.
The trial court found that Nill was entitled to the auxiliary funds under the second argument. However, the Indiana Court of Appeals ultimately held that ERISA did not mandate any distribution to Nill. Essex Group, Inc. v. Nill, 462 N.E.2d 1334 (Ind. App.1984). The Court of Appeals held that the plan was not a "hybrid" plan, and therefore, Nill was not entitled to the monies in the auxiliary fund in excess of the amount necessary to purchase a retirement annuity. The Court of Appeals remanded the case back to the trial court with orders to make a determination with respect to Nill's first theory of recovery, i.e., reformation of the trust agreement to correct a scrivener's error.
The trial court granted Nill's Motion for Summary Judgment as to this theory of recovery on February 5, 1988. The trial court reformed the trust agreement to allow for a lump-sum payment to Nill from the auxiliary fund. Essex appealed this decision of the trial court. The Court of Appeals held that the reformation question was one of state law and was not preempted by ERISA because the omission that formed the basis of the reformation occurred before the preemptive date of ERISA. Essex Group, Inc. v. Nill, 543 N.E.2d 393 (Ind.App.1989). The Court of Appeals further held that reformation was appropriate under the circumstances. Id. at 397.
Subsequently, Essex instituted a cause of action against Nill and others. The Complaint alleged breach of warranty and indemnification provisions of the 1969 contract of sale of Fort Wayne Tool to Essex alleging Nill failed to disclose to Essex the mistake in the trust agreement that lead to its reformation. Essex sought recovery of its attorneys fees and its costs incurred in challenging the lump-sum payment to Nill in the previous action. After remand, on April 16, 1993, the Steuben Circuit Court held Essex was not entitled to indemnification since Essex had no protectable interest in challenging the lump-sum payment to Nill, and therefore, was never "at risk." Accordingly, the court held that any attorneys fees incurred by Essex in that litigation were unreasonable as a matter of law.
As noted supra, Nill filed his malicious prosecution Complaint against Essex in the Allen Superior Court on October 27, 1993. Nill contends that Essex's actions during the dispute over the lump-sum payment from the pension plan amounted to tortious and malicious acts. Nill also seeks punitive damages.
Nill argues that Essex improperly removed his state action to federal court and that this court lacks subject-matter jurisdiction over the Complaint. Nill maintains that the malicious prosecution Complaint does not require any further determinations as to the applicability of ERISA to the trust agreement and that any dispute as to the trust agreement has already been fully disposed of in the state court proceedings. Thus, Nill continues, neither the preemptive provisions of ERISA, which dictate that federal law preempts any state law that may conflict or encroach upon ERISA, nor the complete preemption doctrine apply to the state cause of action of malicious prosecution.
Therefore, Nill concludes, there is no federal question for this court to consider and removal to the federal district court was improper because this court lacks subject-matter jurisdiction over the allegations comprising the Complaint. Furthermore, Nill asserts that removal by Essex was so blatantly improper that the court should order Essex to pay Nill's just costs and actual expenses including attorney fees he has incurred in seeking a remand of this case to state court.
Essex removed the cause of action to this court on November 23, 1993. In Essex's Amended Brief in Response to Plaintiff's Motion to Remand, Essex asserts that removal was proper under a fair reading of Nill's Complaint where the Complaint did not ever use the phrase "malicious prosecution." Essex argues that a fair reading of the Complaint allows one to conclude that the provisions of ERISA would necessarily have to be interpreted in order to defend the lawsuit, and thus, the complete preemption doctrine and the court's federal question jurisdiction would be invoked. Essex maintains that the Complaint alleges improper administration of an ERISA pension plan by Essex, and thus, ERISA's preemptive provisions and the complete preemptive doctrine would allow for removal.
Essex removed the state cause of action to this court pursuant to 28 U.S.C. § 1441.1 Essex relies upon the provisions found in 29 U.S.C. § 1132(a)(2) & (e)(1), 29 U.S.C. § 1109 and 29 U.S.C. § 1144(a) to confer exclusive jurisdiction upon this court of Nill's state cause of action. The crux of Essex's argument is that although Nill has brought his claim for damages in the form of a state malicious prosecution claim, Nill is actually pursuing an ERISA claim for breach of fiduciary duty. Essex relies upon the complete preemption doctrine and ERISA's preemption statute, 29 U.S.C. § 1144,2 for the proposition that federal law has preempted Nill's state malicious prosecution claim as that state claim relates to a claim for breach of fiduciary duty under section 1109 of ERISA, and therefore, can be recharacterized as a federal claim under ERISA.
29 U.S.C. § 1109 is the ERISA section that makes fiduciaries who administer pension plans liable to the pension plan for any breaches of fiduciary duty.3 An action for breach of fiduciary duty is cognizable under the civil enforcement section of ERISA found at 29 U.S.C. § 1132. Subsection (a)(2) recognizes the right of the Secretary, a participant, beneficiary or fiduciary to seek appropriate relief under section 1109.4 Subsection (e)(1) makes explicit that such an action under sections 1109 and 1132(a)(2) are within the exclusive jurisdiction of the United States district courts.5
A Complaint alleging malicious prosecution states a cause of action under the common law of Indiana. See, Willsey v. Peoples Sav. & Loan, 529 N.E.2d 1199 (Ind.App. 1988). There are four elements to a malicious prosecution charge under Indiana law:
Id. at 1205. Furthermore, the gist of an action for malicious prosecution is that the plaintiff has been improperly made the subject of legal process to his damage. Jenner v. Carson, 111 Ind. 522, 13 N.E. 44 (1887).
The court is not convinced that a state claim of malicious prosecution presents a federal question that would confer subject-matter...
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