Nordman v. Tadjer-Cohen-Edelson Assocs.

• Decision Date: 21 September 2022
• Docket Number: Civil Action DKC 21-1818
• Parties: YEHUDA NORDMAN v. TADJER-COHEN-EDELSON ASSOCIATES, INC., et al.
• Court: U.S. District Court — District of Maryland

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YEHUDA NORDMAN v. TADJER-COHEN-EDELSON ASSOCIATES, INC., et al.

Civil Action No. DKC 21-1818

United States District Court, D. Maryland

September 21, 2022

MEMORANDUM OPINION

DEBORAH K. CHASANOW, UNITED STATES DISTRICT JUDGE

Presently pending and ready for resolution in this case brought pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., are (1) the motion to dismiss Plaintiff's Second Amended Complaint for lack of jurisdiction filed by Zivan Cohen (ECF No. 33); (2) the motion to dismiss the Second Amended Complaint filed by Tadjer-Cohen-Edelson Associates, Inc 401(k) Profit Sharing Plan, Tadjer-Cohen-Edelson Associates Inc. Employee Stock Ownership Plan, Soomaz Abooali, Sanjay Khanna, Mahmoud R. Tabassi, Tadjer-Cohen-Edelson Associates Inc., and Alireza Tahbaz (ECF No. 34)(“TCE Defendants”); (3) Plaintiff's Motions for Leave to File a Surresponse (ECF Nos. 44 and 45); and (4) Plaintiff's Motion for an Extension of Time to file the motions for leave to file surresponse (ECF No. 47). The issues have been briefed and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motion to dismiss filed by the TCE Defendants will be granted in part and denied in part, the motion to dismiss filed by Mr. Cohen will be granted, and the motions relating to the filing of surreplies will be denied.

I. Background

In the Second Amended Complaint, Plaintiff Yehuda Nordman, a former employee of Tadjer-Cohen-Edelson Associates, Inc. (“TCE”), alleges that he is a participant in all the TCE Pension Plans, including the TCE 401(k) Profit Sharing Plan (“PS”), the TCE Money Purchase Plan (“MP”), and the TCE Employee Stock Ownership Plan (“ESOP”). He complains that Defendants concluded, erroneously, that he is not a participant in the MP and PS Plans and have refused to distribute benefits to him. He also questions the values of his accounts in those Plans. While Defendants acknowledge that he is a participant in the ESOP, Plaintiff questions the values of his accounts. He also claims that Defendants made errors in the administration of the Plans, breached their fiduciary duties, and violated ERISA. He seeks corrections in his accounts, damages, his proportionate share of payments that he should have received, penalties, attorneys' fees and costs, and other equitable relief.

As noted above, all Defendants move to dismiss all of Plaintiff's claims.

II. Factual Allegations

As alleged in the Second Amended Complaint, Plaintiff was employed by TCE from November 1988 until January 2019. TCE is the plan sponsor of two pension plans. The MP Plan is an employer-funded account whose assets were invested by the Trustees in a pooled account. During 2014-2015, the MP Plan was merged into the PS Plan. The PS Plan consists of two separate accounts: the salary deferral (employee contribution)- 401(k) part and the profit sharing (employer funded) part of the plan. The ESOP also consisted of two separate accounts: the employer securities part, invested in shares of TCE stock, and the Other Investment Account, invested in other assets. It is administered by its Trustees and its Administrator.

Zivan Cohen is alleged to have been a fiduciary to the pension plans because he exercised discretionary control respecting management until December 31, 2017. The complaint alleges, upon information and belief, that he continued working at TCE for at least two years after December 31, 2017, and that he sold approximately 58% of the shares of TCE to the ESOP on May 24, 2000 and May 20, 2004. Mahmood Tabassi, Alireza Tahbaz, Sanjay Khanna, and Soolmaz Abooali are each alleged to be a fiduciary of the plans. Mr. Tabassi allegedly exercises discretionary control respecting management, is a “Managing Partner,” and is a Trustee. Mr. Tahbaz is currently vice-president of TCE and a Trustee. Mr. Khanna is currently a Trustee of the Plans. Ms. Abooali is currently president of TCE.

Plaintiff alleges that, when hired by TCE in 1988, he initially elected not to participate in the MP and PS Plans. In June 1990, after negotiating with Mr. Cohen for a reduced salary, he changed the election and began participating in the MP Plan. He received annual Benefit Statements from the MP plan through May 31, 2014, and after the MP plan merged into the PS plan, he received annual statements for the combined plans through May 31, 2018. He became a participant in the PS plan during 1993-1994, including the salary deferral 401(k) part of the plan. He received his first benefit statement on May 31, 1994, and annually thereafter through May 31, 2018. He became a participant in the ESOP on June 1, 1999 (its effective date), and received annual statements through May 31, 2021. He claims to have, or previously had, five accounts in the TCE Pension Plans. He alleges that, on April 17, 2019, counsel for TCE wrote to his counsel advising that, because of the 1988 waivers, he will not be receiving any further amounts from the 401(k) plan. Further factual allegations from the Second Amended Complaint will be included below when relevant.

III. Standard of Review

A 12(b)(6) motion tests the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4^th Cir. 2006). “[T]he district court must accept as true all well-pleaded allegations and draw all reasonable factual inferences in plaintiff's favor.” Mays v. Sprinkle, 992 F.3d 295, 299 (4^th Cir. 2021). A plaintiff's complaint need only satisfy the standard of Fed.R.Civ.P. 8(a)(2), which requires a “short and plain statement of the claim showing that the pleader is entitled to relief[.]” A Rule 8(a)(2) “showing” still requires more than “a blanket assertion[] of entitlement to relief,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007), or “a formulaic recitation of the elements of a cause of action[.]” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that defendant is liable for the misconduct alleged.” Mays, 992 F.3d at 299-300 (quoting Iqbal, 556 U.S. at 663).

IV. Discussion/Analysis

Defendants contend that Plaintiff lacks standing, the claims are time barred, and the second amended complaint fails to state cognizable claims under ERISA. Zivan Cohen, in addition to joining the arguments made by the other defendants, contends that he is not liable for any acts or decisions made after December 31, 2017, when he stopped working at TCE and ceased being a fiduciary.

The Second Amended Complaint is not a model of clarity, and Plaintiff expends little energy trying to support it. Although the ESOP is named as a defendant in the preliminary portion, no individual count or claim names it as a defendant, as pointed out by Defendants. Plaintiff does not respond to this contention. Inasmuch as there is no request for relief contained in the Second Amended Complaint against the ESOP, it will be dismissed as a defendant.

Two of Defendants' arguments are ill placed and/or ill timed because neither can be addressed fully on these motions to dismiss. Defendants argue that Plaintiff lacks standing because he was not denied benefits pursuant to claim procedures and has failed to exhaust plan remedies. They also assert that some claims are barred by the statute of limitations.

A. Exhaustion of Plan Remedies

Although “ERISA does not contain an explicit exhaustion provision,” “an ERISA claimant generally is required to exhaust the remedies provided by the employee benefit plan in which he participates as a prerequisite to an ERISA action for denial of benefits under 29 U.S.C. § 1132.” Makar v. Health Care Corp. of Mid-Atlantic (CareFirst), 872 F.2d 80, 82 (4^th Cir. 1989). Courts have imposed this requirement because it is consistent with the “Act's text and structure as well as the strong federal interest encouraging private resolution of ERISA disputes.” Id. The exhaustion requirement means that claimants must follow the Plan's internal procedures for a “full and fair review” of a plan administrator's denial of a claim for benefits. Id. at 83.

Wilson v. UnitedHealthcare Ins. Co., 27 F.4th 228, 241 (4^th Cir. 2022). The requirement is not, however, absolute:

We have previously recognized that a failure to exhaust may be excused when pursuing internal remedies would be “futile.” Id. More than “bare allegations of futility” must be demonstrated, however, as a claimant must come forward with a “clear and positive showing” to warrant “suspending the exhaustion requirement.” Id. (internal quotation marks omitted); see Hickey v. Digital Equip. Corp., 43 F.3d 941, 945 (4^th Cir. 1995) (rejecting an assertion of futility when claimant did not file a written claim and alleged, with no further foundation, that doing so would have been “a mere formality if not a charade”). Further, an administrator's failure to “provide a reasonable claims procedure” under ERISA “entitle[s] [beneficiaries] to pursue any available remedies” and thus to “be deemed to have exhausted the administrative remedies available under the [P]lan.” 29 C.F.R. § 2560-503-1(1)(1).

Id. The parties have engaged in a debate over the necessary administrative steps and/or their futility, but their differences cannot be adjudicated on a motion to dismiss based on the current record:

[F]ailure to exhaust administrative remedies under ERISA is an affirmative defense. See Crowell v. Shell Oil Co., 541 F.3d 295, 30809 & nn. 55-58 (5^th Cir. 2008) (collecting cases); Paese v. Hartford Life & Acc. Ins. Co., 449 F.3d 435, 443-46 (2d Cir. 2006). The purpose of a Rule 12(b)(6) motion is to test the sufficiency of the complaint, and rarely

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