Torres v. Bella Vista Hospital, Inc.
| Decision Date | 29 October 2007 |
| Docket Number | Civil No. 06-2158(JAG). |
| Citation | 523 F.Supp.2d 123 |
| Parties | Olga TORRES and Pedro Bonilla, Plaintiff(s) v. BELLA VISTA HOSPITAL, INC., et al., Defendant(s). |
| Court | U.S. District Court — District of Puerto Rico |
Luis Vivaldi-Oliver, Luis Vivaldi Oliver Law Office, Mayaguez, PR, Roberto Millan, Millan Law Office, San Juan, PR, for Plaintiffs.
Carlos Martinez-Texidor, Martinez-Texidor Fuster, Ponce, PR, Cristina S. Belaval-Burger, Alberto Rodriguez-Ramos, Fernando J. Valderrabano-Marina, Martinez Odell & Calabria, Juan A. Marques-Diaz, McConnell Valdes, Francisco J. Colon-Pagan, Colon, Colon & Martinez, Manuel A. Segarra-Vazquez, Manuel A. Segarra Vazquez Law Office, San Juan, PR, for Defendants.
Pending before the Court are: 1) Watson Wyatt & Company's ("Watson Wyatt") Motion to Dismiss (Docket No. 38), 2) Banco Popular de Puerto Rico's ("BPPR") Motion to Dismiss (Docket No. 34), 3) Pannell, Kerr & Foster's ("PKF") Motion to Dismiss (Docket No. 39), 4) Bella Vista Hospital, Inc's ("the Hospital") and Ruben Perez's (collectively "Defendants") Motion to Dismiss (Docket No. 45), and 5) Ruben Perez's Motion for Partial Summary Judgement (Docket No. 31). For the reasons set forth below, the Court DENIES in part and GRANTS in part the Motions.
The Hospital is a non-profit corporation organized under the laws of Puerto Rico and operated by the General Conference of the Seventh Day Adventist Church, a corporation authorized to do business in the Commonwealth of Puerto Rico. (Docket No. 78). The main purposes of the Hospital is to provide medical facilities to persons in need of such services, and to spread the gospel as is understood by the Seventh Day Adventist Church. . The Hospital is operated by the Union Adventista Puertorriqueña1, which reports to the Interamerican Division of the General Conference of the Seventh Day Adventist. (Docket No. 78).
According to the Hospital's by-laws, the Seventh Day Adventist Church delegates its responsibilities for running the Hospital to the Hospital's Board of Trustees. The Hospital's by-laws state that half of the members of the Board of Trustees must be members of the Seventh Day Adventist Church. Moreover, the Hospital's by-laws also provide that four (4) of the nineteen(19) members of the board of Trustees must be members of the Unión Adventista Puertorriqueña. (Docket No. 34, Exh. BB). Currently, the President and the Vice-President of the Finance Committee are officers of the Unión Adventista Puertorriqueña. (Docket No. 78). However, none of the members of the Hospital's Board of Trustees is appointed by the Church.
On January 1, 1982, the Hospital created an Employee Pension Benefit Plan known as the Bella Vista Hospital, Inc. Pension Plan ("the Plan"). The Plan was co-administered by the Union Adventista Puertorriquena and the Interamerican Division of the General Conference of the Seventh Day Adventist, who was designated as the administrator and named fiduciary of the Plan. (Docket No. 78).
A Retirement Committee was in charge of the general administration of the Plan and was responsible for carrying out its provisions. The members of the Retirement Committee were appointed by the Hospital's Board of Trustees and could be removed by the Board at any time. .
Even though the Plan had been subject to three different set of rules, (See Docket No. 1 ¶ 34), only the 1982 rules are on record before the Court. (See Docket No. 59, Exh. 2). Among other things, the 1982 rules established that at the time of the Plan's creation it was subject to ERISA and that the Hospital, acting through its Board of Trustees, could delegate the administration of the Plan to any person or entity. (Docket No. 59, Exh. 2).
On July 29, 1983, a deed of trust was executed, establishing the Bella Vista Hospital Pension Trust ("the Trust"). (Docket No. 34, Exh. B). The Trust named Banco de Ponce as trustee, but BPPR became the successor in interest as trustee. (Docket No. 34).
On January 24, 1996, the Internal Revenue Service ("IRS") issued a determination letter stating that the Hospital was "exempt from Federal income tax under section 501(a) of the Internal Revenue Service" ("IRS"). (Docket No. 34, Exh. C). In 1997, the Hospital filed a Form 5500 along with its federal income tax return, which had an attached notation entitled "Pension Plan" that stated: "The Plan is subject to the provisions of the Employee Retirement Income Act of 1974 (ERISA)." (Docket No. 40, Exh. 5, 6).
In 2000, following a request by the Hospital, the IRS issued a ruling, which stated that the Plan was "a Church Plan within the meaning of section 414(e) of the Code." Said ruling also stipulates that the "ruling is directed only to the taxpayer who requested it" and that "[s]ection 6110(k)(3) of the Code provides that it may not be used or cited by others as precedent." .
On August 14, 2003, the Plan was terminated and liquidated. (Docket No. 34, Exh. D). Two corporations whose service were instrumental in the termination and liquidation of the Plan were: Watson Wyatt and PKF.
Watson Wyatt was a corporate service provider to the Plan. Said company provided actuarial and consulting services regarding the establishment, administration, termination and liquidation of the Plan's benefits, the valuation of the Plan's assets and provided certain documents and rules for the Plan. (Docket Nos. 1, 38).
PKF is a certified accounting firm that acted as a service provider to the Plan and to the Hospital. The firm's services included accounting and financial consulting regarding the administration, operation and termination of the Plan.
Olga Torres and Pedro Bonilla ("Plaintiffs") were both employed by the Hospital and Participated in the Plan. (Docket No. 1). Plaintiff Bonilla became disabled in 1998 and plaintiff Torres became disabled in 1999. As a result of the termination and liquidation of the Plan, Plaintiffs did not receive the benefits they would have received under the Plan had it remained covered by ERISA. (Docket No. 59). On 2004, Plaintiffs filed a lawsuit in state court against, the Hospital, BPPR, the Antillian Union Conference of the Seventh Day Adventist, the Retirement Committee of the General Conference, the General Conference of Seventh Day Adventist, and the Plan, to recover lost benefits. (Docket 34, Exh. H).
On November 17, 2006, Plaintiffs filed a complaint in this Court against: 1) the Hospital, 2) BPPR, 3) The Antillian Union Conference of the Seven Day Adventist 4) the Retirement Committee of the General Conference of the Seventh-Day Adventist2 Interamerican Division, 5) the General Conference of Seventh Day Adventist, 6) Bella Vista Hospital Pension Plan and Trust, 7) the Adventist of the Seven Day Interamerican Division Retirement Plan, 8) Bella Vista Hospital, Inc. 401 K Plan and Trust, 9) Watson Wyatt, 10) PKF, 11) Miguel Ramos and the conjugal partnership between him and his spouse, and 12) Ruben Perez and the conjugal partnership between him and his spouse for declaratory relief; violations of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq. ("ERISA"); and Puerto Rico law claims for professional malpractice, misrepresentation, breach of contract, and tort. (Docket No. 1). The state court lawsuit was stayed pending resolution of this action. (See Docket Nos. 34, Exh. CC, 59)
On March 7, 2007, co-defendant Ruben Perez filed a Motion for Partial Summary Judgement. In said motion, Ruben Perez stated that in the complaint he is named as: the President of the Antillian Retirement Committee of the General Conference, the Treasurer of the Antillian Union Conference of the Seventh Day, representative of the Conference of the Seventh Day Adventist and Vice-President of Bella Vista Hospital, Inc. Ruben Perez conceded that he is the Vice-President of Bella Vista Hospital, Inc. but denied that he has any authority or representative capacity over the other organizations, which Plaintiffs allege he is part of. As such, Ruben Perez contends that all claims of liability against him that arise from the following organizations should be dismissed. (Docket No. 31). Plaintiffs did not oppose Ruben Perez's Motion for Partial Summary Judgement.
On March 12, 2007, BPPR filed a Motion to Dismiss under Fed. R.Civ.P.12(b)(1), alleging that this Court does not have subject matter jurisdiction over this action because Bella Vista Hospital, Inc. Pension Plan ("the Plan") is a church plan and therefore, is not covered by ERISA. Alternatively, BPPR argued that the Court should not exercise its discretion to entertain the action for declaratory relief. (Docket No. 34). Plaintiffs opposed BPPR Motion to Dismiss (Docket No. 59) and BPPR filed a reply to Plaintiffs' opposition (Docket No. 67).
Defendants Watson Wyatt, PKF, the Hospital, Ruben Perez each filed Motions to Dismiss in which they also contend that the Plan is not subject to ERISA because it is a church plan. (Docket Nos. 38, 39, 45). Plaintiffs opposed said Motions to Dismiss, (Docket Nos. 60, 64), and Defendants subsequently replied to Plaintiffs' opposition. (Docket Nos. 69, 72).
In its Motion to Dismiss, Watson Wyatt also moved pursuant to Rule 12(b)(6) to dismiss the causes of action for breach of fiduciary duties on the ground that it is not a plan fiduciary. Furthermore, Watson Wyatt contended that Plaintiffs' state tort causes of action should be dismissed as time barred on the grounds that this lawsuit was filed more than a year after the statute began to run. (Docket No. 38).
PKF, together with Watson Wyatt, also moved to dismiss Plaintiffs' state law tort causes of action as time barred. Moreover,...
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