Torsiello v. Strobeck

• Decision Date: 27 June 2013
• Docket Number: Civ. No. 2:12–3302 (KM).
• Citation: 955 F.Supp.2d 300
• Parties: Michael M. TORSIELLO, M.D., Plaintiff, v. John STROBECK, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

955 F.Supp.2d 300

Michael M. TORSIELLO, M.D., Plaintiff,

v.John STROBECK, et al., Defendants.

Civ. No. 2:12–3302 (KM).

United States District Court, D. New Jersey.

June 27, 2013.

Michael J. Torsiello, M.D., pro se.

Andrew Joseph Karcich, Joanne Eskin Sutkin, Lynch, Karcich & Yellin, Voorhees, NJ, for Defendants.

OPINION

KEVIN McNULTY, District Judge.

This dispute arises from a medical practice merger. The plaintiff, Michael M. Torsiello, M.D., folded his practice into that of Defendant Walk In Wound Medical Associates, P.C. (“WIW”), allegedly in exchange for a minority ownership stake and certain compensation and benefits. Torsiello alleges that he did not receive his end of the bargain. Instead, the Defendants allegedly breached their fiduciary duties, breached contracts, misused corporate assets, engaged in corporate waste, and committed other oppressive acts. They allegedly did this by, inter alia, stripping WIW of accounts receivable, cash, and money, transferring assets to entities or individuals controlled by certain Defendants, taking Torsiello's personal property, misrepresenting WIW's financial condition, refusing to sign an employment agreement, improperly billing Torsiello's work, not compensating Torsiello as required by the contract, and failing to fund a 401(k) plan.

The Defendants, having removed the complaint from state court, now move to dismiss it on two grounds. First, any state-law claims relating to Torsiello's alleged 401(k) plan are governed by the Employee Retirement Income Security Act, 29 U.S.C. § 1002 et seq. (“ERISA”), and therefore are preempted. Second, the claims are not sufficiently pleaded under Federal Rules of Civil Procedure 8(a) and 9(b). See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

I agree, and will dismiss the Complaint, subject to amendment. To the extent Torsiello's claims relate to a 401(k) plan, they are preempted by ERISA. His claims must also be dismissed because they are too destitute of detail to detail to meet federal pleading standards. Such dismissal will be without prejudice to the filing of an amended complaint, which may include claims that invoke, or are pleaded to make it clear that they are not preempted by, ERISA. Leave to amend is generally freely granted in any case; it is even more appropriate here, because Torsiello filed his complaint in state court, not knowing that it would be removed and subjected to federal pleading standards.

I. BACKGROUND¹

Torsiello had his own medical practice for 27 years. (Complaint ¶ 15, Ex. A to Notice of Removal [Docket No. 1–1] ). He decided to merge his practice with WIW in exchange for a 10% ownership interest in WIW, a salary of $360,000 plus benefits, contributions to a 401(k) plan, a bonus structure of 60% of net revenue after expenses and retained earnings, management company ownership, and an offer to purchase shares in the Hawthorne Surgery Center. ( Id.). WIW is operated and controlled by Defendant Strobeck, its Managing Member, who is also a physician. ( Id. ¶ 7).

The merger did not go as planned. The Defendants,² among other things, “stripp[ed] WIW [ ] of significant account receivables, cash and monetary assets, [took] control of plaintiff's personal property, improperly us [ed] and transferr[ed] those assets to other entities or individuals, which entities were either owned and/or controlled by defendants, mismanage[ed] the books and records of WIW [ ], misrepresent[ed] its assets and accounts receivables to plaintiff, misrepresent[ed] WIW['s] liabilities, expenses and profits, lur[ed] plaintiff into a fraudulent business scheme, [stole] confidential and proprietary information, [invaded Torsiello's] privacy, [refused] to sign an employment agreement, fail[ed] to conduct proper billing for work generated by plaintiff, fail[ed] to bill at all for some of plaintiffs work, depriv[ed] plaintiff of his distributive share of bonuses, profits and ownership interests in WIW [ ] and otherwise fail[ed] to honor plaintiffs employment agreement.” ( Id. ¶ 2).

Strobeck, Heart–Lung, and Juliano fired Torsiello once the business started generating significant profits, refused to return Torsiello's equipment and private proprietary information, did not pay Torsiello at various times, never established his 401(k) account, and refused to give Torsiello access to WIW's books and records. ( Id. ¶ 23). In addition, on March 12, 2012, WIW office manager Jane Levine directed an individual to break into one of Torsiello's lockers at WIW and photocopied private and confidential information, including marble notebooks and charts. ( Id. ¶¶ 64–66). Later the same day, at Levine's direction, an individual named Willie used bolt cutters to open Torsiello's other locker at WIW. ( Id. ¶ 67). Levine then copied the contents of this locker, included patient charts and envelopes. ( Id. ¶ 68).

On April 23, 2012, Torsiello filed the Complaint in the Superior Court of New Jersey, Law Division, Passaic County. The Complaint alleges that the conduct described above gives rise to causes of action for fraudulent inducement, a violation of the New Jersey Consumer Fraud Act, N.J. Stat. Ann. § 56:8–1 et seq. (the “CFA”), breach of oral contract, for relief pursuant to N.J. Stat. Ann. § 14A:12–7,³ breach of fiduciary duty, waste and diversion of corporate opportunities, conversion, unjust enrichment, intentional infliction of emotional distress, negligent infliction of emotional distress, theft of proprietary information and invasion of privacy, fraud, and misrepresentation. Torsiello is seeking to recover his bonuses, unpaid salary, 401(k) retirement plan, severance pay, unreimbursed expenses, and his share of profits, plus attorney's fees and costs. ( Id. ¶ 12, 14).

On June 1, 2012, the Defendants timely removed the case to this Court. Defendants allege that this Court has federal question jurisdiction over the claims relating to Torsiello's 401(k) plan ⁴ because any such claims are preempted by Sections 502(a)(1)(B) and 514 of ERISA. See28 U.S.C. § 1331. To the extent that ERISA does not govern the remaining claims, the Court may, under the proper circumstances, exercise supplemental jurisdiction. See28 U.S.C. § 1367. Venue is proper because this District is where the original state action was filed. See28 U.S.C. § 1446(a).

On June 22, 2012, the Defendants filed this Motion to Dismiss the complaint [Docket No. 4].

II. LEGAL STANDARDA. Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The moving party, ordinarily the defendant,bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005). For purposes of a motion to dismiss, the well-pleaded factual allegations of the complaint must be taken as true, with all reasonable inferences drawn in plaintiffs favor. Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008) (“reasonable inferences” principle not undermined by intervening Supreme Court case law).

The United States Supreme Court has elaborated on the standards that a court is to apply in analyzing a Rule 12(b)(6) motion to dismiss, particularly in light of the pleading requirements of Federal Rule of Civil Procedure 8(a)(2). Although a complaint need not contain detailed factual allegations, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.’ ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Thus the factual allegations must be sufficient to raise a plaintiffs right to relief above a speculative level, demonstrating that it is “plausible on its face.” See id. at 570, 127 S.Ct. 1955;see also Umland v. PLANCO Fin. Servs., Inc., 542 F.3d 59, 64 (3d Cir.2008). A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). While “[t]he plausibility standard is not akin to a ‘probability requirement’ ... it asks for more than a sheer possibility.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

The United States Court of Appeals for the Third Circuit has explicated the Twombly/Iqbal standard on several occasions. See, e.g., Argueta v. U.S. Immigration & Customs Enforcement, 643 F.3d 60, 70–73 (3d Cir.2011); Santiago v. Warminster Twp., 629 F.3d 121, 129–30 (3d Cir.2010); Fowler v. UPMC Shadyside, 578 F.3d 203, 209–211 (3d Cir.2009). The Court of Appeals recently summarized the three-step process for analyzing a Rule 12(b)(6) motion:

To determine whether a complaint meets the pleading standard, our analysis unfolds in three steps. First, we outline the elements a plaintiff must plead to a state a claim for relief. See [Iqbal, 556 U.S.] at 675, 129 S.Ct. 1937;Argueta, 643 F.3d at 73. Next, we peel away those allegations that are no more than conclusions and thus not entitled to the assumption of truth. See Iqbal, 556 U.S. at 679, 129 S.Ct. 1937;Argueta, 643 F.3d at 73. Finally, we look for well-pled factual allegations, assume their veracity, and then “determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937;Argueta, 643 F.3d at 73. This last step is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.

Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir.2012).

The Defendants assert that certain of the allegations of the Complaint sound in fraud and therefore must be pleaded with additional particularity. See Sections III.A, B, and...