The opinion of the court was delivered by: Mihm, District Judge.
This case is before the Court for resolution of Defendant
Charles Longanecker II's Motions for Partial Summary Judgment,
Defendant Massachusetts Mutual Life Insurance Company's Motion
for Judgment on the Pleadings, and Third Party Defendants'
Motion for Summary Judgment on the Third Party Complaint.
As described below, the Court GRANTS Defendant Longanecker's
Motion for Partial Summary Judgment, GRANTS Defendant
Massachusetts Mutual's Motion for Judgment on the Pleadings
insofar as it relates to Plaintiff Coleman Clinic and DENIES
the Motion insofar as it relates to Plaintiffs Coleman Clinic,
Ltd. Employee Pension Plan and Jack L. Gibbs, M.D.
Massachusetts Mutual's Motion is also DENIED with respect to
Counts II and III. Finally, the Court sua sponte DISMISSES the
Third Party Complaint for lack of jurisdiction, so that Third
Party Defendants' Motion for Summary Judgment is MOOT.
Plaintiff, Coleman Clinic, Ltd. (hereinafter referred to as
"Coleman") is a medical clinic with its principal offices
located in Canton, Illinois; Plaintiff Coleman Clinic, Ltd.
Employee Pension Plan (hereinafter referred to as "the plan")
is a defined benefit pension plan maintained by Coleman for the
benefit of its employees, and Plaintiff Jack L. Gibbs, M.D. was
a trustee of the plan. The purpose of the plan is to provide
retirement and life insurance benefits for Coleman employees,
principally through yearly contributions by Coleman to the
plan. Count I of Plaintiffs' Complaint is brought pursuant to
the Employee Retirement Income Security Act of 1974 (ERISA),
§ 502(a)(2), 29 U.S.C. § 1132(a)(2) and under ERISA §
502(a)(3), 29 U.S.C. § 1132(a)(3). Counts II and III of
Plaintiffs' Complaint are pendent state law claims.
In 1979, Coleman was approached by Defendant Massachusetts
Mutual Life Insurance Company (hereinafter referred to as "Mass.
Mutual") regarding the possibility of Coleman placing its
existing pension plan with a pension plan sponsored, prepared,
and serviced by Mass. Mutual. Upon review of the information
provided to it by Mass. Mutual, Coleman agreed to revise its
existing pension plan into a Mass. Mutual plan. The new plan was
designated the Coleman Clinic, Ltd. Employee Pension Plan.
On August 15, 1984, Coleman's board of directors voted to
terminate the plan. It was Coleman's goal to terminate the plan
before the plan was required to accrue benefits for the July 1,
1984 to June 30, 1985 plan year (hereinafter referred to as
"1985 plan year"). In order to do so, that termination had to
occur before participants in the plan performed 1,000 hours of
work for Coleman during that period. Shortly after the vote,
Coleman advised Judith Dudiak, an agent of Mass. Mutual, that
the plan had to be terminated. Coleman requested that a Mass.
Mutual agent provide it with the necessary information and
paperwork to terminate the plan. However, Coleman was not
provided with the information and paperwork to terminate the
plan until April of 1985. By that time, plan participants were
entitled to be credited with 1,000 hours of service, so that
the plan was required to accrue benefits for the 1985 plan
According to Plaintiffs, had the plan been terminated
effective June 30, 1984, the costs of all benefits under the
plan would have totaled approximately $462,562, but because
Defendants did not provide the necessary paperwork to terminate
the plan until April 1985, the plan was terminated effective
April 25, 1985, so that the cost of all benefits under the plan
totaled approximately $555,876. It is also alleged by
Plaintiffs that, on March 5, 1985, the plan surrendered the
individual cash value life insurance policies that it had
purchased to Mass. Mutual in exchange for the payment of
$118,760.46 by Mass. Mutual to the plan. Plaintiffs claim that
the amounts paid to the plan by Mass. Mutual upon surrender of
the policies were substantially less than the amounts paid by
the plan as premiums on the policies, plus interest, less the
reasonable value of life insurance protection provided by the
MASS MUTUAL'S MOTION FOR JUDGMENT ON THE PLEADINGS
In its Motion for Judgment on the Pleadings, Defendant Mass.
Mutual argues that Count I should be dismissed in its entirety
for the reasons that: (1) the employer, Coleman, has no
standing to sue under ERISA; (2) the plan has no standing to
sue under ERISA; and (3) neither Plaintiff Gibbs nor the plan
have alleged injury in fact under ERISA. Furthermore, because
dismissal of Count I deprives this Court of federal subject
matter jurisdiction, Mass. Mutual argues that the common law
claims in Counts II and III should be dismissed as well.
According to Mass. Mutual, even assuming that Coleman retained
the right to amend certain aspects of the plan, to appoint
trustees and the plan administrator, and to terminate the plan,
Coleman nevertheless lacks standing to sue in the instant case.
The basis of Mass. Mutual's argument is that there must be a
nexus between an employer's fiduciary responsibility and the
particular cause of action in order to grant standing to an
employer to sue in an ERISA case. In other words, the approach
is a functional one: by the express terms of
29 U.S.C. § 1002(21)(A), a person is a fiduciary only to the extent that he
or she is exercising discretion in the management or
administration of a plan or its assets, or in the rendering of
investment advice. An employer's status as a fiduciary does not
confer standing generally, but only to the extent that the
employer is acting in a particular fiduciary capacity. Cf.
Schulist v. Blue Cross of Iowa, 717 F.2d 1127, 1131 (7th Cir.
1983) ("Congress took a functional approach to defining who was
to be treated as a fiduciary").