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GALLAGHER CORP. v. MASSACHUSETTS MUT. LIFE INS. CO

August 8, 1996

GALLAGHER CORPORATION, an Illinois corporation, individually and in its capacity as sponsor of the Gallagher Corporation Employee Defined Benefit Pension Plan, Plaintiff,
v.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a corporation, Defendant.



The opinion of the court was delivered by: MORAN

 Plaintiff Gallagher Corporation (Gallagher) brought this seven-count lawsuit against defendant Massachusetts Mutual Life Insurance Co. (Mass Mutual) alleging in count I that defendant breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. §§ 1001 et seq. Counts II through VI deny Mass Mutual's status as a fiduciary and assert various state law claims based on theories of negligence (counts II and VI), negligent misrepresentation (counts III and V), and violations of the Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 2/505 et seq. (Consumer Fraud Act) (counts IV and VII). *fn1" In each count plaintiff seeks $ 800,000. Mass Mutual is before this court, pursuant to Federal Rule of Civil Procedure 12(b)(6), on a motion to dismiss counts II-VII. For the following reasons, defendant's motion is denied.

 BACKGROUND

 The allegations are straightforward. In 1978, Mass Mutual designed, established and sold to Gallagher a split-funded defined benefit pension plan (the Plan) for the benefit of Gallagher's employees in their retirement (Cplt. PP5, 6). The Plan is governed by ERISA (Cplt., count I, P6).

 In August 1993, Gallagher considered terminating the Plan pursuant to 29 U.S.C.A. § 1341, but was advised that it could not because of $ 800,000 in underfunded liabilities (Cplt., count V, PP11-13). Gallagher filed a seven-count complaint alleging that Mass Mutual breached its fiduciary duty imposed by ERISA, 29 U.S.C.A. § 1104 (Cplt., count I, P12). In the alternative, Gallagher alleged that Mass Mutual was negligent or committed professional malpractice (counts II and VI). Plaintiff also asserted negligent misrepresentations (counts III and V) and violations of the Illinois Consumer Fraud Act (counts IV and VII). *fn2"

 Mass Mutual originally moved to dismiss all seven counts. On February 1, 1996, Judge Shadur, in a minute order, denied defendant's motion to dismiss count I. He also denied its motion to dismiss counts III and V insofar as he found the pleadings to sufficiently plead state law claims. Judge Shadur, however, left open the question of whether those claims (counts III and V), and the other state law claims (counts II, IV, VI, and VII), were preempted by ERISA. In this order we decide whether the pleadings in counts II, IV, VI, and VII state a claim upon which relief may be granted and, if so, whether the state law claims are nonetheless preempted by ERISA.

 DISCUSSION

 Since dismissal is a drastic measure, a complaint should be dismissed only if "it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Gorski v. Troy, 929 F.2d 1183, 1186 (7th Cir. 1991) (quoting Conley). For purposes of the Rule 12(b)(6) motion, all well pled factual allegations are taken as true, Cruz v. Beto, 405 U.S. 319, 322, 31 L. Ed. 2d 263, 92 S. Ct. 1079 (1972); Gomez v. Toledo, 446 U.S. 635, 637 n.3, 64 L. Ed. 2d 572, 100 S. Ct. 1920 (1980), and all reasonable inferences are drawn and viewed in a light most favorable to the plaintiffs, H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989); Gomez v. Illinois State Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir. 1987). Moreover, plaintiff is entitled to "state as many separate claims...as the party has regardless of consistency...." Fed.R.Civ.Pro. 8(e)(2).

 A. Sufficiency of the Pleadings

 1. Counts II and VI -- Negligence or Professional Malpractice

 Mass Mutual first argues that Gallagher's negligence claim is barred by the Illinois economic loss doctrine. See Moorman Mfg. Co. v. National Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443, 61 Ill. Dec. 746 (Ill. 1982). "In the absence of a decision by the highest state court, we should decide the matter in the way we divine that the highest state court would rule if the issue were squarely presented to it. Decisions of intermediate appellate state courts generally control unless there are persuasive indications that the highest state court would decide the issue differently." L.S. Heath & Son, Inc. v. AT & T Information Systems, Inc., 9 F.3d 561, 574 (7th Cir. 1993). The latest pronouncement from the Illinois Supreme Court on professional malpractice, Congregation of the Passion, Holy Cross Province v. Touche, Ross & Co., 159 Ill. 2d 137, 636 N.E.2d 503, 201 Ill. Dec. 71 (Ill.), cert. denied, U.S. , 130 L. Ed. 2d 312, 115 S. Ct. 358 (1994), guides our analysis.

 In Congregation, the state supreme court found that accountants, like attorneys, owe their clients extra contractual duties which are impossible to memorialize in contracts, and that therefore the economic loss doctrine would not bar tort recovery against them:

 
The evolution of the economic loss doctrine shows that the doctrine is applicable to the service industry only where the duty of the party performing the service is defined by the contract that he executes with his client. Where a duty arises outside of the contract, the economic loss doctrine does not prohibit recovery in tort for the negligent breach of that duty.
 
While a client contracts with an accountant regarding some general matters, an accountant must make his own decisions regarding many significant matters, and the final decision he makes is not necessarily contingent on the contract he executes with his client.... This knowledge and expertise cannot be memorialized in ...

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