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Iron Workers Mid-America Pension Plan v. Nevers

November 10, 2005

IRON WORKERS MID-AMERICA PENSION PLAN, ET AL., PLAINTIFFS,
v.
PAULA NEVERS AND RICHARD OSTERTAG JR., DEFENDANTS.
PAULA NEVERS, CROSS-PLAINTIFF,
v.
RICHARD OSTERTAG, JR. AND DEBORAH HESEK-OSTERTAG, INDIVIDUALLY AND AS MOTHER AND NEXT FRIEND OF RICHARD R. OSTERTAG, JR., A MINOR, CROSS-DEFENDANTS.



The opinion of the court was delivered by: Charles P. Kocoras, Chief District Judge

MEMORANDUM OPINION

This matter comes before the court on the motion of Defendant Paula Nevers to dismiss the amended cross-complaint of Defendants Richard Ostertag, Jr. ("Richard Jr."), and Deborah Hesek-Ostertag ("Deborah"). For the reasons set forth below, the motion is denied.

BACKGROUND

This is an impleader action, filed by Plaintiffs Iron Workers' Mid-America Pension Plan ("the plan"), Iron Workers' Mid-America Supplemental Monthly Annuity Fund ("the fund"), and Joseph Burke, to determine the proper recipient of a pension benefit arising after the death of Richard Ostertag, Sr. ("Richard Sr.").

According to the allegations of the cross-complaint, which we must accept as true for purposes of this motion, and documents attached to the main complaint, Richard Sr. was a participant in both the plan and the fund. The documents pertaining to the plan and the fund specify to whom benefits from each are to be paid; one option is to allow a participant to specify a beneficiary using a particular form.

Richard Sr. was formerly married to Deborah; Richard Jr. is their 15-year-old son. Deborah and Richard Sr. divorced in 1997. As part of the dissolution of marriage, Richard Sr. agreed to maintain life insurance with Richard Jr. named as an irrevocable beneficiary of the policy until he reached a specified age. In February 1999, Richard Sr. executed a beneficiary designation form for his benefits under the plan and the fund naming Richard Jr. as his beneficiary.

On March 24, 2005, Richard Sr. executed a new form naming Nevers, his then live-in girlfriend, as beneficiary of his death benefits under the plan and the fund. He died intestate four days later. Both Nevers and Deborah (on behalf of Richard Jr.) made demands for Richard Sr.'s death benefits under the fund and the plan, leading to the interpleader action. Deborah based her claims not on a contention that the March 24 form did not exist, but that it had no legal effect to remove Richard Jr. as a beneficiary. Nevers and Deborah then each filed cross-claims against each other pursuant to Fed. R. Civ. Proc. 13(g), asserting that the respective party is the proper recipient of the funds at issue. Nevers now moves to dismiss Deborah's cross-claim pursuant to Fed. R. Civ. P. 12(b)(6) on the grounds that it does not state a claim for relief. Alternatively, Nevers attacks an allegation within Deborah's complaint that Richard Sr. was incompetent when he executed the change of beneficiary form. According to Nevers, Deborah has neither evidentiary support for this allegation nor a likelihood that she would discover evidentiary support for it. As a corollary to the latter point, she asks that the paragraph pertaining to Richard Sr.'s alleged incompetence be stricken from the complaint.

LEGAL STANDARD

A Rule 12(b)(6) motion to dismiss is used to test the legal sufficiency of a complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In ruling on a motion to dismiss, a court must draw all reasonable inferences in favor of the plaintiff, construe allegations of a complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Bontkowski v. First Natl. Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). The allegations of a complaint "should not be dismissed for failure to state a claim unless it appears beyond 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 (1957). Nonetheless, in order to withstand a motion to dismiss, a complaint must allege the "operative facts" upon which each claim is based. Kyle v. Morton High Sch., 144 F.3d 448, 454-55 (7th Cir. 1998). The plaintiff need not allege all of facts involved in the claim and can plead conclusions. Higgs v. Carter, 286 F.3d 437, 439 (7th Cir. 2002); Kyle, 144 F.3d at 455. However, any conclusions pled must "provide the defendant with at least minimal notice of the claim." Id. Further, the plaintiff cannot satisfy federal pleading requirements merely "by attaching bare legal conclusions to narrated facts which fail to outline the basis" of the claim. Perkins, 939 F.2d at 466-67. With these principles in mind, we turn to the motion at hand.

DISCUSSION

Employee welfare benefit plans and employee pension benefit plans are governed by the Employee Retirement Income Security Act ("ERISA"). 29 U.S.C. § 1001 et seq. The statute defines the latter as a "plan, fund, or program which . . .

(i) provides retirement income to employees, or (ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond."

29 U.S.C. § 1002(2)(A). In contrast, the former term encompasses plans, funds, or programs that provide benefits to employees or their beneficiaries, inter alia, "in the event of sickness, accident, disability, death or unemployment" through means including the purchase of insurance, excluding pensions on retirement or death and insurance to provide the same. 29 U.S.C. § 1002(1). The complaint for interpleader, which Richard Jr. incorporates by reference into his cross-claim, alleges that the plans at issue in this case were employee pension benefit plans, rather than employee welfare benefit plans.

The cross-claim advances several theories as to why Richard Jr. is entitled to recover Richard Sr.'s benefits. The first contends that Richard Sr. had a fiduciary relationship to Richard Jr. directly and through his mother indirectly to provide financial support for Richard Jr. According to Richard Jr., the money at issue should be placed in a constructive trust for his benefit to fulfill Richard Sr.'s fiduciary responsibility. This theory suffers from a fundamental flaw; it relies upon principles of state law to determine the identity of a beneficiary and attempts to mandate distribution to a person other than that designated under the terms of the plan. ...


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