IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
March 30, 2012
JOSEPHINE SWARTZ, PLAINTIFF
TEACHERS INSURANCE AND ANNUITY ASSOCIATION - COLLEGE RETIREMENT EQUITIES FUND, DOING BUSINESS AS TIAA-CREF, DEFENDANT
JOSEPHINE A. SWARTZ, PLAINTIFF
LEHIGH UNIVERSITY, DEFENDANT
The opinion of the court was delivered by: James Knoll Gardner United States District Judge
The matter before the court is the Motion to Dismiss filed by defendant Lehigh University on May 26, 2011. The motion has been fully briefed and is ripe for disposition. *fn1 Hence this Opinion.
For the reasons expressed below, I grant Lehigh University's motion and dismiss plaintiff's Amended Complaint. Specifically, I conclude that Count I of plaintiff's Amended Complaint, which asserts a non-fiduciary claim against Lehigh University under ERISA, 29 U.S.C. § 1132(a)(1)(B), is time barred by the four-year limitations period applicable to such claims.
Accordingly, I dismiss Count I of the Amended Complaint with prejudice. However, I dismiss the Amended Complaint without prejudice for plaintiff to file a Second Amended Complaint which sufficiently states the factual and legal grounds establishing a plausible fiduciary claim pursuant to ERISA against Lehigh University.
The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e). *fn2
VENUE Venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(1), and (c), and 29 U.S.C. § 1132(e)(2). *fn3
Plaintiff Josephine A. Swartz, a former administrator employed by defendant Lehigh University, initiated this litigation concerning her enrollment in an annuity program, which was administered by Teachers Insurance and Annuity Association-- College Retirement Equity Fund ("TIAA-CREF"). She filed separate actions against defendants Lehigh University and TIAA-CREF in the Court of Common Pleas of Northampton County, Pennsylvania. *fn4
On February 14, 2011, Lehigh removed the action against it to this federal court. On February 17, 2011, TIAA-CREF removed the action against it to this court.
Ms. Swartz filed her Amended Complaint against Lehigh on March 24, 2011. She filed her Amended Complaint against TIAACREF on April 13, 2011.
On April 26, 2012, I approved a Stipulation submitted by the parties and consolidated the above-captioned matters for all purposes including trial.
As noted above, on May 26, 2011, Lehigh filed its Motion to Dismiss, together with a Memorandum in Support of Motion to Dismiss. On August 31, 2011, Ms. Swartz filed her Answer to Motion to Dismiss, together with Plaintiff's Brief in Opposition to Defendant Lehigh University's Motion to Dismiss. On September 21, 2011, Lehigh filed its Reply Memorandum to Plaintiff's Opposition to Motion to Dismiss.
CLAIMS AGAINST LEHIGH UNIVERSITY
Plaintiff's Amended Complaint contains a single count, Count I, which alleges that Lehigh improperly denied Ms. Swartz the benefits of her TIAA-CREF plan by "arbitrarily, capriciously, and unilaterally terminating the TIAA-CREF plan and repurchasing the vested and non-vested portions". *fn5
Although Count I is alleges a "[v]violation of ERISA Pursuant to 29 U.S.C. § 1132(A)(1)(B)", plaintiff also asserts that Lehigh violated "ERISA, its supporting regulations, Federal common law of ERISA and Pennsylvania common law regulating employee benefit plans." *fn6 Based on the clarification provided in her Brief in Opposition, *fn7 it is clear that Count I of the Amended Complaint asserts an ERISA cause of action pursuant to 29 U.S.C. § 1132(A)(1)(B). *fn8
STANDARD OF REVIEW
A claim may be dismissed under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion requires the court to examine the sufficiency of the complaint. Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 102,
Generally, in ruling on a motion to dismiss, the court relies on the complaint, attached exhibits, and matters of public record, including other judicial proceedings. Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2008).
Except as provided in Federal Rule of Civil Procedure 9, a complaint is sufficient if it complies with Rule 8(a)(2), which requires "a short and plain statement of the claim showing that the pleader is entitled to relief."
Fed.R.Civ.P. 8(a)(2). Rule 8(a)(2) "[does] not require heightened fact pleading of specifics, but only enough facts to state a claim [for] relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. at 1974, 167 L.Ed.2d at 949. *fn9
This showing of facial plausibility then "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged," and that the plaintiff is entitled to relief. Fowler, 578 F.3d at 210 (quoting Iqbal, 556 U.S. at , 129 S.Ct. at 1949, 173 L.Ed.2d at 884).
As the Supreme Court explained in Iqbal, "[t]he plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that the defendant acted unlawfully." Iqbal, 556 U.S. at , 129 S.Ct. at 1949, 173 L.Ed.2d at 884.
In determining whether a plaintiff's complaint is sufficient, the court must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading, the plaintiff may be entitled to relief." Fowler, 578 F.3d at 210 (quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).
Although "conclusory or 'bare-bones' allegations will [not] survive a motion to dismiss," Fowler, 578 F.3d at 210, "a complaint may not be dismissed merely because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits." Phillips, 515 F.3d at 231. Nonetheless, to survive a 12(b)(6) motion, the complaint must provide "enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s]." Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. at 1965, 167 L.Ed.2d at 940) (internal quotation omitted).
The court is required to conduct a two-part analysis when considering a Rule 12(b)(6) motion. First, the factual matters averred in the complaint, and any attached exhibits, should be separated from legal conclusions asserted therein. Fowler, 578 F.3d at 210. Any facts pled must be taken as true, and any legal conclusions asserted may be disregarded. Id. at 210-211.
Second, the court must determine whether those factual matters averred are sufficient to show that the plaintiff has a "plausible claim for relief." Id. at 211 (quoting Iqbal, 556 U.S. at __, 129 S.Ct. at 1950, 178 L.Ed.2d at 884).
Ultimately, this two-part analysis is "context-specific" and requires the court to draw on "its judicial experience and common sense" to determine if the facts pled in the complaint have "nudged [plaintiff's] claims" over the line from "[merely] conceivable [or possible] to plausible." Iqbal, 556 U.S. at __, 129 S.Ct. at 1950-1951, 178 L.Ed.2d at 884-885 (internal quotations omitted).
A well-pleaded complaint may not be dismissed simply because "it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely." Twombly, 550 U.S. at 556, 127 S.Ct. at 1965, 167 L.Ed.2d at 940-941.
Based on the averments in plaintiff's Amended Complaint, as well as the exhibits attached to the Amended Complaint, which I must accept as true for purposes of this Opinion under the applicable standard of review discussed above, the pertinent facts are as follows.
Josephine A. Swartz is an adult individual residing in Saylorsburg, Monroe County, Pennsylvania.
Lehigh University ("Lehigh") is an educational institution located in Bethlehem, Northampton County, Pennsylvania.
From October 1973 through August 1978, Ms. Swartz was employed full-time by Lehigh, at different times holding the positions of Research Associate in the Office of the Vice President for Research, Database and Budget Coordinator for the Office of the Vice President for Administration, and Assistant Director of Financial Aid. *fn10 During her employment, on January 16, 1976, Ms. Swartz enrolled in an annuity program administered by TIAA-CREF. *fn11 The Amended Complaint refers to the annuity program as the "TIAA-CREF plan" and I will refer to it as such in this Opinion.
Lehigh made all of the contributions which were made to Ms. Swartz's TIAA-CREF plan between her January 1976 enrollment in the TIAA-CREF plan and the conclusion of her employment with Lehigh at the end of August 1978. *fn12
In July 1980, after Ms. Swartz's employment with Lehigh had come to an end, Lehigh submitted a "Request for Repurchase" to TIAA-CREF. *fn13 Lehigh sought to repurchase the contributions it had made to Ms. Swartz's TIAA-CREF plan from February 1, 1976 through June 1, 1976 -- Ms. Swartz's tenure as a full-time, non-exempt employee. The contributions made by Lehigh to Ms. Swartz's TIAA-CREF plan from February 1, 1976 through June 1, 1976 would not vest until 1983 *fn14
Ms. Swartz's TIAA-CREF plan was "full[y] repurchas[ed]" in the
amount of $3,590.09 in July or August 1980. *fn15
The Warrant CREF, which Ms. Swartz attached as Exhibit D
to her Amended Complaint, clearly identifies both Lehigh and Ms.
Swartz as payees. *fn16 Plaintiff avers,
alternatively, that either (1) Lehigh was paid the full $3,590.09
balance of Ms. Swartz's plan, or
(2) Lehigh was paid the $811.21 non-vested portion of
Ms. Swartz's plan which represented the contributions made by
Lehigh when Ms. Swartz was a non-exempt employee. *fn17
Lehigh never paid any portion of any funds it received from the
repurchase of Ms. Swartz's TIAA-CREF plan to Ms. Swartz. She never
authorized Lehigh to terminate or repurchase any portion of her
TIAA-CREF plan. Ms. Swartz never relinquished or forfeited her right
to the vested portion of her TIAA-CREF plan. *fn18
Rather, Ms. Swartz intended to leave her vested interest
in her TIAA-CREF plan alone to grow until she retired.
While it is not one of the alternative averments put forth by Ms. Swartz in the body of the Amended Complaint, Exhibit E to the Amended Complaint is a letter from Chip Davis, Individual Consultant with TIAA-CREF to Ms. Swartz dated February 14, 2006 which states that "[her] RA contract # A7292228/729225 through Lehigh University was distributed to [her] as a lump sum on July 1, 1980 in the amount of $3,590.09."
Both Exhibit E to the Amended Complaint and paragraph 24 of the Amended Complaint assert that the repurchase payment in the amount of $3,590.09 occurred on or about July 1, 1980. However, the Request for Repayment itself -- which is offered as the impetus for the repurchase -- was dated on or after July 10, 1980. (Compare Amended Complaint at ¶ 24 and Exhibits D and E, with Exhibit C.)
In February 2006, as Ms. Swartz neared retirement age, she contacted TIAA-CREF and requested an accounting of her TIAACREF plan. *fn20 In response to her inquiry, Ms. Swartz received a letter from TIAA-CREF stating that "[her] RA contract # A7292228/729225 through Lehigh University was distributed to [her] as a lump sum on July 1, 1980 in the amount of $3,590.09." *fn21
After receiving the letter from TIAA-CREF, Ms. Swartz searched her records in an effort to locate any document referencing a distribution from her TIAA-CREF plan. She found none.
On January 8, 2010, nearly four years after receiving the letter from TIAA-CREF stating that her TIAA-CREF plan had been paid out to her in a lump sum of $3,590.09 in 1980, Ms. Swartz contacted TIAA-CREF by telephone to obtain documentation from TIAA-CREF relating to her plan. In response to this second inquiry, TIAA-CREF sent a letter to Ms. Swartz dated January 14, 2010 informing her that TIAA-CREF's February 14, 2006 letter was factually inaccurate and that its records indicated that "TIAA processed and mailed a check to both you and your employer." *fn22
On June 18, 2010 Ms. Swartz initiated litigation against Lehigh by filing a Praecipe for Writ of Summons in the Court of Common Pleas of Northampton County, Pennsylvania. A Writ of Summons was issued that same day. On June 23, 2010, a Northampton County sheriff served the Writ of Summons on Lehigh.
Ms. Swartz then sought information regarding her TIAACREF plan from Lehigh. Lehigh informed Ms. Swartz that it did not possess any records relating to her TIAA-CREF plan, or any financial records indicating its receipt of any checks from TIAACREF relating to Ms. Swartz's TIAA-CREF plan. Specifically, Ms. Swartz, through her counsel, Raymond J. DeRaymond, Esquire, received two letters from Heather K. Hosfeld, Lehigh's Assistant General Counsel. *fn23
The first letter, dated July 27, 2010 asserts that "it is clear that Ms. Swartz forfeited the University contributions to her CREF Retirement Unit-Annuity Certificate when she left Lehigh University in 1979." Attorney Hosfeld reasoned that Ms. Swartz's employment ended on June 1, 1979, which is several years prior to her 1983 Vesting Date. As a result, the University re-purchased the contract and certificate as Ms. Swartz had no right to such contract and certificate in accordance with the plan. *fn24
In the second letter, dated October 15, 2010, which was sent in response to a subpoena served upon Lehigh by Ms. Swartz after Ms. Swartz initiated this litigation in the Court of Common Pleas of Northampton County, Pennsylvania, Attorney Hosfeld stated:
As I continue to decipher the documentation that was given to you by TIAA-CREF, I wanted to point out that the document with a large "W" in the right hand corner *fn25 indicates that a full repurchase of Ms. Swartz's account was made on July 1, 1980. The document also indicates that there were two payees: Lehigh University and Ms. Swartz, although I can't determine the amount of each payment. My theory is that Lehigh was paid for the amount of funds contributed to the non-exempt plan, as Ms. Swartz did not meet the 10-year cliff vesting requirement. I also believe that Ms. Swartz may have been paid for the balance of the exempt plan, since it was a small enough amount that TIAA-CREF may not have wanted to carry it until Ms. Swartz attained retirement age. Has Ms. Swartz looked back at her own records, specifically her tax return for 1980 and the corresponding W-2 to determine whether she received a retirement payment from TIAA-CREF that year? *fn26
Ms. Swartz avers that these communications from TIAACREF and Lehigh were misrepresentations and inconsistent positions made and taken "with the intent to conceal from Plaintiff th improper and unauthorized distribution of the vested funds to Lehigh University." *fn27
Ms. Swarts further avers that the vested funds would now have become payable to plaintiff but for the allegedly unauthorized and improper distribution by TIAA-CREF to Lehigh. Ms. Swartz avers that the vested funds would have been worth $83,305.48 as of December 1, 2010. On January 25, 2011, Ms. Swartz filed her Complaint against Lehigh in the Court of Common Pleas of Northampton County, Pennsylvania.
Four-Year Limitations Period Lehigh contends that Ms.
Swartz's Amended Complaint should be dismissed because Ms. Swartz
filed her claim under
29 U.S.C. § 1132(a)(1)(B) more than four years after she was
informed by TIAA-CREF that the funds from her TIAA-CREF plan were
distributed to her in a lump sum sometime in 1980. *fn28
Lehigh contends that plaintiff's claim under §
1132(a)(1)(B) is governed by the four-year limitation period
applicable to breach of contract actions under Pennsylvania law.
Plaintiff contends that her claim under § 1132(a)(1)(B) is timely. Ms. Swartz contends that she "had six years from February 16, 2006 to pursue this non-fiduciary claim and did so by filing her claim in November 2010." *fn30
Count I of the Amended Complaint asserts a claim pursuant to 29 U.S.C. § 1132(a)(1)(B), which allows a plan participant or beneficiary "to recover benefits due to [her] under the terms of the plan, to enforce [her] rights under the terms of the plan, or to clarify [her] rights to future benefits under the terms of the plan." Hahneman University Hospital v. All Shore, Inc., 514 F.3d 300, 305 (3d Cir. 2008)(quoting 29 U.S.C. § 1132(a)(1)(B)).
ERISA does not specify a limitations period for claims asserted under § 1132(a)(1)(B). Id. Where Congress omits a limitations period for a federal cause of action, courts "'borrow' the local time limitation most analogous to the case a hand." Id. (quoting Gluck v. Unisys Corporation, 960 F.2d 1168, 1179 (3d Cir. 1992). *fn31
The most analogous cause of action to an ERISA claim for benefits under § 1132(a)(1)(B) is an action for breach of contract. In Pennsylvania, breach of contract claims are governed by a four-year limitations period. Id. at 305-306 (citing 42 Pa.C.S.A. § 5525(a)(8)). *fn32 Because Ms. Swartz asserts her claim against Lehigh pursuant to § 1132(a)(1)(B), her claim is subject to a limitations period of four years. See id.
"Clear Repudiation" Rule Federal law governs the accrual date of a federal cause of action regardless of the source of the limitations period. Miller, 475 F.3d at 520. Specifically, the federal "discovery rule" governs the accrual of a federal claim where there is no controlling statute. Id.
The Third Circuit Court of Appeals has explained that in the context of ERISA claims, "the discovery rule has been 'developed' into a 'clear repudiation rule' whereby a non- fiduciary cause of action accrues when a claim for benefits has been denied." Id. (quoting Romero v. Allstate Corporation, 404 F.3d 212, 220 (3d Cir. 2005)). *fn33
Under the clear repudiation rule, a " formal denial is not required if there has already been a repudiation of the benefits by the fiduciary which was clear and made known to the beneficiary." Id. at 520-521 (citing Romero, 404 F.3d at 222-223)(emphasis in original). Stated differently, an "'event other than a denial of a claim' may trigger the statute of limitations by clearly alerting the plaintiff that [her] entitlement to benefits has been repudiated." Id. at 521 (quoting Cotter v. Eastern Conference of Teamsters Retirement Plan, 898 F.2d 424, 429 (4th Cir. 1990)). *fn34
In February 2006, Ms. Swartz received a letter from TIAA-CREF in response to an inquiry she submitted to TIAA-CREF requesting an accounting of her TIAA-CREF plan. The letter stated, in pertinent part, that "[her] RA contract # A7292228/729225 through Lehigh University was distributed to [her] as a lump sum on July 1, 1980 in the amount of $3,590.09. *fn35
This letter, attached to Ms. Swartz's Amended Complaint, constitutes a clear repudiation of Ms. Swartz's entitlement to any further benefits under her TIAA-CREF plan. Therefore, the four-year limitation period for her non-fiduciary claim for her TIAA-CREF plan benefits pursuant to § 1132(a)(1)(B) began running on or about February 16, 2006.
Ms. Swartz commenced this action against Lehigh on June 18, 2010 by filing a Writ of Summons in the Court of Common Pleas of Northampton County, Pennsylvania. *fn36
By that time, approximately four years and four months had passed since Ms. Swartz received the letter which clearly repudiated her present entitlement to benefits which she believed she was due under her TIAA-CREF plan. Therefore, plaintiff's § 1132(a)(1)(B) claim against Lehigh is time-barred. For that reason, I dismiss plaintiff's § 1132(a)(1)(B) non-fiduciary claim against Lehigh with prejudice.
Lehigh asserts that dismissal of Ms. Swartz's Amended Complaint is proper on two additional grounds.
First, Lehigh contends that the Amended Complaint should be dismissed because Ms. Swartz "makes no allegation that she has pursued her claim through the administrative processes available under Lehigh's plan" and because plaintiff "does not (and cannot) allege that she ever sought an appeal to the Plan Administrator as required by ERISA and the Plan." *fn37
Second, Lehigh contends that Ms. Swartz fails to allege sufficient facts in her Amended Complaint which, taken as true, would support a reasonable inference that plaintiff can establish the required elements of her claim. *fn38
Because, for the reasons stated above, I conclude that Ms. Swartz's claim against Lehigh under § 1132(a)(1)(B) is time-barred by the applicable four-year limitations period, I do not reach the alternate grounds for dismissal asserted by Lehigh.
Fiduciary Claim As discussed previously, *fn39
Ms. Swartz's Brief in Opposition -- when considered
together with her Amended Complaint -- clarifies (1) that she does not
seek to assert any state law causes of action against Lehigh, and (2)
that she does seek to assert an ERISA claim for denial of benefits under 29 U.S.C. §
1132(a)(1)(B). However, as previously noted, § 1132(a)(1)(B) "provides
a non-fiduciary cause of action". Miller, 475 F.3d
at 519 (emphasis added).
Despite the fact that § 1132(a)(1)(B) is the sole ERISA provision referenced anywhere in the Amended Complaint, plaintiff's Brief in Opposition suggests that Ms. Swartz also seeks to assert a fiduciary claim, or claims, against it.
Specifically, in her Brief in Opposition, plaintiff asserts that (1) she "did not have actual knowledge of her claim for breach of fiduciary duty against Lehigh University until January 14, 2010"; (2) "[s]ubsequent to January 14, 2010, Ms. Swartz learned additional facts further demonstrating Lehigh University's breach of its fiduciary duty to her"; and (3) "her fiduciary claims are timely filed." *fn40
Lehigh also recognizes that plaintiff's Brief in Opposition suggests that Ms. Swartz intends to assert an ERISA breach of fiduciary claim against Lehigh, and seeks to address Ms. Swartz's purported fiduciary claim in its Reply Memorandum. *fn41
Specifically, Lehigh contends that (1) the factual averments in
the Amended Complaint do not state a plausible fiduciary claim against
Lehigh; (2) even if Ms. Swartz adequately pled a fiduciary claim against Lehigh, her claim is barred by the
limitations period provided in 29 U.S.C. § 1113; *fn42
(3) Ms. Swartz may only assert a fiduciary claim on behalf of the
TIAA-CREF plan and not to recover individual benefits she believes she
is due under the plan. *fn43
ERISA imposes duties on those defined as fiduciaries under the statue and provides a cause of action for breach of fiduciary duties. See 29 U.S.C. §§ 1104, 1109, 1132(a)(2)-(3). *fn44
In determining whether Lehigh is a fiduciary as defined by ERISA, *fn45 the court's "task, simply stated, [would be] to resolve whether [Lehigh] maintained any authority or control over management of the plans assets, management of the plan in general, or maintained any responsibility over the administration of the plan." Curcio v. John Hancock Mutual Life Insurance Company, 33 F.3d 226, 233 (3d Cir. 1994).
Plaintiff's Amended Complaint contains a single count, asserted pursuant to 29 U.S.C. § 1132(a)(1)(B), which seeks to recover pension benefits to which Ms. Swartz contends she is entitled under her TIAA-CREF plan. Ms. Swartz's Amended Complaint does not assert a claim pursuant to either §§ 1132(a)(2), (3), which provide for a cause of action asserting breach of fiduciary duties. Instead, Ms. Swartz asserts Count I pursuant to § 1132(a)(1)(B), which provides a non-fiduciary cause of action. Miller, 475 F.3d at 519.
It is not apparent from the Amended Complaint, nor is it explained in plaintiff's Brief in Opposition, what, if any, actions Ms. Swartz alleges that Lehigh took in a fiduciary capacity. Moreover, it is not apparent from the Amended Complaint, nor is it explained in plaintiff's Brief in Opposition, what, if any, fiduciary duty Ms. Swartz alleges that Lehigh violated or what particular conduct constituted the violation. Nonetheless, plaintiff's Brief in Opposition suggests that Ms. Swartz intended to assert an ERISA breach of fiduciary duty claim in her Amended Complaint.
Therefore, while I dismiss Count I with prejudice because plaintiff's claim pursuant to 29 U.S.C. § 1132(a)(1)(B) is time-barred pursuant to the applicable four-year limitations period, I dismiss the Amended Complaint without prejudice for Ms. Swartz to file a Second Amended Complaint, if appropriate and in accordance with this Opinion, which adequately pleads the factual and legal basis for a fiduciary cause of action against Lehigh pursuant to ERISA.
For the reasons stated above, I grant Lehigh's motion and dismiss Ms. Swartz's Amended Complaint. I conclude that Count I of plaintiff's Amended Complaint, which asserts a claim against defendant Lehigh University under ERISA, 29 U.S.C. § 1132(a)(1)(B), is time-barred by the four-year limitations period applicable to such claims. Therefore, I dismiss Count I of the Amended Complaint with prejudice. However, I dismiss the Amended Complaint without prejudice for Ms. Swartz to file a Second Amended Complaint in accordance with this Opinion.