United States District Court, D. South Dakota, Western Division
BH SERVICES INC., FOR ITSELF AS SPONSOR AND FIDUCIARY AND FOR THE BH SERVICES, INC., HEALTH AND WELFARE PLAN, Plaintiff,
FCE BENEFIT ADMINISTRATORS INC., TRUST MANAGEMENT SERVICES, AMERICAN COUNCIL OF ENGINEERING COMPANIES OF METROPOLITAN WASHINGTON, TRANSAMERICA LIFE INSURANCE COMPANY, Defendants.
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO
E. SCHREIER UNITED STATES DISTRICT JUDGE.
September 27, 2017, this court issued a memorandum opinion
and order granting various motions to dismiss and denying a
motion to strike. Docket 104. Specifically, the court
dismissed the two state-law causes of action alleged against
defendants, including Transamerica, because they were
expressly preempted by the Employee Retirement Income
Security Act of 1974 (ERISA). Id. Plaintiffs, BH
Services, Inc. and the BH Services, Inc. Health and Welfare
Plan (the Plan) (collectively, BH Services), filed a second
amended complaint, in which BH Services alleged, among other
allegations, four causes of action under ERISA against
defendant Transmerica. Docket 120. Transamerica moves to
dismiss all causes of action against it. Docket 129. BH
Services opposes the motion to dismiss. Docket 137. For the
reasons that follow, the court grants Transamerica's
motion to dismiss count one but denies Transamerica's
motion to dismiss counts three, four, and five.
more complete factual background regarding all defendants,
the court refers to its previous memorandum opinion and
order. See Docket 104. The current motion to dismiss
only applies to defendant Transamerica, so the court will
briefly provide a background of BH Services' allegations
against Transamerica, construing facts pleaded in the second
amended complaint as true.
Services, a not-for-profit corporation based in Rapid City,
South Dakota, is the sponsor, administrator, and named
fiduciary of the Plan. Docket 120 ¶ 9. The Plan is an
employee welfare benefit plan as defined by ERISA.
Id. ¶ 10. BH Services hired defendant FCE as a
third-party administrator for the Plan, and in this capacity
FCE, as a plan fiduciary, exercised discretionary control or
discretionary authority over Plan assets and services related
to the Plan. Id. ¶ 11.
its owners, Gary Beckman and Stephen Porter, told BH Services
that contributions made to the Plan would be for the benefit
of the Plan and its participants. Id. ¶ 23. BH
Services believed it sponsored group term life insurance
benefits but instead learned that the Plan participants had
cash accounts in at least two group variable universal life
insurance policies issued by Transamerica. Id.
Beckman and Porter, the FCE owners, were also agents of
2016, BH Services requested information from Transamerica
about the cash accounts for BH Services' Plan
participants. Id. ¶ 24. Transamerica, in
response, provided a spreadsheet showing that BH
Services' participant accounts were comingled with 50
other employer accounts in the group variable universal life
insurance policies. Id. The cash surrender value and
assets of these insurance policies were controlled by
Transamerica, and thus, Transamerica could access the
built-up cash that accumulated in these insurance policies.
Id. ¶ 25. And because the defendants hid the
existence of these group permanent life insurance policies
from BH Services, BH Services did not know about their access
to the cash surplus. Id. BH Services also learned
that the accounts for former BH Services employees were
“warehoused” in accounts of FCE, but never
returned to the Plan. Id. ¶ 29.
is an Iowa insurance company. Id. ¶ 14. BH
Services alleges that Transamerica and the other defendants
exercised discretionary control over the cash surplus by
either charging excessive fees to the Plan or by taking the
cash surplus. Id. ¶ 26. Additionally,
Transamerica exercised control over the Plan assets by
refusing to inform BH Services' Plan participants about
the insurance policies and through its agents, Beckman and
Porter, receiving commissions on the sale of the life
insurance policies. Id. It is BH Services'
position that these commissions are a prohibited form of
self-dealing by Transamerica's agents. Id.
Services alleges that through its exercise of discretionary
authority or control over Plan assets, Transamerica is a Plan
fiduciary under ERISA, Transamerica's actions breached
its fiduciary duties, and such breaches caused damages to BH
Services and the Plan. Id. ¶ 48. In addition to
its claim for breach of fiduciary duty, BH Services brings
three other causes of action against Transamerica: a request
for an injunction, recovery of plan assets wrongfully
dissipated, and attorney's fees and costs. See
generally Docket 120. Transamerica moves to dismiss all
four causes of action. Docket 129.
may dismiss a complaint for “failure to state a claim
upon which relief can be granted.” Fed.R.Civ.P.
12(b)(6). Inferences are construed in favor of the nonmoving
party. Braden v. Wal-Mart Stores, Inc., 588 F.3d
585, 595 (8th Cir. 2009). “To survive a motion to
dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.' ” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id. (citing Twombly, 550
U.S. at 556). And “[w]hile a complaint attacked by a
Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, ” the plaintiff must provide
“more than labels and conclusions[.]”
Twombly, 550 U.S. at 555. In ruling on a motion to
dismiss, courts can also “consider ‘those
materials that are necessarily embraced by the
pleadings.' ” Hughes v. City of Cedar
Rapids, 840 F.3d 987, 998 (8th Cir. 2016) (quoting
Schriener v. Quicken Loans, Inc., 774 F.3d 442, 444
(8th Cir. 2014)). “Those materials include
‘documents whose contents are alleged in a complaint
and whose authenticity no party questions, but which are not
physically attached to the pleadings.' ”
Id. (quoting Kushner v. Beverly Enters.,
Inc., 317 F.3d 820 (8th Cir. 2003)).
Breach of Fiduciary Duty and Breach of Co-Fiduciary
state a claim for breach of an ERISA fiduciary duty, the
plaintiff must show that the defendant acted as a fiduciary,
breached its fiduciary duty, and thereby caused a loss to the
Plan. See Pegram v. Herdrich, 530 U.S. 211, 225-26