Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01584/USCOURTS-azd-2_11-cv-01584-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1132 E.R.I.S.A.

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Jon Haug, 

Plaintiff, 

vs.

Midstate Mechanical, Inc., an Arizona

corporation; Midstate Mechanical

Nonqualified Defined Contribution Plan;

Midstate Mechanical Nonqualified

Deferred Compensation Plan, 

Defendants. 

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No. CV-11-01584-PHX-JAT

ORDER

Pending before the Court is Defendants’ Motion to Dismiss. (Doc. 7.) The Court now

rules on the motion.

I. BACKGROUND

On August 11, 2011, Plaintiff Jon Haug filed a Complaint against Defendants

Midstate Mechanical, Inc., Midstate Mechanical Nonqualified Defined Contribution Plan,

and Midstate Mechanical Nonqualified Deferred Compensation Plan. (Doc. 1.) Plaintiff’s

Complaint seeks a declaratory judgment, including an order that Defendants violated 29

U.S.C. § 1132(c)(1); damages for breach of the covenant of good faith and fair dealing; and

for an accounting of funds. Id. at 6-8. Defendants have moved to dismiss Plaintiff’s claims

on the basis that they fail to state a claim upon which relief may be granted. (Doc. 7.) In his

response, Plaintiff concedes that his claims for breach of the covenant of good faith and fair

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dealing and for an accounting should be dismissed. (Doc. 9 at 1.)

II. MOTION TO DISMISS

A. 12(b)(6) Legal Standard

The Court may dismiss a complaint for failure to state a claim under 12(b)(6) for two

reasons: 1) lack of a cognizable legal theory and 2) insufficient facts alleged under a

cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.

1990). 

To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet the

requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a “short and

plain statement of the claim showing that the pleader is entitled to relief,” so that the

defendant has “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S.

41, 47 (1957)). 

Although a complaint attacked for failure to state a claim does not need detailed

factual allegations, the pleader’s obligation to provide the grounds for relief requires “more

than labels and conclusions, and a formulaic recitation of the elements of a cause of action

will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). The factual allegations

of the complaint must be sufficient to raise a right to relief above a speculative level. Id.

Rule 8(a)(2) “requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief.

Without some factual allegation in the complaint, it is hard to see how a claimant could

satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim, but also

‘grounds’ on which the claim rests.” Id. (citing 5 C. WRIGHT & A. MILLER, FEDERAL

PRACTICE AND PROCEDURE § 1202 (3d ed. 2004)).

Rule 8’s pleading standard demands more than “an unadorned, the-defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing

Twombly, 550 U.S. at 555). A complaint that offers nothing more than naked assertions will

not suffice. To survive a motion to dismiss, a complaint must contain sufficient factual

matter, which, if accepted as true, states a claim to relief that is “plausible on its face.” Iqbal,

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129 S.Ct. at 1949. Facial plausibility exists if the pleader pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged. Id. Plausibility does not equal “probability,” but plausibility requires more than a

sheer possibility that a defendant has acted unlawfully. Id. “Where a complaint pleads facts

that are ‘merely consistent’ with a defendant’s liability, it ‘stops short of the line between

possibility and plausibility of entitlement to relief.’” Id. (citing Twombly, 550 U.S. at 557).

In deciding a motion to dismiss under Rule 12(b)(6), the Court must construe the facts

alleged in the complaint in the light most favorable to the drafter of the complaint and the

Court must accept all well-pleaded factual allegations as true. See Shwarz v. United States,

234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, the Court does not have to accept as true a

legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286

(1986).

B. ERISA § 502(c)

Section 502(a) of the Employee Retirement Income Security Act of 1974 (ERISA)

creates an “exclusive remedy for rights guaranteed under ERISA.” Ingersoll-Rand Co. v.

McClendon, 498 U.S. 133, 144 (1990). Section 502(a)(1) permits a participant or beneficiary

to recover the relief provided for in § 502(c). 29 U.S.C. § 1132(a)(1)(A). Section

502(c)(1)(B) provides, in part, that a plan administrator “who fails or refuses to comply with

a request for any information which such administrator is required by this subchapter to

furnish to a participant or beneficiary . . . may in the court’s discretion be personally liable

to such participant or beneficiary . . . . ” 29 U.S.C. § 1132(c)(1)(B) (emphasis added).

As the plain language of § 502(c)(1) indicates, a remedy only exists if there is a

violation of a participant or beneficiary’s right to information under ERISA. See Williams

v. Caterpillar, Inc., 944 F.2d 658, 667 (9th Cir. 1991). Absent a violation of an ERISAprovided right, § 502(c)(1) does not provide any relief.

C. Discussion

Both parties agree that Plaintiff’s Second and Third Claims for Relief should be

dismissed. Accordingly, the Court now addresses only Plaintiff’s request for § 502(c)

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damages found in his First Claim for Relief.

In evaluating Defendants’ motion for dismissal, the Court construes the facts alleged

in the Complaint in the light most favorable to Plaintiff. Nevertheless, Plaintiff has failed to

sufficiently allege a claim for a § 502(c) violation. Plaintiff argues that paragraph 23 of the

Complaint and pages 2-3 of its attached Exhibit 6 serve as adequate pleading. Accepting the

facts alleged as true, then Plaintiff has shown that he filed an appeal of Defendants’ claim

denial and that he asked for “all documents showing how the Committee was constituted,

who made the determination who would be on the Committee, the board resolution

appointing the Committee and any minutes or documents that reflect any determination by

the Committee,” as well “copies of the board minutes.” (Doc. 1-1 at 41-42.)

For Plaintiff to adequately plead a claim under § 502(c)(1), Plaintiff must allege that

his request for documents was made pursuant to a statutory right and that the plan

administrator wrongfully refused or denied such request in violation of that right. These two

requirements must be met to show a valid claim for relief under § 502(c)(1). Plaintiff’s

Complaint fails to allege any statutory basis for his request for documents, fails to allege that

the plan administrator denied his request or failed to provide the requested documents, and

fails to allege that this failure was a violation of the an ERISA statute. There is no “fair

notice of what the . . . claim is.” Twombly, 550 U.S. at 555 (quoting Conley, 355 U.S. at 47).

Because the Complaint fails to specify the necessary elements of a claim for relief under §

502(c)(1), it lacks both a cognizable legal theory and sufficient facts upon which relief can

be granted.

Therefore, Plaintiff has failed to sufficiently allege a claim for § 502(c) damages and

that request for relief will be dismissed.

III. LEAVE TO AMEND

A. Legal Standard

Federal Rule of Civil Procedure 15(a) permits a party to amend its pleading with

either the opposing party’s written consent or the court’s leave. “The court should freely give

leave when justice so requires.” FED.R.CIV. P. 15(a)(2); see also Foman v. Davis, 371 U.S.

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178, 182 (1962) (“If the underlying facts or circumstances relied upon by a plaintiff may be

a proper subject of relief, he ought to be afforded an opportunity to test his claim on the

merits.”). A party who moves for leave to amend “must attach a copy of the proposed

amended pleading as an exhibit to the motion or stipulation . . .” L. R. CIV. P. 15.1.

Though leave to amend “shall be freely given when justice so requires,” FED.R.CIV.

P. 15(a), “it may be denied if the proposed amendment either lacks merit or would not serve

any purpose because to grant it would be futile in saving the plaintiff’s suit.” Universal

Mortgage Co., Inc. v. Prudential Ins. Co., 799 F.2d 458, 459 (9th Cir. 1986). The Ninth

Circuit has denied leave to amend where “the movant presents no new facts but only new

theories and provides no satisfactory explanation for his failure to fully develop his

contentions originally.” Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). In making the

legal determination that an amended complaint is futile, a court may examine the merits of

the case. See Gabrielson v. Montgomery Ward & Co., 785 F.2d 762, 766 (9th Cir. 1986).

B. Discussion

Plaintiff’s Response asks this Court to “permit [Plaintiff] an opportunity to amend to

set out with more specificity what is alleged clearly in Exhibit 6 of the Complaint.” (Doc. 9

at 2.) Because leave to amend shall be freely given when justice so requires, the Court treats

this request as a motion for leave to amend the Complaint with respect to the First Claim for

Relief, even though Plaintiff has not complied with Local Rule 15.1. Defendant argues that

granting leave to amend would be futile and that this Court should not grant such leave. This

Court cannot conclude that it would be futile for Plaintiff to amend his complaint. Plaintiff

asserts that a valid claim can be alleged “with more specificity,” (Doc 9 at 2), and it is

possible that Plaintiff can allege facts and statutory violations that satisfy the pleading

standard. Because, at this point, the Court cannot say with certainty that amendment would

be futile, the Court will give Plaintiff leave to amend.

Accordingly,

IT IS ORDERED granting Defendant’s Motion to Dismiss (Doc. 7) Plaintiff’s

Second and Third Claims for Relief and the request for § 502(c) damages found in the First

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Claim for Relief.

IT IS FURTHER ORDERED granting Plaintiff leave to amend the Complaint with

respect to the First Claim for Relief. Plaintiff shall file an amended complaint within ten (10)

days of this Order. If Plaintiff fails to file an amended complaint within that time, the Clerk

shall dismiss this case without further notice.

DATED this 22nd day of February, 2012.

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