Court Opinion

ID: 2982618
Source: CourtListenerOpinion
Date Created: 2015-09-22 20:28:20.637454+00
Date Added: 2024-06-11T15:48:27.822979
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                            File Name: 14a0798n.06

                                          No. 14-5283

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

DUBLIN EYE ASSOCIATES, P.C., et al.,)                                           FILED
                                    )                                      Oct 22, 2014
    Plaintiffs-Appellants,          )                                 DEBORAH S. HUNT, Clerk
                                    )
v.                                  )                           ON APPEAL FROM THE
                                    )                           UNITED STATES DISTRICT
MASSACHUSETTS MUTUAL LIFE INSURANCE )                           COURT FOR THE EASTERN
COMPANY, et al.,                    )                           DISTRICT OF KENTUCKY
                                    )
    Defendants-Appellees.           )
                                    )

       Before: GIBBONS and KETHLEDGE, Circuit Judges; DOW, District Judge.*

       KETHLEDGE, Circuit Judge: For 18 years, the trustees of Dublin Eye’s pension plan let

Thomas Ackerman, their Mass Mutual insurance agent, manage the plan’s investments. And for

most if not all of those years, the plan’s trustees—the plaintiffs here—received invoices and

other documents indicating that the plan was purchasing vastly more life-insurance policies than

Ackerman had told them it would. But the plaintiffs never read any of those documents. When,

in 2007, the plaintiffs finally did catch on to this discrepancy, they waited almost four years to

bring this ERISA suit. Thus, the district court held that the plaintiffs’ claims are time-barred.

We agree, and affirm.

*
  The Honorable Robert M. Dow, Jr., Judge for the Northern District of Illinois, sitting by
designation.
No. 14-5283
Dublin Eye Associates, P.C. v. Massachusetts Mutual Life Insurance Company

                                                    I.

       We view the evidence in the light most favorable to Dublin Eye, the non-movant for

summary judgment here. Hamilton v. Gen. Elec. Co., 556 F.3d 428, 433 (6th Cir. 2009). Dublin

Eye established a pension plan with Mass Mutual in 1980. Per the plan documents, Dublin Eye’s

two ophthalmologists, Roger Smith and James Jones, were the plan’s trustees; Smith was the

plan’s administrator. Catherine Chatfield, Kim Shea, and Qualified Plan Services, Inc. assisted

at different times as third-party administrators.

       The doctors allowed Thomas Ackerman—their Mass Mutual agent, close friend, and

Smith’s cousin—to make all investment decisions for the plan. Ackerman falsely told the

doctors that Mass Mutual required the plan to spend 10% of its assets on life insurance. He also

told the doctors that the plan would purchase one or two policies for each of the plan’s

participants. Without the doctors’ knowledge, however, Ackerman sold as many as ten policies

per participant to the plan, all from Mass Mutual. Ackerman also sold annuities to a separate,

defined-benefits plan that Dublin Eye maintained alongside its pension plan. To obtain some of

the signatures needed to authorize these sales, Ackerman asked the doctors to sign blank

application forms, which they did. Ackerman also allegedly forged the doctors’ signatures on

other documents.

       For years thereafter, Mass Mutual mailed invoices for all these policies to Dublin Eye.

Each of the invoices—including one for $90,500—listed all of the policies the plan had

purchased, along with the name of the person insured by each policy. For example, an invoice

from 1994 listed ten policies for Anita Mallory, the office manager, another six policies for her

husband, and as many as nine policies for the other plan participants. But the doctors never

looked at these invoices. Instead, only Mallory handled them. Her practice was to forward the

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No. 14-5283
Dublin Eye Associates, P.C. v. Massachusetts Mutual Life Insurance Company

invoices to Dublin Eye’s accountant, then adjust the amount of payment per the accountant’s

instructions, prepare a check for the final amount, detach the payment coupon from the invoice,

and present the check and coupon to a doctor for approval. Mallory kept the old invoices in her

office.

          Dublin Eye also received numerous other documents related to the plan, including cost-

of-insurance reports, account statements, and annual reports. In addition, Ackerman visited

Dublin Eye several times a year, bringing with him banker’s boxes filled with documents, forms

for the doctors to sign, or reports on the plan’s investments. Some of these documents showed

the number of policies that the plan had purchased for each participant. But again the doctors

rarely read anything, so the papers usually sat in Smith’s office until Ackerman threw them out.

Eventually, Ackerman stopped bringing as many documents.

          In addition to paying invoices, the doctors occasionally signed forms concerning the

policies and annuities. In 1996, for example, Smith signed forms allowing two employees to

surrender a total of ten life-insurance policies.     In 1999, Smith and Jones signed forms

authorizing the surrender of nine life-insurance policies in Smith’s name. On another occasion,

Jones signed a document authorizing certain changes to all policies “shown in the attached

Schedule Page[.]” R. 265-38, Authorization for Amendment. The schedule page, which Jones

says he does not remember seeing, listed every policy owned by the plan.

          In 1998, the plan participants assumed control of their own investments—at which point

Ackerman left Mass Mutual to partner with a broker and to sell other investments (stocks, bonds,

mutual funds) to the plan participants. A few years later, Ackerman’s partnership dissolved; and

Ackerman failed to provide the trustees with information needed for a report. The trustees asked

Ackerman’s former partner to investigate. In 2007, he reported that the plan owned 50 life-

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No. 14-5283
Dublin Eye Associates, P.C. v. Massachusetts Mutual Life Insurance Company

insurance policies—more than double the number that he expected to find.                The trustees

complained to Mass Mutual, but its internal investigation uncovered no wrongdoing.

       More than four years later, in 2011, Dublin Eye, Smith, and Jones sued Mass Mutual,

Ackerman, and the plan’s third-party administrators. (We refer to the plaintiffs as Dublin Eye

and the defendants as Mass Mutual.) In the second amended complaint, Dublin Eye alleged that

Mass Mutual violated its fiduciary duties under ERISA, by misstating material facts concerning

the life-insurance policies, wrongfully profiting from the policies’ sale, and fraudulently

inducing the plan to buy the policies and annuities, among other things.

       The district court later dismissed certain of Dublin Eye’s claims that were based on fraud,

holding that the claims were not pled with sufficient particularity. Dublin Eye responded by

moving for leave to file a third amended complaint after the court’s deadline for amendment of

pleadings. The district court denied the motion, finding that Dublin Eye had been dilatory and

that an amendment would prejudice Mass Mutual. The district court thereafter granted summary

judgment to Mass Mutual on all remaining claims, holding they were time-barred. This appeal

followed.

                                                 II.

       We review the district court’s grant of summary judgment de novo.                  Montell v.

Diversified Clinical Services, 757 F.3d 497, 503 (6th Cir. 2014).

                                                 A.

       Dublin Eye’s principal argument is that its ERISA claims for breach of fiduciary duty—

based upon Ackerman’s sale to the plan of multiple life-insurance policies per member—are not

time-barred. Normally, an ERISA claim for breach of fiduciary duty must be brought no later

than six years after the breach itself, or three years after the plaintiff has actual knowledge of the

                                                 -4-
No. 14-5283
Dublin Eye Associates, P.C. v. Massachusetts Mutual Life Insurance Company

breach, whichever is earlier. 29 U.S.C. § 1113. “[I]n the case of fraud or concealment,”

however, the statute’s so-called discovery rule extends the filing deadline to “six years after the

date of discovery of such breach or violation.” Id.

       Here, Dublin Eye waited more than three years after it actually knew of the alleged

breach in 2007 to bring suit. The district court assumed without deciding, however, that the six-

year discovery rule for “fraud or concealment” applies here. We make the same assumption for

purposes of this appeal.

       The discovery rule’s six-year period runs from the date when a reasonably diligent

plaintiff would have discovered the breach, not from when the plaintiff actually did so. Med.

Mut. of Ohio v. k. Amalia Enterprises Inc., 548 F.3d 383, 391 (6th Cir. 2008). Here, for several

reasons, the district court found that Dublin Eye should have known about the unauthorized life-

insurance sales at least six years before it brought this lawsuit. We need only discuss two of

those reasons here.

       First, for many years, Dublin Eye received invoices that plainly showed that the plan

owned as many as ten policies per participant. Dublin Eye argues that this fact does not matter

because none of the doctors—the plan’s trustees—even looked at the invoices; only their office

manager, Mallory, did. But a person—much less an ERISA trustee—who receives a document

is presumed to have knowledge of its contents. See Brown v. Owens Corning Inv. Review

Committee, 622 F.3d 564, 571–72 (6th Cir. 2010). And the law provides no exception to this

rule for people who say they are too busy to read what is sent to them.

       Second, the district court found that the doctors should have known about the plan’s

purchases of excess policies on the numerous occasions when the doctors signed forms

surrendering them—including on one occasion when they signed forms surrendering nine

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No. 14-5283
Dublin Eye Associates, P.C. v. Massachusetts Mutual Life Insurance Company

policies for Smith alone. Dublin Eye responds that the doctors signed blank surrender forms. To

state that argument is to answer it. A reasonably diligent plaintiff would have discovered the

basis of these claims years before the plaintiffs did here. The district court properly held that

Dublin Eye’s ERISA claims are time-barred.

                                                B.

       Dublin Eye argues that the district court failed to discuss its annuity-based claims when it

granted summary judgment to Mass Mutual. By that point, however, the district court had

already dismissed those claims on grounds that they were not pled with sufficient particularity in

the second amended complaint. See Fed. R. Civ. P. 9(b). Thus, by the time the district court

granted summary judgment, there were no annuity-based claims left to discuss.

       Dublin Eye’s final argument is related: that the district court should have allowed them

to file a third amended complaint after the deadline set forth in the court’s scheduling order for

amendment of pleadings. But Dublin Eye is not entitled to an exception from this deadline

either. The third amended complaint was based upon facts and law that were available to Dublin

Eye well before the amendment deadline. The district court did not abuse its discretion by

enforcing its scheduling order. See Leary v. Daeschner, 349 F.3d 888, 909 (6th Cir. 2003).

       Affirmed.

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