Stewart v. IHT Insurance Agency Group LLC Welfare Benefits Plan

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

MERRILEE STEWART, et al.,

Case No. 2:16-cv-210

Plaintiffs,

v. Judge Graham

IHT INSURANCE AGENCY GROUP Magistrate Judge Jolson

LLC WELFARE BENEFITS PLAN,

et al.,

Defendants.

OPINION AND ORDER

In the case at bar, Plaintiffs Merrilee Stewart and Charles Stewart allege that Defendants1

wrongfully terminated Ms. Stewart’s membership interest in Defendant RRL Holding Company

of Ohio, LLC (“RRL”),2 in violation of an operating agreement (the “Buy/Sell Agreement”), and

in doing so, intentionally interfered with the benefits afforded Plaintiffs through Ms. Stewart’s

membership in the IHT Insurance Agency Group, LLC Welfare Benefits Plan (the “Plan”), an

employee welfare benefits plan established under the Employee Retirement Security Act of 1974

(“ERISA”). (Am. Compl. ¶¶ 30–33, 74, ECF No. 12 at 50, 55.) Plaintiffs further claim that

Defendants IHT Insurance, RRL, and Fritz Griffieon breached their fiduciary duties to Plaintiffs

1 The five Defendants in this case are: 1) IHT Insurance Agency Group, LLC Welfare Benefits Plan (the “Plan”), an

employee welfare benefits plan established under ERISA. (Am Compl. at ¶¶ 2,5); 2) IHT Insurance Agency Group,

LLC (“IHT Insurance”), the Plan sponsor and administrator. (Id. at ¶ 8); 3) RRL Holding Company of Ohio, LLC

(“RRL”), the previous sole member of IHT Insurance. (Id. at ¶ 9); 4) Griffioen Agency, LLC, the alleged insurance

“agent/broker” for the Plan. (Id. at ¶ 10); and 5) Fritz Griffioen, the alleged personal insurance agent for the Plan. (Id.

at ¶ 12). The Court refers to these five collectively as “Defendants.”

2 Firefly Insurance Agency LLC (“Firefly”) is an Ohio limited liability company formerly known as IHT Insurance

Agency Group, LLC. Firefly/IHT Insurance was wholly owned by a second limited liability company, RRL Holding

Company of Ohio, LLC, a member-managed LLC. On December 31, 2018, RRL merged with Firefly. (ECF No. 45-

2.) Firefly is the surviving entity and RRL’s successor-in-interest. (Id.)

as Plan participants and beneficiaries and did not evenly apply the terms of the Plan to similarly

situated persons. (Id. at ¶¶ 61, 67, ECF No. 12 at 53–54.)

Before the Court is the issue of whether the underlying facts and issues concerning

Plaintiffs’ ERISA claims here were previously resolved at arbitration. For the reasons that follow,

the Court finds that Plaintiffs’ claims were resolved at arbitration, and their claims before this

Court are therefore DISMISSED.

I. BACKGROUND

On March 2, 2015, Defendants RRL and IHT Insurance filed suit against Ms. Stewart in

the Franklin County Court of Common Pleas. On May 8, 2015, Ms. Stewart filed a counterclaim

seeking damages for the loss of her health and life insurance benefits. (Ex. B, ECF No. 68-2.) On

November 10, 2015, the state court action was stayed, and the parties were ordered to arbitration

to determine whether Ms. Stewart was properly removed as a member of Defendant RRL. The

arbitration panel later granted Ms. Stewart’s request to add Rodney Mayhill, William Griffieon,

and Fritz Griffieon as parties to the arbitration and assert counterclaims.

On February 19, 2016, Ms. Stewart filed a complaint against the Plan and IHT Insurance

in the Franklin County Court of Common Pleas, alleging wrongful termination of benefits under

the Plan in violation of 29 U.S.C. § 1162. On March 8, 2016, the Plan and IHT Insurance filed

their Notice of Removal to this Court. (ECF No. 1.) On May 27, 2016, Ms. Stewart filed her

Amended Complaint, alleging, inter alia, wrongful termination of benefits and breach of fiduciary

duties and adding her son, Charles Stewart, as a plaintiff, and Griffieon Agency, LLC and Fritz

Griffieon as defendants. (ECF No. 12.)

On February 3, 2017, Ms. Stewart filed several arbitration counterclaims, claiming, inter

alia, that Defendants RRL and IHT Insurance “took affirmative steps to wrongfully terminate

Stewart’s health, vision, and dental coverage, among other benefits” and “[b]y virtue of her one-

fourth membership interest in RRL, Stewart was/is entitled to continued benefits, including but

not limited to health, vision, and dental coverage,” along with, “RRL, IHT, Mayhill, W. Griffieon,

and F. Griffieon breached their obligations to Stewart by discontinuing the benefits to which

Stewart was entitled and remained entitled” and “Stewart is entitled to continued benefits on the

same terms and conditions existing prior to the unlawful removal, and on the same terms and

conditions governing the continued benefits provided to [others].” (Arbitration Countercl., ECF

No. 57-1 at ¶¶ 50, 98–100.)

On August 9, 2017, Defendants moved this Court to stay these proceedings pending the

outcome of the related arbitration proceeding, arguing that the arbitration would decide whether

there were any remaining claims in the instant case. (ECF No. 33.) Through arbitration,

Defendants sought an order requiring Ms. Stewart to execute the Membership Interest Redemption

Agreement set forth in a specific form attached to the Buy/Sell Agreement, which includes a

mutual release of claims. (Id. at 122–23.)

On October 4, 2017, the Court ordered Defendants to submit evidence of arbitration. (ECF

No. 37.) Defendants submitted evidence of arbitration that same day. (ECF No. 38.) On October

5, 2017, the Court granted Defendants’ Motion to Stay Pending Arbitration. (ECF No. 39.) The

Court reasoned, “It would make little sense to proceed to trial if it is possible that the arbitration

could result in Ms. Stewart executing a release of claims.” (ECF No. 37 at 215.)

A three-day hearing was held before the arbitration panel on October 5, October 6, and

November 3, 2017, where Ms. Stewart “was given full opportunity to present evidence over three

hearing days, and made no challenge or objection to the amount of time available to her to present

her counterclaims or defense of claims.” (Final Arbitration Award, ECF No. 57-2 at 758.) In her

closing arbitration brief, Ms. Stewart sought damages relating to her health and life insurance

benefits. (Ex. C, ECF No. 68-3.)

On December 8, 2017, the arbitration panel issued its decision. The panel unanimously

found Ms. Stewart was properly removed as a member of RRL. (ECF No. 57-2 at 763.) The panel

determined that during an October 24, 2014 managerial board meeting, and “[a]fter a discussion

of the negative impact Ms. Stewart’s actions [had] on IHT, the remaining members voted to

suspend Ms. Stewart from IHT, and also adopted a plan of ending her participation in RRL by

November 30, 2014.” (Id. at 756.) The panel denied Ms. Stewart’s counterclaims in their entirety.

(Id. at 763.) The panel ordered Ms. Stewart to execute closing documents, including a mutual

release of claims contained within the Membership Interest Redemption Agreement. (Id.)

Section 4 of the Membership Interest Redemption Agreement entitled Mutual Release,

provides in subsection (b) that:

The Redeemed Member [Ms. Stewart] and any Affiliate thereof (collectively with

any of their heirs, executors, administrators, personal representatives, successors

and assigns . . .) releases each of the Company [Firefly Agency LLC] and the

Remaining Members, their officers, directors, shareholders, members, managers,

beneficial owners, trustees, partners, Affiliates, employees, participants and agents)

. . . from all actions, causes of action, suits . . . which [Ms. Stewart and any Affiliate

thereof] now has or hereafter can, shall or may have for, upon or by reason of (i)

any matter, cause or thing whatsoever from the beginning of the world to the date

of this Agreement, and (ii) any matter, cause or thing whatsoever which arises from

and after the date of this Agreement, including, without limitation, any matter or

thing arising from or in connection with the Operating Agreement, the Buy/Sell

Agreement or any transaction entered into by the Company . . . .

(Ex. A, ECF No. 68-1 at 1045–46.)

“Affiliates” is broadly defined as including “any officer, director, member, manager,

beneficial owner, trustee, employee, participant, agent, heir, executor, administrator, personal

representative, successor or assign of a party hereto.” (Id. at 1042.)

The panel’s decision was confirmed by the state trial court through the entry of judgment

against Ms. Stewart, affirmed by the state appellate court, and the Supreme Court of Ohio twice

declined to hear the case. (ECF No. 46 at 148.) Ms. Stewart has exhausted her appeals.

On September 10, 2019, Plaintiffs filed a Motion to Lift Stay Order. (ECF No. 45.)

On November 13, 2019, the Court granted Plaintiffs’ order but not for the reasons put forth

by Plaintiffs. (ECF No. 52.) The Court reasoned, “The arbitration panel has established the rights

of the parties, and those rights are currently being enforced by the state court. Consequently, there

are no remaining disputes for this Court to decide, as the release of claims Ms. Stewart has been

ordered to sign, extends to the claims presently before the Court.” (Id. at 460.) The Court ordered

Plaintiffs to show cause why their case should not be dismissed. (Id.)

On January 13, 2020, Plaintiffs responded that the proposed mutual release provision set

forth in the redemption agreement does not extend to Plaintiffs’ ERISA claims, and the mutual

release of claims would therefore not extinguish all claims in the present litigation. (ECF No. 63

at 978–79.)

On April 7, 2020, the parties were ordered to submit further briefing on the issue of whether

the arbitration panel’s decision and the mutual release of claims extends to the ERISA claims in

this case and whether the Court should dismiss these claims as a result thereof. (ECF No. 67 at

1029.) On April 21, 2020, Defendants filed their brief in response. (ECF No. 68.) On May 15,

2020, Plaintiffs filed their reply brief. (ECF No. 70.)

II. DISCUSSION

After considering the submissions by both parties, the Court concludes that both the mutual

release of claims and the arbitration panel’s decision extend to the ERISA claims in this case and

warrant dismissal of Plaintiffs’ claims.

A. Mutual Release of Claims

Plaintiffs argue that the mutual release “would not serve to extinguish the[ir] ERISA claims

nor does [it] absolve any of the plan fiduciaries from liability” and only “pertains to buyouts of

members’ interests in the company.” (ECF No. 63 at 979.) Plaintiffs provide no support for their

contention, whereas Defendants point out that the broad language of the mutual release pertains to

any causes of action Ms. Stewart and Mr. Stewart, as her Affiliate, ever had before and since the

February 28, 2020 effective date of the Member Interest Redemption Agreement (the

“Agreement”) against those she identifies in her Amended Complaint as the Plan fiduciaries,

Defendants IHT Insurance and RRL, which comprise the Company, as defined in the Agreement

as Firefly Agency LLC,3 and Defendant Fritz Griffieon, who is a Remaining Member, as defined

in the Agreement. (ECF No. 68-1 at 1042.)

Though Plaintiffs only argue that the Agreement’s mutual release does not extend to “plan

fiduciaries,”4 Griffieon Agency, LLC and the Plan itself are also defendants in this case, and the

Court finds that the mutual release also encompasses these defendants. Remaining Member

William Griffieon is the sole member of Griffieon Agency, LLC,5 and as an agent of the Company,

Griffieon Agency, LLC falls within the Agreement’s definition of Affiliates.

Similarly, as the Company’s administrator of benefits, the Plan also falls within the

Agreement’s definition of Affiliates. See Halldorson v. Wilmington Tr. Ret. & Institutional Servs.

Co., 182 F. Supp. 3d 531, 543–46 (E.D. Va. 2016) (collecting cases and determining that a general

release covered a plan because the plan was an affiliate of the employer). Furthermore, because

3 Firefly Agency, LLC is the entity formerly known as Defendant IHT Insurance Group LLC and is also the successor-

in-interest to RRL Holding Company of Ohio, LLC.

4 Plaintiffs’ Amended Complaint identifies the Plan fiduciaries as IHT Insurance Group LLC, RRL Holding Company

of Ohio, and Fritz Griffieon. (Am. Compl. ¶¶ 14, 54, ECF No. 12 at 48, 52.)

5 (W. Griffieon Aff. ¶ 2, Ex. G, ECF No. 68-7 at 1114.)

the Company and the Plan are so closely related, the mutual release need not explicitly reference

the Plan for the release of claims to be enforced against it. Sullivan v. Cap Gemini Ernst & Young

United States, 573 F. Supp. 2d 1009, 1021–22 (N.D. Ohio 2008) (collecting cases and

“conclud[ing] that [the employer] and the Plan are so closely associated as to be ‘affiliates’ within

the meaning of the [w]aiver”).

Furthermore, the mutual release covers any cause or matter occurring before or after the

effective date of the Agreement, without limitation. (Id. at 1045–46.) The mutual release therefore

covers all claims, past, present, and future and extends to Plaintiffs’ ERISA claims in the present

case. As such, Plaintiffs’ claims warrant dismissal.

B. The Arbitration Panel’s Decision

Dismissal of Plaintiffs’ claims is further warranted, because the underlying facts and issues

central to Plaintiffs’ claims before this Court were already decided in arbitration, and the Court

finds that the arbitration panel’s decision has preclusive effect in the instant case. “There is

significant precedent holding that an arbitrator’s decision has preclusive effect in federal court.”

Schreiber v. Philips Display Components Co., 580 F.3d 355, 367 (6th Cir. 2009) (citing Cent.

Transp., Inc. v. Four Phase Sys., Inc., 936 F.2d 256, 257 (6th Cir. 1991) (finding “plaintiffs’

remaining claims were based on facts already determined in favor of the defendants by the

arbitration panel”)).

As the state trial court submitted the issue of whether Ms. Stewart was properly removed

as a member of Defendant RRL to arbitration and later confirmed the arbitration panel’s final

award determining that Ms. Stewart was properly removed and denying her counterclaims for

wrongful termination of benefits and breach of fiduciary duties, the Court turns to Ohio law

concerning the doctrine of res judicata. “Under the doctrine of res judicata, state court judgments

are given the same preclusive effect in federal court as they would have received in the courts of

the rendering state.” Stotts v. Pierson, 976 F. Supp. 2d 948, 959 (S.D. Ohio 2013).

Under Ohio law, “[t]he doctrine of res judicata encompasses the two related concepts of

claim preclusion, also known as res judicata or estoppel by judgment, and issue preclusion, also

known as collateral estoppel.” O’Nesti v. DeBartolo Realty Corp., 2007-Ohio-1102, ¶ 6, 113 Ohio

St. 3d 59, 61, 862 N.E.2d 803, 806.

The Ohio Supreme Court set forth three requirements for the application of collateral

estoppel. “Collateral estoppel applies when the fact or issue (1) was actually and directly litigated

in the prior action, (2) was passed upon and determined by a court of competent jurisdiction, and

(3) when the party against whom collateral estoppel is asserted was a party in privity with a party

to the prior action.” Thompson v. Wing, 70 Ohio St.3d 176, 183, 1994 Ohio 358, 637 N.E.2d 917.

“The essential test in determining whether the doctrine of collateral estoppel is to be

applied is whether the party against whom the prior judgment is being asserted had full

representation and a ‘full and fair opportunity to litigate that issue in the first action.’” Cashelmara

Villas Ltd. Partnership v. DiBenedetto, 87 Ohio App.3d 809, 813, 623 N.E.2d 213 (1993) (quoting

Hicks v. De La Cruz, 52 Ohio St.2d 71, 74, 369 N.E.2d 776 (1977)). Crucially, and contrary to

Plaintiffs’ assertion otherwise, “[i]ssue preclusion applies even if the causes of actions differ.” Id.

i. Facts and Issues in the Prior Arbitration Action

In the case at bar, Plaintiffs claim that in December 2014, Defendant Fritz Griffieon

spearheaded an effort to terminate Ms. Stewart’s membership interest in RRL and her subsequent

termination was done with the intent to interfere with health and life insurance benefits, protected

rights, to which both she and her beneficiary, Mr. Stewart, were entitled to under ERISA. (ECF

No. 12 at 49–51.) Plaintiffs further claim that Defendants IHT Insurance, RRL, and Fritz Griffieon

breached fiduciary duties owed to Plan participants and beneficiaries and failed to administer the

terms of the Plan evenly by “not treat[ing] alike similarly-situated persons.” (Id. at 52–53.)

Though the state court ordered the parties to arbitration to determine whether Ms. Stewart

was properly removed as a member of Defendant RRL, it was Ms. Stewart who expanded the

scope of arbitration by seeking permission to assert various counterclaims against Defendants RRL

and IHT Insurance and other parties she joined to the arbitration proceedings. On February 3,

2017, almost a year after filing her Amended Complaint in this Court, Ms. Stewart willingly

submitted to arbitration, with the assistance of counsel, the facts and issues of her alleged wrongful

termination from the Plan for the purported reason to intentionally interfere with her entitlement

to benefits and the Plan fiduciaries’ alleged breach of fiduciary duties owed to her by discontinuing

her benefits, including more favorable treatment of others similarly situated. (ECF No. 57-1.)

Ms. Stewart claimed in arbitration that she was wrongfully terminated without notice on

December 30, 2014 and shortly thereafter, “RRL and IHT took affirmative steps to wrongfully

terminate Stewart’s health, vision, and dental coverage, among other benefits” and she was

“entitled to continued benefits on the same terms and conditions existing prior to the unlawful

attempted removal, and on the same terms and conditions governing the continued benefits

provided to [others].” (Id. at 704, 709.) In support of her claims, Ms. Stewart submitted detailed

damages calculations for both her health and life insurance benefits to the arbitration panel. Thus,

the facts and issues concerning Ms. Stewart’s entitlement to benefits and the Plan fiduciaries’

alleged breach of fiduciary duties were actually and directly heard before the arbitration panel.

ii. Determined by a Court of Competent Jurisdiction

The arbitration panel unanimously found Ms. Stewart was properly removed as a member

of RRL, and that the remaining members adopted a plan for her removal prior to December 2014.

(ECF No. 57-2 at 763.) The panel denied Ms. Stewart’s counterclaims in their entirety and

rendered an award “in full resolution and settlement of all claims and counterclaims submitted to

this Arbitration.” (Id. at 763–64.) The panel’s decision was confirmed by the state trial court

through the entry of judgment against Ms. Stewart, affirmed by the state appellate court, and the

Supreme Court of Ohio twice declined to hear the case. (ECF No. 46 at 148.) Therefore, the facts

and issues concerning Ms. Stewart’s entitlement to benefits and her breach of fiduciary duty claims

were determined by a court of competent jurisdiction.

iii. Parties in Privity with a Party to the Prior Action

Furthermore, the parties to the present case were either parties to the arbitration or in privity

with those parties to the arbitration. Ohio courts apply “a relaxed concept of privity . . . for

purposes of res judicata” and do not require a contractual or beneficiary relationship. State ex rel.

Davis v. Pub. Emples. Ret. Bd., 2007-Ohio-6594, ¶ 23, 174 Ohio App. 3d 135, 145, 881 N.E.2d

294, 301. Instead, a “‘mutuality of interest, including an identity of desired result,’ might . . .

support a finding of privity.” O’Nesti v. DeBartolo Realty Corp., 862 N.E.2d 803 (2007) (quoting

Brown v. Dayton, 2000-Ohio-148, 89 Ohio St. 3d 245, 730 N.E.2d 958, 962). “Mutuality . . .

exists only if the person taking advantage of the judgment would have been bound by it had the

result been the opposite.” Id. “An interest in the result of and active participation in the original

lawsuit may also establish privity.” O’Nesti, 862 N.E.2d at 806.

Here, Plaintiffs share a beneficiary relationship, so the relaxed concept of privity need not

apply. The other non-parties to the arbitration, the Plan and Griffieon Agency, LLC are privies

for purposes of res judicata. Neither the Plan nor Griffieon Agency, LLC seek “personally tailored

relief to fit their unique circumstance or factual situation” and “their legal interests are the same”

as the other Defendants and parties to arbitration. Brown, 730 N.E.2d at 962 (finding taxpayers in

privity with each other for purposes of res judicata where they sought the same general

disallowance of a local ordinance for the same reasons). Likewise, had the arbitration panel

determined Ms. Stewart’s benefits were wrongfully terminated and that the Plan fiduciaries

breached any fiduciary duties owed to her, the Plan and Griffieon Agency, LLC would have been

bound by that result. Therefore, the Court finds the Plan and Griffieon Agency, LLC are privies

for purposes of res judicata.

Accordingly, all three elements of collateral estoppel: 1) actual and direct litigation; 2)

determination by a court of competent jurisdiction; and 3) privity have been met, and collateral

estoppel applies to Plaintiffs’ ERISA claims before this Court.

iv. Full and Fair Opportunity to Litigate the Issue in the First Action

Not only are the three elements of collateral estoppel satisfied, but Ms. Stewart had a full

and fair opportunity to litigate the issues surrounding her removal from RRL and termination of

benefits at arbitration. There, Ms. Stewart “was given full opportunity to present evidence over

three hearing days and made no challenge or objection the amount of time available to her to

present her counterclaims or defense of claims.” (ECF No. 57-2 at 758.) Thus, she cannot relitigate

the same underlying facts and issues here.

As such, Plaintiffs’ ERISA claims are subject to issue preclusion and further warrant

dismissal.

III. CONCLUSION

For the reasons stated above, Plaintiffs’ claims are DISMISSED WITH PREJUDICE.

Consequently, Plaintiffs’ pending motions (ECF Nos. 50 and 51) are DENIED as moot.

The Clerk is instructed to enter final judgment in favor of Defendants on all of Plaintiffs’

claims.

IT IS SO ORDERED.

/s/ James L. Graham

JAMES L. GRAHAM

United States District Judge

DATE: June 15, 2020