Conner v. Associated Radiologists, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA

CHARLESTON DIVISION

TIMOTHY M. CONNER,

Plaintiff,

v. CIVIL ACTION NO. 2:19-cv-00329

ASSOCIATED RADIOLOGISTS, INC., et al.,

Defendants.

MEMORANDUM OPINION AND ORDER

Before the Court is a motion to dismiss by Defendants Associated Radiologists, Inc.

(“ARI”), Associated Radiologists, Inc. Defined Benefit Plan (“DB Plan”), Shelby King (“Ms.

King”), John J. Anton, M.D., Michael E. Anton, M.D., Stephen M. Elksnis, M.D., and Johnsey L.

Leef, III, M.D. (collectively, “Defendants”). (ECF No. 7.) For the reasons discussed below, the

motion, (ECF No. 7), is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

Plaintiff Timothy M. Connor, M.D., (“Plaintiff”) is a radiologist and former employee,

shareholder, officer, and director of ARI. (ECF No. 1 at 1 ¶ 1.) In 2017, Plaintiff entered into

an employment agreement with ARI, which specified his salary, bonus, severance pay, and pension

rights, as well as his obligations as an employee of ARI. (Id. at 3 ¶¶ 11, 12.) The retirement

benefits afforded to Plaintiff under the agreement included a defined contribution plan and the DB

Plan, managed by Massachusetts Mutual Life Insurance Company (“MassMutual”). (Id. 2 ¶ 3, 3

¶ 13.) Ms. King is a certified public accountant employed by ARI as its current Business

Manager, and in this capacity administers certain aspects of the DB Plan. (Id. at 2 ¶ 4.) John J.

Anton, M.D., Michael E. Anton, M.D., Stephen M. Elksnis, M.D., and Johnsey L. Leef, III, M.D.

(collectively, “Physician Defendants”), are also shareholders, directors, and employees of ARI,

(id. ¶¶ 5, 6), and serve with Ms. King on the Executive Committee of ARI, which is responsible

for handling “personnel, compensation, and benefit” administration, (id. ¶ 7).

On March 30, 2018, Plaintiff informed ARI that he would resign on December 31, 2018.

(Id. at 4 ¶ 15.) At that time, Plaintiff believed, “based on documentation provided by

MassMutual, by and through ARI, (and also based on what was reported by MassMutual in his

online account),” that the value of his DB Plan account exceeded $1,000,000.000. (Id. ¶ 19.) In

planning for Plaintiff’s resignation, ARI contributed funds to the DB Plan so that Plaintiff could

receive the entire value of his DB Plan as a lump sum payment. (Id. at 5 ¶ 21.) “[I]n reliance on

the explicit assurance that he would have access to his entire lump sum on December 31, 2018

(and that the modest contribution necessary to effectuate that assurance had indeed been paid),

[Plaintiff] accordingly made no changes to his existing plan to formally retire on December 31,

2018, and left his money in the DB Plan.” (Id. ¶ 25.)

Plaintiff continued working and was informed in November 2018 “that a series of

‘miscommunications’ with MassMutual dating back to 2013 and continuing throughout the years

afterward had caused the substantial and material underfunding of the DB Plan.” (Id. at 8 ¶ 38.)

As a result, “ARI took actions to freeze the DB Plan” and required Plaintiff to pay $330,000.00 to

fund the plan. (Id. at 9 ¶ 40.) On November 16, 2018, Plaintiff was “informed that he would not

receive his salary for November and December[.]” (Id. ¶ 44.) Plaintiff, therefore, resigned from

ARI effective that same day. (Id. at 10 ¶ 45.) ARI subsequently paid Plaintiff his salary for the

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first half of November but denied him severance pay. (Id. ¶ 47, 11 ¶ 52.) Further, Plaintiff could

not access the funds in his DB Plan account, an amount less than he was assured to be paid, from

November 2018 to February 2019 because the plan had been terminated. (Id. ¶ 49.) On April

26, 2019, Plaintiff filed the instant suit asserting various ERISA claims and state law claims for

negligence, breach of fiduciary duty, breach of contract, violations of the West Virginia Wage

Payment and Collection Act (“WVWPCA”), W. Va. Code § 21–5–4, et seq., conversion, and civil

conspiracy. Defendants filed the present motion to dismiss on June 7, 2019. (ECF No. 7.)

Plaintiff timely responded, (ECF No. 14), and Defendants timely replied, (ECF No. 16). As such,

the motion is now fully briefed and ripe for adjudication.

II. LEGAL STANDARD

In general, a pleading must include “a short and plain statement of the claim showing that

the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); see McCleary-Evans v. Md. Dep’t of

Transp., State Highway Admin., 780 F.3d 582, 585 (4th Cir. 2015) (stating that this requirement

exists “to give the defendant fair notice of what the . . . claim is and the grounds upon which it

rests” (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007))). To withstand a motion to

dismiss made pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must plead enough

facts “to state a claim to relief that is plausible on its face.” Wikimedia Found. v. Nat’l Sec.

Agency, 857 F.3d 193, 208 (4th Cir. 2017) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

“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.” Iqbal, 556

U.S. at 678. Stated another way, the factual allegations in the complaint “must be sufficient ‘to

raise a right to relief above the speculative level.’” Woods v. City of Greensboro, 855 F.3d 639,

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647 (4th Cir. 2017) (quoting Twombly, 550 U.S. at 555). Well-pleaded factual allegations are

required; labels, conclusions, and a “formulaic recitation of the elements of a cause of action will

not do.” Twombly, 550 U.S. at 555; see also Ms. King v. Rubenstein, 825 F.3d 206, 214 (4th Cir.

2016) (“Bare legal conclusions ‘are not entitled to the assumption of truth’ and are insufficient to

state a claim.” (quoting Iqbal, 556 U.S. at 679)).

In evaluating the sufficiency of a complaint, the court first “identif[ies] pleadings that,

because they are no more than conclusions, are not entitled to the assumption of truth.” Iqbal,

556 U.S. at 679. The court then “assume[s] the[] veracity” of the complaint’s “well-pleaded

factual allegations” and “determine[s] whether they plausibly give rise to an entitlement to relief.”

Id. Review of the complaint is “a context-specific task that requires [the court] to draw on its

judicial experience and common sense.” Id. “[T]o satisfy the plausibility standard, a plaintiff is

not required to plead factual allegations in great detail, but the allegations must contain sufficient

factual heft to allow a court, drawing on judicial experience and common sense, to infer more than

the mere possibility of that which is alleged.” Nanni v. Aberdeen Marketplace, Inc., 878 F.3d

447, 452 (4th Cir. 2017) (internal quotation marks omitted).

III. DISCUSSION

A. Count One – ERISA § 502(a)(1)(A)

In Count One of the Complaint, Plaintiff alleges a violation of ERISA’s plan production

requirement under 29 U.S.C. § 1024(b)(4). (See ECF No. 1 at 12 ¶¶ 57–62.) 29 U.S.C. §

1024(b)(4) provides that “[t]he administrator shall, upon written request of any participant or

beneficiary, furnish a copy of the . . . instruments under which the plan is established or operated.”

Specifically, Plaintiff alleges that on November 19, 2018, he “requested all paperwork that was

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necessary for him to assess the status of his retirement benefits, access those funds, and roll over

both his DB Plan account and his Defined Contribution Plan into another qualified plan” but that

his request “was not answered within 30 days.” (ECF No. 1 at 10 ¶ 46.) Thus, he asserts that he

is entitled to the daily penalty provided under ERISA § 502(c). See 29 U.S.C. 1132(c)(1)

(providing that “[a]ny 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 . . . by mailing the material requested to the last known address of the requesting

participant or beneficiary within 30 days after such request may in the court’s discretion be

personally liable to such participant or beneficiary in the amount of up to $100 a day . . . .”).

Defendants counter that because Plaintiff’s November 19, 2018, request was not made in

writing, the statutory penalty is not available, and his claim must be dismissed. (ECF No. 8 at 3.)

The Court agrees and finds it is fatal to Plaintiff’s claim that he does not specifically allege that

his request for information under the DB Plan was made in writing as required by 29 U.S.C. §

1024(b)(4). See, e.g., Cohen v. Independence Blue Cross, 820 F. Supp. 2d 594, 609 (D. N.J. 2011)

(noting a written request “is an essential requirement under 29 U.S.C. § 1024(b)(4)” and dismissing

claim for failure to timely provide plan information because the plaintiffs did not allege that the

beneficiary made any written requests for documents); Professional Orthopedic Associates, PA v.

Excellus Blue Cross Blue Shield, No. 14–6950, 2015 WL 4387981, at *14 (D.N.J. July 15, 2015)

(relying on Cohen and finding that the “failure to allege that the plan beneficiary made the written

request is fatal to Plaintiffs’ claim under § 503(c).”); Ernisse v. L.L. & G., Inc., No. 07–2579, 2008

WL 4499974, at *6 (D. Kan. Sept. 29, 2008) (same); Powers v. AT&T, No. 15–cv–01024, 2015

WL 5188714, at *7 (N.D. Cal. Sept. 4, 2015) (noting that whether requests for information were

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in writing is a necessary detail to state a claim for a Section 502(c) violation). Accordingly,

Defendants’ motion is GRANTED insofar as it seeks to dismiss Count One for failure to state a

claim upon which relief can be granted.1

B. Count Two – ERISA § 502(a)(1)(B)

In Count Two, Plaintiff asserts a claim under § 502(a)(1)(B) to recover the value of his DB

Plan in full. Specifically, Plaintiff alleges that Defendants assured him he would receive a lump

sum payment of the entire value of his benefits but, despite this assurance, the value of his funds

decreased by $127,512.78 due to Defendants’ mismanagement of the DB Plan. Therefore, he

seeks to recover this lost balance. (ECF No. 1 at 13 ¶¶ 63–68.)

Defendants make two arguments in support of their proposition that the allegations in the

Complaint do not support a claim under § 502(a)(1)(B). First, they contend that Plaintiff has not

exhausted the administrative remedies required under the DB Plan Summary Plan Description.

Second, they argue that the Complaint does not assert a cognizable claim because Plaintiff has not

established that the lost balance was due to some malfeasance or nonfeasance on the part of

Defendants. (ECF No. 8 at 3–4.)

Relying on Smith v. Sydnor, 184 F.3d 356 (4th Cir. 1999), Plaintiff, first, argues that the

DB Plan’s exhaustion requirement does not apply to his claim. In Smith, the Fourth Circuit held

1 In response to Defendants’ motion to dismiss, Plaintiff attaches two emails exchanged between Plaintiff and Ms.

King to support his claim that a written request was made. (ECF No. 14-1.) While a court is free to consider

documents attached to a motion to dismiss “so long as they are integral to the complaint and authentic,” Philips v. Pitt

Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009), the Complaint here makes no reference to these emails or a

written request whatsoever. Even if the Court were to consider these documents, they offer no facts from which the

Court can reasonably infer that a written request was made. The first email, dated November 19, 2018, is from

Plaintiff to Ms. King and states the following: “Should I stop by the office today and pick up paperwork or is there a

form being mailed to me? Do I need destination account set up right as paperwork is filed?” (Id. at 2.) In the

second email, Ms. King advises Plaintiff that the paperwork is being mailed to him directly and that she can sign as

the plan administrator. (Id. at 4.) Whether these documents serve as a written request for Plaintiff’s DB Plan

information is an issue of fact that would otherwise be more appropriate for summary judgment.

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that exhaustion is not required when ERISA claims are statutory and not based on the plan

administrator’s denial of benefits. Id. at 362–63 (holding that administrative remedies must be

exhausted “before bringing a claim for breach of fiduciary duty in federal court where the basis of

the claim is a plan administrator’s denial of benefits or an action by the defendant closely related

to the plaintiff’s claim for benefits, such as withholding of information regarding the status of

benefits.”) There, the plaintiff did “not challenge a denial of benefits or an action related to denial

of benefits, but rather the conduct of [the fiduciaries] that he claims [ ] lowered the value of his

and the other participants’ 401(k) Plan accounts.” Id. at 363. Thus, the court concluded that the

plaintiff asserted valid claims for breach of fiduciary duties because the resolution of the claims

rested upon an interpretation and application of ERISA rather than upon the plan. Id. at 362. As

such, the plaintiff was not required to exhaust the plan provisions before filing suit for breach of

fiduciary duties.

Like in Smith, Plaintiff, here, claims that Defendants’ conduct lowered the value of his DB

Plan account. Plaintiff alleges that MassMutual provided financial records and an online account

statement reflecting a total estimated balance of $1,051,210.81 to his individual account during

the January to June 2018 period. (ECF No. 1 at 4–5 ¶ 19, 8 ¶ 36.) He alleges that because

Defendants elected to freeze or terminate the plan in November 2018, (id. at 6 ¶ 29), the DB Plan

funds no longer accrued benefits as of the date of the freeze through February 2019, (id. at 10 ¶

49, 11 ¶ 50). Plaintiff, therefore, claims that the value of his plan decreased and he “is entitled

to recover the lost balance.” (Id. at 13 ¶¶ 66, 68.) He further claims that his low return under the

DB Plan was “attributable, in substantial part, to the negligent mismanagement and negligent

miscommunication” by ARI, Ms. King, and MassMutual. (Id. at 11–12 ¶ 56.)

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While Plaintiff frames Count Two as a claim under § 502(a)(1)(B) to recoup benefits

denied under the DB Plan, it appears he intends to advance this claim to hold the fiduciaries liable

for actions that allegedly reduced the value of the DB Plan and recover his lost balance. This

claim does not require this Court to interpret and apply the terms of the DB Plan as would be

necessary under a claim for benefits. To determine liability for the alleged mismanagement of

the DB Plan, the Court would only need to evaluate whether the Defendants’ actions were wrongful

under ERISA. As established in Smith, the Court agrees with Plaintiff that he is not required to

exhaust his administrative remedies where his claims rest upon compliance with ERISA.

Turning to Defendants’ next argument, the Court finds that Plaintiff does not need to

establish at the pleading stage that the lost balance was due to some malfeasance or nonfeasance

on the part of Defendants. The Complaint need only plead some facts that “plausibly give rise to

an entitlement to relief.” Iqbal, 556 U.S. at 679. Plaintiff satisfies this requirement by alleging

throughout his Complaint that his low balance was “attributable, in substantial part, to the

negligent mismanagement and negligent miscommunication” by ARI, Ms. King, and MassMutual.

(Id. at 11–12 ¶ 56.)

Nonetheless, such a claim is typically pled as a claim for breach of fiduciary duty under §

502(a)(2) rather than a claim under § 502(a)(1)(B). See 29 U.S.C. § 1132 (a)(2) (providing a civil

action “for appropriate relief under section 1109” for breach of a fiduciary duty); LaRue v.

DeWolff, Boberg & Associates, Inc., 552 U.S. 248 (2008) (holding that “although § 502(a)(2) does

not provide a remedy for individual injuries distinct from plan injuries, that provision does

authorize recovery for fiduciary breaches that impair the value of plan assets in a participant’s

individual account.”); Marks Const. Co., Inc. v. Huntington Nat’l Bank, 614 F. Supp. 2d 700 (N.D.

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W. Va. 2009) (holding that § 502(a)(2) of ERISA authorizes recovery for fiduciary breaches that

impair the value of plan assets in a participant’s individual account where the alleged fiduciary

misconduct relating to defunct plan occurred before the termination of the plan); Smith, 184 F.3d

at 363 (finding that the plaintiff’s claim under § 502(a)(2) challenges “the conduct of [the

defendants] that he claims has lowered the value of his” plan). But see Mass. Mut. Life Ins. Co.

v. Russell, 473 U.S. 134, 140 (1985) (holding that a participant in a disability plan could not bring

suit under § 502(a)(2) to recover consequential damages arising from delay in the processing of

her claim because § 502(a)(2) “provid[es] remedies that would protect the entire plan rather than

individuals” (internal quotation omitted)). The Court is not aware of any cases where similar

claims were brought under § 502(a)(1)(B), and Plaintiff has not directed the Court to any.

Moreover, “any recovery under § 502(a)(2) must be for the plan as a whole rather than for

individual beneficiaries.” Coyne & Delany Co. v. Blue Cross & Blue Shield, 102 F.3d 712 (4th

Cir. 1996) (citing Mass. Mutual Life Ins. Co. v. Russell, 473 U.S. 134 (1985)). Thus, the Court

cannot recast Plaintiff’s claim, which seeks to recoup only his individual losses, as one brought

under § 502(a)(2). Accordingly, the motion to dismiss Count Two is GRANTED.

C. Count Three – ERISA § 502(a)(3)

In Count Three, Plaintiff claims that Defendants breached their fiduciary duties under the

DB Plan. Specifically, Plaintiff alleges that ARI “has a fiduciary duty as Plan sponsor to operate

the DB Plan” in accordance with ERISA, (ECF No. 1 at 14 ¶ 70), that Ms. King, “as plan

administrator, has a fiduciary duty to administer the DB Plan in accordance with” ERISA, (id. at

15 ¶ 75), and that “all the Defendant Physicians, respectively, have a fiduciary duty to one another

as shareholders and directors of ARI.” (Id. ¶ 77.) Plaintiff alleges that ARI was acting as a

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fiduciary and breached its fiduciary duties by misleading Plaintiff about his ability to access his

benefits on the date of his resignation, failing to prudently communicate and manage the DB Plan

with MassMutual, which resulted in underfunding of the plan, and terminating the DB Plan. (Id.

¶¶ 71–73.) Plaintiff also claims that Ms. King and the Defendant Physicians breached their

fiduciary duties because they acted in concert with ARI and played an “active and intentional role”

in ARI’s behaviors. (Id. at 15 ¶¶ 75–78.) Defendants argue that Plaintiff fails to allege a breach

of fiduciary duty because these alleged acts are purely administrative and were not taken in a

fiduciary capacity. (ECF No. 8 at 4–6.)

On a motion to dismiss, “the threshold question is whether the plaintiff has sufficiently

alleged that the defendant was a ‘fiduciary.’” Moon v. BWX Techs., Inc., 577 F. App’x 224, 229

(4th Cir. 2014) (citing Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 60–61 (4th Cir. 1992)).

Two general types of fiduciaries exist under ERISA. See Dawson-Murdock v. National

Counseling Group, Inc., 931 F.3d 269, 275 (4th Cir. 2019) (citations omitted). The first type of

fiduciary contemplated by ERISA is a “named fiduciary,” who is named in the plan documents.

Id. (citing 29 U.S.C. § 1102(a)(2)). The second type is a “functional fiduciary.” Id. at 276.

Under ERISA, a person is a “functional fiduciary” to a plan when:

(i) he exercises any discretionary authority or discretionary control respecting

management of such plan or exercises any authority or control respecting

management or disposition of its assets, (ii) he renders investment advice for a fee

or other compensation, . . . with respect to any moneys or other property of such

plan, or has any authority or responsibility to do so, or (iii) he has any discretionary

authority or discretionary responsibility in the administration of such plan.

29 U.S.C. § 1002(21)(A). In summarizing the two types of fiduciaries, the Fourth Circuit has

explained that “the concept of a fiduciary under ERISA . . . includes not only those named as

fiduciaries in the plan instrument, . . . but [also] any individual who de facto performs specified

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discretionary functions with respect to the management, assets, or administration of a plan.” Id.

(citing Custer v. Sweeney, 89 F.3d 1156, 1161 (4th Cir. 1996)).

Pursuant to ERISA, a person is a fiduciary “only to the extent that he acts in such a capacity

in relation to a plan.” Pegram v. Herdrich, 530 U.S. 211, 225–26 (2000) (citing 29 U.S.C.

§1002(21)(A)); Lockheed Corp. v. Spink, 517 U.S. 882, 890–91 (1996) (holding that a person

becomes a fiduciary within the meaning of the statute only “when fulfilling certain defined

functions” (internal quotation omitted)). An employer’s status as “an ERISA plan sponsor does

not automatically convert the employer into a plan fiduciary.” Moon, 577 F. App’x at 229 (citing

Beck v. PACE Int’l Union, 551 U.S. 96, 101 (2007)). For example, an employer “can be [an]

ERISA fiduciar[y] and still take actions to the disadvantage of employee beneficiaries, when they

act as employers (e.g., firing a beneficiary for reasons unrelated to the ERISA plan), or even as

plan sponsors (e.g., modifying the terms of a plan as allowed by ERISA to provide less generous

benefits).” Pegram, 530 U.S. at 225. Thus, a functional analysis is necessary to determine if

an employer acted as a fiduciary and owed a fiduciary duty regarding particular conduct. See id.

at 226; Coleman v. Nationwide Life. Ins. Co, 969 F.2d 54, 61 (4th Cir. 1992) (explaining that “a

court must ask whether a person is a fiduciary with respect to the particular activity at issue.”);

Estate of Weeks v. Advance Stores Co., 99 F. App’x 470, 476 (4th Cir. 2004) (“[O]ur determination

of whether a person qualifies as an ERISA fiduciary is based on a person’s job activities rather

than job title.”).

Here, Plaintiff alleges that Defendants acted as a fiduciary and breached their duty in the

following three instances: (1) misleading Plaintiff about his ability to access his benefits; (2) failing

to prudently communicate and manage the DB Plan with MassMutual; and (3) terminating the DB

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Plan. (ECF No. 1 at 14–15.) As an initial matter, it is well-settled that “an employer’s decision

whether to terminate an ERISA plan is a settlor function immune from ERISA’s fiduciary

obligations.” Beck, 551 U.S. at 101 (emphasis omitted); Curtiss-Wright Corp. v. Schoonejongen,

514 U.S. 73, 78 (1995) (an employer “does not act in a fiduciary capacity when deciding to amend

or terminate a welfare benefits plan’”); Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 443 (1999)

(“Plan sponsors who alter the terms of a plan do not fall into the category of fiduciaries”) (quoting

Lockheed Corp., 517 U.S. at 890). Thus, since none of the defendants were acting in a fiduciary

capacity when deciding to terminate the DB Plan, this alleged conduct cannot support a claim

under § 1132(a)(3).

However, the Court is satisfied that the Complaint plausibly alleges that Defendants acted

as fiduciaries when advising Plaintiff about his ability to receive his accrued benefits in a “full

lump sum on the date of his noticed resignation,” (ECF No. 1 at 14 ¶ 71), and “communicat[ing]

and manag[ing] the DB Plan with MassMutual,” (id. at 14 ¶ 72). These alleged fiduciary acts

with respect to each defendant are addressed in turn.

1. ARI

With respect to ARI, Plaintiff’s claim for breach of fiduciary duty under ERISA § 502(a)(3)

is adequately pled. First, Plaintiff sufficiently alleges that ARI acted as a fiduciary by providing

him information from upper management that allowed him to make an informed decision related

to the DB Plan. The Supreme Court and the Fourth Circuit have both recognized that conveying

information about plan benefits to a beneficiary in order to assist plan-related decisions can

constitute fiduciary activity. See Varity Corp. v. Howe, 516 U.S. 489, 505 (1996) (explaining

that “intentional representations about the future of plan benefits, thereby permitting beneficiaries

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to make an informed choice about continued participation” is a fiduciary activity); Griggs, v. E.I.

DuPont de Nemours & Co., 237 F.3d 371, 379-80 (4th Cir. 2001) (holding a plan administrator

acted in fiduciary capacity by communicating with participant about pension benefits). An

employer can also be held liable when a plan administrator offers tailored advice concerning

benefit decisions. See Dawson-Murdock, 931 F.3d at 280; cf. Advance Stores Co., 99 F. App’x

at 476 (finding an administrative employee did not act as an ERISA fiduciary when she “simply

repeated information that was given to her by upper-management or that had already been inputted

into the company’s computer database.”). In Dawson-Murdock, a beneficiary alleged that the

employer violated ERISA’s fiduciary duties by advising her, through the employer’s vice

president, that she did not need to appeal the insurer’s denial of her benefits claim. Dawson-

Murdock, 931 F.3d at 280. The Fourth Circuit rejected the employer’s argument that the vice

president’s conduct was taken in an administrative capacity. Id. In reaching this conclusion,

the court noted that the beneficiary received “tailored advice” from an upper management

employee “over a sustained period” and distinguished these facts from Weeks, where an employee

merely repeated information received from upper management. Id. n.15.

Here, Plaintiff sufficiently alleges that ARI acted in a fiduciary capacity, through its

employees, by providing information about Plaintiff’s ability to access his benefits. First,

through its employees, ARI made representations about his ability to access his plan benefits in

the future, (ECF No. 1 at 5 ¶¶ 21–22), thereby permitting Plaintiff to make an informed choice

about retiring and accessing his benefits. (Id. at 4 ¶ 18.) Like in Dawson-Murdock, Plaintiff

states that he detrimentally relied on tailored information he received from the Board of Directors

(the Physician Defendants) and the plan administrator related to the contribution amount he would

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receive and assurance that it had already been paid. (Id. at 5 ¶ 25.) Importantly, unlike the

information provided in Weeks, the ARI employees did not “simply repeat information that was

given to them.” Rather, the Complaint alleges that the information was determined and decided

at an official Board meeting, (id. ¶ 21), and Ms. King informed Plaintiff of her own action of

allegedly paying the $142,600.00 from the group funds, (id. ¶ 22).

Defendants argue that this conduct was not fiduciary in nature based on the Department of

Labor’s (“DOL”) guidance that clerical or ministerial acts do not implicate fiduciary conduct. 29

C.F.R. § 2509.75-8, D-2. But the context of the DOL’s guidance makes clear that such is the

case only where the person doing the calculations is not in a policymaking position:

[A] person who performs purely ministerial functions such as . . . [benefit

calculations] for an employee benefit plan within a framework of policies,

interpretations, rules, practices and procedures made by other persons is not a

fiduciary because such person does not have discretionary authority or

discretionary control respecting the management of the plan . . . and does not have

any authority or responsibility to do so.

Id. (emphasis added). Conversely, as for those in policy-making positions, the DOL indicates

the following:

Some offices or positions of an employee benefit plan by their very nature require

persons who hold them to perform one or more of the functions described in section

3(21)(A) of the Act. For example, a plan administrator . . . must, b[y] the very

nature of his position, have “discretionary authority or discretionary responsibility

in the administration” of the plan . . . . Persons who hold such positions will

therefore be fiduciaries.

Id. at D-3.

In sum, the 1975 DOL bulletin explains that a person or entity with only ministerial

functions in relation to a plan is not a functional fiduciary, whereas a person or entity with

discretionary authority or discretionary responsibility in the administration of the plan is a

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fiduciary. Here, Ms. King is the plan administrator, tasked with administering and answering

questions about the DB Plan, (ECF No. 1 at 2 ¶ 4, 15 ¶ 75; ECF No. 7-4 at 26 (2012 Summary

Plan Description)), and the Board is a named trustee, which is responsible for managing the DB

Plan assets, (id.).2 Thus, Plaintiff has pled sufficient facts to allow the Court to draw the

reasonable inference that ARI, through the Plan Administrator and its Board, acted in a fiduciary

capacity in providing information to Plaintiff related to his ability to access his benefits.

Plaintiff also alleges that ARI acted in a fiduciary capacity in managing the DB Plan. A

corporation sponsoring an employee benefit plan, such as ARI, can be a fiduciary where it has a

substantial role in making investment decisions. See Davidson v. Cook, 567 F. Supp. 225, (E.D.

Va. 1983), judgment aff’d without published op, 734 F.2d 10 (4th Cir. 1984); Atwood v. Burlington

Industries Equity, Inc., No. 2:92-cv-00716, 1994 WL 698314 (M.D.N.C. Aug. 3, 1994) (finding

that a corporation was sufficiently alleged to be an ERISA fiduciary where it allegedly had the

ability to direct the plan trustee’s investment of stock, the trustee’s borrowing of funds with which

to purchase stock, and the trustee to repay funds borrowed from the employer). However,

Plaintiff has only alleged that ARI has a fiduciary duty based on its status as a plan sponsor, without

any facts indicating ARI exercised any discretionary authority or discretionary control respecting

management or administration of the assets. Further, the DB Plan documents shows that ARI did

not reserve any fiduciary rights in the DB Plan. ARI assigned the duty of managing funds to the

Board and the duty of administering the DB Plan to the Plan Administrator, Ms. King. (ECF No.

7-1 at 41-44, 46-49 (ARI DB Plan).) Thus, Plaintiff has not pled enough facts to allow the Court

2 Even if the Board was not explicitly named a fiduciary in the DB Plan, under the holding of Curtiss-Wright Corp.

v. Schoonejongen, 514 U.S. 73, 80–81 (1995), an ERISA plan need not specify individuals or bodies within a company

to show who has the authority to perform the action on behalf of the corporation.

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to draw a reasonable inference that ARI acted in a fiduciary capacity in managing the DB Plan

assets.

2. Ms. King

As for Ms. King, the Court finds that Plaintiff has sufficiently pled that she was acting as

a fiduciary both when providing Plaintiff with information on his ability to access his benefits and

managing the DB Plan with MassMutual. Critically, the Fourth Circuit has concluded that a

plaintiff need not allege that an ERISA plan administrator and named fiduciary also satisfies the

functional fiduciary test to state a plausible fiduciary breach claim under ERISA. See Dawson-

Murdock, 931 F.3d at 280. As stated previously, the term “named fiduciary” means a fiduciary

“who is named in the plan instrument” and has “authority to control and manage the operation and

administration of the plan” pursuant to a procedure specified in the plan. See 29 USCA § 1102.

Here, Ms. King is listed as the plan administrator, who has the authority to control and manage the

operation and administration of the DB Plan. (ECF No. 9-3 at 4 (ARI Plan Summary); ECF No.

8 at 2; ECF No. 7-1 at 46.) Thus, Plaintiff has sufficiently pled that Ms. King acted in a fiduciary

capacity by providing information on Plaintiff’s ability to access his benefits and by managing the

DB Plan.

3. Physician Defendants

Turning to the Defendant Physicians, the Court finds that Plaintiff has sufficiently pled that

Defendant Physicians, as both the Board and shareholders, were acting in a fiduciary capacity

when managing the DB Plan with MassMutual. Directors or trustees of the plan are ordinarily

deemed to be fiduciaries because they must, by the very nature of their position, have

“discretionary authority or discretionary responsibility in the administration” of the plan. 29 CFR

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§ 2509.75-8, D-3. But members of the board of directors of an employer that maintains an

employee benefit plan will be fiduciaries only to the extent that they have responsibility for the

functions described in section 3(21)(A) of the Act. Id. § 2509.75-8, D-4. The DOL provided the

following example to illustrate:

[T]he board of directors may be responsible for the selection and retention of plan

fiduciaries. In such a case, members of the board of directors exercise

“discretionary authority or discretionary control respecting management of such

plan” and are, therefore, fiduciaries with respect to the plan. However, their

responsibility, and, consequently, their liability, is limited to the selection and

retention of fiduciaries[.]”

Id.

Here, the DB Plan explicitly tasks the Board with the responsibility of managing DB Plan

assets. (ECF No. 7-4 at 26; ECF No. 7-1 at 41-44.) This includes directing the acquisition and

disposition of any of the plan’s assets, developing a policy for funding the plan, and retaining and

consulting with accountants, actuaries, and other professional advisors. (ECF No. 7-1 at 46.)

Thus, any management—or lack thereof—of ARI’s assets was a fiduciary act of the Board. See

ERISA § 404(a)(1), 29 U.S.C.A. § 1104(a)(1) (providing that fiduciary misconduct can include

acts or omissions). Therefore, the Complaint alleges sufficient facts to allow the Court to infer

that the Board acted in a fiduciary capacity when managing the plan with MassMutual based on

its obligation to do so as set forth in the DB Plan.

In addition, Plaintiff has sufficiently pled that Defendant Physicians, as shareholders, were

acting in a fiduciary capacity when managing the account. A corporation is an entity, separate

and distinct from its officers and stockholders, and, thus, its debts are not the individual

indebtedness of its stockholders. See DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co.,

540 F.2d 681, 683 (4th Cir. 1976). However, courts have declined to recognize this theory when

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it would produce “injustices or inequitable consequences.” Id. (citations omitted). Therefore,

“in an appropriate case and in furtherance of the ends of justice, the corporate veil will be pierced,

and its stockholders will be treated as identical.” Id. (citation omitted).

The determination of whether one entity constitutes the alter ego of another is to be made

on a case-by-case basis. Id. at 684 (finding that a corporation acted as alter ego of its president

and holding the president personally liable). Factors to consider include gross

undercapitalization, insolvency, siphoning of funds, failure to observe corporate formalities and

maintain proper corporate records, non-functioning of officers, control by a dominant stockholder,

and injustice or fundamental unfairness. See Keffer v. H.K. Porter Co., Inc., 872 F.2d 60, 65 (4th

Cir.1989); DeWitt, 540 F.2d 681, 684–87; see also United States Fire Ins. Co. v. Allied Towing

Corp., 966 F.2d 820, 828–29 (4th Cir. 1992) (introducing overlap of directors as additional factor).

Here, the Complaint offers facts to support the assertion that Defendant Physicians, as

individual stockholders, are liable for the alleged mismanagement of the DB Plan assets. For

instance, Plaintiff alleges that in July of 2018 he was assured a lump sum payment of

$1,051,210.81 upon retirement. The Complaint goes on to state that in August 2018, because of

“a series of miscommunications” with MassMutual dating back five years, the DB Plan was

underfunded. Plaintiff purportedly received only $923,698.03 from the DB Plan, which is

$127,512.78 less than he was promised, raising questions of insolvency. In addition, Plaintiff’s

allegations raise questions of injustice and fundamental unfairness. First, Plaintiff alleges that he

was required to make a $330,00.00 payment to the DB Plan, which was vastly beyond his allocable

share of the $142,600.00. Second, he asserts that Defendant Physicians refused to take alternative

paths to funding the DB Plan that would not have resulted in substantial harm to Plaintiff. The

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termination date of the DB Plan was the same day that Plaintiff intended to retire, and there are

allegations that Plaintiff was denied his final wages. Finally, Plaintiff claims that ARI failed to

provide requested documentation which resulted in Plaintiff being unable to access his DB Funds.

Accepting Plaintiff’s allegations as true, these facts allow the Court to draw a reasonable inference

that Defendant Physicians, as ARI shareholders, were acting as fiduciaries when managing the DB

Account as an alter ego of ARI.

However, as a final note, the Complaint does not support the assertion that Defendant

Physicians were acting in a fiduciary capacity when providing Plaintiff information on his ability

to access his benefits. First, the DB Plan vested the authority and responsibility to interpret the

plan and answer questions concerning its administration and application to the plan administrator,

Ms. King. Second, the Complaint does not allege that the Board provided Plaintiff with

information concerning his ability to access his benefits. Rather, the facts averred only provide

that the Board determined a contribution total so that Plaintiff could receive his lump sum payment

at the time of his departure. (ECF No. 1 at 5 ¶ 21.) This fact standing alone does not allow the

Court to infer that the Board intentionally misled Plaintiff regarding his ability to access his

benefits.3

For these reasons, the Complaint sets forth a plausible claim for relief under § 502(a)(3) of

ERISA and, thus, Defendants’ motion to dismiss Count Three is DENIED.

3 Considering Plaintiff has asserted a plausible claim for breach of fiduciary duty under § 502, Count Four, asserting

liability against ARI under the doctrine of respondeat superior, likewise, stands. Accordingly, Defendants’ motion

to dismiss Count Four on the basis that it is derivative of Counts One through Three is DENIED.

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D. Counts Five and Six – Common Law Negligence and Breach of Fiduciary Duty

Defendants argue that Plaintiff’s negligence and breach of fiduciary duty claims asserted

in Counts Five and Six relate to the DB Plan and, thus, must be dismissed as preempted by ERISA.

(ECF No. 8 at 6.) ERISA’s “civil enforcement remedies were intended to be exclusive.” Pilot

Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987). To this end, ERISA contains “express pre-

emption provisions” that are “deliberately expansive, and designed to ‘establish pension plan

regulation as exclusively a federal concern.’” Id. at 45–46 (quoting Alessi v. Raybestos-

Manhattan, Inc., 451 U.S. 504, 523 (1981)). ERISA’s preemption provision broadly provides

that “[ERISA] shall supersede any and all State laws insofar as they may now or hereafter relate

to any employee benefit plan described in section 1003(a) of this title . . . .” 29 U.S.C. § 1144(a).

“The term ‘State law’ encompasses not only statutes but also common law causes of action.”

Gresham v. Lumbermen’s Mut. Cas. Co., 404 F.3d 253, 258 (4th Cir. 2005). Further, the phrase

“relate to” is “given its broad common-sense meaning, such that a state law ‘relate[s] to’ a benefit

plan ‘in the normal sense of the phrase, if it has a connection with or reference to such a plan.’”

Pilot Life Ins. Co., 481 U.S. at 47 (quoting Metro. Life Ins. Co. v. Mass., 471 U.S. 724, 739 (1985)).

Turning first to Count Five, Plaintiff argues that his negligence claim “deals specifically

with the non-DB Plan Defendants’ mismanagement of the DB Plan,” not with the DB Plan itself.

(ECF No. 14 at 8–9.) However, this is simply nonsensical. Despite Plaintiff’s argument to the

contrary, Plaintiff explicitly alleges in Count Five that each defendant “failed to exercise

reasonable care in the administration of the DB Plan . . . .” (ECF No. 1 at 17 ¶ 87.) He adds that

Defendants “miscommunicate[ed] with MassMutual and irresponsibly allow[ed] the DB Plan to

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become substantially underfunded to the pecuniary detriment to [Plaintiff].” (Id. ¶ 88.) Quite

clearly, this allegation relates to the DB Plan and is subject to ERISA’s preemption clause.

In addition, the Fourth Circuit has recognized that “when a state law claim is completely

preempted as an alternative enforcement mechanism under § 502, it will also be ‘related to’ an

ERISA plan and preempted under § 514.” Darcangelo v. Verizon Commc’ns, Inc., 292 F.3d 181,

191 n.3 (4th Cir. 2002); Tingler v. Unum Life Ins. Co., No. 6:02-1285, 2003 WL 1746202, at * 4

(S.D. W. Va. Apr. 2, 2003) (claim of negligence was akin to ERISA claim for breach of fiduciary

duty and, thus, preempted). Here, Plaintiff’s negligence claim may be read as asserting the same

claim for enforcement of the fiduciary requirements of ERISA and of Plaintiff’s specific ERISA

plan. See supra III.C; 29 U.S.C. § 1104(a)(1) (requiring an ERISA fiduciary to “discharge [its]

duties with respect to a plan solely in the interest of the participants and beneficiaries”).

Accordingly, Defendants’ motion with respect to Count Five is GRANTED.

As for Count Six, Plaintiff contends that his common law breach of fiduciary duty claim

involves the obligation of good faith and fair dealing that ARI stockholders, directors, and officers

owe to one another—issues that only incidentally relate to the DB Plan. (ECF No. 14 at 9–10.)

Specifically, he points to the allegations regarding Defendants’ denial of his salary, bonuses, and

severance pay in support of the proposition that this claim relates to the employment contract rather

than the DB Plan. The Court agrees with Defendants that Plaintiff’s claim falls within the scope

of ERISA’s preemption provision but only to the extent he alleges that the DB Plan assets were

improperly managed. See supra III.C.

However, Plaintiff also alleges that Defendants, “[i]n their negligent and/or intentional

mistreatment of [Plaintiff], . . . violated their fiduciary duties . . . by intentionally taking advantage

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of [Plaintiff’s] departure to his detriment in order for them to benefit.” (ECF No. 1 at 18 ¶ 93.)

Plaintiff supports this assertion throughout the Complaint with allegations that Defendants

“eliminated all remaining salary and bonuses for 2018”, (id. at 9 ¶ 42), and denied his severance

pay, which he was purportedly entitled to under the terms of the employment agreement, (id. 9–

10 ¶ 44) in order to fund the DB Plan. Unlike in Count Five, Plaintiff does not simply allege

negligent plan administration. Rather, the Complaint alleges that Defendants were not fulfilling

their fiduciary function under the employment agreement. The actions Defendants allegedly

undertook concerning the denial of Plaintiff’s salary, bonuses, and severance pay were entirely

unrelated to and outside the scope of their duties under the DB Plan. Thus, Plaintiff’s claims do

not fall within the purview of ERISA’s preemption clause.

Defendants contend that, even if ERISA preemption does not apply, Plaintiff has not

adequately stated a claim for fiduciary breach under West Virginia common law principles. A

fiduciary duty is “[a] duty to act for someone else’s benefit, while subordinating one’s personal

interest to that of the other person.” Elmore v. State Farm Mut. Auto Ins. Co., 504 S.E.2d 893,

898 (W. Va. 1998) (citing Black’s Law Dictionary 625 (6th ed.1990)). Under West Virginia law,

“[a] violation of the fiduciary relationship may result from oppressive conduct, which is conduct

that departs from the standards of good faith and fair dealing which are inherent in the concept of

a fiduciary relationship.” Syl. pt. 3, Masinter v. WEBCO Co., 262 S.E.2d 433 (W. Va. 1980).

The West Virginia Supreme Court of Appeals has recognized that “the officers and directors of a

business corporation . . . occupy a fiduciary relationship toward the organization and its

shareholders. The same fiduciary relationship exists on the part of the majority shareholders of a

business corporation toward its minority shareholders.” Id. at syl. pt. 2.

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As discussed above, Plaintiff alleges throughout his Complaint that ARI, as an entity, and

Defendant Physicians, as shareholders, violated their fiduciary duties to Plaintiff by taking actions

“to his detriment” and for their own benefit. (ECF No. 1 at 18 ¶ 93, 10 ¶ 45, 11 ¶ 56 (alleging,

Defendants “altered the terms of his employment without his consent” and denied wages and

severance pay owed to him to fund the DB Plan.) Accepting Plaintiff’s well-pleaded factual

allegations as true, the Court finds that Count Six sufficiently alleges a claim for common law

breach of fiduciary duty. Accordingly, Defendants’ motion to dismiss Count Six as preempted

by ERISA and for failure to state a claim upon which relief can be granted is DENIED.

E. Count Seven – Breach of Contract

Next, Defendants move to dismiss Plaintiff’s breach of contract claim on the basis that ARI

fulfilled its obligation and remitted all earned wages and benefits owed to Plaintiff upon his

resignation. (ECF No. 8 at 7.) In Count Seven, Plaintiff alleges a breach of contract claim arising

from ARI’s denial of wages, bonuses, benefits, and severance pay, which he was purportedly

entitled to pursuant to the terms of his employment contract. (ECF No. 1 at 18–20 ¶¶ 95–104.)

Plaintiff’s claim is predicated on two theories: first, on promissory estoppel based on wrongful,

constructive discharge of Plaintiff’s fixed-term employment contract and, second, on common law

breach of contract for wrongful withholding of severance pay entitled to him under the terms of

the employment contract. (ECF No. 14 at 10.)

First, in support of his promissory estoppel claim, Plaintiff argues that the parties’ reliance

on Plaintiff’s December 31, 2018, departure gave rise to a term contract of employment that was

only terminable with just cause. He avers that ARI breached the term contract on or around

November 16, 2018, when Plaintiff was informed that he would not receive his salary for the

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remainder of his employment. Defendants deny the existence of a term contract and counter that

the only contract at issue in this case is the 2017 at-will employment contract between ARI and

Plaintiff.

West Virginia has long adhered to the doctrine of employment at-will. See Williams v.

Precision Coil, Inc., 459 S.E.2d 329, 340 (W. Va. 1995). Unless agreed to otherwise,

employment is at-will and may be terminated for any reason or no reason at all as long as the

termination is not contrary to law. See id. However, in some circumstances, an employer may

be estopped from claiming that an employment is at-will under the doctrine of promissory estoppel.

To establish the existence of promissory estoppel in the employment context, the employee must

show that (1) that the employer made a promise and “intended or reasonably should have expected”

that such promise “would be [relied or] acted upon” by an employee, and (2) that the employee,

“without fault himself, did [rely or] act” on that promise to his detriment. Hatfield v. Health

Mgmt. Assocs. of W. Va., 672 S.E.2d 395, 402 (W. Va. 2008) (citing syl. pt. 4, Barnett v. Wolfolk,

140 S.E.2d 466 (W. Va. 1965)).

The employment contract in this case purportedly establishes an at-will employment of

Plaintiff that could be terminated at any time by either party. (ECF No. 1 at 18 ¶ 96.) With

respect to any modifications to his at-will employment, the Complaint alleges that Plaintiff

provided written notice of resignation to ARI on April 2, 2018, with a departure date of December

31, 2018. (Id. at 4 ¶ 16.) Therein, he stated that he “expected that there would be ‘no major

changes in current compensation structures and amounts’” and also that he “expected to receive

the full Severance Pay pursuant to the Employment Agreement[.]” (Id.) According to the

Complaint, ARI “accepted [Plaintiff’s] notice of resignation, and its terms, and thereafter took

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steps to make arrangements for his departure . . . .” (Id. ¶ 17.) In reliance on ARI’s assurances,

Plaintiff “made no changes to his existing plan to formerly retire on December 31, 2018.” (Id. at

5 ¶ 25.) Plaintiff alleges, based on ARI’s acceptance of his resignation notice and guarantee to

provide wages and benefits owed to him under the contract, that a “for-cause” contract of

employment was created for a term through December 31, 2018. (Id. at 18 ¶¶ 96–97.) The

Complaint goes on to state that, despite the parties’ mutual understanding regarding the duration

of Plaintiff’s employment and the terms and conditions of his salary and benefits, ARI terminated

“all forms of compensation” for the “final two months of his term” and threatened to withhold his

severance pay, thereby “constructively discharge[ing] [Plaintiff] in November of 2018.” (Id. at

19 ¶ 99.) Based on these allegations, the Court finds that this claim survives the plausibility

standard under a Rule 12(b)(6) motion to dismiss.

The Court similarly finds that the Complaint adequately states a plausible claim for breach

of contract under common law. To state a claim for breach of contract, a plaintiff must allege

sufficient facts to support the following elements: “the existence of a valid, enforceable contract;

that the plaintiff has performed under the contract; that the defendant has breached or violated its

duties or obligations under the contract; and that the plaintiff has been injured as a result.”

Executive Risk Indem., Inc. v. CAMC, 681 F. Supp. 2d 694, 714 (S.D. W. Va. 2009) (citation

omitted). In the Complaint, Plaintiff references the severance pay provision of the employment

contract, which allegedly provides that ARI “shall pay . . . as termination pay an amount equal to

. . . four months’ salary if such termination occurs after the completion of four years of service

from the date of [the employee’s] original employment with [ARI], and at least four months’ notice

is given, calculated from the date of termination.” (ECF No. 1 at 19 ¶ 101.) As stated previously,

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Plaintiff alleges that notice of his resignation was orally given to ARI on March 28, 2018, and

reiterated in writing on April 2, 2018, over seven months before his departure in November, 2018.

(Id. at 4 ¶¶ 15–16, 19 ¶ 102.) Although he was employed with ARI since 1992, (id. at 3 ¶ 10),

and provided well over four months’ notice, Plaintiff states he was denied severance pay owed to

him under the employment contract after his resignation on November 18, 2018, (id. 11 ¶ 56).

While Defendants contend that Plaintiff did not comply with the notice requirement under the

severance provision, the Court need not determine this issue at the pleading stage. Further, the

employment contract has not been made a part of the record to allow the Court to address this

contention.4 Therefore, Defendants’ motion to dismiss Count Seven is DENIED.

F. Counts Nine and Ten – Conversion and Civil Conspiracy

Defendants also move to dismiss Plaintiff’s conversion and civil conspiracy claims under

the “gist of the action” doctrine. Defendants argue that liability, if any, for these tort claims stems

from Plaintiff’s employment contract with ARI and, thus, must be dismissed as tort-disguised

duplicates of Plaintiff’s breach of contract claim. (ECF No. 8 at 11–12.)

The gist of the action doctrine provides that a tort claim arising from a breach of contract

may be pursued only if “the action in tort would arise independent of the existence of the contract.”

Secure US, Inc. v. Idearc Media Corp., No. 1:08-cv-190, 2008 WL 5378319, at *3–4 (N.D. W.

Va. Dec. 24, 2008) (quoting syl. pt. 9, Lockhart v. Airco Heating & Cooling, 567 S.E.2d 619 (W.

Va. 2002)). The West Virginia Supreme Court of Appeals addressed the vitality of this doctrine

4 For the same reasons, the Court DENIES Defendants’ motion to dismiss Count Eight of the Complaint, asserting

violations of the WVWPCA. (ECF No. 1 at 20–21 ¶¶ 105–109.) In their motion, Defendants rely solely on

provisions of the employment contract in support of their proposition that Plaintiff himself breached the employment

contract and gave improper notice of resignation. They contend that, due to his breach and non-performance, ARI is

excused of its obligation to pay him unearned wages and benefits that he otherwise would have been entitled to under

the employment contract. These arguments, again, raise factual issues concerning the terms of the contract that the

Court will not resolve at this stage.

26

in Gaddy Eng’g Co. v. Bowles Rice McDavid Graff & Love, LLP, 746 S.E.2d 568 (W. Va. 2013).

In Gaddy, the court held that “recovery in tort will be barred” where any of the following four

factors is present:

(1) where liability arises solely from the contractual relationship between the

parties; (2) when the alleged duties breached were grounded in the contract itself;

(3) where any liability stems from the contract; and (4) when the tort claim

essentially duplicates the breach of contract claim or where the success of the tort

claim is dependent on the success of the breach of contract claim.

Id. at 577 (quoting Star v. Rosenthal, 884 F. Supp. 2d 319, 328–29 (E.D. Pa. 2012)). In short, to

determine “whether a tort claim can coexist with a contract claim”, the court must examine

“whether the parties’ obligations are defined by the terms of the contract.” Id. (citation omitted);

CWS Trucking, Inc. v. Welltech Eastern, Inc., No. 2:04-cv-84, 2005 WL 2237788, at *3 (N.D. W.

Va. Sept. 14, 2005) (stating “[t]he source of the duty is controlling.”).

The Court agrees with Defendants that Plaintiff’s tort claims against ARI are barred by the

gist of the action doctrine. Plaintiff’s assertions that ARI made misrepresentations and withheld

his wages, benefits, and severance pay to fund the DB Plan, (ECF No. 1 at 22–24), simply recasts

Plaintiff’s claim for breach of contract. In other words, ARI’s alleged liability is directly tied to

the duties and obligations assumed in the employment agreement. Gaddy, 746 S.E.2d at 586.

Therefore, Plaintiff’s conversion and conspiracy claims as to ARI are barred by the gist of the

action doctrine.

However, with respect to Ms. King and Defendant Physician, the Court finds that, under

the facts of this case, the claims may separately survive. Unlike Plaintiff’s tort claims against

ARI, the conversion and conspiracy claims as to Ms. King and Defendant Physicians do not

challenge a breach of duty owed under the employment contract but rather take issue with their

27

role in the alleged scheme to terminate the DB Plan and convert money owed to Plaintiff to fund

the plan. As Plaintiff notes, Ms. King and Defendants Physicians are not parties to Plaintiff’s

employment contract. Therefore, Plaintiff’s tort claims against these defendants arise wholly

from their fiduciary duties as shareholders and the administrator of the DB Plan.

Nevertheless, Defendants maintain that the Complaint fails to state plausible conversion

and conspiracy claims against Ms. King and Defendant Physicians. West Virginia law recognizes

conversion as “any distinct act of dominion wrongfully exerted over the property of another in

denial of his rights or inconsistent therewith . . . .” Rodgers v. Rodgers, 399 S.E.2d 664, 677 (W.

Va. 1990). In particular, Defendants argue that Plaintiff cannot establish that he was lawfully

entitled or otherwise had a property interest in any further payment pursuant to the employment

contract given his improper notice of resignation. The Fourth Circuit has clarified that “[a]

plaintiff cannot bring a claim for conversion unless he has a property interest in and is entitled to

immediate possession of the converted item.” Worldcom v. Byne, 68 Fed App’x 447, 454 (4th

Cir. 2003) (internal quotations omitted). However, for the reasons discussed previously, whether

Plaintiff was entitled to wages, benefits, and severance pay under the terms of the employment

contract is an issue of fact that the Court will not decide at this stage.

Further, to state a claim for civil conspiracy, a plaintiff must establish that two or more

persons acted “by concerted action to accomplish an unlawful purpose or to accomplish some

purpose, not in itself unlawful, by unlawful means.” The cause of action is not created by the

conspiracy but by the wrongful acts done by the defendants to the injury of the plaintiff.” Syl. pt.

8, Dunn v. Rockwell, 689 S.E.2d 255 (W. Va. 2009). Defendants argue that Plaintiff’s conspiracy

claim fails to satisfy the pleading requirements because he alleges no wrongful acts. Specifically,

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Defendants call attention to the allegation that Ms. King and Defendant Physicians formulated a

plan to terminate the DB Plan. They argue that, because it was within their discretion to terminate

the plan, Plaintiff offers no support for the assertion that it was terminated in an unlawful manner.

(ECF No. 16 at 10.) However, the Complaint bases the civil conspiracy claim, not only on

Defendants’ termination of the DB Plan, but also upon purportedly misleading Plaintiff about the

availability of his entire DB Plan account, denying him benefits, wages, and severance pay, and

colluding to convert money owed to Plaintiff to the DB Plan. As noted above, these alleged

wrongful acts are grounded in their fiduciary duties and, when accepted as true, more than

sufficiently demonstrate a claim for civil conspiracy.

For these reasons, the motion to dismiss Counts Nine and Ten is DENIED.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART

Defendants’ Motion to Dismiss. (ECF No. 7.) Specifically, the Court GRANTS Defendants’

motion to dismiss Counts One, Two, and Five and DENIES the motion as to the remaining counts.

IT IS SO ORDERED.

The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any

unrepresented party.

ENTER: February 14, 2020

&

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