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Alexander v. The Terry Law Firm, P.C.

United States District Court, E.D. Tennessee, Greeneville Division

November 7, 2016

DEBORAH SUSAN ALEXANDER and PAMELA WEEKS, Plaintiffs,
v.
THE TERRY LAW FIRM, P.C. 401(K) PROFIT SHARING PLAN and THE TERRY LAW FIRM, P.C., Defendant.

          MEMORANDUM OPINION

          Thomas W. Phillips United States District Judge

         This matter is before the Court on Defendants' Motion to Dismiss [doc. 8], Defendants' Brief in Support of the Motion to Dismiss [doc. 9], and Plaintiffs' Response in Opposition [doc. 11]. For the reasons herein, the Court will grant in part and deny in part Defendants' Motion.

         I. Background

         Plaintiffs Deborah Susan Alexander and Pamela Weems (“Plaintiffs”) allege that they were former employees of the Terry Law Firm, P.C. (“Terry Law Firm”) and participants in The Terry Law Firm, P.C. 401(k) Profit Sharing Plan (“Plan”). [Compl., doc. 1, ¶¶ 8- 11]. Plaintiffs claim that when their employment ended with the Terry Law Firm, they requested that the Terry Law Firm, the Plan's administrator, [1] transfer the retirement benefits they earned under the Plan to their personal retirement accounts. [Id. ¶ 13]. The Plan provides that a participant is eligible to receive distribution of retirement benefits “in the Plan Year following the Plan Year in which you terminate employment, ” after “request[ing] a distribution on the appropriate forms.” [The Plan, doc.1-4, at 13].

         In attempting to request their vested retirement benefits, Plaintiffs allege that they submitted all the necessary paperwork to the Terry Law Firm but that it has not executed their request and refuses to do so. [Compl. ¶ 17]. Instead, the Terry Law Firm brought a civil suit against Plaintiffs in state court, [2] and filed a “Motion to Pay Monies into Court, ” in which it asks the state court to order that “monies owed” to Plaintiffs under the Plan “be paid into” the court's registry, [Mot. to Pay Monies, doc. 9-1, 1]:

1. This case has been stayed at the request of the Defendants in an effort to allow the Defendants to protect any and all information, which may be used to incriminate themselves in a criminal action.
2. [T]he Defendants have thus far been able to protect documents from discovery . . . that would, in fact, show whether the Defendants misappropriated clients and monies from the [Terry Law Firm] while the Defendants were employed by the [Terry Law Firm].
. . . .
12. The [Terry Law Firm] would be entitled to a set off of any monies, which the Defendants obtained wrongfully or illegally and as a result since that amount cannot be determined at this time, the [Terry Law Firm] would ask the Court to hold these monies that could be used for a setoff in the Court's Registry until such time as the extent of the monies owed to the [Terry Law Firm] can be determined . . . .

[id. ¶¶ 1-2, 12].

         As a result, Plaintiffs brought suit in this Court under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461, alleging violations of 29 U.S.C. §§ 1132(a)(1)(B), (a)(3). [Compl. ¶ 4].[3] Plaintiffs also claim that the Terry Law Firm's efforts to deposit their vested retirement benefits into the state court's registry is a violation ERISA's prohibition against alienation under 29 U.S.C. § 1056.[4] [Id. ¶ 21]. Plaintiffs assert that because the Terry Law Firm refuses to disburse the funds, additional requests on their part “would be futile” and therefore “all avenues of administrative relief have been exhausted.” [Id. ¶ 25]. In Plaintiffs' prayer for relief, Plaintiffs request several remedies, including an accounting, specific performance, prejudgment interest, restitution, preliminary and permanent injunctions, and attorney's fees and expenses. [Id. at 6-7]. The Terry Law Firm and the Plan (“Defendants”) now request dismissal of the Complaint. [Defs.' Br. at 1-9].

         II. Legal Standard

         Under Federal Rule of Civil Procedure 8(a)(2), “[a] pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief.” In determining whether to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6), a court accepts the factual allegations in the complaint as true and construes them in a light most favorable to the non-moving party. See Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions, ” however, and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). In addition, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         III. Analysis

         Defendants argue that the Court should dismiss Plaintiffs' claim for the recovery of benefits under § 1132(a)(1)(B) because they “already paid Plaintiffs their entire vested balances” under the Plan. [Defs.' Br. at 3]. As a result, Defendants propose that Plaintiffs' claim under § 1132(a)(B)(1) is moot. [Id. at 4]. As for the claim under § 1132(a)(3), Defendants maintain that Plaintiffs fail to plead facts that can support a breach of fiduciary duty because Plaintiffs do not allege that Defendants have “misappropriated or misused” assets under the Plan. [Id. at 5]. Defendants also claim that because Plaintiffs have already received an adequate remedy under § 1132(a)(B)(1)-namely the receipt of their retirement benefits-they cannot invoke § 1132(a)(3) “to redress the exact same injury (i.e., nonpayment of benefits).” [Id.]. If dismissal is not proper on these grounds, Defendants urge the Court to dismiss the claims because Plaintiffs fail to allege facts that can support the remedies they seek under ERISA. [Id. at 6-9].

         In response, Plaintiffs agree that Defendants have recently distributed their funds under the Plan and that therefore “Plaintiffs' request for specific performance is now moot.” [Pls.' Resp. at 3]. Plaintiffs also state that Defendants have offered an accounting of their funds that is “satisfactory.” [Id.]. Although Plaintiffs acknowledge that they have received the funds, they nevertheless maintain that “this Court should issue a permanent injunction to prohibit Defendants from continuing to alienate Plaintiffs [sic] retirement monies.” [Id.]. Plaintiffs also contend that Defendants still owe them attorney's fees, prejudgment interest, and restitution totaling $175, which is a loss that they claim to have incurred because of “market fluctuation” while they waited for Defendants to distribute their funds. [Id.]. In sum, Plaintiffs maintain that “[a]t the time [they] filed their lawsuit, they were entitled to all of the relief sought” and have “forced the Defendants to attempt to comply ...


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