Curran v. Camden National Corp.

477 F.Supp.2d 247

Richard CURRAN, et al., Plaintiffs, v. CAMDEN NATIONAL CORPORATION, Defendant.

No. CV-06-104-B-W.

United States District Court, D. Maine.

February 28, 2007.

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Bruce C. Gerrity, Preti, Flaherty, Beliveau, Pachios & Haley, LLP, Augusta, ME, Joseph P. Messina, Peter A. Biagetti, Mintz Levin Cohn Ferris Glovsky & Popeo P.C., Boston, MA, Roy T. Pierce, Preti, Flaherty, Beliveau, Pachios & Haley, LLP, Portland, ME, for Plaintiffs.

John H. Montgomery, Lorelle K. Londis Dwyer, Daniel J. Mitchell, Bernstein, Shur, Portland, ME, for Defendant.

ORDER ON DEFENDANT'S MOTIONS TO DISMISS AND PLAINTIFFS' MOTION TO AMEND THE AMENDED COMPLAINT

WOODCOCK, District Judge.

If Camden National Corporation (CNC) terminated its membership in the Bankers' Health Trust (Trust) on June 30, 2006, it owes the Trust $525,000.00; if it terminates on June 30, 2007, it will owe almost nothing. The Trust prefers the larger number and has filed suit to get it.¹ CNC responded with a motion to dismiss, claiming that the Trust's law suit runs afoul of the remedy restrictions and preemption provisions of ERISA.

I. Factual Background

A. The Bankers' Health Trust

In 1994, the Maine Legislature passed the Maine Multi-Employer Welfare Arrangements Act (the Act). See 24-A M.R.S.A. §§ 6601 et seq.² The Act, enacted in response to rising health care costs, allows employers to pool their resources to lower premiums. Compl. ¶ 1. In 2000, in an effort to reduce their health care costs, seven small regional banks³ joined together to implement the provisions of the Act. Compl. ¶¶ 1, 8. They signed a Participation Agreement (Agreement) and Declaration of Trust (Declaration), both effective July 1, 2000. Compl. ¶ 1; Agreement ¶ 1; Declaration. The Declaration details a Participating Employer's obligations upon withdrawal from the Trust:

Consistent with the Act, including any regulation of the Superintendent, and any rule or regulation adopted from time to time by the Board of Trustees, a Participating Employer may withdraw from the Trust effective only as of the last day of any Plan Year, upon (i) at least ninety (90) days prior written notice to the Trustees and (ii) the payment of an additional three (3) months of premiums at the rate in effect as of the date of such termination.

Declaration Art. 4, ¶ 4.5.

B. The CNC Gives Notice of Withdrawal and the Trust Sends the Bills

On February 14, 2006, CNC wrote the Trust:

Please accept this letter as notification from Camden National Corporation of its intent to terminate participation in the Trust, as required in Article 4, paragraph 4.5 of the Bankers' Health Trust, Declaration of Trust Agreement ("Agreement"). We intend to notify you as to the effective date of our withdrawal by March 31, 2006.

Compl. Ex. C. On March 13, 2006, CNC met with Mark Walker — Managing Administrator of the Trust — and Dan Daigneault — the chairman of the Trust's board of trustees. Am. Compl. ¶ 42. Plaintiffs allege that CNC "proposed that it be allowed to withdraw from the Trust on June 30, 2006 and pay only its exact claims amount incurred prior to that date, rather than the three months' premium required by the Declaration of Trust and the Participation Agreement." Id ¶ 43. On March 14, 2006, the Trust's board of trustees rejected CNC's withdrawal proposal. Am. Compl. ¶¶ 43-44. In a letter dated March 23, 2006, Mark Walker explained:

As an ERISA plan, each Trustee holds a fiduciary duty for every employee receiving medical coverage from the Plan. Without doubt, Camden's decision to withdraw creates additional risk for the remaining employees, and authorizing either of Camden's requests adds to this risk. One of the primary benefits of a group plan is the increased stability from having larger numbers of enrolled participants. Camden's exit from the plan makes the Trust riskier for the remaining participants, and there is potential "harm" for the remaining participants should the Trustees approve either of the two requests.

Compl. Ex. D.

CNC replied by letter dated March 31, 2006 and frankly disclosed its plan for withdrawal:

Effective June 30, 2006 CNC will offer a large group of our employees a fully funded health insurance plan that will better meet their needs and cost demands. A smaller group of employees will continue their health insurance benefits through the Trust until June 30, 2007. Continuing CNC's membership as a participating employer in the Trust will decrease the three-month premium penalty assessed upon termination and will protect our interests in the cash fund reserve, which we firmly believe is based on actual paid-in value by the participating employer and employees.

Compl. Ex. D. According to CNC, its withdrawal would become effective June 30, 2007, not 2006.⁴ In the interim, CNC's enrollment would decrease from 260 participants to just five, thereby dramatically reducing the "rate in effect as of the date of such termination" under paragraph 4.5 of the Declaration, and, accordingly, the termination amount CNC owed the Trust. Am. Compl. ¶ 50.

Notwithstanding CNC's letter, the Trust treated CNC's February 14, 2006 notice as establishing the effective date of withdrawal, June 30, 2006, and the Trust issued CNC invoices for the three-month "runoff period" in the amount of $175,200 per month. See Ex. E, F. After CNC failed to pay, the Trust brought suit.⁵

II. Procedural History

In their Amended Complaint, Plaintiffs allege federal jurisdiction under ERISA and assert several state law claims. See Am. Compl. (Docket # 10). The Amended Complaint contains six counts: (1) breach of contract — Declaration; (2) breach of contract — Agreement; (3) breach of the implied covenant of good faith and fair dealing; (4) breach of fiduciary duty in violation of ERISA, 29 U.S.C. § 1109; (5) civil enforcement of Declaration and Agreement, 29 U.S.C. 1132; and, (6) declaratory judgment. On November 20, 2006, Plaintiffs moved to amend the Amended Complaint, attaching a proposed Second Amended Complaint. See Pls.' AM. for Leave to Amend the Compl. (Docket # 19). This pleading would add a new paragraph 86 under Count V:

The Trust therefore seeks equitable relief to redress Camden National's violations of the terms of the Declaration of Trust and the Participation Agreement, and to enforce the terms of these agreements, including payment of the $525,600 owed to the Trust and in Camden National's possession, and payment of all claims incurred by Camden National participating employees prior to June 30, 2006.

Pls.' Mot. Ex. A. It also adds five paragraphs to the Request for Relief, delineating the equitable relief the Trust seeks.⁶ CNC opposes the Trust's motion for leave to amend. See Def's Obj. to Pls.' Mot. to Amend First Am. Compl. (Docket # 21).

III. Motion to Dismiss

Rule 12(b)(6) provides, in part:

Every defense, in law or fact, to a claim for relief in any pleading ... shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: ... (6) failure to state a claim upon which relief can be granted....

Fed.R.Civ.P. 12(b)(6). "In ruling on a motion to dismiss [under Rule 12(b)(6)], a court must accept as true all the factual allegations in the complaint and construe all reasonable inferences in favor of the plaintiffs." Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir.2001) (citing Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16 (1st Cir.1998)). A defendant is entitled to dismissal only if it "`appears to a certainty that the plaintiff would be unable to recover under any set of facts.'" State St. Bank & Trust Co. v. Denman Tire Corp.,"240 F.3d 83, 87 (1st Cir.2001) (quoting Roma Constr. Co. v. A Russo, 96 F.3d 566, 569 (1st Cir.1996)); see also Nethersole v. Bulger, 287 F.3d 15, 18 (1st Cir.2002).

Ordinarily, when a court reviews a motion to dismiss, it may not take into account documents outside the complaint. Alternative Energy, 267 F.3d at 33. An exception exists, however, for "documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint."⁷ Id.; Beddall v. State St Bank & Trust Co., 137 F.3d 12, 16 (1st Cir.1998). Here, Plaintiffs attached a number of documents to the Complaint, "the authenticity of which are not disputed by the parties" and which are "central to the plaintiffs' claim." See id. CNC has not disputed the authenticity of the documents, and has, referred to them throughout its filings. In accordance with the Alternative Energy exception, the Court has considered the documents attached to the Complaint in ruling on the motion to dismiss. Finally, at oral argument, CNC introduced a copy of a letter dated July 6, 2006 from Attorney Biagetti, the Trust's lawyer, to Attorney Montgomery, CNC's lawyer, and the parties agreed that the Court could consider the letter in ruling on the motion to dismiss. Def. Hearing Ex. 1.

IV. Discussion

A. ERISA Civil Enforcement — 29 U.S.C. § 1132

In Count V of the Amended Complaint, Plaintiffs seek an equitable remedy to enforce the terms of the Plan documents under ERISA. See Am. Compl. ¶¶ 80-85. In particular, Plaintiffs allege that CNC has "refused to pay the three months' additional premium," Am. Compl. ¶ 83, and "has refused to pay the amounts necessary to pay all [CNC] claims" incurred prior to withdrawal. Id. ¶ 84. Plaintiffs assert: "The Trust's claim under this ERISA provision seeks redress in equity for Camden National's violations of the Declaration of Trust and the Participation Agreement.... Specifically, the Trust seeks to enforce the terms of these ERISA plan documents." Pls.' Opp'n to Def's Mot. to Dismiss Am. Compl. at 3 (Docket # 18) (Pls.' Second Opp'n). Plaintiffs seek relief in Count V under....