Flick v. Chartwell Advisory Grp. Ltd.

WILLIAM O. FLICK, JR., Plaintiff, v. CHARTWELL ADVISORY GROUP LTD. et al., Defendants.

CIVIL ACTION NO. 14-06953

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JULY 2, 2015

PAPPERT, J.

MEMORANDUM

Plaintiff William O. Flick, Jr. ("Flick") brings this action seeking to recover monies owed to him based on promises allegedly made before and during his employment with Defendant Chartwell Advisory Group Ltd. ("Chartwell"). Defendants Chartwell, Lawrence Kent, Maurice Kent, and Lawrence Palmer ("Palmer") (collectively "Chartwell Defendants") move to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, the motion is granted with leave to amend the complaint consistent with this opinion.

Factual and Procedural Background

Flick worked at Chartwell from 1992 through 1999. (Compl. ¶ 18, ECF No. 1.) While Flick was employed elsewhere, Defendant Stephen Deviney ("Deviney"), Chartwell's then president, recruited Flick to return to the company. (Id. ¶¶ 19, 20.) Flick agreed to return to Chartwell as a vice president after Deviney enticed him with a number of promises, including a $150,000 yearly salary (with at least $200,000 total compensation per year guaranteed), ten percent of net profits, ten percent of any net proceeds from a group of cases being litigated in Nevada, and a three percent share of the company. (Id. ¶ 21.) Deviney made these promises to Flick on behalf of Chartwell and personally guaranteed that payment would be made. (Id. ¶ 22.) Flick worked for Chartwell from2004 through 2009 in reliance on Deviney's promises, and declined several other employment opportunities that would have paid $300,000 to $400,000 per year. (Id. ¶¶ 23, 51.) During this period, Deviney assured Flick that he would receive the payments he was promised and Deviney told Flick that he was maintaining a log of the amounts owed to Flick based on the yearly profits. (Id. ¶¶ 24-25.) The net profits for one year were allegedly almost $700,000 and Flick was assured he would receive all amounts due to him. (Id. ¶ 25.) Deviney again affirmed these promises in January 2009¹, albeit while informing Flick that Flick's annual salary would be reduced from $175,000 to $75,000 due to financial requirements imposed by Deviney's partners. (Id. ¶ 26.) Despite the salary cut, Deviney reminded Flick that he was owed ten percent of the net profits and ten percent of the Nevada litigation. (Id.) These benefits were to be paid to Flick whether or not he remained with Chartwell. (Id. ¶ 27.)

In January 2010, Flick signed an employment agreement with Chartwell that outlined his compensation for services from December 19, 2009 forward. (Id. ¶ 28.) Soon after executing the contract, Flick and Deviney executed a separate one page contract memorializing the promises regarding Flick's share of the Nevada litigation proceeds and his share in the net profits. (Id. ¶ 29.) Both copies of this second contract "later disappeared from Chartwell's offices under suspicious circumstances while Mr. Palmer was physically present in Chartwell's offices." (Id. ¶ 29.) Deviney again recognized his promises to Flick via an email and a handwritten note sent to Flick on two separate occasions after they executed the January 2010 contract. (Id. ¶ 30.)

Deviney "abruptly" left Chartwell in 2013. (Id. ¶ 37.) After Deviney's departure, Flick sought assurances from Palmer and others that Chartwell would honor the promises Deviney made to Flick. (Id. ¶ 38.) Palmer and Lawrence Kent repeatedly implied that Chartwell would honor the promises, but Flick received no response to his request for written assurances to that effect. (Id. ¶¶39, 40.) Palmer and Lawrence Kent tried to renegotiate the deal Deviney and Chartwell had reached with Flick on more than one occasion. (Id. ¶ 41.) In May 2014, Lawrence Kent advised Flick that Chartwell was discontinuing its sales operation and terminated Flick's employment. (Id. ¶ 47.)

Chartwell also administered a 401k plan for its employees. (See id. ¶ 12.) Chartwell's Employee Handbook stated that Chartwell would match employees' 401k plan contributions, if certain requirements were met. (Id. ¶ 33.) Flick and other employees were "repeatedly told that arrangements were being made to provide these matching payments, but no such payments have been credited to Mr. Flick's 401k account to date." (Id. ¶ 34.)

Flick filed his complaint on December 3, 2014, alleging claims pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq., and Pennsylvania common law breach of contract, promissory estoppel, fraud, fraudulent inducement, and unjust enrichment claims as well as a violation of the Pennsylvania Wage Payment and Collection Law, 43 P.S. § 260.1 et seq. The Court has original subject matter jurisdiction over the alleged ERISA claims pursuant to 28 U.S.C. § 1331. Flick alleged that the Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over the state law claims.

The Chartwell Defendants moved to dismiss the complaint, or in the alternative for summary judgment, on February 5, 2015. (ECF No. 7.) Flick filed his opposition on February 23, 2015, (ECF No. 11), and the Chartwell Defendants replied on March 2, 2015. (ECF No. 12.) Defendant Deviney answered the complaint and filed counterclaims for breach of contract and set-off against Flick as well as cross-claims against the Chartwell Defendants for indemnification, contribution and reimbursement. (Deviney Am. Answer, ECF No. 23.) The Chartwell Defendants answered Deviney's cross-claims and asserted cross-claims of their own against Deviney for breachof fiduciary duty and contribution and indemnification. (Chartwell Defs. Answer, ECF No. 25.) The Court held oral argument on the Chartwell Defendants' motion to dismiss on June 18, 2015.

Legal Standard

To withstand a motion to dismiss, the complaint must contain "'sufficient factual matter to show that the claim is facially plausible,' thus enabling 'the court to draw the reasonable inference that the defendant is liable for [the] misconduct alleged.'" Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (quoting Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)). "[A] complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such an entitlement with its facts." Fowler, 578 F.3d at 210-11 (citation omitted). A motion to dismiss will be granted if the factual allegations in the complaint are insufficient "to raise the right of relief above the speculative level." W. Run Student Hous. Assocs., LLC v. Huntington Nat'l Bank, 712 F.3d 165, 169 (3d Cir. 2013) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

"When reviewing a motion to dismiss, '[a]ll allegations in the complaint must be accepted as true, and the plaintiff must be given the benefit of every favorable inference to be drawn therefrom." Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). But the Court "need not credit a plaintiff's 'bald assertions' or 'legal conclusions' when deciding a motion to dismiss." Morse v. Lower Merion Sch. Dist. 132 F.3d 902, 906 (3d Cir. 1997) (citation omitted).

"To decide a motion to dismiss, courts generally consider only the allegations contained in the complaint, exhibits attached to the complaint and matters of public record." Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (citation omitted). Additionally, "[a] document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss into one for summary judgment." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). Because the Court considers only Flick's allegations in the complaint and thelanguage of the Employee Handbook, which is the basis for Flick's ERISA claims, the Court need not convert the Chartwell Defendants' motion into one for summary judgment. See Fed. R. Civ. P. 12(d) ("If, on motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.").

Discussion

The Chartwell Defendants move to dismiss Flick's ERISA claims contained in Counts I-III, contending that Flick's reliance on the language of the Employee Handbook, rather than the language of the summary plan description, does not establish a right to matching contributions actionable under ERISA and that Chartwell acted in accordance with the discretionary language in the summary plan description. The Court agrees that Flick has not stated claims under ERISA, though in part for reasons other than those articulated by the Chartwell Defendants.

Count I—Violations of Section 502(a)(1)(B)²

Flick contends that he is entitled to "the present value of the 401k matching payments for 2004-2012 that Chartwell failed to make." (Compl. ¶ 52.) "A civil action may be brought by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan . . . ." 29 U.S.C. § 1132(a)(1)(B) (emphasis added). To seek relief under Section 502(a)(1)(B), a plaintiff "must demonstrate that the benefits are actually 'due'; that is, he or she must have a right to benefits that is legally enforceable against the plan." Hooven v. Exxon Mobil Corp., 465 F.3d 566, 574 (3d Cir. 2006); see also Menkes v. Prudential Ins. Co. of Am, 762 F.3d 285, 296 (3d Cir. 2014)("Claims involving denial of benefits or improper processing of benefits require interpreting what benefits are due under the plan. . . . [T]he claims explicitly require reference to the plan and what it covers . . .").

Here, there are no allegations in the complaint describing any benefits to which Flick is entitled pursuant to an ERISA plan. See Cranston v. PJM Interconnection LLC, No. 13-cv-04916, 2014 WL 5503151, at *7 (E.D. Pa. Oct. 31, 2014) ("It is the terms of the Plan document that control and limit the bounds of the...