United States District Court, E.D. Michigan, Northern Division
FRANCES M. WOLF, Plaintiff,
CAUSLEY TRUCKING, INC, et al., Defendants.
ORDER ADOPTING REPORT AND RECOMMENDATION, GRANTING
DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF'S MOTION TO VACATE THE ADMINISTRATIVE
L. LUDINGTON United States District Judge.
Rieck was a former Vice President and Director of Maintenance
at Defendant Causley Trucking, a business owned by Mr.
Rieck's uncle, Defendant Gregory Causley. Compl.
¶¶ 10-11. Mr. Rieck passed away on August 7, 2014.
Id. at ¶ 9. After his death, Mr. Rieck's
surviving spouse, Plaintiff Frances Wolf, applied for
benefits under Causley Trucking's Death Benefit Only Plan
(the “Plan”). Wolf was awarded $206, 405.39.
Unsatisfied with the benefits determination, Wolf filed an
appeal with Causley, who upheld the benefits determination.
Wolf proceeded to file suit in Michigan state court, which
was subsequently removed by Defendants to this Court on July
16, 2015, who alleged that Wolf's claims were preempted
by the Employee Retirement Income Security Act
(“ERISA”). Wolf then filed an amended complaint
on August 13, 2015.
August 31, 2015 Defendants moved to dismiss all but the first
count of Wolf's amended complaint, or all but
Plaintiff's claim that Defendants wrongfully denied her
benefits under the plan pursuant to ERISA. See ECF
No. 11. Wolf then moved to remand the action to State Court
on September 17, 2015. See ECF No. 13. On February
5, 2016, Wolf's motion to remand was denied, and
Defendants' motion to dismiss was granted in part and
denied in part. See ECF No. 21. Plaintiff's
denial of benefits claim (Count I) and her estoppel claim
(Count IV) survived in their entirety, and her breach of
fiduciary duty claim (Count II) survived in part.
matter was referred to magistrate judge Patricia T. Morris.
See ECF No. 31. On August 16, 2016 the magistrate
judge issued an order denying Plaintiff's procedural
challenge, and determining that discovery outside of the
record was not justified and would not be permitted as to
Count I. See ECF No. 34. The parties then filed
cross-motions for summary judgment on December 16, 2016.
See ECF Nos. 39, 40. On March 23, 2017 the
magistrate judge issued her report, recommending that
Defendants' motion be granted and Plaintiff's motion
be denied. See Rep. & Rec., ECF No. 47.
Plaintiff timely filed objections. See ECF No. 48.
For the reasons stated below, Plaintiff's objections will
be overruled and the report and recommendation will be
report and recommendation, the Magistrate Judge has
summarized the factual and procedural background of the
parties' dispute. Because neither party has objected to
that summary, it is adopted in full.
to Federal Rule of Civil Procedure 72, a party may object to
and seek review of a magistrate judge's report and
recommendation. See Fed.R.Civ.P. 72(b)(2). Objections must be
stated with specificity. Thomas v. Arn, 474 U.S.
140, 151 (1985) (citation omitted). If objections are made,
“[t]he district judge must determine de novo any part
of the magistrate judge's disposition that has been
properly objected to.” Fed.R.Civ.P. 72(b)(3). De novo
review requires at least a review of the evidence before the
magistrate judge; the Court may not act solely on the basis
of a magistrate judge's report and recommendation.
See Hill v. Duriron Co., 656 F.2d 1208, 1215 (6th
Cir. 1981). After reviewing the evidence, the Court is free
to accept, reject, or modify the findings or recommendations
of the magistrate judge. See Lardie v. Birkett, 221
F.Supp.2d 806, 807 (E.D. Mich. 2002).
first objection concerns her claim that she was wrongfully
denied benefits under the Plan pursuant to ERISA. Plaintiff
argues that in recommending denial of her claim the
magistrate judge erred in focusing too narrowly on the
language of the Plan, and did not sufficiently consider
general concepts of fairness. Plaintiff essentially argues
that because of Defendant Causley's conflict of interest
and his changing statements regarding the amount of benefits
expected to be payable to Plaintiff, a more exacting standard
of review should apply.
argument is without merit. ERISA's civil enforcement
provision permits a participant or beneficiary to bring a
civil suit “to recover benefits due him under the
terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future
benefits under the terms of the plan.” 29
U.S.C. § 1132(a)(1)(B) (emphasis added). “ERISA
does not mandate that employers provide any particular
benefits, and does not itself proscribe discrimination in the
provision of employee benefits.” Shaw v. Delta Air
Lines, Inc., 463 U.S. 85, 91 (1983). “Under the
arbitrary-and-capricious standard, the determination of an
administrator will be upheld if it is rational in light
of the plan's provisions.” McClain v.
Eaton Corp. Disability Plan, 740 F.3d 1059, 1064 (6th
Cir. 2014) (emphasis added) (internal quotations and
citations omitted). “[T]he conflict of interest
inherent in self-funded plans does not alter the standard of
review, but should be taken into account as a factor in
determining whether the decision was arbitrary and
capricious.” Peruzzi v. Summa Med. Plan, 137
F.3d 431, 433 (6th Cir. 1998) (internal quotations and
citation omitted). Because the benefits awarded to Plaintiff
were rational in light of the plan's provisions, her
first objection will be overruled.
second objection, Plaintiff argues that the magistrate judge
did not address her broad claim that Defendants did not act
in the best interest of the plan beneficiaries when
determining the benefit award amount under 29 U.S.C. §
1104(a)(1)(A). This objection is without merit, as the
magistrate judge did address this argument in her report and
recommendation. See Rep. & Rec. 15-18. The
magistrate judge specifically addressed Plaintiff's
claims that Causley (1) did not act in the best interest of
the plan by lowering the death benefits amount to retain
funds for himself and his company and (2) commingling assets
of the Plan with assets of the company. The magistrate judge
concluded that, because the Plan provided that death benefits
“shall be provided out of the general assets of the
corporation, ” it was proper for Causley to deposit
monies received from the insurance policy on Rieck into the
general coffers of Causley Trucking. If Plaintiff wished the
magistrate judge to address another theory as to how
Defendants did not act in the best interest of the plan
beneficiaries, it was Plaintiff's responsibility to raise
that argument before the magistrate judge. Because Plaintiff
did not do so, her objection is without merit.
also argues that the magistrate judge erred in rejecting her
claim that Defendants wrongfully commingled the insurance
proceeds with the general assets of Causley trucking.
However, as pointed out by the magistrate judge, there is no
requirement that the assets of an employee benefit plan be
held in trust where the assets of the plan consist of
insurance contracts or policies. 29 C.F.R. §
2550.403b-1. And as emphasized by Defendants, the Plan
Documents establish that “the Corporation shall be
designated as owner and the beneficiary of any [life
insurance] policies purchased and all rights and benefits
accruing from such policies shall belong solely to the
Corporation. The Participant shall have no rights or interest
in such policies.” Am. Compl. Ex. A ¶ 3. As a
participant's surviving spouse, Plaintiff was entitled
only to an amount “no less than the cash value of the
policy….” Am Compl. Ex. B ¶ 1. Plaintiff
received all ...