United States District Court, D. Colorado
JEANNE B. BRYANT, in her capacity as court-appointed Independent Fiduciary for Retirement Security Plan and Trust, Plaintiff,
MATRIX TRUST COMPANY, LLC f/k/a MG Trust Company, LLC, a Colorado limited liability company, Defendant.
A. BRIMMER CHIEF UNITED STATES DISTRICT JUDGE.
matter comes before the Court on defendant Matrix Trust
Company, LLC's Renewed Motion to Dismiss the Complaint
and Brief in Support [Docket No. 37]. The Court has
jurisdiction pursuant to 28 U.S.C. § 1331 and 28 U.S.C.
allegations in plaintiff's Complaint [Docket No. 1] are
to be taken as true in considering a motion to dismiss.
Brown v. Montoya, 662 F.3d 1152, 1162 (10th Cir.
2011). The Court will also consider attached exhibits and
documents incorporated into the complaint by reference.
Smith v. United States, 561 F.3d 1090, 1098 (10th
case arises out of misfeasance by a plan trustee. Plaintiff
is the court-appointed fiduciary for Retirement Security Plan
and Trust (“RSPT”), a trust comprised of various
retirement plans. Docket No. 1 at 2, ¶ 1-2. RSPT's
original named trustee was Matthew D. Hutcheson
(“Hutcheson”). Id. at 3, ¶ 8.
RSPT's sponsor and administrator was Hutcheson Walker
Advisors, LLC (“HWA”) and its third-party
administrator was ASPire Financial Services
(“ASPire”). Id., ¶¶ 8, 11, 13.
Defendant, doing business as “MG Trust Company, LLC,
” entered into a Custodial Account Agreement (the
“Custodial Agreement”) with HWA and Hutcheson in
2009. Docket No. 1-2. Under the Custodial Agreement,
defendant agreed to “take, hold, invest, and distribute
all of the assets of [RSPT] . . . as a non-discretionary,
directed custodian.” Id. at 7. The Custodial
Agreement provided for a Designated Representative - here,
ASPire - who would “provide direction to
[defendant]” by “provid[ing]
[i]nstructions” on behalf of RSPT. Id. at
The instructions provided by ASPire could include
“plac[ing] orders for the purchase and sale of
securities” and authorizing disbursement of funds on
RSPT's behalf. Id. The Custodial Agreement
provided that defendant “shall be under no duty to make
an investigation with respect to any [i]nstructions received
from [ASPire].” Id. The Custodial Agreement
also provides that Hutcheson, as Trustee, “has the
power to delegate trading authorization to [ASPire] and has
done so by executing [the Custodial Agreement].”
Id. at 14.
December 21, 2010, Hutcheson emailed ASPire, instructing it
to make a request to defendant to transfer $275, 000 of RSPT
assets to an account which later turned out to be controlled
by Hutcheson. Docket No. 1 at 6, ¶ 28. ASPire made the
request to defendant. Id., ¶ 29. Upon receipt
of the instructions, defendant transferred the funds.
Id. On December 23, 2010, Hutcheson instructed
ASPire to have defendant transfer $3, 001, 000 of RSPT assets
to a real estate title company in order to purchase a bank
note. Id., ¶ 30. Again, ASPire did so, and
defendant followed the instructions. Id., ¶ 32.
Hutcheson used the $3, 276, 000 to purchase the bank note f
or the benefit of a company owned or controlled by Hutcheson.
Id., ¶ 33. Hutcheson gave a promissory note to
RSPT. Id., ¶ 34. Because the transaction
between RSPT and a company owned or controlled by Hutcheson
was a “prohibited transaction, ” the United
States Department of Labor began an investigation.
Id. at 8, ¶¶ 43-44. The Department of
Labor removed Hutcheson as trustee and appointed plaintiff as
his replacement. Id., ¶ 46. Hutcheson was
eventually charged with crimes related to the transfer of
funds. Id., ¶ 47. A jury found Hutcheson guilty
of wire fraud. Id., ¶ 49.
December 30, 2016, plaintiff filed this lawsuit in the
District of Idaho. Docket No. 1. Plaintiff asserts five
claims for relief: (1) breach of fiduciary duty under the
Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et
seq., to prudently manage RSPT's assets; (2) breach
of fiduciary duty under ERISA to administer RSPT in
accordance with its terms; (3) professional negligence; (4)
state law breach of fiduciary duty; and (5) attorney's
fees and costs. Id. at 9-16, ¶¶ 52-84.
Defendant moved to dismiss under Fed.R.Civ.P. 12(b)(3) and
12(b)(6), arguing that (1) venue was improper in the District
of Idaho and (2) plaintiff failed to state a claim upon which
relief could be granted. Docket No. 10-1. The Idaho court
granted the motion to dismiss in part and denied it in part,
concluding that venue was not proper in Idaho and
transferring the case to this Court. Docket No. 30 at 13. The
Idaho court did not reach the question of whether plaintiff
had stated a claim under Fed.R.Civ.P. 12(b)(6). Docket No. 27
at 19 n.4 (report and recommendation of magistrate judge).
subsequently filed a renewed motion to dismiss. Docket No.
37. Defendant argues that: (1) plaintiff's claims under
ERISA fail because she does not allege facts that plausibly
show that defendant was an ERISA fiduciary with respect to
RSPT; (2) plaintiff's claim for professional negligence
is barred by the statute of limitations, the economic loss
rule, and waiver; and (3) plaintiff's state law claim for
breach of fiduciary duty is preempted by ERISA or is
otherwise barred. Id. at 8-16.
survive a motion to dismiss under Rule 12(b)(6) of the
Federal Rules of Civil Procedure, a complaint must allege
enough factual matter that, taken as true, makes the
plaintiff's “claim to relief . . . plausible on its
face.” Khalik v. United Air Lines, 671 F.3d
1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “[W]here the
well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has
alleged-but it has not shown-that the pleader is entitled to
relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009) (internal quotation marks and alteration marks
omitted); see also Khalik, 671 F.3d at 1190
(“A plaintiff must nudge [his] claims across the line
from conceivable to plausible in order to survive a motion to
dismiss.” (quoting Twombly, 550 U.S. at 570)).
If a complaint's allegations are “so general that
they encompass a wide swath of conduct, much of it innocent,
” then plaintiff has not stated a plausible claim.
Khalik, 671 F.3d at 1191 (quotations omitted). Thus,
even though modern rules of pleading are somewhat forgiving,
“a complaint still must contain either direct or
inferential allegations respecting all the material elements
necessary to sustain a recovery under some viable legal
theory.” Bryson v. Gonzales, 534 F.3d 1282,
1286 (10th Cir. 2008) (alteration marks omitted).
argues that plaintiff's ERISA claims fail because she has
not plausibly alleged that defendant is a fiduciary under
ERISA with respect to RSPT. Docket No. 37 at 8.
designates as fiduciaries not only those persons expressly
named by a plan, but also those persons who exercise control
over the management and administration of the plan and the
distribution of its assets [and] individuals who provide
investment advice for a fee or other compensation.”
Reich v. Stangl, 73 F.3d 1027, 1029 (10th Cir. 1996)
(internal citations and quotations omitted). If a person is
not a “named fiduciary” under 29 U.S.C. §
1102(a), he or she may nevertheless be a functional
fiduciary. 29 U.S.C. § 1102(a); Reich, 73 F.3d
at 1029. As the statute explains,
a person is a fiduciary with respect to a plan to the extent
(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, direct or indirect, with respect to any
moneys or other property of such plan, or has any authority
or responsibility to do so, or ...