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Thomas L. anderson v. Strauss Neibauer & anderson Apc Profit Sharing 401(K) Plan

January 18, 2011


The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

(related case: 1:10-cv-02195)


(DOC. 112)


1:10-cv-02195 OWW DLB


Thomas L. Anderson and Lynn Anderson (together, "Andersons") move to dismiss Strauss Neibauer‟s first amended complaint ("FAC") filed in action 1:10-cv-02195, a related lawsuit which was consolidated with action 1:09-cv-01446. Doc. 112. Straus Neibauer filed an opposition. Doc. 115.


On March 6, 2008, Strauss Neibauer filed a complaint against Mr. Anderson in the Superior Court of California, County of Stanislaus. Doc. 32 Ex. 1. The complaint asserted twelve causes of action, including declaratory relief, breach of fiduciary duty, rescission of bonuses, rescission of contributions made to the Strauss Neibauer & Anderson APD Profit Sharing 401(k) Plan (the "Plan") on Mr. Anderson‟s behalf, conversion, and fraud. Mr. Anderson filed a cross-complaint for damages in state court against Strauss Neibauer and Douglas Neibauer on April 9, 2008. Doc. 32 Ex. 3. 0 On August 17, 2009, Mr. Anderson filed a federal suit against the Plan, Mr. Neibauer, Strauss Neibauer, and Total Benefit Services, Inc. ("TBS") asserting claims under the Employee Retirement Income Security Act ("ERISA") for declaratory relief, benefits, breach of fiduciary duty, attorneys‟ fees, and equitable relief. Doc. 1. The Defendants filed answers. Doc. 8 and 10. TBS was dismissed without prejudice on June 9, 2010. Doc. 18.

On September 8, 2010, Defendants in the federal case filed a motion to dismiss, or, in the alternative, stay the federal case until the conclusion of the pending state court case. Doc. 35.

Mr. Anderson filed an opposition (Doc. 73), and Defendants filed a reply (Doc. 79). On November 5, 2010, Defendants‟ motion to dismiss or, in the alternative, stay the federal case was denied. Doc. 87.

On August 6, 2010, Mr. Anderson filed a motion for summary judgment of the federal case. Doc. 21. Defendants filed an opposition (Doc.29), to which Mr. Anderson replied (Doc. 74). Summary judgment was granted as to Mr. Anderson‟s entitlement to employee contributions to the Plan and denied as to Strauss Neibauer‟s contributions to the Plan, breach of fiduciary duty, and attorneys‟ fees. Doc. 100. These claims will be decided at trial, which is scheduled to commence January 11, 2010.

On November 24, 2010, Strauss Neibauer filed a separate 0 federal suit against the Andersons asserting claims for declaratory relief, rescission of contributions made to Mr. Anderson‟s Plan account, rescission of bonuses, and removal as trustee. Doc. 8. Strauss Neibauer‟s federal case was consolidated with Mr. Anderson‟s federal case on December 6, 2010. Doc. 11.

On December 16, 2010, the Andersons filed this motion to dismiss the FAC. Doc. 112. Strauss Neibauer filed an opposition Doc. 115.


To survive a Rule 12(b)(6) 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.‟" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955 (2007)). A complaint does not need detailed factual allegations, but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007).

In deciding a motion to dismiss, the court should assume the veracity of "well-pleaded factual allegations," but is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal, 127 S.Ct. at 1950. "Labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. "‟Naked assertion[s]‟ 0 devoid of "further factual enhancement‟" are also insufficient.

Iqbal, 127 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 557). Instead, the complaint must contain enough facts to state a claim to relief that is "plausible on its face." Twombly, 550 U.S. at 570.

A claim has facial plausibility when the complaint‟s factual content allows the court to draw the reasonable inference that the defendant is liable for the alleged misconduct. Iqbal, 127 S.Ct. at 1949. "The plausibility standard is not akin to a "probability requirement,‟ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556). "A well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and "that a recovery is very remote and unlikely.‟" Twombly, 550 U.S. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683 (1974).

The Ninth Circuit summarizes the governing standard as follows: "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009)(quotations omitted).

If a district court considers evidence outside the pleadings, a Rule 12(b)(6) motion to dismiss must be converted to 0 a Rule 56 motion for summary judgment, and the nonmoving party must be given an opportunity to respond. U.S. v. Ritchie, 342 F.3d 903, 907 (9th Cir.2003). "A court may, however, consider certain materials-documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment." Id. at 908.


A. First Claim for Declaratory Relief

Strauss Neibauer‟s first claim seeks a declaration that (1) the Andersons owe Strauss Neibauer, as assignee to the Plan, Mr. Anderson‟s unpaid loan balance and reasonable attorneys‟ fees incurred in collecting the loan balance, and (2) the Plan may deduct the unpaid loan balance from any Plan distributions made to Mr. Anderson.

1.Constitutional Standing

The Andersons contend that the first claim for relief does not sufficiently allege a case or controversy. Article III of the Constitution limits federal court jurisdiction to "cases" and "controversies." U.S. Parole Comm‟n v. Geraghty, 445 U.S. 388, 395, 100 S.Ct. 1202 (1980). To establish a "case" or "controversy", a plaintiff must show: (1) injury in fact, i.e., an injury that is "concrete and particularized" and "actual or 0 imminent, not conjectural or hypothetical"; (2) causation, i.e., the injury is fairly traceable to the challenged action; and (3) likelihood that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561, 112 S.Ct. 2130 (1992).

The first claim does not sufficiently allege an actual case or controversy. The FAC alleges that Mr. Anderson‟s Plan loan has not been timely repaid and that the entire balance is now due and owing. The regulations pertaining to 401(k) plan loans provide that if "payments are not made in accordance with the terms applicable to the loan, a deemed distribution occurs as a result of the failure to make such payments." 26 CFR § 1.72(p)-1, A-4. Within the bankruptcy context, the Ninth Circuit has explained that a retirement plan participant‟s loan from his retirement account "is essentially a debt to himself-he has borrowed his own money. [He] contributed the money to the account in the first place; should he fail to repay himself, the administrator has no personal recourse against him. Instead, the plan will deem the outstanding loan balance to be a distribution of funds, thereby reducing the amount available to [him] from his account in the future." In re Egebjerg, 574 F.3d 1045, 1049 (9th Cir. 2009)(emphasis added). Mr. Anderson admits that he took a loan from his Plan account and concedes that his Plan ...

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