Robert Lopriore, III v. Raleigh Cardiovascular and Thoracic, Inc., et al.

Raleigh C & T is a corporation located in Raleigh, Wake County,
North Carolina. Drs. Davis and Chaudhry started practicing medicine
at Raleigh C & T in 1982, and Dr. Alexander joined the practice from
1991 to 1994. Raleigh C & T sponsored two self-funded employee
benefit plans, the money purchase pension fund and the profit sharing
pension fund. The plans were amended and restated in 1986, August
1991, and November 1991. RCV Tech was a corporation formed by
Drs. Chaudhry and Davis on November 9, 1987. These two doctors
were the sole shareholders and officers of RCV Tech. Although RCV
Tech and Raleigh C & T shared office space, the two corporations
were separate corporate entities, with separate articles of incorpora-
tion and separate income tax returns.

Drs. Davis and Chaudhry began employment discussions with
Lopriore in October 1987 because they were interested in his perfu-
sion services.2 Lopriore was hired to work for RCV Tech at a salary
of $36,000 per year and began work on November 10, 1987. He
signed his employment agreement on November 12, 1987 with RCV
Tech. RCV Tech never sponsored its own pension plans, and Lopriore's work agreement with RCV Tech did not specify any type of
pension plan or benefits to be provided for him. No contributions
were made to the Raleigh C & T plans on Lopriore's behalf until
1991. Contributions were then made by Raleigh C & T on Lopriore's
behalf for the years 1991, 1992, 1993, and 1996. The enrollment of
Lopriore into the plans came after Professional Management of
Raleigh, Inc. spoke with Lopriore regarding the benefits. Lopriore's
enrollment did not change his employment status with RCV Tech.

* * *

In 1991, Lopriore was enrolled in the plans in the short plan year.
Professional Management of Raleigh, Inc. wrote a letter to Lopriore
in February 1992 explaining that he had been enrolled in the plans
and that a contribution had been made for him in the short plan year.
Contributions were also made on Lopriore's behalf for the plan years
of 1992, 1993, and 1996. Raleigh C & T ceased operations in 1997.

Lopriore received his salary from RCV Tech from 1987 until 1996,
and contributions to the plans were made on his behalf as stated by
Raleigh C & T starting in 1991. Lopriore also received two loans
from RCV Tech in 1989 and 1992, memorialized in two promissory
notes, and he made salary-increase requests and all other employment
related requests to RCV Tech. Lopriore became an employee of
Raleigh C & T in 1996 when RCV Tech and Raleigh C & T merged.
In 1996, Lopriore through his attorneys, made several requests to
Raleigh C & T to provide him with the plan documents. He received
timely responses to those requests. On April 14, 1997, Raleigh C &
T informed Lopriore that it was discontinuing its operations.

On June 18, 1997, Lopriore filed an eleven-count complaint in the
United States District Court for the Eastern District of North Carolina
against the defendants. The complaint alleged: 1) deprivation of bene-
fits under ERISA, 2) misappropriation by defendants in violation of
ERISA, 3) disqualification losses under ERISA, 4) failure to provide
documents in violation of ERISA, 5) failure and refusal to provide
documents in violation ERISA, 6) breach of fiduciary duty in viola-
tion of ERISA, 7) interference with protected rights in violation of
ERISA, 8) federal common law breach of contract, 9) federal com-
mon law promissory estoppel/misrepresentation, 10) punitive dam-
ages, and 11) attorneys' fees. On April 1, 1998, the defendants moved
for summary judgment and to strike Lopriore's demand for a jury
trial. The magistrate judge made the following recommendations in a
memorandum opinion, which the district court adopted as its own on
December 15, 1998. First, the court granted the defendants' motion
for summary judgment as to Lopriore's third, fourth, fifth, seventh,
eighth, ninth, and tenth claims and dismissed the claims. Second, the
court granted the defendants' motion for summary judgment as to
Lopriore's second and sixth claims as to RCV Tech and the plans, but
denied the motion as to Raleigh C & T and Drs. Davis, Chaudhry, and
Alexander. Third, the court denied defendants' motion for summary
judgment as to Lopriore's first and eleventh claims. Fourth, the court
granted defendants' motion to strike the demand for a jury trial.

The district court conducted a bench trial on February 8 and 9,
1999. The district court found that Lopriore was not entitled to partic-
ipate in Raleigh C & T's two plans before 1991 because he was an
employee of RCV Tech and RCV Tech had not adopted the plans;
therefore, the district court denied Lopriore's claims for contributions
and breach of fiduciary duty between 1987 and 1991. The district
court did find, however, that Dr. Davis breached his fiduciary duty by
collecting loans and distributions from the plans and awarded Lopri-
ore attorneys' fees for bringing the breach to light. Lopriore appeals
the district court's judgment regarding his eligibility to participate in
the plans from 1987-1991 and his related claims. Dr. Davis and the
other defendants did not file a notice of appeal.

* * *

On December 15, 1998, the district court entered an order confirm-
ing the magistrate's memorandum and recommendation regarding the
defendants' motion for summary judgment. Lopriore contends that
the portion of that order denying him the statutory penalty amounts
for defendants' alleged failure to produce documents was in error. In
his complaint, Lopriore asserted that 29 U.S.C. S 1024 obligated the
defendants to produce various plan documents to comply with Lopri-
ore's many requests.3 He sought to recover the penalty amounts under
29 U.S.C. SS 1132(c)(1)(A)-(B). Section 1132(c)(1)(A) describes the
penalties to be imposed upon a plan administrator who fails to meet
the requirements of 29 U.S.C. S 1166, the filing and publication
requirements for group health plans. See 29 U.S.C. S 1132(c)(1)(A);
29 U.S.C. S 1166. Section 1132(c)(1)(B) states that if a plan adminis-
trator fails or refuses to comply with a request for information that the
administrator is required to furnish within 30 days after such request,
a statutory penalty of $100 per day may be imposed.

* * *

Lopriore argues that because 29 U.S.C. S 1024(b)(1) requires a
plan administrator to furnish participants automatically with plan doc-
uments, and defendants did not comply automatically, he is entitled
to statutory penalties. Defendants concede that a failure to provide
documents automatically due to a participant is a technical violation
of S 1024(b)(1), but assert that the statutory penalties are not available
for this type of violation. The defendants argue that these statutory
penalties are available only for failures to comply with "request[s]
for" plan information. 29 U.S.C. S 1132(c)(1)(B). In fact, the letters
from Lopriore's attorneys to the defendants referred to 29 U.S.C.
S 1024(b)(4), demonstrating that Lopriore was making written
requests for documents, to which the defendants promptly responded.

In Sedlack v. Braswell Services Group, Inc., we upheld a district
court's imposition of penalties upon a plan administrator when the
participant had requested information in writing and did not receive
it in a timely fashion. 134 F.3d 219, 226 (4th Cir. 1998); but see
Crotty v. Cook, 121 F.3d 541, 548 (9th Cir. 1997) (imposing statutory
penalties on plan administrator for failing to comply with oral
requests for plan information that the administrator was to provide
automatically). We interpreted 29 U.S.C. S 1132(c)(1)(B) as requiring
that a request be made before penalties may be imposed. Sedlack, 134
F.3d at 226 (requiring not more than one request); see also Doe v.
Travelers Ins. Co., 167 F.3d 53, 60-61 (1st Cir. 1999) (interpreting 29
U.S.C. S 1132(c) as reserving the $100 per day penalty only to those
cases in which conduct falls squarely within the terms of the section).
In order for the statutory penalties in 29 U.S.C. S 1132(c) to apply,
Lopriore would have to demonstrate that the defendants failed to pro-
vide him with documents following his written requests. We agree
with the district court that because Lopriore cannot show that the
defendants failed to respond to his written requests, the defendants
were entitled to a grant of summary judgment on those claims. We
affirm that judgment.

* * *

Lopriore asserts that the district court erred in holding that he was
not a participant of Raleigh C & T's two plans under ERISA and that
he was therefore not entitled to any damages or benefits. The district
court concluded the following: 1) Raleigh C & T and RCV Tech were
separate legal entities, filing separate income tax returns, from the
dates of their respective incorporations until August of 1996 when the
two corporations merged; 2) Raleigh C & T and RCV Tech consti-
tuted an affiliated service group under Internal Revenue Code
S 414(m);4 3) Lopriore was an employee of Raleigh C & T for tax
purposes; and 4) prior to 1991, when Lopriore became enrolled in the
plans, RCV Tech never affirmatively adopted the plans as required by
the plans.

* * *

Click the case caption above for the full text of the
Court's opinion.

Because we affirm the district court's judgment that Lopriore was
a non-participant in the plans prior to 1991, we also hold that he was
not entitled to recover denied benefits or to assert claims of breach of
fiduciary duty or misappropriation of benefits that may have occurred
prior to 1991.

Accordingly, the judgment of the district court is
Affirmed.

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