United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND OPINION
ROSENTHAL CHIEF UNITED STATES DISTRICT JUDGE.
The Allegations In The Complaint.
Duff sued his former employer, Hilliard Martinez Gonzalez,
LLP, a law firm in Corpus Christi, Texas, and two partners,
Robert Hilliard and Catherine Tobin, who allegedly made the
financial decisions for the firm. (Docket Entry No. 1). Duff
was hired in August 2010 to serve as the chief financial
officer for Hilliard Martinez Gonzales. Id. at
¶ 9. Duff alleges that in April 2015, Robert Hilliard
agreed to pay him a bonus of “half a million” for
his contributions and service, from money the law firm
expected to get from cases it settled with General Motors.
Id. Duff alleges that on June 10, 2015, he and
Robert Hilliard signed a “deferred compensation
agreement, ” under which the firm would put $800, 000
for Duff into an account associated with the agreement in
four $200, 000 installments. Id. Duff also alleges
that the firm agreed to pay him a bonus tied to the General
Motors settlement funds, but separate from the
contributions-and-service bonus. Id.
fall of 2016, Duff was assigned the task of managing the
General Motors settlement funds, increasing his workload. He
alleges that he accepted the added work because of the bonus
he believed he would receive. Id. at ¶ 10. When
Duff sought assurance from Robert Hilliard that the deferred
compensation agreement was still in force, Robert Hilliard
allegedly told Duff, “I will take care of you
Hilliard did not give Duff a bonus in December 2016 or
January 2017. Id. That month, Duff brought the bonus
issue to Catherine Hilliard's attention. Id. at
¶ 11. Catherine Hilliard told Duff that she and Robert
Hilliard had considered paying Duff a bonus but did not do so
because they wanted it to be “substantial, ”
which required waiting until after the law firm collected the
General Motors funds. Id. Duff alleges that
Catherine Hilliard acknowledged that he would also receive
$500, 000 for his contributions and service to the law firm.
spring of 2017, Duff told the Hilliards that the firm had
collected most of the General Motors settlement funds.
Id. at ¶ 12. Duff alleges that he asked Robert
Hilliard to insulate the collected settlement funds from
creditors or from bankruptcy, to protect his deferred
compensation agreement from what he saw as Robert
Hilliard's needless spending. Id. Robert
Hilliard allegedly agreed to do so, but he did not.
Id. Duff alleges that in July 2017, he asked Robert
Hilliard to loan him 90% of his deferred compensation account
balance, to protect the funds in the account. Id. at
¶ 13. The loan was not made. Id. Hilliard
Martinez Gonzales did not pay Duff $500, 000 after the
General Motors settlement funds were collected, instead
awarding Duff $5, 000. Id. at ¶ 14. After Duff
retained counsel to enforce the deferred compensation
agreement, he was terminated on November 28, 2017.
The Motion To Dismiss.
asserts claims for violations of ERISA, 29 U.S.C. §
1132, and under Texas state law for breach of contract,
fraud, breach of fiduciary duty, promissory estoppel, and
unjust enrichment. He seeks damages and an injunction. The
defendants have moved to dismiss under Rule 12(b)(6),
asserting that the complaint fails to state a plausible claim
under ERISA and arguing that the court should decline to
exercise jurisdiction over the state-law claims if it
dismisses the federal ERISA claim. (Docket Entry No. 7). Duff
responded, the defendants replied, and Duff sur-replied.
(Docket Entries No. 12, 13, 14).
on the pleadings, the motion, response, reply, and sur-reply,
the record, and the applicable law, the court dismisses the
ERISA claim, with prejudice because amendment would be
futile, declines to exercise jurisdiction over the state-law
claims, and dismisses them, without prejudice, so that they
might proceed in the state court. The reasons are explained
The Applicable Legal Standards
Rule 12(b)(6) Motions to Dismiss.
12(b)(6) allows dismissal if a plaintiff fails “to
state a claim upon which relief can be granted.”
Fed.R.Civ.P. 12(b)(6). Rule 12(b)(6) must be read in
conjunction with Rule 8(a), which requires “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a) (2). A complaint
must contain “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). Rule 8 “does
not require ‘detailed factual allegations, ' but it
demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 555). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Id. (citing Twombly, 550 U.S. at 556).
“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. (citing Twombly, 550
U.S. at 556).
withstand a Rule 12(b)(6) motion, a “complaint must
allege ‘more than labels and conclusions, '”
and “a formulaic recitation of the elements of a cause
of action will not do.” Norris v. Hearst Tr.,
500 F.3d 454, 464 (5th Cir. 2007) (quoting Twombly,
550 U.S. at 555). “Nor does a complaint suffice if it
tenders ‘naked assertion[s]' devoid of
‘further factual enhancement.'”
Iqbal, 556 U.S. at 678 (alteration in original)
(quoting Twombly, 550 U.S. at 557). “[A]
complaint does not need detailed factual allegations, but
must provide the plaintiff's grounds for entitlement to
relief-including factual allegations that when assumed to be
true ‘raise a right to relief above the speculative
level.'” Cuvillier v. Taylor, 503 F.3d
397, 401 (5th Cir. 2007) (quoting Twombly, 550 U.S.
at 555). “Conversely, when the allegations in a
complaint, however true, could not raise a claim of
entitlement to relief, this basic deficiency should be
exposed at the point of minimum expenditure of time and money
by the parties and the court.” Id. (quoting
Twombly, 550 U.S. at 558) (internal quotation marks
and alteration omitted).
plaintiff's complaint fails to state a claim, the court
should generally give the plaintiff a chance to amend the
complaint under Rule 15(a) before dismissing the action with
prejudice, unless it is clear that to do so would be futile.
See Carroll v. Fort James Corp., 470 F.3d 1171, 1175
(5th Cir. 2006) (Rule 15(a) “evinces a bias in favor of
granting leave to amend”); Great Plains Tr. Co. v.
Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329
(5th Cir. 2002) (“[D]istrict courts often afford
plaintiffs at least one opportunity to cure pleading
deficiencies before dismissing a case, unless it is clear
that the defects are incurable or the plaintiffs advise the
court that they are unwilling or unable to amend in a manner
that will avoid dismissal.”). A court may deny a motion
to amend for futility if the amended complaint would fail to
state a claim upon which relief could be granted.
Villarreal v. Wells Fargo Bank, N.A., 814 F.3d 763,
766 (5th Cir. 2016) (citing Stripling v. Jordan Prods.
Co., LLC, 234 F.3d 863, 873 (5th Cir. 2000)). The
decision to grant or deny leave to amend “is entrusted
to the sound discretion of the district court.”
Pervasive Software Inc. v. Lexware GMBH & Co.,
688 F.3d 214, 232 (5th Cir. 2012).
ERISA statute defines the retirement, health, severance,
compensation, or other employee benefit plans it covers; with
preemptive force. The statute provides that:
The terms “employee welfare benefit plan” and
“welfare plan” mean any plan, fund, or program
which was heretofore or is hereafter established or
maintained by an employer or by an employee organization, or
by both, to the extent that such plan, fund, or program was
established or is maintained for the purpose of providing for
its participants or their beneficiaries, through the purchase
of insurance or otherwise, (A) medical, surgical, or hospital
care or benefits, or benefits in the event of sickness,
accident, disability, death or unemployment, or vacation
benefits, apprenticeship or other training programs, or day
care centers, scholarship funds, or ...