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Owner's Management Co. v. Arthur J. Gallagher & Co.

United States District Court, N.D. Ohio, Eastern Division

July 13, 2018




         This matter is before the Court on Plaintiff Owner's Management Company's (“Plaintiff”) Motion for Reconsideration of Order and Opinion Dismissing Counts III and V of Complaint Against Defendant Arthur J. Gallagher & Co., or, in the alternative, Motion for Leave to Amend Complaint (ECF DKT # 27). For the following reasons, the Court denies Plaintiff's Motion for Reconsideration and grants Plaintiff's Motion for Leave to Amend Complaint.

         Background Facts

         Plaintiff filed the instant Complaint on April 25, 2017, against HealthSmart Benefit Solutions, Inc. (“HBS”) and Arthur J. Gallagher & Co. (“Gallagher”) for Breach of Contract, Breach of Fiduciary Duties, Negligent Misrepresentation and for Accounting. Plaintiff is an independent senior living and multi-family residences property management company. Gallagher is an insurance brokerage and risk management company.

         Plaintiff had a long-standing relationship with Gallagher and relied upon Gallagher's expertise and advice for its employee healthcare benefit needs. Compl. ¶¶ 14-15. Plaintiff placed “special trust and confidence” in Gallagher to select and procure an employee healthcare plan that was in Plaintiff's best interests. Compl. ¶¶ 16-17. Gallagher recommended a self-funded employee healthcare benefit plan (the “Plan”) from November 1, 2014 through October 31, 2015 that allegedly minimized Plaintiff's cost and potential exposure. Compl. ¶¶ 20-22. Gallagher also recommended that Plaintiff utilize HBS as Claims Administrator. Plaintiff selected the Plan based upon Gallagher's advice.

         On November 1, 2014, Plaintiff, as Plan Sponsor, Administrator and Fiduciary, entered into the HealthSmart Benefit Solutions, Inc. Administrative Services Agreement with HBS. Compl. Ex. 2. Gallagher was not a party to that Agreement. According to the Complaint, however, Gallagher and HBS modified how the assets of the Plan would be managed and how the costs, including the amount of approved benefit claims, were to be paid, all without Plaintiff's knowledge or consent. Allegedly, Gallagher did not correctly or adequately advise Plaintiff that the Plan posed a much higher risk than the other options; that the cost of the Plan would be much higher than Gallagher represented; that Plaintiff would be required to satisfy various reporting requirements and obligations for self-funded plans under the Affordable Care Act and ERISA and that Plaintiff would need to create proper reserves to guard against cash flow fluctuations. Compl. ¶¶ 26, 28, 30-31. Ultimately, as a result of the alleged failures, mismanagement and misconduct of Gallagher and HBS, the Plan was underfunded and Plaintiff “caused the Plan to be terminated.”[1] Compl. ¶ 52.

         On July 26, 2017, Gallagher moved for dismissal of Count I (Breach of Contract); Count III (Breach of Common Law Fiduciary Duties); Count V (Breach of ERISA Fiduciary Duties); Count VII (Negligent Misrepresentations or Concealments) and Count IX (Action on Accounting). On December 1, 2017, this Court dismissed Counts III and V against Gallagher.

         On January 10, 2018, Plaintiff moved for reconsideration of the Court's Opinion and Order dismissing Counts III and V against Gallagher or, in the alternative, for leave to amend its Complaint. Plaintiff contends that the Court “only focused on the relationship up to the time the Plan was established” and did not give “due consideration... to its allegations that fiduciary duties on the part of [Gallagher] were created and continued after the Plan was put in place.” (Emphasis original). ECF DKT # 27, at 3. Furthermore, Plaintiff urges the Court to consider Pfahler v. National Latex Products Company, 517 F.3d 816 (6th Cir. 2007), which they contend allows them to recover on behalf of a terminated plan. Id. at 7.


         Motion to Reconsider

         “District courts possess the authority and discretion to reconsider and modify interlocutory judgments any time before final judgment.” Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 Fed.Appx. 949, 952 (6th Cir. 2004). See also Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12 (1983) (“every order short of a final decree is subject to reopening at the discretion of the district judge”). “District courts have authority both under common law and Rule 54(b) to reconsider interlocutory orders and to reopen any part of a case before entry of final judgment.” Rodriguez, 89 Fed.Appx. at 959. However, reconsideration is disfavored:

Although motions to reconsider are not ill-founded step-children of the federal court's procedural arsenal, they are extraordinary in nature and, because they run contrary to notions of finality and repose, should be discouraged. To be sure, a court can always take a second look at a prior decision; but it need not and should not do so in the vast majority of instances, especially where such motions merely restyle or re-hash the initial issues.

McConocha v. Blue Cross and Blue Shield Mutual of Ohio, 930 F.Supp. 1182, 1184 (N.D.Ohio 1996) (internal citations and quotations omitted).

         Motions for reconsideration “serve a limited purpose and should be granted for one of three reasons: (1) because of an intervening change in controlling law; (2) because evidence not previously available has become available; or (3) because it is necessary to correct a clear error of law or preventing manifest injustice.” Boler Co. v. Watson & Chalin Mfg. Inc., 372 F.Supp.2d 1013, 1024-25 (N.D.Ohio 2004), quoting General Truck Drivers, Local No. 957 ...

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