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Malinowski v. The Lichter Group, LLC

United States District Court, D. Maryland, Northern Division

February 26, 2015

STEVEN MALINOWSKI, et al., Plaintiffs,
v.
THE LICHTER GROUP, LLC, et al., Defendants.

MEMORANDUM OPINION

WILLIAM D. QUARLES, Jr., District Judge.

Steven Malinowski, and others, [1] sued The Lichter Group, LLC ("Lichter"), and others, [2] for violating Section 406(a) of the Employee Retirement Income Security Act ("ERISA")[3], and for state law negligent misrepresentation. Pending is the Plaintiffs' motion for leave to amend the complaint, ECF No. 24. No hearing is necessary. Local Rule 105.6 (D. Md. 2014). For the following reasons, the Plaintiffs motion will be granted in part and denied in part. Additional briefing on diversity jurisdiction will be ordered before the Court addresses the proposed state law claim.[4]

I. Background

A. Facts[5]

Trojan Horse, Ltd. ("Trojan Horse") is a mail transportation contractor, providing mail services for the U.S. Postal Service under the McNamara-O' Hara Service Contract Act[6] ("SCA"). ECF No. 24-2 ¶ 19. Malinowski was employed by Trojan Horse as a Manager/Supervisor at its Bethpage, New York facility. Id. ¶ 6. Miley, Dotzler, Frantz, and McMillen were employed as Trojan Horse truck drivers. Id. ¶¶ 7-14. Lichter is a Maryland limited liability company that provides certified public accounting and business consulting services. Id. ¶¶ 15-16.

The SCA required Trojan Horse to establish benefits for the Plaintiffs and putative class members that included "pensions on retirement or death' or equivalents." Id. ¶ 21. On January 1, 2009, Trojan Horse established the Plan: a "single employer Plan, with a Trust Plan funding and benefit arrangement." Id. ¶¶ 22-23.[7] Trojan Horse administered the Plan. Id. ¶¶ 26-27. Brian Hicks was Plan Administrator and a Trustee. Id. ¶ 28.

Trojan Horse retained Lichter, which "held itself out as experts in performing audits of Employee Benefit Plans, " to audit the Plan's December 31, 2010 and December 31, 2011 financial statements (respectively, the "2010 audit" and "2011 audit"). Id. ¶¶ 31, 52, 53, 92.[8] Lichter audited "statement[s] of net assets available" for the Plan as of December 31, 2009 and December 31, 2010. Id. ¶ 56. It also "prepared and approved Form 5500[s][9] for Plan years 2009, 2010, and 2011." Id. ¶¶ 33, 103.[10]

In a January 7, 2011 Letter of Engagement prepared in connection with the 2010 audit, Lichter noted, "You acknowledge that the Form 5500 for the year ended December 31, 2009, was filed without the required financial statements and auditor's report attached." Id. ¶¶ 54-55.[11]

Lichter's December 31, 2010 Financial Report ("2010 Financial Report") stated that "Plan contributions totaled $1, 427, 885" for the year ending December 31, 2010. Id. ¶ 58. That same report stated that, as of December 31, 2009, the Plan's fair value of assets was $464, 866, and that, as of December 31, 2010, the Plan's fair value of assets was $1, 824, 702. Id. ¶¶ 59, 60. The 2010 Form 5500 reported that the Plan's fair value of assets, as of December 31, 2010, was $1, 900, 604. Id. ¶ 61. Lichter "later reported [that] the fair value of assets in the Plan, as of December 31, 2010, [was] $1, 901, 143." Id. ¶ 62.

The 2010 Financial Report further stated that:
During 2010 and 2009, [Trojan Horse] inadvertently failed to deposit $5, 268 and $539, respectively, of participant deferrals within the required time frame as stated by the [Department of Labor ("DOL")].
[Trojan Horse] will calculate lost earnings and remit them to the Plan in 2011. Also, [Trojan Horse] will file Form 5330[12] and pay the applicable excise tax. The excise payment will be made from [Trojan Horse's] assets.

Id. ¶ 66.

Lichter's October 31, 2012 Financial Report ("2012 Financial Report"), prepared in connection with the 2011 audit, stated that "timeliness and consistency of remitting contributions to the [Plan]" were discussed with Trojan Horse, identified "significant deficiencies" in the Plan's "internal control, " and noted that Trojan ...


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