Lopriore v. Raleigh Cardiovascular & Thoracic, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ROBERT LOPRIORE, III, 
Plaintiff-Appellant,
v.
RALEIGH CARDIOVASCULAR AND
THORACIC, INCORPORATED; RALEIGH
CARDIOVASCULAR AND THORACIC,
INCORPORATED MONEY PURCHASE
PENSION PLAN; JAMES HOWELL DAVIS,
M.D., individually and as Plan
Administrator and Trustee of
Raleigh Cardiovascular and
Thoracic, Incorporated Money
Purchase Pension Plan and Profit
Sharing Plan; ABDUL GHAFOOR
CHAUDHRY, M.D., individually and
as Trustee of Raleigh
Cardiovascular and Thoracic,  No. 99-1861
Incorporated Money Purchase
Pension Plan and Profit Sharing
Plan; L. GEORGE ALEXANDER, M.D.,
Trustee of Raleigh Cardiovascular
and Thoracic, Incorporated Money
Purchase Pension Plan and Profit
Sharing Plan; RALEIGH
CARDIOVASCULAR AND THORACIC,
INCORPORATED PROFIT SHARING PLAN;
RCV TECHNOLOGY, INCORPORATED,
Defendants-Appellees,
and
PROFESSIONAL MANAGEMENT OF
RALEIGH, INCORPORATED,
Defendant.

2 LOPRIORE v. RALEIGH CARDIOVASCULAR
Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
W. Earl Britt, Senior District Judge.
(CA-97-480-5-BR)
Argued: April 3, 2000
Decided: February 8, 2002
Before WIDENER, Circuit Judge, Claude M. HILTON,
Chief United States District Judge for the
Eastern District of Virginia, sitting by designation, and
David A. FABER, United States District Judge for the
Southern District of West Virginia, sitting by designation.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Leslie Bruce McDaniel, MCDANIEL, ANDERSON &
STEPHENSON, L.L.P., Raleigh, North Carolina, for Appellant. Mark
Stanton Thomas, MAUPIN, TAYLOR & ELLIS, P.A., Raleigh,
North Carolina, for Appellees. ON BRIEF: D. Royce Powell, Joanne
J. Lambert, MAUPIN, TAYLOR & ELLIS, P.A., Raleigh, North Car-
olina, for Appellees.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
LOPRIORE v. RALEIGH CARDIOVASCULAR 3
OPINION
PER CURIAM:
Plaintiff Robert Lopriore, III appeals the district court’s grant of
summary judgment on his claims under 29 U.S.C. § 1132(c)(1) and
the district court’s judgment in favor of the defendants, Raleigh Car-
diovascular & Thoracic Inc. (Raleigh C & T), Drs. Davis, Chaudhry,
and Alexander, RCV Technology, Inc. (RCV Tech), Professional
Management of Raleigh, Inc.,1 and Raleigh C & T’s money purchase
plan and profit sharing plan (the plans), on his claim alleging a depri-
vation of benefits under ERISA. We affirm.
I.
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 Lopri-
1
Professional Management of Raleigh, Inc. is not a party to this appeal.
2
A perfusionist monitors and regulates a variety of physiologic func-
tions during various cardiovascular surgeries (cardiopulmonary
bypasses), such as blood gas analysis, membrane and bubbler oxygena-
tion, cardioplegia administration, and the use of vasoactive drugs.
4 LOPRIORE v. RALEIGH CARDIOVASCULAR
ore’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.
Raleigh C & T began sponsorship of the plans in 1977 and
remained the sponsor until closing its doors in 1997. In January 1986,
before Lopriore commenced his employment with RCV Tech,
Raleigh C & T executed the documents to adopt the terms and the
provisions of the NCNB Master Contribution Plan and Trust (1986
Master Plan) applied here. When Lopriore began working as a perfu-
sionist for RCV Tech, the following terms from the 1986 Master Plan
were in force at Raleigh C & T:
Section 18.1 Multiple Employers.
(a) General. The Plan may be sponsored by more than
one employer if (i) all sponsoring employers execute the
same Adoption Agreement and (ii) each sponsoring
employer would be an Affiliated Employer with respect to
the Plan if not a sponsor. If the employers sponsoring the
Plan are all corporations that are members of the same "af-
filiated group" of corporations within the meaning of Sec-
tion 1504 of the Code, the provisions of Section 18.1(b)
shall apply.
Section 18.1(b) referred to "adopting corporations" in its provisions
regarding "participating employers." The adoption agreement, to
which the 1986 Master Plan referred, stated that if any employers
aggregated with respect to the Master Plan under sections 414(b),
414(c), or 414(m) of the tax code as it existed in January 1986, those
employers shall have adopted the 1986 Master Plan by executing the
adoption agreement as set forth in 18.1(a) of the 1986 Master Plan.
The adoption agreement further represented that if any other employ-
ers became aggregated in the future, those new employers would per-
form one of two actions: 1) adopt the 1986 Master Plan or 2) the plans
LOPRIORE v. RALEIGH CARDIOVASCULAR 5
would be amended and restated without using that form of the adop-
tion agreement. When RCV Tech was incorporated, and throughout
its existence as a separate corporation, it never executed the adoption
agreement to adopt the 1986 Master Plan.
Raleigh C & T amended and restated the plans in August 1991 and
in November 1991, and RCV Tech did not execute adoption agree-
ments under the amended plans. From 1987 until 1990-91, the plans
operated on a plan year which began on July 1 and ended on June 30.
The plans had a short plan year from July 1, 1991 to December 31,
1991, and following the last 1991 amendment and restatement, Drs.
Davis, Chaudhry, and Alexander became the trustees of the plans and
the plan began operating on a calendar year plan year effective Janu-
ary 1, 1992.
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
6 LOPRIORE v. RALEIGH CARDIOVASCULAR
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.
We review the district court’s grant of summary judgment de novo.
See Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167
(4th Cir. 1988). Summary judgment is appropriate when there is no
genuine issue of material fact to be decided by the trier of fact and
the moving party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(c). We must construe the facts in the light most favorable
to the non-moving party. See Perini Corp. v. Perini Constr., Inc., 915
F.2d 121, 123-24 (4th Cir. 1990).
LOPRIORE v. RALEIGH CARDIOVASCULAR 7
We review the judgment of the district court after the two day
bench trial under the following standards: we review matters of law
de novo; we review factual findings under a clearly erroneous stan-
dard; and we review the imposition of penalties and award of attor-
ney’s fees for abuse of discretion. See West v. Murphy, 99 F.3d 166,
167 (4th Cir. 1996).
II.
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. § 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. §§ 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. § 1166, the filing and publication
requirements for group health plans. See 29 U.S.C. § 1132(c)(1)(A);
29 U.S.C. § 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.
The magistrate judge reasoned that there was a factual question of
whether the plantiff was eligible to participate in any applicable plan
so summary judgment was not awarded because of lack of participa-
tion, but because defendants responded in a timely fashion to all of
Lopriore’s written requests for plan documents. Lopriore made three
written requests in August 1996, February 1997, and May 1997,
3
Section 1024 provides that the administrator of an employee benefit
plan must furnish to a participant a copy of the summary plan description
with modifications and changes within 90 days after the person becomes
a participant, as well as provide, upon written request of any participant,
a copy of the latest updated summary plan description, the latest annual
report, and other named papers. See 29 U.S.C. § 1024(b)(1); 29 U.S.C.
§ 1024(b)(4).
8 LOPRIORE v. RALEIGH CARDIOVASCULAR
respectively. The defendants responded to each one of these written
requests as required by 29 U.S.C. § 1024(b)(4).
Lopriore argues that because 29 U.S.C. § 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 § 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. § 1132(c)(1)(B). In fact, the letters
from Lopriore’s attorneys to the defendants referred to 29 U.S.C.
§ 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. § 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. § 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. § 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.
We now turn to the district court’s judgment regarding Lopriore’s
claim that he was deprived benefits under ERISA.
LOPRIORE v. RALEIGH CARDIOVASCULAR 9
III.
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
§ 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.5
Lopriore argues that by concluding that he was an employee of
Raleigh C & T for tax purposes, the district court should have con-
cluded that he was also eligible to be a participant of the plans based
on this status. We disagree. Under ERISA, a participant is defined as
"any employee or former employee of an employer who is or may
become eligible to receive a benefit of any type from an employee
benefit plan." 29 U.S.C. § 1002(7). An employee is defined as "any
individual employed by an employer." 29 U.S.C. § 1002(6). The dis-
trict court did not conclude that Lopriore was an employee under
ERISA, rather it concluded that Lopriore was an employee for tax
purposes.
In National Mutual Insurance Co. v. Darden, 503 U.S. 318 (1992),
the Supreme Court stated that ERISA’s definition of employee is
"nominal, . . . completely circular and explains nothing." Darden, 503
U.S. at 323. The Court decided to adopt a common-law test for deter-
4
One definition given in § 414(m) of an affiliated service group is a
group consisting of a service organization, referred to as the first organi-
zation, and any service organization that is a shareholder or partner of the
first organization and regularly performs services for the first organiza-
tion or is regularly associated with the first organization in performing
services for third persons. See 26 U.S.C. § 414(m)(2).
5
Even after 1991 until the time RCV Tech and Raleigh C & T merged,
RCV Tech never sponsored its own employee pension benefit plans.
10 LOPRIORE v. RALEIGH CARDIOVASCULAR
mining who qualifies as an employee under ERISA by considering
the amount of control of the hiring party and other factors. Darden,
503 U.S. at 323 (citing Community for Creative Non-Violence v. Reid,
490 U.S. 730, 740, 751-52 (1989)). In the case before us, the district
court did not do an exhaustive test to determine Lopriore’s employee
status, but it did find that Lopriore received his pay from RCV Tech,
that RCV Tech was a legally separate corporation from Raleigh C &
T, and that RCV Tech never affirmatively adopted the plans as
required by the plans themselves.
The district court’s conclusion that Lopriore was an employee of
Raleigh C & T for tax purposes was based on § 414(m) of the Internal
Revenue Code and Internal Revenue Service regulations. The district
court stated that "[w]hile it may affect the tax status of the plans,
[Lopriore]’s employee status does not impart any rights under the
plans upon him." We agree with this conclusion and follow this
court’s decision in West v. Murphy, 99 F.3d 166 (4th Cir. 1996).
In West, plaintiff West claimed that he should have been entitled
to participate in an employee benefit plan formulated by Murphy,
another person in West’s law partnership. West, 99 F.3d at 167. Mur-
phy’s employee benefit plan contained language stating that employ-
ers under the plan included affiliates, meaning any "business entity
which is part of an affiliated service group of [Murphy]" as defined
by § 414(m) of the tax code. West, 99 F.3d at 169. West argued that
under § 414(m) and other sections of the tax code, he should be con-
sidered Murphy’s employee. West, 99 F.3d at 169. We rejected these
arguments and held that those provisions of the tax code, including
§ 414(m), "deal with minimum participation, vesting, and funding
standards that must be satisfied in order for an employee pension plan
to receive favorable tax treatment." West, 99 F.3d at 169. We found
that nothing in § 414(m) varied ERISA’s definition of participant or
the requirements of an employer-employee relationship. West, 99
F.3d at 169; see also Reklau v. Merchants Nat’l Corp., 808 F.2d 628,
631 (7th Cir. 1986) (holding that if Congress intended certain sections
of the tax code, such as § 401, to be applicable to ERISA, it would
have so stated). We find that the reasoning in West controls this case,
and we therefore affirm the district court’s judgment.
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
LOPRIORE v. RALEIGH CARDIOVASCULAR 11
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.6
6
This case is essentially a claim by Lopriore that he was a participant
in the various plans involved in this case prior to the time that any pay-
ments were made into the plans on his behalf, which payments com-
menced in 1991. He also claimed money benefits on account of the
discovery during the case that one of the physicians involved had made
loans from his own account in the funds which were not repaid but which
were reported by the physician as income. While the district court prop-
erly denied any money recovery on this account, it also properly allowed
attorney’s fees, and that item is not appealed.
There were some 11 causes of action stated in the complaint, with
multiple sub-parts, each of which, save the attorney’s fees not appealed,
was correctly decided in favor of the defendants for the reasons stated in
the opinions of the magistrate judge, the district judge, and in our opinion
here. The various sub-parts of the plaintiff’s claims decided adversely to
him, which are not taken up with specificity in his brief in this court, are
not discussed in this opinion. And we emphasize that the judgment of the
district court is affirmed in all respects.