Torres v. Bella Vista Hospital, Inc.

523 F.Supp.2d 123 (2007)

Olga TORRES and Pedro Bonilla, Plaintiff(s)
v.
BELLA VISTA HOSPITAL, INC., et al., Defendant(s).

Civil No. 06-2158(JAG).

United States District Court, D. Puerto Rico.

October 29, 2007.

Luis Vivaldi-Oliver, Luis Vivaldi Oliver Law Office, Mayaguez, PR, Roberto Millan, Millan Law Office, San Juan, PR, for Plaintiffs.

Carlos Martinez-Texidor, Martinez-Texidor Fuster, Ponce, PR, Cristina S. Belaval-Burger, Alberto Rodriguez-Ramos, Fernando J. Valderrabano-Marina, Martinez Odell & Calabria, Juan A. Marques-Diaz, McConnell Valdes, Francisco J. Colon-Pagan, Colon, Colon & Martinez, Manuel A. Segarra-Vazquez, Manuel A. Segarra Vazquez Law Office, San Juan, PR, for Defendants.

OPINION AND ORDER

JAY GARCIA-GREGORY, District Judge.

Pending before the Court are: 1) Watson Wyatt & Company's ("Watson Wyatt") Motion to Dismiss (Docket No. 38), 2) Banco Popular de Puerto Rico's ("BPPR") Motion to Dismiss (Docket No. 34), 3) Pannell, Kerr & Foster's ("PKF") Motion to Dismiss (Docket No. 39), 4) Bella Vista Hospital, Inc's ("the Hospital") and Ruben Perez's (collectively "Defendants") Motion to Dismiss (Docket No. 45), and 5) Ruben Perez's Motion for Partial Summary Judgement (Docket No. 31). For the reasons set forth below, the Court DENIES in part and GRANTS in part the Motions.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Hospital

The Hospital is a non-profit corporation organized under the laws of Puerto Rico and operated by the General Conference of the Seventh Day Adventist Church, a corporation authorized to do business in the Commonwealth of Puerto Rico. (Docket No. 78). The main purposes of the Hospital is to provide medical facilities to persons in need of such services, and to spread the gospel as is understood by the Seventh Day Adventist Church. (See Docket No. 34, Exh. A). The Hospital is operated by the Union Adventista Puertorriqueña^[1], which reports to the Interamerican Division of the General Conference of the Seventh Day Adventist. (Docket No. 78).

According to the Hospital's by-laws, the Seventh Day Adventist Church delegates its responsibilities for running the Hospital to the Hospital's Board of Trustees. The Hospital's by-laws state that half of the members of the Board of Trustees must be members of the Seventh Day Adventist Church. Moreover, the Hospital's by-laws also provide that four (4) of the nineteen(19) members of the board of Trustees must be members of the Unión Adventista Puertorriqueña. (Docket No. 34, Exh. BB). Currently, the President and the Vice-President of the Finance Committee are officers of the Unión Adventista Puertorriqueña. (Docket No. 78). However, none of the members of the Hospital's Board of Trustees is appointed by the Church.

2. The Plan

On January 1, 1982, the Hospital created an Employee Pension Benefit Plan known as the Bella Vista Hospital, Inc. Pension Plan ("the Plan"). The Plan was co-administered by the Union Adventista Puertorriquena and the Interamerican Division of the General Conference of the Seventh Day Adventist, who was designated as the administrator and named fiduciary of the Plan. (Docket No. 78).

A Retirement Committee was in charge of the general administration of the Plan and was responsible for carrying out its provisions. The members of the Retirement Committee were appointed by the Hospital's Board of Trustees and could be removed by the Board at any time. (Docket No. 34, Exh. A).

Even though the Plan had been subject to three different set of rules, (See Docket No. 1 ¶ 34), only the 1982 rules are on record before the Court. (See Docket No. 59, Exh. 2). Among other things, the 1982 rules established that at the time of the Plan's creation it was subject to ERISA and that the Hospital, acting through its Board of Trustees, could delegate the administration of the Plan to any person or entity. (Docket No. 59, Exh. 2).

On July 29, 1983, a deed of trust was executed, establishing the Bella Vista Hospital Pension Trust ("the Trust"). (Docket No. 34, Exh. B). The Trust named Banco de Ponce as trustee, but BPPR became the successor in interest as trustee. (Docket No. 34).

On January 24, 1996, the Internal Revenue Service ("IRS") issued a determination letter stating that the Hospital was "exempt from Federal income tax under section 501(a) of the Internal Revenue Service" ("IRS"). (Docket No. 34, Exh. C). In 1997, the Hospital filed a Form 5500 along with its federal income tax return, which had an attached notation entitled "Pension Plan" that stated: "The Plan is subject to the provisions of the Employee Retirement Income Act of 1974 (ERISA)." (Docket No. 40, Exh. 5, 6).

In 2000, following a request by the Hospital, the IRS issued a ruling, which stated that the Plan was "a Church Plan within the meaning of section 414(e) of the Code." Said ruling also stipulates that the "ruling is directed only to the taxpayer who requested it" and that "[s]ection 6110(k)(3) of the Code provides that it may not be used or cited by others as precedent." (Docket No. 34. Exh. A).

On August 14, 2003, the Plan was terminated and liquidated. (Docket No. 34, Exh. D). Two corporations whose service were instrumental in the termination and liquidation of the Plan were: Watson Wyatt and PKF.

Watson Wyatt was a corporate service provider to the Plan. Said company provided actuarial and consulting services regarding the establishment, administration, termination and liquidation of the Plan's benefits, the valuation of the Plan's assets and provided certain documents and rules for the Plan. (Docket Nos. 1, 38).

PKF is a certified accounting firm that acted as a service provider to the Plan and to the Hospital. The firm's services included accounting and financial consulting regarding the administration, operation and termination of the Plan.

3. Plaintiffs

Olga Torres and Pedro Bonilla ("Plaintiffs") were both employed by the Hospital and Participated in the Plan. (Docket No. 1). Plaintiff Bonilla became disabled in 1998 and plaintiff Torres became disabled in 1999. As a result of the termination and liquidation of the Plan, Plaintiffs did not receive the benefits they would have received under the Plan had it remained covered by ERISA. (Docket No. 59). On 2004, Plaintiffs filed a lawsuit in state court against, the Hospital, BPPR, the Antillian Union Conference of the Seventh Day Adventist, the Retirement Committee of the General Conference, the General Conference of Seventh Day Adventist, and the Plan, to recover lost benefits. (Docket 34, Exh. H).

On November 17, 2006, Plaintiffs filed a complaint in this Court against: 1) the Hospital, 2) BPPR, 3) The Antillian Union Conference of the Seven Day Adventist 4) the Retirement Committee of the General Conference of the Seventh-Day Adventist^[2] Interamerican Division, 5) the General Conference of Seventh Day Adventist, 6) Bella Vista Hospital Pension Plan and Trust, 7) the Adventist of the Seven Day Interamerican Division Retirement Plan, 8) Bella Vista Hospital, Inc. 401 K Plan and Trust, 9) Watson Wyatt, 10) PKF, 11) Miguel Ramos and the conjugal partnership between him and his spouse, and 12) Ruben Perez and the conjugal partnership between him and his spouse for declaratory relief; violations of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq. ("ERISA"); and Puerto Rico law claims for professional malpractice, misrepresentation, breach of contract, and tort. (Docket No. 1). The state court lawsuit was stayed pending resolution of this action. (See Docket Nos. 34, Exh. CC, 59)

On March 7, 2007, co-defendant Ruben Perez filed a Motion for Partial Summary Judgement. In said motion, Ruben Perez stated that in the complaint he is named as: the President of the Antillian Retirement Committee of the General Conference, the Treasurer of the Antillian Union Conference of the Seventh Day, representative of the Conference of the Seventh Day Adventist and Vice-President of Bella Vista Hospital, Inc. Ruben Perez conceded that he is the Vice-President of Bella Vista Hospital, Inc. but denied that he has any authority or representative capacity over the other organizations, which Plaintiffs allege he is part of. As such, Ruben Perez contends that all claims of liability against him that arise from the following organizations should be dismissed. (Docket No. 31). Plaintiffs did not oppose Ruben Perez's Motion for Partial Summary Judgement.

On March 12, 2007, BPPR filed a Motion to Dismiss under Fed. R.Civ.P.12(b)(1), alleging that this Court does not have subject matter jurisdiction over this action because Bella Vista Hospital, Inc. Pension Plan ("the Plan") is a church plan and, therefore, is not covered by ERISA. Alternatively, BPPR argued that the Court should not exercise its discretion to entertain the action for declaratory relief. (Docket No. 34). Plaintiffs opposed BPPR Motion to Dismiss (Docket No. 59) and BPPR filed a reply to Plaintiffs' opposition (Docket No. 67).

Defendants Watson Wyatt, PKF, the Hospital, Ruben Perez each filed Motions to Dismiss in which they also contend that the Plan is not subject to ERISA because it is a church plan. (Docket Nos. 38, 39, 45). Plaintiffs opposed said Motions to Dismiss, (Docket Nos. 60, 64), and Defendants subsequently replied to Plaintiffs' opposition. (Docket Nos. 69, 72).

In its Motion to Dismiss, Watson Wyatt also moved pursuant to Rule 12(b)(6) to dismiss the causes of action for breach of fiduciary duties on the ground that it is not a plan fiduciary. Furthermore, Watson Wyatt contended that Plaintiffs' state tort causes of action should be dismissed as time barred on the grounds that this lawsuit was filed more than a year after the statute began to run. (Docket No. 38).

PKF, together with Watson Wyatt, also moved to dismiss Plaintiffs' state law tort causes of action as time barred. Moreover, PKF moved to dismiss Plaintiffs' breach of contract claim on the ground that the complaint did not adequately allege a cause of action. Finally, PKF sought the dismissal of Plaintiffs' ERISA claims against it arguing that they were time barred. (Docket No. 39). All of Defendants' Motions to Dismiss were referred to Magistrate-Judge Bruce J. McGiverin for a Report and Recommendation.

On August 23, 2007, Magistrate-Judge Bruce J. McGiverin issued his Report and Recommendation. First, the Magistrate Judge decided to treat Defendants' Motions to Dismiss, on the grounds that the Plan is a church plan, as Motions for Summary Judgement. The Magistrate Judge determined to convert `Defendants' Motions to Dismiss into Motions for Summary Judgment because ERISA provided the basis for both subject matter jurisdiction and the causes of action. Furthermore, the Magistrate-Judge noted that the facts relevant to the merits of Plaintiffs' claims are also the facts relevant to the determination of subject matter jurisdiction. After analyzing said Motions to Dismiss (now converted into motions for summary judgement), the Magistrate Judge determined that Defendants failed to prove that the Plan was a church plan. Consequently, the Magistrate-Judge recommended that Defendants' Motions to Dismiss be denied.

Second, the Magistrate-Judge did not agree with BPPR's contention that the Court should not exercise its discretion to entertain the action for declaratory relief. The Magistrate-Judge recommended that the Court entertain Plaintiffs' declaratory judgement action because it is based entirely on federal law and because the state court had already taken action to prevent duplication of judicial efforts. Third, the Magistrate-Judge recommended that the Court deny Watson Wyatt's Rule 12(b)(6) Motion to Dismiss based on the allegation that it was not a plan fiduciary. The Magistrate-Judge noted that in accordance with the Rule 12(b)(6) standard, the Court must accept as true all well-pleaded factual claims and Plaintiffs clearly alleged that Watson Wyatt was a plan fiduciary that exercised its discretion in its management and administration of the Plan.

Fourth, the Magistrate-Judge determined that Plaintiffs' Puerto Rico tort and contract causes were not preempted by ERISA. Consequently, the Magistrate-Judge recommended that PKF's Motion to Dismiss on these grounds be denied. Fifth, the Magistrate-Judge considered Watson Wyatt and PKF's contention that Plaintiffs' state law tort causes were time barred. The Magistrate-Judge agreed with Watson Wyatt and PKF's allegation and recommended that their Motion to Dismiss the state law tort claims as time barred be granted.

Sixth, the Report and Recommendation analyzed PKF's allegation that Plaintiffs' breach of contract claim should be dismissed because the complaint does not adequately allege a cause of action. The Magistrate-Judge concluded that Plaintiffs' pleadings were not sufficient to bring forth a breach of contract action against PKF. Seventh, the Magistrate-Judge recommended that PKF's Motion to Dismiss, on the grounds that Plaintiffs' ERISA claim against them was time barred, be granted. Finally, the Magistrate-Judge recommended that Defendant Ruben Perez's unopposed Motion for Partial Summary Judgement be granted. (Docket No. 73).

On August 20, 2007, Defendants the Hospital and Mr. Ruben Perez as Vice President of the Hospital objected the Magistrate-Judge's conclusion that the Plan is not a church plan. (Docket No. 78). On August 21, 2007, Watson Wyatt also filed their objections to the Report and Recommendation. Specifically, Defendant Watson Wyatt alleged that the Plan is a church plan exempted from ERISA coverage and that it is not a fiduciary under ERISA. In addition, Watson Wyatt contends that if the Court determines that it is not a plan fiduciary, Plaintiffs' ERISA claims against it should be dismissed as they are time barred. (Docket No. 80). The Court will address each of the Defendants' objections.

STANDARD OF REVIEW

1. Motion to Dismiss Standard.

Under Fed. R.Civ.P. Rule 12(b)(1), a defendant may move to dismiss an action for lack of subject matter jurisdiction. As courts of limited jurisdiction, federal courts must narrowly construe jurisdictional grants. See e.g., Alicea-Rivera v. SIMED, 12 F.Supp.2d 243, 245 (D.P.R.1998). Consequently, the party asserting jurisdiction has the burden of demonstrating the existence of federal jurisdiction. See Murphy v. United States, 45 F.3d 520, 522 (1st Cir.1995); Droz-Serrano v. Caribbean Records Inc., 270 F.Supp.2d 217 (D.P.R.2003). When deciding whether to dismiss a complaint for lack of subject matter jurisdiction, the Court "may consider whatever evidence has been submitted, such as . . . depositions and exhibits." See Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir.1996).

Motions brought under Rule 12(b)(1) are subject to the same standard of review as Rule 12(b)(6) motions. Negrou-Gaztambide v. Hernandez-Torres, 35 F.3d 25, 27 (1st Cir.1994); Torres Maysonet v. Driller, S.E., 229 F.Supp.2d 105, 107 (D.P.R.2002). Under. Rule 12(b)(6), dismissal is proper "only if it clearly appears, according to the facts alleged, that the plaintiff cannot recover on any viable theory." Gonzalez-Morales v. Hernandez-Arencibia, 221 F.3d 45, 48 (1st Cir.2000)(quoting Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir. 1990)). Under Rule 12(b)(1), dismissal would be proper if the facts alleged reveal a jurisdictional defect not otherwise remediable.

In Bell Au. Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court recently held that to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege "a plausible entitlement to relief." Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95-96 (1st Cir.2007)(quoting Twombly, 127 S.Ct. at 1967). While Twombly does not require heightened fact pleading of specifics, it does require enough facts to "nudge [plaintiffs] claims across the line from conceivable to plausible." Twombly, 127 S.Ct. at 1974. Accordingly, in order to avoid dismissal, the plaintiff must provide the grounds upon which his claim rests through factual allegations sufficient "to raise a right to relief above the speculative level." Id. at 1965.

The Court accepts all well-pleaded factual allegations as true, and draws all reasonable inferences in plaintiffs favor. See Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir.1990). The Court need not credit, however, "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like" when evaluating the Complaint's allegations. Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996). When opposing a Rule 12(b)(6) motion, "a plaintiff cannot expect a trial court to do his homework for him." McCoy v. Massachusetts Institute of Tech., 950 F.2d 13, 22 (1st Cir.1991). Plaintiffs are responsible for putting their best foot forward in an effort to present a legal theory that will support their claim. Id. at 23 (citing Correa-Martinez, 903 F.2d at 52). Plaintiffs must set forth "factual allegations, either direct or inferential, regarding each material element necessary to sustain recovery under some actionable theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir.1988).

2. Summary Judgment Standard

The court's discretion to grant summary judgment is governed by Rule 56 of the Federal Rules of Civil Procedure. Rule 56 states, in pertinent part, that the court may grant summary judgment only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c); See also Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52. (1st Cir.2000).

Summary judgment is appropriate if "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." See Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the burden of showing the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Once a properly supported motion has been presented before the court, the opposing party has the burden of demonstrating that a trial-worthy issue exists that would warrant the court's denial of the motion for summary judgment. For issues where the opposing party bears the ultimate burden of proof, that party cannot merely rely on the absence of competent evidence, but must affirmatively point to specific facts that demonstrate the existence of an authentic dispute. See Suarez v. Pueblo Int'l, Inc., 229 F.3d 49 (1st Cir. 2000).

In order for a factual controversy to prevent summary judgment, the contested facts must be "material" and the dispute must be "genuine". "Material" means that a contested fact has the potential to change the outcome of the suit under governing law. The issue is "genuine" when a reasonable jury could return a verdict for the nonmoving party based on the evidence. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). It is well settled that "Wile mere existence of a scintilla of evidence" is insufficient to defeat a properly supported motion for summary judgment. Id. at 252, 106 S.Ct. 2505. It is therefore necessary that "a party opposing summary judgment must present definite, competent evidence to rebut the motion." Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994).

In making this assessment, the court "must view the entire record in the light most hospitable to the party opposing summary judgment, indulging in all reasonable inferences in that party's favor." Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990). The court may safely ignore "conclusory allegations, improbable inferences, and unsupported speculation." Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990).

3) Standard for Reviewing a Magistrate-Judge's Report and Recommendation

Pursuant to 28 U.S.C. §§ 636(b)(1)(B); Fed. R.Civ.P. 72(b); and Local Rule 503; a District Court may refer dispositive motions to a United States Magistrate Judge for a Report and Recommendation. See Alamo Rodriguez v. Pfizer Pharmaceuticals, Inc., 286 F.Supp.2d 144, 146 (D.P.R.2003). The adversely affected party may "contest the Magistrate Judge's report and recommendation by filing objections `within ten days of being served' with a copy of the order." United States v. Mercado Pagan, 286 F.Supp.2d 231, 233 (D.P.R.2003) (quoting 28 U.S.C. §§ 636(b)(1)). If objections are timely filed, the District Judge shall "make a de novo determination of those portions of the report or specified findings or recommendation to which [an] objection is made." Rivera de Leon v. Maxon Eng'g Servs., 283 F.Supp.2d 550, 555 (D.P.R. 2003). The Court can "accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate," however, if the affected party fails to timely file objections, the "district court can assume that they have agreed to the magistrate's recommendation'." Alamo Rodriguez, 286 F.Supp.2d at 146 (quoting Templeman v. Chris Craft Corp., 770 F.2d 245, 247 (1st Cir.1985)).

DISCUSSION

1. Defendants' Motion to Dismiss on the Grounds that the Plan is a Church Plan

Defendants Watson Wyatt, the Hospital and Ruben Perez all claimed in their objection to the Report and Recommendation that the Plan is a church plan not subject to ERISA. As mentioned above, the Magistrate Judge determined to convert Defendants' Motions to Dismiss into Motions for Summary Judgment. (Docket Nos. 78, 80).

A court can convert a Rule 12(b)(1) motion to dismiss into a Rule 12(b)(6) motion or a Rule 56 summary judgment motion when resolution of the jurisdictional question is intertwined with the merits of the case. Holt v. United States, 46 F.3d 1000, 1003 (10th Cir.1995); see also Redmon v. United States, 934 F.2d 1151, 1155 (10th Cir.1991). The jurisdictional question is intertwined with the merits of the case if subject matter jurisdiction is dependent on the same statute which provides the substantive claim in the case. Holt, 46 F.3d at 1003.

However, while such a conversion is required in other Circuits, see e.g. Holt, 46 F.3d at 1003; this Circuit provides more flexibility. Gonzalez v. United States, 284 F.3d 281, 287 (1st Cir.2002)("a Rule 12(b)(1) motion is sometimes transformed into a Rule 56 motion where jurisdictional issues cannot be separated from the merits of the case"). Indeed, the First Circuit has noted that when "jurisdictional facts . . . are inextricably intertwined with the merits of the case . . . the court may defer resolution of the jurisdictional issue until the time of trial." Valentin v. Hosp. Bella Vista, 254 F.3d 358, 363 n. 3 (1st Cir.2001); see also Hollingsworth v. United States, 2005 WL 3435099, *6, 2005 U.S. Dist. LEXIS 33224, "20-21 (D.Me.2005).

In the instant case, the jurisdictional question is intertwined with the merits of the case because ERISA provides the basis for both subject matter jurisdiction and the causes of action. Furthermore, the facts relevant to the merits of Plaintiffs' claims are also the facts relevant to the determination of subject matter jurisdiction. However, in accordance with our Circuit's holding in Valentin the conversion of Defendants' Motions to Dismiss into Motions for Summary Judgement is not mandatory.

Permitted to do so by Valentin, this Court defers resolution of the jurisdictional issue. There is an apparent dispute as to the fact if the Plan is a church plan or a plan subject to ERISA. As such, this Court is not prepared to rule as a matter of law that the Plan is a church plan not subject to ERISA. This is particularly true when the parties have made differing claims as to whether the plan constitutes a church plan or a plan subject to ERISA. Therefore, this Court concludes that this matter should be presented in a format better designed for a full airing of the issues, after the parties have an opportunity to narrow areas of factual dispute. Consequently, the Court hereby modifies the Magistrate-Judges findings in the Report and Recommendation that the Plan is not a church plan. As a result, Defendants' Motions to Dismiss, (Docket Nos. 34, 38, 39, 45), on the grounds that the Plan is a church plan are to be denied.

2. The Plan Fiduciary

Defendant Watson Wyatt avers in its objections to the Report and Recommendation that it is not a fiduciary of the Plan. Watson Wyatt has informed this Court that the services that it provided to the Hospital regarding the Plan included the following: 1) conducting actuarial valuation for accounting purposes, 2) providing administrative support, which included the computation of pension benefits, 3) drafting government forms and providing advice to the Hospital when it sought a ruling from the IRS that stated that the Plan was a church plan, and 4) providing support and advice to the Hospital when the Plan was liquidated. (Docket No. 80). However, Plaintiffs alleged, in their complaint, that Watson Wyatt also "managed the Plan operation since its inception," and "acted as a Plan fiduciary by exerting discretionary authority and control regarding the management and administration of defendant defined benefit Plan." (Docket No. 1, ¶ 11).

ERISA reserves fiduciary liability for "named fiduciaries," defined either as those individuals listed as fiduciaries in the plan documents or those who are otherwise identified as fiduciaries pursuant to a plan-specified procedure. 29 U.S.C. § 1102(a)(2); see also Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 18 (1st Cir.1998). However, the statute also extends fiduciary liability to functional fiduciaries, who are persons that act as fiduciaries (though not explicitly denominated as such) by performing at least one of several enumerated functions with respect to a plan. Beddall, 137 F.3d at 18. Under 29 U.S.C.S. § 1002(21)(A), a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.

The key determinant of whether a person qualifies as a functional fiduciary is whether that person exercises discretionary authority in respect to, or meaningful control over, an ERISA plan, its administration, or its assets (such as by rendering investment advice). See Beddall, 137 F.3d at 18; O'Toole v. Arlington Trust Co., 681 F.2d 94, 96 (1st Cir.1982); see also 29 C.F.R. § 2509.75-8, at 571 (1986). The exercise of physical control or the performance of mechanical administrative tasks generally is insufficient to confer fiduciary status, a person is a plan fiduciary only "to the extent" that he possesses or exercises the requisite discretion and control. 29 U.S.C. § 1002(21)(A); see also Beddall, 137 F.3d at 18.

An ERISA fiduciary, properly identified, must employ within the defined domain "the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use." Id. (quoting 29 U.S.C. § 1104(a)(1)(B)). The fiduciary should act "solely in the interest, of the participants and beneficiaries," and his overarching purpose should be to "provide benefits to the participants and their beneficiaries" and to "defray[] reasonable expenses of administering the plan." Id. (quoting 29 U.S.C. § 1104(a)(1)). A fiduciary who fails to fulfill these responsibilities is "personally liable to make good to [the] plan any losses to the plan resulting from . . . such breach." Id. (quoting 29 U.S.C. § 1109(a)).

Plaintiffs clearly allege in their complaint that Watson Wyatt was a plan fiduciary because according to them, it exerted discretionary authority and control regarding the management and administration of the Plan. Since Watson Wyatt's Motion to Dismiss is a 12(b)(6) motion, the Court must accept this well-pleaded factual allegations as true, and draw all reasonable inferences in Plaintiffs' favor. Said factual allegation taken as true would be sufficient to determine that Watson Wyatt is a functional fiduciary, an element necessary to sustain recovery under Plaintiffs' theory. As such, Plaintiffs factual allegations are sufficient to avoid dismissal because they raise their alleged right to relief above the speculative level.^[3] Consequently, this Court disagrees with Watson Wyatt's objections. Watson Wyatt's Motion to Dismiss is hereby denied. (Docket No. 38).

Finally, as mentioned above, the only Defendants that filed objections to the Report and Recommendation were Watson Wyatt and the Hospital together with its Vice-President Ruben Perez. As such, the Court accepts those parts of the Report and Recommendation, which are not modified by this Opinion and Order and to which Defendants did not object.^[4]

CONCLUSION

For the reasons stated above, the Court hereby MODIFIES in part the Magistrate-Judges finding regarding Defendants' Motion to Dismiss and ADOPTS the rest of the Magistrate-Judge's Report and Recommendation. (Docket No. 73). As a result, the Court DENIES Defendants BPPR, the Hospital and Ruben Perez's Motions to Dismiss. (Docket Nos. 34, 45). The Court GRANTS Ruben Perez's Motion for Partial Summary Judgement. (Docket No. 31).

Regarding PKF's Motion to Dismiss, the Court GRANTS the Motion on the grounds that Plaintiffs' ERISA and state law tort causes of action are time barred and that Plaintiffs failed to adequately allege a breach of contract claim against PKF. However, the Court DENIES PKF's Motion because Plaintiffs tort and contract causes of action are not preempted by ERISA. (Docket No. 39). The Court also DENIES Watson Wyatt's Motion to Dismiss in which Defendant contends it is not a plan fiduciary and that the Plan is a church plan. Nonetheless, the Court GRANTS Watson Wyatt's Motion to Dismiss on the grounds that Plaintiffs' state law tort claims are time barred. (Docket No. 38).

Accordingly, Plaintiffs' ERISA and breach of contract claims against PKF is dismissed with prejudice. Furthermore, Plaintiffs' state law tort claims against PKF and Watson Wyatt are dismissed with prejudice.

IT IS SO ORDERED.

MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

BRUCE J. McGIVER IN, United States Magistrate Judge.

PROCEDURAL BACKGROUND

Plaintiffs Olga Torres and Pedro Bonilla ("plaintiffs") filed a complaint against several codefendants for declaratory relief; violations of the Employee retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq. ("ERISA"); and Puerto Rico law claims for professional malpractice, misrepresentation, breach of contract, and tort. (Docket No. 1). Plaintiffs seek a declaration of ERISA coverage, a computation of the benefits due them, restitution, back pay, punitive damages, and other equitable relief as a result of the alleged wrongful conduct. (Docket No. 1, p. 22-24). Before this court are the following motions: Banco Popular de Puerto Rico's ("BPPR") Motion to Dismiss under Fed.R.Civ.P. 12(b)(1) ("Rule 12(b)(1)"), alleging that this court does not have subject matter jurisdiction over this matter and, alternatively, that the court should not exercise its discretion to entertain the action for declaratory relief (Docket No. 34), plaintiffs' opposition (Docket No. 59), and BPPR's reply (Docket No. 67); Watson Wyatt & Company's ("Watson Wyatt") Motion to Dismiss for lack of subject matter jurisdiction and for failure to state a claim (Docket No. 38), plaintiffs' opposition (Docket No. 64), and Watson Wyatt's reply (Docket No. 72); Panel, Kerr & Foster's ("PKF") Motion to Dismiss (Docket No. 39), plaintiffs' opposition (Docket No. 60), and PKF's reply (Docket No. 69); Bella Vista Hospital, Inc.'s and Ruben Pérez's ("codefendants") Motion to Dismiss for lack of subject matter jurisdiction (Docket No. 45), and plaintiffs' opposition (Docket No. 64); and Ruben Pérez's unopposed Motion for Partial Summary Judgment (Docket No. 31).

The case was assigned to me for a report and recommendation on the motions listed above pursuant to 28 U.S.C. 636(b)(1). (Docket No. 56). For the reasons that follow, I recommend that said motions be granted in part and denied in part as articulated below.

FACTUAL BACKGROUND

The following facts were taken from the complaint, the parties' moving papers, and the exhibits attached thereto.

Bella Vista Hospital, Inc. ("Hospital") is a non-profit corporation organized under the laws of Puerto Rico. (Docket No. 34, Exh. A, p. 1). Ruben Pérez serves as vice president of the Hospital. (Docket No. 1, ¶ 14; Docket No. 31, ¶ 5). The by-laws of the Hospital require that more than half of its Board of Trustees be active members of the Seventh Day Adventist Church. (Docket No. 34, Exh. BB). The Hospital reports to the Antillian Union Conference of Seventh Day Adventists,^[1] which reports to the Interamerican Division of the Church. (Docket No. 34, p. 17).

The Hospital created the Bella Vista Hospital, Inc. Pension Plan ("Plan") on January 1, 1982. (Docket No 59, Exh, 1), The Plan has been subject to three different sets of rules: one dated January 1, 1982; another dated January 1, 1985; and one established as the Adventist Plan rules. (Docket No. 1, ¶ 34). But only the 1982 rules are on record before the court. (See `Docket No. 59, Exh. 2). Those rules established that at the time of the Plan's creation it was subject to ERISA. (Docket No. 59, Exh. 2, p. 1, 6, 8). They further establish that the Hospital, acting through its Board of Trustees, is empowered to delegate the administration of the Plan to whom it chooses. (Docket No. 59, Exh. 2, p. 6). On January 24, 1996, the Internal Revenue Service ("IRS") issued a determination letter stating that the Hospital was "exempt from Federal income tax under section 501(a) of the Internal Revenue Code as an organization described in section 501(c)(3)." (Docket No. 34, Exh. C). In 1997, the Hospital filed a Form 5500 along with its federal income tax return (Docket No. 40, Exh. V), and attached a notation to it entitled "Pension plan," which stated: "The plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA)." Id. at Exh. VI.

A deed of trust was executed on July 29, 1983, establishing the Bella Vista Hospital Pension Trust. (Docket No. 34, Exh. B). It named Banco de Ponce as trustee, id. at p. 2, but BPPR has become the successor in interest as trustee (Docket No. 34, p. 3).

Plaintiffs Olga Torres and Pedro Bonilla were both employed by the Hospital and participated in the Plan. (Docket No. 1, ¶ 15). Plaintiff Bonilla became disabled in 1998 and plaintiff Torres became disabled in 1999. (Docket No. 59, p. 2).

In 2000, the IRS issued a ruling — which had been requested by the Hospital — that found the Plan to be "a Church Plan within the meaning of section 414(e) of the Code." (Docket No. 34, Exh. A). The ruling went on to state that it "is directed only to the taxpayer who requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited by others as precedent." Id. The Plan was terminated and liquidated by corporate resolution dated August 14, 2003.^[2] (Docket No. 34, Exh. D). As a result of this termination and liquidation, neither plaintiff received the benefits they would have received under the Plan had it remained covered by ERISA. (Docket No. 59, p. 3).

Watson Wyatt was a corporate service provider to the Plan. (Docket No. 38, p. 6; Docket No. 1, ¶ 11). Its duties included providing actuarial and consulting services regarding the establishment, administration, termination and liquidation of Plan benefits, the valuation of plan assets, and providing certain Plan documents and rules for the Plan. (Docket No. 38, p. 6; Docket No. 1, ¶ 11, 25, 27-28, 32-33). PKF is a certified accounting firm that acted as a service provider to the Plan, as well as to the Hospital. (Docket No. 1, ¶ 12). These services included accounting and financial consulting regarding the administration, operation and termination of the Plan. Id.

Plaintiffs filed a lawsuit in state court in 2004 against, inter alia, the Hospital, BPPR, the Antillian Union Conference of the Seventh Day Adventist, the Retirement Committee of the General Conference, the General Conference of Seventh Day Adventist, and the Plan, to recover the lost benefits (Docket No. 34, Exh. H), and filed this lawsuit in 2006 to recover ERISA disability benefits. (Docket No. 1). The state court lawsuit was stayed pending resolution of this "action. (See Docket No. 59, p. 1; Docket No. 34, Exh. CC).

STANDARD OF REVIEW

The co-defendants addressed in this report and recommendation submitted motions to dismiss under two different standards; Rule 12(b)(1) and Rule 12(b)(6). Each will be discussed in turn.

I. Rule 12(b)(1) and Summary Judgment

Ordinarily, a motion challenging subject matter jurisdiction is analyzed as a motion under Rule 12(b)(1). However, "if jurisdictional issues cannot be separated from the merits of the case, then consideration of matters outside the pleadings transforms the motion into one for summary judgment." Jones-Booker v. United States, 16 F.Supp.2d 52, 58 n., 9 (D.Mass. 1998); see also Gonzalez v. United States, 284 F.3d 281, 287 (1st Cir.2002) ("A Rule 12(b)(1) motion is sometimes transformed into a Rule 56 motion where jurisdictional issues cannot be separated from the merits of the case."); Holt v. United States, 46 F.3d 1000, 1003 (10th Cir.1995) ("where resolution of the jurisdictional question is intertwined with the merits of the action, a court is required to treat the motion as one for dismissal pursuant to Fed.R.Civ.P. 12(b)(6), or as one for summary judgment pursuant to Fed.R.Civ.P. 56"); Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1558 (9th Cir.1987) (when facts relevant to the determination of subject matter jurisdiction go directly to the merits of plaintiffs claim, the district court should apply summary judgment standards to the motion to dismiss for lack of subject matter jurisdiction).

The jurisdictional issue is usually "intertwined with the merits of the action where the court's subject matter jurisdiction depends upon the same statute which governs the substantive claims in the case." McLellan Hwy. Corp. v. United States, 95 F.Supp.2d 1, 6 (D.Mass.2000), citing Holt, 46 F.3d at 1003. However, the two issues are not intertwined, despite sharing a common statutory source, where "the facts relevant to the determination of subject matter jurisdiction do not go directly to the merits of the plaintiffs claim," such as when the jurisdictional issue is whether the claim is time-barred. Gonzalez, 284 F.3d at 287. Here, ERISA provides the basis for both subject matter jurisdiction and the causes of action. Furthermore, the facts relevant to the determination of subject matter jurisdiction are the very same facts relevant to the merits of plaintiffs' claims — i.e., the facts relevant to whether the Plan is a "church plan." Accordingly, BPPR's motion to dismiss under Rule 12(b)(1) will be converted to a motion for summary judgment.

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, to whether with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(e). A fact is material only if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining if a material fact is "genuine," the court does not weigh the facts but, instead, ascertains whether the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.; Leary v. Dalton, 58 F.3d 748, 751 (1st Cir.1995).

"[A] party seeking summary judgment always bears the initial responsibility of. informing the district court of the basis for its motion, and identifying those portions of the [evidence] . . . which it believes demonstrate the absence of a genuine issue of material fact." Crawford-El v. Britton, 523 U.S. 574, 600 n. 22, 118 S.Ct. 1584, 140 L.Ed.2d 759 (1998), quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once this threshold is met, the burden shifts to the nonmoving party. The nonmovant may not rest on mere conclusory allegations or wholesale denials. Fed.R.Civ.P. 56(e); Libertad v. Welch, 53 F.3d 428, 435 (1st Cir.1995). Instead, the nonmoving party must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Further, the nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Of course, the court draws inferences and evaluates facts "in the light most favorable to the nonmoving party." Leary, 58 F.3d at 751. Still, summary judgment is appropriate where the nonmoving party rests entirely upon. "conclusory allegations, improbable inferences, and unsupported speculation" on any essential element of the discrimination claim. Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990).

II. Rule 12(b)(6)

When deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)"), the court must accept as true all well-pleaded factual claims, and indulge all reasonable inferences in the non-movant's favor. Centro Medico del Turabo, Inc. v. Feliciano de Melecio, 406 F.3d 1, 5 (1st Cir.2005). Dismissal under Rule 12(b)(6) is appropriate if the facts alleged, taken as true, do not justify recovery. Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996). In order to survive a motion to dismiss, the plaintiff must set forth "factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988). Although all inferences must be made in the non-movant's favor, the court need not accept "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like." Aulson, 83 F.3d at 3.

Moreover, when considering a motion to dismiss under Rule 12(b)(6), the court must limit its focus to the allegations of the complaint. Litton Indus., Inc. v. Colon, 587 F.2d 70, 74 (1st Cir.1978); Doyle v. Hasbro, Inc., 103 F.3d 186, 190 (1st Cir.1996). Specifically, the inquiry should be "whether a liberal reading of [the complaint] can reasonably admit of a claim." Litton Indus., 587 F.2d at 74.; see also Doyle, 103 F.3d at 190.

DISCUSSION

I. Whether the Plan is a "Church Plan"

BPPR, Watson Wyatt, PKF, the Hospital, and Ruben Pérez aver that the Plan is not subject to ERISA because it is a church plan within the meaning of § 414(e) of the Internal Revenue Code, 26 U.S.C. § 414(e), and that the court therefore lacks subject matter jurisdiction over this case. (Docket No. 34, p. 18 (BPPR); Docket No. 38, p. 8(Watson Wyatt); Docket No. 39, P. 11(PKF); Docket No. 45, p. 2, 7-8 (the Hospital and Ruben Perez)). Plaintiffs argue that the Plan is covered by ERISA, and that the defendants deprived plaintiffs of their due benefits under the federal statute by improperly terminating the pension program. (See, e.g., Docket No. 59, p. 14).

The provisions of ERISA do not apply to a church plan "with respect to which no election has been made under section 410(d) of Title 26." 29 U.S.C. § 1003(b)(2). Plaintiffs argue that the Hospital chose to establish an ERISA-covered pension and welfare benefits plan, and that it cannot now renege on its promise to provide such benefits to its employees. (Docket No. 59, p. 8-9). If the Hospital did make an election under § 410(d), then even if the Plan qualifies as a church plan, it would still be covered by ERISA.

Under 26 C.F.R. § 1.410(d)-1(c)(5), an election under § 410(d) must contain a statement indicating: "(i) that the election is made under section 410(d) of the Code and (ii) the first plan year for which it is effective." Here, the rules applicable to the Plan established in 1982 contain several statements declaring that the Plan is subject to ERISA, but make no mention of § 410(d). (Docket No. 59, Exh. 2, p. 1, 6, 8). Likewise, the Hospital attached to its 1997 Form 5500 a notation entitled "Pension plan," which stated: "The plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA)." (Docket No. 40, Exh. VI). Neither of these actions by the Hospital amounts to a § 410(d) election because the Hospital never explicitly states that it is making the election under that specific section, as required by the regulations.^[3] Because no § 410(d) election was made, ERISA will not apply if the plan is in fact a "church plan."

Section 1002 of Title 29 defines church plan as "a plan established and maintained . . . for its employees . . . by a church or by a convention or association of churches which is exempt from tax under section 501 of Title 26." 29 U.S.C. § 1002(33)(A). Such a plan "includes a plan maintained by an organization . . . the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits, or both, for the employees of a church or a convention or association of churches, if such organization is controlled by or associated with a church or a convention or association of churches." 29 U.S.C. § 1002(33)(C)(i). However, courts have overwhelmingly interpreted § 1002(33)(C)(i) as not limiting the non-church organizations which can establish church plans to those whose "principal purpose or function" is the administration or funding of a retirement or welfare benefits plan or program. See Chronister v. Baptist Health, 442 F.3d 648, 652-53 (8th Cir.2006) (treating a healthcare organization as encompassed within the church plan exception if it is controlled by or associated with a church, regardless of what its principal purpose or function is); Lown v. Continental Casualty Co., 238 F.3d 543, 547-48 (4th Cir.2001) (same); Catholic Charities of Me., Inc. v. City of Portland, 304 F.Supp.2d 77, 86 n. 4 (D.Me. 2004) (finding that § 1002(33)(C)(i) provides "an alternative means of satisfying the `church plan' definition" rather than limiting the definition of church plan); Friend v. Ancillia Systems Inc., 68 F.Supp.2d 969, 973 (N.D.Ill.1999) ("section 1002(33)(C)(i) does not `require' that the plan be maintained by an organization the principle purpose of which is administering or funding the plan. The statute merely `includes' such plans in the definition of church plan . . . [The intent of (C)(i)] is to require that if an organization controlled by or associated with a church wants to hire an administrator for its plan, the administrator must also be controlled by or associated with the church."); see also Peter J. Wiedenbeck, ERISA's Curious Coverage, Wash. Univ. L.Q. 311, n. 178 (1998) ("Where the plan is set up by the churchrelated charity for its employees, the expansive definitions of `church' and `church employee' seem to assure that the plan is `established and maintained' by a (deemed) church for its employees. But church control or influence (direct or indirect) over the board or committee that administers the plan also satisfies the definition. Some rulings explicitly treat the latter requirement as an alternative means of satisfying the church plan definition."); Dept. of Labor Opinions, 94-11A; 95-10A; 90-12A (all treating § 1002(33)(C)(i) as an alternative means of meeting the definition).

Courts have focused on other ERISA provisions and regulations which "bring[] a plan established or maintained by a non-church organization within the general definition of `church plan' if that organization is `controlled by' or `associated with' a church." Catholic Charities, 304 F.Supp.2d at 85; see also Chronister, 442 F.3d at 652 (enunciating the same legal conclusion as Catholic Charities); Lown 238 F.3d at 547 (same). One such provision is § 1002(C)(iv), which states that "[a]n organization, whether a civil law corporation or otherwise, is associated with a church or a convention or association of churches if it shares common religious bonds and convictions with that church or convention or association of churches." 29 U.S.C. § 1002(C)(iv); see also 26 C.F.R. § 1.414(e)-1(d)(2) ("An organization is associated with a church if it shares common religious bonds and convictions with that church."). In addition, 26 C.F.R. § 1.414(e)1(d)(2) states that an organization is controlled by a church when, for example, a religious institution appoints a majority of the organization's officers or directors.

Two courts have addressed whether employee disability plans created by nonprofit hospital corporations qualify as "church plans" under ERISA. In Lown, the plaintiff claimed that the federal court lacked subject matter jurisdiction over her case because her long-term disability plan was a church plan not governed by ERISA. Lown, 238 F.3d at 545. There, Lown worked for Baptist Healthcare System of South Carolina, Inc., which until 1993 had been affiliated with the South Carolina Baptist Convention, a group of state Baptist churches. After 1993, Baptist Healthcare did not receive any funding from either the Southern Baptist Convention or the South Carolina Baptist Convention. Moreover, Baptist Healthcare served individuals of all faiths and creeds. The court held that Baptist Healthcare's long-term disability benefits plan did not qualify as a church plan under ERISA because Baptist Healthcare was not controlled by a church or convention nor were there common religious bonds and convictions between the two entities. Id. at 548. In arriving at its conclusion, the court applied a non-exclusive three-part test to determine whether an organization shares common bonds and convictions with a church: "(1) whether the religious institution plays an official role in the governance of the organization, (2) whether the organization receives assistance from the religious institution, and (3) whether a denominational requirement exists for any employee or patient/customer of the organization." Id.

In Chronister, the Eighth Circuit adopted the Lown three-part test to determine whether a nonprofit hospital's disability plan fit into the "church plan" exception to ERISA. Chronister, 442 F.3d at 653. There, Chronister worked for Baptist Health, a nonprofit corporation that owns and operates hospitals. Chronister became disabled on account of injuries she suffered in a car accident and filed a claim for long-term disability benefits. After denial by the insurer, Chronister brought suit, which was removed to federal court. The insurer argued that ERISA governed the plan, but Chronister averred that the plan fit within the "church plan" exception. "Specifically, Chronister point[ed] out that Baptist Health requires its CEO, its board of directors, and its chaplains to be members of Baptist churches. Baptist Health's management is instructed to follow religious principles, and under Baptist doctrine . . . Moreover, if Baptist principles and secular medicine conflict, Baptist principles control, i.e. in the case of abortion." Id. at 652. In addition, "[t]he CEO refer[ed] to. Baptist Health as a Christian organization that operates a healing ministry where all management employees are expected to be spiritual leaders as determined by Christian principles," and "all management employees [must] attend a seminar entitled `Spiritual Dimensions of Leadership.'" Id. at 653. Despite these numerous ties to the Baptist church, the court, applying the Lown factors, found that Baptist Health's long-term disability benefits plan to not be a "church plan," and was therefore governed by ERISA. Id.

Here, defendants' claim that the Hospital is controlled by or associated with the Seventh Day Adventist Church rests primarily upon three grounds articulated by BPPR, none of which establishes such a connection between the Hospital and the Church. First, BPPR points out that the Hospital's by-laws require that more than half of the members of the Board of Trustees be active members of the Church. (Docket No. 34, p. 17). This requirement falls short of the one present in Chronister, which was found to be insufficient to establish control by or an association with the Baptist church. There, the organization's CEO and board of directors were all required to be members of the Baptist church, and all managers were required to be "spiritual leaders as determined by Christian principles" and to attend a seminar entitled "Spiritual Dimensions of Leadership." Chronister, 442 F.3d at 653. Those requirements were deemed insufficient to establish control by or association with the Baptist church because, inter alia, the local Baptist church did not appoint any board members. Id. In this case, none of the members of the Hospital's Board of Trustees is appointed by the Church.

Second, BPPR avers in its motion that "the Hospital (through its Board of Trustees) reports directly to the Antillian Union, which in turn reports to the Interamerican Division of the Church." (Docket No. 34, p. 17). However, the Hospital's bylaws provide that only four of 22 members of the Board of Trustees "must be officers of the Antillian Union. (Docket No. 34, Exh. BB). BPPR fails to explain how this small number of Antillian Union-affiliated board members equates to the Hospital "report[ing] directly to the Antillian Union," and there is insufficient evidence before the court to make such a finding.^[4]

Finally, defendants argue that the administration of the Plan is delegated to the Retirement Committee, the members of which are appointed, and may be removed or changed at any time, by the Hospital's Board of Trustees. (Docket No. 34, p. 17; Exh. A, p. 2). However, since the composition of the Board of Trustees does not denote control by or association with the Church, the fact that the Board of Trustees appoint's and removes members of the Retirement Committee likewise falls short of establishing such control. The other defendants articulate essentially the same arguments as BPPR based on the same facts. (Compare Docket No. 34, p. 13-18, with Docket No. 38, p. 8-12; Docket No. 39, pp. 11-12; and Docket No. 45, p. 2, 7-8).

Defendants try to distinguish Lown and Chronister from the present case by noting that neither of those cases involved a prior IRS letter ruling finding the existence of a "church plan." (Docket No. 34, p. 16). However, that distinction does not render those cases inapposite. Here, the first IRS letter ruling was apparently ignored by the Hospital, since more than a year after its issuance the Hospital filed a Form 5500, which non-profit organizations must file in order to qualify for ERISA coverage, along with its federal tax returns. (Docket No. 40, Exh. V); see Stern v. IBM, 326 F.3d 1367, 1373 (11th Cir. 2003) ("IBM asserts that it annually files Form 5500 with the Department of Labor and the IRS identifying the Program as an ERISA plan."); United States v. Coyle, 63 F.3d 1239, 1242 (3d Cir.1995) ("Under ERISA, the Fund was required to file a federal Form 5500."). In addition, the Hospital attached to its Form 5500 a notation which stated: "The plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA)," id. at Exh. VI, leaving no doubt whatsoever that its intention was to keep the Plan under the authority of ERISA, notwithstanding the IRS ruling.

Although the Hospital requested and was granted a second letter ruling in 2000 (Docket No. 34, Exh. A), that ruling does not constitute binding precedent on this court. 26 U.S.C. 6110(k)(3); see also David R. Webb Co., Inc. v. Commissioner of Internal Revenue, 708 F.2d 1254, 1257 n. 1 (7th Cir.1983) ("[T]axpayer also cites several private [IRS] letter rulings. These rulings, however, may not be used or cited as precedent."), citing 26 U.S.C. § 6110(j)(3) (now (k)(3)). Rather, such rulings are accorded "some deference," depending on the thoroughness evident in its consideration, validity of its reasoning, and all other factors which give it power to persuade. Aeroquip-Vickers, Inc. v. C.I.R., 347 F.3d 173, 181 (6th Cir. 2003); see also Tupper v. United States, 134 F.3d 444, 447 (1st Cir.1998) (holding that IRS rulings are given "due deference," as long as they are reasonable); In re Flindall, 105 B.R. 32, 41 (Bankr.D.Ariz. 1989) ("This court is not bound by a Letter Ruling of the I.R.S. and declines to follow it"), reed on other grounds, Pitrat v. Garlikov, 992 F.2d 224 (9th Cir.1993). The 2000 IRS letter ruling was based entirely upon "statements and information" conveyed by the Hospital to the IRS in 1999 and 2000. (Docket No. 34, Exh. A, p. 1). In this case, such a ruling — which is based entirely upon the Hospital's representations, and where the plaintiffs have not been given the opportunity to advocate their position — holds little precedential or persuasive value.

In sum, defendants have failed to prove that the Plan is a church plan as a matter of law. See Catholic Charities, 304 F.Supp.2d at 85. I therefore recommend that all defendants' motions to dismiss (converted to motions for summary judgment) on the ground that the Plan is a church plan be denied.

II. Whether the Court Will Entertain the Declaratory Judgment Action

Defendants request in the alternative that the court decline to exercise its discretion to entertain the action for declaratory relief. (Docket No. 34, p. 18). Although it concedes that "the determination of [w]hether to entertain a justiciable declaratory judgment action is a matter committed to the sound discretion of the trial court," (Docket No. 34, p. 19) (see also Horace Mann Ins. Co. v. Johnson By and Through Johnson, 953 F.2d 575, 576 (10th Cir.1991)), defendants allege that the court should not hear the declaratory judgment action because the plaintiffs filed a prior suit in local court before bringing the federal action.

In Wilton v. Seven Falls Co., 515 U.S. 277, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995), the Supreme Court noted that "[s]ince its inception, the Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Wilton, 515 U.S. at 286, 115 S.Ct. 2137; see also El Diet, Inc. v. Hernandez Colon, 963 F.2d 488, 493 (1st Cir.1992) ("The Declaratory Judgment Act . . . neither imposes an unflagging duty upon the courts to decide declaratory judgment actions nor grants an entitlement to litigants to demand declaratory remedies."). Such discretion endures "even when the suit otherwise satisfies subject matter jurisdictional prerequisites." Wilton, 515 U.S. at 282, 115 S.Ct. 2137. The First Circuit has noted that "[i]n the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration." DeNovellis v. Shalala, 124 F.3d 298, 313 (1st Cir.1997), quoting Wilton, 515 U.S. at 288, 115 S.Ct. 2137.

The court's discretion, while broad, "is not unfettered." Standard Fire Ins. Co. v. Gordon, 376 F.Supp.2d 218, 224 (D.R.I.2005), quoting Travelers Ins. Co. v. La. Farm Bureau Fed'n, Inc., 996 F.2d 774, 778 (5th Cir.1993). "The question for a district court presented with a suit under the Declaratory Judgment Act . . . is `whether the questions in controversy between the parties to the federal suit, and which are not foreclosed under the applicable substantive law, can better be settled in the proceeding pending in the state court.'" Wilton, 515 U.S. at 282, 115 S.Ct. 2137, quoting Brillhart, 316 U.S. at 495, 62 S.Ct. 1173. The Supreme Court has provided the following non-exclusive list of factors governing the proper exercise of discretion: "the scope of the pending state court proceeding, the available state court defenses, and whether the claims of all parties in interest can be settled in the state court proceeding." Gordon, 376 F.Supp.2d at 224, citing Wilton, 515 U.S. at 282, 115 S.Ct. 2137. Specifically, where "parallel proceedings . . . presenting opportunity for ventilation of the same state law issues [are] underway in the state court," these considerations "clearly support[]" a district court's decision to stay or dismiss a declaratory judgment action. Wilton, 515 U.S. at 290, 115 S.Ct. 2137; see also Brillhart, 316 U.S. at 495, 62 S.Ct. 1173 ("Ordinarily it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties.").

While the presence or absence of parallel state proceedings is clearly important, "questions remain about how the term `parallel' should be construed in the declaratory judgment context." Gordon, 376 F.Supp.2d at 226. "While the First Circuit has not specifically addressed what constitutes a `parallel proceeding' in the declaratory judgment context post-Wilton, its broad construction of the term outside of the declaratory judgment context supports the view that `parallel' does not mean `identical.'" Gordon, 376 F.Supp.2d at 226, citing Villa Marina Yacht Sales, Inc. v. Hatteras Yachts, 947 F.2d 529, 533, 536 (1st Cir.1991) (finding parallel proceedings despite, lack of perfect identity of parties and issues); and Ambrose v. New England Ass'n of Schs. and Colls., 100 F.Supp.2d 48, 50 (D.Me.2000) ("[s]uits are parallel if substantially the same parties litigate substantially the same issues in different forums"). "Where the same parties are involved in related federal and state court actions, and where all claims made in the declaratory judgment action in federal court can be adjudicated in state court, a stay or dismissal may be appropriate." Gordon, 376 F.Supp.2d at 226-27, citing Wilton, 515 U.S. at 283, 115 S.Ct., 2137; and Aetna Cas. & Sur. Co. v. Kelly, 889 F.Supp. 535, 540 (D.R.I.1995).

When applied to the circumstances of this case, this factor weighs in favor of this court's exercise of jurisdiction over plaintiffs' declaratory judgment action. Here, both plaintiffs and BPPR are named parties in the state court litigation. (See Docket No. 34, Exh. H). Importantly, however, as conceded by BPPR, "the local forum does not have subject matter jurisdiction to entertain the ERISA claim against BPPR for alleged violations of its fiduciary duties" (Docket No. 34, p. 26 (emphasis omitted)), which include plaintiffs' second and third causes of action (See Docket No. 1, p. 13-14). Moreover, plaintiffs' prayer for declaratory relief is based on their ERISA claims which were not raised in local court.^[5] (Docket No. 1, ¶ 49; Docket No. 34, Exh. H).

Another factor to consider is whether adjudication of the declaratory judgment action requires resolution of factual questions that will be litigated in the underlying state court proceeding. If so, "practicality and wise judicial administration would counsel against proceeding with the declaratory judgment action." Gordon, 376 F.Supp.2d at 227, citing Metro. Prop. and Liability Ins. Co. v. Kirkwood, 729 F.2d 61, 62 (1st Cir.1984). Importantly, the ERISA-related factual questions requiring resolution in the declaratory judgment action, though similar, are still distinct from those in the Puerto Rico lawsuit. The fiduciary issue in the Puerto Rico action turns on whether BPPR (and/or other defendants) acted in a manner amounting to a "willful default" or "manifest negligence," 31 L.P.R.A. § 2569; (see Docket No. 34, Exh. H, ¶ 46), whereas the federal declaratory judgment fiduciary issue turns on whether BPPR (and/or other defendants) acted "with the care, skill, prudence, and diligence under the circumstances," 29 U.S.C. § 1104. See Aetna Cas. & Sur. Co. v. Kelly, 889 F.Supp. 535, 542 (D.R.I.1995) (staying an insurer's request for declaratory relief regarding its duty to indemnify various church officials because church officials' entitlement to indemnification and their liability in tort turned on exactly the same "central" question: whether the officials were aware of the alleged abuse). However, even to the extent that the fiduciary liability issue is similar in both the Puerto Rico lawsuit and the federal declaratory judgment action, such similarity is insufficient to compensate for the glaring differences between the two actions. The central thrust of the declaratory judgment action consists of a request to declare whether the Plan is covered by ERISA, to enforce plaintiffs' ERISA rights, and to specify the calculations of the benefits which are owed to plaintiffs under ERISA. (Docket No. 1, ¶ 49). These determinations turn on application of federal law unrelated to the Puerto Rico lawsuit.

The source of law involved in a declaratory judgment action is also relevant to the court's decision of whether to dismiss or stay the action. See Gordon, 376 F.Supp.2d at 231 (addressing this issue); see also BFI Waste Sys. of N. Am., Inc. v. Travelers Cas. and Sur. Co., 1999 WL 813879, at *6 (D.N.H. Oct.6, 1999). While "the absence of any federal law issue weighs in favor of dismissing [the] declaratory judgment action," Gordon, 376 F.Supp.2d at 231, the existence of federal law issues, favors retaining the case. Here, the declaratory judgment action is based entirely on federal law — i.e., ERISA; a factor weighing heavily against dismissal of the action.

Furthermore, the principal concern in support of dismissal of declaratory judgments is to avoid "piecemeal litigation, duplication of effort and the possibility of inconsistent results." Gordon, 376 F.Supp.2d at 225 (citations and quotations omitted). Such worries are less relevant here since the underlying Puerto Rico lawsuit has been stayed pending resolution of the federal action. (See Docket No. 59, p. 1; Docket No. 34, Exh. CC). Because the state court already has taken action to prevent duplication of judicial efforts, this factor also weighs against dismissal.

Based upon a balancing of the relevant factors, 1 recommend that this court find that considerations of practicality and wise judicial administration weigh in favor of adjudication of plaintiffs' declaratory judgment action. Thus, I recommend that this court entertain the declaratory judgment action and deny BPPR's motion.

III. Whether Watson Wyatt is a Plan Fiduciary

Watson Wyatt moves under Rule 12(b)(6) to dismiss the causes of action for breach of fiduciary duties on the ground that it is not a plan fiduciary. (Docket No. 38, p. 15). Plaintiffs counter that Watson Wyatt "exercis[ed] discretion in determining and reporting the plan as an ERISA or as a church plan, us[ed] several methods and plan rules to value benefit and plan obligations, [and] recommend[ed] and implement[ed] the termination and liquidation of the plan." (Docket No. 64, ¶ 3).

ERISA imposes liability on "fiduciaries" and "co-fiduciaries" who breach their fiduciary duties, as defined by the statute. Under the statute, liability extends not only to "named fiduciaries" — defined either as those individuals listed as fiduciaries in the plan documents or those who are otherwise identified as fiduciaries pursuant to a plan-specified procedure — but also to functional fiduciaries. Beddall v. State Street Bank and Trust Co., 137 F.3d 12, 18 (1st Cir.1998). The latter group consists of "persons who act as fiduciaries (though not explicitly denominated as such) by performing at least one of several enumerated functions with respect to the plan." Id. Specifically, the statute instructs that: "a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan." 29 U.S.C. § 1002(21)(A). "Person," under the statute, includes partnerships, joint ventures, corporations, trusts, estates, associations, and a variety of other types of organizations. 29 U.S.C. § 1002(9).

"The key determinant of whether a person qualifies as a functional fiduciary is whether that person exercises discretionary authority in respect to, or meaningful control over, an ERISA plan, its administration, or its assets." Beddall, 137 F.3d at 18, citing O'Toole v. Arlington Trust Co., 681 F.2d 94, 96 (1st Cir.1982). The "mere exercise of physical control or the performance of mechanical administrative tasks generally is insufficient to confer fiduciary status." Beddall, 137 F.3d at 18. In addition, fiduciary status is not an all or nothing proposition; the language of the statute indicates that a person is a plan fiduciary only "to the extent" that he or she possesses or exercises the requisite discretion or control. 29 U.S.C. § 1002(21)(A).

Here, plaintiffs allege that Watson Wyatt "manage[d] the Plan operation since its inception," and "acted as a Plan fiduciary by exerting discretionary authority and control regarding the management and administration of defendant defined benefit Plan." (Docket No. 1, ¶ 11). Plaintiffs also allege that the plan liquidation was implemented using benefits values provided by Watson Wyatt that did not reflect the real value of the benefits, id. at ¶ 28, that Watson, Wyatt "exercised discretion in valuating Plan benefits under three (3) sets of plan rules, when the Administrator was directed to apply the ruling retroactively and when the Plan benefits were valuated for purposes of Plan termination," id. at ¶ 32, and that Watson Wyatt "was the entity providing the Employer with the Plan documents and rules for the Plan which did not include all the ERISA required provisions," id. at ¶ 33.

As this is a Rule 12(b)(6) motion, the court must accept as true all well-pleaded factual claims, and indulge all reasonable inferences in the non-movant's favor, Feliciano de Melecio, 406 F.3d at 5, and dismissal is appropriate only if the facts alleged, taken as true, do not justify recovery. Aulson, 83 F.3d at 3. Here, the complaint adequately alleges that Watson Wyatt is a fiduciary under ERISA. Plaintiffs clearly allege that Watson Wyatt exercised discretion in its management and administration of the Plan. I therefore recommend that Watson Wyatt's motion to dismiss the breach of fiduciary claims be denied.

IV. Whether ERISA Preempts the Puerto Rico Causes of Action

PKF asserts that plaintiffs' Puerto Rico tort and contract causes of action are preempted by ERISA. (Docket No. 39, p. 4). Plaintiffs counter in their opposition that the Puerto Rico claims are not of the type intended to be preempted by the federal statute. (See Docket No. 60, p. 8).

Preemption under ERISA is "expansive in scope." Rosario-Cordero v. Crowley Towing & Transp. Co., 46 F.3d 120, 122 (1st Cir.1995). "[T]he express pre-emption provisions of ERISA are deliberately expansive, and designed to `establish pension plan regulation as exclusively a federal concern.'" Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981). Specifically, ERISA provides, with some exceptions not relevant here, that ERISA "supercede[s] any and all State laws<sup>[6]</sup> insofar as they . . . relate to any employee benefit plan." 29 U.S.C. § 1144(a) (emphasis added). A state law, in turn, "`relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). Additionally, ERISA's preemptive force can displace any state cause of action, Pilot Life Ins., 481 U.S. at 44, 107 S.Ct. 1549, "even if the law is not specifically designed to affect such plans, or the effect is only indirect." District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 130, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992), quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990).

Nevertheless, the Supreme Court in Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), made clear that ERISA does not preempt every state law claim that has any connection to an ERISA plan. Id. at 832-34. "[L]awsuits against ERISA plans for run-of-the-mill state-law claims such as unpaid rent, failure to pay creditors, or even torts committed by an ERISA plan" are not preempted by ERISA. Id. at 833. In addition, "[c]ertain state laws which affect ERISA funds are not [preempted] because they have too `tenuous, remote and peripheral' an impact on the fund to be preempted." Framingharn Union Hosp., Inc. v. Travelers Ins. Co., 721 F.Supp. 1478, 1489 (D.Mass.1989), citing Mackey, 486 U.S. at 825, 108 S.Ct. 2182 (garnishment laws not preempted); Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 145 (2d Cir.1989) (Connecticut escheat law not preempted); Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286, 1290 (5th Cir.1988). "[L]aws that have been ruled preempted are those that provide an alternative cause of action to employees to collect benefits protected by ERISA, refer specifically to ERISA plans and apply solely to them, or interfere with the calculation of benefits owed to an employee. Those that have not been preempted are laws of general application — often traditional exercises of state power or regulatory authority — whose effect on ERISA plans is incidental.'" Travelers Ins., 721 F.Supp. at 1490, quoting Borges, 869 F.2d at 146.

Applying the authority set out in Mackey, Borges, and Pilot Life Ins., the district court in Travelers Ins. held that a state law claim for malpractice against a plan accountant was not preempted since it did not "relate to" the plan. Travelers Ins., 721 F.Supp. at 1490. The court found that the malpractice cause of action did not "purport[] to impact the administration of the Plan,' provision of benefits or any like concern of ERISA. The possibility that the terms of ERISA or the Plan may be evidence of certain aspects of the claim does not mandate their preemption." Id.

The district court in Bourns, Inc. v. KPMG Peat Marwick, 876 F.Supp. 1116 (C.D.Cal.1994), also found, but on different grounds, that state law claims against plan accountants were not preempted by ERISA. There, the court pointed out that "[p]lan auditors such as [PKF] are `parties in interest' under ERISA, rather than fiduciaries." Id. at 1120, citing 29 U.S.C. § 1002(14)(B). This distinction is relevant here because the main thrust of plaintiffs' ERISA claims — with the exception of the claim against PKF — stems from alleged breaches of fiduciary duties (see Docket No. 1), and the fiduciary/non-fiduciary contrast has been highlighted as relevant to the preemption analysis in other cases, see, e.g., Miller v. Retirement Funding Corp., 953 F.Supp. 180, 183 (W.D.Mich.1996) ("Plaintiff acknowledges that if defendant is held to be a `fiduciary' under ERISA then its ERISA remedies are exclusive and the state law claims are preempted."). Accordingly, the court in. Bourns held that although it is possible to bring a Section 1132 equitable claim against a plan auditor, "ERISA does not regulate the relationship between a plan (or a plan sponsor) and its accountant in manner [sic] that is comprehensive enough to justify ERISA preemption of all related state law causes of action." Id. at 1121. It then found that the state law accounting malpractice and breach of contract claims against the plan auditor were not preempted by ERISA. Id.

Here, the two rationales articulated in Travelers Ins. and Bourns weigh against finding that ERISA preempts the state law claims against PFK. I therefore recommend that PKF's motion to dismiss the Puerto Rico law claims as preempted by ERISA be denied.

V. Whether the Puerto Rico Tort Claims Have Prescribed

Watson Wyatt and PKF (referred to throughout this section as "co-defendants") move to dismiss the state law tort causes of action as time-barred on the ground that this lawsuit was filed more than a year after the statute of limitations began to run. (Docket No. 38, p. 18). Plaintiffs oppose co-defendants' argument by alleging ongoing injury, presumably as a justification to toll the statute of limitations. (See Docket No. 60, p. 5; Docket No. 64, p. 10).

Plaintiffs' Tenth Cause of Action states claims for professional malpractice, misrepresentation, breach of contract, and tort against co-defendants. (Docket No. 1, p. 20-21). These actions can be divided into two categories: tort and contract.^[7] Co-defendants' motions are aimed at the tort actions, so I will limit my discussion to those claims.

The statute of limitations for tort actions in Puerto Rico is one year. 31 L.P.R.A. § 5298; Arturet Velez v. R.J. Reynolds Tobacco Co., 429 F.3d 10, 12 (1st Cir.2005). The one year period begins to run once "the claimant is on notice of her claim; that is, notice of the injury, plus notice of the person who caused it." Id. at 14 (internal quotations omitted); see also Rodriguez-Suns v. Montesinos, 123 F.3d 10, 13 (1st Cir.1997). "This does not require actual knowledge; it is enough that the would-be plaintiff had notice that would have led a reasonable person to investigate and so uncover the needed information." Arturet Velez, 429 F.3d at 14; Rodriguez — Surfs, 123 F.3d at 14-17.

In this case, plaintiffs found out, " at the latest, that their employer had denied their Plan benefits on May 22, 2002. (See Docket No. 1, ¶¶ 18-19; Docket No. 59, p. 2). Plaintiffs were thus on notice at that time and had the duty to investigate to uncover any needed information to bring a claim, including the identity of any liable party. Moreover, plaintiffs clearly were aware of their injury and of the identities of some parties when they filed suit in state court on March 15, 2004. (Docket No. 34, Exh. H). Therefore, absent tolling, plaintiffs' state law tort causes of action prescribed on March 15, 2005.

In this case, plaintiffs have made no argument that their tort claims against codefendants have been tolled under Puerto Rico law, see 31 L.P.R.A. § 5303 ("[p]rescription of actions is interrupted by their institution before the courts, by extrajudicial claim of the creditor, and by any act of acknowledgment of the debt by the debtor") or by the doctrine of equitable tolling. Sánchez v. U.S., 134 F.Supp.2d 211, 216 (D.P.R.2001) (burden of proving equitable tolling of prescription period rests on party seeking it). The only argument plaintiffs make in their opposition motions is that they suffered some kind of ongoing injury. (See Docket No. 60, p. 5; Docket No. 64, p. 10). Their assertions, however, contain no specific facts or citations to supporting authority. Furthermore, plaintiffs appear to argue only continuing ERISA violations by defendants, rather than violations of state tort law. (See Docket No. 60, p. 5 ("continuous violation to GAAS and ERISA . . . allowing the continue deprivation of ERISA protected benefits under the Plan"); Docket No. 64, p. 10 ("Wyatt has the continuing duty to amend the plan returns of form 5500. . . . [T]hey are liable for misleading and contradictory statements as to whether the plan is an ERISA or church plan. Therefore the claim for their continuing representation is not time barred.")). Since plaintiffs have failed to raise any cognizable argument with regard to tolling the statute of limitations, I consider any such argument to be waived. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir.1990) ("issues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation are deemed waived. . . . It is not sufficient for a party to mention a possible argument in the most skeletal way, leaving the court to . . . put flesh on its bones"); Mitchell v. City of Moore, 218 F.3d 1190, 1199 (10th Cir.2000) ("The district court was not obligated to comb the record in order to make [the plaintiffs] arguments for him."); Jackson v. ABC Nissan, Inc., 2006 WL 2256908, at * 12 (D.Ariz.2006) ("It is not the Court's duty to make Plaintiff's arguments for him . . . ").

As a result, the statute of limitations prescribed, at the latest, on March 15, 2005, more than a year and a half before plaintiffs filed the complaint in the present action on November 17, 2006. (See Docket No. 1). I therefore recommend that codefendants' motions to dismiss the state law tort claims as time-barred be granted.

VI. PKF's Motion to Dismiss Based on Lack of Contract

PKF also moves to dismiss plaintiffs' breach of contract claim on the ground that the complaint does not adequately allege a cause of action. (Docket No. 39, p. 7). Plaintiffs' opposition contains only general references to contract law, but contains no responses to PKF's allegations. (Docket No. 60, p. 6, 10).

Under Puerto. Rico law, the elements of a cause of action for breach of contract are: 1) a valid contract; and 2) a breach by one of the parties to the contract. F.C. Imports, Inc. v. First Nat'l Bank of Boston, 816 F.Supp. 78, 93 (D.P.R. 1993), citing Unisys P.R., Inc. v. Ramallo Brothers Printing, Inc., 91 J.T.S. 69, 128 D.P.R. 842, 1991 WL 735351 (P.R.1991). "In Puerto Rico, contracts are generally only valid between the parties who execute them," and "[a]ctions arising out of a contract can be prosecuted only by one contracting party against the other." F.C. Imports, 816 F.Supp. at 93, citing 31 L.P.R.A. § 3374; Suárez v. Hernández, 56 P.R.R. 262, 268-69, 1940 WL 8045 (1940); Pérez Sánchez v. Advisors Mortgage Investors, Inc., 1992 JTS 61, 130 D.P.R. 530, 1992 WL 755606 (1992). "A stranger to the contractual relationship may demand the fulfillment of a contract successfully only if the contract contains a stipulation in his favor." F.C. Imports, 816 F.Supp. at 93-94, citing A.L. Arsuaga, Inc. v. La Hood Constr., Inc., 90 P.R.R. 101, 107-08, 1964 WL 14359 (1964).

Here, plaintiffs make no factual allegation whatsoever in their complaint as to the existence of a contract between PKF and themselves, or the existence of any stipulation favoring them in a contract between. PKF and a third party.^[8] Rather, plaintiffs merely tack on a breach of contract claim to their Tenth Cause of Action. (Docket No. 1, p. 20). Although all inferences must be made in the non-movant's favor in deciding a Rule 12(b)(6) motion to dismiss, the court need not accept "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like." Aulson, 83 F.3d at 3. Moreover, this court must limit its focus to the allegations in the complaint. Litton Indus., 587 F.2d at 74. Accordingly, I find that, under the facts as pleaded, plaintiffs have not sufficiently pled a breach of contract action against PKF. I therefore recommend that PKF's motion to dismiss the breach of contract claim be granted.

VII. Whether the Statute of Limitations for the ERISA Claims has Run

PKF next moves to dismiss plaintiffs' ERISA claims against it as time-barred, arguing that the applicable limitations period is one year. (Docket No. 39, 10-11).

ERISA provides a six-year limitations period for breach of fiduciary duty, 29 U.S.C. § 1113, but provides no specific statute of limitations for claims under 29 U.S.C. § 1132(a)(3) that do not allege breach of fiduciary duty. Here, plaintiffs' claim against PKF is not for breach of fiduciary duty, but rather, for equitable remedies resulting from PKF's violations of its duties under ERISA. Moreover, although federal law provides a default statute of limitations of four years for all federal statutes enacted after 1990, 28 U.S.C. § 1658, this law is inapplicable to ERISA, which was enacted in 1974. Thus, because plaintiffs' claim falls outside the scope of the federal statutes, this court must borrow the most analogous Puerto Rico limitations period. See Laurenzano v. Blue Cross and Blue Shield of Mass., Inc. Retirement Income Trust, 134 F.Supp.2d 189, 205 (D.Mass.2001); Nazario Martinez v. Johnson & Johnson Baby Products, 184 F.Supp.2d 157, 159 (D.P.R. 2002); Gluck v. Unisys Corp., 960 F.2d 1168, 1179 (3d Cir.1992).

In Laurenzano, the court held that "a cause of action under ERISA § [1132(a)(3)] to recalculate benefits already paid is most analogous to a contract claim and thus is subject to a six-year statute of limitations" under Massachusetts law. Laurenzano, 134 F.Supp.2d at 206. This court in Nazario Martinez found that, absent an allegation of breach of fiduciary duty, "the proper characterization of a claim under § 1132 (a)(1) (B) is as a contract action," and accordingly applied Puerto Rico's 15-year statute of limitations applicable to contract actions. Nazario Martinez, 184 F.Supp.2d at 161-62 (emphasis added).

Here, however, the primary thrust of plaintiffs' claims against PKF is in tort, not contract. The only cause of action which specifically names PKF is the Tenth Cause of Action, which is a "State Cause of Action for Professional Malpractice, Misrepresentation, Breach of Contract and Tort." (Docket No. 1, p. 20). Although the complaint lists breach of contract as a cause of action, plaintiffs fail to state a claim for breach of contract, as discussed supra under Subsection III.C of the Discussion. Plaintiffs' factual allegations also point to the same conclusion.^[9] Accordingly, this court must borrow Puerto Rico's one-year limitations period for tort actions. 31 L.P.R.A. § 5298; see also Arturet-Velez v. R.J. Reynolds Tobacco Co., 429 F.3d 10, 12 (1st Cir.2005) ("Puerto Rico has a one-year statute of limitations for tort claims."). As discussed in Discussion Subsection V, supra, the one-year state tort limitations period prescribed, at the latest, on March 15, 2005, more than a year and a half before plaintiffs filed the complaint in the present action on November 17, 2006. (See Docket No. 1). I therefore recommend that PKF's motion to dismiss plaintiffs' ERISA claims against it as time-barred be granted.

VIII. Ruben Pérez's Motion for Partial Summary Judgment

Defendant Ruben Pérez moves this court for partial summary judgment on all claims of liability against him that arise from his alleged involvement with three organizations: the Antillian Union Conference of the Seventh Day Adventist; the General Conference of the Seventh Day Adventist; and the Retirement Committee of the General Conference of the Seventh Day Adventist Interamerican Division. (Docket No. 31, p. 2-3). Plaintiffs submitted no opposition.

Mr. Pérez's motion for summary judgment lacks a material element which is required to be included in this district; "a separate, short, and concise statement of material facts, set forth in numbered paragraphs, as to which the moving party contends there is no genuine issue of material fact to be tried." Local Rule 56(b). Ordinarily, the failure to include such a statement of uncontested facts would be fatal to his motion. See Linder v. Myers, 233 F.R.D. 81, 81-83 (D.P.R.2005) (holding that plaintiffs' failure to comply with rules governing summary judgment — including Local Rule 56(e) — warranted granting of defendant's motion for summary judgment).

In this case, however, plaintiffs failed to submit an opposition to Mr. Pérez's motion, thus waiving an objection thereto and effectively conceding the averments made therein. See Local Rule 7.1(b) ("Unless within ten (10) days after the service of a motion the opposing party files written objection thereto, incorporating a memorandum of law, the opposing party shall be deemed to have waived objection."); Local Rule 56(b) (listing specific requirements for opposing a motion for summary judgment); Tavárez v. Champion Prods., Inc., 903 F.Supp. 268, 270 (D.P.R.1995) ("Although [failure to comply with Local Rule 311.12] [now Local Rules 7.1(b) and 56] does not signify an automatic defeat, it launches the nonmovant's case down the road toward an easy dismissal."). The court will therefore consider the motion on the merits.

The complaint lists Mr. Pérez as "the president of the . . . Retirement Committee of the General Conference, treasurer of the Antillian Union Conference of the Seventh-Day, vice president of Bella Vista Hospital, Inc. and representative of the Conference of Seventh-Day Adventist." (Docket No. 1, ¶ 14). Mr. Pérez concedes that he is the vice president of Bella Vista Hospital, Inc. (Docket No. 31, ¶ 5), but in a sworn statement that was incorporated by reference into his motion id. at ¶ 4, he denies any involvement whatsoever with the other three organizations (Docket No. 30, Exh. E). In the same sworn statement, Mr. Pérez states that, to his knowledge, no organization of the name Antillian Union Conference of the Seventh Day Adventist exists. (Docket No. 30, Exh. E). Having made these assertions in a sworn statement, Mr. Pérez has met his initial burden of identifying those portions of the evidence that he believes demonstrate an absence of a genuine issue of material fact. See Crawford-El, 523 U.S. at 600 n. 22, 118 S.Ct. 1584. "The First Circuit has repeatedly held that the district court is justified in deeming one party's submitted uncontested facts to be admitted when the other party fails to file an opposition in compliance with Local Rule 56." Marina Aguila v. Den Caribbean, Inc., 490 F.Supp.2d 244, 246 (D.P.R.2007), citing Fontanez-Nunez v. Janssen Ortho LLC, 447 F.3d 50, 55 (1st Cir.2006), Torres-Rosado v: Rotger-Sabat, 335 F.3d 1, 4 (1st Cir.2003), and Corrada Betances v. SeaLand Serv., Inc., 248 F.3d 40, 43-44 (1st Cir.2001); see also Local Rule 56(e) (declaring facts not properly controverted "shall be deemed admitted"). I therefore recommend that Ruben Pérez's motion for partial summary judgment be granted.

CONCLUSION

In view of the foregoing, I recommend that BPPR's Rule 12(b)(1) motion for summary judgment and its request that the court decline to entertain the declaratory judgment action (Docket No. 34) be DENIED; that Watson Wyatt's Rule 12(b)(1) motion for summary judgment and its Rule 12(b)(6) motion to dismiss the causes of action against it involving breach of fiduciary duties (Docket No. 38) be DENIED; that Watson Wyatt's Rule 12(b)(6) motion to dismiss the state law tort claims (Docket No. 38) be GRANTED; that PKF's motion to dismiss all claims against it (Docket No. 39) be GRANTED; that the motion to dismiss by Bella Vista Hospital, Inc. and Mr. Ruben Perez (Docket No. 45) be DENIED; and that Ruben Perez's motion for partial summary judgment (Docket No. 31) be GRANTED.

The parties have ten (10) business days to file any objections to this report and recommendation, See Local Rule 72(d); 28 U.S.C. § 636(b)(1). Failure to file same within the specified time waives the right to appeal this order. Henley Drilling Co. v. McGee, 36 F.3d 143, 150-151 (1st Cir. 1994); United States v. Valencia-Copete, 792 F.2d 4, 6 (1st Cir.1986); see also Paterson-Leitch Co. v. Mass. Mun. Wholesale Elec. Co., 840 F.2d 985, 991 (1st Cir. 1988) ("Systemic efficiencies would be frustrated and the magistrate's role reduced to that a mere dress rehearser if a party were allowed to feint and weave at the initial hearing, and save its knockout punch for the second round").

IT IS SO RECOMMENDED.

Aug. 23, 2007.

NOTES

[1] The Hospital's by-laws state that the Hospital is operated by the Antillian Union Conference of Seven Day Adventists. (Docket No. 34, Exh. BB). However, the Hospital clarified that no entity by that name exists and the correct name is Union Adventista Puertorriqueña. (Docket No. 78).

[2] Defendants stated in their "Opposition to Report and Recommendation of U.S. Magistrate Judge" that the correct name for said entity is Union Adventista Puertorriquena. (See Docket No. 78).

[3] In order to avoid dismissal, the plaintiff must provide the grounds upon which his claim rests through factual allegations sufficient "to raise a right to relief above the speculative level." Twombly, 127 S.Ct. at 1965.

[4] In conducting its review, the Court is free to "accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(C). See Templeman v. Chris Craft Corp., 770 F.2d 245, 247 (1st Cir.1985); Alamo Rodriguez v. Pfizer Pharmaceuticals, Inc., 286 F.Supp.2d 144, 146 (D.P.R.2003). Hence, the Court may accept those parts of the report and recommendation to which the Defendants do not object. See Hernandez-Mehas v. General Elect, 428 F.Supp.2d 4, 6 (D.P.R.2005) (citing Lacedra v. Donald W. Wyatt Detention Facility, 334 F.Supp.2d 114, 125-126 (D.R.I.2004)).

[1] This is an unsupported assertion made in BPPR's motion to dismiss. However, co-defendant Ruben Pérez, in a sworn statement, stated that, to his knowledge, no organization exists by the name of Antillian Union Conference of the Seventh Day Adventist. (Docket No. 30, ¶ 5).

[2] BPPR avers that the Plan was terminated and liquidated on December 31, 1998, but cites to a corporate resolution dated August 14, 2003. (Docket No. 34, p. 8; Exh. D).

[3] There is very little case law on what actions must be taken in order to effect a § 410(d) election. The only case listed in either statute's — 26 U.S.C. § 410 and 29 U.S.C. § 1003 — annotations which addresses this issue is Catholic Charities of Maine, Inc. v. City of Portland, 304 F.Supp.2d 77 (D.Me.2004). There, the court stated that "Catholic Charities filed an election under the Internal Revenue Code Section 410(d), 26 U.S.C. § 410(d), for all of its plans, welfare and pension, stating its intent to be bound by federal law." Id. at 84. That case provides very little guidance on what actions are necessary for a § 410(d) election. As a result, I defer to the Code of Federal Regulations; which imposes a strict requirement that the electing party state explicitly that it is making its election under § 410(d). 26 C.F.R. § 1.410(d)-1(c)(5).

[4] In a sworn statement, Ruben Pérez stated that, to his knowledge, no organization exists by the name of Antillian Union Conference of the Seventh Day Adventist. (Docket No. 30, ¶ 5).

[5] Specifically, plaintiffs pray for the following declaratory relief: "(a) for a determination as to whether the Plan is an ERISA covered plan, (b) to enforce their ERISA rights under the terms of the Plan, (c) to clarify their rights to the monthly disability benefit under the most favorable benefit formula specified in any of the three (3) set [sic] of Plan rules documents maintained by the Plan, (d) to clarify the formula and method in determining the lump sum value of Plaintiff Bonilla's benefits as of the date his monthly pension annuity was liquidated by the Plan Administrator, (c) to determine if the Plan was terminated in accordance with the ERISA requirements, (1) to enjoin the liquidation of the Plan, (g) to determine if the plan participants have continue [sic] accruing benefits under the plans maintained by the Employer to which Plaintiffs' rights to benefits were transferred[,] (h) to determine whether the Adventist Plan or any other plan maintained by the Employer became an ERISA Plan when Plaintiffs' rights were transferred or merged to such plan, and (i) to determine the effects of the ruling issued by the Internal Revenue Service over the benefits accrued by Plaintiffs under the Plan." (Docket No. 1, ¶ 49).

[6] "The term `State law' includes all laws, decisions, rules, regulations, or other State action having the effect 6 of law, of any State." 29 U.S.C. § 1144(c)(1).

[7] The tort claims include those for "professional malpractice," "misrepresentation," and "tort." The remaining claim is for breach of contract.

[8] Plaintiffs' factual allegations include the following: PKF assisted Bella Vista Hospital, Inc. — plaintiffs' employer — in wrongfully terminating the Plan (Docket No. 1, ¶ 25); PKF prepared Bella Vista Hospital's financial statements "including discrepancies and conflicting information," and that PKF allowed the employer's "intentional conduct to deprive participants of benefits accrued under the Plan," id. at ¶ 30; PKF "violated [its] duty to certify to the public and to the Plan participants the facts surrounding the accrual of benefits and the termination of the Plan with complete veracity and full disclosure", id. at ¶ 98; and PKF committed malpractice under Puerto Rico law "by their misrepresentation, breach of contract, fiduciary state trust law and tort," and that "[t]heir misconduct and malpractice contributed to the actual and proximate cause of the alleged damages in this case," id. at ¶ 99.

[9] See footnote 8, supra.