David Tullis v. UMB Bank, N.A.
423 F. App'x 567
6th Cir.2011Background
- Doctors Tullis and Mack lost substantial sums from Davis’s fraud in their individually directed 401(k) accounts with UMB Bank as trustee.
- Doctors allege UMB knew of Davis’s fraud years before it became public and breached ERISA fiduciary duties by not informing them.
- UMB contends § 1104(c) safe harbor applies to participant-controlled accounts and that it bears no liability for losses under that provision.
- Accounts were individually directed, with directives limiting UMB’s monitoring and using cost basis for non-public assets; statements noted cost value.
- Davis was ordered to cease operations in spring 2003 after a federal action; many assets in doctors’ accounts were worthless.
- District court granted summary judgment for UMB on the doctors’ claims and on UMB’s indemnification counterclaim; doctors appeal under Rule 56.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1104(c) safe harbor shielded UMB from liability given alleged concealment. | Tullis argues concealment denied independent control, destroying safe harbor. | UMB asserts independent control exists; no concealment shown. | Safe harbor applies; no genuine concealment issue. |
| Whether evidence of prior settlements and suits creates a genuine issue of concealment. | Tullis points to Roche and Lopez-related materials showing knowledge before public knowledge. | UM B contends those materials are not properly before the court or insufficient to show concealment. | No genuine issue; materials not properly in record; concealment not shown. |
| Whether ERISA indemnification provisions permit UMB’s costs against the doctors. | Doctors dispute indemnification provisions as an equity matter. | ERISA allows indemnification so long as fiduciary responsibility is not exonerated. | Indemnification provisions upheld; district court affirmed. |
Key Cases Cited
- Pfahler v. Nat’l Latex Prods. Co., 517 F.3d 816 (6th Cir. 2007) (indemnification allowed so long as fiduciary accountability remains)
- Dowling v. Cleveland Clinic Found., 593 F.3d 472 (6th Cir. 2010) (standard for de novo review on summary judgment)
- United States v. Universal Mgmt. Servs. Inc., 191 F.3d 750 (6th Cir. 1999) (evidentiary scope and appellate review limitations under Rule 4(a)(4))
- Gruener v. Ohio Cas. Ins. Co., 510 F.3d 661 (6th Cir. 2008) (timeliness and scope of notice on appeal under Rule 4(a)(4))