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| Supreme ¢ enast. U) Ss

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— FEB 5 - 2004

No. 03-959 ae

In The

Supreme Court of the Anited States

CLARA VARCO,

Petitioner,

Vv.

ADMINISTRATIVE COMMITTEE OF THE

WAL-MART STORES, INC. ASSOCIATES’

HEALTH AND WELFARE PLAN,

Respondent.

a +

On Petition For Writ Of Certiorari

( To The United States Court Of Appeals

For The Seventh Circuit

BRIEF IN OPPOSITION

THOMAS H. LAWRENCE

Counsel of Record

JOHN M. RUSSELL

LAWRENCE & RUSSELL, LLP

5050 Poplar Avenue

Suite 1717

Memphis, Tennessee 38157

Telephone: (901) 844-4430

Facsimile: (901) 844-4435

Counsel for Respondent

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

Does the decision of the Seventh Circuit panel below

conflict with this Court’s decision in Great-West Life &

Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002)?

Does the decision of the Seventh Circuit panel below

conflict with the Ninth Circuit’s decision in Westaff,

Inc. v. Arce, 298 F.3d 1164 (9th Cir. 2002), cert. denied,

537 U.S. 1111(2003)?

Does the decision of the Seventh Circuit panel below

conflict with other decisions of the Seventh Circuit?

CORPORATE DISCLOSURE STATEMENT

Pursuant to Supreme Court Rule 29.6, Administrative

Committee of the Wal-Mart Stores, Inc. Associates’ Health

and Welfare Plan states that it is the fiduciary of the

Associates’ Health and Welfare Plan, which is sponsored

by Wal-Mart Stores, Inc. Wal-Mart Stores, Inc. is a pub-

licly held Arkansas corporation, and there are no parent

corporations or publicly held companies owning 10% of its

stock.

ili

TABLE OF CONTENTS

Page

crac dineaesionotas i

Corporate Disclosure Statement ..................cceeeeeeeeee ii

ES en ili

dlc emacinns iv

ESTEE TOO OTA TTT 1

Statement of Jurisdiction. ..................ccccccseecesesceeecees 1

Statutory Provisions Involved..................cccccseeeeeeeeee 1

I I oo occeinnecneseuciunvseusiiessevinekenen 2

Reasons for Denying Review ...............0..cccecceeeceeeeeees 4

I. The Seventh Circuit’s decision does not

II.

ITI.

IV.

conflict with this Court’s decision in Great-

West Life & Annuity Ins. Co. v. Knudson.......

In Great-West Life, this Court found that

federal courts can preside over an ERISA

plan’s claim for reimbursement when the

plan seeks equitable relief under 29

ES I BIUD wcscetcsecauressétensetseionveses

The Seventh Circuit’s decision clearly follows

this Court’s holding in Great-West Life .........

A claim for equitable restitution will not

a sceueaannbaaes

The decision below does not conflict with

other circuit court decisions ..............cccccceceeee

The decision below does not conflict with

other decisions within the Seventh Circuit....

There is no issue of substantial importance...

EN all eR aS

TABLE OF AUTHORITIES

Page

CASES

Admin. Comm. of the Wal-Mart Stores, Inc. Associ-

ates’ Health and Welfare Plan v. Varco, 338 F.3d

Se EG SID cccicctssucsaudeenandegnenmpsenadacanesnumaddeoution 7

Allison v. Wellmark, Inc., No. C00-3015-MWB, 2002

U.S. Dist. LEXIS 24168 (N.D. Iowa Oct. 15,

SUID -ciicssescabaetisolenasioseadbinendasadanicendiaiamaldneineginaaiamanideiadniie 9

Bauhaus USA, Inc. v. Copeland, 292 F.3d 439 (5th

ETE IIIT i cseshsesisscopianie voiesuiaibdatecabaiapneadieknalicnndieadanlammaninentiaibas 9,13

Bauer v. Camrud, Maddock, Olsen & Larson, Ltd.,

Nos. A3-00-161, A3-02-27, 2002 U.S. Dist. LEXIS

Fe ee Be Be Fs ee iistidttticdanieteiicnintbanasieciadiinina 8

Bombardier Aerospace Employee Welfare Benefits

Plan v. Ferrer, Poirot and Wansbrough, P.C., No.

03-10195, 2003 U.S. App. LEXIS (5th Cir. Dec.

Be I wouaccnndedceaiadionssniadicadaibdadidaiansiioimeies 8, 13, 17, 18

Forsling v. J.J. Keller & Associates, Inc., 241

F. Supp. 2d 915 (E.D. Wis. 2003)..........--ccccccsssseceeerees 8, 16

Gerosa v. Savasta & Co., 329 F.3d 317 (2d Cir.

SE cecctdeumscitenbdseadsadssendsviaademnanmenaenuadialaiasnniaiien 9,13

Great-West Life & Annuity Ins. Co. v. Knudson, 534

as Se MEE scssdpvicinocnibddssammnaaaseiaiianuniuasanimoumndiiniin passim

Great-West Life & Annuity Ins. Co. v. Brown, 192

FP. Sepa. 3a ISTE COLD. Ge. BODE) ccccccessvccvcescecscevssvoesses 8

Honolulu Joint Apprenticeship and _ Training

Comm. of United Assoc. Local Union No. 675 v.

Foster, 332 F.3d 1234 (9th Cir. 2003).................... passim

Hotel & Restaurant & Bar Employees Fringe

Benefit Funds v. Mui Trong, No. 01-873, 2002

U.S. Dist. LEXIS 1697 (D. Minn. Jan. 31, 2002).......... 11

TABLE OF AUTHORITIES — Continued

Page

IBEW-NECA Southwestern Health and Benefit

Fund v. Douthitt, 211 F. Supp. 2d 812 (N.D. Tex.

UTE isiscineatescsciisatadaaiaddbddnlendelabiantigiisadiumeiaimie nt teas 8

Leipzig v. AIG Life Ins. Co., 257 F. Supp. 2d 1152

ECCIY Silln CUED cesesrensssedcobteeasementondvuledaaainiada diamante 16

Primax Recoveries, Inc. v. Lee, 260 F. Supp. 2d 43

a eae AS Siig Be cechinisevedsicecniidaienbdeiabete meeeoare 8

Primax Recoveries, Inc. v. Sevilla, 324 F.3d 544 (7th

Coes FINED ondinssadiviussesivatininaniessagieateeammaeciaiciaamoniaae 14, 15

Primax Recoveries, Inc. v. Young, No. 02-2115, 2003

U.S. App. LEXIS 25786 (4th Cir. Dec. 18, 2003)........... 13

Pullins v. Associated Material Handling Inds., Inc.,

No. 1:03-cv-0099-JDT-WTL, 2003 U.S. Dist. LEXIS

12438 (S.D. Ind. May 20, 2008)...cccccecoccscccecseovevceveceresses 11

Wal-Mart Stores, Inc. Assoc. Health & Welfare Plan

~v. Wells, 213 F.3d 398 (7th Cir. 2000), cert. denied,

Pe OFA et CD iti ssinincdenvaiuedenstenticlnncmaiionan 15, 18

Wellmark, Inc. v. DeGuara, 257 F. Supp. 2d 1209

EP, BOI BD cciccsccsessuscsssnieiniatenteaniiinaaidainaaammatalanona 8

Westaff Inc. v. Arce, 298 F.3d 1164 (9th Cir. 2002),

cert. denied, 537 U.S. 1111 (2008) .................. 10, 11, 12

STATUTES

Be CE eB Ti sisevsnnsintucsetancoinancasennadthcabadenaaimennnnan 1

Be Us EEE titeitiewritiitiindasineede eee 3

ee SEN & ON voitssssindesindisisccmndtaipioicssndiiaiadaoaaaane 3

28 U.S.C. § 1132(a)(3) [§ 502(a)(3)) «0.2... eee eeeeeeeeeee passim

aaa

OPINIONS BELOW

The panel opinion of the United States Court of

Appeals for the Seventh Circuit (See Varco Petition, App.

B) was entered on July 29, 2003, and is reported at 338

F.3d 680 (7th Cir. 2003). The order denying petition for

rehearing en banc (See Varco Petition, App. A) was entered

by the Seventh Circuit Court of Appeals on August 22,

2003, and is reported at 2003 U.S. App. LEXIS 17772 (7th

Cir. 2002). The opinion of the United States District Court

for the Northern District of Illinois granting summary

judgment to respondent (See Varco Petition, App. D) was

issued on October 2, 2002, and it is reported at 2002 U.S.

Dist. LEXIS 18933 (N.D. Ill. 2002). The order of the

United States District Court for the Northern District of

Illinois, denying petitioner’s motion to dismiss for lack of

subject matter jurisdiction (See Varco Petition, App. E at

50-52) was entered on January 14, 2002, and is reported at

2002 U.S. Dist. LEXIS 530 (N.D. Ill. 2002).

STATEMENT OF JURISDICTION

Petitioner invoked the jurisdiction of this Court

pursuant to 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

The operative statutory provision, § 502(a)(3) of the

Employee Retirement Income Security Act of 1974, found

at 29 U.S.C. § 1132(a)(3), provides:

(A) Persons empowered to bring a civil action.

A civil action may be brought —

(3) by a participant, beneficiary or

fiduciary (A) to enjoin any act or

practice which violates any provision of

this subchapter or the terms of the

plan, or (B) to obtain other appropriate

equitable relief (i) to redress such

violations or (ii) to enforce any

provisions of this subchapter or the

terms of the plan.

STATEMENT OF THE CASE

Clara Varco was injured in an automobile accident. At

the time of her accident, Varco was a participant in the

Wal-Mart Stores, Inc. Associates’ Health and Welfare Plan

(the “Plan”). Pursuant to its terms, the Plan paid

$18,865.72 in benefits on behalf of Varco as a result of

those injuries. While the Plan provides that Varco, as a

participant, is entitled to receive benefits, the Plan does

not allow her to enjoy a “double recovery” of benefits for

her injuries — one payment from the Plan and one from the

other parties Varco sued in an Illinois state court. Instead,

the Plan requires that Varco reimburse the Plan to the

extent of benefits paid when she makes a recovery from

another party.

Varco filed an action in an Illinois state court seeking

recovery for her injuries. Upon recovering a total of

$100,000.00 from the responsible third-party and her

underinsured motorist carrier, Varco refused to fully

reimburse the Plan.

Instead, her attorney, Laurence Dunford, told the

Committee’s counsel that he was disbursing the funds to

Ms. Varco. The Plan filed this action, alleging federal

question subject matter jurisdiction, pursuant to 28 U.S.C.

§§ 1331 and 1332, and § 502(a)(3) of the Employee Retire-

ment Income Security Act, 29 U.S.C. § 1132. (See Varco

Petition, App. F). The Plan sought to enforce its rights by

way of injunction, declaratory judgment, constructive

trust, or restitution. The Committee obtained a temporary

restraining order and preliminary injunction prohibiting

Varco and Dunford from disbursing the funds. Despite the

fact that the district court had taken control of the funds,

Dunford attempted to return to state court to have that

court determine the Plan’s rights. The Plan sought, and

obtained, an injunction staying the state court action

pending a final determination in the court below.

Varco filed a motion to dismiss, for among other

reasons, lack of federal subject matter jurisdiction. This

motion was denied on January 14, 2002. (See Varco Petition,

App. E at 47a-49a). Varco filed an interlocutory appeal. (See

Varco Petition, App. B at 3a). The parties thereafter filed

cross motions for summary judgment.

On October 2, 2002, the district court granted the

Committee’s motion for summary judgment, but held that

the Illinois Common Fund Doctrine applied to the Com-

mittee’s reimbursement amount despite the fact that the

plan provision specifically provides that all attorney’s fees

are the responsibility of the participant. The order grant-

ing summary judgment found that the plan was entitled to

reimbursement pursuant to the terms of the Plan, but that

in accordance with the Common Fund Doctrine, Varco was

entitled to credits for the plan’s pro-rata share of attorney’s

fees and cost attributable to the recovery. (See Varco

Petition, App. D).

Varco filed an interlocutory appeal of the decision

issuing a preliminary injunction, and denying her motion

to dismiss for lack of subject matter jurisdiction. (See

Varco Petition, App. B at 6a). After the district court

granted summary judgment, the Plan appealed the finding

that the Illinois Common Fund Doctrine applied to the

Plan’s claim for reimbursement. These appeals were

consolidated. (See Varco Petition, App. B at 8a). The panel

below, in an opinion issued by the Seventh Circuit Court of

Appeals, affirmed the district court’s denial of Varco’s

motion to dismiss, and reversed the trial court’s finding

that the Illinois Common Fund Doctrine applied to an

ERISA plan’s suit to enforce its right to reimbursement.

REASONS FOR DENYING REVIEW

I. The Seventh Circuit’s decision does not con-

flict with this Court’s decision in Great-West

Life & Annuity Ins. Co. v. Knudson.

A. In Great-West Life, this Court found that

federal courts can preside over an ERISA

plan’s claim for reimbursement when the

plan seeks equitable relief under 29 U.S.C.

§ 1132(a)(3).

Varco misconstrues this Court’s holding in Great-West

Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002).

Varco asserts that this Court found that § 502(a)(3) of

ERISA does not ever authorize the federal courts to

preside over an ERISA plan’s claim for reimbursement.

(Varco Petition, pp. 7-8). That is not what this Court held

in Great-West Life. This Court specifically held that a

plaintiff, pursuant to 29 U.S.C. § 1132(a)(3), can seek

equitable restitution in the form of a constructive trust

when: (1) identifiable monies are being held by a defen-

dant; and (2) the plaintiff is entitled to the monies. Great-

West Life, 534 U.S. at 213. Under Varco’s interpretation of

Great-West Life, all claims brought by an ERISA plan

seeking reimbursement should be characterized as legal

claims and should never be actionable under 29 U.S.C.

§ 1132(a)(3).

In Great-West Life, Plaintiff Great-West asked this

Court to recognize the rights of ERISA plans and their

fiduciaries to file suit in federal court to enforce reim-

bursement provisions. Plaintiff Great-West argued that its

suit was authorized by § 502(a)(3)(B) because it sought

restitution, which they characterized as equitable relief.

Great-West Life, 534 U.S. at 212. This Court noted that not

all restitution is equitable and clarified the distinction

between legal and equitable restitution for purposes of

ERISA. Id. at 213-14. The court found that restitution is

legal when the plaintiff’s claim seeks “to obtain a judg-

ment imposing a merely personal liability upon the defen-

dant to pay a sum of money.” Jd. at 213. The court further

noted that:

In contrast, a plaintiff could seek restitution

in equity, ordinarily in the form of a con-

structive trust or an equitable lien, where

money or property identified as belonging

in good conscience to the plaintiff could

clearly be traced to particular funds or

property in the defendant’s possession. [ci-

tations omitted]. A court of equity could

then order a defendant to transfer title (in

the case of the constructive trust) or to give

a security interest (in the case of the equi-

table lien) to a plaintiff who was, in the eyes

of equity, the true owner.

But where “the property [sought to be recovered]

or its proceeds have been dissipated so that no

product remains, [the plaintiff’s] claim is only

that of a general creditor,” and the plaintiff “can-

not enforce a constructive trust or an equitable

lien upon other property of the [defendant].” Re-

statement of Restitution, supra, § 215, Comment

a, at 867. Thus, for restitution to lie in equity,

the action generally must seek not to impose

personal liability on the defendant, but to re-

store to the plaintiff particular funds or

property in the defendant’s possession.

Id. at 213. (Emphasis added).

Therefore, this Court did not find that § 502(a)(3) of

ERISA never authorizes federal courts to preside over an

ERISA plan’s claim for reimbursement, but rather found

that such an action can be brought under § 502(a)(3), so

long as the monies over which the plan fiduciary seeks

restitution or a constructive trust are being held by the

defendant in the federal court lawsuit and in good con-

science belong to the plaintiff.

B. The Seventh Circuit’s decision clearly fol-

lows this Court’s holding in Great-West

Life.

Varco alleges that the decision below ignores the

precedent set by this Court in Great-West Life. (Varco

Petition, p. 7). This allegation is false, as a review of the

decision below shows that the Seventh Circuit not only

discussed the Great-West Life decision but relied upon it in

forming its decision. See Admin. Comm. of the Wal-Mart

Stores, Inc. Associates’ Health and Welfare Plan v. Varco,

338 F.3d 680, 686-88 (7th Cir. 2003). The court below

specifically noted that “[iJn Great-West Life, the Court

considered a case with facts similar to this case and

therefore bears scrutiny.” Id. at 686.

In reaching its decision, the court below noted that

this case was unlike Great-West Life, because the funds at

issue here “are identifiable, have not been dissipated, and

are still in the control of a Plan participant.” Jd. at 687.

Relying on Great- West Life’s reasoning that “plaintiff could

seek restitution in equity, ordinarily in the form of a

constructive trust or an equitable lien, where money or

property identified as belonging in good conscience to the

plaintiff could clearly be traced to particular funds or

property in the defendant’s possession,” the court below

found that the Committee’s reimbursement action is

equitable because the funds sought are identifiable; in the

control of Varco; and the Committee is rightfully entitled

to the monies under the terms of the Plan. Jd. at 688.

Therefore, the court below held that the Committee’s claim

| was equitable under § 502(a)(3)(B) of ERISA, and that the

| district court properly exercised federal question subject

matter jurisdiction. Id. at 688.

Federal courts throughout the United States have

routinely held, based on this Court’s decision in Great-West

Life, that monetary payments in the form of equitable

restitution are appropriate where the disputed funds are

identifiable and traceable and in the control of a defendant

in the action. See Honolulu Joint Apprenticeship and

Training Committee of United Assoc. Local Union No. 675

v. Foster, 332 F.3d 1234, 1238 (9th Cir. 2003) (following

Great-West Life and holding that equitable restitution in

the form of a monetary payment is appropriate where

“identifiable and traceable” funds are in the control of a

defendant); Bombardier Aerospace Employee Welfare

Benefits Plan v. Ferrer, Poirot and Wansbrough, P.C., No.

03-10195, 2003 U.S. App. LEXIS, at *18 (5th Cir. Dec. 17,

2003) (finding that the imposition of a constructive trust

over specifically identifiable settlement funds was equita-

ble in nature and permitted by § 502(a)(3)) (copy attached

hereto as App. 1-28); Forsling v. J.J. Keller & Associates,

Inc., 241 F. Supp. 2d 915 (E.D. Wis. 2003) (applying Great-

West Life and allowing equitable relief where the funds at

issue were identifiable; had not been dissipated; were still

in the control of the insurer; and in good conscience

belonged to the sponsor pursuant to the subrogation

provisions of its plan); Primax Recoveries, Inc. v. Lee, 260

F. Supp. 2d 43, 48 (D. D.C. 2003) (noting that the claim for

restitution is equitable because the funds are in the

possession of the defendant); Wellmark, Inc. v. DeGuara,

257 F. Supp. 2d 1209 (S.D. Iowa 2003) (allowing equitable

relief under Great-West Life where a defendant had control

of identifiable funds); Great-West Life & Annuity Ins. Co. v.

Brown, 192 F. Supp. 2d 1376 (M.D. Ga. 2002) (finding that

the disputed funds were identifiable and traceable where

the covered person’s attorney was holding funds; thus, the

plan was entitled to equitable relief); IBEW-NECA South-

western Health and Benefit Fund v. Douthitt, 211 F. Supp.

2d 812 (N.D. Tex. 2002) (holding that the disputed funds in

the participant’s attorney’s trust account were traceable

and identifiable to the defendant and, therefore, the plan

was entitled to equitable relief); Bauer v. Camrud, Mad-

dock, Olsen & Larson, Ltd., Nos. A3-00-161, A3-02-27,

2002 U.S. Dist. LEXIS 7246 (D. N.D. Apr. 22, 2002) (ruling

that an ERISA plan fiduciary may pursue a reimburse-

ment claim in the form of a constructive trust where the

funds at issue are preserved in an attorney trust account)

(copy attached hereto as App. 29-36); Allison v. Wellmark,

Inc., No. C00-3015-MWB, 2002 U.S. Dist. LEXIS 24168

(N.D. Iowa Oct. 15, 2002) (concluding that a constructive

trust is among the remedies available under § 1132(a)(3),

as a means by which to compel restitution to an ERISA

plan) (copy attached hereto as App. 37-57).

C. A claim for equitable restitution will not

always lie.

Varco asserts that since all monies distributed to

personal injury plaintiffs pass through the client trust

fund account of their attorneys, a claim for equitable

restitution will always lie and federal courts will be

flooded with this type of litigation. (Varco Petition, pp. 10-

11). This assertion is unfounded. As this Court found in

Great-West Life, a claim for equitable restitution did not lie

because defendants no longer possessed the funds. Great-

West Life, 534 U.S. at 214. In Great-West Life, the funds

from the settlement had been disbursed by two checks,

with “one made payable to the Special Needs Trust and

the other to respondents’ attorney (who, after deducting

his own fees and costs, placed the remaining funds in a

client trust account from which he tendered checks to

respondents’ other creditors, Great-West and Medi-Cal).” Jd.

Additionally, circuit courts have also dismissed claims

for restitution because the defendant was not in posses-

sion of the funds. See Gerosa v. Savasta & Co., 329 F.3d

317, 321-322 (2d Cir. 2003) (holding that the plaintiffs did

not make out a claim under restitution because the monies

sought by them were never in the possession of the defen-

dant); Bauhaus USA, Inc. v. Copeland, 292 F.3d 439, 445

(5th Cir. 2002) (finding that there was no claim for restitu-

tion because the settlement proceeds were not in defendants’

possession). Therefore, Varco’s assertion that a claim for

equitable restitution will always lie is without merit.

II. The decision below does not conflict with

other circuit court decisions.

Varco asserts that the decision below creates an

irreconcilable conflict among the circuits, especially with

the Ninth Circuit’s holding in Westaff Inc. v. Arce, 298 F.3d

1164 (9th Cir. 2002), cert. denied, 537 U.S. 1111 (2003).

(Varco Petition, p. 11).

Varco alleges that the facts in Westaff are identical to

the present case. (Varco Petition, p. 13). This is incorrect,

because there is an important distinction between these

two cases. The plaintiff in Westaff did initiate an action in

federal court seeking a determination of the Plan’s rights

under ERISA, but the action was filed before this Court

decided Great-West Life and only sought declaratory relief

and specific performance. (A true and correct copy of

Westaff’s complaint is attached hereto as App. 58-61).

This Court stated in Great-West Life that “specific per-

formance ... was not typically available in equity.” Great-

West Life, 534 U.S. at 211. Unlike the plaintiff in Westaff,

the Committee here specifically sought restitution when it

filed its action. See Varco, 338 F.3d at 683.

Westaff could not have realized the importance of

specifically seeking restitution in the form of a construc-

tive trust, which is the form of “equitable relief” that this

Court recognized in Great-West Life is typically available

in equity, even if the party seeks a monetary payment, so

long as the funds are “identifiable” and the party seeking

the funds is entitled to them. See Great-West Life, 534 U.S.

at 213. Thus, based on this Court’s decision in Great-West

Life, an important distinction exists among these cases,

since the Committee’s complaint does not suffer from the

defect present in Westaff’s complaint.’

Since the Westaff court did not address the issue of

asserting restitution, it left intact the availability of

restitution as “appropriate equitable relief” under 29

U.S.C. § 1132(a)(3). Therefore, the Westaff decision does

not present an irreconcilable conflict with the panel below,

as these cases dealt with different types of relief.

Even if Westaff did present a conflict, Varco fails to

mention that the Ninth Circuit later clarified its holding

in Westaff by finding that equitable restitution in the form

of a monetary payment is appropriate where, as here,

“identifiable and traceable” funds are in the control of the

defendant in the action. See Honolulu Joint Apprentice-

ship and Training Comm. of United Assoc. Local Union

No. 675 v. Foster, 332 F.3d 1234, 1238 (9th Cir. 2003). In

Honolulu, the Ninth Circuit stated:

' The result in Westaff is much like Hotel & Restaurant & Bar

Employees Fringe Benefit Funds v. Mui Trong, No. 01-873, 2002 U.S.

Dist. LEXIS 1697 (D. Minn. Jan. 31, 2002) (copy attached hereto as

App. 62-70). There, the Court held that equitable relief was not

available under ERISA because the plan’s complaint did not seek the

type of equitable relief, restitution, that the Supreme Court in Knudson

held was typically available in equity. See also Pullins v. Associated

Material Handling Inds., Inc., No. 1:03-cv-0099-JDT-WTL, 2003 U.S.

Dist. LEXIS 12439, at * 7-8 (S.D. Ind. May 20, 2003) (noting that one of

the reasons this Court concluded that Great-West sought legal restitu-

tion was because the petitioners did not seek to impose a constructive

trust or equitable lien on particular property) (copy attached hereto as

App. 71-78).

Thus, equitable restitution is available where the

specific res or funds can be identified and at-

tached by equitable lien or constructive trust, but

not where the plaintiff seeks to impose general

personal liability as a remedy for the defendant’s

monetary obligations.

Id. at 1238.’

In Honolulu, the union sought reimbursement for

monies it paid to a plan participant for the costs incurred

for his training in the plumbing and pipefitting industry.

Id. at 1236. While the court found that the union was

seeking legal restitution not available under § 1132(a)(3)

because the action sought to impose personal liability on

the participant, the court noted that equitable restitution

is: available when there is an identifiable res, i.e. when

money or property belonging to the plaintiff can clearly be

traced to particular funds or property in the defendant’s

possession. Jd. at 1238.

Thus, both circuits follow this Court’s decision in

Great-West Life, and hold that equitable restitution in the

form of a monetary payment is appropriate where “identi-

fiable and traceable” funds are in the control of a defen-

dant. Therefore, there is no circuit split, and it is

unnecessary for this Court to grant certiorari.

Varco further alleges that the decision below conflicts

with the decisions of other circuits, noting tha} other

circuits have adhered to this Court’s admonition to look

past the label attached to a suit filed under § 502(a)(3),

* Unlike Westaff, Honolulu was decided after this Court’s decision

in Great-West Life.

and determine whether the claimant is seeking to impose

personal liability for traditionally legal remedies. (Varco

Petition, p. 14). While this is true, Varco fails to mention

that in doing so, these circuits further analyze whether the

claim for restitution under ERISA is an equitable or legal

claim. Consistent with this Court’s decision in Great-West

Life, when the funds are still in the possession of the

defendant, circuit courts find that the claim is one for

equitable relief under ERISA. See Honolulu, 332 F.3d at

1237-38 (following Great-West Life and holding that

equitable restitution in the form of a monetary payment is

appropriate where “identifiable and traceable” funds are

in the control of a defendant); Bombardier, 2003 U.S. App.

LEXIS, at *18 (finding that the imposition of a construc-

tive trust over specifically identifiable settlement funds

was equitable in nature and permitted by § 502(a)(3));

Primax Recoveries, Inc. v. Young, No. 02-2115, 2003 U.S.

App. LEXIS 25786, at *4 (4th Cir. Dec. 18, 2003) (holding

that because the funds at issue were within the defen-

dant’s possession, plaintiff could properly proceed under

ERISA) (copy attached hereto as App. 79-83). Cf. Gerosa v.

Savasta & Co., 329 F.3d 317, 321-322 (2nd Cir. 2003)

(finding that the plaintiffs did not make out a claim under

restitution because the monies sought by them were never

in the possession of the defendant); Bauhaus USA, Inc. v.

Copeland, 292 F.3d 439, 445 (5th Cir. 2002) (holding that

the relief sought did not constitute restitution because the

settlement proceeds were not in defendants’ possession).

Thus, like the court below, other circuits also adhere

to this Court’s decision in Great-West Life, and analyze

whether the claim is one for legal or equitable relief in

determining whether an action can be maintained under

ERISA. When the funds are in the possession of the

defendant, these courts conclude, as did the court below,

that the claim is an equitable claim under ERISA. There-

fore, this Court should deny review, because no inconsis-

tent precedent exists among the circuit courts. Hence,

there is nothing for this Court to review.

III. The decision below does not conflict with

other decisions within the Seventh Circuit.

Varco alleges that the decision below creates an intra-

circuit conflict with the Seventh Circuit’s decision in

Primax Recoveries, Inc. v. Sevilla, 324 F.3d 544 (7th Cir.

2003). (Varco Petition, pp. 15-16). Varco is incorrect,

because he unquestionably misstates the court’s holding in

Sevilla.

Varco asserts that in Sevilla, the Seventh Circuit

“determined that an ERISA fiduciary’s claim for reim-

bursement under the terms of the plan, no matter how

drafted, is a legal claim for breach of contract, and thus

not within the federal subject matter jurisdiction granted

under 29 U.S.C. § 502(a)(3).” (Varco Petition, p. 16). This

is an incorrect summation of the Seventh Circuit’s holding

in Sevilla. In Sevilla, the Seventh Circuit did not conclude

that an ERISA fiduciary’s claim for reimbursement is

always a legal claim for breach of contract, and in fact,

specifically noted that the Supreme Court made clear in

Great-West Life that an ERISA fiduciary cannot sue a plan

participant or beneficiary under ERISA unless it is seeking

equitable relief, which can include the imposition of a

* Respondent assumes that Varco meant to say under 29 U.S.C.

§ 1132(a)(3).

constructive trust on money claimed to be wrongfully

withheld from the plaintiff. Jd. at 547.

In Sevilla, Primax instituted a declaratory judgment

action seeking entitlement to a declaration of its right

under ERISA to reimbursement out of recoveries against

third parties. Sevilla, 324 F.3d at 547. Applying Great- West

Life, the court conducted an analysis to determine whether

Primax’s claim was an equitable claim available under

ERISA. Id.

Primax argued that the money it sought should be

thought of as a fund, a res, held by the third party’s

insurer and claimed by Primax but wrongfully withheld

because of the lawyer’s refusal to endorse the check. Id. at

548. The court disagreed because the funds were not in the

possession of the defendant. Jd. The court stated, “[s]o to

this day the fund remains in the hands of the insurer, who

is not a defendant. You can impose a constructive trust

only on a defendant.” Jd. Thus, in Sevilla, there were no

funds in the possession of the defendant as required by

Great-West Life to assert a claim for equitable restitution

under ERISA.

In both cases, the Seventh Circuit utilized the same

analysis. Different results were reached because in

Sevilla, the defendant did not have possession of the

funds, while in the case below, Varco did have possession

of the funds. Thus, there is no intra-circuit split within the

Seventh Circuit.

Additionally, the decision below is in accord with other

Seventh Circuit precedent. For example, in Wal-Mart

Stores, Inc. Assoc. Health & Welfare Plan v. Wells, 213 F.3d

398, 401 (7th Cir. 2000), the Seventh Circuit found that a

plan administrator’s suit for a constructive trust over

settlement funds, presumed to be held in escrow by the

participant’s attorney, “nestles comfortably” within ERISA’s

concept of equity.

Furthermore, the decision below is in accord with the

district court decisions within the Seventh Circuit. For

example, in Forsling v. J.J. Keller & Associates, Inc., 241

F. Supp. 2d 915 (E.D. Wis. 2003), a Wisconsin district

court, applying Great-West Life, found that a plan sponsor

could maintain an equitable claim under § 502(a)(3). The

court specifically stated that “Knudson, by its own lan-

guage, did not bar plan administrators from bringing an

action to obtain reimbursement for benefits they paid.” Id.

at 919. The court also noted that the mere fact the plan

administrator was seeking money does not ipso facto turn

the action into a legal action for damages, as the plaintiff

had argued. Jd. The Forsling court concluded that there

was an equitable claim and awarded a constructive trust

over the funds, because the funds were identifiable; had

not been dissipated; were still in control of a defendant;

and in good conscience belonged to the plan administrator

pursuant to the subrogation provision of the Plan. Id.

There are also district court decisions, applying the

same analysis as that applied by the court below, who

have concluded that the action was based in law and not

equity. In Leipzig v. AIG Life Ins. Co., 257 F. Supp. 2d 1152

(N.D. Ill. 2003), an Illinois district court found that the

insurer’s restitution claim was not actionable under

§ 1132(a)(3), because the funds were not in the possession

of the plan participant. Thus, the court below applies the

same analogy as that utilized by the district courts within

the Seventh Circuit.

Rl a eee as

Varco further asserts that the panel below is the first

and only panel of the federal circuit courts of appeal to

find federal subject matter jurisdiction for an ERISA plan

administrator’s claim for reimbursement against a plan

participant’s personal injury recovery. (Varco Petition, p.

16). This is clearly incorrect. As previously discussed,

many other circuit courts have found that subject matter

jurisdiction exists in these types of cases. See Honolulu,

332 F.3d at 1238 (following Great-West Life and holding

that equitable restitution in the form of a monetary

payment is appropriate where “identifiable and traceable”

funds are in the control of a defendant); Bombardier, 2003

U.S. App. LEXIS at *18 (finding that the imposition of

a constructive trust over specifically identifiable settle-

ment funds was equitable in nature and permitted by

§ 502(a)(3)).

Based on the above, it is clear that there is no intra-

circuit split in the Seventh Circuit regarding the availabil-

ity of equitable relief under 29 U.S.C. § 1132(a)(3). There-

fore, a review by this Court is not warranted on this basis.

IV. There is no issue of substantial importance.

There is no urgent need for this Court to review the

decision below, as alleged by Varco. This Court has already

outlined the circumstances under which a Plan can seek

reimbursement under ERISA, and the court below fol-

lowed its application. As previously discussed, this Court,

the Seventh Circuit, other circuit courts, and other panels

of the Seventh Circuit all agree that the federal courts

have subject matter jurisdiction to preside over an ERISA

plan’s reimbursement claim against a plan participant

who has made a personal injury recovery, so long as the

funds sought are identifiable; in the control of the defen-

dant; and the Plan is rightfully entitled to the monies

under the terms of the Plan. See Great-West Life, 534 U.S.

at 213; Varco, 338 F.3d at 687; Honolulu, 332 F.3d at 1238;

Bombardier, 2003 U.S. App. LEXIS at *18; Wells, 213 F.3d

at 401. Thus, the issue of when a Plan can seek reim-

bursement under ERISA has been well established by this

Court and followed by other courts. Therefore, there is no

need for the Court to review this issue.

CONCLUSION

For all of the foregoing reasons, Respondent respect-

fully requests that the Court deny Petitioner’s Writ of

Certiorari to review the judgment of the United States

Court of Appeals for the Seventh Circuit.

Respectfully submitted,

THOMAS H. LAWRENCE

JOHN M. RUSSELL

LAWRENCE & RUSSELL, LLP

5050 Poplar Avenue

Suite 1717

Memphis, Tennessee 38157

Telephone: (901) 844-4430

Facsimile: (901) 844-4435

_ sd

App. 1

BOMBARDIER AEROSPACE EMPLOYEE WELFARE

BENEFITS PLAN, Plaintiff-Appellee, versus

FERRER, POIROT AND WANSBROUGH; ET ALS,

Defendants, FERRER, POIROT AND

WANSBROUGH; STEVEN MESTEMACHER,

Defendants-Appellants.

No. 03-10195

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

December 17, 2003, Filed

COUNSEL: For BOMBARDIER AEROSPACE EM-

PLOYEE WELFARE BENEFITS PLAN, Plaintiff-

Appellee: Neal Stuart Manne, Joseph Samuel Grinstein,

Susman Godfrey, Houston, TX.

For FERRER, POIROT AND WANSBROUGH, STEVEN

MESTEMACHER, Defendants-Appellants: John Thomas

Kirtley, III, Ferrer, Poirot & Wansbrough, Dallas, TX.

For ELAINE CHAO, SECRETARY, DEPARTMENT OF

LABOR, Amicus Curiae: Elizabeth Hopkins, US —

ment of Labor, Washington, DC.

JUDGES: Before JOLLY and WIENER, Circuit Judges

and WALTER,’ District Judge.

OPINION BY: WIENER

OPINION: WIENER, Circuit Judge:

* District Judge of the Western District of Louisiana, sitting by

designation.

App. 2

Defendants-Appellants Ferrer, Poirot & Wansbrough,

P.C. (the “law firm”) and Steven Mestemacher appeal the

district court’s grant of the summary judgment motion of

Plaintiff-Appellee Bombardier Aerospace Employee Wel-

fare Benefits Plan (the “Plan”), an ERISA-governed, self-

funded employee welfare benefit plan, to enforce the terms

of the Plan’s reimbursement provision against the law firm

and Mestemacher. They also appeal the district court’s

denial of their respective motions to dismiss the Plan’s

action for lack of subject matter jurisdiction and for failure

to state a claim, as well as its denial of their joint motion

for summary judgment. We affirm.

I. FACTS AND PROCEEDINGS

A. Background

The Plan was established by Bombardier Aerospace to

provide managed care services for its employees and their

dependents.’ Mestemacher was an employee of Bombar-

dier Aerospace and a participant in the Plan. After he was

injured in an automobile accident, he sought $ 13,643.63

from the Plan for medical expenses. The Plan paid Meste-

macher’s medical expenses in that amount, subject to a

“Reduction, Reimbursement and Subrogation” provision

contained in the Plan’s documents. That provision gave

the Plan “the right to recover or subrogate 100% of the

Benefits paid ... by the Plan for Covered Persons to the

extent of... [aJny judgment, settlement, or payment made

or to be made, because of an accident, including but not

limited to insurance.” The documents further specified

' See 29 U.S.C. § 1002(1).

App. 3

that “attorneys fees and court costs are the responsibility

of the participant, not the Plan.”

Mestemacher retained the law firm on a one-third

contingent fee basis to seek recovery from the tortfeasor

responsible for the automobile accident. After negotiating

a $65,000 settlement, the law firm received the settle-

ment payment on Mestemacher’s behalf and placed the

funds in a trust account at Bank of America in the law

firm’s name.

B. The Instant Litigation

This action arises out of the Plan’s efforts to obtain

reimbursement for the funds advanced to Mestemacher.

The Plan filed suit in district court against the law firm,

Mestemacher, and Bank of America before Mestemacher’s

settlement funds were ever disbursed to him from the law

firm’s trust account at Bank of America.’ In its efforts to

recover the funds that it had advanced to Mestemacher for

medical expenses, the Plan sought (1) the imposition of a

constructive trust over $ 13,643.63 of the funds being held

for Mestemacher in the law firm’s trust account, (2) a

declaration that the Plan is entitled to ownership of that

amount out of the settlement funds that remained in the

trust account, (3) an order directing the law firm and Bank

of America to execute any instruments necessary to

transfer legal title of the “converted property” to the Plan,

and (4) a temporary restraining order and a preliminary

? Bank of America was voluntarily dismissed from this suit after

settling with all parties.

App. 4

injunction prohibiting the law firm from disbursing the

share of the settlement funds claimed by the Plan.

In an agreed order, the law firm consented to hold

$ 18,500.00 of the settlement proceeds in its trust account,

an amount more than sufficient to satisfy the Plan’s

reimbursement demand. The law firm nevertheless

maintained that it was entitled to one-third of the pro-

ceeds of the settlement ($ 21,666.66) plus costs ($ 302.24),

by virtue of its contingent fee agreement with Meste-

macher. The law firm and Mestemacher each filed a

motion to dismiss for lack of subject matter jurisdiction,

contending that § 502(a)(3) of ERISA does not provide a

cause of action against an entity like the law firm, which

is neither a plan fiduciary nor a signatory to the plan, and

does not authorize the Plan’s claim for a constructive trust

over funds not in the possession of its participant, Meste-

macher.

Agreeing with the Plan’s assertion that it was seeking

“equitable relief” within the contemplation of § 502(a)(3),

the district court accepted subject matter jurisdiction over

the Plan’s action and denied Mestemacher’s and the law

firm’s motions to dismiss. Agreeing further that the terms

contained in the Plan’s documents provide a right of

reimbursement, the district court granted summary

judgment in favor of the Plan and ordered the law firm to

transfer to the Plan the sum of $13,643.63 from the

settlement proceeds being held in its trust account. This

judgment further ordered that nothing be deducted from

the Plan’s funds for attorneys’ fees and costs.

———— .

App. 5

Citing our opinion in Sunbeam-Oster Company, Inc.

Group Benefits Plan for Salaried and Non-Bargaining

Hourly Employees v. Whitehurst,’ the district court ob-

served that the Plan contained “clear and unambiguous

reimbursement provisions, including a provision allowing

the Plan reimbursement from third party beneficiaries

such as settlement proceeds.” As for whether the Plan had

stated a claim under § 502(a)(3), the court noted that the

Plan did not seek to impose in personam liability on any of

the defendants, but merely sought the in rem imposition of

a constructive trust over funds in the trust account. Thus,

the district court concluded, the Plan’s claim was for

“appropriate equitable relief ” under § 502(a)(3) and fell

comfortably within that jurisdictional grant. Finally, the

court refused to apply either the Texas or the federal

version of the common fund doctrine to block the Plan’s

recovery, noting that “the Plan expressly provides that

attorney’ fees and court costs are the responsibility of

Mestemacher and not the Plan.” Final judgment was

entered in the Plan’s favor, and Mestemacher and the law

firm timely filed a notice of appeal.

3 102 F.3d 1368 (5th Cir. 1996).

‘ All parties agree that the Plan’s language unambiguously

provides for a right of reimbursement and subrogation. As neither party

seeks a construction of the Plan’s terms, we need not engage in

application of the deference principles articulated by the Supreme

Court in Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 103

L. Ed. 2d 80, 109 S. Ct. 948 (1989).

App. 6

II. ANALYSIS

A. Standard of Review

We review de novo both a grant of a motion to dismiss

and a grant of a motion for summary judgment.’ In our de

novo review of a district court’s ruling on a motion to

dismiss under either Rule 12(b)(1) or 12(b)(6), we apply

the same standard as does the district court: “[A] claim

may not be dismissed unless it appears certain that the

plaintiff cannot prove any set of facts in support of her

claim which would entitle her to relief.”

B. Subject Matter Jurisdiction

To determine whether the district court properly

exercised subject matter jurisdiction over the instant

action, we first must decide whether § 502(a)(3) authorizes

the Plan’s suit for a constructive trust over the funds held

in the law firm’s trust account.’ The law firm and Meste-

macher assert two bases for holding that § 502(a)(3) does

not authorize the Plan’s suit. They first contend that,

because the law firm was not a signatory to the Plan, it is

* See St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 n.8

(5th Cir. 2000).

* Benton v. United States, 960 F.2d 19, 21 (5th Cir. 1992); see also

St. Paul Mercury Ins. Co., 224 F.3d at 440 n.8 (“[T]he central issue [in

reviewing a motion to dismiss] is whether, in the light most favorable to

the plaintiff, the complaint states a valid claim for relief.”).

” See Bauhaus USA, Inc. v. Copeland, 292 F.3d 439, 442 (5th Cir.

2002) (“ERISA grants the federal courts ‘exclusive jurisdiction of civil

actions under this title brought by ... [a] fiduciary.’”). The parties

agree that the Plan is governed by ERISA and that the Plan is a

“fiduciary” under ERISA.

App. 7

not a fiduciary; thus the Plan cannot maintain an action

for equitable relief against the law firm under § 502(a)(3).

They contend secondly that the Plan’s action for a con-

structive trust is not one “typically available in equity”

and thus falls outside § 502(a)(3)’s jurisdictional grant.

1. The “Universe of Possible Defendants”

under § 502(a)(3).

Section 502(a)(3) authorizes a civil action “by a par-

ticipant, beneficiary, or fiduciary (A) to enjoin any act or

practice which violates any provision of this title or the

terms of the plan, or (B) to obtain other appropriate

equitable relief (i) to redress such violations or (ii) to

enforce any provisions of this title or the terms of the

plan.” The law firm and Mestemacher contend that this

authorization is contingent on the existence of a profes-

sional or contractual relationship between the Plan and

the particular defendant that is subject to suit. In other

words, according to them, an entity must owe a duty to an

ERISA plan before it can properly be named as a defen-

dant in a § 502(a)(3) suit for equitable relief. Because it is

not a signatory of the Plan, insists the law firm, it owes no

fiduciary duty to the Plan, and thus no cause of action can

be maintained against it under § 502(a)(3).° We disagree.

* 29 U.S.C. § 1132(a)(3).

* For purposes of this case, a person is a plan fiduciary to the

extent that he exercises discretionary authority or control over the

management or administration of the plan or its assets, or renders

investment advice to the plan for compensation. See 29 U.S.C.

§ 1002(21)(A). The parties agree that the law firm is not a plan fiduci-

ary.

App. 8

Although neither we nor the Supreme Court has

squarely addressed the question whether a plan partici-

pant’s or beneficiarys attorney who possesses disputed

settlement funds on his client’s behalf can be subject to

suit under § 502(a)(3), the Supreme Court has ruled that

§ 502(a)(3) liability is not dependent on an entity’s status

as a plan fiduciary. In Harris Trust and Savings Bank v.

Salomon Smith Barney, Inc.,"° the Court squarely held

that § 502(a)(3) authorizes suit against a non-fiduciary

“party in interest” to a transaction prohibited under

§ 406(a)."" In so holding, the Court rejected the Seventh

Circuit’s holding that no cause of action exists under

§ 502(a)(3) absent a substantive provision of ERISA

expressly imposing a duty on the party being sued. The

Court observed that § 502(a)(3) “admits of no limit (aside

from the ‘appropriate equitable relief’ caveat ... ) on the

universe of possible defendants.”” Indeed, the Court noted

that, in contrast to other provisions of ERISA which

expressly delineate the entities subject to suit,”

“§ 502(a)(3) makes no mention at all of which parties may

** 530 U.S. 238, 147 L. Ed. 2d 187, 120 S. Ct. 2180 (2000).

" See id. at 241. ERISA both imposes a general duty of loyalty on

plan fiduciaries, § 406(a); 29 U.S.C. § 1104, and, “categorically bar|s]

certain transactions deemed ‘likely to injure the pension plan.’”

§ 406(a)(1); 29 U.S.C. § 1106.

* Id. at 244-246.

* For example, the following ERISA provisions explicitly delineate

the entities subject to suit: (1) “§ 409(a), 29 U.S.C. §1109(a) (‘Any

person who is a fiduciary with respect to a plan who breaches any of the

responsibilities, obligations, or duties imposed upon fiduciaries by this

subchapter shall be personally liable’);” and (2) “§ 502(1), 20 U.S.C.

§ 1132(1) (authorizing imposition of civil penalties only against a

‘fiduciary who violates part 4 of Title I or ‘any other person’ who

knowingly participates in such a violation).” Jd. at 246-47.

App. 9

be proper defendants.”” This is because “§ 502(a)(3) itself

imposes certain duties, and therefore ... liability under

that provision does not depend on whether ERISA’s

substantive provisions impose a specific duty on the party

being sued.””

The litigation in Harris Trust arose out of a soured

business deal between an ERISA plan and a “party in

interest.” National Investment Services of America

(“NISA”) had been hired by the plan’s administrator to act

as an investment manager for the plan.” Because it had

“discretionary control” over plan assets, NISA qualified as

a plan fiduciary.” Salomon Smith Barney, Inc. (“Salomon”)

furnished the plan with broker-dealer services at the

direction of the fiduciaries, thus qualifying under § 3(14)

as a “party in interest.” During the relevant time, Salo-

mon sold to the plan, through NISA, interests in several

motel properties that later turned out to be worthless.”

On learning of the nature of this transaction, the plan’s

administrator and its trustee filed suit against Salomon

under § 502(a)(3), claiming, inter alia, “that NISA, as plan

fiduciary, had caused the plan to engage in a per se prohib-

ited transaction under § 406(a) in purchasing the motel

interests from Salomon.” Salomon countered that

* Id. at 246.

* Id. at 245.

7 Id. at 243.

%® See id. at 242.

* Id. at 243.

*° Id.

App. 10

§ 502(a)(3) authorizes suit “only against the party ex-

pressly constrained by 406(a),” namely, the fiduciary who

caused the party to enter into the prohibited transaction,

and not the “counterparty to the transaction.” The

Seventh Circuit agreed with Salomon, but the Supreme

Court reversed for the reasons stated above.” Therefore,

even though, in the instant litigation, the law firm is not a

“party in interest,” as that term is defined by ERISA,” the

Supreme Court’s reasoning in Harris Trust influences us

to conclude today that § 502(a)(3) authorizes a cause of

action against a non-fiduciary, non-“party in interest”

attorney-at-law when he holds disputed settlement funds

on behalf of a plan-participant client who is a traditional

ERISA party. As Harris Trust makes clear, an entity need

not be acting under a duty imposed by one of ERISA’s

substantive provisions to be subject to liability under

§ 502(a)(3).

To this end, we note that the law firm’s reliance on the

Seventh Circuit’s opinion in Health Cost Controls of

Illinois, Inc. v. Washington” in support of the law firm’s

contrary position — that an entity must be a plan fiduciary

before it can be properly named as a defendant in a

§ 502(a)(3) action — is badly misplaced. The question before

21 Id

® See id. at 244-45.

* The term “ ‘party in interest’... encompasses those entities that

a fiduciary might be inclined to favor at the expense of the plan’s

beneficiaries.” Harris Trust, 530 U.S. at 242. Finding nothing in the

record that would suggest that the law firm is an entity likely to be

favored by the plan’s fiduciaries, we will assume that the law firm is not

a “party in interest.”

* 187 F.3d 703 (7th Cir. 1999).

App. 11

the Health Cost court was not, as here, which entities can

be subject to suit under § 502(a)(3), but rather which

entities are entitled to bring suit under § 502(a)(3). In

Health Cost, the Seventh Circuit addressed, inter alia,

whether the assignee of an ERISA plan’s reimbursement

claims qualified as an ERISA fiduciary and thus as a

proper plaintiff in a suit for a constructive trust under

§ 502(a)(3). Although the court noted that a lawyer hired

by an ERISA plan to bring suit on the plan’s behalf is not

an ERISA fiduciary, and thus not a proper plaintiff to a

§ 502(a)(3) action, it held that, because an assignee of a

plan’s reimbursement claims exercises greater discretion

over the plan’s assets than does the plan’s lawyer, the

assignee qualified as a fiduciary and thus as a proper

plaintiff under § 502(a)(3).”

Without a doubt, the text of § 502(a)(3) places limits

on the proper plaintiffs to a suit for equitable relief: As the

language of that provision expressly states, a civil action

for equitable relief may be brought only by a “participant,

beneficiary, or fiduciary” of an ERISA plan.” Congress did

not see fit, however, to include a similar limitation on the

set of proper defendants to a § 502(a)(3) action, and we

decline the law firm’s invitation to impose such limits

judicially today.”

* See id. at 709.

** See Harris Trust, 530 U.S. at 248 (“§ 502(a) itself demonstrates

Congress’ care in delineating the universe of plaintiffs who may bring

certain civil actions.”).

” The other cases cited by the law firm in support of its proposition

that it must be a plan fiduciary to be a proper defendant under

§ 502(a)(3) are equally inapposite. The issue in each of these cases was

(Continued on following page)

App. 12

In sum, the law firm’s status as a non-fiduciary would

have some relevance to this case if the Plan were seeking

to saddle the lawyers with personal liability for the breach

of a fiduciary duty. As it stands, however, the only action

that the Plan asserts is one for equitable in rem relief

under § 502(a)(3). As liability under that provision does

not depend on whether a substantive provision of ERISA

imposes a duty on the particular defendant subject to suit,

we hold that the law firm, as counsel for the plan partici-

pant and stake holder of specifically identifiable settle-

ment funds in a trust account — on that beneficiary’s

behalf — fits comfortably within the “universe of possible

defendants” subject to suit under that provision.

2. “Appropriate Equitable Relief” under

§ 502(a)(3)

The law firm and Mestemacher contend next that,

despite styling its action as one for a “constructive trust”

over the funds contained in the law firm’s trust account,

whether the plan could properly maintain an action against the

defendant-attorney for either breach of contract or breach of fiduciary

duty — not for equitable relief under § 502(a)(3). See Southern Council of

Indus. Workers v. Ford, 83 F.3d 966, 969 (8th Cir. 1996) (subject matter

jurisdiction exists over plan’s claim for breach of fiduciary duty against

beneficiary’s attorney who signed the plan’s subrogation agreement);

Witt v. Allstate Ins. Co., 50 F.3d 536, 538 (8th Cir. 1995) (beneficiary’s

insurer is not a fiduciary subject to liability to the plan for breach of

fiduciary duty); Hotel Employees & Rest. Employees Int'l Union Welfare

Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1994) (beneficiary’s attorney

is not liable for breach of fiduciary for failing to reimburse plan prior to

distributing settlement funds to the beneficiary); Chapman v. Klemick,

3 F.3d 1508, 1508-09 (11th Cir. 1993) (beneficiary's attorney is not a

fiduciary subject to liability to the plan for breach of fiduciary duty).

Sadi ugha ealih MRA ng ame acetate nN Tite acter Aes aa

Bi AA a atl ik Loewe aS

mead eee tolt leet ma

App. 13

the Plan actually seeks to impose personal liability on the

defendants to enforce Mestemacher’s contractual reim-

bursement obligation to the Plan for the amount he

received in benefits. Thus, they argue, the Plan’s suit is

essentially legal in nature — as distinguished from equita-

ble — and falls outside the scope of “appropriate equitable

relief” permitted by § 502(a)(3). The Plan responds —

correctly, we conclude — that because it seeks to recover

specifically identifiable funds that are in the constructive

possession and the legal control of the participant but

belong in good conscience to the Plan, its action for a

constructive trust in no way seeks to impose personal

liability on either defendant. Instead, the Plan continues,

it seeks relief that indeed is equitable in nature and thus

authorized by § 502(a)(3).

In Mertens v. Hewitt Associates, the Supreme Court

interpreted “appropriate equitable relief” under

§ 502(a)(3) to include only “those categories of relief that

were typically available in equity.” Subsequently, the

Court, in Great-West Life & Annuity Insurance Co. v.

Knudson, elaborated on the distinction between “legal”

and “equitable” relief, stating that “a plaintiff could seek

restitution in equity, ordinarily in the form of a construc-

tive trust or an equitable lien, where money or property

identified as belonging in good conscience to the plaintiff

could clearly be traced to particular funds or property in

the defendant’s possession.” On the other hand, reasoned

* 508 U.S. 248, 256, 124 L. Ed. 2d 161, 113 S. Ct. 2063 (1993).

*® 534 U.S. 204, 213, 151 L. Ed. 2d 635, 122 S.Ct. 708 (2002)

(citations omitted). In Knudson, the plan administrator sought to

recover benefits paid to a beneficiary following the latter’s receipt of

(Continued on following page)

App. 14

the Court, if “the property [sought to be recovered] or its

proceeds have been dissipated so that no product re-

mains,” “(the plaintiff’s] claim is only that of a general

creditor, and the plaintiff ‘cannot enforce a constructive

trust of or an equitable lien upon other property of the

(defendant].’”” In such an instance, the plaintiff is seeking

a legal remedy — the imposition of personal liability on the

defendant to pay a sum of money to which the plaintiff is

owed — so his claim falls outside § 502(a)(3)’s jurisdictional

grant.”

Recently, in Bauhaus USA, Inc. v. Copeland,” we

interpreted Mertens and Knudson in the context of a plan

administrator’s suit to recover benefits previously paid to

a plan beneficiary, after settlement funds from a third

party tortfeasor were received on behalf of the beneficiary.

The administrator of the plan sought the imposition of a

constructive trust over the portion of the funds that had

settlement funds from a third-party tortfeasor. See Knudson, 534 U.S.

at 208. The funds, however, had been placed in a Special Needs Trust

for the beneficiary to provide for her medical care pursuant to Califor-

nia law. See id. at 207-08. The Supreme Court rejected the plan

administrator’s argument that it sought equitable relief under

§ 502(a\(3), stating that “the funds to which [the plan) claims an

entitlement under the Plan’s reimbursement provision ... are not in

the [beneficiary’s] possession.” Jd. at 214. As the plan essentially sought

“the imposition of personal liability [upon the beneficiary] for the

benefits” it had conferred, the Court held that its claim was legal,

rather than equitable, in nature and thus fell outside the scope of relief

authorized by § 502(a)(3). Jd.

* Id. at 213-14 (citing RESTATEMENT (FIRST) OF RESTITU-

TION § 215 (1937)).

" See id. at 210 (citing Mertens, 508 U.S. at 256.)

“ 292 F.3d 439 (5th Cir. 2002).

ees

App. 15

been placed in the registry of the Mississippi Chancery

Court, pursuant to the terms of a tort settlement agree-

ment, to satisfy any liens against the funds.” Focusing on

the language in Knudson regarding the beneficiary's

possession of the disputed funds, the panel majority in

Bauhaus found the facts of the case before it legally

indistinguishable from those considered by the Supreme

Court in Knudson.“ The court observed that the disputed

funds in Knudson were outside the “possession and con-

trol” of the beneficiary, having been placed in a Special

Needs Trust to cover the beneficiary's medical expenses.”

Reasoning that funds placed in the court registry were just

as much beyond the “possession and control” of the benefi-

ciary as those placed in a Special Needs Trust, the panel

majority held that the plan’s suit did not lie in equity and

was therefore unauthorized by § 502(a)(3).”

Although the facts of Knudson and Bauhaus resemble

those in Mestemacher’s case in several respects, those

cases are significantly distinguishable from Meste-

macher’s. To verify this conclusion, one need only compare

the facts of these three cases by answering the relevant

three-part inquiry: Does the Plan seek to recover funds (1)

that are specifically identifiable, (2) that belong in good

conscience to the Plan, and (3) that are within the posses-

sion and control of the defendant beneficiary? In both

Knudson and Bauhaus, as in the instant case, the benefit

* See id. at 441.

* See id. at 445.

* See id.

App. 16

plans sought to recover funds from a specifically identifi-

able corpus of money that they had paid out previously as

benefits. Likewise, in each case, the plan’s terms contained

an express, unambiguous reimbursement provision which

made the disputed funds “belong in good conscience” to the

plan. It is, however, the third element of the inquiry — the

defendant-beneficiary’s “possession and control” over the

disputed funds — that distinguishes Knudson and Bauhaus

from the case before us today.

In Knudson and Bauhaus, the beneficiary had neither

actual nor constructive possession or control over the ~

funds. In Knudson, the funds had been placed in a Special

Needs Trust, as mandated by California law, to provide for

the beneficiary's medical care, and the trustee was totally

independent of the plan beneficiary. Similarly, in Bauhaus,

the funds had been deposited in the state court’s registry

in anticipation of an interpleader action to determine their

ownership. Obviously, that court was totally independent

of the plan beneficiary. Here, in stark contrast, the funds

that the Plan is seeking to recover belong to the partici-

pant and are simply being held in a bank account in the

name of the participant’s attorneys, who are indisputably

his agent. Unlike the beneficiaries in Knudson and Bau-

haus, the Plan’s participant, Mestemacher, has ultimate

control over, and thus constructive possession of, the

disputed funds. The law firm and Mestemacher concede

that the law firm is merely holding the funds in its trust

account on Mestemacher’s behalf — as Mestemacher’s

agent — and is legally obligated to disburse the funds to

Mestemacher the moment he directs their release. This

crucial distinction is more than sufficient to warrant a

finding that the Plan’s action is indeed “equitable” in

nature.

~ BOP aueat, sical a i a late Ae

App. 17

The Seventh Circuit’s recent opinion in Administra-

tive Committee of the Wal-Mart Stores, Inc. Associates’

Health and Welfare Plan v. Varco offers further support for

our determination that the Plan’s action for a constructive

trust lies in equity.” In Varco, the ERISA plan sought to

enforce the provisions of a subrogation clause against a

participant through imposition of a constructive trust over

settlement funds from a third party tortfeasor.” The

participant’s attorney had accepted delivery of the funds

from the tortfeasor on the participant’s behalf prior to the

plan’s filing suit and, after taking out an amount sufficient

to cover his fees, the lawyer had placed the remaining

funds in a reserve account in the participant’s name.”

Noting that (1) the participant had “control” over the

disputed funds, (2) the funds were “identifiable, and [had]

not been dissipated,” and (3) the funds, “in good con-

science,” belonged to the plan, the Seventh Circuit held

that the plan’s action for a constructive trust was equita-

ble in nature and therefore authorized by § 502(a)(3).”

In making the same determination today, we remain

unpersuaded by the contention voiced by the law firm

during oral argument to the effect that Mestemacher lacks

“possession and control” over the one-third share of the

$ 18,500 contained in the trust account to which the law

firm asserts ownership by virtue of its contingent fee

agreement with Mestemacher. This assertion ignores

Mestemacher’s pre-existing contractual reimbursement

” 338 F.3d 680 (7th Cir. 2003).

* See id. at 683-84.

* See id. at 684.

“ See id. at 687-88.

App. 18

obligation to the Plan, which requires him to reimburse

the Plan the full amount of the benefits that he had

received from the Plan and to do so out of any third-party

recovery, without deduction for attorney's fees and costs.

This pre-existing reimbursement obligation to the Plan

precluded Mestemacher from contracting away to the law

firm that which he did not own himself, namely, the right

to all or any portion of the $ 13,643.63 that rightfully

belonged to the Plan. In essence, Mestemacher could not

create a greater right in the funds by virtue of entering the

contingent fee arrangement with the law firm than

Mestemacher had himself.

In addition, Mestemacher’s contingent fee agreement

does not restrict his obligation to compensate the law firm

solely to the proceeds of his recovery. Rather, that agree-

ment creates an in personam obligation, requiring Meste-

macher to pay counsel an amount equivalent to one-third

of his recovery. Mestemacher is personally responsible to

the law firm for its attorneys’ fees in an amount equal to

one-third of his recovery. The fact that he may have to

satisfy some part or even all of this personal obligation out

of his own pocket in no way diminishes his pre-existing

reimbursement obligation to the Plan vis-a-vis the funds

recovered from his tortfeasor. We are satisfied that neither

Mestemacher’s contingency fee agreement with the law

firm nor the location of the settlement funds in the trust

account affects his legal “possession and control” over the

disputed $ 13,643.63. Our conclusion in this regard is

consistent with Judge Posner’s opinion for the Seventh

Circuit in Wal-Mart Stores, Inc. Assoc. Health and Welfare

at cencnld | cal Date

App. 19

Plan v. Wells,” in which that court held, on substantially

similar facts, that a plan administrator’s § 502(a)(3) suit

for a constructive trust over settlement funds presumed to

be held in escrow by the participant’s attorney “nestle[d]

comfortably” within “ERISA’s concept of equity.””

Having closely examined the substance of the relief

sought in the case before us, we are convinced that, in its

efforts to recoup the amount paid to Mestemacher in

benefits, the Plan does not seek to impose personal liabil-

ity on either Mestemacher or his counsel. Thus, we hold

the Plan’s requested relief — the imposition of a construc-

tive trust over specifically identifiable settlement funds

held in the trust account of the law firm as agent for

Mestemacher — to be equitable in nature. Accordingly, we

further hold that § 502(a)(3) authorizes the Plan’s claim

for relief, and we affirm the district court’s exercise of

subject matter jurisdiction over this action.”

“ 213 F.3d 398, 401 (7th Cir. 2000).

“ Id.

“ We recognize that our holding today is at variance with the

Ninth Circuit’s recent opinion in Westaff (USA), Inc. v. Arce, 298 F.3d

1164 (9th Cir. 2002). In Westaff, the Ninth Circuit held that a plan

administrator’s suit to recoup benefits paid to a beneficiary upon the

beneficiary’s receipt of settlement funds from a third party tortfeasor

was essentially legal in nature, even though the beneficiary had placed

the funds in an escrow account in the beneficiary's name pending a

determination of to whom the money was owed. See id. at 1167.

Acknowledging that the disputed funds held in escrow were “specifi-

cally identifiable,” the Ninth Circuit nevertheless held that the funds

were “a legitimate personal injury settlement to which the beneficiary

is entitled” and that the administrator’s action was essentially “one for

money damages” falling outside the jurisdictional grant of § 502(a\(3).

Id. We perceive that decision to depart from the Supreme Court’s

opinions in Mertens and Knudson, and from our own precedent in

(Continued on following page)

App. 20

C. Actual Fraud and Unjust Enrichment

We turn next to the question whether a showing of

either actual fraud or unjust enrichment, or both, on the

part of Mestemacher and the law firm is required before a

constructive trust can be imposed on the disputed funds.

Noting correctly that ERISA does not specify the elements

of a constructive trust in a § 502(a)(3) action,” the law firm

and Mestemacher maintain that this lacuna in the statu-

tory text should be filled by Texas law. Under that State’s

law, a plaintiff seeking a constructive trust must establish,

inter alia, (1) the breach of a fiduciary relationship or,

alternatively, actual fraud, and (2) unjust enrichment of

the wrongdoer.”

Bauhaus, so we decline to follow the Ninth Circuit’s more restrictive

view of the scope of “appropriate equitable relief” under § 502(a)(3).

“ See 29 U.S.C. § 1132(a)(2).

“ See, e.g., Haber Oil Co. v. Swinehart, 12 F.3d 426, 437 (5th Cir.

1994). We recognize in passing that our precedent interpreting Texas

law as it relates to constructive trusts has not been altogether consis-

tent. In some cases, we have interpreted Texas law as requiring a

showing of actual fraud or breach of fiduciary duty prior to imposition

of a constructive trust. See id. at 437 (the elements of a constructive

trust under Texas law include, inter alia, “breach of a fiduciary rela-

tionship, or in the alternative, actual fraud... .”) (citing Jn re Monnig’s

Dept. Stores, Inc., 929 F.2d 197, 201 (5th Cir. 1991)). More recently, we

held that it was sufficient under Texas law for a plaintiff to show

merely constructive fraud, as opposed to actual fraud or wrongdoing.

See Burkhart Grob Luft Und Raumfahrt GmbH & Co. v. E-Systems,

Inc., 257 F.3d 461, 469 (5th Cir. 2001) (the elements of a constructive

trust under Texas law include a showing of either actual or constructive

fraud) (citing Haber Oil Co., Inc. v. Swinehart, 12 F.3d 426, 437 (5th

Cir. 1994)). If indeed constructive fraud is all that is required under

Texas law, then the district court clearly did not err in not making a

finding of fraud, for the requirement of “constructive fraud” is “merely

an expression of the idea that a constructive trust may arise in the

(Continued on following page)

it nebo

App. 21

In recognition of ERISA’s overarching aim of national

uniformity, we have consistently held that any hiatus in

ERISA’s text must be filled by application of federal

common law rather than the law of any particular state.“

Accordingly, Texas law is not directly applicable to the

Plan’s claim, and the Plan will not be required to establish

actual fraud and unjust enrichment — unless, that is, some

basis exists for concluding that these elements are re-

quired under a federal common law standard for the

imposition of a constructive trust.

Although the law firm and Mestemacher argue

alternatively that we should incorporate the Texas law

elements of actual fraud and unjust enrichment into the

federal common law rule, federal common law -— like gaps

in ERISA’s statutory provisions — cannot be defined solely

by reference to the law of but a single state. This is espe-

cially true when adherence to the strictures of Texas law

would require the Plan to establish actual fraud on the

part of either Mestemacher or the law firm, an element

that has never been required by the Supreme Court or this

absence of fraud.” SCOTT ON TRUSTS § 462 (4th ed. 2001). Neverthe-

less, because some confusion exists as to this issue, and because the

issue was not briefed by the parties, we will assume arguendo for

purposes of the instant analysis that Texas law requires a showing of

actual fraud or breach of fiduciary duty prior to imposition of a con-

structive trust.

“ See Jamail, Inc. v. Carpenters Dist. Council of Houston Pension

& Welfare Trusts, 954 F.2d 299, 303 (5th Cir. 1992) (“Both the legisla-

tive history and the case law pursuant to ERISA validate our applica-

tion of federal common law to ERISA.”); see also Rodrigue v. Western

and Southern Life Ins. Co., 948 F.2d 969, 971 (5th Cir. 1991) (“Congress

intended that federal courts should create federal common law when

adjudicating disputes regarding ERISA.”).

App. 22

Circuit. Indeed, as discussed in the preceding section,

Knudson requires a § 502(a)(3) plaintiff seeking a con-

structive trust to show only the existence of “money or

property identified as belonging in good conscience to the

plaintiff [that can] clearly be traced to particular funds or

property in the defendant’s possession,” and makes no

mention of the necessity of showing actual fraud or

wrongdoing on the part of the defendant.” Neither does

Bauhaus, which contains our most recent discussion of the

circumstances in which a constructive trust may be

imposed under § 502(a)(3), suggest that a showing of

actual fraud or wrongdoing is required.

Further, as did the Knudson Court in its efforts to

define the contours of “appropriate equitable relief” under

§ 502(a)(3), we look to “standard current works, such as

Dobbs, Palmer, Corbin, and the Restatements” in ascer-

taining the federal common law rule to be applied.“ Of

those works, two that have squarely considered whether a

showing of fraud or wrongdoing is required for imposition

of a constructive trust have concluded that such a trust

may properly be imposed in the absence of fraud.“ Based

on these expressions, as well as the absence of any indica-

tion in our precedent or that of the Supreme Court to the

effect that federal common law requires that actual fraud

” Knudson, 534 U.S. at 213.

* Id. at 716.

“ SCOTT ON TRUSTS § 462 (4th ed. 2001) (“[T]here are numerous

situations in which a constructive trust may be imposed in the absence

of fraud.”); 1 DOBBS LAW OF REMEDIES § 4.3(2) (2d ed. 1993)

(“Sometimes it is still said that the constructive trust applies only to

misdealings by fiduciaries or in cases of fraud . . . but this is a miscon-

ception.”).

App. 23

be established before a constructive trust can be imposed

under § 502(a)(3),” we hold today that federal common law

does not require a plaintiff in a § 502(a)(3) action to show

that he was the victim of actual fraud or wrongdoing as a

prerequisite to obtaining a constructive trust.”

As for the additional requirement of Texas law that

the defendant must have been unjustly enriched at the

expense of the plaintiff, it is axiomatic that a party who

of a constructive trust in the absence of a showing of actual fraud or

other wrongdoing, the Seventh Circuit has also answered the question

in the negative. See Health Cost Controls, 187 F.3d at 711. Writing for

the panel in Health Cost, Judge Posner noted that

although the Ninth Circuit appears to believe that the im-

position of a constructive trust in an ERISA case is permis-

sible only when there has been a breach of trust, FMC

Medical Plan v. Owens, 122 F.3d 1258, 1261 (9th Cir. 1997),

it has given no reason for this belief and there is no basis for

it either in ERISA or in the principles of equity. Granted

that in times of yore the constructive trust was available

only as a remedy against trustees and other fiduciaries, 1

Dobbs, supra, § 4.3(2), p. 597, there is nothing to suggest

that ERISA’s drafters wanted to embed their work in a time

warp.

Id.

® As today we hold that actual fraud is not an element required in

a §502(a)(3) action for a constructive trust, we do not reach the

question whether the Plan has demonstrated actual fraud on the part of

Mestemacher and the law firm. We note, however, that at least one

other circuit has observed, on nearly identical facts, that the refusal of

a participant’s lawyer to turn over settlement proceeds that rightfully

belonged to the plan constituted wrongdoing on the part of the lawyer.

See Wal-Mart Stores, Inc. Assoc. Health and Welfare Plan v. Wells, 213

F.3d 398, 401 (7th Cir. 2000) (lawyer’s refusal to hand over settlement

check to which plan claimed entitlement by virtue of its unambiguous

reimbursement provision was “clearly wrongful”).

App. 24

retains funds “belonging in good conscience to another” is

unjustly enriched at that other party’s expense. None

disputes that the Plan’s terms unambiguously state a

right to recover benefits that it has previously paid, up to

the full extent of any settlement proceeds obtained by the

participant or beneficiary. Thus, the disputed funds

“belong in good conscience” to the Plan, and the law firm’s

and Mestemacher’s continued retention of these funds

would unjustly enrich them at the Plan’s expense. Accord-

ingly, even if we assume arguendo that unjust enrichment

is a prerequisite, the Plan has produced sufficient evidence

that the defendants would be unjustly enriched, entitling

the Plan to have a constructive trust imposed on the

disputed settlement funds.

D. Common Fund Doctrine

Finally, we consider whether the Plan’s claim is

subject to either the Texas or the federal “common fund”

doctrine. There is no substantive difference between the

Texas and federal versions of this doctrine; in essence,

both provide that “a litigant or lawyer who recovers a

common fund for the benefit of persons other than himself

or his client is entitled to a reasonable attorney’s fee from

the fund as a whole.” “The doctrine rests on the percep-

tion that persons who obtain the benefit of a lawsuit

* Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 62 L. Ed. 2d 676,

100 S. Ct. 745 (1980); compare Lancer Corp. v. Murillo, 909 S.W.2d 122

(Tex. Ct. App. 1995) (“Under the [Texas] common fund doctrine, the

court may allow reasonable attorney’s fees to a litigant who, at his own

expense, has maintained a suit which creates a fund benefitting other

parties as well as himself.”) (cites omitted).

App. 25

without contributing to its costs are unjustly enriched at

the successful litigant’s expense.” In the instant case, the

district court found this doctrine inapplicable to the Plan’s

claim for benefits because the language of the Plan ex-

pressly provided — long before Mestemacher was injured

and long before he retained the law firm on a contingent

fee basis — that “[a]ttorney’s fees and court costs are the

responsibility of the participant, not the Plan.” We agree.

Although we have yet to address whether equitable

fee sharing is warranted under the common fund doctrine

when the Plan language expressly provides to the con-

trary, we held in Walker v. Wal-Mart Stores, Inc. that,

when a plan’s terms give it the right to recover benefits “to

the extent of any and all” settlement payments, but fail to

specify who bears the responsibility for fees and costs, the

plan is nevertheless entitled to full recovery of the amount

of the benefits paid without offset for fees and costs.”

Here, the Plan’s terms not only give it the right to recover

benefits “to the extent of any and all” settlement

* Boeing, 444 U.S. at 478; compare Lancer Corp., 909 S.W.2d at

126 (“The common fund doctrine is based on the principle that those

receiving the benefits of the suit should bear their fair share of the

expenses.”) (citing Trustees v. Greenough, 105 U.S. 527, 532-37, 26

L. Ed. 1157 (1881); Knebel v. Capital Nat'l Bank, 518 S.W.2d 795, 799-

801, 18 Tex. Sup. Ct. J. 120 (Tex. 1974)).

“ 159 F.3d 938, 940 (5th Cir. 1998). Interpreting the plan’s “‘any

and all’ language,” the Walker panel held that such language “plainly

means the first dollar of recovery (any) and 100% recovery (all) of the

funds received by the plaintiff in the settlement, up to the full amount

of the benefits paid.” Jd. The panel further noted that the fact that the

plan did not “specifically mention attorneys’ fees or set out detailed

distribution procedures did not constitute silence or ambiguity on

behalf of the plan,” reasoning that ERISA plans should not be labeled

“silent or unambiguous” simply for lack of “technical precision.” Jd.

App. 26

payments, but explicitly state that the participant must

bear the fees and costs associated with his tort action. Our

holding in Walker thus supports our determination here

that neither the federal nor Texas common fund doctrine

may be invoked to prevent or reduce the Plan’s recovery of

the funds that it advanced to Mestemacher, up to the full

amount of his recovery from the tortfeasor.

The Seventh Circuit’s Varco opinion further supports

this conclusion.” The Varco court refused to apply either

the Illinois or federal common fund doctrine to defeat an

ERISA plan’s express provision that fees and costs were

the sole responsibility of the participant.” Considering the

Illinois doctrine first, the court held that, because applica-

tion of that doctrine would contradict the express terms of

the Plan, it was preempted by § 514 of ERISA.” Turning

next to the federal common fund doctrine, the Varco court

declined to offset the plan’s recovery on that basis as well,

noting that application of “federal common law to override

the Plan’s reimbursement provision would contravene,

rather than effectuate, the underlying purposes of ERISA

because the express terms of the Plan provided for the

appropriate distribution of attorney’s fees.”” Thus, rea-

soned the Seventh Circuit, the federal common fund

* 338 F.3d 680 (7th Cir. 2003)

* See id. at 692-93.

” See id. at 690. In addition to complete preemption under

§ 502(2), ERISA § 514 provides for conflict preemption when a state

statute “directly conflicts with ERISA’s requirements that the plans be

administered, and benefits be paid in accordance with plan documents.”

Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 150, 149 L. Ed. 2d 264,

121 S. Ct. 1322 (2001); 29 U.S.C. 1144(a).

* Varco, 338 F.3d at 692.

App. 27

doctrine should only be applied to offset an ERISA plan’s

recovery in the absence of controlling plan language that

specifies the manner in which the costs of the underlying

litigation are to be distributed.”

We agree with the Seventh Circuit’s determination in

Varco that the state and federal common fund doctrines

are inapplicable when, as here, the controlling plan

language clearly and unambiguously expresses that fees

and cost are the sole responsibility of the participant.

Accordingly, we hold that the district court correctly

refused to apply either the Texas or federal common fund

doctrines to allow a deduction from the Plan’s recovery of a

pro rata share of Mestemacher’s attorney’s fees and costs.

Ill. CONCLUSION

We affirm the district court’s exercise of subject

matter jurisdiction based on ERISA § 502(a)(3) over the

Plan’s action for a constructive trust because it is equita-

ble in nature. Further, because federal common law does

not require a showing of actual fraud or wrongdoing as an

element of imposing a constructive trust, we affirm the

district court’s grant of the Plan’s requested relief, despite

an absence of such a showing. Finally, we affirm the

district court’s holding that neither the federal nor Texas

common fund doctrine trumps the Plan’s express language

specifying that all fees and costs associated with the

® Id. (citing McIntosh v. Pacific Holding Co., 120 F.3d 911, 912 (8th

Cir. 1997); Waller v. Hormel Foods Corp., 120 F.3d 138, 141 (8th Cir.

1997)).

App. 28

underlying tort litigation are to be born by the participant.

Accordingly, the district court’s decision is, in all respects,

AFFIRMED.

wider ew an

App. 29

2002 US DIST. LEXIS 7246

Jack Bauer, et al, Plaintiffs, -vs- Delvin Gylten,

Defendant. Jack Bauer, et al., Plaintiffs, -vs- Cam-

rud, Maddock, Olson & Larson, Ltd., Defendant.

A3-00-161, A3-02-27

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NORTH DAKOTA,

SOUTHEASTERN DIVISION

April 22, 2002, Decided

COUNSEL: For JACK BAUER, RICHARD BERGSTAD,

JIM BESSINE, DONALD BRUEMMER, CLINTON

BURGE, RUTH CHERMOK, DON DAWSON, DAN

FINNIE, ROBERT JARDING, STEVE JUNKER, JAMES

KAVANAUGH, KENNETH KLEVER, ROGER LARSON,

DOUG MARTIN, FRANCIS MAZZA, STEVEN MILLER,

RYAN PENDERGRAFT, RANDY STAINBROOK, plain-

tiffs (00-CV-161, 02-CV-27): David S. Anderson, Richard L.

Evans, Kathleen M. Brennan, McGRANN SHEA ANDER-

SON CARNIVAL STRAUGHN & LAMB, MINNEAPOLIS,

MN.

For DELVIN GYLTEN, defendant (00-CV-161): Randall

Shane Hanson, Patrick J. Maddock, CAMRUD, MAD-

DOCK, OLSON & LARSON, LTD, GRAND FORKS, ND.

For CAMRUD, MADDOCK, OLSON & LARSON, LTD.,

defendant (02-CV-27): Randall Shane Hanson, Patrick, J.

Maddock, CAMRUD, MADDOCK, OLSON & LARSON,

LTD, GRAND FORKS, ND.

JUDGES: RODNEY S. WEBB, CHIEF JUDGE,

UNITED STATES DISTRICT COURT.

OPINION BY: RODNEY S. WEBB

App. 30

OPINION:

MEMORANDUM AND ORDER

I. Introduction

Before the Court are a several motions in each of the

above captioned cases. First, in both cases there is a

motion by plaintiffs for a temporary injunction and a

preliminary injunction, as well as for hearings on both

(doc. # 3 in A3-02-27; # 18 in A3-00-161). As explained

below, these motions are DENIED. Second, plaintiffs seek

to consolidate the two cases (doc. # 3 in A3-02-27; # 18 in

A3-00-161). This motion is GRANTED. Finally, plaintiffs

seek to amend the complaint in A3-00-161 (doc. # 18). This

motion is also GRANTED. In addition to ruling on these

motions, the Court essentially REAFFIRMS its earlier

grant of summary judgment.

II. Background

The procedural history here is somewhat complicated,

so the Court will briefly review it before proceeding.

Defendant Delvin Gylten was covered by the ERISA plan

of which plaintiff’s are administrators; he was in an

accident, and the plan paid for his medical bills. He then

sought and recovered money from the third party tortfea-

sor who had caused the accident. Plaintiffs then initiated

this action to recover ERISA benefits from Gylten pursu-

ant to a subrogation agreement and various plan provi-

sions. On cross motions for summary judgment, the Court

on December 12, 2001, held that the plan could recover

amounts paid dollar-for-dollar except to the extent the

recovery was attributable to Gylten’s wife. The Court did

tt ath fs Aa nea : -

App. 31

not attempt to perform such an apportionment, however,

and so did not enter any final judgment.

Then, on January 8, 2002, the United States Supreme

Court decided Great-West Life & Annuity Insurance

Company v. Knudson, 534 U.S. 204, 151 L. Ed. 2d 635, 122

S. Ct. 708 (2002). In short, Great-West held that ERISA

plans could not sue in law to recover plan benefits; such

efforts at collection were limited to suits in equity. This

Court considered that Great-West might have an effect on

the ultimate outcome of the instant case, and so on Janu-

ary 28, 2002, it ordered the parties to provide additional

briefing.

Before the time for briefing had run, plaintiffs com-

menced the action numbered A3-02-27, seeking injunctive

relief requiring defense counsel to maintain the funds at

issue and enjoin their distribution. They also sought to

amend the complaint in A3-00-161 to add explicitly equi-

table remedies. The parties arranged a stipulation —

approved by the Court — by which defense counsel agreed

to maintain the funds, essentially giving plaintiffs what

they sought as injunctive relief. This stipulation also

extended the time for filing supplemental briefs; this

period has now run and the Court has received and con-

sidered these briefs. The Court now enters several rulings

on the motions before it.

III. Analysis

A. Temporary restraining order & prelimi-

nary injunction

As mentioned, the parties have essentially stipulated

to the injunctive relief sought (doc. # 20 in A3-00-161).

Therefore, the Court considers these motions moot, and

sereniere

App. 32

they are DENIED. The Court thanks the parties for

working to achieve this result.

B. Motion to consolidate

In light of the above motion, there is little left in A3-

02-27. However, to the extent any issues remain, it makes

sense to resolve them together with the primary case.

Therefore, the motion to co solidate cases A3-00-161 and

A3-02-27 is GRANTED.

C. Motion to amend

Plaintiffs seek to amend the complaint in A3-00-161 to

request the creation of a constructive trust, consisting of

the monies which they claim under the plan and which

defense counsel is currently holding, and transfer of that

trust to them. This amendment would essentially bring

their complaint in line with Great-West, as it seeks the

kind of equitable relief the Supreme Court held ERISA

authorizes plans to seek. The first question is thus

whether to allow the amendment; assuming the Court

does so, the substantive issues could then be addressed.

Rule 15(a) of the Federal Rules of Civil Procedure

provides that a party at this stage of a case “may amend

[its] pleading only by leave of court or by written consent

of the adverse party; and leave shall be freely given when

justice so requires.” This decision lies in the discretion of

the trial court. See generally Grandson v. Univ. of Minne-

sota, 272 F.3d 568, 575 (8th Cir. 2001). A number of courts

confronting the situation facing the Court here have

concluded that amendments intended to reflect a recent

change in decisional law are generally permissible. See,

App. 33

e.g, Gregory v. Harris-Teeter Supermarkets, Inc., 728

F. Supp. 1259, 1260 (W.D.N.C. 1990); Vanguard Savings &

Loan Ass’n V. Banks, 1995 WL 379999 (E.D. Pa. June 27,

1995).

The Court agrees with this general proposition, and

finds its application appropriate here for several reasons.

First, this case does not involve discovery; the parties

submitted it for summary judgment on stipulated facts.

There is therefore no real trial schedule which will be

affected by amendment. Second, it is only proper that the

decision here reflect the current state of the law, and this

amendment is necessary to achieve that result. Therefore,

the motion to amend is GRANTED, and the proposed

amended complaint is ORDERED FILED.

D. Effect of Great-West on earlier summary

judgment

In its December 12, 2001, order granting summary

judgment to plaintiffs, the Court held that the plan lan-

guage allowed plaintiff to collect, from defendant’s third-

party recovery, benefits paid on behalf of defendant except

to the extent that the monies were attributable to defen-

dant’s wife’s loss of consortium claim. The Court did not

attempt to perform such an allocation, however, and the

parties have not since put that issue before the Court. The

only question at this point, therefore, is whether Great-

West changes the Court’s original ruling. The Court con-

cludes that it does not.

The holding of Great-West is fairly limited. In it, the

Court was required to construe ERISA § 502(a)(3), codified

at 29 U.S.C. § 1132(a)(3), which provides in relevant part:

App. 34

A civil action may be brought —

(3) by a participant, beneficiary, or fiduciary (A)

to enjoin any act or practice which violates any

provision of this subchapter or the terms of the

plan, or (B) to obtain other appropriate equitable

relief (i) to redress such violations or (ii) to en-

force any provisions of this subchapter or the

terms of the plan|[.]

Plaintiff Great-West, an ERISA plan, had sued defendant

Knudson to recover benefits it paid on her behalf after she

was rendered a quadriplegic in a car accident. Great- West,

122 S. Ct. at 711. The procedural history of the case was

quite complicated, and the Court will not dwell on that

procedure here. Jd. For purposes of this case, the key is

that part of the relief Great-West sought was “judicially

decreed reimbursement,” which the Ninth Circuit ulti-

mately held was not the sort of equitable relief authorized

by § 502(a)(3). Great-West 122 S. Ct. at 712.

The Supreme Court granted certiorari and affirmed

this conclusion. In so doing, it affirmed its earlier defini-

tion of “equitable relief” as “those categories of relief that

were typically available in equity.” Jd. (citing Mertens v.

Hewitt Assoc., 508 U.S. 248, 256, 124 L. Ed. 2d 161, 113

S. Ct. 2063 (1993)). After characterizing the relief Great-

West sought as “personal liability ... for a contractual

obligation to pay money,” the Court concluded that be-

cause this was not relief typically available in equity,

Great-West could not obtain it from Knudson. Great-West

122 S. Ct. at 713.

Of particular relevance to the instant case is the

Supreme Court’s recognition that permissible equitable

relief could include restitution, so long as it was “in the

App. 35

form of a constructive trust or equitable lien, where money

or property identified as belonging in good conscience to

the plaintiff could clearly be traced to particular funds or

property in the defendant’s possession.” Great-West 122

S. Ct. at 714. The court would then order transfer of the

property in trust to the plaintiff. Jd. According to the

Court, the key is that “the action generally must seek not

to impose personal liability on the defendant, but to

restore to the plaintiff particular funds or property in the

defendant’s possession.” Great-West 122 S. Ct. at 714-15.

While admitting that this was a fine distinction, the Court

made clear that the language at issue necessitated that

the distinction be drawn. Great-West 122 S.Ct. at 715,

717.

Here, the plaintiffs’ original suit was for legal restitu-

tion, a kind of relief rendered unattainable by Great- West.

They now seek to establish a constructive trust, however,

and ultimately to compel its transfer to them, a form of

relief explicitly authorized by Great-West. Great-West 122

S. Ct. at 714. Pursuant to a stipulation, defense counsel

has agreed to hold the funds, making the money sought

traceable to particular funds in the defendant’s possession.

Id. Thus, this seems to be the precise situation allowed in

Great-West, and other courts in similar situations have

also recognized as much by allowing ERISA plans to seek

the relief plaintiffs here seek. See, e.g., Admin. Comm. of

the Wal-Mart Stores, Inc. v. Varco, 2002 U.S. Dist. LEXIS

530, 2002 WL 47159 (N.D. Ill. Jan. 14, 2002). Therefore,

the Court must conclude that Great-West has no effect on

its earlier ruling other than to change the form of relief

granted and the equitable basis of such relief.

Defendant’s brief on the effect of Great-West does not

change this conclusion. Though he urges that the result

App. 36

reached here is not, in fact, equitable in the sense of

fairness, the Court cannot overlook the fact that the

Supreme Court specifically suggested that transfer of a

constructive trust is equitable relief under the rule of

Great-West. Defendant also argues that a constructive

trust is inappropriate because he has not been unjustly

enriched or done something wrong; indeed, he will be left a

debtor. The Court has previously made its sympathy for

defenddnt’s position clear, and this sympathy has not

changed. However, the Court also previously rejected these

arguments, and changing the form of relief pursuant to

Great-West does not change the Court’s underlying analy-

sis.

In conclusion, the Court has reconsidered its earlier

summary judgment in light of Great-West and has reached

the following conclusions. First, the form of relief previ-

ously authorized is now clearly impermissible, but this is

cured by plaintiff’s amended complaint, which seeks a

constructive trust. Second, the Court does not change its

essential analysis and conclusion that the plan language

entitles plaintiffs to recover monies paid on behalf of

defendant except to the extent the recovery from which

those monies come is attributable to defendant’s wife.

Finally, the Court will not rule on any such apportionment

until the issue is fully and properly before it.

IT IS SO ORDERED.

Dated this 22nd day of April, 2002.

RODNEY S. WEBB, CHIEF JUDGE

UNITED STATES DISTRICT COURT

App. 37

2002 U.S. DIST. LEXIS 24168

PAUL ALLISON, Plaintiff, vs. WELLMARK, INC.,

d/b/a BLUE CROSS AND BLUE SHIELD OF IOWA,

Defendant.

No. C00-3015-MWB

UNITED STATES DISTRICT COURT FOR

THE NORTHERN DISTRICT OF IOWA,

CENTRAL DIVISION

October 15, 2002, Decided

COUNSEL: For Paul J. Allison, PLAINTIFF: Raymond P.

Drew, Drew Law Firm, Hampton, IA USA.

For Paul J. Allison, PLAINTIFF: Tom L. Drew, Lawyer

Lawyer Dutton Drake, West Des Moines, [A USA.

For Wellmark, Inc., DEFENDANT: David M. Swinton,

Ahlers Cooney Dorweiler Haynie Smith & Allbee, Des

Moines, IA USA. ;

JUDGES: Judge: Mark W. Bennett, Judge.

OPINION BY: Mark W. Bennett

OPINION:

MEMORANDUM OPINION AND ORDER RE-

GARDING DEFENDANT’S MOTION FOR PARTIAL

SUMMARY JUDGMENT AND PLAINTIFF’S MOTION

TO REMAND

TABLE OF CONTENTS

I. INTRODUCTION AND BACKGROUND

A. Procedural Background

B. Factual Background

App. 38

II. LEGAL ANALYSIS

A. Standards For Summary Judgment

B. Analysis Of Wellmark’s Motion For Partial

Summary Judgment

1. Subject matter jurisdiction

2. Constructive trust

C. Allison’s Motion To Remand

II, CONCLUSION

I. INTRODUCTION AND BACKGROUND

A. Procedural Background

On February 3, 2000, plaintiff Paul J. Allison filed a

petition for declaratory judgment in the Iowa District

Court In And For Franklin County seeking a declaration

that defendant Wellmark, Inc. d/b/a Blue Cross and Blue

Shield of Iowa (“Wellmark”) had no right of subrogation to

the proceeds of plaintiff Allison’s underinsured motorist

coverage. Defendant Wellmark removed this case to this

court on February 18, 2000, pursuant to 28 U.S.C. § 1441.

On February 28, 2001, defendant Wellmark filed its

answer and prayed for a declaration from the court that

Wellmark’s subrogation rights extend to plaintiff Allison’s

underinsured motorist coverage.

On April 12, 2001, plaintiff Allison filed his Motion

For Summary Judgment and defendant Wellmark filed its

Motion For Partial Summary Judgment. The parties’

cross-motions for summary judgment centered on the

central issue in this case, whether defendant Wellmark is

entitled to subrogation of plaintiff Allison’s right to recov-

ery of underinsured motorist coverage proceeds.

App. 39

On July 30, 2001, after oral arguments on the parties’

cross-motions for summary judgment, the court concluded

that Wellmark’s interpretation of the Plan’s subrogation

provision was not unreasonable. Thus, the court concluded

that defendant Wellmark was entitled to subrogation of

plaintiff Allison’s right to recovery of underinsured motor-

ist coverage proceeds and granted Wellmark’s Motion for

Partial Summary Judgment and denied Allison’s Motion

for Summary Judgment. This ruling would have been the

final judgment in the case but for the fact that Wellmark

did not seek summary judgment on the question of

whether it owed Allison a reasonable attorney’s fee in

connection with his recovery of the underinsured motorist

proceeds at issue in this litigation.

On January 8, 2002, the United States Supreme Court

issued its decision in Great-West Life & Annuity Ins. Co. v.

Knudson, 534 U.S. 204, 151 L. Ed. 2d 635, 122 S. Ct. 708

(2002)." On March 1, 2002, in light of the Knudson

* In Knudson, the Court addressed the issue of the extent to which

ERISA authorizes a plan administrator to enforce a plan’s reimburse-

ment provision. Janette Knudson, a beneficiary of an ERISA-governed

employee welfare benefit plan, was severely injured in a car accident.

122 S. Ct. at 711. She was covered by an employee benefit plan. The

plan included a reimbursement provision similar to the one at issue in

the present case; the provision stated that the plan had “ ‘the right to

recover from the [beneficiary] any payment for benefits’ paid by the

Plan that the beneficiary is entitled to recover from a third party.” Id.

Knudson filed a state tort suit against the manufacturer of the car in

which she was riding and other tortfeasors. The parties subsequently

negotiated a settlement and the tortfeasors paid the settlement money

into a Special Needs Trust and gave the remainder to Knudson’s attorney,

who tendered a check in the amount of $13,828.70 to Great-West. Instead

of cashing its check, however, Great-West filed suit, under ERISA

§ 502(a)(3), seeking to enforce the reimbursement provision of the plan

and recover from the settlement proceeds the $411,157.11 it had paid

(Continued on following page)

App. 40

decision, Wellmark requested that it be granted leave to

amend its answer to include a request for the imposition of

a collective trust on the proceeds of the underinsured

motorist coverage and an award of interest. On July 1,

2002, the court found that Wellmark had established good

cause to amend its answer to take the change in the

decisional law into account and granted Wellmark’s

request for leave to amend its answer.

On August 29, 2002, defendant Wellmark filed its

Motion for Partial Summary Judgment. In its motion,

defendant Wellmark seeks summary judgment on the

issue of its entitlement to imposition of a constructive

trust. Plaintiff Allison filed a timely response to defendant

Wellmark’s motion in which he argues that the circum-

stances of this case do not establish Wellmark’s entitle-

ment to a constructive trust under Iowa law. Allison also

argues that the court lacks subject matter jurisdiction over

this matter.

On September 13, 2002, Plaintiff Allison filed a

motion to remand which is grounded on his argument that

the court does not have subject matter jurisdiction over this

matter. Defendant Wellmark filed a timely response to

Allision’s motion to remand in which it asserts that because

plaintiff Allison’s claims are completely preempted by

for Knudson’s medical treatment. The Supreme Court held that ERISA

§ 502(a)(3) did not authorize the action because the plan was seeking

legal relief. 122 S. Ct. at 719. The Court, however, suggested that if the

plan administrator had been secking an equitable lien on particular

property in the hands of the plan beneficiary, such a suit would sound

in equity and would be authorized by § 502(a)(3). 122 S. Ct. at 714-15.

App. 41

ERISA, the court has subject matter jurisdiction over the

case.

The court heard telephonic oral arguments on defen-

dant Wellmark’s Motion for Partial Summary Judgment

on October 8, 2002. At the oral arguments, plaintiff Allison

was represented by counsel Raymond P. Drew of Drew Law

Firm, Hampton, Iowa. Defendant Wellmark was repre-

sented by counsel David Swinton of Ahlers, Cooney, Dor-

weiler, Haynie, Smith & Allbee, P.C., Des Moines, Iowa.

The court turns first to a discussion of the undisputed

facts as shown by the record and the parties’ submissions,

then to consideration of the standards applicable to the

motion for summary judgment, and, finally, to the legal

analysis of whether defendant Wellmark is entitled to

summary judgment on the issue of its entitlement to

imposition of a constructive trust. The court will then

address plaintiff Allison’s motion to remand.

B. Factual Background

The record reveals that the following facts are undis-

puted. Plaintiff Paul J. Allison was an employee of the

Curries Company on June 3, 1990. As an employee of the

Curries Company, Allison had health care benefits through

the Curries Company health benefits plan (“The Plan”).

The Plan is self-funded by the Curries Company and is

maintained pursuant to an Alliance Select Benefit Certifi-

cate. Defendant Wellmark provides certain administrative

services and stop-loss coverage to the Curries Company

with respect to the Plan pursuant to an Administrative

Services and Financial Agreement. The Plan is an em-

ployee welfare benefit plan governed by the Employee

Retirement Income Security Act of 1974, 29 U.S.C. § 1001

App. 42

et seq. (“ERISA”). Plaintiff Allison was furnished with a

copy of the Plan.

On June 3, 1999, plaintiff Allison was severely injured

in an automobile accident. Plaintiff Allison was a passen-

ger in the automobile at the time of the accident. The

accident was caused by the driver of the automobile in

which Allison was a passenger. The driver of the automo-

bile carried automobile insurance with the Hartford

Insurance Company with a liability limit of $10,000.

Plaintiff had automobile insurance with the Prudential

Insurance Company which provided underinsured motor-

ist coverage in the amount of $100,000.

As a result of the injuries sustained in the accident,

plaintiff Allison incurred medical expenses in excess of

$135,000. Plaintiff Allison’s total damages for injuries

sustained in the accident exceed the amount of automobile

insurance coverage available to him. Following the acci-

dent, Allison made a demand on the Prudential Insurance

Company for the limits of his underinsured motorist

coverage. The Prudential Insurance Company subse-

quently paid to Allison underinsured motorist benefits in

the amount of $100,000.

Defendant Wellmark has paid $126,067.17 in benefits

for the medical expenses incurred by Allison as a result of

the accident. The Plan contains the following provision

with respect to subrogation:

- SUBROGATION

Once you receive benefits under this certificate

arising from an illness or injury, we will assume

any legal right you have to collect compensation,

damages, or any other payment related to the

App. 43

illness or injury, including benefits from any of

the following:

. The responsible person’s insurer.

. Uninsured motorist coverage.

. Underinsured motorist coverage

. Other insurance coverage.

You and your family agree to all of the following:

. You will let us know about any potential

claims or rights of recovery related to the

illness or injury.

. You will furnish any information and assis-

tance we determine we will need to enforce

our rights under this certificate.

. You will do nothing to prejudice our rights

and interests.

. You will not compromise, settle, surrender,

or release any claim or right of recovery de-

scribed above, without getting our written

permission.

. You must reimburse us to the extent of

benefit payments made under this certifi-

cate if payment is received from the other

party or parties.

You and your covered family member(s) must no-

tify us if you have the potential right to receive

payment from someone else. You must cooperate

with us to ensure that our rights to subrogation

are protected.

App #4

We reserve the right to offset any amounts owed

to us against any future claim settlement

amounts.

Curries Company Alliance Se'ect Health Benefits Certifi-

cate, Def.’s Ex. C at pp. 46-47. Wellmark first corresponded

with Allison regarding its subrogation rights no later than

August 30, 1999. In response to Wellmark’s letter of

August 30, 1999, Allison’s counsel wrote to Wellmark on

September 9, 1999. Allison’s counsel’s letter of September

9, 1999, does not mention the possibility of recovery under

an underinsured motorist policy. On October 12, 1999,

Wellmark wrote to Allison and his counsel. Wellmark

advised both Allison and his counsel that Wellmark had a

right of subrogation to the proceeds of underinsured

motorist coverage and requested that Wellmark be kept

informed of any settlement negotiations. On September

20, 1999, a check was issued to Allison from his automo-

bile insurance carrier for his underinsured motorist

coverage.

On October 19, 1999, Allison’s counsel wrote to Well-

mark, advising it that Allison had underinsured motorist

coverage in the sum of $100,000. Allison’s counsel did not

inform Wellmark that the proceeds of that coverage had

already been paid out. Allison’s counsel indicated that it

was his position that Allison’s underinsured motorist

coverage was not subject to subrogation. He requested that

Wellmark provide him with any Iowa legal authority

supporting its position that its right of subrogation ex-

tended to Allison’s underinsured motorist coverage. On

November 16, 1999, Wellmark wrote to Allison’s counsel to

advise him of the amount of benefits paid by Wellmark as

of that date. On December 20, 1999, Wellmark responded

to Allison’s counsel’s request to be supplied with legal

App. 45

authority supporting its position that its right of subroga-

tion extended to Allison’s underinsured motorist coverage.

There was no further correspondence between the parties

prior to February 3, 2000, when plaintiff Allis « filed the

present case. On March 9, 2000, in a letter from Allison’s

counsel, Wellmark was advised for the first time that the

proceeds of Allison’s underinsured motorist coverage had

been paid out to him.

II. LEGAL ANALYSIS

A. Standards For Summary Judgment

This court has considered in some detail the stan-

dards applicable to motions for summary judgment pursu-

ant to Fed. R. Civ. P. 56 in a number of prior decisions. See,

e.g., Swanson v. Van Otterloo, 993 F. Supp. 1224, 1230-31

(N.D. Iowa 1998); Dirks v. J.C. Robinson Seed Co., 980 F.

Supp. 1303, 1305-07 (N.D. Iowa 1997); Laird v. Stilwill,

969 F. Supp. 1167, 1172-74 (N.D. Iowa 1997); Rural Water

Sys. #1 v. City of Sioux Ctr., 967 F. Supp. 1483, 1499-1501

(N.D. Iowa 1997), aff’d in pertinent part, 202 F.3d 1035

(8th Cir. 2000), cert. denied, 121 S. Ct. 61 (2000); Tralon

Corp. v. Cedarapids, Inc., 966 F. Supp. 812, 817-18 (N.D.

Iowa 1997), aff’d, 205 F.3d 1347 (8th Cir. 2000) (Table

op.); Security State Bank v. Firstar Bank Milwaukee, N.A.,

965 F. Supp. 1237, 1239-40 (N.D. Iowa 1997); Lockhart v.

Cedar Rapids “»mmunity Sch. Dist., 963 F. Supp. 805

(N.D. Iowa 1997). Thus, the court will not consider those

standards in dete | here. Suffice it to say that Rule 56

itself provides, in :-rtinent part, as follows:

Rule 56. Summary Judgment

(a) For Claimant. A party seeking to recover

upon a claim, counterclaim, or cross-claim or to

App. 46

obtain a declaratory judgment may, at any time

after the expiration of 20 days from the com-

mencement of the action or after service of a mo-

tion for summary judgment by the adverse party,

move with or without supporting affidavits for a

summary judgment in the party’s favor upon all

or any part thereof.

(b) For Defending Party. A party against whom

aclaim ...is asserted... may, at any time, move

for summary judgment in the party’s favor as to

all or any part thereof.

judgment sought shall be rendered forthwith if

the pleadings, depositions, answers to interroga-

tories, 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(a)-(c) (emphasis added). Applying these

standards the trial judge’s function at the summary

judgment stage of the proceedings is not to weigh the

evidence and determine i/:2 truth of the matter, but to

determine whether there are genuine :ssues for trial.

Quick v. Donaldson Co., 90 F.3d 1372, 1376-77 (8th Cir.

1996); Johnson v. Enron Corp., 906 F.2d 1234, 1237 (8th

Cir. 1990). An issue of material fact is genuine if it has a

real basis in the record. Hartnagel v. Norman, 953 F.2d

394 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 586-87, 89 L. Ed. 2d

538, 106 S.Ct. 1348 (1986)). As to whether a factual

dispute is “material,” the Supreme Court has explained,

“Only disputes over facts that might affect the outcome of

the suit under the governing law will properly preclude

the entry of summary judgment.” Anderson v. Liberty

App. 47

Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct

2505 (1986); Beyerbach v. Sears, 49 F.3d 1324, 1326 (8th

Cir. 1995); Hartnagel, 953 F.2d at 394. If a party fails te

make a sufficient showing of an essential element of a

claim with respect to which tt party has the burden oi

proof, then the opposing party is “entitled to judgment as a

matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 323,

91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); In re Temporo

mandibular Joint (TMJ) Implants Prod. Liab. Litig., 113

F.3d 1484, 1492 (8th Cir. 1997). In reviewing the record,

the court must view all the facts in the light most favor-

able to the nonmoving party and give that party the

benefit of all reasonable inferences that can be drawn from

the facts. See Matsushita Elec. Indus. Co., 475 U.S. at 587;

Quick, 90 F.3d at 1377. With these standards in mind, the

court turns to consideration of defendant Wellmark’s

Motion for Partial Summary Judgment.

B. Analysis Of Wellmark’s Motion For Partial

Summary Judgment

1. Subject matter jurisdiction

The court will initially take up plaintiff Allison’s

argument that the court lacks subject matter jurisdiction

over this case. Thus, as a threshold issue this court must

determine whether removal was appropriate. If it was not,

the court does not have subject matter jurisdiction and the

court must deny as moot defendant Wellmark’s Motion For

Partial Summary Judgment. A civil action is removable if

the district court has “original jurisdiction founded on a

claim or right arising under the Constitution, treaties or

laws of the United States.” 28 U.S.C. § 1441(b). It is

uncontested that plaintiff Allison has pleaded only a state

App. 48

law claim for declaratory judgment. As the Eighth Circuit

Court of Appeals has observed:

Under the “well-pleaded complaint” rule, “a case

may not be removed to federal court on the basis

of a federal defense, including the defense of pre-

emption, even if the defense is anticipated in the

plaintiff’s complaint.” Franchise Tax Board v.

Construction Laborers Vacation Trust, 463 U.S. 1,

14, 103 S. Ct. 2841, 77 L. Ed. 2d 420 (1983).

However, the well-pleaded complaint rule does

not apply if Congress has evidenced an intent

that federal law completely displace state law.

“Once an area of state law has been completely

pre-empted, any claim purportedly based on that

pre-empted state law is considered, from its in-

ception, a federal claim, and therefore arises un-

der federal law.” Caterpillar, Inc. v. Williams, 482

U.S. 386, 393, 107 S. Ct. 2425, 96 L.Ed.2d 318

(1987).

Lyons v. Philp Morris Inc., 225 F.3d 909, 912 (8th Cir.

2000). Thus, under application of the complete preemption

doctrine, because state common law claims are deemed to

be recast as federal claims, the preempted state law claims

give rise to federal question jurisdiction, and, as a result,

provide a basis for removal. Jd.

In Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 95

L. Ed. 2d 55, 105 S. Ct. 1542 (1987), the Supreme Court

held that the “complete preemption” exception applies to

§ 1132(a) of ERISA, 29 U.S.C. § 1132(a), which is ERISA’s

civil enforcement scheme. Id. at 67; see Lyons, 225 F.3d at

912. Thus, a state-law claim seeking the sort of relief

provided for in § 1132(a) is essentially transformed into a

claim which is “federal in character” and which will

support removal jurisdiction. Metropolitan Life Ins. Co.,

App. 49

481 U.S. at 67; Lyons, 225 F.3d at 912. The question, then,

is whether plaintiff Allison’s state-law claim for declara-

tory relief falls within the scope of ERISA § 1132(a). Thus,

if Allison could have brought his claim under ERISA

§ 1132(a), the claim must be deemed to be completely

preempted, and the court is correct to exercise jurisdiction

here.

Section 1132(a), in relevant part, provides:

A civil action may be brought —

(1) by a participant or beneficiary —

(A) for the relief provided for in subsection (c) of

this section, or

(B) to recover benefits due to him under the

terms of his plan, to enforce his rights under the

terms of the plan, or to clarify his rights to future

benefits under the terms of the plan;

(2) by the Secretary, or by a participant, benefi-

ciary or fiduciary for appropriate relief under sec-

tion 1109 of this title;

(3) by a participant, beneficiary, or fiduciary (A)

to enjoin any act or practice which violates any

provision of this subchapter or the terms of the

plan, or (B) to obtain other appropriate equitable

relief (i) to redress such violations or (ii) to en-

force any provisions of this subchapter or the

terms of the plan;

(4) by the Secretary, or by a participant, or

beneficiary for appropriate relief in the case of a

violation of 1025(c) of this title...

29 U.S.C. §§ 1132(a)(1)-(4).

App. 50

The Eighth Circuit Court of Appeals has held that a

fiduciary’s claim against a plan beneficiary for specific

performance of the plan’s subrogation clause falls within

§ 502(a)(3)’s exclusive jurisdiction over suits to enforce the

terms of the plan. See Southern Council of Indus. Workers

v. Ford, 83 F.3d 966, 969 (8th Cir. 1996); see also Lyons,

225 F.3d at 912 (holding that plan fiduciaries’ subrogation

claims against tobacco companies for recovery of costs

incurred due to tobacco related illnesses fells within

§ 502(a)(3)’s exclusive jurisdiction over suits to enforce the

terms of the plan). In its Ford decision, the Eighth Circuit

Court of Appeals considered whether subject matter

jurisdiction existed over a claim by an ERISA plan to

enforce the terms of a subrogation clause. Ford, 83 F.3d at

967-68. The Southern Council of Industrial Workers and

the Southern Council of Industrial Workers Trust Fund

(“Southern Council”) maintained an employee benefit plan

that provided health insurance. Jd. at 967. The plan

contained a subrogation clause providing that Southern

Council would be subrogated to the rights of a beneficiary

to receive or claim indemnification from a third party. Id.

at 967-68. A beneficiary to the plan, Jacqueline Ford

(“Ford”) sustained injuries from a fall at a supermarket.

After the plan paid $39,971.35 in medical benefits on

Ford’s behalf, Ford brought suit against the supermarket

and eventually obtained a settlement of $150,000 from the

supermarket’s insurer. Jd. at 968. Prior to the settlement,

Ford and her attorney signed a subrogation agreement

providing that they would reimburse the plan from the

proceeds of any recovery for Ford’s injuries. Jd. After Ford

and her attorney paid the fund only $10,000 in reim-

bursement for the benefits paid on Ford’s behalf, Southern

Council brought suit against Ford and her attorney seeking

to recover the balance of the amounts it had paid on Ford’s

App. 51

behalf. Id. The district court ruled that there was no cogni-

zable claim under ERISA for Southern Council’s recovery of

benefits paid on Ford’s behalf. Jd. The Eighth Circuit

reversed, finding that Southern Council alleged an ERISA

cause of action under § 1132(a)(3) to obtain equitable

relief. Id. “Southern Council’s allegation that Ford admit-

tedly failed to reimburse it as required by the subrogation

clause is a claim that Ford failed to comply with a term of

the plan. Southern Council sought specific performance of

Ford’s obligation under the subrogation clause.” Id. (cita-

tions omitted).

Although the Ford decision involved a plan’s lawsuit

against a plan beneficiary to enforce a plan’s subrogation

clause while this case involves a lawsuit brought by a plan

beneficiary against the plan for declaratory relief that the

plan has no right of subrogation to the proceeds of under-

insured motorist coverage under its terms, the court

concludes that this difference does not eliminate

§ 1132(a)(3) jurisdiction over this case. Here, plaintiff

Allison is seeking to redress what he believes is a violation

of the terms of the plan with respect to its right of subro-

gation. Such a claim falls squarely within the framework

of §§ 1132(a)(1) and 1132(a)(3)(A).

Plaintiff Allison does not address the Ford decision in

his moving papers. Rather, plaintiff Allison’s argument

that subject matter jurisdiction is lacking here is grounded

on the Fifth Circuit Court of Appeals’s recent decision in

Arana v. Oschner Health Plan, Inc., 302 F.3d 462, 2002

WL 1878714 (5th Cir. Aug. 15, 2002). In Arana, a depend-

ent of a plan beneficiary, Arana, was severely injured in an

automobile accident. The defendant, Ochsner Health Plan,

Inc. (“OHP”) provided health benefits to participants and

beneficiaries of the plan pursuant to a Group Health

App. 52

Services Agreement (“GHSA”) between OHP and the ,

employer. 302 F.3d 462, 2002 WL 1878714 at *1. After the

automobile accident, Arana’s health care providers submit-

ted to OHP claims for services rendered to Arana, and

OHP paid approximately $180,000 in health benefits for

treatment of Arana’s accident-related injuries. Jd. Four

automobile insurance policies provided coverage for the

accident. Arana subsequently settled claims under the four

policies for a total of $1,112,500. After receiving notifica-

tion from OHP that claimed a contractual right to reim-

bursement of the health benefits it had paid on Arana’s

behalf, Arana filed suit against OHP in the Louisiana

state district court. 302 F.3d 462, 2002 WL 1878714 at *2.

In his state court petition, Arana requested a declaratory

judgment “requiring OHP to release its notice of lien and

to withdraw and release OHP’s subrogation, reimburse-

ment, and assignment claims” against him. Arana as-

serted that such claims violated La. Rev. Stat. 22:663.

OHP removed Arana’s lawsuit to the Eastern District of

Louisiana, on the grounds that the petition asserts claims

that were completely preempted by ERISA. OHP then

filed a motion to dismiss or, alternatively, a motion for

summary judgment. In response to OHP’s motion to

dismiss, Arana asserted that subject matter jurisdiction

was lacking. 302 F.3d 462, 2002 WL 1878714 at *2, n.4.

SEPT

The district court concluded that Arana’s petition

stated a claim for benefits under 29 U.S.C. § 1132(a) that

was completely preempted by ERISA. In reversing, the

Fifth Circuit Court of Appeals concluded that Arana’s

claim was not one for benefits under § 1132(a). 302 F.3d

462, 2002 WL 1878714 at *4. The court of appeals also

concluded that Arana’s cause of action under La.Rev.Stat.

22:663 was not within the scope of § 1132(a) as an action

App. 53

“to enforce his rights under the terms of the plan.” Jd. In

reaching this conclusion, the court of appeals noted that,

because the terms of the plan were not of record, it was

not persuaded that Arana was seeking a declaration that

Louisiana state law controlled over plan provisions. The

court went on to observe:

Moreover, assuming arguendo that the terms of

the GHSA are properly considered to be the

terms of the LeCler plan, such an assumption

still does not justify characterizing Arana’s claim

as one to enforce the plan’s terms. Arana does not

dispute that the GHSA affords OHP the subroga-

tion and reimbursement rights it claims. Arana

in fact concedes that he would owe a portion of

his tort recovery to OHP if the terms of the

GHSA were enforced, but he argues that the

relevant provisions in the GHSA are illegal by

operation of 22:663. Although Arana’s suit to en-

force state law over the terms of the plan may be

“akin” to a suit to enforce the terms of the plan

itself, the fact that a claim is akin to a cause of

action authorized under section 502(a) is not

enough to support a federal claim under ERISA.

302 F.3d 462, 2002 WL 1878714 at *5.

The Arana decision is distinguishable from the pre-

sent case. In contrast to the petition involved in Arana,

plaintiff Allison’s petition does not assert that Wellmark’s

right to subrogation under the plan is unenforceable under

state law. Instead, plaintiff Allison asserts that the plan

does not provide for subrogation, and that the plan “is

ambiguous in its terms as to what, if any, claims the

Defendant could legally claim under the facts of this case.”

Complaint at {J 8-9. Moreover, plaintiff Allison expressly

sought “a declaratory judgment construing the insurance

App. 54

policy of the defendant and declaring that said defendant

has no subrogation rights under the underinsured benefits

of Plaintiff’s automobile policy.” Complaint at p. 2. Thus,

Allison, unlike the plaintiff in Arana, is seeking an inter-

pretation of the plan and a declaration of his rights under

the plan. Such a prayer for relief falls squarely within the

scope of §§ 1132(a)(1) and 1132(a)(3)(A). Therefore, the

court concludes that plaintiff Allison’s claims are com-

pletely preempted by ERISA and the court has subject

matter jurisdiction to hear this matter.

2. Constructive trust -

The court turns next to consider whether a construc-

tive trust is available to protect the plan where a plan’s

beneficiary has obtained funds which are subject to subro-

gation.

The issue of whether a constructive trust is available

under the facts of this case must be determined by appli-

cation of federal common law. The federal common law in

turn, may draw guidance from analogous state law. See

Wegner v. Standard Ins. Co., 129 F.3d 814, 818 (5th Cir.

1997); Jones v. Georgia Pacific Corp., 90 F.3d 114, 116 (5th

Cir. 1996); Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1451

(5th Cir. 1995); Brandon v. Travelers Ins. Co., 18 F.3d :

1321, 1325 (5th Cir. 1994); Heasley v. Belden & Blake

Corp., 2 F.3d 1249, 1257 (3d Cir. 1993); McMillan v. j

Parrott, 913 F.2d 310, 311 (6th Cir. 1990). A constructive

trust is “an equitable remedy compelling a person who has

property to which he is not justly entitled to transfer it to

the person entitled.” United States v. Pegg, 782 F.2d 1498,

1499 (9th Cir. 1986). A constructive trust is among the

remedies available to a court of equity and is therefore

EE eee

App. 55

available under 29 U.S.C. § 1132(a)(3), as means by which

to compel restitution to an ERISA plan. See Mertens v.

Hewitt Assocs., 508 U.S. 248, 250, 124 L. Ed. 2d 161, 113

S. Ct. 2063 (1993); Amalgamated Clothing & Textile

Workers v. Murdock, 861 F.2d 1406, 1413 (9th Cir. 1988).

Under Iowa law, a constructive trust is an equitable

remedy and is appropriate in three instances: actual

fraud, constructive fraud, or equitable principles other

than fraud. See Koster v. City of Davenport, 183 F.3d 767,

769 (8th Cir. 1999); Berger v. Cas’ Feed Store, Inc., 577

N.W.2d 631, 632 (Iowa 1998); In re Estate of Peck, 497

N.W.2d 889, 890 (Iowa 1993); Slocum uv. Hammond, 346

N.W.2d 485, 493 (Iowa 1984); Regal Ins. Co. v. Summit

Guar. Corp., 324 N.W.2d 697, 704 (Iowa 1982); Loschen v.

Clark, 256 Iowa 413, 419, 127 N.W.2d 600, 603 (1964); see

also In re Marriage of Jones, 451 N.W.2d 25, 26 (Iowa Ct.

App. 1989). “Other circumstances supporting imposition of

equitable principles include bad faith, duress, coercion,

undue influence, abuse of confidence, or any form of

unconscionable conduct or questionable means by which

one obtains the legal right to property which they should

not in equity and good conscience hold.” In re Estate of

Welch, 534 N.W.2d 109, 111 (Iowa Ct. App. 1995). “The

party who seeks the imposition of a constructive trust

must establish the right by clear, convincing, and satisfac-

tory evidence.” Neimann v. Butterfield, 551 N.W.2d 652, 654

(Iowa Ct. App. 1996); see Slocum, 346 N.W.2d at 493; In re

Estate of Welch, 534 N.W.2d at 111; James v. James, 252

Iowa 326, 330, 105 N.W.2d 498 (1960); see also In re Estate

of Farrell, 461 N.W.2d 360, 361 (Iowa Ct. App. 1990).

Wellmark concedes that Allison is not guilty of actual

or constructive fraud under the first two grounds. Rather, it

argues that the third ground is applicable because it is

App. 56

inequitable for Allison to retain the proceeds of the under-

insured motorist coverage in light of the plan’s subrogation

provision and this court’s prior determination that Weli-

mark is entitled to the underinsured motorist coverage

proceeds under the subrogation provision. Given that the

court has previously determined that Wellmark is entitled

to the underinsured motorist coverage proceeds pursuant

to the plan’s subrogation provision, the court concludes

that equity requires the imposition of a constructive trust

on the insurance proceeds at issue in this case. Therefore,

the court grants defendant Wellmark’s Motion For Partial

Summary Judgment and orders that the underinsured

motorist coverage proceeds are to be held in constructive

trust for Wellmark.

C. Allison’s Motion To Remand

In his motion to remand, Allsion asserts that this

matter should be remanded to state court because this

court lacks subject matter jurisdiction. Allison reiterates

the jurisdictional arguments he raised in his resistance to

Wellmark’s motion for partial summary judgment. For the

reasons discussed above, the court concludes that plaintiff

Allison’s claims are completely preempted by ERISA, and,

thus, the court has subject matter jurisdiction here.

Therefore, plaintiff Allison’s motion to remand is denied.

Ill, CONCLUSION

The court concludes that Allison’s claims for relief fall

within the scope of §§ 1132(a)(1) and 1132(a)(3)(A). There-

fore, the court concludes that plaintiff Allison’s claims are

completely preempted by ERISA, and the court has subject

matter jurisdiction over the case. The court further

hat salt esd.

App. 57

concludes that, in light of the fact that this court previ-

ously determined that Wellmark is entitled to the under-

insured motorist coverage proceeds pursuant to the plan’s

subrogation provision, equity requires the imposition of a

constructive trust on the insurance proceeds at issue in

this case. Therefore, the court grants defendant Well-

mark’s Motion For Partial Summary Judgment «ad orders

that the underinsured motorist coverage proceeds are to

be held in constructive trust for Wellmark.

Because the court concludes that it has subject matter

jurisdiction over this matter, Allison’s motion to remand is

denied.

It appears to the court that the only matter left

unresolved in this litigation is the question of whether

Wellmark owes Allison a reasonable attorney’s fee in

connection with his recovery of the underinsured motorist

proceeds at issue in this case. The parties are urged to

attempt to resolve this issue amongst themselves in order

to expedite the entry of a final judgement and the filing of

any appeals the parties may wish to take in this case. To

that end, the parties are directed to confer within the next

month in an attempt to resolve the fee issue amongst

themselves. The parties shall file a status report not later

than November 15, 2002, addressing whether the

parties have been able to resolve the fee issue and the

need for the court to hold a bench trial on the fee issue.

IT IS SO ORDERED.

DATED this 15th day of October, 2002.

Judge: Mark W. Bennett

App. 58

Mark S. Sifferman, #006600

NORLING, KOLSRUD, SIFFERMAN

& DAVIS, P.L.C.

3101 North Central Avenue

Suite 690

Phoenix, Arizona 85012

(602) 264-5866

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

WESTAFF (USA), INC., a No. CIV ’99 1222 PHX ROS

California corporation d/b/a

Western Staff Services, as COMPLAINT

Administrator of the (Filed Jul. 7, 1999)

WESTERN STAFF

SERVICES EMPLOYEE

HEALTH PLAN,

Plaintiff,

BETTY ARCE, a single

woman,

Defendant.

1. Plaintiff is a corporation created and existing

under the laws of the State of California.

2. Defendant is a citizen of the State of California.

3. Plaintiff is the Administrator of the Western

Staff Services Employee Health plan (“the Plan”), an

Employee Welfare Benefit Plan within the meaning of

Employee Retirement Income Security Act (“ERISA”), 29

App. 59

U.S.C. § 1002(1). Among other things, the Plan provides

medical benefits for employees of the Plaintiff, and their

dependents.

4. This court has jurisdiction of the matter pursu-

ant to 29 U.S.C. § 1132(e)(1) and 28 U.S.C. § 1331.

5. Plaintiff has standing to bring this action

pursuant to 29 U.S.C. § 1132(a)(3).

6. Venue is proper in this district pursuant to 29

U.S.C. § 1132(e)(2) as the Plan is administered in this

District through TPA of Arizona, Inc.

7. Defendant was an employee of Plaintiff. Defen-

dant was “a covered person” under the terms and condi-

tions of the Plan.

8. On or about November 19, 1997, Defendant was

involved in an automobile accident which caused physi-

cal injury to her.

9. The ERISA benefit plan established and main-

tained by the Plaintiff paid medical expenses on behalf

of Defendant in excess of $30,000.00.

10. The Plan, a portion of which is attached hereto

as Exhibit 1, provides, among other things:

. Accepting benefits under this Plan for

those incurred medical or dental expenses

automatically assigns to the Plan any rights

the Covered Person may have to recover pay-

ments from any third party or insurer. This

subrogation right allows the Plan to pursue

any claim which the Covered Person has

against any third party, or insurer, whether or

not the Covered Person chooses to pursue that

App. 60

claim. The Plan may make a claim directly

against the third party or insurer, but in any

event, the Plan has a lien on any amount re-

covered by the Covered Person whether or not

designated as payment for medical expenses.

This lien shall remain in effect until the Plan is

repaid in full. ...

11. On or about February 5, 1998, Defendant

executed a Reimbursement Agreement with Plaintiff, a

true and correct copy of which is attached hereto as

Exhibit 2. By that Reimbursement Agreement, Defen-

dant agreed that in accordance with provisions of the

Employee Benefit Plan, she agreed to reimburse and pay

promptly to Plaintiff an amount from any recovery from

benefits paid.

12. The Reimbursement Agreement further pro-

vides that Defendant would pay all attorneys’ fees and

costs incurred by Plaintiff in pursuing any rights under

the Agreement.

13. Defendant has pursued a claim for personal

injury against a third party. The third party has ten-

dered $15,000 in satisfaction of the claim. The $15,000

is being held in a trust account.

14. Plaintiff and Defendant have attempted, but

have failed to reach an agreement regarding the $15,000

and the Plaintiff's subrogation and reimbursement

rights.

15. There is a controversy existing among the

parties regarding the rights and responsibilities of the

parties under the Plan and Reimbursement Agreement.

App. 61

WHEREFORE, Plaintiff prays for judgment as

follows:

1. Adjudicating the rights and liabilities of the

parties hereto with respect to the obligations of reim-

bursement and subrogation under the Plan and the

Reimbursement Agreement;

2. That an order issue requiring the specific perform-

ance of the Plan and the Reimbursement Agreement.

3. Such other and further relief the court deems just

and proper.

RESPECTFULLY SUBMITTED this 7th day of

July, 1999.

NORLING, KOLSRUD,

SIFFERMAN & DAVIS, P.L.C.

By /s/ Mark S. Sifferman

Mark S. Sifferman

App. 62 t

2002 U.S. DIST. LEXIS 1697

HOTEL & RESTAURANT & BAR EMPLOYEES

FRINGE BENEFIT FUNDS, Plaintiff, v. Mui Trong,

as mother and natural guardian of Peter Truong,

Defendant.

Civil File No. 01-873 (MJD/RLE).

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MINNESOTA

January 31, 2002, Decided

COUNSEL: For HOTEL & RESTAURANT & BAR EM-

PLOYEES FRINGE BENEFIT FUNDS, plaintiff: Thomas

F Andrew, Aaron Robert Bransky, Brown Andrew Sig-

norelli & Zallar, Duluth, MN.

For MUI TRUONG, defendant: Mark Leslie Knutson,

Boyd Agnew Dryer & Storaasli, Duluth, MN

JUDGES: Michael J. Davis, United States District Court

Judge.

OPINION BY: Michael J. Davis

OPINION:

MEMORANDUM AND ORDER

This matter is before the Court on the parties’ cross-

motions for summary judgment. For the reasons that

follow, the Court grants Defendant’s motion and denies

Plaintiff’s motion.

BACKGROUND

The parties have stipulated to the following facts.

Minor Peter Truong was born on December 31, 1986. His

soe ei

App. 63

mother is Mui Trong (“Defendant”). Peter and Mui Truong

are of Vietnamese and Chinese descent. Mui came to the

United States as an adult refugee. Mui’s knowledge of

English is very limited. She must use a translator for her

legal matters and other important affairs. On August 6,

1993, Peter was 6 years old. He lived at 326 South 16th

Avenue East in Duluth, Minnesota. Down the hill from his

residence is a street called “South Street,” which abuts the

freeway in that area. On the morning of the accident,

Peter left his house and crossed the Avenue to try to play

with some friends. He was not able to do so, and played in

the yard adjoining South Street between 16th Avenue East

and 15th Avenue East. At some point, he noticed a troll

doll across the street from him. He then entered South

Street to retrieve the doll. As he did so, he was struck by a

garbage truck driven by James King Hall, Jr., and owned

by TGR Sanitary Services of Duluth, Minnesota.

There are various disputes regarding how the accident

occurred, including among other matters, the visibility of

the driver and whether the driver should have anticipated

Peter’s entry into the street. When Peter was struck by the

garbage truck, his right foot was dragged along the pave-

ment by the truck’s wheel for a distance of some feet. The

skin and other soft tissues were abraded from the top of

his foot.

As a result of this accident, Peter has had several

surgeries. The top of his foot remains severely disfigured

by a graft of skin and fat which was placed there to replace

the damaged tissue. Although he can run and walk with-

out a dramatic limp, he still does not quite have a normal

gait. He has scars on his thigh and his back from the

donor sites of the grafts which were used on his foot. His

impairments affect his activities. He claims to have

App. 64

emotional distress as a result of this disfigurement. It

appears that further surgery may be required on his foot

as his foot grows and he matures.

Following mediation, a settlement has been reached

with the driver, the sanitary service and its insurer, State

Farm Insurance. The amount of the settlement is

$150,000.00. There has been a Petition filed for approval

of the settlement in Minnesota District Court in the Sixth

Judicial District in Duluth, Minnesota. The Petition for

settlement includes payment to Mui Truong and some

sums from that settlement, payment of attorney’s fees and

costs of the settlement, and placement of the remainder of

the settlement either in a Settlement Preservation Trust

for Peter Truong, or payment by way of a Structured

Settlement.

Pursuant to an agreement between the Plaintiff and

Defendant in this matter, $30,000.00 of the $150,000.00

settlement has been placed in an interest-bearing Escrow

Account with Boyd Agnew Dryer & Storaasli, Ltd., attor-

neys for the Truongs, pending resolution of the underlying

lawsuit.

The parties agree that the Truongs have not been fully

compensated by this settlement. The medical expenses for

Peter related to this accident and injuries sustained on

August 6, 1993, exceed $45,000.00. Of those medical

expenses, the garbage truck’s No-Fault Insurance paid

$20,000.00. Mui herself has paid for some of the medical

expenses not covered by the insurance. The Hotel &

Restaurant & Bar Employees Fringe Benefit Funds also

paid $25,012.14 in medical benefits. The Hotel Plan claims

a subrogation interest in the sum of $25,012.14 in the

settlement proceeds. The Truongs deny that the Plan has

App. 65

a valid subrogation interest in that sum. The dispute

between the parties regards the nature and priority of any

subrogation interest, not regarding its amount, if there is

a subrogation interest in the settlement proceeds.

Plaintiff Hotel & Restaurant & Bar Employees Fringe

Benefit Funds (“Funds”) is a multi-employer, jointly-

trusted fringe benefit plan created and maintained pursu-

ant to Section 302(c)(5) of the Labor Management Rela-

tions Act of 1947 (“LMRA”), as amended (29 U.S.C.

§ 186(c)(5)). The Fund is administered in accordance with

the provisions of the Employee Retirement Income Secu-

rity Act of 1974 (“ERISA”), as amended (29 U.S.C. § et

seq.), and is exempt from federal income taxation pursu-

ant to Internal Revenue Code Section 501(c)(9). The Fund

is governed by and administered pursuant to the terms of

the Agreement and Declaration of Trust establishing the

trust fund (“Trust Agreement”) and a Plan Document and

Summary Plan Description (“Plan”). An employee of an

Asian restaurant in Duluth, Minnesota, Mui was a par-

ticipant in the Fund as provided under the terms of the

Trust Agreement and Plan. The Fund also provided

coverage for Peter as Mui’s dependent.

On January 4, 1994, Mui signed a “Request for Pay-

ment and Subrogation Assignment” at the request of the

Plan. That form was given to Mui by the Plan with the

instruction that she had to sign the form before the Plan

would pay medical bills relating to the accident. The Plan

claims that the Plan and Plan terms that were in effect on

the date of the accident of August 6, 1993, specifically the

relevant subrogation language, are contained in Para-

graph X11, pages 39 and 40 of the Plan. The Plan repre-

sents that there were no intervening Plans or changes in

language regarding the subrogation provisions between

App. 66 ;

August 6, 1993 and the present time, apart from the

changes indicated in the July 1, 1999 Plan.-Mui claims

that she did not receive a copy of the Plan before the time

of the accident or before the time she signed the “Request

for Payment and Subrogation Assignment” on January 4,

1994. Mui asserts that the only notice of the nature of

Plaintiff’s subrogation interest before Spring 2001, was

the notice given in the “Request for Payment and Subroga-

tion Assignment” executed on January 4, 1994. The Plan

represents that it believes Mui was given a copy of the

Plan before those times.

PTT ae ee Oe OO Ae Oe ek

On May 7, 2001, Mui, on behalf of Peter, submitted for

filing a Petition for Approval of the Settlement to a state

court administrator. She also filed in state court a Notice

of Motion and Memorandum to allow settlement without

payment of the subrogation interest, and served a copy on

the Plan. On May 18, 2001, the Plan filed the underlying

action in federal court. Both parties have moved for

summary judgment and waived oral argument. The Court

sought additional briefing from the parties in light of the

Supreme Court’s recent decision in Great-West Life &

Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S. Ct. 708,

151 L. Ed. 2d 635, 2002 WL 15399 (2002).

DISCUSSION

A. Standard

Summary judgment is proper if there are no disputed

issues of material fact and the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex

Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct.

2548 (1986); Unigroup, Inc. v. O’Rourke Storage & Trans-

fer Co., 980 F.2d 1217, 1219-20 (8th Cir. 1992). As the

App. 67

United States Supreme Court has stated, “summary

judgment procedure is properly regarded not as a disfa-

vored procedural shortcut, but rather as an integral part

of the Federal Rules as a whole, which are designed to

secure the just, speedy, and inexpensive determination of

every action.” Celotex, 477 U.S. at 327 (quotation omitted).

B. ERISA § 502(a)(3)

Citing the recent Supreme Court decision in Great-

West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122

S. Ct. 708, 151 L. Ed. 2d 635, 2002 WL 15399 (2002) and

reiterating arguments made in her motion for summary

judgment, Defendant argues that the underlying action

was not properly commenced pursuant to ERISA because

Plaintiff, the fiduciary, seeks legal not equitable relief. To

the extent that Defendant characterizes this issue as

dispositive of this case, the Court will assume that Defen-

dant has waived her argument for Younger abstention.

Plaintiff argues that the underlying action properly states

a claim because the parties signed a Stipulation on June

22, 2001, agreeing that:

11. Jurisdiction of this action is based on

§ 502(e)(1) of the Employee Retirement Income

Security Act of 1974, as amended (“ERISA”), 29

U.S.C. § 1132(e)(1), conferring jurisdiction on the

District Courts to hear civil actions brought by a

fiduciary pursuant to Section 502(a)(3) of ERISA,

29 U.S.C. § 1132(a)(3).

12. Venue is appropriate in this District Court

pursuant to § 502(e)(2) of ERISA, 29 U.S.C.

§ 1132(3)(2) in that this is the District in which

the Fund is administered.

App. 68

(Stipulation 7J 11 and 12).

The Court disagrees with Plaintiff’s reasoning.

ERISA § 502(a)(3) authorizes a civil action:

... by a... fiduciary (A) to enjoin any act or

practice which violates . . . the terms of the plan,

or (B) to obtain other appropriate equitable re-

lief (i) to redress such violations or (ii) to enforce

any provisions of . . . the terms of the plan.

29 U.S.C. §1132(a)(3) (emphasis added). Plaintiff’s

Complaint contains two counts: (1) Count 1 for Violation of

Plan Terms; and (2) Count 2 for Attorney’s Fees. (Compl.

at 4.) In Count I, Plaintiff seeks reimbursement of

$25,012.14 “as a result of Mui Truong’s breach of the terms

of the Plan.” (Compl. { 20.) In the prayer for relief, in

addition to attorney’s fees, Plaintiff seeks “an award of

$25,012.14 in damages.” (Jd. at 5, J 1) (emphasis added).

On the face of the Complaint, Plaintiff asserts no claim to

enjoin a practice or for equitable relief against Defendant.

Recently in Great-West, petitioners sought an injunc-

tion to compel the payment of money past due under the

reimbursement provision of respondents’ ERISA Plan, or

alternatively, restitution for money past due. 534 U.S. 204,

122 S.Ct. 708, 151 L. Ed. 2d 635, 2002 WL 15399. The

Supreme Court held that because petitioners in that case

sought legal relief, or the imposition of personal liability

on respondents for a contractual obligation to pay money,

ERISA § 502(a)(3) did not authorize the action. 534 U.S.

204, at *9. Accordingly, the Supreme Court affirmed

summary judgment in favor of respondents. Jd. The

Supreme Court made clear that:

A claim for money due and owing under a con-

tract is quintessentially an action at law. Almost

App. 69

invariably ... suits seeking (whether by judg-

ment, injunction, or declaration) to compel the

defendant to pay a sum of money to the plaintiff

are suits for ‘money damages,’ as that phrase has

traditionally been applied, since they seek no

more than compensation for loss resulting from

the defendant’s breach of a legal duty. And

[mJoney damages are, of course, the classic form

of legal relief.

122 S. Ct. at 713, at *4 (citations and quotations omitted).

The Supreme Court discusses at length petitioner’s claim

for restitution and when such a claim may be character-

ized as an “equitable” versus a “legal” remedy. 122 S. Ct.

708 at *6-*9. But see 122 S. Ct. 708 at *10-*11 (Stevens, J.,

dissenting), *11-*18 (Ginsburg, J., dissenting.) However,

this Court need not reach that issue or discuss that analy-

sis at this time. Unlike the petitioners in Great-West,

Plaintiff here has not pled an action for specific perform-

ance or restitution. In fact, Plaintiff has not sought “to

enjoin” Defendant or “equitable” relief against Defendant

at all. Plaintiff’s Complaint quite plainly seeks money

damages based on a contractual obligation, or legal relief.

Furthermore, the parties’ Stipulation does not bear on

this issue. Whether this Court has jurisdiction pursuant to

ERISA §502(e)(1) over claims arising under ERISA

§ 502(a)(3) is a separate and distinct question from

whether a claim has been properly asserted under ERISA

§ 502(a)(3). The Court cannot construe the parties’ Stipu-

lation any broader than the language it contains, and that

language does not waive argument on whether a claim has

been properly asserted under ERISA § 502(a)(3). Accord-

ingly, because Plaintiff in this case is seeking legal relief,

Plaintiff has failed to state a claim under ERISA

§ 502(a)(3).

App. 70

CONCLUSION

Based on all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that:

1. Plaintiff’s Motion for Summary Judgment

(Clerk Doc. No. 13) is DENIED; and

2. Defendant’s Motion for Summary Judgment

(Clerk Doc. No. 8) is GRANTED to the extent

that Plaintiff has failed to assert a claim for eq-

uitable relief under ERISA § 502(a)(3).

LET JUDGMENT BE ENTERED ACCORDINGLY.

Dated: January 31, 2002

Michael J. Davis

United States District Court Judge

App. 71

LATASHA OLIVER-PULLINS, Plaintiff, vs.

ASSOCIATED MATERIAL HANDLING

INDUSTRIES, INC., Defendant.

1:03-cv-0099-JDT-WTL

UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF INDIANA,

INDIANAPOLIS DIVISION

May 20, 2003, Decided

COUNSEL: For Latasha Oliver-Pullins, PLAINTIFF:

Brenda F. Rodeheffer, Monday Rodeheffer Jones & AI-

bright, Indianapolis, IN USA.

For Associated Material Handling Industries, Inc, DE-

FENDANT: Charmagne Topacio, Craig G _ Penrose,

Tressler Soderstrom Maloney & Priess, Durga M Bharam,

Tressler Soderstrom Malony & Priess, Chicago, IL USA.

For Associated Material Handling Industries, Inc, Counter

CLAIMANT: Charmagne Topacio, Craig G Penrose,

Tressler Soderstrom Maloney & Priess, Durga M Bharam,

Tressler Soderstrom Malony & Priess, Chicago, IL USA.

JUDGES: John Daniel Tinder, Judge, United States

District Court.

OPINION BY: John Daniel Tinder

OPINION:

App. 72

ENTRY ON MOTION TO DISMISS COUNT THREE"

The Defendant moves the court to dismiss “Count II:

ERISA Violation” of the Complaint for failure to state a

claim. The motion is opposed by the Plaintiff.

Count III alleges in relevant part that the Plaintiff

was employed by the Defendant and was discharged; she

carried health insurance and other benefits through her

employment, the use of which had the potential of increas-

ing costs to the Defendant; her husband had a life threat-

ening illness requiring the use of such benefits; and in

terminating her employment, the Defendant was moti-

vated by an effort to avoid the costs of providing a benefit

under the Employment Retirement Income Security Act,

29 U.S.C. § 1001 et seg. (“ERISA”). The Complaint asks

the court to find that the Defendant violated ERISA and

seeks to recover the Plaintiff’s lost income, including the

value of lost benefits, compensatory damages, punitive

damages, pre- and post-judgment interest, reasonable

attorney’s fees and costs, and all other appropriate relief.

The Defendant seeks dismissal of the Plaintiff’s claim

to the extent she seeks benefits under ERISA Section

502(a)(1)(B). The Plaintiff’s response clarifies that her

only ERISA claim is that the Defendant violation Section

510 by terminating her employment because of concerns

* This Entry is a matter of public record and is being made

available to the public on the court’s web site, but it is not intended for

commercial publication either electronically or in paper form. Although

the ruling or rulings in this Entry will govern the case presently before

this court, this court does not consider the discussion in this Entry to be

sufficiently novel or instructive to justify commercial publication or the

subsequent citation of it in other proceedings.

App. 73

over what her husband’s illness did or would do to its

employee health insurance costs. Thus, the court under-

stands that the Plaintiff does not assert a claim to benefits

under 502(a)(1)(B) and such a claim is not in this case.

This leaves only the Section 510 discharge claim brought

under Section 502(a)(3). The Defendant contends that this

claim should be dismissed because the relief requested is

not recoverable under Section 502(a)(3).

The first question is whether the Defendant’s motion

ought to be treated as a motion to dismiss for lack of

subject matter jurisdiction instead of a motion to dismiss

for failure to state a claim. The asserted basis for this

court’s jurisdiction over Count III is federal question, 28

U.S.C. § 1331 and 29 U.S.C. § 1132(e), in that the claim

allegedly falls under ERISA Section 502(a)(3).

(Compl.{J 10, 11, 50.) A federal court has jurisdiction over

an action authorized under Section 502(a). See 29 U.S.C.

§ 1132(e)(1); Admin. Comm. v. Gauf, 188 F.3d 767, 770

(7th Cir. 1999). A federal court lacks jurisdiction over a

claim under Section 502(a)(3) seeking legal relief. Mertens

v. Hewitt Assocs., 508 U.S. 248, 255-62, 124 L. Ed. 2d 161,

113 S. Ct. 2063 (1993). So, the Defendant’s motion should

be treated as a motion to dismiss for lack of subject matter

jurisdiction.

Thus, the second question is whether the court has

subject matter jurisdiction over the claim asserted in

Count III. The claim is brought under ERISA Section

502(a)(3) which provides:

A civil action may be brought -...

(3) by a participant, beneficiary, or fiduciary (A)

to enjoin any act or practice which violates any

provision of this subchapter or the terms of the

App. 74

plan, or (B) to obtain other appropriate equitable

relief (i) to redress such violations or (ii) to en-

force any provisions of this subchapter or the

terms of the plan|[.]

29 U.S.C. § 1132(a)(3). Therefore, the answer to the second

question hinges on whether Count III seeks equitable

relief.

The Supreme Court’s decision in Great-West Life &

Annuity Ins. Co. v. Knudson, 534 U.S. 204, 151 L. Ed. 2d

635, 122 S. Ct. 708 (2002), guides this court to the answer.

Great-West Life reaffirmed Mertens in concluding that

Section 502(a)(3) authorizes suits seeking equitable relief,

not legal relief. Jd. at 221. In that case, the respondent

Janette Knudson was covered by an ERISA plan of her

then-husband’s employer. The plan covered $411,157.11 of

her medical expenses resulting from a car accident, all

except $75,000 of which was paid by the petitioner Great-

West. The plan contained a reimbursement provision, the

rights to which were assigned to Great-West. Id. at 207.

Great-West sued under Section 502(a)(3) to enforce the

plan’s reimbursement provision by requiring the Knudsons

to pay the plan $411,157.11 of any proceeds recovered from

third parties. Jd. at 208. The issue was whether Section

502(a)(3) authorized the action. Jd. at 206.

The Supreme Court answered, “no.” The Court first

rejected the argument that the suit was authorized be-

cause the petitioners sought an injunction to compel the

respondents to reimburse the plan. Great-West Life, 534

U.S. at 210. The Court reasoned that “an injunction to

compel the payment of money past due under a contract or

specific performance of a past due monetary obligation,

was not typically available in equity.” Jd. at 210-11 (foot-

note omitted).

- — |

App. 75

The Court next rejected the argument that the suit

was authorized because Great-West sought restitution,

which it argued was a form of equitable relief. The Court

recognized that restitution can take the form of equitable

or legal relief, id. at 212, 218, and explained that whether

restitution was “legal or equitable depends on the basis for

the plaintiff’s claim and the nature of the underlying

remedies sought.” Jd. at 213 (quotation omitted). Restitu-

tion was considered legal “[iJn cases in which the plaintiff

could not assert title or right to possession of particular

property, but in which nevertheless he might be able to

show just grounds for recovering money to pay for some

benefit the defendant had received from him[.]” Jd. (quota-

tion omitted). A plaintiff’s claim for restitution was legal

in such cases “because he sought to obtain a judgment

imposing a merely personal liability upon the defendant to

pay a sum of money.” Jd. (quotation omitted). The Court

distinguished equitable restitution as follows:

a plaintiff could seek restitution in equity, ordi-

narily in the form of a constructive trust or an

equitable lien, where money or property identi-

fied as belonging in good conscience to the plain-

tiff could clearly be traced to particular funds or

property in the defendant’s possession . .. . Thus,

for restitution to lie in equity, the action gener-

ally must seek not to impose personal liability on

the defendant, but to restore to the plaintiff par-

ticular funds or property in the defendant’s pos-

session.

Great- West Life, 534 U.S. at 213-14 (citations omitted).

The Court concluded that Great-West sought legal

restitution. This was based on the fact that Great-West

claimed entitlement to funds which were not in the

App. 76

respondents’ possession. Thus, the Court reasoned: “The

basis for petitioners’ claim is not that respondents hold

particular funds that, in good conscience, belong to petition-

ers, but that petitioners are contractually entitled to some

funds for benefits that they conferred.” Jd. at 214. Another

determinative fact was that the petitioners did not seek to

impose a constructive trust or equitable lien on particular

property. Jd. The Supreme Court therefore held that

because Great-West was seeking legal relief, that is, the

imposition of personal liability on respondents for the

payment of money, Section 502(a)(3) did not authorize the

action. Id. at 221.

Application of the legal principles from Great-West

Life leads to the conclusion that the Plaintiff’s claim in

Count III is for legal relief and therefore is not authorized

by Section 502(a)(3). The Plaintiff does not assert title to

any particular property or funds in the possession of the

Defendant. She does not seek a constructive trust or

equitable lien on particular funds or property. The basis

for her claim is not that the Defendant has any particular

funds or property that belong to her, but that she is

entitled to some funds or property from the Defendant.

The court therefore concludes that the claim asserted in

Count III seeks legal relief which is not authorized by

Section 502(a)(3).”

’ If the Plaintiff argued that she seeks equitable relief by seeking

an injunction to compel payment of backpay and the value of lost

benefits, the relief sought no doubt would be considered legal under

Great-West Life. If she seeks compensatory or punitive damages under

Count III, such damages are not considered “appropriate equitable

relief” and are thus not recoverable under Section 502(a)(3). See

Mertens, 508 U.S. at 256; Buckley v. Dement, Inc. v. Travelers Plan

(Continued on following page)

App. 77

The Plaintiff’s attempts to distinguish Great- West Life

are unavailing. She first argues that the basis for

reimbursement there was a contract, whereas, here it is

not. In explaining the difference between equitable

restitution and legal restitution, the Court said that

claims for legal restitution were viewed as breach of

contract actions, whether or not the contract was actual or

implied. Great-West, 534 U.S. at 213. Thus, an express

contract is not

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