Suter v. The Carpenter Health and Welfare Trust Fund of St. Louis
Filing
20
MEMORANDUM AND ORDER IT IS HEREBY ORDERED that, on the claims plaintiffs raise, Plaintiffs' Motion To Dismiss Defendant's Counterclaims (Docket No. 12), is denied with regard to Count I of defendant's Counterclaim, and granted w ith regard to Count II of defendant's Counterclaim. IT IS FURTHER ORDERED that Count II of defendant's Counterclaim is dismissed pursuant to Rule 12(b) (6) of the Federal Rules of Civil Procedure. Granting in part and denying in part 12 Motion to Dismiss. Signed by Magistrate Judge Frederick R. Buckles on 6/17/2011. (NCL)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MICHAEL SUTER, et al.,
Plaintiffs/Counter-Defendants,
v.
THE CARPENTER HEALTH AND
WELFARE TRUST FUND OF
ST. LOUIS,
Defendant/Counter-Claimant.
)
)
)
)
)
)
)
)
)
)
)
Case No. 4:10CV1855 FRB
MEMORANDUM AND ORDER
Presently before the Court is Plaintiffs’ Motion To
Dismiss Defendant’s Counterclaims (Docket No. 12), filed pursuant
to Fed. R. Civ. P. 12(b)(6).1
All matters are pending before the
undersigned United States Magistrate Judge, with consent of the
parties, pursuant to 28 U.S.C. § 636(c).
I.
Procedural Background
Plaintiffs brought this action in the Associate Division
of the 21st Judicial Circuit Court, St. Louis County, Missouri. On
October 1, 2010, defendant removed the matter to this Court,
alleging that this Court has jurisdiction over plaintiffs’ claims
inasmuch as they arise under the civil enforcement provision of the
Employee Retirement Income Security Act (“ERISA”), 28 U.S.C. §
1
In the first numbered paragraph of the instant motion, plaintiffs write
that “there are fourteen (14) named defendants,” followed by a list of individual
names.
(Docket No. 12).
For the purposes of these proceedings, those
individuals referred to as named defendants are not properly considered
defendants because they were not named in plaintiffs’ petition as required by
Fed.R.Civ.P. 10(a) (“The title of the complaint must name all the parties”).
-1-
1332(a)(1)(B).
The parties do not dispute that The Carpenters
Health and Welfare Trust Fund of St. Louis (also “Fund”) is an
employee benefit plan governed by ERISA.
Defendant subsequently filed an Answer and a two-count
Counterclaim, acknowledging that plaintiffs are covered individuals
under the employee benefit plan (also “Plan”).
In Count I of its
Counterclaim, defendant alleges that plaintiff Michael Suter was
injured in a motor vehicle accident on or about April 27, 2004, for
which a third party is or may be responsible.
The Counterclaim
alleges that the Plan provides that: “The covered person, and
anyone acting on his or her behalf, shall hold the third-party
recovery In Trust, as Trustee, for the benefit of the Plan, to be
applied first in satisfaction of the reimbursement obligation of
the covered person.”
(Docket No. 7 at page 5).
Defendant alleges
that plaintiffs have received, or will receive, “the settlement sum
as the trustees of an express trust, referred to herein as the
“Settlement Trust,” with the fiduciary duty to apply the Settlement
Trust assets to satisfy their reimbursement obligations under the
Plan.”
(Id. at page 6).
In Count I, defendant seeks a declaration
that, if plaintiffs receive money from a third party based on an
act or omission that caused injuries for which the Fund paid
benefits, that plaintiffs will hold such money as trustees of the
Settlement Trust for the benefit of the Fund.
In Count II,
defendant seeks a declaration that it is “entitled to impose a
charge on the beneficial interest of Plaintiffs in the Plan Asset
Trust to satisfy any overpayments of benefits that have been made
-2-
by
withholding
future
benefits
payable
to
Plaintiffs
as
beneficiaries of said Trust or by recovering benefits already
paid.”
(Id. at page 8).
In support of the instant motion, plaintiffs argue that
the Counterclaim fails to state a claim upon which relief can be
granted because it seeks legal remedies rather than the narrowlydefined “appropriate equitable relief” contemplated by 29 U.S.C. §
1132(a)(3) of ERISA.
has
not
pinpointed
In support, plaintiffs argue that defendant
a
specifically
identifiable
fund
that
is
controlled by plaintiffs, and has failed to allege that either
plaintiff received funds in a specific amount from a specified
person
that
is
particularly
identifiable
and
traceable
to
a
specific fund, as required under the test established by the
Supreme Court in Sereboff v. Mid Atlantic Medical Services, 547
U.S. 356 (2006).
Plaintiffs state that, according to case law, a
beneficiary may only make an equitable claim to specifically
identifiable funds that are traceable to a particular payment, and
argue that defendant’s “vague and indefinite” allegations fall
short of meeting this definition.
In
response,
defendant
argues
that
this
court
has
jurisdiction over its Counterclaim; that it has stated claims under
the Declaratory Judgment Act; and that its failure to locate and
identify a specific fund is not fatal to its ERISA claims.2
2
Having
In support of its Memorandum in opposition to the instant motion,
defendant submitted various Plan documents, including the subrogation agreement
and correspondence from plaintiffs’ counsel. (Docket No. 17). Generally, in
analyzing a motion to dismiss filed under Rule 12(b)(6) of the Rules of Civil
Procedure, courts are required to disregard matters outside the pleadings, but
-3-
considered
the
record
and
the
arguments
of
the
parties,
the
undersigned determines that plaintiffs’ motion will be denied as to
Count I of the Counterclaim, and granted as to Count II.
II.
Discussion
Plaintiffs bring the instant motion pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure, which allows a
Court to dismiss a cause of action for failure to state a claim
upon which relief may be granted.
When considering a motion to
dismiss filed pursuant to Rule 12(b)(6), the Court must treat all
well-pleaded factual allegations as true, and grant the non-moving
party all reasonable inferences therefrom.
Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990).
Westcott v. City of
The Court is not,
however, bound to accept as true legal conclusions that are couched
as factual allegations.
Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007); see also Ashcroft v. Igbal, 129 S.Ct. 1937, 1949
(2009).
A Motion to Dismiss made pursuant to Rule 12(b)(6) should
be granted only if the plaintiff fails to plead facts sufficient to
state a claim “that is plausible on its face” and would entitle the
plaintiff to the relief requested.
Bell Atlantic Corp., 550 U.S.
at 545 (abrogating the “no set of facts” language from Conley v.
Gibson, 355 U.S. 41, 45-46 (1957)); see also Wisdom v. First
may consider some public records, materials that do not contradict
or materials that are “necessarily embraced by the pleadings.” .
Corp. v. Alorica Central, LLC, 543 F.3d 978, 982 (8th Cir. 2008)
Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999)).
bar, defendant quotes in its Counterclaim the portion of the Plan
claims rest. It is not necessary to consider the matters outside
and the undersigned will confine the analysis herein to the four
pleadings.
-4-
the complaint,
Noble Systems
(citing Porous
In the case at
upon which its
the pleadings,
corners of the
Midwest Bank of Poplar Bluff, 167 F.3d 402, 406 (8th Cir. 1999).
Dismissal is appropriate under Rule 12(b)(6) where the allegations
in the complaint show that there is some “insuperable bar” to
relief.
Benton v. Merrill Lyncy & Co., Inc., 524 F.3d 866, 870
(8th Cir. 2008) (citations omitted).
Relevant to the instant motion is 29 U.S.C. § 1132(a)(3)
of ERISA’s civil enforcement provision, which permits (inter alia)
a plan fiduciary to bring a civil action “(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.”
§ 1132(a)(3).
29 U.S.C.
as a fiduciary.
The parties here do not dispute defendant’s status
In addition, neither party has argued, nor is it
logical to conclude, that defendant is seeking to enjoin any act or
practice which violates the terms of the plan at issue.
U.S.C. § 1132(a)(3)(A).
See 29
This leaves defendant with the remedies
available under 29 U.S.C. § 1132(a)(3)(B).
The U.S. Supreme Court has addressed the scope of the
remedial power conferred on district courts by § 1132(a)(3)(B). In
Mertens v. Hewitt Associates, 508 U.S. 248, 256-57 (1993), the
Supreme Court construed § 1132(a)(3)(B) to authorize only relief
typically available at equity, rejecting a claim that sought only
compensatory damages.
Subsequently, in Great-West Life & Annuity
Ins. Co. v. Knudson, the Court further refined the definition of
the scope of relief available under § 1132(a)(3)(B), explaining
-5-
that one feature of equitable resolution was that it sought to
impose a constructive trust or equitable lien on “particular funds
or property in the defendant’s possession.”
(2002).
534 U.S. 204, 213
In Knudson, the Court determined that the relief sought
was legal, not equitable, because the funds Great-West sought had
been placed in a “Special Needs Trust” under California law, and
were outside of Knudson’s control.
Id. at 214.
The Knudson Court
therefore characterized the type of relief sought by Great-West as
legal, inasmuch as Great-West sought the imposition of personal
liability upon Knudson for a contractual obligation to pay money,
instead of seeking the imposition of a constructive trust or
equitable lien on particular property within Knudson’s control, and
concluded that suit could not proceed under § 1132(a)(3)(B).
Id.
In Sereboff v. Mid Atlantic Medical Services, Inc., cited
by plaintiffs, the Sereboffs, insureds under Mid Atlantic’s ERISAregulated Plan, were injured in an auto accident, and the Plan paid
for medical expenses incurred as a result.
547 U.S. at 359-60.
The Plan contained an “Acts of Third Parties” provision, which
required an insured who was injured as the result of an act or
omission of a third party to reimburse Mid Atlantic for benefits it
paid because of such injuries, if the insured recovers for those
injuries from the third party.
Id. at 359.
The plan administrator
sought reimbursement of medical expenses from an investment account
that
contained
settlement.
funds
the
Id. at 360.
Sereboffs
had
obtained
in
a
tort
Noting its past decisions that §
1132(a)(3)(B) authorized only equitable relief, the Sereboff Court
-6-
wrote that case law “from the days of the divided bench” confirmed
that Mid Atlantic’s claim appropriately sought equitable relief:
In Barnes v. Alexander, 232 U.S. 117, 34 S.Ct. 276, 58
L.Ed. 530 (1914), for instance, attorneys Street and
Alexander performed work for Barnes, another attorney,
who promised them “One-third of the contingent fee” he
expected in the case. Id., at 119, 34 S.Ct. 276. In
upholding their equitable claim to this portion of the
fee, Justice Holmes recited “The familiar rul[e] of
equity that a contract to convey a specific object even
before it is acquired will make the contractor a trustee
as soon as he gets a title to the thing.” Id. at 121, 34
S.Ct. 276. On the basis of this rule, he concluded that
Barnes’ undertaking “create[d] a lien” upon the portion
of the monetary recovery due Barnes from the client,
ibid., which Street and Alexander could “follow . . .
into the hands of . . . Barnes,” “as soon as [the fund]
was identified,” Id. at 123, 34 S.Ct. 276.
Id. at 363-64.
In characterizing the relief sought in the Sereboff case
as equitable, not legal, the Court observed that the “Acts of Third
Parties” provision in the Sereboffs’ plan “specifically identified
a particular fund, distinct from the Sereboffs’ general assets ‘[a]ll
recoveries
from
a
third
party
(whether
by
lawsuit,
settlement, or otherwise)’ - and a particular share of that fund to
which Mid Atlantic was entitled - ‘that portion of the total
recovery
which
is
due
[Mid
Atlantic]
Sereboff, 547 U.S. at 364 (emphasis added).
for
benefits
paid.’”
The Court determined
that “like Street and Alexander in Barnes, therefore, Mid Atlantic
could rely on a ‘familiar rul[e] of equity’ to collect for the
medical bills it had paid on the Sereboffs’ behalf,” and that this
rule “allowed them to ‘follow’ a portion of the recovery ‘into the
[Sereboffs’]
hands’
‘as
soon
as
-7-
[the
settlement
fund]
was
identified,’ and impose on that portion a constructive trust or
equitable lien.”
Id.
The Sereboffs argued that Mid Atlantic’s suit would not
have satisfied the conditions for “equitable restitution” at common
law,
“particularly
the
‘strict
tracing
rules’
that
allegedly
accompanied this form of relief.” Id. In rejecting this argument,
the Court noted that the Barnes case confirmed that no such tracing
requirement applied to equitable liens by agreement or assignment.
The Court noted that the Barnes plaintiffs “could not identify an
asset they originally possessed, which was improperly acquired and
converted into property the defendant held, yet that did not
preclude them from securing an equitable lien.”
Id. at 365.
The
Court concluded that, under the teaching of Barnes and similar
cases,
Mid
Atlantic’s
action
relief” under § 1132 (a)(3)(B).
A.
appropriately
sought
“equitable
Sereboff, 547 U.S. at 369.
Count I
Plaintiffs here argue that defendant’s Counterclaim fails
to
state
a
claim
for
appropriate
equitable
relief
under
§
1132(a)(3)(B) because defendant has not pinpointed a specifically
identifiable fund that is distinct from plaintiffs’ general assets
and is controlled by plaintiffs, and has failed to allege any facts
naming a “specifically identifiable ‘third party’” who caused
Michael Suter’s injuries.
(Docket No. 19 at page 3).
Regarding Count I of the Counterclaim, there is no
impediment to characterizing the relief sought as equitable.
The
Plan provision identified in the Counterclaim, like the promise
-8-
made in Barnes and like the provision analyzed by the Court in
Sereboff, specifically identified a particular fund, to be held in
trust, that is distinct from the plaintiffs’ general assets: any
third-party recovery, to be held in trust for the benefit of the
Plan.
See Id. at 364 (the plan provision “specifically identified
a particular fund, distinct from the Sereboffs’ general assets ‘[a]ll
recoveries
from
a
third
party
(whether
by
lawsuit,
settlement, or otherwise’”). The Plan provision currently at issue
also, as required, specifies the amount of the recovery: the
reimbursement obligation.
identified a
See Id. (the plan provision properly
particular share of that fund to which Mid Atlantic
was entitled - “that portion of the total recovery which is due
[Mid Atlantic] for benefits paid”).
Plaintiffs place great emphasis on defendant’s failure to
pinpoint a particular fund, or prove that plaintiffs have control
over any such fund.
As noted above, however, the Sereboff Court
noted that the Barnes plaintiffs were not precluded from securing
an equitable lien because they were unable to pinpoint a specific
asset that was originally theirs that the defendant had wrongfully
converted and possessed.
Sereboff, 547 U.S. at 365.
The Sereboff
Court noted that an equitable lien by agreement (of the sort at
issue in the instant case) did not require the strict tracing
recognized as required for equitable liens sought as a matter of
restitution, and that Mid Atlantic could “follow” a portion of the
third-party recovery “into [plaintiffs’] hands” “as soon as [the
settlement funds are] identified,” and impose an equitable lien on
-9-
the portion up to the amount of the reimbursement obligation.
at 364-65 (quoting Barnes, 232 U.S. at 123).
Id.
The undersigned
therefore determines that, in Count I, defendant seeks equitable
relief of the sort recognized as “appropriate equitable relief” for
purposes of the applicable civil enforcement provision of ERISA, §
1132(a)(3)(B).
Plaintiffs argue that defendant has no “recognizable
claim” against Candice Suter because the Counterclaim fails to
allege that she was involved in an accident; she did not sign a
subrogation agreement, and she has not received any identifiable
funds traceable to a motor vehicle accident. (Docket No. 13 at
pages 5-6).
Plaintiffs argument is unavailing.
As discussed
above, the Counterclaim seeks to enforce Plan provisions, and
Candice Suter was, along with Michael Suter, a beneficiary of the
Plan.
Plaintiffs do not cite, nor is the undersigned aware of, any
authority supporting the dismissal of Defendant’s claims against
Candice Suter for the reasons given by plaintiffs.
For the reasons discussed above, in Count I of the
Counterclaim, defendant seeks equitable, not legal, relief.
Count
I therefore properly states a claim for “appropriate equitable
relief” under 29 U.S.C. § 1132(a)(3)(B).
B.
Count II
In Count II, defendant seeks a declaration that it is
“entitled
to
impose
a
charge
on
the
beneficial
interest
of
Plaintiffs in the Plan Asset Trust to satisfy any overpayments of
benefits that have been made by withholding future benefits payable
-10-
to Plaintiffs as beneficiaries of said Trust or by recovering
benefits already paid.”
(Docket No. 7 at page 8).
There is an impediment to characterizing the relief
defendant seeks in Count II of the Counterclaim as equitable:
defendant appears to seek to hold plaintiffs personally liable, and
to require plaintiffs to reimburse defendant for the benefits
defendant
paid
on
their
behalf.
This
is
not
considered
“appropriate equitable relief” for purposes of § 1132(a)(3)(B). As
discussed
in
detail
above,
restitution
is
considered
to
be
“appropriate equitable relief” when a claimant seeks to impose a
constructive trust or equitable lien over funds or property that,
in good conscience, belongs to the claimant. Sereboff, 547 U.S. at
364; Knudson, 534 U.S. at 214.
In Count II, however, defendant’s
claim is that it is entitled to recover something from plaintiffs
because
it
conferred
benefits
on
plaintiffs.
The
kind
of
restitution defendant seeks, therefore, is legal: the imposition of
personal liability for the benefits conferred. Defendant therefore
fails to state a claim upon which relief can be granted under §
1132(a)(3)(B).
Knudson, 534 U.S. at 214 (monetary relief in the
form of restitution is available only if the action seeks “not to
impose personal liability on the defendant, but to restore to the
plaintiff
particular
funds
or
property
in
the
defendant’s
possession.”)
Defendant argues that this court has jurisdiction over
its claims pursuant to the Declaratory Judgment Act, and also asks
that this court exercise ancillary jurisdiction over its claims.
-11-
However, the issue presented in the instant motion is not one of
jurisdiction, it is whether defendant’s Counterclaim states a claim
upon which relief can be granted.
Defendant also argues that it
has stated claims for relief under the Declaratory Judgment Act.
This argument is unavailing.
As discussed above, § 1132(a)(3)
authorizes only an action “to enjoin any act or practice which
violates the terms of the plan” or to “obtain other appropriate
equitable relief.”
28 U.S.C. § 1132(a)(3); see also Bauhaus USA,
Inc. v. Copeland, 292 F.3d 439 (5th Cir. 2002) (ERISA did not
authorize employer’s declaratory judgment action to enforce plan
terms allowing the plan to recover, from any settlement proceeds
received by beneficiary, amounts advanced for medical care for
medical expenses resulting from third party malfeasance, where the
employer’s action was not an action “to enjoin any act or practice
which
violates
the
terms
of
the
plan”
or
“to
obtain
other
appropriate equitable relief” within meaning of ERISA.)
On
the
claims
that
plaintiffs
raise,
therefore,
Plaintiffs’ Motion To Dismiss Defendant’s Counterclaims is denied
with respect to Count I, and granted with respect to Count II.
C.
Redaction of Privileged Information
As noted above, in response to the instant motion,
defendant
filed,
inter
alia,
various
correspondence from plaintiffs’ counsel.
plan
documents
and
Plaintiffs, in their
Reply To Defendant’s Memorandum Of Law In Opposition To Plaintiffs’
Motion To Dismiss (Docket No. 19), complain that Exhibit A-2
reveals privileged and confidential personal
-12-
information of plaintiff Michael Suter.
It
should have been redacted. In logging to file
the documents, Defendants’ counsel certified
that all privileged material was redacted.
Plaintiff Michael Suter requests that the
document be withdrawn, if possible, and
defendants sanctioned for violating the rules
regarding redaction and exposing plaintiff’s
private information.
(Id. at 1-2).
Plaintiffs offer no citation for the “rules regarding
redaction” upon which they rely.
Having reviewed the material in
question,
only
it
appears
that
the
confidential
information
revealed therein was Mr. Suter’s name, and the last four digits of
his Social Security number (the first five numbers were redacted).
Eastern District of Missouri Local Rule 2.17 lists the personal
identifiers that must be redacted from filings.
Regarding Social
Security numbers, Rule 2.17(A)(1) provides that only the last four
digits of a Social Security number may be listed in a filing.
Rule
2.17 does not require the redaction of a party’s name from a
filing.
Nevertheless, plaintiffs are free to file with the Court
a motion regarding this issue.
Any such motion should specify the
authority upon which plaintiffs rely, and should specify the ways
in which defendant’s filing is in violation.
Therefore, for all of the foregoing reasons,
IT IS HEREBY ORDERED that, on the claims plaintiffs
raise, Plaintiffs’ Motion To Dismiss Defendant’s Counterclaims
(Docket No. 12),
is denied with regard to Count I of defendant’s
-13-
Counterclaim, and granted with regard to Count II of defendant’s
Counterclaim.
IT IS FURTHER ORDERED that Count
II of defendant’s
Counterclaim is dismissed pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure.
_______________________________
Frederick R. Buckles
UNITED STATES MAGISTRATE JUDGE
Dated this 17th day of June, 2011.
-14-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?