The opinion of the court was delivered by: BARBARA JONES, District Judge
At issue in this opinion is whether a pension trust fund can sue an
ERISA pension participant for the return of moneys the trust improperly
paid to him, pursuant to several remedies the Plaintiffs characterize as
"equitable." The Court holds that if Defendant dissipated these funds,
Plaintiffs may not obtain the remedies they seek.
The following constitutes the undisputed facts of the case except where
Plaintiffs Robert Greenes, Justin McCarty, Lawrence Scuder, Bernard
Pellegrino and Demos Demopoulos are the Trustees and Fiduciaries
("Trustees") of the Local 553 Pension Fund ("Fund") in which Defendant
Joseph Adornato participated. This plan was governed both by the terms of
the Pension Regulations/ Trust
Agreement and by ERISA, 29 U.S.C. § 1001, et seq.
From January 1, 1986 through June 2000, Defendant received a monthly
pension benefit from the Fund in the amount of $655.00. By letters dated
May 12 and August 16, 200, the Fund notified Defendant that the Fund had
committed an error in calculating his proper monthly benefit, and that he
was in fact only entitled to $385.00 per month. The Fund therefore
overpaid Defendant $270.00 per month over a sixteen year period, totaling
$46,440.00. The Fund advised Defendant that he was required to return the
Defendant admits that the fund overpaid him $46,440.00, but to date,
has failed and refused to pay this amount. On January 28, 2002,
Plaintiffs filed a complaint in this Court, alleging the facts as stated
above, and claiming (1) Defendant violated the terms of the Fund's
Pension Plan and ERISA and should be enjoined to return the
overpayments, (2) Plaintiffs were entitled to restitution and Defendant
should be enjoined to return the overpayments, (3) Defendant was unjustly
enriched and should be enjoined to return the overpayments, and (4)
Defendant is holding the monies in constructive trust for the
beneficiaries of the Fund and should be ordered to disgorge the monies to
the Trustees. Both Plaintiffs and Defendants moved for summary judgment.
Plaintiff does not dispute that he was overpaid the amount
of $46,440.00, and does not dispute that the Defendants have the
standing and authority to pursue him for recovery of these funds. The
only issue in this case is whether the Plaintiffs are entitled to
recovery for the overpayments under ERISA and the governing law.
ERISA Section 502(a)(3) confers authority upon fiduciaries to commence
civil actions "to enjoin any act or practice which violates any provision
of [ERISA Title I] or the terms of the plan . . . or to obtain other
appropriate equitable relief (i) to redress such violations or (ii) to
enforce any provisions of [ERISA Title I] or the terms of the plan."
Gerosa v. Savista & Co., Inc., 329 F.3d 317, 320 (2d Cir. 2003)(quoting
29 U.S.C. § 1132 (a)(3)) (emphasis added). Fiduciaries, such as trustees
of ERISA-based funds, have a duty to locate and reclaim trust fund assets
that have been improperly taken or disbursed. Central States v. Central
Transp., Inc., 472 U.S. 559, 572 (1985); Gerosa, 329 F.3d at 320.
The core of the dispute here, however, is not whether ERISA authorizes
suit against Defendant, but "rather whether the remedy the Plaintiffs
seek falls within such `other appropriate equitable relief' as they may
obtain" under Section 502. Gerosa, 329 F.3d at 321. Specifically, as the
Supreme Court made clear in the recent opinion Great-West Life &
Annuity Insurance Co. v.
Knudson, 534 U.S. 204, 210 (2002), a court must look to the "real nature"
of the relief sought, and not just the "equitable" label put on it by the
In Great-West, Petitioner insurance company sought reimbursement for
insurance proceeds it previously paid to the Respondent, pursuant to the
terms of the Plan that obligated the recipient of insurance proceeds to
repay such moneys if the recipient later recovered at least that amount
in a settlement or judgment., Id. at 207. Justice Scalia, delivering the
majority opinion, drew a fine distinction between remedies that a court
should consider equitable rather than legal, and clarified that even
where a party seeks restitution, a court must still decide "whether it is
legal or equitable [which] depends on the basis for the plaintiff'[s]
claim and the nature of the underlying remedies sought." Id. at 214
(citations and quotation marks omitted); see also Neidich v. Estate of
Neidich, 222 F. Supp.2d 357, 375 (S.D.N.Y. 2002) ("Restitution for unjust
enrichment may be sought under ERISA only if the nature of the
restitution is equitable, not legal.").
Accordingly, a suit seeking to compel a defendant to pay a sum of
money, whether by judgment or injunction, "[a]lmost invariably . . . are
suits for `money damages,' as that phrase has traditionally been
applied," and thus considered a remedy at law. Id. at 210 (quoting
Bowen v. Massachusetts, 487 U.S. 879, 918-919
(1988)); see also id. at 210-11 (rejecting Petitioners' request for an
injunction because an injunction "to compel the payment of money past due
under a contract," and "specific performance of a contract to pay money"
were not remedies typically available at equity unless the injunction
sought to prevent future losses); Gerosa, 329 F.3d at 321 ("Section
1132(a)(3) permits money awards only in very limited circumstances.").
The Court's decision that Petitioners actually sought to "impose
personal liability" on respondents turned on the fact that the Respondent
was not in actual possession of the money Petitioners sought.
Great-West, 534 U.S. 210. The Court explained that where a plaintiff
could not assert title or right to possession of particular property, but
nevertheless "might be able to show just grounds for recovering money to
pay for some benefit the defendant had received from him, the plaintiff
had a right to restitution at law." Id. at 213 (citations and quotation
marks omitted). The Court contrasted restitution in equity, which is
usually sought through constructive trusts or equitable liens, 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." Id. at 213; see also ...