Opinion
00 Civ. 7396 (RWS)
March 22, 2001
ALLEGAERT BERGER VOGEL, Attorney for Plaintiffs, New York, NY, By: LOUIS A. CRACO, JR., ESQ., Of Counsel.
BUCHANAN INGERSOLL, Attorney for Defendant, New York, NY, By: DAVID J. MOLTON, ESQ., GAYLE N. WOLKENBERG, ESQ., ALISON R. ROHMER, ESQ., Of Counsel.
OPINION
Plaintiffs Beate Freudenberg Gustafson and Susanne Freudenberg Burick have moved for clarification of this Court's January 10, 2001 opinion, which upheld their ERISA claim for interest on delayed death benefit payments. See Gustafson v. Kennametal Inc., No. 00 Civ. 7396 (RWS), 2001 WL 25722, *6-*7 (S.D.N.Y. Jan. 10, 2001) ("Gustafson I"). Specifically, the plaintiffs seek to clarify whether the prior opinion held that unjust enrichment was a requisite to recovering interest as equitable relief pursuant to 29 U.S.C. § 1132 (a)(3)(B), because, as they note, the insurer, Reliance Standard Life Insurance Company ("RSL"), not defendant Kennametal, Inc. ("Kennametal") possessed the funds during the period of delay.
Kennametal agrees with the contention that RSL, not Kennemetal, held the funds during the delay, but asserts that, if granted, the plaintiffs' motion would anomolously favor it rather than the plaintiffs, and that the plaintiffs therefore are improperly seeking to expedite a "clean appeal" to the Second Circuit. (Craco Feb. 27, 2001 Letter at 2.)
After the parties submitted letters on February 15 an 27, 2001, the motion was deemed fully submitted on February 28, 2001.
Discussion
Neither party has set forth any authority under which this Court may consider plaintiffs' motion for clarification. As the motion was filed more than ten days of the docketing of the prior opinion, it may not be considered pursuant to Federal Rule of Civil procedure 59(e) or Local Civil Rule 6.3.
The plaintiffs' motion will be construed as invoking Rule 60(a), under which a party may seek to clarify a prior opinion or order. See Polanco v. Allan, No. 93-CV-1498, 1996 WL 377074 (N.D.N.Y. July 5, 1996) (McAvoy, C.J.).
In the context of a discussion of the availability of equitable relief under § 1132(a)(3)(B), Gustafson I raised the issue of unjust enrichment, which is one basis on which prior courts have found equitable relief to be available. See 2000 257232, at *5-*7. As the relevance of unjust enrichment to holding of Gustafson I may have been ambigious, that opinion hereby clarified as follows. To the extent that any element this opinion conflicts with the prior one, this opinion shall control.
Gustafson I relied principally on two cases, Strom v. Goldman, Sachs Co., 202 F.3d 138 (2d Cir. 1999), and Dunnigan v. Metropolitan Life ins. Co., 99 F. Supp.2d 307, 320 (S.D.N Y 2000), in support of the holding that interest on delayed death benefits was available as "other equitable relief" pursuant to 29 U.S.C. § 1132 (a)(3)(B). A brief discussion of the reasoning of these cases is necessary to clarify the basis for theGustafson I opinion.
The Strom Court held that a plan beneficiary could recover the value of death benefits withheld by an insurer due to the employer's neglect as equitable relief on the grounds that the employer had breached a fiduciary duty to the beneficiary. Strom, 202 F.3d at 144. In so holding, the Court specifically noted that unjust enrichment, although relevant to a plaintiff's ability to recover against an insurer under an equitable restitution theory, was not a prerequisite to recovery against a plan administrator for a breach of its fiduciary duty that led to a delay in payments. Id., 202 F.3d at 144-45 ("the alleged breach of a fiduciary duty . . . never has required a showing of unjust enrichment"). With this understanding, the Court went on to hold that § 1132(a)(3)(B) provided an equitable "make whole" remedy under which beneficiaries could recover from employers "the benefit that (they] would have received absent the alleged breach of duty." Id., 202 F.3d at 149.
In Dunnigan, the plaintiff sought to recover for interest on delayed benefits from an insurer, rather than from a plan administrator. The Dunnigan court held that interest could be recovered from the insurer as equitable restitution pursuant to § 1132(a)(3)(B), as long as the plaintiff could show a breach of a fiduciary duty. 99 F. Supp.2d at 321.
Appeal pending.
Combining elements from both Strom and Dunnigan, Gustafson I upheld plaintiffs' cause of action to recover interest on delayed payments against the plan administrator. As in Strom, the plaintiffs in this case merely seek a "make whole" remedy for a breach of fiduciary duty. Under the logic of Dunnigan, awarding interest is the appropriate "make whole" remedy for the lost time-value of the delayed payments.
Therefore, because a "make whole" remedy is available under a breach of fiduciary duty theory, see Strom, 202 F.2d at 150, the fact that the defendant was not unjustly enriched is no bar to the plaintiffs' recovery of interest on delayed benefit payments. See Strom, 202 F.3d at 145 ("The absence of unjust enrichment here therefore is not inconsistent with accurate characterization of the relief plaintiff seeks as `equitable.'"); Dunnigan, 99 F. Supp.2d at 321 (finding that interest is equitable remedy recoverable under § 1132(a)(3)(B)).
In short, plaintiffs' cause of action was upheld because they alleged that (1) the defendant owed and breached a fiduciary duty to them that arose under ERISA; (2) the breach caused a delay in payments; (3) that resulted in the plaintiffs not receiving the full benefit they would have received if not for the breach. See 2001 WL 25722, at *7-*8 (setting forth necessary elements of the claim and citing to the complaint).
Conclusion
Gustafson is hereby clarified as set forth above.
It is so ordered.