Opinion
Case No. 01 C 8277.
January 10, 2001
ORDER
Plaintiffs emergency motion to stay the state court proceedings under the authority of the Anti-Injunction Act, 28 U.S.C. § 2283, and to enjoin the defendants is granted. The court, having heard the arguments of counsel and the authorities cited, finds and concludes as follows:
1. Based on section 502(e)(1) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132 (e)(1), this court has exclusive jurisdiction of the subject matter presented by this action, as it is an action brought by a fiduciary under part 4 of ERISA, 29 U.S.C. § 1101 et seq., and no exception specified in section 502(e)(1) granting concurrent jurisdiction to the state court applies. See Administrative Committee v. Gauf, 188 F.3d 767, 771 (7th Cir. 1999).
2. On December 21, 2001, this court entered a preliminary injunction in this case directing defendants Laurence Dunford and Clara Varco to hold $34,034.55 of certain settlement funds arising from Varco v. Lapsis, No. 00 L 12201E, pending in the Circuit Court of Cook County, Illinois, until the rights of plaintiff can be determined by this court.
3. These funds are within the control of the defendants and are specifically identifiable as settlement funds which plaintiff in the pending federal case contends rightfully belong to it. As such, this case seeks to impose a constructive trust and is an equitable action cognizable under § 502(a)(3)(B) of ERISA, 29 U.S.C. § 1132 (a)(3)(B), and is not an action at law. Compare Great-West Life Annuity Insurance Company v. Knudson, 2002 WL 15399 (U.S. Jan. 8, 2002) (§ 502(a)(3) does not authorize a suit by an assignee of an ERISA plan fiduciary against a plan beneficiary for reimbursement where the funds had been distributed to a special needs trust for the beneficiary's care, the beneficiary's attorney in the state court action, and other lien holders, including a small portion to the plan for its payments for the beneficiary's medical care; specifically, the complaint under § 502(a)(3)(A) for an injunction requiring restitution could not be properly characterized as equitable relief but was actually a claim for damages under § 502(a)(3)(B) for breach of contract.)
4. On January 4, 2002, the state court dismissed the case against the state court defendant and reserved jurisdiction over the sole remaining issue, which is the same issue that plaintiff has presented to this court, plaintiffs right to share in the settlement recovery. Plaintiff, however, is not a party to the state court action, although it is a lien claimant with notice of Varco's motion in that court to adjudicate its lien asserted against any recovery in the state court case.
5. If this court does not stay the state court proceeding, plaintiffs rights under ERISA may be defeated. Therefore, and pursuant to the "in aid of jurisdiction" exception to the Anti-Injunction Act, 28 U.S.C. § 2283, this court hereby stays further proceedings in the state court action and enjoins defendants under the All Writs Act, 28 U.S.C. § 1651, from proceeding further in the state court action.