Opinion
Case No. 4:05 cv 0029.
October 6, 2005
MEMORANDUM OPINION AND ORDER
This matter is before the Court upon an order to Show Cause as to the propriety of subject matter jurisdiction. (Dkt. #13). Before the Court are Plaintiff's "Statement of Facts and Legal Issues" (Dkt. #11) and Plaintiff's "Response to Supplemental Case Management Conference Statement of Defendant Steve Farkas." (Dkt. #16). Also before the Court are Defendant's "Statement of Facts and Legal Issues for Case Management Conference" (Dkt. #12) and "Supplemental Case Management Conference Statement." (Dkt. #15). Neither party filed formal memoranda in response to this Court's order to Show Cause.
I. FACTUAL BACKGROUND
The Plaintiff is the plan administrator of the Hunt Valve Company, Inc. Hourly Employees' Pension Plan ("Plan"). (Dkt. #11). The Defendant, an hourly Hunt Valve employee, is a Plan participant. On October 8, 2003, Plaintiff terminated Defendant's employment. As a result, Defendant filed a grievance contesting the termination, which proceeded to arbitration. (Dkt. # 11). In February of 2004, while the grievance was pending, Defendant received a lump sum distribution in the amount of $25,214.40 from the Plan. (Dkt. #11).
The arbitration resulted in Defendant's reinstatement in August 2004. Prior to the Defendant's return to Hunt Valve Company, Inc., the Plaintiff determined that the lump sum distribution payment from the Plan was in error. (Dkt. #11). Plaintiff then filed the instant claim under Section 502(a)(3) of the Employee Retirement Income and Security Act ("ERISA"), 29 U.S.C. section 1132(a)(3), requesting specifically, (1) restitution of the lump sum payment plus interest, (2) judgment against the Plaintiff in the amount of $25,214.40 plus interest, and (3) the imposition of a constructive trust over the proceeds of the lump sum distribution. (Dkt. #1 at 7).
In his Answer, Defendant indicated that he no longer possessed any of the funds that constituted the lump sum distribution. (Dkt. #14, ¶ 46). However, in his Supplemental Case Management Conference Statement, Defendant indicated that a savings account existed consisting of approximately $3,592.53 that can be traced to the lump sum distribution. (Dkt. #15). Defendant further indicated that "[a]rrangements are currently being made for the turnover of the entire savings account balance to Plaintiff in the near future." (Dkt. #15 at 2).
On February 22, 2005, this matter came before the Court for a Case Management Conference ("CMC") wherein this Court inquired as to the propriety of subject matter jurisdiction. The Court then issued a Show Cause Order, dated February 22, 2005, as to why the matter should not be dismissed for lack of subject matter jurisdiction. As no formal memoranda have been filed, the Court shall address this issue based on the parties' Statements of Facts and Legal Issues, Defendant's Supplemental Case Management Conference Statement, and Plaintiff's Response to Defendant's Supplemental Case Management Conference Statement. (Dkt. #11, 12, 15, 16).
Defendant's counsel also contacted this Court indicating that the challenged funds had been remitted to Plaintiff. The Court subsequently contacted counsel for Plaintiff who indicated that he believed the funds had been returned but nevertheless felt such turnover did not dispose of the above claims.
II. STANDARD OF REVIEW ANALYSIS
Title 28 of the United States Code, Section 1331, provides that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331 (2003). The Plaintiff invoked this Court's subject matter jurisdiction pursuant to the Employee Retirement Income Security Act ("ERISA"), Pub.L. No. 93-406, 88 Stat. 829, (codified, as amended, at 29 U.S.C. §§ 1001- 1461 (2003)). (Compl. ¶ 6). Specifically, the Plaintiff asserts claims arising under 29 U.S.C. § 1132(a)(3). (Compl. ¶ 6).
29 U.S.C. § 1132(a)(3) states in relevant part: "A civil action may be brought by a 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."
Section 1132(a)(3) limits the types of equitable relief available under ERISA to those that have been historically granted by courts of equity. Great-West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002). It is the court's responsibility to determine whether the relief sought is truly equitable.Qualchoice, Inc. v. Rowland, 367 F.3d 638, 643 (6th Cir. 2004). A federal court lacks subject matter jurisdiction over claims purportedly arising under section 1132(a)(3) where "the property [sought to be recovered] or its proceeds have been dissipated so that no product remains." Great-West, 534 U.S. at 213.
The term "section" refers to title 29 of the United States Code unless otherwise noted.
Following Great-West, Defendant contends that the "remedies of restitution and/or constructive trust are available only when the money at issue can clearly be traced to particular funds or property that remain in the defendant's possession." (Dkt. #12 at 2). Defendant, though first indicating that "the funds that constituted the lump sum distribution have been dissipated in that they were either used to pay taxes or spent by Defendant Farkas," (Dkt. #12 at 3), later revealed that he possessed "approximately $3,592.53 on deposit in a savings account" which "could be traced to the lump sum pension distribution." (Dkt. #15 at 1). In Great-West, the Supreme Court found the equitable remedy of a constructive trust unavailable because the funds at issue had been paid into trust accounts and not directly to the defendants. Consequently, the funds sought by Great-West were not in the defendants' possession. Here, however, Plaintiff has sued an individual who was in possession of the funds at the time of filing the complaint. The Supreme Court acknowledged the importance of this factor in stating:
Thus, for restitution to lie in equity, 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, 534 U.S. at 214 (internal citation omitted). See also Cmty. Health Plan of Ohio v. Mosser, 347 F.3d 619, 624 (6th Cir. 2003) (quotingGreat-West, 534 U.S. at 214) ("[A]t equity these remedies contemplated a situation in which `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.'").
In the case sub judice, the funds from the lump sum distribution of the Plan were not completely dissipated at the time the complaint was filed. Funds directly traceable to the lump sum distribution existed in Defendant's savings account at the time Plaintiff's action ensued. Consequently, subject matter jurisdiction was proper when Plaintiff commenced its action and the $3,592.53 was in Defendant's possession.
However, while the Court may have initially had subject matter jurisdiction, the facts presented before the Court indicate that the Plaintiff has received its requested relief through the turnover of the funds traceable to the lump sum distribution. Plaintiff's claim is an assertion of the right to possess the funds claimed to be erroneously distributed. Those funds have been returned to Plaintiff. The Defendant therefore possesses no property from the lump sum distribution upon which the Court may impose the equitable remedy of restitution or a constructive trust. Accordingly, Plaintiff's claim does not fall within the type of equitable relief contemplated by section 1132(a)(3) and is DISMISSED for lack of subject matter jurisdiction.
III. CONCLUSION
For the foregoing reasons, the Court orders that the above-captioned action shall be DISMISSED for lack of subject matter jurisdiction.
IT IS SO ORDERED.