Opinion
Civil Action No. 03-5272.
August 19, 2004
MEMORANDUM
Plaintiff Local Union No. 98 and related entities have obtained a judgment of $324,421.76 against defendant Garney Morris, Inc. under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., for failure to make contributions to multiemployer benefit funds pursuant to a collective bargaining agreement. 29 U.S.C. § 1145. The plaintiff also has a judgment of $60,783.21 against Garnett Morris, Jr., the president of Garney Morris, Inc., under a state law claim. Before the court is the motion of plaintiffs for the imposition of a constructive trust and entry of an order enjoining defendants from dissipating assets post judgment.
Plaintiffs first rely on § 1132(a)(3) of ERISA for the imposition of a constructive trust with respect to the judgment against Garney Morris, Inc. That provision reads in relevant part:
(a) Persons empowered to bring a civil action
A civil action may be brought —
. . .
(3) by a participant, beneficiary, or 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. . . .
The motion to impose a constructive trust on property owned by Garney Morris, Inc. is without merit. In Great-West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213 (2002), the Supreme Court ruled that a constructive trust can be imposed under ERISA only "where money or property identified as belonging in good conscience to plaintiff could be traced to particular funds or property in the defendant's possession." Plaintiffs have conceded at a recent hearing before this court that it cannot trace the funds as required. There is simply no identifiable "res." See also, Louis Dolente Sons v. United States Fid. and Guar. Corp., 252 F. Supp. 2d 178 (E.D. Pa. 2003).
Plaintiffs next attempt to rely on Rule 3118 of the Pennsylvania Rules of Civil Procedure to prevent dissipation of defendant's assets. Rule 69 of the Federal Rules of Civil Procedure provides that we are to follow the practice and procedure of the state in which we sit, that is, Pennsylvania in aid of execution on a judgment.
Rule 3118(a) provides:
(a) On petition of the plaintiff, after notice and hearing, the court in which a judgment has been entered may, before or after the issuance of a writ of execution, enter an order against any party or person
(1) enjoining the negotiation, transfer, assignment or other disposition of any security, document of title, pawn ticket, instrument, mortgage, or document representing any property interest of the defendant subject to execution;
(2) enjoining the transfer, removal, conveyance, assignment or other disposition of property of the defendant subject to execution;
(3) directing the defendant or any other party or person to take such action as the court may direct to preserve collateral security for property of the defendant levied upon or attached, or any security interest levied upon or attached;
. . .
(6) granting such other relief as may be deemed necessary and appropriate.
Under Rule 3118, the court conducts less than a full hearing and may grant only a stay of the transfer of assets to preserve the status quo. Kaplan v. I. Kaplan, Inc., 619 A.2d 322, 325 (Pa.Super. 1993); Hearst v. Goodway Marketing Co., 815 F. Supp. 145 (E.D. Pa. 1992). The court may not reach the merits of entitlement or grant full equitable relief such as the transfer of property without having previously held a "full dress equity proceeding." Id.
We held a hearing as required under Pennsylvania law on plaintiffs' motion pursuant to Rule 3118. Despite the opportunity to do so, plaintiffs presented no evidence that defendants or either of them was dissipating assets or attempting to engage in a transfer or removal of property so as to undermine the efforts of the plaintiffs to satisfy the judgments in issue. In the Pennsylvania cases cited by plaintiffs where the court has authorized a stay, the judgment debtor was attempting to engage in what appeared to be a fraudulent transfer or removal of assets available to satisfy a judgment. See, e.g., Greater Valley Terminal Corp. v. Goodman, 202 A.2d 89 (Pa. 1964); Kaplan v. I. Kaplan, Inc., supra. Plaintiffs have pointed to no precedent which has interpreted Rule 3118 as authorizing a stay without a showing of a need for such relief.
The motion of plaintiffs for the imposition of a constructive trust and for an order enjoining dissipation of assets post judgment will be denied.