Rickard v. BAC/FLEET (In re Rickard)
520 B.R. 486
Bankr. W.D. Pa.2014Background
- Debtors filed for Chapter 13 bankruptcy on July 2, 2010.
- November 16, 2012, Mr. Rickard suffered a motor vehicle accident causing paraplegia.
- Rickard was a participant in the Welfare Fund (ERISA plan) which paid medical expenses of at least $279,498.03.
- Welfare Fund has a subrogation/reimbursement right for third-party-related injuries.
- Debtors' counsel, Cutruzzula, was retained in 2013 with a contingency up to 40% of any recovery.
- ANPC settled the underinsured motorist claim for $250,000; proposed distribution would allocate funds to counsel, bankruptcy counsel, and Mr. Rickard but not to Welfare Fund.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Welfare Fund's subrogation priority overrides attorney fees. | Rickard argues fund’s interest is subordinate to attorney lien. | Welfare Fund asserts its priority per plan language and ERISA rights. | Welfare Fund priority prevails; plan language controls. |
| Whether McCutchen controls over Morrone regarding fee allocation when plan terms exist. | Rickard argues for common-fund/equitable lien in absence of paying provisions. | Welfare Fund contends McCutchen governs where plan expressly allocates costs and no agreement to pay fees is shown. | McCutchen governs; plan terms prevail over equitable doctrines. |
| Does the plan expressly require Welfare Fund to be paid first from settlement proceeds? | Fund’s priority is not explicitly honored in proposed distribution. | Plan states Welfare Fund must be reimbursed first; no agreement to pay Debtors’ attorney fees. | Yes; plan requires Welfare Fund to be paid first. |
Key Cases Cited
- Morrone v. Thuring, 759 A.2d 1238 (N.J. Super. Ct. Law Div. 2000) (ERISA plan rights; common-law charging lien can be subordinate to plan terms)
- US Airways, Inc. v. McCutchen, 133 S. Ct. 1537 (U.S. 2013) (plan terms govern; common-fund rule not applied against express contract)
- In re Second Pennsylvania Real Estate Corp., 192 B.R. 663 (Bankr.W.D. Pa. 1995) (common fund doctrine; context of bankruptcy proceedings)
- Novinger v. E.I. DuPont de Nemours & Co., Inc., 809 F.2d 212 (3d Cir. 1987) (equitable charging liens; limitations in bankruptcy contexts)