21 F.4th 350
6th Cir.2021Background
- Plaintiff Fund paid $16,225 in medical costs for Courtney Simpson and claimed a subrogation/reimbursement lien against Simpson’s $30,000 personal-injury settlement.
- The Law Office of Michael A. DeMayo (the Firm) deposited the settlement in trust, then paid Simpson $9,817.33, other lienholders $1,000.82, and transferred $10,152.67 to its operating account for fees/expenses.
- The Firm offered the Fund $9,029.18 (which it later tendered), leaving $7,195.82 of the Fund’s claimed $16,225 unpaid.
- The Fund sued under ERISA § 502(a)(3) seeking an equitable lien to recover the unpaid amount; the district court issued a TRO requiring the Firm to maintain $7,497.99 in its operating account (scrivener’s error in amount).
- The Firm moved for summary judgment, arguing it had commingled and, before the TRO, dissipated the settlement funds so only a legal (not equitable) remedy would lie; the district court agreed and granted summary judgment for the Firm.
- On appeal the Fund argued the district court should have applied the lowest intermediate balance test to show the funds were not dissipated, but the Sixth Circuit held that argument forfeited because it was not properly raised or supported below and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Fund sought an equitable remedy under ERISA § 502(a)(3) | Fund: TRO required the Firm to maintain the settlement funds in its operating account, so identifiable funds were in the Firm’s possession (equitable relief available) | Firm: Funds were commingled and dissipated before the TRO, so only a legal money judgment could be sought (no § 502(a)(3) relief) | Court: District court correctly found pre-TRO dissipation; no identifiable funds for equitable relief, summary judgment for Firm affirmed |
| Whether the lowest intermediate balance (LIB) test should govern dissipation analysis | Fund: LIB test shows funds were not fully dissipated between commingling and the TRO (so equitable relief still available) | Firm: Dissipation occurred before the TRO; LIB test was not invoked below in response to Firm’s dissipation argument | Court: Fund forfeited LIB argument by failing to raise/support it in district court and by not developing the record; appellate review denied |
| Whether the Fund preserved sufficient evidence to show non-dissipation | Fund: Relied on deposit slip and TRO order to show funds remained | Firm: Fund failed to produce intermediate account balances or seek discovery to prove that account never hit zero | Court: Fund failed to develop the evidentiary record (no bank statements, discovery, depositions, or expert); forfeiture supports affirmance |
Key Cases Cited
- Montanile v. Bd. of Trs. of Nat’l Elevator Indus. Health Benefit Plan, 577 U.S. 136 (2016) (dissipation of specifically identifiable funds defeats equitable relief under ERISA)
- Great‑West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) (distinguishing equitable relief for recovery of specific funds from legal money judgments)
- Zirbel v. Ford Motor Co., 980 F.3d 520 (6th Cir. 2020) (commingling vs. dissipation distinction; commingling may still permit equitable relief)
- Barner v. Pilkington N. Am., Inc., 399 F.3d 745 (6th Cir. 2005) (preservation requirement for appellate review)
- Greer v. United States, 938 F.3d 766 (6th Cir. 2019) (issues must be raised below to be reviewable on appeal)
- Scottsdale Ins. Co. v. Flowers, 513 F.3d 546 (6th Cir. 2008) (forfeiture and fairness to the district court)
- Greco v. Livingston County, 774 F.3d 1061 (6th Cir. 2014) (appellate courts generally decline issues not raised below)
- Armstrong v. City of Melvindale, 432 F.3d 695 (6th Cir. 2006) (failure to present an issue to the district court forfeits appellate review)