Treasurer, Trustees of Drury Industries, Inc. Health Care Plan & Trust v. Goding
692 F.3d 888
8th Cir.2012Background
- Goding, a beneficiary of the Drury ERISA Plan, received $11,423.79 in benefits and later settled a related civil suit.
- The Plan contains a subrogation provision giving the Administrator a first-priority right to recover benefits from any recovery.
- Casey & Devoti, representing Goding, acknowledged Drury’s subrogation lien in January and March 2009 but did not sign or guarantee the plan terms.
- Goding’s settlement proceeds were kept in trust by Casey and then fully disbursed to Goding; Goding later filed for bankruptcy.
- Drury sued Casey asserting equitable lien by agreement, restitution, constructive trust, tortious interference, and conversion; the district court granted Casey summary judgment.
- Drury appeal sought reconsideration based on Boeing Co. v. Thurmon and related authorities; the district court’s rulings were ultimately affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Casey’s acknowledgments created an implied contract binding Casey | Goding (Drury) argues acknowledgment of the lien suffices to bind Casey | Casey contends mere notice without an agreement to honor the lien is insufficient | No implied contract against Casey; acknowledgment alone does not bind Casey |
| Whether Drury may obtain equitable relief under ERISA §502(a)(3) against Casey | Drury seeks equitable relief for the subrogation claim | Recovery must be equitable, not legal, and Casey no longer holds the funds | Relief denied; claim is legal, not equitable, because funds are no longer in Casey’s possession |
| Whether ERISA preempts Drury’s state-law conversion claim against Casey | Drury relies on ERISA plan terms to enforce the subrogation | ERISA preempts state-law actions relating to an employee benefit plan | Preempted by ERISA; state-law conversion claim is not viable |
| Whether the district court properly awarded attorneys’ fees to Casey | Casey seeks fees under ERISA §1132(g)(1) for in-house counsel representation | Kay v. Ehrler limits fees for self-represented attorneys; in-house representation may be fee-worthy | Fees affirmed; district court acted within discretion under Lawrence factors; in-house representation permitted in this context |
Key Cases Cited
- Gentner v. Gentner, 50 F.3d 721 (9th Cir. 1995) (mere notice of subrogation does not create implied contract with attorney)
- Ford v. Ford, 83 F.3d 966 (9th Cir. 1996) (attorney who signs subrogation agreement can be bound by it)
- Knudson v. Great-West Life & Annuity Ins. Co., 534 U.S. 204 (U.S. 2002) (ERISA § 502(a)(3) only permits equitable relief; if property is dissipated, relief is not equitable)
- Sereboff v. Mid Atlantic Med. Servs., 547 U.S. 356 (U.S. 2006) (equitable relief available where funds are identified and in possession/control of defendants)
- CGI Techs. & Solutions, Inc. v. Rose, 683 F.3d 1113 (9th Cir. 2012) (expands potential defendants under § 502(a)(3) beyond plan signatories; emphasizes attorney liability nuance)
- Kay v. Ehrler, 499 U.S. 432 (U.S. 1991) (attorney fees not allowed for self-representation; organizational in-house counsel may be treated differently)