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Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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FILED 

United States Court of Appeals 

Tenth Circuit 

PUBLISH June 8, 2005 

UNITED STATES COURT OF APPEALS PATRICK FISHER 

Clerk 

TENTH CIRCUIT 

PAUL D. GORMAN, 

Plaintiff - Appellee, 

V. 

CARPENTERS' & MILL WRIGHTS' 

HEAL TH BENEFIT TRUST FUND, 

Defendant - Appellant. 

No. 03-1526 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

(D.C. NO. 03-WY-191-CB (PAC)) 

Timothy J. Parsons (Dean C. Heizer and Miranda K. Hawkins with him on the 

briefs) of Gorsuch Kirgis, LLP, Denver, Colorado, for Defendant-Appellant. 

Raphael M. Solot, Denver, Colorado, for Plaintiff-Appellee. 

Before BRISCOE and MURPHY, Circuit Judges, and STEWART*, District 

Judge. 

STEWART, District Judge. 

* The Honorable Ted Stewart, United States District Judge for the District 

of Utah, sitting by designation. 

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Defendant/appellant Carpenters' and MillWrights' Health Benefit Trust 

Fund (the Fund) appeals from the district court's Order on 1v1otions for Summary 

Judgment granting plaintiff/appellee Paul Gorman (Plaintiff) equitable relief from 

the terms of a subrogation contract on the grounds that the Fund acted arbitrarily 

and capriciously because its contract imposed a condition on Plaintiff that was not 

contained in the Plan or the Summary Plan Description. Thi~ new condition was 

that the Plaintiff must file a third-party action at his own expense in order to 

obtain his vested medical benefits resulting from the injuries he sustained in an 

accident. The Fund also appeals the award to Plaintiff of attorney's fees and 

costs under 29 U.S.C. § l 132(g)(l). We have jurisdiction under 28 U.S.C. § 1291 

and affirm. 

BACKGROUND 

On August 31, 2002, Plaintiff and his wife were injured in a motorcycle 

accident. The accident left Plaintiff unable to work. Plaintiff was a beneficiary 

of the Fund, an BRISA-qualified welfare plan described in a Restated Plan 

document (the Plan) and the 1999 Summary Plan Description (the 1999 SPD). In 

September 2002, Plaintiff and his wife filed medical claims with the Fund. 

Plaintiffs medical expenses totaled over $120,000. 

Initially, the Fund approved payment of Plaintiffs wife's claim. However, 

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it denied Plaintiff's claim for benefits under the 1999 SPD's commission of a 

crime exclusion because he was cited by law enforcement for "following too 

close'' in connection with the accident. Pursuant to Plaintiff's administrative 

appeal, the Fund's trustees eventually reversed their denial and allowed Plaintiff's 

claim. However, the Fund required Plaintiff and his wife to sign its Subrogation 

Assignment Contract (SAC) as a pre-condition to payment of benefits. Although 

the Fund asserted the 1999 SPD provided authority for the requirement, the SAC 

added several provisions not included in the 1999 SPD. The new provisions 

included ( 1) that Plaintiff must file a legal action against the third party within 

one year; (2) that the Fund would not "be liable for payment of any portion of the 

beneficiary's litigation costs and/or attorney's fees in connection with any legal 

action against such third-party;" (3) that Plaintiff would diligently pursue the 

third-party action; and ( 4) that Plaintiff would obtain the Fund's prior written 

consent for any settlement of the third-party action that would not pay the Fund in 

full. Rec. 230-31. 

The SAC recites that Plaintiff desired to proceed with an action against the 

third-party. It is undisputed that Plaintiff did not want to bring such a lawsuit 

under the conditions imposed by the SAC. However, he was injured and unable 

to work, was under pressure from creditors to pay his substantial medical bills, 

and the Fund refused to pay any of his medical bills unless he signed the SAC. 

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Plaintiffs wife refused to sign the SAC under those conditions and eventually 

withdrew her claim for health benefits. 

On January 14, 2003, Plaintiff signed the SAC in ord,~r to obtain payment 

of his medical bills while he challenged the Fund's right to require him to sue at 

his own expense. Plaintiff's attorney refused the Fund's demand that he also sign 

the SAC. 

On January 17, 2003, Plaintiff filed a lawsuit against the third-party driver 

for the purpose of complying with the SAC. On January 30, 2003, Plaintiff filed 

the present action challenging the SAC under ERISA. 

The Fund amended its Plan and the 1999 SPD to add an express provision 

that the Fund would not pay any attorney's fees or costs (the 2003 SPD). 

Significantly, however, the 2003 SPD did not provide that the Fund could require 

a participant or beneficiary to file a third-party action at his own expense as a 

condition of receiving benefits. Further, although the 2003 SPD is dated as 

•'effective January 1, 2003," it is undisputed that the Fund did not distribute it to 

plan participants until May 2003, long after Plaintiff signed the SAC and filed his 

third-party suit and this action. 

Plaintiff filed this action seeking equitable relief in the form of 

reformation, rescission, or declaratory relief. The parties agreed the facts were 

undisputed and submitted the matter pursuant to summary judgment. The district 

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court applied the 1999 SPD because it was the SPD in effect at the time Plaintiff 

made his claim. The district court found that the Fund's interpretation of the 

1999 SPD was unreasonable. It found that the Fund was arbitrary in "going 

beyond any reasonable request for documentation" under the 1999 SPD's 

cooperation clause when it imposed the SAC as a prerequisite for benefits. It also 

found as follows: 

The Fund acted i_n an arbitrary and capricious manner in requiring the 

signing of the SAC and forcing Plaintiff to bring a third-party action 

when he may have chosen not to bring such an action. If Plaintiff 

chose not to bring a third-party action, [t]he Fund, through its 

subrogation rights, could have brought a legal action at their own 

expense against a third-party. However, [t]he Fund put all of the risk 

on the beneficiary and retained all of the benefits for a no lose 

situation. 

Rec. at 287. 

Accordingly, the district court rescinded the SAC and granted equitable 

relief. It initially ordered that any third-party recovery be divided proportionally, 

with the Fund "being reimbursed for the amount of funds it paid to Plaintiff, less 

[the Fund's] proportion of the attorney's fees and litigation costs." Id. at 288. 

Pursuant to§ l 132(g)(l), the district court awarded Plaintiff reasonable attorney's 

fees and costs associated with defending the Fund's Motion for Summary 

Judgment. 

Subsequently, the third-party claim settled for $80,000.00, less than the 

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$86,014.24 total of benefits paid by the Fund. I I The settlement proceeds are 

currently held in Plaintiff's attorney's trust account. 

On November 28, 2003, the district court entered an Order on Various 

Motions (Clarification Order), noting that the third-party claim had settled for an 

amount less than the amount of the benefits paid to Plaintiff by the Fund. The 

district court found the attorney's fees ($26,666) and costs ($3,323) to be 

reasonable, ordered them subtracted from the settlement proceeds, and ordered 

that the entire net amount of $50,011 be paid to the Fund per its right of 

subrogation under the 1999 SPD. It also found Plaintiff's attorney's fees and 

costs in the amount of $19,732.50 for defending the Fund's summary judgment 

motion to be reasonable and granted judgment in that amount to Plaintiff. 

On appeal, the Fund contends that: ( 1) the district court erred in finding the 

Plan's interpretation of the Plan documents to be arbitrary and capricious; (2) the 

district court erred by rescinding the subrogation contract because rescission is 

not appropriate equitable relief under ERISA, 29 U .S .C. § l 132(a)(3); (3) the 

district court erred in applying the common fund doctrine; and ( 4) the district 

court erred by awarding Plaintiff attorney's fees pursuant to ERISA, 29 U.S.C. § 

1132(g)(l). 

11 The Fund paid $82,504.95 in medical benefits and $3,509.29 in 

disability benefits. 

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DISCUSSION 

A. Standard of Review 

This court reviews the grant of summary judgment under the same standard 

as applied by the district court. Charter Canyon Treatment Ctr. v. Pool Co., 153 

F.3d 1132, 1135 (10th Cir. 1998). Because the parties agree there are no material 

issues of fact, we review de nova the district court's legal conclusions. Thus, we 

review de nova the district court's legal conclusion that the Fund's decision was 

arbitrary and capricious. Sandoval v. Aetna Lzfe and Cas. Ins. Co., 967 F.2d 377, 

380 (10th Cir. 1992). 

B. Arbitrary and Capricious 

The Fund contends that the district court erroneously relied on the 1999 

SPD, rather than the 2003 SPD. It contends that a reasonable interpretation of the 

subsequent Plan and SPD amendments would allow the Fund to require execution 

of the terms of its SAC. 

We agree with the district court that the controlling document is the 1999 

SPD. 2 "Because plan administrators have an obligation imposed by ERISA to 

operate the plan according to current plan documents, a post hoc amendment 

clearly cannot alter a plan provision in effect at the time performance under the 

2 However, our decision would be same under the 2003 SPD because it 

did not provide the Fund the right to require a plan participant to file a third-party 

action at his or her own expense. 

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plan became due." Member Services Life Ins. Co., v. American National Bank 

and Trust Co., 130 F .3d 950, 957 (10th Cir. 1997). 

The Fund contends that the 2003 SPD controls because it provided notice 

of the amendments within the 120 days following their adoption as required by 

ERISA, 29 U.S.C. § 1024(b)(l), and the SAC was signed after the effective date 

of the 2003 SPD. However, Plaintiff's benefits were vested prior to the effective 

date of the 2003 SPD. A welfare plan's benefits vest when performance is due. 

Member Services, 130 F .3d at 956. Under the 1999 SPD, benefits vest upon 

receipt of written proof satisfactory to the Fund. The Fund's November and 

December 2002 communications to Plaintiff specifically rely on the 1999 SPD as 

authority for its demand that Plaintiff and his wife sign the SAC. Rec. at 161 and 

167. The communications also notified Plaintiff that benefits would not be paid 

unless and until the SAC was signed. The Fund's January 7, 2003, letter 

announced its decision on the administrative appeal, reiterated its demand that 

Plaintiff sign the previously provided SAC, and declared that the failure to do so 

would result in a loss of benefits. 

The fact that the SAC was finally signed shortly after the effective date of 

the new amendments does not mean that the Fund can apply those new 

amendments to Plaintiff's previously vested benefits. Because the Fund cannot 

unilaterally change the terms of its performance after performance is due, we find 

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no error in the district court's holding that the 1999 SPD controls. 

We turn to the issue of whether the Fund's interpretation of its SPD was 

arbitrary and capricious. The 1999 SPD provides: 

This Plan shall be subrogated and may, if deemed appropriate by the 

Plan, succeed to the individual's right of recovery from a third party 

for incurred Hospital, medical and surgical expenses. The individual 

shall pay over to the Plan all sums recovered by suit, settlement or 

otherwise in an amount equal to such services or benefits which the 

Plan provided .... 

* * * 

The Fund may, in its sole discretion, commence an independent 

action based on the Fund's right of subrogation against a third party 

for medical, hospital and surgical expenses incurred by the Eligible 

Employee and paid by the Fund regardless of whether the Eligible 

Employee has commenced his/her own action against any third party. 

If a Participant is injured or becomes ill due to or as a result of the 

act or omission of any other person and if ... benefits are provided 

to or on behalf of the Participant by this Plan due to or as a result of 

such injury or illness, then to the extent that the Participant recovers 

similar medical expenses for the same injury or illness from any 

responsible third party, or the third party's insurance carrier, this 

Plan shall be entitled to receive a refund from the Participant in an 

amount equal to such services or benefits which this Plan provided. 

This Plan may file a lien for such payment. The Participant shall, 

upon request, execute and deliver such instrument or papers as may 

be required and do whatever else is necessary to carry out this 

prov1s10n. 

Rec. at 204. The 1999 SPD does not address attorney's fees or other costs of 

litigation. 

In support of its position that it did not act arbitrarily and capriciously in 

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requiring Plaintiff to sign the SAC providing that Plaintiff must bring a thirdparty action at his own expense, the Fund relies upon our unpublished case, Alves 

v. Silverado Foods, Inc., 6 Fed. Appx. 694 (10th Cir. 2001). It also submits as 

supplemental authority our recent case Administrative Committee of the Wal-Mart 

Associates Health and Welfare Plan v. Willard, 393 F.3d 1119 (10th Cir. 2004) 

and the Fourth Circuit case Kress v. Food Employers Labor Relations Ass 'n., 391 

F.3d 563 (4th Cir. 2004). We find those cases to be distinguishable. 

In Alves, we affirmed the district court's granting of summary judgment in 

favor of a plan on a claim that it breached its fiduciary duty when it refused to 

pay claims until the beneficiaries signed an agreement recognizing its rights to 

subrogation and reimbursement. However, in Alves, the district court found that 

the reimbursement agreement "did not broaden the Plan's rights from those in the 

SPD.'' 6 Fed. Appx. at 705. 

Thus, Alves is distinguishable because, in the present case, the Fund 

interpreted the 1999 SPD in a way that attempted to materially broaden its rights 

by conditioning benefits on the participant's signing an agreement that added an 

entirely new requirement not found in the Plan or the 1999 SPD. For the same 

reason, the Willard case, supra, is inapposite because it also did not involve a 

plan's imposition of conditions that broadened its rights from those in the SPD. 

In Kress, the Fourth Circuit held it was not an ERISA violation for a fund 

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to require the participant and his attorney to sign a subrogation agreement 

agreeing to reimburse the plan first out of any recovery because that condition 

was plainly required in the SPD. 391 F.3d at 567-68. Thus, there was no attempt 

in Kress to broaden rights from those in the plan and the SPD. 

Further distinguishing Kress are two facts. First, the accident-related 

medical expenses at issue in Kress were, unlike the benefits in the present case, 

expenses that were not covered by the plan. Instead the expenses were advanced 

as an "interest free loan" from the fund to employees injured by third parties. 391 

F .3d at 568. Second, the subrogation agreement in Kress did not require that a 

participant file a third-party action because even if the participant "did accept the 

advance, he was under no obligation to sue." Id. at 570 n.2; see also id. at 570 

(''If the participant and his attorney conclude that private litigation will not 

produce a sufficient recovery to make the litigation worthwhile, they need not 

bring the case."). Because the injured plan participant could choose not to file a 

third-party action, the Kress court held it was not unconscionable to require a 

subrogation agreement from a participant and his attorney providing that any 

attorney's fees be subordinated to the Plan's right to reimbursement. Id. at 570-

71. 

In the present case, as previously noted, the SAC attempted to broaden the 

Fund's rights by imposing a new requirement on Plaintiff as a condition for 

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receiving benefits. Despite requiring the unwilling Plaintiff to file an action, the 

SAC provides that the Fund will not pay any portion of the litigation costs and 

fees. Because that requirement was not contained in the 1999 SPD, it was 

arbitrary and capricious for the Fund to impose the new condition as a 

prerequisite to paying Plaintiff his benefits under the 1999 SPD. 

C. Appropriate Equitable Relief 

The Fund contends that the district court erred by rescinding the 

subrogation contract because ( 1) rescission is not a remedy under subsection 29 

U.S.C. § l 132(a)(3); (2) the district court lacked authority to impose rescission 

under that section; (3) Plaintiff seeks monetary not equitable relief; and ( 4) 

Plaintiff did not establish the prerequisites for a rescission claim. 

Plaintiff brought this action under ERISA, 29 U.S.C.§ 1132(a): 

(a) 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 [Title I of ERISA] 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 [Title I ofERISA] or the terms of the plan[.] 

29 U.S.C.§ 1132(a)(3)(A) and (B) (emphasis added). 

Other circuits have determined that in appropriate circumstances, rescission 

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may be "appropriate equitable relief' within the meaning of§ l 132(a)(3)(B). See 

Griggs v. E.I. DuPont and Nemour & Co., 3 85 F .3d 440, 446 n.3 ( 4th Cir. 2004) 

( collecting cases). 

However, we need not address the issue because we find that the district 

court's resolution was pure equitable relief within its authority under§ 

l 132(a)(3)(B). The district court determined (1) that the Fund's interpretation of 

the SPD was unreasonable; (2) that the Fund acted arbitrarily and capriciously in 

requiring the SAC; and (3) that the Plaintiff would not have filed the third-party 

action but for the fact that he was compelled to do so by the SAC. The Fund's 

action provided a basis for equitable relief under§ l 132(a)(3)(B). Accordingly, 

the district court acted to restore the parties to the positions they would have 

occupied had the Fund not acted arbitrarily and capriciously in conditioning 

payment of vested benefits on signing a contract that imposed terms not contained 

in the Plan or disclosed in the 1999 SPD. 

Prior to the signing of the SAC, the parties were in the following position: 

the Fund had a subrogation right to "all sums" recovered in an amount equal to 

the benefits and a refund right to the amount equal to such services or benefits 

that the Plan provided. Rec. at 203-04. Plaintiff had an obligation to cooperate 

in such subrogation and refund. However, he also had the right to decide whether 

or not to bring a third-party action, depending on how he evaluated factors such 

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as the stress of litigation, the strength of his case, and the like:lihood of recovery. 

Among the factors Plaintiff would have to consider in deciding whether or not to 

bring a third-party action was that the Fund was entitled to a full refund in the 

amount of any benefits paid. If Plaintiff choose not to file an action under these 

circumstances, he would incur no attorney's fees or other litigation-related 

expenses. The Fund always had the right to file its own third-party action for 

subrogation, in which case the Fund would bear its own costs and fees incurred as 

a result of its decision to file an action. 

In its equitable resolution, the district court imposed responsibility for the 

attorney's fees and costs on the party that made the decision to file the third-party 

action-the Fund. At the same time, the district court recognized the Fund's right 

under the 1999 SPD to a repayment in the amount of the ben,efits it paid Plaintiff 

by requiring that Plaintiff repay the Fund the full remainder of the settlement. 

As we recently noted, this type of equitable resolution is available under § 

1 l 32(a)(3 ). In Callery v. United States Life Insurance Company in the City of 

New York, 392 F.3d 401 (10th Cir. 2004), we examined "appropriate equitable 

relief' under§ l 132(a)(3) and found that the various remedies sought were not 

available because the employee was in actuality seeking money damages, a classic 

form of legal relief. Id. at 404-05. However, we distinguished the types of relief 

sought in Callery from the clear equitable remedy of the type applied in our 

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earlier case, Downie v. Independent Drivers Ass'n Pension Plan, 934 F.2d 1168 

(10th Cir. 1991 ). In Downie, as in the present case, a plan acted arbitrarily and 

capriciously and violated the participant's rights under the plan. 

In Downie, the court used its equitable powers to restore the parties to 

their original positions in order to affect the beneficiary's ability to 

receive future payments. Id. at 1170-71. This is a clear equitable 

remedy and is distinct from the relief sought in this case. 

Callery, 392 F.3d at 407. 

The fact that the relief sought in the present case involved the attorney's 

fees incurred in the third-party action does not mean that Plaintiff sought 

monetary relief instead of equitable relief within the meaning of§ 1132(a)(3 ). As 

we recently noted, "any equitable relief, including those forms explicated by the 

Court as available under [§l 132(a)(3)], must involve the direct or indirect transfer 

of money, and we cannot read the statute to proscribe all forms of relief." 

Administrative Committee of the Wal-Mart Associates Health and Welfare Plan v. 

Willard, 393 F.3d at 1125 (plan administrator's suit for equitable restitution is 

·'appropriate equitable relief'). 

We hold that on the unique facts of this case, the district court's action 

granted "appropriate equitable relief' within the meaning of 29 U.S.C. 

§ l l 32(a)(3 )(B). 

D. Common Fund 

The Fund also contended that the district court erred by applying the 

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common fund doctrine. However, as we have determined that the district court's 

resolution was equitable relief within the meaning of 29 U.S.C.§ l l 32(a)(3), the 

common fund doctrine is not dispositive. 

E. Attorney's Fees under§ l 132(g)(l) 

The Fund contends that the district court erred in its Clarification Order by 

awarding Plaintiff attorney's fees incurred in the present cas,e pursuant to 

§ 1 l 32(g)(l) because it did not apply the five-factor test to dt:termine whether an 

award of attorney's fees is appropriate. See Gordon v. U.S. Steel Corp., 724 F .2d 

106, 109 (10th Cir. 1983) (applying five-factor test from Eaves v. Penn, 587 F.2d 

453, 463 (10th Cir. 1978)). Plaintiff contends that the Fund waived this argument 

by failing to raise it below. 

Id. 

Section ll 32(g)(l) of ERISA provides: 

In any action under this subchapter ... by a participant, beneficiary, 

or fiduciary, the court in its discretion may allow a reasonable 

attorney's fee and costs of action to either party. 

We consider each case individually in determining whether to exercise our 

discretion to consider a question raised for the first time on appeal. TeleCommunications, Inc. v. C.I.R., 104 F.3d 1229, 1232 (10th Cir. 1997). Such 

determination must begin with recognition that sound policy supports the 

proposition that an appellate court will not consider an isswe raised for the first 

time on appeal. 

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Id. 

Review of issues not raised below would require us frequently to 

remand for additional evidence gathering and findings; would 

undermine the need for finality in litigation and conservation of judicial 

resources; would often have this court hold everything accomplished 

below for naught; and would often allow a party to raise a new issue on 

appeal when that party invited the alleged error below. Lyons v. 

Jefferson Bank & Trust, 994 F .2d 716, 721 (10th Cir. 1993 ). 

This rule is particularly apt when dealing with an appeal from a grant 

of summary judgment, because the material facts are not in dispute and 

the trial judge considers only opposing legal theories. 

The Fund contends that it raised the issue of the failure to apply the fivefactor test below, citing its one-sentence general objection to any award of 

attorney's fees contained in its Response to Plaintiffs Application for Attorney's 

Fees. However, raising a theory in "a vague and ambiguous way" or by "raising a 

related theory" is insufficient to preserve an issue for appeal. Id. at 1234 ( citing 

Lyons v. Jefferson Bank & Trust, 994 F.2d 716, 722 (10th Cir.1993)). Our review 

of the record reveals that the argument that the district court failed to apply the 

five-part test was never raised below. Because the issue was never presented to 

the district court, it did not have the opportunity to rule on the issue, and the issue 

cannot be raised in this appeal. 

CONCLUSION 

We AFFIRM the judgment of the district court. 

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