# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _

No. 1 1- 28 85

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Treas ur er, Tru st ees of Dru ry Ind us tri es , Inc . Healt h C are P la n a nd Trus t

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Sean God in g; Cas ey

& Dev ot i, P.C.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

__ __ __ __ __ __

App eal fro m

Uni te d S ta te s Di st ric t Co ur t
fo r th e Eas te rn Dis tri ct of M is so ur i - C ap e Gir ard eau

__ __ __ __ __ __

Su bm it te d: Apri l 1 9, 2 01 2

Fil ed : Se pt em

be r 7, 2 01 2

__ __ __ __ __ __

Befo re MUR PHY, MELLOY, an d GRUENDER, Ci rcu it Ju dg es

.

__ __ __ __ __ __

MELLOY, Circu it Ju dg e.

Sean God in g was a be ne fic ia ry of an ERISA (Em pl oyee Ret ire m en t In su ran ce

Secu rit y Act, 29 U.S.C. § 10 01

, et se q.) Pl an ad m in is te red by Treas ur er, Trus te es of

Dru ry In du st rie s, In c. Heal th Care P l a n a n d Trus t ("Dru ry "). God in g su st ai ne d

in juri es in a sl ip an d fal l acci de nt an d rece iv ed $1 1,4 23 .79 in be ne fit s fro m th e Dru ry

ad m in is te red Pla n. Godi ng al so ob ta in ed co m pe ns at io n th ro ug h th e se tt le m en t o f a

ci vi l su it rel at ed to th os e in juri es

. Pu rs ua nt to a su br og at io n pr ov is io n in th e ERISAPl an , Dru ry at te m pt ed to se cu re rei m

bu rs em en t fro m God in g fo r th e be ne fit s it pa id

, bu t was un ab le to do so aft er God in g de cl ared ba nk ru pt cy

. Dru ry th en at te m pt ed to

ob ta in th at rei m

bu rs em en t fro m th e fir m th at rep res e nt ed God in g, Cas ey & Dev ot i,

P.C. ("C as ey "). The di s tri ct co ur t fo un d th at Dru ry co ul d no t ob ta in su ch 1

rei m bu rs em en t be cau se Cas ey ha d no t ag reed to th e Pl an 's su br og at io n pr ov is io n an d

co ns eq u e n tl y was no t co nt ract ua ll y bo un d by i t. It al so fo un d th at Dru ry co ul d no t

m ai nt ai n a su it ag ai ns t Cas ey in eq ui ty an d co ul d no t br in g a st at e cau se of act io n fo r

co nv ers io n ag ai ns t Cas ey

. Fi na ll y , aft er se ve ral m or e m on th s of li ti ga ti on , th e di st ric t

co ur t award ed Cas ey at to rn ey s' fees fo r su cces sf ul de fen se of a su bs eq ue nt m ot io n.

W e n ow af

fir m th e d is tri ct co ur t i n a ll res pe ct s.

I

The Pla n c on ta in s a su br og at io n p ro vi si on th at "ap pl [ie s] when Pla n b en efi ts

are pa id as a res ul t of in juri es or il ln es s y ou su st a i n e d a n d y ou ha ve a rig ht to a

Rec ov ery or ha ve rece iv ed a reco ve ry ." Und er t hi s p ro vi si on :

The Adm in is tra to r, on be ha lf o f th e Em pl oyer, h as th e ri gh t t o re co ve r Pl an pa y m en t s mad e on y ou r be ha lf fro m an y pa rty res po ns ib le fo r

co m pe ns at in g you r in

juri es . The fo ll owi ng ap pl y :

-The Adm in i s t r a t o r, on be ha lf of th e Em pl oyer, ha s fir st

pr io rit y fo r th e fu ll am ou nt of be ne fit s th ey ha ve pa id fro m

an y Rec ov ery reg ard le ss of whe th er y o u a re fu ll y

co m pe ns at ed

, an d reg ard le ss of whe th er th e pa y m en ts y ou

rece iv e m ak e y ou who le for y ou r lo ss es an d i nju rie s.

The Hon or ab le St ep he n N. Lim ba ug h, Ju ni or , Uni te d St at es Dis tri ct Ju dg e fo r 1

th e Eas te rn Dis tri ct of M is so ur i.

-2

--Yo u an d y ou r le ga l r e p res en ta ti ve m us t do wha te ve r is

ne ces sa ry to en ab le th e Adm in is tra to r, on be ha lf of th e Emp l oyer, to ex erci se th ei r rig ht s an d do no th in g to

pr ejud ic e th em

.

- The ad m i n i st rat or , on be ha lf of th e Em pl oyer, ha s th e rig ht to ta ke wha te ve r le ga l acti on th ey se e fi t ag ai ns t an y

pa rty or en ti ty to reco ve r th e be ne fit s pai d u nd er the Pl an

.

- To th e ex te nt th at th e to ta l as se ts fro m whi ch a Rec ov ery is a v a i l a bl e are in su ffi ci en t to sa ti sf y in fu ll th e Adm in is tra to r's su br og at io n cl ai m an d an y cl ai m st il l he ld by y ou , th e Adm in is tra to r's su br og at io n cl ai m sh al l be fir st

sa ti sf ie d be fo re an y pa rt of Rec ov ery is ap pl ie d to y ou r cl ai m , y ou r at to rn ey

fees , ot he r ex pe ns es or c os ts

.

In ad di ti on to rece iv in g be ne fit s fro m th e ERISA Pl an , God in g al so br ou gh t a

ci vi l s ui t fo r ne gl ig en ce. In th at act io n, h e was rep res en te d b y th e la w firm

Cas ey

.

Dur in g it s re p r e s en ta ti on of God in g, Cas ey twi ce ack no wled ge d Dru ry 's

su br og at io n agr eem en t. Fi rs t, on Ja nu ary 15

, 20 09

, Cas ey wro te in co rres po nd en ce

wit h Dru ry , "[t ]his wil l co nf irm th at we do ack no wled ge Dru ry In ns , In c.'s

, li en in th is

m at te r." Seco nd

, on Mar ch 16

, 20 09

, Cas ey wro te : "we are no t ch al le ng in g y ou r rig ht

to rei m bu rs em en t/ su br og at io n fo r pa y m en ts m ad e fo r th e he al th care of Sean God in g

rel at in g [to ] th e in

juri e s c a u s e d b y hi s fal l at th e Hil to n." God in g, th ro ug h Cas ey ,

ev en tu al ly se tt le d th e ci vi l su it

. W he n Cas ey rece iv ed th e se tt le m en t m on ey , it ke pt

a po r t i o n f

or pa y m en t of it s at to rn ey s' fees , h el d $1 1,4 23 .79 (th e am ou nt su bjec t to

Dru ry 's su br og at io n in te res t) in tru st

, an d di sb ur se d th e rem ai nd er to God in g. Afte r

ab ou t a m on th

, ho wev er, C a s e y al so di sb ur se d th e $1 1,4 23 .79 to God in g. Des pi te

rece iv in g th is m on ey , God in g ev en tu al ly de cl ared ba nk ru pt cy an d ha s no t rei m bu rs ed

Dru ry for th e b en efi ts it pa id hi m

.

-3

-Dru ry th en at te m pt ed to reco ve r th os e be ne fit s from Cas ey , br in gi ng th is su it

an d as se rti ng th eo rie s of eq ui ta bl e li en by ag reem en t, res ti tu ti on , imp o s i t i o n of a

co ns tru ct iv e tru st

, to rti ou s in te rfer en ce wit h co nt ract ua l rel at io ns , an d co nv ers io n. Upo n cro ss -m ot io ns fo r su m m ar y jud gm en t, th e di st ric t co ur t, on Mar ch 1, 20 10

,
gr an te d Cas ey 's m ot io n an d de ni ed Dru ry 's. Ove r a ye ar la te r on Mar ch 15

, 20 11

, 2

Dru ry fil ed a se co nd m ot io n fo r su m m ary jud gm en t, cl ai m in g it was ba se d on ne w

au th or it y

. Thi s cl ai m ed ne w au th or it y was Bo ei ng Co

. v. Thu rm on , No. 4: 9- cv -1 45 6,

2 0 09 W L 47 82 08 5 (E.D. Mo

. Dec. 7, 20 09 ), whi ch was act ua ll y de ci d e d mo n t h s

be fo re t he co ur t ru le d on th e fir st m ot io n for su m m ary jud gm en t. The di st ric t co ur t

de ni ed th is se co nd m ot io n on May 19

, 20 11

. A mo nt h la te r, Dru ry fil ed a th ird

m ot io n, th is ti m e fo r reco ns id er a t i o n , whi ch th e di st ric t co ur t al so de ni ed

. Afte r

en te rin g fin al jud gm en t, the di st ric t co ur t award ed Cas ey at to rn ey s' fees in cu rred aft er

Cas ey rece iv ed Dru ry 's m ot io n fo r reco ns id erat io n. In th e or de r award in g fees , t he

di st ric t cou rt no te d th at Dru ry ha d st ret ch ed ou t th e li ti ga ti on m or e th an a y ear afte r

th e in it ia l d eci si on for no leg it im at e rea so n.

Dru ry ap pe al s fro m th at se rie s of or de rs , arg ui ng th at th e di st ric t co ur t erre d in

de nyi n g th e cl ai m s fo r en fo rcem en t of an eq ui ta bl e li en an d co nv ers io n, an d in

award in g at to rn ey s' fees to Cas ey

. W e fin d no erro r an d co ns eq ue nt l y affi rm th e

di st ric t co ur t o n a ll is su es

.

II

W e m us t fir st co ns id er whe th er th e di st ric t co ur t erre d in gr an ti ng Dru ry le av e

to fil e an un ti m el y no ti ce of ap pe al un de r Fed eral Ru le of App el la te Pro ced ur e 4( a).
"[T]he ti m e li m it s se t fo rth in [Ru le ] 4( a) are juri sd ic ti on a l b e c au se th e li m it s are

The cas e rem ai ne d o pe n a nd no jud gm en t en te red un de r Fed . R. Civ . P. 58 2

be cau se th e p or ti on of t he cas e ag ai ns t Se an God in g h ad be en st ay ed by the
ba nk ru pt cy

fil in g.

-4

-de riv ed fro m st at ut e, 28 U.S.C. § 21 07 (a)." Uni te d St at es v. W at so n, 62 3 F.3 d 54 2,

54 5 (8 th Ci r. 20 10 ) (ci ti ng Bo wles v. Ru s s e l l

, 55 1 U.S. 20 5, 21 2– 13 (2 00 7) ). W e

rev ie w a di st ric t co ur t's gr an t of a mo t i o n f o r ex te ns io n of ti m e to fil e a no ti ce of

ap pe al for ab us e o f di sc ret io n. Me tro . Fed

. Ban k, F.S.B. v. W .R. Grace & Co., 99 9

F.2 d 1 25 7, 1 25 9 (8 th Cir . 19 93 ).

Und er Ru le 4( a)( 1 )

, t h e t i m e fo r fil in g a no ti ce of ap pe al is th irt y da y s "af te r

en try of jud gm en t or or de r ap pe al ed fro m ." The di st ric t co ur t m ay ex te nd th e ti m e to

fil e a no ti ce of ap pe al if th e pa rty se ek in g an ex te ns io n "s ho ws ex cu sa bl e ne gl ect or

go od cau se ." Fed

. R. App

. P. 4( a)(5 )(A)(i i). W e co ns id er fo ur fact or s in de te rm in in g

whe th er ex cu sa bl e ne gl ect or go od cau se fo r an ex te ns io n ex is ts : (1 ) t h e da ng er of

pr ejud ic e to th e no n- m ov in g pa rty; (2 ) th e le ng th of de la y an d it s po te nt ia l im pa ct on jud ic ia l pr oc eed in gs ; (3 ) th e reas on fo r th e de la y , in cl ud in g whe th er it was wit hi n th e

reas on a b le co nt ro l of th e m ov an t; an d (4 ) whe th er th e m ov an t act ed in go od fai th

. Lowry v. McDo nn el l Do ug la s C or p., 2 11 F.3d 45 7, 46 2 (20 00 ) (ci ti ng Pi on eer Inv

. Serv s. Co . v. Bru ns wick Ass oc . Ltd . P'sh ip , 50 7 U.S. 3 80 , 39 5 (19 93 )). The se fo ur

fact or s are no t eq ua ll y im po rta nt ; "t he ex cu se gi ve n fo r th e la te fil in g m us t ha ve th e

gr eat es t im

po rt" an d "wi ll al way s be cri ti cal to th e in qu iry." Lowry, 21 1 F.3 d at 46 3.

W e ha ve reco gn iz ed th a t "ex cu sa bl e ne gl ect in cl ud es la te fil in gs cau se d by

i n a d v ert en ce, m is ta ke or care le ss ne ss ." Su ga rb ak er v. SSM Heal th Care

, 18 7 F.3 d

85 3, 85 6 (8t h Cir. 19 99 ) (i nt ern al qu ot at io n m ark s o m it te d) . To be reas on ab le

, it is

no t ne ces sa ry th at th e ne gl ect be "ca us ed by ci rcu m st an ces be y on d th e co nt ro l of th e

m ov an t." Lowry , 21 1 F .3d at 4 63 (in te rn al qu ot at io n m ark s o m it te d)

.

The reas on f

o r D ru ry 's un ti m el y fil in g he re is a co m pu te r erro r. Dru ry 's

co un se l us ed a cal en da rin g ap pl ic at io n to cal cu la te th e da te th irt y da y s fro m th e en try

of fin al jud gm en t, bu t th at ap pl ic at io n pr od uc ed an ou tp ut th at was on e da y la te r th an

th e act ua l de ad li ne . Becau se th e d at e th e p ro gr am pro du ced was a Sat ur da y , Dr ur y

fil ed it s n ot ic e o f ap pe al on th e fo ll owi ng Mo nd ay

.

-5

-The di st ric t co ur t's de te rm in at io n th at th is in ad ve rte nt m is ta ke or care le ss ne ss

was ex cu sa bl e ne gl ect was no t an ab us e of di sc ret io n. Dru ry m is se d th e de ad li ne no t

be cau se it ig no red th e de ad li ne o r pr oc ras ti na te d bu t be cau se it m ad e an erro r in

at te m pt in g to co m

pl y

. Co m

pa re Su ga rb ak er, 18 7 F.3 d at 85 6 (fi nd in g ex cu sa bl e

ne gl ect whe n an at to rn ey at te m pt ed to co m

pl y wit h a de ad li ne bu t m is cal cu la te d it

an d fil ed th e req ue st on e da y la te ), wit h Lowry, 21 1 F.3 d at 46 3– 64 (fi nd in g ne gl ect

was no t ex cu sa bl e whe n th e de la y was du e to "g ard en -v ari et y at to rn ey in at te nt io n,"

an d th e at to rn ey 's ex cu se s fo r it were "t hi n" an d co nf us ed ). Bu t se e Sy m

bi on ic s In c.

v. Or t l i e b

, 4 32 F. App 'x 21 6, 22 0 (4 th Ci r. 20 11 ) (u np ub li sh ed ) ("C ou ns el 's to ta l

de pe nd en ce on a co m

pu te r ap pl ic at io n

. . . to de te rm in e th e fil in g de ad li ne fo r a no ti ce

of ap pe al is ne it he r ex tra ne ou s to no r in de pe nd en t of co un se l's ne gl ig en ce.

. . . [T]his

ne gl ect is pr eci se ly th e so rt of ru n- of -th e-m il l in at te nt iv en es s by co un se l th at we ha ve

co ns is te nt ly decl in ed to ex cu se in th e p as t." (in te rn al qu ot at io n m ark s o m it te d) ).

The ot he r fact or s al so su pp or t th e di st ric t co ur t's fin di ng of ex cu sa bl e ne gl ect

. The fir st two fact or s weig h in fav or of Dru ry : be cau se th e fil in g was on ly on e da y

la te

, bo th th e da ng er to th e no n- m ov in g pa rty an d th e le ng th of de la y were m in im al

. The re was al so no in di cat io n th at D r u r y's ta rd y fil in g was in an y way m ot iv at ed by

ba d fai th

. Acco rd in gl y , th e di st ric t co ur t di d no t a b u s e i ts di sc ret io n in gr an ti ng

3

Dru ry lea ve to fil e an un ti m el y no ti ce o f ap pe al

.

Cas ey as ks us to co ns id er th es e la st th ree fact or s m or e b ro ad ly, arg ui ng we 3

sh ou ld co ns id er Dru ry 's co nd uc t th ro ug ho ut th is la wsu it cu m ul at iv el y al on g wit h th e da ng er to Cas ey , th e de la y , an d th e ba d fait h st em m in g fro m th is pa rti cu la r m ot io n. Howev er, ou r c a s e s d o no t in di cat e th at su ch a br oa d, cu m ul at iv e ap pr oa ch is

ap pr op ria te

, an d we de cl in e to em br ace it he re. See, e.g ., Lowry, 21 1 F.3 d at 46 3– 64 (d is cu ss in g on ly th e im m ed ia te ci rcu m st an ces su rro un di ng th e t a r dy fil in g) ; Su ga rb ak er, 1 87 F.3d at 8 56 (sa m e).

-6

-III

Dru ry at te m

pt s to reco ve r it s su br og at io n li en vi a two av en ue s. Fi rs t, it arg ue s

it m ay en fo rce th e te rm s of th e ERISA Pl an ag ai ns t Ca se y be cau se Cas ey

ag reed to

th o s e t e r ms

. Seco nd , Dr ur y arg ue s th at ev en if Cas ey di d no t ag ree to th os e te rm s,

Dru ry m ay su e Cas ey in eq ui ty. Alt ho u g h w e ag ree th at reco ve ry is ge ne ral ly

po ss ib le un de r ei th er of th os e th eo rie s, se e CGI Tech

. & So lu ti on s, In c. v. Ro se , 68 3

F .3d 11 13

, 11 17 (9 th Ci r. 20 12 ) (n ot in g th at ERISA § 50 2( a)(3 ) do es no t li m it t h e

un iv ers e of pos si bl e de fen da nt s to on ly si gn at or ie s of ERISA pl an s, an d th at eq ui ta bl e

a c t io ns ag ai ns t tru st ees or fid uc ia rie s m ay al so be po ss ib le ), in th is cas e, n e i t h e r

al lo ws Dru ry

to reco ve r.

A

W e no w t u r n t o th e m eri ts of th e cas e an d co ns id er whe th er Cas ey 's

ack no wled gm en t of th e Pl an 's su br og at io n pr ov is io n cr e a t ed an im pl ie d co nt ract

be twee n Cas ey an d Drury. "We rev ie w th e de ci si on to gr an t su m m ary jud gm en t de

no vo an d wil l affi rm if, vi ewin g th e ev id en ce in th e li gh t m os t fav or ab le to th e

no nm ov in g pa rt y, w e c o n cl ud e th ere are no ge nu in e is su es of m at eri al fact an d th e

m ov in g pa rty is en ti tl ed to jud gm en t as a m at te r of la w." Halb ach v. Great -West Life

& Ann ui ty In s. Co

., 56 1 F.3 d 87 2, 87 5 (8 th Ci r. 20 09 ). A su br og at io n a g r e e ment

be twee n a cl ie nt an d an ERISA pl an is on ly en fo rcea bl e ag ai ns t a cl ie nt 's at to rn ey if

th e at to rn ey "ag rees wit h a cl ie nt an d a pl an to ho no r th e p la n's su br og at io n ri gh t."

S. Co un ci l of In du s. W or ke rs v. Fo rd

, 83 F. 3 d 96 6, 96 9 (8 th Ci r. 19 96 ); se e al so

Hot el Em ps . & Res t. Em

ps . I nt 'l Uni on W el fare Fu nd v. Gen tn er, 50 F.3 d 71 9, 72 1
(9 th Ci r. 19 95 ) (Lay

, J., si tt in g by de si gn at io n) ("A su br og at io n ag reem en t or li en can

-7

-be en fo rced ag ai ns t th e at to rn ey on ly if th e at to rn ey ag rees wit h th e cl ie nt an d cred it or

to pro te ct th e li en ."). 4

In Gen tn er, th e Nin th Ci rcu it reas on ed th at "[m ]ere no ti ce or kn owl ed ge of th e

su br og at io n a gr eem en t o r li en do es no t co ns ti tu te an im pl ie d c on tra ct " b et ween th e

at to rn ey an d th e pl an

. Gen tn er, 5 0 F

. 3 d at 72 1. In th at cas e, th e cl ie nt

, Jo se ph

Newel l, rece iv ed be ne fit s fro m an ERISA fu nd fo r in juri es he su ffer ed whe n he was

st ru ck by a car. In co nn ect io n wit h th os e be ne f i ts

, Newel l ex ecu te d a su br og at io n

ag reem en t wit h th e fu nd in whi ch he ag reed to rei m bu rs e th e fu nd fo r al l pa y m en ts

it m ad e to hi m to th e ex te nt th at he rece iv ed m on ey fro m an y ot he r in su rer. Id

. at 72 0.

Newel l's at to rn ey was aware of th e su br og at io n ag reem en t b u t di d no t si gn or

o t h e rwis e ag ree to it

. Id

. The Nin th Ci rcu it he ld th at un de r th es e fact s, th e fu n d

co ul d n ot en fo rce t he li en as a n i m pl ie d c on tra ct ag ai ns t t he att or ne y . Id.

Unl ik e in Gen tn er, th e at to rn e y i n Fo rd no t on ly k ne w a bo ut th e su br og at io n

ag reem en t but al so "h im se lf si gn ed th e su br og at io n ag reem en t." Fo rd

, 83 F.3 d at 96 9.

In th at cas e, be f

o r e t h e cl ie nt se tt le d he r pe rs on al in jury cl ai m wit h th e pl an

ad m in is tra to r, bo th sh e an d he r at to rn ey "s ig ne d a su br og at io n ag reem en t pr ov id in g

th at th ey wou l d r e i mb u r s e th e fu nd fro m th e pr oc eed s of an y reco ve ry rece iv ed fo r [th e cl ie nt 's] in

juri es ." Id

. at 96 8. Thi s was th e ke y fact fo r ou r ho ld in g in th at cas e.

In CGI Tech no lo gi es , th e Nin th Ci rcu it reco gn iz ed the ab ro ga tio n of Gen tn er's 4

ho ld in g th at th e un iv ers e of po ss ib le de fen da nt s un de r § 50 2( a) (3 ) on ly in cl ud es

at to rn ey s whe n th ey were si gn at or ie s of ERISA pl an s. 68 3 F.3 d at 11 17 (ci ti ng Harri s Trus t & Sav in gs Ban k v. Sal om on Sm it h Barn ey , 5 30 U.S. 2 38 (2 00 0) )

. A s d i s c us se d ab ov e, we ag ree wit h th e Nin th Ci rcu it th at at to rn ey s m ay be li a b l e i n

eq ui ty ev en if th ey are no t si gn at or ie s to ERISA pl an s. Howev er, we be li ev e Gen tn er is st il l v a l i d an d in st ru ct iv e wit h reg ard to it s an al y si s of th e ci rcu m st an ces un de r whi ch at to rn ey s m ay b e co m e si gn at or ie s to ERISA pl an s. Acco rd in gl y , ou r refe ren ces to Gen tn er sh ou ld be un de rs to od to rel y on ly on th at cas e's an al y si s of th at

na rro w is su e.

-8

-Id

. at 96 9. C i t i n g Gen tn er, we de te rm in ed th at "[b ]ecaus e [th e at to rn ey ] hi m se lf

si gn ed th e su br og at io n ag reem en t,

. . . t h e c o mp l ai nt al so st at ed an ERISA cl ai m

ag ai ns t h im

for vi ol at io n o f th e su br og at io n c la us e." Id

.

Here, Dru ry arg ue s th at Cas ey sh ou ld be bo un d by th e su br og at io n ag reem en t

on th e ba si s of t w o l e t t e r s C as ey se nt to Dru ry

. Fi rs t, in a Ja nu ary 15

, 20 09 le tt er,

Cas ey wro te : "Th is wil l co nf irm th at we do ack no wled ge Dru ry In ns , In c.'s li en in th is

m at te r." And se co nd

, in a Mar ch 16

, 20 09 le tt er: "we are no t ch al le ng in g y ou r rig ht

to rei m bu rs em en t/ su br og at io n fo r pa y m en ts m ad e fo r th e he al th care of Sean God in g

rel at in g [s ic ] th e in

juri es cau se d b y

hi s fall at th e Hil to n." Thes e st at em en ts cle arl y

ack no wled ge th e va li di ty an d ex is te nc e of a su br og at io n ag reem en t be twee n God in g

a n d Dru ry

. Howev er, ab se nt fro m th es e st at em en ts or an y ot he r co m m un ic at io n

id en ti fie d by Dru ry is a pr om is e by Ca se y t o t a k e a n y a ct io n to hi m se lf en fo rce th e

su br og at io n a gr eem en t o r ev en to en su re t ha t Go di ng ab id e b y it

.

W it ho ut su ch a pr om is e, th e ack no wled gm en t al on e is in su ffi ci en t to es ta bl is h

an im pl ie d c on tra ct . As th e d is tri ct co ur t n ot ed

,

th is is no t a cas e li ke Fo rd

, i n w h i c h th e la wy er act ua ll y si gn ed th e

su br og at io n ag reem en t. Nor is it a cas e in whi ch t h e la wy er

un eq ui vo cal ly ag reed to tra ns m it a sp e c i f i e d am ou nt of m on ey to th e pl ai nt iff up on th e se tt le m en t of th e un d e r lying cas e. In st ead

, th e

co rres po nd en ce co ns is ts of no th in g m or e tha n a sim ple ack no wled gm en t
th at th e pl ai nt iff he ld a li en ag ai ns t th e se tt le m en t pr oc eed s by vi rtu e of

it s su br og at io n ag reem en t wit h God in g. Agai n, Ca se y was no t a pa rty

to t h a t s ub ro ga ti on ag reem en t, an d th ere is no ot he r ev id en ce of a

pr of es si on al or co nt ract ua l rel at io ns hi p be twee n pl ai nt iff an d Cas ey th at

wou ld su pp or t a du ty to pl ai nt iff

. And

, as he ld in Gen tn er, m ere no ti ce

or kn owl ed ge of

th e su br og at io n ag reem en t or li en do es no t co ns ti tu te

an im pl ie d co nt ract

. Ult im at el y , al th ou gh Cas ey ack no wled ge d th e li en , it di d n ot ag ree t o h on or or p ro te ct th e li en

.

-9

-Treas ur er, Trus te es of Dru ry In du s., In c. v. Sean God in g and Cas ey & Dev ot i, P.C.,

No. 09 -0 01 21

, sl ip op

. at 4 (E.D. Mo

. Mar ch 1, 20 10 ) (m em or an du m an d or de r). W e

agree wit h th e di st ric t co ur t's well -rea so ne d co nc lu si on on th is is su e. Alt ho ug h Cas ey

a c kn owl ed ge d th e ex is te nc e of th e li en ag ai ns t th e se tt le m en t pr oc eed in gs , i t ne v e r

ag reed wit h Dru ry an d God in g to ho no r th e Pl an 's su br og at io n rig ht

. Bec au se Cas ey

was no t a p art y

to th e su br og at io n ag reem en t, Dru ry can no t en fo rce th at ag reem en t

ag ai ns t Ca se y

.

B

Dru ry arg ue s th at ev en if Cas ey di d no t it se lf ag ree to th e su br og at io n

ag reem en t in th e Pl an , it st il l ha s an eq ui ta bl e rem ed y ag ai ns t Cas ey be cau se "Dru ry 's

li en att ach ed at th e m om en t Case y rece iv ed th e di sp ut ed se tt le m en t fun ds on be ha lf

of God in g." Howev er, t h i s a r gu m en t is un av ai li ng

. Sect io n 50 2( a)(3 ) of ERISA

au th or iz es pe rs on s to br in g a ci vi l act io n fo r vi ol at io n of a pl an , bu t on ly to ob ta in

eq ui ta bl e, no t le ga l, rel ie f. 29 U.S.C. § 11 32 (a)( 3) ; se e al so Grea t -West Life &

Ann ui ty Ins . Co. v. Knu ds on , 53 4 U.S. 20 4, 21 0 (2 00 2) (li m it in g e qu it ab le rel ie f in

§ 50 2( a)(3 ) to "t ho se cat eg or ie s of rel ie f th at were t y p i c al ly av ai la bl e in eq ui ty."
(in te rn al qu ot at io n m ark s o m it te d) ).

In eq ui ty, th ere was no cau se fo r res ti tu ti on whe re th e tru st ee of pr op ert y

wro ng fu ll y di sp os ed of an ot he r's pr op ert y , bu t no lo ng er he ld t h a t p r o p ert y or it s

pr od uc t. Knu ds on 52 4 U.S. at 21 3– 14 (q uo ti ng Res ta te m en t (Fi rs t) of Res ti tu ti on § 21 5 (1 93 7) ). A pa rty who ha s be en wro ng f u l l y d i v e s t e d of it s pr op ert y was no t

en t i tl ed to eq ui ta bl e rel ie f "m erel y be cau se of th e ch arac te r of th e wro ng do ne to

hi m ." Re s t a t e men t Res ti tu ti on , at § 21 5( 1) cm t. a (1 93 7)

. In st ead

, it co ul d on ly

r e c o v er if it pr ov ed no t on ly th at th e ot he r pa rty "o nc e ha d pr op ert y le ga ll y o r

eq ui ta bl y be lo ng in g to [it ], " bu t al so "t ha t he st il l ho ld s th e pr op ert y or pr o p e rti es

whi ch is in who le or pa rt it s pr od uc t." Id

. The Res ta te m en t de sc rib es th is di st in ct io n

be twee n l eg al an d e qu it ab le rem ed ie s as fol lo ws:

-1 0-if it is sh own th at th e pr op ert y or pr oc eed s ha ve be en di ss ip at ed so th at

no pr od uc t rem ai ns , [th e pa rty's] cl ai m is on ly th at of a ge ne ral cred it or of th e w ro ng do er. Thu s, if th e wro ng do er ha s us ed th e m on ey of th e cl ai man t in sp ecu la ti on an d ha s lo st it al l, th e cl ai m an t can no t en fo rce

a co ns tru ct iv e tru st of or a n e q u i t a bl e li en up on ot he r pr op ert y of th e

wro ng do er, an d ha s on ly a pe rs on al cl ai m ag ai ns t th e wro ng do er, an d is

no t en ti tl ed to pri or it y

ov er o th er cre di to rs of t he wron gd oe r.

I d

. I n ot he r wor ds

, whe re th e wro ng do er no lo ng er ha s th e pr op ert y at is su e in it s

po ss es si on , th e cl ai m ag ai ns t th at pa rty is le ga l, no t eq ui ta bl e. Knu ds on , 53 4 U.S. at

21 0.

Bec au se th e reci pi en ts of ERISA be ne fit s in Great W es t Li f e & Ann ui ty

In su ran ce Co

. v. Knu ds on no lo ng er po ss es se d th e se tt le m en t fu nd s to whi ch th e pl an

cl ai m ed en ti tl em en t, Great W es t ha d no eq ui ta bl e cl ai m an d co ul d no t reco ve r th os e

be ne fit s. Knu ds on , 53 4 U.S. at 21 4. The cl ai m in th at cas e was si m il ar to th e on e

h ere. The Knu ds on s ha d rece iv ed be ne fit s un de r an ERISA pl an an d ha d al so

co ll ect ed m on ey in a ci vi l se tt le m en t. The ER ISA pl an co nt ai ne d a su br og at io n

cl au se , un de r whi ch th e co ve red em pl oyees were ob li ga te d to ret ur n be ne fit s to Great

W es t to th e ex te nt th ey rece iv ed co m pe ns at io n f

or th e sa m e in

juri es fro m an ot he r

so ur ce. Id

. at 20 7. The se tt le m en t f u n d s i n t h a t cas e were no t pa id di rect ly to th e

Knu ds on s bu t were di sb ur se d by two ch eck s, on e t o r e sp on de nt s' at to rn ey an d th e

ot he r to a Sp eci al Need s Trus t (as req ui red by Cal ifo rn ia la w). Id

. a t 2 1 4

. Thu s, "[t ]he ba si s fo r pe ti ti on ers ' cl ai m [was ] no t th at res po nd en ts [h el d] p a r t i cu la r fu nd s

th at

, in go od co ns ci en c e , be lo ng [ed ] to pe ti ti on ers , bu t th at pe ti ti on ers [were ]

co nt ract ua ll y

en ti tl ed to so me fun ds for be ne fit s th at th ey co nf erre d." Id. Th e k in d

of res ti tu ti on Great W es t so ug ht

, "t he refo re, [was ] no t eq ui ta bl e—t he im po si ti on of

a co ns tru ct iv e tru st or eq ui ta bl e li en on pa rti cu la r pr op ert y —b ut le ga l— th e

im po si ti on of pe rs on al li ab il it y fo r th e be ne fit s th at th ey co nf erre d on res po nd en ts ."

Id

.

-1 1-On th e ot he r ha nd

, in Sere bo ff v. Mi d Atl an ti c Med ic al Serv ic es In c., 54 7 U.S.

35 6 (2 00 6) , th e Ser eb of

fs , reci pi en ts of ERI SA be ne fit s, ac tu al ly recei ve d a nd he ld

th e be ne fit s fro m th ei r se tt le m en t, an d th us Mi d Atl an ti c co ul d m ai nt ai n an eq ui ta bl e

act io n ag ai ns t th em

. I d

. a t 36 2– 63

. Thi s was be cau se Mi d Atl an ti c "s ou gh t

sp eci fic al ly id en ti fia bl e f u n d s t h at were wit hi n th e po ss es si on an d co nt ro l of th e

Sere bo ffs —t ha t po rti on of th e to rt se tt le m en t du e Mi d Atl an ti c un de r th e te rm s of th e

ERISA pl an , se t as id e an d pr es erv ed in th e Sere bo ff's in ve st m en t acco un ts ." Id .; se e

al so Lon ga be rg er Co

. v. Kol t, 58 6 F.3 d 45 9, 46 9 (6 th Ci r. 20 09 ) (h ol di ng th at

eq ui ta bl e rel ie f un de r § 50 2( a)(3 ) was pr op er be cau se Lo ng ab erg er "p ro pe rly

id en ti fie d a sp eci fic fu nd

. . . th at was in t h e po ss es si on an d le ga l co nt ro l of [th e

de fen da nt ], bu t b el on ge d i n g oo d c on sc ie nc e to th e Pl an .").

Here, lik e in Knu ds on , Dru ry is ess en ti al ly at te m

pt in g to im

po se pe rs on al

, or

le ga l, li ab il it y on Cas ey fo r th e be ne fit s it co nf erre d on God in g. Afte r rece iv in g th e

se tt le m en t fu nd s fro m God in g's pe rs on al in jury la w su it

, Cas ey in it ia ll y he ld in tru st

th e $1 1,4 23 .79 to whi ch Dru ry cl ai m s an in te res t, bu t he ev en tu al ly d i s b u r s e d th e

en ti ret y of th at su m to God in g. Cas ey th us no lo ng er ha s an y m on ey to whi ch Dru ry

cl ai m s an in te res t. Acco rd in gl y , an y act io n by Dru ry to reco ve r fro m Cas ey is le ga l,

no t eq ui ta bl e. Bec au se § 50 2( a)(3 ) al lo ws on ly eq ui ta bl e rel ie f, th e di st ric t co ur t was

co rrec t i n d en y in g Dru ry 's m ot io n fo r su m m ary jud gm en t o n t hi s i ss ue

.

C

Dru ry al so at te m

pt s to br in g a st at e cau se of act io n ag ai ns t Ca s e y fo r

co n v e rs io n of th e se tt le m en t fu nd s ov er whi ch Dru ry as se rts an in te res t. Howev er,

we m ay no t co ns id er th is cau se of act io n be cau se it is pr eem pt ed by ERISA. ERISA's

pr eem pt io n pro vi si on st at es it s enfo rcem en t pro vi si on s "s ha ll su pe rs ed e an y an d all

St at e la ws i ns of

ar as th ey m ay

no w or h erea fte r rel at e to an y em pl oyee be ne fit pl an

de sc rib ed in se ct io n 10 03 (a) of th is ti tl e." 29 U.S.C. § 11 44 (a); Aetn a Heal th In c. v.

Dav il a, 54 2 U.S. 20 0, 20 9 (2 00 4)

. Co n gr es s in te nd ed co ur ts to read th is pr ov is io n

-1 2-b r o a d l y, in or de r to pr ot ect ERISA's "u ni fo rm reg ul at or y reg im e ov er em pl oyee

be ne fit pl an s." Dav il a, 54 2 U.S. at 20 8. In pa rti cu la r, th e Co ur t ha s so ug ht to pr ot ect

ERISA's "i nt eg rat ed en fo rcem en t m ec h a n i s m," § 50 2( a), whi ch "i s a di st in ct iv e

feat ur e of ERISA, an d es se nt ia l to acco m pl is h Co ng re s s ' p u r

po se of crea ti ng a

co m pr eh en si ve st at ut e fo r th e reg ul at io n of em pl oyee be ne fit pl an s." Id

. at 20 8; se e

al so Pi lo t Life In s. Co

. v. Ded e a u x, 48 1 U.S. 41

, 54 (1 98 7) ("Th e si x care fu ll y

in te gr at ed c i v i l e n f

o r cem en t pr ov is io ns fo un d in § 50 2( a) of th e st at ut e as fin al ly

en act ed

. . . pr ov id e st ro ng ev id en ce tha t Con gr es s di d no t in te nd to au th or iz e o th er

rem ed ie s th at it si m

pl y fo rg ot to in co rp or at e ex pr es sl y ." (in te rn al qu ot at io n m ark s

om it te d) ).

ERISA pr eem

pt s st at e cau se s of act io n whe ne ve r "t he in di vi du al is en ti tl ed to

su ch co v e rag e on ly be cau se of th e te rm s of an ERISA-r eg ul at ed em pl oyee be ne fit
pl an , an d whe re no le ga l du ty (s ta te or fed eral ) i n d e p e n de nt of ERISA or th e pl an

te rm s is vi ol at ed ." Dav il a, 54 2 U.S. 20 0, 21 0 (2 00 4)

. "In ot he r wor ds

, if an

in di vi du al

, at so m e po in t in ti m e, co ul d ha ve br ou gh t hi s cl ai m un de r ERISA

§ 50 2( a)(1 )(B)

, an d whe re th ere is no ot he r in de pe nd en t le ga l du ty th at is im pl ic at ed
by a de fen da nt 's act io ns , th en th e i n d i v i du al 's cau se of act io n is co m pl et el y pr eem pt ed by E RISA § 50 2( a)(1 )(B) ." Id

.

Dru ry al le ge s th at th e ERISA Pl an req u i r e d Cas ey to ho ld in tru st an d

ev en tu al ly to ret ur n to Dru ry an y se tt le m en t m on ey God in g rece iv ed fo r hi s in juri es

. Any rig ht th at Dru ry ha s to th e se tt le m en t m on ey ob ta in ed by Cas ey an d God in g was

crea te d by an d em an at es so le ly fro m th e Pl an

. The refo re, D r u r y's o nl y av en ue fo r

en fo rci ng th e su br og at io n ag reem en t in th e Pl an is ERISA; it m ay no t res or t to st at e

la w cau se s o f act io n.

-1 3-IV

Dru ry fin al ly arg ue s th at th e di st ric t co ur t sh ou ld no t ha ve award ed at to rn ey s'

fees in th is cas e. I t a ss ert s th at ERISA § 50 2( a)(1 ) do es no t pe rm it th e award of

at to rn ey s' fees to at to rn ey s th at act as co un se l to th ei r own fir m s, as Cas ey di d he re.

Sect i o n 5 0 2 ( g ) (1 ) pr ov id es th at fo r "an y act io n un de r th is su bc ha pt er

. . . by a

pa rti ci pa nt

, be ne fic ia ry , or fid uc ia ry , th e c o ur t in it s di sc ret io n m ay al lo w a

reas on ab le at to rn ey s' fee an d co st s of act io n to ei th er pa rty." 29 U.S.C. § 11 32 (g )(1 ).

Fo r s u p p o r t

, Dru ry ci te s Kay v. Ehrl er, 49 9 U.S. 43 2 (1 99 1)

, in whi ch th e

Su pr em e Co ur t he ld t h at 42 U.S.C. § 19 88 do es no t pe rm it at to rn ey s' fees fo r an

at to rn ey who rep res en ts hi m se lf pe rs on al ly. Id

. at 43 8. In th at cas e, th e Co ur t no te d

th at "t he wor d 'at to rn ey ' as su m es an ag en cy rel at io ns hi p, an d it se em s li ke ly th at

Co ng res s co nt em

pl at ed an at to rn ey -cl ie nt rel at io ns hi p as th e pr ed ic at e fo r an award

un de r § 19 88 ." Id

. at 43 5– 36

. Thu s, whe re an at to rn ey rep res en ts hi m se lf pe rs on al ly,

an award of at to rn ey s' fees is no t ap pr op ria te

. Im po rta nt ly, ho wev er, the Co ur t als o

no te d in di ct a th a t w h e r e an or ga ni zat io n en ga ge s an in -h ou se at to rn ey , th at

"o rg an iz at io n is no t co m

pa rab le to a pr o se li ti ga nt be cau se th e or ga ni zat io n is al way s

rep res en te d by co un se l, whe th er in -h ou se o r p r o bo no , a nd th us , t he re is al way s an

at to rn ey -cl ie nt rel at io ns hi p." Id. at 43 6 n .7.

Si n ce Kay

, th ree of ou r si st er ci rcu it s ha ve rel ie d on fo ot no te 7 to ho ld th at

,

un li ke at to rn ey s who rep res en t t he m se lv es pe rs on al ly, in -h ou se at to rn ey s fo r la w

fir m s (an d fo r or ga ni zat io ns in ge ne ral ) m ay be en ti tl ed to award s of at to rn ey s' fees

. In Bak er & Hos te tl er v. Uni te d S t a t e s D e p a rtment of Co m m erce , th e D.C. Ci rcu it

reas on ed th at

[i]n ex pl ai ni ng th at or ga ni zat io ns m ay reco ve r fees whe n rep res en te d by

in -h ou se co un se l, th e Su pr em e Co ur t di d no t di st in gu is h be twee n la w fir m s an d ot he r types of or ga ni zat io ns . No r can we se e an y pr in ci pl ed
ba si s fo r m ak in g su ch a di st in ct io n. Fo ot no te 7 s u gg es ts th at an in

-

-1 4-ho us e co un se l fo r a co r p or at io n is su ffi ci en tl y in de pe nd en t to en su re

effe ct iv e pr os ecu ti on of cl ai m s, th us jus ti f yin g fees

. An at to rn ey who

wor ks fo r a la w fir m cert ai nl y is no le ss in de pe nd en t th an an at to rn ey

w h o wor ks fo r a co rp or at io n. The refo re, it wou ld m ak e li tt le s e n s e t o sl ic e an d di ce K a y's co nc lu si on reg ard in g "o rg an iz at io ns " an d ap pl y fo ot no te 7 t o so me org an iz at io ns bu t n ot ot he rs

.

47 3 F.3d 31 2, 32 5 (C.A.D.C. 20 06 ); se e al so Bo nd v. Bl um , 31 7 F.3 d 38 5, 40 0 (4 th

Ci r. 20 03 ) ("Th ou gh rep res en ta ti on of a la w fir m by on e of it s m em be rs pr es en ts an

in crea se d ris k of em ot io na l in vo lv em en t an d lo ss of in de pe nd en ce, th e la w fir m st il l

rem ai ns a bu si ne ss an d pr of es si on al en ti ty di st in ct fro m it s m em be rs , an d th e m em

be r

rep res en ti ng th e fir m as an en ti ty rep res en ts th e fir m 's di st in ct in te res ts in th e ag en cy

re la tio nshi p inh er en t in th e at to rn ey -cl ie nt rel at io ns hi p." ); Gol d, W eem s, Bru se r, Su es

& Ru nd el l v. Met al Sal es Mfg

. Co rp ., 23 6 F.3 d 21 4, 21 8– 19 (5 th Ci r. 20 00 ) ("[ W ]hen

an or ga ni zat io n is rep res en te d by an at to rn ey em pl oyed by th e or ga ni z a ti on , th e

at to rn ey ha s a s ta tu s s ep arat e fro m th e cl ie nt .").

W e joi n th e Fo ur th

, Fi fth

, a n d D.C. Ci rcu it s to ho ld th at

, whe re an at to rn ey

rep res en ts hi s or he r own fir m , Katz do es no t fo rb id th e award of at to rn ey s' fees

. W e

ag ree th at th ere is no m ean in gf ul di st in ct io n be twee n a la w fir m an d an y ot he r

or ga ni zat io n on th e is su e of whe th er th ere ex is ts an at to rn ey -cl ie nt rel at io ns hi p

be twee n t he org an iz at io n a nd it s at to rn ey

.

Mo reo ve r, we ho ld th at th e di st ric t co ur t d i d n o t ab us e it s di sc ret io n in

award in g at to rn ey s' fees in th is cas e. See Newbe rry v. Bu rli ng to n Bas ke t Co

., 62 2

F

. 3d 97 9, 98 2 (8 th Ci r. 20 10 ) (s ta nd ard of rev ie w). In de ci di ng whe th er to award

at to rn ey s' fe es , th e d is tri ct co ur t s ho ul d c on si de r th e fo ll owi ng fact or s:

( 1 ) t he de gr ee of th e op po si ng pa rti es ' cu lp ab il it y or ba d fai th ; ( 2 ) t h e ab il it y of th e o p p o si ng pa rti es to sa ti sf y an award of at to rn ey s' fees ; (3 ) whe t h e r an award of at to rn ey s' fees ag ai ns t th e op po si ng pa rti es

co ul d de te r ot he r pe rs on s act in g un de r si m il ar ci rcu m st an ces ;

-1 5-(4 ) whe th er th e pa rti es re q u e st in g at to rn ey s' fees so ug ht to be ne fit al l

pa rti ci pa nt s an d be ne fic ia rie s of an ERISA pl a n o r t o res ol ve a si gn ifi can t le ga l qe us ti on [s ic ] reg ard in g ERISA i t s e l f; an d (5 ) th e rel at iv e m eri ts of t he pa rti es po si ti on s.

Lawren ce v. W es te rh au s, 74 9 F.2 d 49 4, 49 6 (8 th Ci r. 19 84 ) (in te rn al qu ot at io n

m ark s o m it te d)

.

Here, t he di st ric t awa rd ed Cas ey att or ne y s' fe es no t fo r th e en ti re ca se , bu t o nl y for th e ex pe ns es ass oc ia te d wi th th e m ot io n fo r rec on si de rat io n:

Alt ho ug h th e Co ur t is no t co nv in ced th at Cas ey is en ti tl ed to th e en ti ret y of it s at to rn ey 's fe es , th e Co ur t bel ie ve s th at pl ai nt iff cau se d def en da nt
Cas ey to un ne ces sa ril y in cu r ad di ti on al li ti ga ti on ex pe ns es su bs eq ue nt

to pl ai nt iff

's fil in g it s Mo ti on fo r Rec on si de rat io n. By th at ti m e, Cas ey ha d p rev ai le d n ot on ce, b ut twi ce, an d th e Mo ti on for Reco ns id erat io n

was by the n e nt ire ly rearg um en t an d wi th ou t m eri t.

The co ur t al so di sc us se d th e se co nd th ro ug h fif th fact or s f

r o m La wren ce,

fin di ng th at Dru ry co ul d sa ti sf y a fee award

, th e award wou ld de te r ot he rs fro m

en ga gi ng in di la to ry ta ct ic s, Cas ey so ug ht to he lp ot he r Pl an be ne fic ia rie s an d

pa rti ci pa nt s to ob ta in rep res en ta ti on in to rt act io ns , an d th e rel at iv e m eri ts were

ap pa ren t be cau se Dru ry "l os t it s cas e, on th e m e rit s, as a m at te r of la w, t hr ee

ti m es ." Alt ho ug h Dru ry arg ue s th at th es e fact or s do no t ne ces si ta te an award

of at to rn ey s' fees in th is cas e, th e di st ric t co ur t w as well wit hi n it s di sc ret io n

in award in g t he m

.

Acco rd in gl y , we affi rm

th e d eci si on of t he di st ric t co ur t.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-1 6-