## F I L E D United States Court of Appeals Tenth Circuit 

### DEC 10 2004 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

SANDY CALLERY, Plaintiff - Appellant,

vs. THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK; JB’S RESTAURANTS, INC.; JB’S FAMILY RESTAURANTS; STAR BUFFET, Defendants - Appellees.

------------------- AARP; SECRETARY OF LABOR, Amici Curiae. No. 03-4097

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH (D.C. No. 02-CV-524-C)
Brian S. King, Salt Lake City, Utah, for Plaintiff - Appellant. W. Mark Gavre, Parsons, Behle & Latimer, Salt Lake City, Utah, for Defendants - Appellees. Karen L. Handorf, Deputy Associate Solicitor, (and Elizabeth Hopkins, Counsel for Appellate and Special Litigation Plans Benefits Security Division, with her on- 2 -

the brief, Howard M. Radzely, Acting Solicitor of L abor, Timothy D. Hauser, Associate Solicitor, and Adrienne K. Dwyer, Trial Attorney, Plan Benefits Security Division, on the brief), Office of the Sol icitor, Plans Benefits Security Division, Washington, D.C., for Amicus Curiae. Mary Ellen Signorille, (and Melvin R. Radowitz, on the brief), AARP Foundation, Washington, D.C., for Amicus Curiae AARP.

Before KELLY , HOLLOWAY , and LUCERO , Circuit Judges.

KELLY , Circuit Judge.

Plaintiff-Appellant Sandy Callery appeals from a ju dgment on the pleadings in favor of Defendant-Appellee Star Buffet. The di strict court held that the monetary award sought by Ms. Callery did not consti tute “appropriate equitable relief” under § 502(a)(3) of ERISA. We have jurisd iction pursuant to 28 U.S.C. § 1291, and we affirm.

Background In 1994, Plaintiff-Appellant Sandy Callery filled o ut an application for life insurance with The United States Life Insurance Company in the City of New York. (“U.S. Life”). The group insurance was spon sored by her employer. In addition to her own coverage and coverage for child ren, she selected “Life insurance for spouse” in the amount of $100,000. O n August 29, 1997, Mr. and Mrs. Callery divorced, but she continued to pay lif e insurance premiums for Mr.- 3 -

Callery’s coverage until his death on February 28, 2000. Ms. Callery applied for the benefits, and U.S. Life denied coverage based upon a policy exclusion providing for termination of a spouse’s eligibilityfor life insurance upon divorce. U.S. Life provided her a copy of the policy, and re funded the premiums she had paid. Ms. Callery filed suit against U.S. Life and her employers, J.B.’s Restaurants, Inc., J.B.’s Family Restaurants, Inc., and Star Buffet, Inc., claiming that Defendants violated ERISA’s notice requirement s, 29 U.S.C. § 1021, and breached their fiduciary duties, Id. § 1104(a)(1), by failing to provide her copy of the summary plan description (“SPD”). Aplt. App. 8 -9. Her complaint sought a judgment in her favor of $100,000, plus prejudgmentinterest, and attorney’s fees and costs, though one claim referred to this relief as “equitable relief.” Id. at 9. As the litigation progressed, it became clear that Ms. Callery sought a remedy under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), co ntending that “appropriate equitable relief” would include the face value of t he life insurance policy. Following dismissal of all other defendants withoutprejudice, Star Buffet moved for judgment on the pleadings pursuant to Fed . R. Civ. P. 12(c), arguing “appropriate equitable relief” under § 502(a)(3) do es not include the payment of $100,000, which would be the equivalent of the life insurance proceeds. In an oral ruling followed by a summary order, the distri ct court granted the motion.- 4 -

Ms. Callery now appeals.

Discussion We review the district court’s grant of judgment on the pleadings pursuant to Rule 12(c) under the same standard of review app licable to a Rule 12(b)(6) motion. Ramirez v. Dep’t of Corr. , 222 F.3d 1238, 1240 (10th Cir. 2000). Thus review is de novo, applying the same standard as th e district court. Id. All wellpleaded allegations in the complaint are accepted a s true and construed in the light most favorable to the plaintiff. Id. A complaint should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle [her] to relief.” Conley v. Gibson , 355 U.S. 41, 45-46 (1957). Section 502 authorizes a civil action “by a partici pant, beneficiary, or fiduciary (A) to enjoin any act or practice which v iolates . . . 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 . . . the terms of the plan.” 29 U.S.C. § 1132(a)(3). The only issue is whether ERI SA’s limitation of remedies to “appropriate equitable relief” allows monetary reli ef in these circumstances. A. Appropriate Equitable Relief The Supreme Court has addressed the meaning of “app ropriate equitable- 5 -

relief” under § 502(a)(3) in several opinions, incl uding Great-West Life & Annuity Insurance Co. v. Knudson , 534 U.S. 204, 209-21 (2002), and Mertens v. Hewitt Associates , 508 U.S. 248, 251-63 (1993). In both cases, the Court unequivocally rejected attempts to impose personal liability for a contractual obligation to pay money under § 502(a)(3), holding that the term “equitable relief” in § 502(a)(3) refers to “those categories of relief that were typically available in equity (such as injunction, mandamus, and restitution, but not compensatory damages).” Mertens , 508 U.S. at 256; see also Great-West , 534
U.S. at 210.
In Mertens , a class of former steel industry employees partic ipating in a qualified pension plan brought suit against a non-f iduciary, seeking monetary relief under § 502(a)(3). Mertens , 508 U.S. at 250. The Court concluded that although the employees “often dance around the word , what [they] in fact seek is nothing other than compensatory damages” in the for m of monetary relief for damages resulting from the alleged breach of fiduci ary duty. Id. at 255. “Money damages are, of course, the classic form of legal r elief.” Id.
In Great-West , the Court further elaborated on the meaning of “appropriate equitable relief.” In that case, Great-West provid ed coverage to the defendantbeneficiary, who was severely injured in a car acci dent, pursuant to a plan that included a reimbursement provision. Great-West , 534 U.S. at 207. Great-West- 6 -

sought to recover monies paid by a third party to t he beneficiary under the reimbursement provision through § 502(a)(3). Id. at 208. The Court rejected its claim, holding that Great-West was merely seeking, “in essence, to impose personal liability on respondents for a contractual obligation to pay money -- relief that was not typically available in equity.” Id. at 210. Reaffirming its previous holding in Mertens , the Court stated that “we rejected a reading of t he statute that would extend the relief obtainable und er § 502(a)(3) to whatever relief a court of equity is empowered to provide in the particular case at issue (which could include legal remedies that would othe rwise be beyond the scope of the equity court’s authority).” Id. (citing Mertens , 508 U.S. at 257-58). The Court specifically rejected the argument that the m onetary payment sought was equitable relief, stating that “an injunction to co mpel the payment of money past due under a contract, or specific performance of a past due monetary obligation, was not typically available in equity.” Id. at 210-11. The Tenth Circuit has followed this reasoning, conc luding that generally “monetary compensation for economic or other harm” is unavailable under ERISA. Moffett v. Halliburton Energy Servs., Inc. , 291 F.3d 1227, 1234 (10th Cir. 2002); see also Millsap v. McDonnell Douglas Corp. , 368 F.3d 1246, 1251- 54 (10th Cir. 2004) (concluding that back pay was appropriately classified as legal relief).- 7 -

In her complaint, Ms. Callery seeks “payment of ins urance on the life of John Callery in the amount of $100,000” and “equita ble relief providing for payment of the insurance on the life of John Callery.” Aplt. App. 8-9. In her opposition to the Rule 12(c) motion, she is more sp ecific. She asks the court “to enjoin the defendants from not paying her the life insurance benefits.” Aplt. App. 69. In the alternative, she seeks “an order estopp ing Defendant’s from denying” the claim. Id. at 70. She also claims that equitable remedies su ch as constructive trust or equitable lien might be appropriate, as we ll as restitution or specific performance. Id. at 70, 74. Ms. Callery necessarily avoids the term “compensato ry damages.” As the Court explained, “[a]lmost invariably . . . suits s eeking (whether by judgment, injunction, or declaration) to compel the defendantto pay a sum of money to the plaintiff are suits for ‘money damages,’ as that ph rase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant’s breach of legal duty. And [m]oney dama ges are, of course, the classic form of legalrelief.” Great-West , 534 U.S. at 210 (internal citations and quotations omitted) (emphasis in original). To the extent Ms. Callery seeks payment of the poli cy proceeds, such relief is barred under § 502(a)(3). To the extent she see ks injunctive relief compelling the payment of the policy proceeds, Ms. Callery has dismissed the insurance- 8 -

company from the case and has not alleged that her situation satisfies the limitations placed upon the grant of injunctive rel ief in equity. Great-West , 534 U.S. at 211 n.1. Ms. Callery’s claim might be mostaccurately construed as one for reliance damages, because she claims that the l ack of notice prevented her from obtaining life insurance on her former husbandfrom another source. Included in the record is Ms. Callery’s affidavit s uggesting an insurable interest-- her former husband provided child support for theirchildren. Aplee. App. 20-21. Regardless, such relief is compensatory and not typ ically available in equity. Dan B. Dobbs, Law of Remedies §12.3(1), at 50; see also Caffey v. UNUM Life Ins.
Co. , 302 F.3d 576, 583 (6th Cir. 2002). In the alternative, Ms. Callery argues that followi ng Mertens and GreatWest , numerous courts continue to allow monetary relief under § 502(a)(3). She relies upon Administrative Committee of Wal-Mart St ores, Inc. Associates’ Health & Welfare Plan v. Varco , 338 F.3d 680, 687-88 (7th Cir. 2003) and In re Carpenter , No. 00-2348, 2002 WL 1162277, at *1-2 (4th Cir. J une 3, 2002). These cases merely reflect that awards of equitable restitution damages are still permitted under the Supreme Court’s decisions. In Great-West , the Court stated that restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, was typically available in equity a nd therefore is an appropriate equitable remedy. 534 U.S. at 213. Such restituti on is limited to situations where- 9 -

the money or property can be “traced to particular funds or property in the defendant’s possession.” Id. Ms. Callery, however, is not seeking to regain part icular funds or property. She argues that the full amount of the insurance po licy is the appropriate award of restitution damages under equitable principles. Ho wever, restitution recoveries are based upon a defendant’s gain, not on a plainti ff loss. Great-West , 534 U.S. at 229 (Ginsburg, J., dissenting). Using this appr oach, restitution damages might equal the premiums paid by Ms. Callery to Star Buff et (ignoring that these amounts were probably forwarded to U.S. Life), rath er than the face amount of the policy (the loss to Ms. Callery). These cases simply do not support full compensatory damages, as she requests. In fact, Ms . Callery has already been refunded the premium payments made after her divorc e; she has thus already received restitution damages. Next, Ms. Callery argues that the Supreme Court’s d ecision in Varity Corp.
v. Howe , 516 U.S. 489 (1996), supports her claim. In Vari ty , the issue before the Court was whether individual beneficiaries harmed b y an administrator’s breach of fiduciary obligations may bring suit. 516 U.S. at 492. Importantly, the issue of whether the relief sought, namely reinstatement, was equitable was conceded and not before the Court. Id. at 508. Nevertheless, Ms. Callery argues that the real benefit conveyed was not reimbursement, but rather the monetary benefit- 10 -

associated with reinstatement to a solvent plan. H owever, Ms. Callery never sought relief in the form of reinstatement. In any event, even if the insurance company was still a party and we were to “reinstate ” Ms. Callery to the policy, this, like specific performance of the contract, wo uld entitle her to exercise the contract. The terms of the contract, of course, do not entitle her to payment, because they exclude coverage of former spouses. A ccordingly, Ms. Callery’s claim for full payment of the face value of the pol icy is not analogous to Varity , in which the plaintiffs sought reinstatement in the plan in question. Ms. Callery’s second argument involving Varityis based on the Court’s statement that § 502 of ERISA is a “‘catchall’ prov ision[ that] act[s] as a safety net, offering appropriate equitable relief for inju ries . . . not elsewhere adequately remed[ied].” Id. at 512. Relying on Varity , she argues that “there is no reason to believe Congress would want to immunize breaches of ERISA’s statutory requirements that result in great harm to beneficia ries by denying those beneficiaries any remedy.” Aplt. Br. at 28. An identical argument was rejected by the Supreme C ourt in Mertens , where the Court stated that “vague notions of a statute’s ‘basic purpose’ are nonetheless inadequate to overcome the words of its text regarding the specific issue under consideration,” especially considering the complex and detailed structure of ERISA. 508 U.S. at 261-62; see also Great-West , 534 U.S. at 220-211 Within this argument, Ms. Callery also cites numer ous other cases, which

do not address the issue of appropriate equitable r elief under § 502(a)(3) and are therefore inapposite. See Horn v. Cendant Operations, Inc. , No. 01-5205, 2003 WL 21513210, at *7 (10th Cir. July 3, 2003); MemberServs. Life Ins. Co. v. Am. Nat’l Bank & Trust Co. , 130 F.3d 950 (10th Cir. 1997); Bartlett v. Martin Marietta Operations Support Inc. Life Ins. Plan , 38 F.3d 514 (10th Cir. 1994). - 11 - (rejecting the same argument); Millsap , 368 F.3d at 1259 (rejecting the same argument). Ms. Callery also argues that if she “has no remedy for the undisputed violations of ERISA, the Defendants may ignore ERIS A’s requirements with impunity.” Aplt. Br. at 28. But Ms. Callery has a remedy under ERISA; under § 502(a)(3) she is entitled to “appropriate equitab le relief.” Though the equitable relief she might obtain (i.e. plan compliance with notice requirements in the future or premium returns) would not be as attracti ve as compensatory damages, the limitation of remedy is the product of the stat ute and we must enforce it. Next, Ms. Callery argues that the Tenth Circuit has provided equitable remedies under § 502(a)(3) in order to allow monetary relief in past cases, citing Downie v. Independent Drivers Ass’n Pension Plan , 934 F.2d 1168 (10th Cir. 1991). In Downie , the court used its equitable powers to restore th e parties to their original positions in order to affect the ben eficiary’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. 1- 12 -

Ms. Callery also asserts that her claim is distingu ishable because this case involves an aleatory contract - one that was depend ent upon some fortuitous event that was beyond the control of the parties involved . Restatement (Second) of Contracts § 232 cmt. c (1981). Ms. Callery asserts that with regard to aleatory contracts, the Restatement supports allowing the be neficiary to reach the profits or unjust enrichment realized by the breaching party. The Restatement merely recognizes the rule that a beneficiary may reach any profits resulting from wrongful disposition of trust property by the trust ee, even if the transaction was one that involved a great risk of loss or possibili ty of profit. Restatement (Second) of Trusts § 202 cmt. c. Ms. Callery is no t attempting to reach profits realized by Star Buffet through improper use of herpremiums, and thus this section of the Restatement does not support her cas e. Ms. Callery’s final argument is that other equitabl e relief traditionally available at common law would be appropriate in thi s case, including equitable estoppel, accounting for profits, and reformation. Although other circuits have recognized equitable estoppel in limited circumstan ces in the context of ERISA, the Tenth Circuit has not done so. Miller v. Coast al Corp. , 978 F.2d 622, 625 (10th Cir. 1992); see also Kaus v. Standard Life In s. Co. , 176 F. Supp. 2d 1193,2 Ms. Callery cites Johnson v. Life Investors Insur ance Co. of America ,

996 F. Supp. 1105 (D. Utah 1998) for the propositio n that the Tenth Circuit recognizes equitable estoppel. However, that case dealt with the Utah Insurance Regulations, not ERISA. Id. at 1107. - 13 - 1198-99 (D. Kan. 2001). 2 Millerleft open the possibility that estoppel might be applied in “egregious” cases, 978 F.2d at 625, but Ms. Callery has not alleged such circumstances (lies, fraud or an intent to dec eive) in this case. With regard to Ms. Callery’s claims for accounting for profits and reformation, Ms. Callery did not assert these arguments before the district court. New arguments presented for the first time on appeal are not properly befor e the court and, absent extraordinary circumstances, will not be considered . McDonald v. KinderMorgan, Inc. , 287 F.3d 992, 999 (10th Cir. 2002). B. Suit Against a Fiduciary for Breach of Fiduciary Duty Ms. Callery, and amici Secretary of Labor and AARP, assert that the limited availability of monetary damages in Mertens and Great-Westis inapplicable in this case because those cases invol ved contract breaches by nonfiduciaries, rather than a claim against a fiduciary for a breach of fiduciary duty. Ms. Callery asserts that the monetary relief she se eks was typically available in equity for a breach of fiduciary duty. Eaves v. Pe nn , 587 F.2d 453, 462 (10th Cir. 1978) (“Traditional trust law provides for broad an d flexible equitable remedies in cases involving breaches of fiduciary duty.”). In a breach of trust action- 14 -

against a trustee, monetary relief may be awarded b ased on any losses to the trust or gains by the trustee as a result of the breach. See Restatement (Second) of Trusts § 205. Thus, Ms. Callery and amici assert t hat “the remedies of the beneficiary against the trustee are exclusively equ itable.” Restatement (Second) of Trusts § 197. This issue has never been squarel y addressed by the Tenth Circuit. Ms. Callery argues that decisions in other circuits support her conclusion. In Bowerman v. Wal-Mart Stores, Inc. , 226 F.3d 574, 592 (7th Cir. 2000), the court found that Wal-Mart breached its fiduciary du ty by failing to adequately explain plan coverage and limitations. The Seventh Circuit awarded the “equitable remedy of restitution,” in the form of r einstatement in the plan, id. , totally dissimilar to the relief sought here. In S trom v. Goldman, Sachs & Co. , 202 F.3d 138, 143 (2d Cir. 1999), decided prior to Great-West , the plaintiff sought the amount of money she would have received had the alleged breach of fiduciary duty not resulted in the insurance becomi ng ineffective by the time of her husband’s death. The court noted that such cla ims “have lain at the heart of equitable jurisdiction from time immemorial.” Id. at 144. Thus, the court allowed “make-whole” damages under § 502(a)(3), con cluding that the remedy was typically available in equity because “plaintif f’s claim is based on the alleged breach of a fiduciary duty, a claim that has always been within the exclusive- 15 -

jurisdiction of equity.” Id. at 145. As noted above, the Supreme Court has rejected this broad definition of “equitable remedy” as any remedy that a court of eq uity could grant in favor of those categories of relief that were typicallyavailable in equity. Great-West , 534 U.S. at 219 (rejecting the argument that “the commo n law of trusts provides petitioners with equitable remedies that allow them to bring this action under § 502(a)(3)”). Importantly, the cases relied upon by Ms. Callery w ere decided before
Great-West , and courts have since questioned their continuing validity in light of that decision. Watson v. Deaconess Waltham Hosp. , 298 F.3d 102, 110 n.8 (1st Cir. 2002) (stating that it is unclear whether Bowe rman ’s reasoning that reinstatement is equitable is still valid); Kishterv. Principal Life Ins. Co. , 186 F. Supp. 2d 438, 445 (S.D.N.Y. 2002) (stating that “th e Second Circuit’s reasoning in Stromhas been superseded by Great-West Life ”). While the arguments of amici that we should look to the common law of trus ts and award monetary damages pursuant to an equitable breach of trust by a fiduciary may have been compelling before Great-West , they are not so now. Further, other courts have rejected the distinction made in Stromand
Bowermanbased on the status of the defendant as a fiduciary. For example, in McLeod v. Oregon Lithoprint Inc. , 102 F.3d 376, 378 (9th Cir. 1996), the- 16 -

beneficiary asserted that Mertens did not control because it dealt with the availability of monetary relief against a nonfiduciary . The court stated, “the status of the defendant, whether fiduciary or nonfi duciary, does not affect the question of whether damages constitute ‘appropriate equitable relief’ under § 502(a)(3).” Id. at 378. The court concluded that monetary damages equal to the benefits the beneficiary would have received but fo r the fiduciary’s breach constituted legal relief unavailable under § 502(a) (3). Id. Similarly, in Rego v. Westvaco Corp. , 319 F.3d 140, 144-46 (4th Cir. 2003), Rego requested an order of specific performa nce requiring defendants to issue him stock in compensation for their breach of fiduciary duty. After the district court determined the claim was not equitab le, he argued, on appeal, that at common law, actions for breach of fiduciary duty co uld only be brought in equity. Id. at 145. After considering Mertens and Great-Westand finding that the Supreme Court had “squarely rejected” the argument, the court stated that “the relevant question is not whether a given type of ca se would have been brought in a court of equity, but whether a given type of reli ef was available in equity courts as a general rule.” Id. Ultimately, the court refused to award monetary d amages as equitable relief under § 502(a)(3). Id. ; see also Crosby v. Bowater Inc. Ret. Plan for Salaried Employees of Great N. Paper Inc. , 382 F.3d 587, 596 (6th Cir. 2004) (rejecting plaintiff’s argument that money da mages should be awarded- 17 -

because the suit is by a beneficiary against a fidu ciary, as “explicitly rejected” in
Great-West ); Helfrich v. PNC Bank, Ky., Inc. , 267 F.3d 477, 482-83 (6th Cir. 2001) (“ERISA does not permit plan beneficiaries to claim money damages from plan fiduciaries.”); Kerr v. Charles F. Vatterott & Co ., 184 F.3d 938, 945 (8th Cir. 1999) (determining that a claim for monetary r elief for losses as a result of breach of fiduciary duty was a claim for compensato ry damages not constituting equitable relief); Rogers v. Hartford Life & Accide nt Ins. Co. , 167 F.3d 933, 944 (5th Cir. 1999) (noting “the Supreme Court firmly c losed this door” on the recovery of compensatory damages under § 502(a)(3)) ; Armstrong v. Jefferson Smurfit Corp. , 30 F.3d 11, 13 (1st Cir. 1994) (stating that “the status of the defendant (i.e., fiduciary or nonfiduciary) does no t affect the question of whether compensatory legal damages constitute ‘appropriate equitable relief’”). Though the issue is close, we must adhere to the Supreme Court’s rather emphatic guidance and therefore conclude that in a suit by a beneficiary against a fiduciary, the beneficiary may not be awarded compe nsatory damages as “appropriate equitable relief” under § 502(a)(3) of ERISA.
AFFIRMED.