___________ No. 95-2446

___________ Southern Council of Industrial * Workers; Southern Council of * Industrial Workers Trust Fund, * * Appellants, * Appeal from the United States * District Court for the v. * Eastern District of Arkansas. * [PUBLISHED] Jacqueline F. Ford, Morris W. * Thompson, Valley Forge * Insurance Company, * * Appellees. *

___________ Submitted: April 10, 1996 Filed: May 14, 1996

___________ Before BOWMAN, WOLLMAN, and HANSEN, Circuit Judges.

___________
PER CURIAM.

The South ern Council of Industrial Workers and the Southern Council of Ind ustrial Workers Trust Fund (Southern Council) appeal from th e district court's orde r dismissing for lack of subject matter jurisdiction their acti on under 29 U.S.C. § 1132 of the Employee Retirement Incom e Securi ty Act (ERISA), 29 U.S.C. §§ 1001-1461. We affirm in part an d reverse in part and remand for further proceedings.

I.

So uthern Council's complaint alleged the following: It maintaine d
an employee benefit plan that provided health insurance; the plan containe d a subrogation clause providing that Southern Council would be subrogated, to the extent of payments it had made,

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to the rights of a be neficiary to receive or claim indemnification from a third p arty. Jacqueline F. Ford was a beneficiary under the plan. Sh e sustained injuries af ter falling in a supermarket and received $39,971.35 in medical benefits paid for by the plan. Ford retained attorney Morris Thompson to represent her in her personal injury claim against th e supermarket. Ford's claim was settled for $150,000 paid to her by th e supermarket's insurer, Valley Forge Insurance (Valley Forge). Prior to th e settlement, Ford and Thompson signed a subrogation agreement providing tha t they would reimburse the fund from the proceeds of any recovery received for Ford's injuries, and an agent of Valley Forge indicated to Souther n Council that the subrogation agreement would be honored. The settlement proceeds were release d by Valley Forge and Thompson to Ford, who paid the fund $10,0 00 in reimbursement. Seeking to recover the balance of th e amount it had paid for Ford's medical benefits, Southern Council claimed that by failing to reimburse the fund, (1) Valley Forge and Thompso n breached t heir fiduciary duty owed to the plan; (2) Ford and Thompso n violated the plan's s ubrogation clause and the subrogation agreement; and (3) Ford, Thompson, and Valley Forge appropriate d and converted the assets of the plan.

Southern Council attached to its com plaint a copy of the subrogation agreement signed by Ford and Thompson, which acknowledges subrogation to Southern Council of "my (our) rights" to recover or claim from a thir d party any "indemnification, damage or other payment with respect to [an] injury or sickness," and which further states, "I (we) agree and understan d that the fund will not pay nor share in any legal fees or expenses which may be incurred in connection with such recovery."

Aft er the parties filed cross-motions for summary judgment, th e district court determined that neither Thompson nor Valley Forge was a fiduciary of the plan. Noting that Ford did not contest subject matte r jurisdiction, the court nevertheless

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concl uded that because there was no claim under ERISA against an y defendant, the court did not have jurisdiction, no federal question being raised and the amount in controversy being insufficient to confer diversit y jurisdiction. The court also dismissed the pendent state law claims.

II.

Because the district court did not consider matters outside th e pleadings, we review de novo the dismissal for lack of subject matte r jurisdict ion. See Osborn v. United States , 918 F.2d 724, 730 (8th Cir

. 1990).

A. Fiduciary Duty Claims

We conclude that the district court correctly determined that th e complaint failed to s tate a claim against either Thompson or Valley Forge for violation of a fi duciary duty owed to the plan. Under ERISA, federal district courts have exclusive jurisdiction over civil actions for breach of duty by a fiduciary of a plan. 29 U.S.C. §§ 1132(a)(2) & (e)(1); 1109. A person is a fiduciary of a plan to the extent that person "exercises any

. . . authority or control respecting management or disposition of [th e plan's] assets." 29 U.S.C. § 1002(21)(A).
Thompson did not become a plan fiduc iary merely by representing Ford
or by rel ated control over the settlement proceeds. See Chapman v
. Klemick , 3 F.3d 1508, 1509-11 (11th Cir. 1993), cert. denied , 114 S. Ct. 1191 (1994); see also Witt v. Allstate Ins. Co. , 50 F.3d 536, 537 (8th Cir

. 1995) (citing Chapman with approval). Southern Council's argument that th e result here should be different because Thompson signed the subrogatio n agreement is unpersua sive. "An attorney has an ethical obligation to his
or her client that does not admit of competing allegiances." Chapman , 3 F.3d at 1511. Accordingly, to impose fiduciary

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liability on Thompson would be to subject him to "unacceptable conflicts of interest." Id. Moreover, the subrogation agreement did not by it s terms purport to make Thompson a fiduciary of the plan.
Likewise, Valley Forge, a third-part y insurance company with no preexi sting fiduciary relationship to the plan, was not a fiduciary merel y becau se it possessed or controlled assets to which the plan asserted a claim. See Witt , 50 F.3d at 537. Valley Forge's alleged agreement t o honor Southern Council's subrogation rights did not impose a fiduciary dut y upon it. Valley Forge's duty to its own shareholders and clients coul d very well conflict with any fiduciary duty owed to Southern Council an d subject Valley Forge to irreconcilable obligations. Cf. Useden v. Acker , 947 F.2d 1563, 1575-7 6 (11th Cir. 1991) (concluding that bank's duties to shareh olders and customers could conflict with fiduciary duty to plan

borrower), cert. denied , 508 U.S. 959 (1993).

B. Claims Based on Subrogation Clause and Agreement

We concl ude that the district court erred in determining there wa s no s ubject matter jurisdiction over the claim that Ford violated th e subrogation clause. Federal courts have exclusi ve jurisdiction over civil actions brought by fiduciaries for equitable rel ief to enforce, or redress violations of, terms of ERISA plans. 29 U.S.C. § 1132(a)(3), (e)(1)
. Southern Council's al legation that Ford admittedly failed to reimburse it
as required by the subrogation clause is a claim that Ford failed to compl y with a term of the pl an. See Cooper Tire & Rubber Co. v. St. Paul Fire & Marine Ins. Co. , 48 F.3d 365, 369 (8th Cir.), ce rt. denied , 116 S. Ct. 300 (1995). Southern Council sought specific perfor mance of Ford's obligation under the subrogation clause. See Antoine v. United States , 637 F.2d 1177 , 1182 (8th Cir. 1981) (specific performance is an equitable remedy).

### -5- Becaus e Thompson himself signed the subrogation agreement, w e concl ude that the complaint also stated an ERISA claim against him fo r violati on of the subrogation clause. In Hotel Employees & Restauran t Employees Int'l Union Welfare Fund v. Gentner , 5 0 F.3d 719 (9th Cir. 1995) (Lay, J., sitting by designation), the court addressed an attorney' s liability under section 1132(a)(3) for distribut ing settlement proceeds to
a client without reimbursing a fund, even though the attorney knew of a subro gation agreement between the client and the fund. Id. at 719-21
. Noting that ERISA is silent on the issue, the co urt turned to state law to fashio n an appropriate federal common-law rule and concluded that a n attorney who is not a party to a subrogation agreement does not violate a plan provision by fai ling to reimburse a fund. Id. at 721-22. The court recognized that a subrogation agreement is enfor ceable against an attorney who agrees with a client and a plan to honor the plan's subrogation right. See id. at 721.

C. Pendent Claims
Finally, in light of our conclusion that jurisdiction exists as t o the ERISA claims agai nst Ford and Thompson, the district court should not have dism issed the pendent claims. "[I]n any civil action of which th e district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related t o claims in the action within such original jurisd iction that they form part of the sam e case or controversy . . . ." 28 U.S.C. § 1367(a)
. Supplemental jurisdiction exists over state-law claims where, as here, "th e federal-law claims an d state-law claims in the case `derive from a common nucleus of operative fact' and are `such that [Southern Council] woul d ordi narily be expected to try them all in one judicial proceeding.' " Kansas Public Employe es Retirement Sys. v. Reimer & Koger, Assocs., Inc. , 77 F.3d 1063, 1067 (8 th Cir. 1996) (quoted case omitted). Where original jurisdiction exists, exercise of supplemental jurisdiction over al l adequately related

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claims is mandatory, absent certain exceptions t hat are inapplicable here. See McLaurin v. Prater , 30 F.3d 982, 984-85 (8th Cir. 1994).

III.

The d istrict court's judgment is affirmed in part and reversed i n part, and the case is remanded for further proceedings consistent with thi s opinion.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.