then decide whether the plaintiffs can pursue restitution in this case against Angulo, who did not
receive any of the benefits in question.

1. ERISA Restitution Claims for Improperly-Paid Benefits

The parties agree that ERISA preempts claims for restitution and fraud under the common.
law of Illinois. Plaintiffs, in their complaint, allege that this is a case for restitution that arises
under 29 U.S.C. § 1132 and not under the Illinois common law. Angulo admits that ERISA
provides a cause of action for restitution but argues that plaintiffs cannot pursue that remedy
against him under these facts. The court agrees with the plaintiffs.

According to 29 U.S.C. § 1132:

A civil action may be brought ... by a participant, beneficiary, or fiduciary (A) to

enjoin any act or practice which violates any provision of this subchapter 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 this subchapter or the terms of

the plan.
29 U.S.C. § 1132(a)(3). According to ERISA, a fiduciary is a person who “exercises any
discretionary authority or discretionary control respecting management of such plan ... or... has
any discretionary authority or discretionary responsibility in the administration of such plan.”
29 U.S.C. § 1002(21)(A). Pension fund trustees are considered fiduciaries under ERISA. See
Schmidt v. Sheet Metal Workers’ Nat'l Pension Fund, 128 F.3d 541,547 (7th Cir. 1997) (citing
29 C.F.R. § 2509.75-8(D-3), which rules that pension fund trustees, by nature, have discretionary
authority or responsibility and are, therefore, fiduciaries). Therefore, because the plaintiff

Trustees in this case are ERISA fiduciaries, they are proper plaintiffs to bring this action under

29 U.S.C. § 1132(a)(3).


Having determined that Rule 9(b) applies to this case, the court must decide whether the
complaint satisfies those heightened pleading requirements.

2. The Welfare Fund’s Complaint Does not Comply With Rule 9(b)

Angulo argues that the plaintiffs have failed to plead fraud with sufficient particularity
to satisfy Rule 9(b) because they have not alleged the time, place, or method of Angulo’s alleged
misrepresentations. Plaintiffs contend that the complaint conforms to the Rule 9(b)
requirements. The court agrees with Angulo.

To meet the particularity requirements of Rule 9(b), a complaint must specify the identity
of the person making the misrepresentation, the time, place, and content of the misrepresentation,
and the method by which the misrepresentation was communicated to the plaintiff. Slaney v.
Int'l Amateur Ath. Fed’n, 244 F.3d 580, 597 (7th Cir. 2001). In this case, the complaint
identifies Angulo as one of the parties who is alleged to have made misrepresentations. The
complaint fails, however, to describe the time, place, and methods by which Angulo informed
the Welfare Fund that Rodriguez was his wife. Plaintiffs provide a more detailed description of
Angulo’s and Rodriguez’s methods in their response. However, a plaintiff cannot amend its
complaint in its briefs in opposition to a motion to dismiss. Gomez, 811 F.2d at 1039.
Therefore, the court must not consider those portions of the plaintiffs’ reply and must focus only
upon the sufficiency of the complaint. Because the complaint does not plead the necessary
details of Angulo’s alleged misrepresentations, the court finds that the complaint does not meet

the heightened pleading standards of Rule 9(b).


the plaintiffs can properly seek restitution only from Rodriguez, who received the medical care,
or Rodriguez’s health care providers, who received the money. Plaintiffs argue that Angulo
actively participated in deceiving the Welfare Fund, that deception induced the Welfare Fund
to pay for Rodriguez’s medical care and Angulo’s involvement entitles the plaintiffs to
restitution from Angulo. The court agrees with the plaintiffs.

In cases brought for equitable relief under ERISA, restitution is available when one party
has been unjustly enriched at the expense of another party. Harris Trust & Sav. Bank v.
Provident Life & Accident Ins. Co., 57 F.3d 608, 615 (7th Cir. 1995). A party seeking restitution
must establish: (1) that party had a reasonable expectation to be paid, (2) the enriched party
should have expected to pay, or (3) nonpayment would defeat the reasonable expectations of
society. Jd. This is an unusual] claim for restitution because the plaintiffs are not seeking the
remedy from either Rodriguez or her health care providers — the two parties who have benefitted
from this transaction. Instead, the plaintiffs are seeking restitution from Angulo, who helped
deceive the Welfare Fund but did not receive anything from the transaction.

Another court in this district has ruled that a benefit plan can use ERISA to pursue
restitution against a party who helped deceive the benefit plan, but who did not receive any
benefits. Chicago District Council of Carpenters Pension Fund y. Reinke Insulation Co., 94C
2296, 1996 WL 99710 (N.D. Ill. March 4, 1996). In Reinke, an employer intentionally over-
reported an employee’s hours worked and the employee consequently qualified for plan medical
benefits to which he would not have otherwise been entitled. Consequently, the plan paid for

the employee’s medical care. Although the employer did not receive any benefit from the


According to the Seventh Circuit, restitution is “undoubtedly an equitable action,” for the
purposes of 29 U.S.C. § 1132(a)(3). Cent. States, Southeast & Southwest Areas Health &
Welfare Fund v. Neurobehavioral Assoc., P.A., 53 F.3d 172, 174 (7th Cir. 1995). The Seventh
Circuit has allowed ERISA fiduciaries to bring an action for restitution when a plan has
mistakenly overpaid benefits. Id. In Central States, a multiemployer benefits plan received a
$100 claim for medical benefits from one of its qualified members. Due to a clerical error, the
plan paid the health care provider $10,000. The plan then brought an action for restitution under
29 U.S.C. § 1132(a)(3) to recover the unauthorized benefits that it had mistakenly paid. The
Seventh Circuit reversed the district court’s dismissal of the case and held that ERISA authorized
the plan’s claim because the plan was seeking to recover benefits that it had paid in violation of
the terms of the plan. Jd. at 173. The case currently before the court is analogous to Central
States because these plaintiffs are also seeking the recovery of medical benefits that were not
properly paid under the plan. This is, therefore, an appropriate action for restitution under
ERISA because the plaintiff Trustees bring this suit under 29 U.S.C. § 1132 as ERISA
fiduciaries seeking restitution of Rodriguez’s medical benefits, Nevertheless, even though
ERISA provides fiduciaries with a restitution cause of action, the question remains as to whether
the plaintiffs can pursue this claim against Angulo because Angulo did not receive any of the

medical benefits.

2. ERISA Restitution Claims Against a Party Who Has Not Been Unjustly
Enriched

Angulo argues that the plaintiffs cannot pursue a claim for restitution against him because

he has not been unjustly enriched in this case. Angulo contends that he received nothing and that

5


the general federal notice pleading rule. According to the rule, a complaint alleging fraud must
state the circumstances constituting fraud with particularity. FED. R. Civ. P. 9(b). Plaintiffs
argue that this is not a case alleging fraud because ERISA preempts common-law fraud claims
and that, consequently, Rule 9(b) does not apply to this case. Plaintiffs contend, however, that
if Rule 9(b) applies, the complaint does sufficiently allege fraud.

Therefore, the court must first determine whether Rule 9(b) applies to this case. If the
rule applies, the court must then determine whether the plaintiffs complied with the rule.

1. Rule 9(b) Applies to this Case

Plaintiffs argue, without offering any supporting authority, that Rule 9(b) does not apply
because it brings this case under ERISA and not as a state-law fraud claim. The court disagrees
with the plaintiffs.

Other courts in this district have ruled that Rule 9(b) applies to ERISA cases alleging
deception and misrepresentation. Adamczyk v. Lever Bros. Co., 991 F. Supp. 931 (N.D. Il.
1997); Bd. of Tr., Sheet Metal Workers’ Nat'l Pension Fund v. Ill. Range, Inc., 186 F.R.D. 498,
503 (N.D. Ill. 1999). The Adamczyk court applied Rule 9(b) to the plaintiffs’ allegations of
misrepresentation that provided the basis for their breach of: fiduciary claims and dismissed some
of those claims for failure to comply with Rule 9(b). The I/inois Range court applied Rule 9(b)
to a case alleging that defendants sought to avoid and evade withdrawal liability under ERISA
by engaging in certain improper transactions, Because of the similarities between these two

cases and the case currently before the court, the court finds that Rule 9(b) applies to this case.


Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge
or Magistrate Judge

Sitting Judge if Other

James H. Alesia
than Assigned Judge

CASE NUMBER 01 C 4058 DATE October 30, 2001
CASE Chicago District Council of Carpenters Welfare Fund, et al. vs. Abel Angulo and Maria
TITLE Rodriguez

Un the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

MOTION:

DOCKET ENTRY:

(1) Oo Filed motion of [ use listing in “Motion” box above.]

Q) oO Brief in support of motion due

(3) ao Answer brief to motion due___. Reply to answer briefdue___.

(4) oO Ruling/Hearingon_ssetfor_ at.

(5) im Status hearing[held/continued to] [set for/re-set for] on set for at

(6) og Pretrial conference[held/continued to] [set for/re-set for] on set for at.

(7) oO Trial[set for/re-set for] on____at

(8) a [Bench/Jury trial] [Hearing] held/continued to___at

(9) qo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) (General Rule 21 OC) FRCP41(a)(1) OI FRCP41(a)(2).

ao) {Other docket entry] | Enter Memorandum Opinion and Order. The court grants in part and

denies in part defendant Angulo’s motion to dismiss [4-1].

Mail AO 450 form.

Docketing to mail notices.

Copy to judge/magistrate judge.

cw

(11) a [For further detail see order attached to the original minute order.}
No notices required, advised in open court.
No notices required. umber of notices
Notices mailed by judge’s staff. DCT 3 1 2001
Y | Notified counsel by telephone, Sate dockerea

docketing deputy initials

date mailed notice
courtroom

deputy’s
initials

Date/time received in
central Clerk’s Office

rmuiling deputy initials



a IE eee MOA HNN ae mere ye

Because the court finds that the complaint in this case does not comply with Rule 9(b),
the court grants Angulo’s motion to dismiss. Accordingly, Plaintiffs’ claim is dismissed without
prejudice. See Galdikas v. Fagan, 01 C 4268, 2001 WL 1223539 (N.D. Ill. Oct. 10, 2001)
(dismissing fraud claim without prejudice for failure to comply with Rule 9(b)).

II. CONCLUSION

For the foregoing reasons, the court denies defendant’s motion to dismiss pursuant to

Rule 12(b)(6) and grants defendant’s motion to dismiss under Rule 9(b). Plaintiff is given ten

days to file an Amended Complaint that complies with Rule 9(b).

ome OCT 30 2001 y KM llsec2

dames H. Alesid
United States District Judge



transaction, the pension fund brought an action under 29 U.S.C. § 1132(a)(3), seeking restitution
of the paid medical benefits from the employer. The Reinke court noted that it could not see how
the employer had been unjustly enriched, but held that Section 17 of the Restatement of
Restitution entitled the pension fund to restitution from the employer, even though the employer
had not been unjustly enriched. The Reinke court’s analysis is applicable to this case.

According to Comment “e” to Section 17, “A person who makes a payment to another
in accordance with a contract with a third person is entitled to restitution from the third person

. if the contract was obtained by the fraud or misrepresentation of the third person.”

Restatement of Restitution § 17 cmt. e. In this case, plaintiffs allege that the Welfare Fund
provided medical benefits to Rodriguez because Angulo had qualified Rodriguez for those
benefits by misinforming the Welfare Fund that Rodriguez was his wife. Angulo’s
misrepresentation created a contractual obligation, under the documents governing the Welfare
Fund, that the Welfare Fund pay for Rodriguez’s health care. Because this contractual duty
resulted from Angulo’s misrepresentation to the Welfare Fund, the plaintiffs are entitled to seek
restitution from Angulo. His failure to repay those benefits to the Welfare Fund would defeat
the reasonable expectations of society.

For these reasons, the court finds that the plaintiffs have stated a claim upon which relief
can be granted and thus denies Angulo’s motion to dismiss pursuant to Rule 12(b)(6).
Cc. Pleading Fraud with Particularity Under Rule 9(b)

Angulo also argues that the plaintiffs have failed to allege fraud with sufficient

particularity to satisfy Rule 9(b). Federal Rule of Civil Procedure 9(b) creates an exception to


Angulo now moves to dismiss the complaint, claiming: (1) the plaintiffs cannot pursue
an ERISA restitution claim alleging fraud against him and (2) the plaintiffs have failed to allege
fraud with sufficient particularity to satisfy Rule 9(b).!

II. DISCUSSION
A. Standard for Deciding a Motion to Dismiss

In ruling on a motion to dismiss under Rule 12(b)(6), the court must accept all factual
allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff.
Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1019 (7th Cir. 1992). If, when viewed in the light
most favorable to the plaintiff, the complaint fails to state a claim upon which relief can be
granted, the court must dismiss the case. Gomez v. Ill. State Bd. of Educ., 811 F.2d 1030, 1039
(7th Cir. 1987). The court may dismiss the complaint only if it appears beyond a doubt that the
plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Conley
v. Gibson, 355 U.S. 41, 45-46 (1957).

B. Restitution Claims Under ERISA
The court must first determine whether ERISA provides a restitution action that allows

a plan to recover benefits paid to a party that was not entitled to receive them. The court must

‘Angulo argues in his reply that the court should dismiss the case to prevent the plaintiffs
from forum-shopping. He points out that plaintiffs have an identical claim pending against the
same defendants in a case before Judge Shadur and attaches two exhibits to his reply. When
ruling on a motion to dismiss, pursuant to Rule 12(b)(6), a court must not look to materials
beyond the pleading itself. Duda v. Bd. of Educ. of Franklin Park, 133 F.3d 1054, 1056 n.1 (7th
Cir. 1998). Therefore, both of Angulo’s exhibits are inappropriate for consideration by this court
in ruling on this motion. Furthermore, the court brought this case to the attention of Judge
Shadur, who determined that it was not sufficiently related to the case before him to merit
reassignment under Local Rule 40.4.


Pepper (collectively, “Trustees”) are trustees of the fund. The Welfare Fund receives
contributions from employers pursuant to collective bargaining agreements between the
employers and the Chicago and Northeast Illinois District Council of Carpenters (“the Union”).
LAMA Interiors, Inc. (“LAMA Interiors”) is a construction company incorporated under the
laws of Illinois. Defendants Maria Rodriguez (“Rodriguez”) and Abel Angulo (“Angulo”) are
or were officers and agents of LAMA Interiors.

Atall times relevant to this case, LAMA Interiors was bound to the Welfare Fund throu: gh
a series of collective bargaining agreements. This collective bargaining agreement bound
LAMA Interiors to the provisions of the Trust Agreements and Declarations of Trust that created
the Welfare Fund. Under the agreement, LAMA Interiors employees who qualified as Welfare
Fund participants as well as the spouses of those qualified participants were entitled to medical
coverage through the Welfare Fund.

The complaint alleges that from May 1999 through August 1999, Rodriguez sought to
qualify Angulo for Welfare Fund medical benefits by falsely reporting to the Welfare Fund that
Angulo was a LAMA Interiors employee. Plaintiffs further allege that Angulo, in turn, falsely
informed the Welfare Fund that Rodriguez was his wife, thus making her eligible for medical
benefits. Plaintiffs claim that from September 13, 1999 through December 23, 1999, it paid
$58,669.00 of medical claims on Rodriguez’s behalf, in reliance upon the false statements of
Rodriguez and Angulo. Plaintiffs bring this suit under the Employee Retirement Income

Security Act (“ERISA”) seeking to recover the $58,669.00 from Rodriguez and Angulo.


BOCKETED

IN THE UNITED STATES DISTRICT COURT cT 3 1 2001
FOR THE NORTHERN DISTRICT OF ILLINOIS 9
EASTERN DIVISION

CHICAGO DISTRICT COUNCIL OF
CARPENTERS WELFARE FUND,

EARL J. OLIVER, JEFFREY ISAACSON,
KENNETH BORG, ROBERT
QUANSTROM, RICHARD A. BAGGIO,
MELVIN GRAY, BENJAMIN A.
JOHNSTON, and STANLEY PEPPER, as
Trustees of the CHICAGO DISTRICT
COUNCIL OF CARPENTERS WELFARE
FUND

Plaintiffs,
v.
ABEL ANGULO and MARIA
RODRIGUEZ,
Defendants.

NS SS SS SS SH SS SS SS

Case No: 01 C 4058

Judge James H. Alesia

MEMORANDUM OPINION AND ORDER

Before the court is defendant Abel Angulo’s motion to dismiss plaintiffs’ complaint

pursuant to Federal Rules of Civil Procedure 12(b)(6) (“Rule 12(b)(6y”) and 9(b) (“Rule 9(b)”).

For the following reasons, the court denies defendant’s motion to dismiss under Rule 12(b)(6)

and grants defendant’s motion to dismiss under Rule 9(b).

I. BACKGROUND

Plaintiff Chicago District Council of Carpenters Welfare Fund (“Welfare Fund”) is a

multi-employer fringe benefit trust fund. Plaintiffs Earl J. Oliver, Jeffrey Isaacson, Kenneth

Borg, Robert Quanstrom, Richard A. Baggio, Melvin Gray, Benjamin A. Johnston, and Stanley