IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

GC AMERICA INC., ) 

 ) 

 Plaintiff, ) 

 ) No. 20-cv-03045 

 v. ) 

 ) Judge Andrea R. Wood 

KEVIN HOOD, et al., ) 

 ) 

Defendants. ) 

MEMORANDUM OPINION AND ORDER

Defendant Kevin Hood allegedly received a settlement or judgment of at least $7 million 

through a medical negligence suit in which he was represented by Defendant Law Offices of 

Goldberg & Goldberg (“Goldberg”). Plaintiff GC America, Inc. (“GC America”), the sponsor and 

fiduciary of the GC America Inc. Group Benefit Plan (“Plan”), has sued Hood, a Plan participant 

and beneficiary, and Goldberg under the Employee Retirement Income Security Act of 1974 

(“ERISA”), 29 U.S.C. § 1132(a)(3), to recover the amounts the Plan paid for Hood’s medical 

bills. GC America Inc. has filed its First Amended Complaint (“FAC”) following the Court’s 

dismissal of the claims against Goldberg in the original complaint for failure to state a claim upon 

which relief could be granted. Now before the Court are Goldberg’s motion to dismiss GC 

America’s claims against it in the FAC pursuant to Federal Rule of Civil Procedure 12(b)(6) (Dkt. 

No. 69) and GC America’s motion for default judgment against Hood (Dkt. No. 55). For the 

following reasons, Goldberg’s motion is granted in part and denied in part and GC America’s 

motion is denied. 

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BACKGROUND 

I. Facts 

The following facts are taken from GC America’s amended complaint and, for purposes of 

Goldberg’s motion to dismiss, accepted as true and viewed in the light most favorable to GC 

America as the nonmoving party. See Santiago v. Walls, 599 F.3d 749, 756 (7th Cir. 2010). 

GC America sponsors and serves as a fiduciary of the Plan, which provides health benefits 

to GC America employees and their eligible spouses and dependents. (First Am. Compl. ¶¶ 4, 6, 

Dkt. No. 67.) At all times relevant to this action, Hood was a Plan participant and beneficiary. (Id.

¶ 5.) In 2009, Hood was injured in an automobile collision. (Id. ¶ 12.) Over the course of his postaccident medical treatment, Hood was the victim of medical negligence. (Id.) As a result, the Plan 

paid $1,732,846.51 in medical expenses on Hood’s behalf. (Id. ¶ 13.) Under the terms of the Plan, 

Hood was required to reimburse the Plan for those medical expenses in the event he won any 

judgments or settlements from third parties compensating him for his deficient medical care. (Id.

¶¶ 9, 12.) The Plan’s terms also stated that the Plan would have a first priority lien on any 

recovery received from third parties and the Plan’s beneficiary or their legal representative would 

be considered a constructive trustee for any such recovery. (Id. ¶ 9.) 

Goldberg represented Hood in a medical negligence suit against the third parties 

responsible for his post-collision treatment. (Id. ¶ 5.) As a result of that litigation, Hood obtained a 

settlement or judgment of more than $7 million (“Award”) in 2017. (Id. ¶ 15.) When GC America 

demanded that Hood and Goldberg use a portion of the Award to reimburse the Plan for medical 

expenses it paid on Hood’s behalf, they refused. (Id. ¶ 23.) GC America alleges that Goldberg 

continues to possess at least one-third of the Award funds, i.e., approximately $2.3 million, and 

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Hood continues to possess the remainder. (Id. ¶ 22.) Consequently, GC America has filed the 

present lawsuit. 

II. Procedural Posture 

GC America’s FAC asserts a claim against Hood and Goldberg pursuant to ERISA 

§ 502(a)(3), 29 U.S.C. § 1132(a)(3), seeking several forms of equitable relief, including (1) a 

declaration that the Plan has a first priority right to the settlement proceeds up to the amount of 

payments made for Hood’s medical expenses; and (2) an injunction requiring Defendants to 

reimburse the Plan for $1,732,846.51 in medical bills that it paid for Hood’s treatment. The Court 

previously dismissed GC America’s original complaint as to Goldberg, including its ERISA claim 

under § 502(a)(3) and state-law claims for tortious interference with contract and conversion, for 

failure to state a claim. (Dkt. No. 65.) Now that GC America has filed its FAC, Goldberg again 

seeks dismissal of GC America’s ERISA claim with prejudice.1

Hood, meanwhile, was duly served with the original complaint on July 16, 2020. (Dkt. No. 

22-1.) After he failed to timely answer or respond to the complaint, the Court entered default 

against Hood on September 3, 2020. (Dkt. No. 24.) Subsequently, Hood appeared in the case and 

filed a motion asking the Court to vacate the entry of default and grant a continuance so that he 

could obtain legal representation. (Dkt. No. 31.) The Court granted Hood’s motion, vacated the 

default entered against him, and extended his time to respond to the complaint. (Dkt. No. 33.) But 

after Hood failed to answer GC America’s complaint by the extended deadline and did not appear 

for several status hearings, the Court ordered Hood to show cause in writing why he should not be 

found in default again. (Dkt. No. 39.) 

1 GC America has not re-alleged in the FAC its previous claims for tortious interference with contract and 

conversion.

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Following Hood’s failure to answer or otherwise respond to the complaint, or to comply 

with the Court’s show cause order, the Court again entered default against him on July 13, 2021. 

(Dkt. No. 40.) After the Court’s entry of default, on April 19, 2022, GC America filed the FAC. 

As to Hood, the FAC contains substantively the same allegations as the original complaint, except 

that GC America no longer asserts state-law claims against Hood and now definitively alleges that 

Hood continues to possess a portion of the settlement funds. (See First Am. Compl. ¶ 22.) On 

February 24, 2022, GC America filed the present motion for a default judgment against Hood in 

the amount of $1,732,846.51, along with a declaration that GC America has a first and top priority 

lien and constructive trust on the Award proceeds. The Court directed Hood to respond to GC 

America’s motion for default judgment by May 4, 2022. (Dkt No. 68.) He failed to do so, nor has 

he answered or otherwise responded to GC America’s original complaint or amended complaint. 

DISCUSSION 

I. Goldberg’s Motion to Dismiss 

The Court first addresses Goldberg’s motion to dismiss the FAC. To survive a Rule 

12(b)(6) motion, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a 

claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint does not necessarily need to 

contain detailed factual allegations to meet this pleading standard. Twombly, 550 U.S. at 555. 

Rather, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the 

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 

Adams v. City of Indianapolis, 742 F.3d 720, 728 (7th Cir. 2014) (quoting Iqbal, 556 U.S. at 678). 

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A. Pleading Standard 

As a threshold matter, in addition to the notice-pleading standard under Federal Rule of 

Civil Procedure 8, Goldberg argues that the FAC should be subject to Federal Rule of Civil 

Procedure 9(b)’s heightened pleading requirement for allegations of fraud and mistake.2

Specifically, Goldberg contends that Rule 9(b) applies because GC America’s claim for equitable 

relief under ERISA is premised on Goldberg’s alleged breach of fiduciary duty, conversion of 

settlement funds, and unjust enrichment. 

Rule 9(b) requires a complaint alleging fraud or mistake to “state with particularity the 

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). The particularity requirement 

means that the complaint must allege the “who, what, when, where, and how of the fraud.” 

Haywood v. Massage Envy Franchising, LLC, 887 F.3d 329, 333 (7th Cir. 2018) (citation 

omitted). The purpose of the particularity requirement is “to discourage a sue first, ask questions 

later,” strategy, especially considering the reputational harm that can accompany fraud 

allegations. Cornielsen v. Infinium Cap. Mgmt., LLC, 916 F.3d 589, 598 (7th Cir. 2019) (internal 

quotation marks omitted). Whether Rule 9(b) applies depends on a complaint’s factual 

allegations, since the rule encompasses more than just claims that are fraudulent torts by 

definition but also includes claims that “sound[] in fraud.” See Borsellino v. Goldman Sachs Grp., 

Inc., 477 F.3d 502, 507 (7th Cir. 2007). A claim “sounds in fraud” if it is predicated on a course 

of fraudulent conduct. Id. (citation omitted); see also Cornielsen, 916 F.3d at 594, 604 (subjecting 

the plaintiffs’ breach of fiduciary claim to Rule 9(b) because the claim was premised on 

2

 The Court notes that Goldberg, in its previous motion to dismiss the original complaint, did not claim 

that Rule 9(b)’s heightened pleading standard applied to GC America’s ERISA claim.

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allegations that defendants knowingly misled plaintiffs to induce them to convert their loans to 

the company into equity). 

Goldberg cites several cases from this District for the proposition that Rule 9(b) applies to 

claims of breach of fiduciary duty, conversion, and unjust enrichment, and claims under ERISA. 

See, e.g., Desmond v. Taxi Affiliation Servs. LLC, 344 F. Supp. 3d 917 (N.D. Ill. 2018); 

Schaufenbuel v. InvestForClosures Fin., LLC, No. 09 C 1221, 2009 WL 3188222 (N.D. Ill. Sept. 

30, 2009); In Re Sears, Roebuck & Co. ERISA Litig., No. 02 C 8324, 2004 WL 407007 (N.D. Ill. 

Mar. 3, 2004). But in those cases, the underlying factual allegations asserted that the defendants 

had engaged in fraudulent schemes or misrepresentations. For instance, in Desmond, the court 

found that underlying the plaintiff’s breach of fiduciary duty and conversion claims against a 

company’s officers were allegations of the defendants’ scheme to siphon money out of the 

company’s assets to evade creditors. 344 F. Supp. 3d at 924. Similarly, in In Re Sears Roebuck, 

the court determined that Rule 9(b) applied to an ERISA claim because the plaintiffs alleged that 

their employer and plan sponsor misrepresented the company’s profitability in prospectuses and 

SEC financial statements, which resulted in financial losses to the plaintiffs when the company’s 

stock price dropped. 2004 WL 407007, at *1–2, *6. 

By contrast, GC America’s ERISA claim in this case is not premised on allegations of 

fraudulent conduct by Hood or Goldberg. While GC America alleges that Defendants converted 

the Award proceeds and Goldberg breached its fiduciary duty to the Plan, GC America does not 

allege that Hood and Goldberg engaged in any misrepresentations or attempted to deceive GC 

America in some manner. Allegations that a party wrongfully possessed funds or failed to 

distribute funds does not automatically amount to fraudulent conduct. Cf. Bank of Am., N.A. v. 

Knight, 875 F. Supp. 2d 837, 851 (N.D. Ill. 2012) (“Not all breaches of fiduciary duty are based 

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on fraudulent conduct.”). Therefore, the Court finds that the heightened standard of Rule 9(b) 

does not apply. GC America must only meet Rule 8(a)’s “less stringent pleading standard,” in 

which “[a] complaint need not narrate all relevant facts or recite the law; all it has to do is set out 

a claim for relief.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 737 (7th Cir. 2014). 

B. Equitable Relief Under ERISA 

1. Constructive Trust, Equitable Lien, and Injunction 

Goldberg asserts that GC America’s ERISA claim fails because it has not pleaded facts 

sufficient to allege entitlement to any form of equitable relief from Goldberg. More specifically, 

Goldberg argues that GC America has failed to cure the pleading defect in the original complaint: 

GC America failed to plausibly allege that Goldberg had the specific, identified settlement funds 

in its possession. 

Section 502(a)(3) of ERISA allows fiduciaries of an employee welfare benefit plan to 

bring a civil suit to enjoin acts or practices that violate ERISA or the terms of the relevant plan or 

to obtain other appropriate equitable relief. See 29 U.S.C. § 1132(a)(3). Nonplan defendants, such 

as Goldberg and Hood, may be subject to suit under this section. Larson v. United Healthcare Ins. 

Co., 723 F.3d 905, 916 (7th Cir. 2013) (citing Harris Tr. & Sav. Bank v. Salomon Smith Barney 

Inc., 530 U.S. 238, 254 (2000)). But the Supreme Court has held that § 502(a)(3) provides only 

equitable relief, not legal relief. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 

209 (2002) (citing Mertens v. Hewitt Assocs., 508 U.S. 248, 256, 258 n.8 (1993)). Therefore, 

“whether a remedy is available under [§] 502(a)(3) ‘depends on (1) the basis for the plaintiff’s 

claim and (2) the nature of the underlying remedies sought’; both must be equitable to proceed 

under [§] 502(a)(3).” Cent. States, Se. & Sw. Areas Health & Welfare Fund by Bunte v. Am. Int’l 

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Grp., Inc., 840 F.3d 448, 453 (7th Cir. 2016) (quoting Montanile v. Bd. of Trs. of Nat’l Elevator 

Indus. Health Benefit Plan, 577 U.S. 136, 142 (2016)). 

Here, the Court finds that GC America plausibly alleges that the basis for its ERISA claim 

is equitable. The Supreme Court has concluded that an ERISA suit by a plan to enforce an 

equitable lien by agreement, such as a beneficiary’s agreement with a plan to convey settlement 

proceeds from a third party, has an equitable basis. See Montanile, 577 U.S. at 142–44 (citation 

omitted). An equitable lien by agreement is an “equitable lien created by an agreement to convey 

a particular fund to another party.” Id. at 143 (citation omitted). Such a claim is equitable because 

a plan relies on a traditional rule of equity to collect the settlement proceeds: “the rule that a 

contract to convey a specific object even before it is acquired will make the contractor a trustee as 

soon as he gets a title to the thing.” Id. at 143–44 (internal quotation marks omitted). 

Here, GC America asserts that the Plan’s terms created an equitable lien by agreement on 

Hood’s settlement. (First Am. Compl. ¶¶ 9, 11, 17–18.) For instance, the Plan’s terms state that 

the Plan has a “first priority lien and right of recovery” on any recovery received from a third 

party and the beneficiary becomes a constructive trustee with respect to such recovery. (Id. ¶ 9.) 

Thus, GC America sufficiently alleges that the basis of its claim is equitable because the Plan’s 

terms indicate that GC America had an equitable lien by agreement that attached to Hood’s 

Award proceeds when he acquired title to the Award. 

The Court next considers whether the nature of the underlying remedies GC America 

seeks is equitable. GC America’s § 502(a)(3) claim seeks relief in several forms, including a 

constructive trust and an equitable lien in its favor with respect to the Award proceeds. GC 

America essentially requests an injunctive order directing Defendants to turn over money. In 

dismissing the original complaint’s ERISA claim against Goldberg, the Court found that GC 

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America had alleged no factual basis for its speculation that Goldberg and Hood might be in 

possession of the remaining settlement funds belonging to GC America. The Court further noted 

that GC America contradicted its assertion that Goldberg possessed some of the settlement funds 

by also alleging that Goldberg distributed the settlement funds to Hood. In the original complaint, 

GC America asserted that “[u]pon information and belief, Defendants may be in possession of the 

remaining settlement funds belonging to the Plaintiff.” (Compl. ¶ 16.) Now, in its FAC, GC 

America alleges that “[u]pon information and belief, Goldberg retained and continues to possess 

at least one-third of the Recovery funds obtained by judgment/settlement of Hood’s injury claim 

taken as a fee for obtaining recovery amounting to a figure in excess of $2.3 million.” (First Am. 

Compl. ¶ 22.) 

Regardless of whether a party fashions a claim in equitable terms, “[a]lmost invariably 

suits seeking (whether by judgment, injunction, or declaration) to compel the defendant to pay a 

sum of money to the plaintiff are suits for money damages” because “they seek no more than 

compensation for loss resulting from the defendant’s breach of legal duty.” Great-West, 534 U.S. 

at 210 (internal quotation marks and alterations omitted). “[M]oney damages are, of course, the 

classic form of legal relief.” Id. (internal quotation marks omitted); see also Cent. States, 840 F.3d 

at 453 (“[S]imply phrasing the request for relief in equitable terms—e.g., restitution, unjust 

enrichment, an equitable lien—is not dispositive.”). Therefore, a claim that seeks injunctive relief 

in the form of a money order “is properly regarded as equitable only if the plaintiff seeks the 

return of specifically identified funds that remain in the defendant’s possession or traceable items 

that the defendant purchased with the funds.” Cent. States, 840 F.3d at 453 (internal quotation 

marks and alterations omitted). 

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By contrast, a plaintiff seeking “money damages from the beneficiary’s general assets” is 

pursuing “a quintessentially legal remedy.” Id. The Seventh Circuit in Central States affirmed the 

dismissal of an ERISA plan’s claim against health insurers to reimburse it for medical bills under 

§ 502(a)(3), even though the plan had styled its claim in equitable terms. Id. at 449–50. The 

Seventh Circuit explained that although the defendant insurers may have realized some monetary 

benefit by avoiding their contractual duties to pay their insureds’ medical bills, they did not have 

any specific, identifiable funds to which the plaintiff was entitled. Id. at 453–54. Instead, the 

plaintiff sought general compensatory damages—a legal remedy. Id. Conversely, in Sereboff v. 

Mid Atlantic Medical Services, 547 U.S. 356, 362–63 (2006), the Supreme Court found that a 

plaintiff properly sought equitable relief because it could point to specifically identifiable funds in 

the defendants’ possession that had been set aside in separate investment accounts. 

Construing the facts in the light most favorable to GC America, the Court concludes that 

GC America has pleaded sufficiently that Goldberg retains the specific, identified settlement 

funds. Accordingly, the nature of the underlying remedies sought is equitable. Unlike in the 

original complaint, GC America now asserts that Goldberg has a portion of the settlement funds 

in its possession that it kept as a fee, rather than its prior speculation that Goldberg might be in 

possession of some of the funds. (Compare First Am. Compl. ¶ 22, with Compl. ¶ 16.) GC 

America also identifies the specific amount it believes Goldberg still possesses—at least one-third 

of the Award proceeds. (See First Am. Compl. ¶ 22.) 

Goldberg argues that GC America fails plausibly to allege that Goldberg continues to 

possess some of the settlement funds because it does not provide a factual basis for its claim. But 

“[w]here pleadings concern matters peculiarly within the knowledge of the defendants, 

conclusory pleading on information and belief should be liberally viewed.” Brown v. Budz, 398 

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F.3d 904, 914 (7th Cir. 2005) (internal quotation marks omitted). “The Seventh Circuit has long 

allowed plaintiffs to stand on allegations made on ‘information and belief’ when the information 

is accessible only by defendants.” Flores v. United Airlines, No. 18 C 6571, 2021 WL 843415, at 

*5 (N.D. Ill. Mar. 5, 2021) (collecting cases); see also Huon v. Denton, 841 F.3d 733, 743 (7th 

Cir. 2016) (permitting pleading based on information and belief where the information necessary 

to prove or refute the plaintiff’s allegation that the defendants authored the defamatory comment 

was only available to the defendants); Atos, LLC v. Allstate Ins. Co., No. 20-CV-06224, 2021 WL 

6063963, at *13 (N.D. Ill. Dec. 22, 2021) (“[C]ourts recognize that ‘on merits issues, information 

and belief allegations are perfectly fine in appropriate circumstances, where the basis for the 

contention is not something properly within plaintiff’s personal knowledge.’”). In contrast, 

pleadings based on information and belief generally cannot satisfy Rule 9(b)’s particularity 

requirement unless (1) the plaintiff does not have access to the facts constituting the fraud; and (2) 

the plaintiff provides the grounds for their suspicions. See Cincinnati Life Ins. Co. v. Beyrer, 722 

F.3d 939, 948 (7th Cir. 2013) (internal quotation marks and citation omitted). But here, as 

discussed above, Rule 9(b)’s particularity requirement does not apply. Consequently, GC 

America may rely on information and belief to support its allegation that GC America possesses 

at least one-third of the Award proceeds.3

3

 Moreover, the Court views GC America’s pleading on information and belief liberally because whether 

Goldberg still possesses the settlement funds, the precise amount it possesses, and the specific accounts 

where the funds are held are matters exclusively within Goldberg’s knowledge. Cf. Schiavone v. 

Prudential Insurance Co. of America, No. 16-CV-09848, 2017 WL 1493721, at *6 (N.D. Ill. Apr. 26, 

2017) (concluding that the nature of the plaintiff’s desired recovery was equitable under § 502(a)(3), 

where the plaintiff alleged on information and belief that the defendant was in possession of the entire 

amount of the overpayment of disability benefits). Goldberg nonetheless may seek sanctions under 

Federal Rule of Civil Procedure 11 if it is determined that GC America’s factual allegations were known 

by GC America’s counsel to be without any factual basis. See Huon, 841 F.3d at 743.

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2. Declaratory Judgment 

Additionally, GC seeks a declaration that it has a first priority right to the settlement 

proceeds up to the full amount of payments advanced for Hood’s medical expenses. Courts have 

found that an ERISA suit by a plan fiduciary seeking declaratory relief may be an appropriate 

equitable remedy under the statute. Simon v. Coop. Educ. Serv. Agency #5, 46 F.4th 602, 607 (7th 

Cir. 2022) (citing Spitz v. Tepfer, 171 F.3d 443, 450 (7th Cir. 1999)). Nonetheless, in dismissing 

the original complaint, the Court determined that declaratory relief was inappropriate because GC 

America failed to identify specific funds in Goldberg’s possession. As a result, a declaration of the 

Plan’s ownership of the settlement proceeds as to Goldberg could do nothing to enforce GC 

America’s right to the proceeds if Goldberg did not still possess the funds. But because GC 

America now plausibly alleges in the FAC that Goldberg still retains some of the Award proceeds, 

the Court finds that GC America has also sufficiently alleged that it is entitled to declaratory relief 

against Goldberg under § 502(a)(3). 

3. Equitable Surcharge 

Finally, GC America contends that it is entitled to equitable relief in the form of an 

equitable surcharge. 

Relevant here, a “surcharge” is an equitable remedy to “make the beneficiary whole for 

any losses caused by the [fiduciary’s] breach of [trust].” Divane v. Nw. Univ., 953 F.3d 980, 994 

(7th Cir. 2020) (citing CIGNA Corp. v. Amara, 563 U.S. 421, 440–43 (2011)), vacated on other 

grounds sub nom. Hughes v. Nw. Univ., 142 S. Ct. 737 (2022). Specifically, a surcharge is “a 

traditional equitable remedy in the form of monetary compensation for losses caused by a trustee’s 

breach of duty.” Iron Workers St. Louis Dist. Council Pension Fund v. Zenith Am. Sols., Inc., No. 

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13 C 7867, 2014 WL 3563295, at *1 (N.D. Ill. July 17, 2014) (citing CIGNA Corp., 563 U.S. at 

441–42). 

In dismissing the original complaint, the Court concluded that an equitable surcharge was 

not an appropriate form of relief as to Goldberg because it was not a fiduciary of the Plan. The 

Court noted that other courts have recognized that an equitable surcharge may be an appropriate 

remedy available to a beneficiary when there has been a breach of an ERISA fiduciary duty. See, 

e.g., Kenseth v. Dean Health Plan, Inc., 722 F.3d 869, 877–83 (7th Cir. 2013) (explaining how an 

ERISA fiduciary could be surcharged in an action brought pursuant to a § 1132(a)(3) action by a 

plan beneficiary); McBean v. United of Omaha Life Ins. Co., No. 18-cv-166-MMA (JLB), 2019 

WL 1508456, at *7 (S.D. Cal. Apr. 5, 2019) (describing how, under § 1132(a)(3), a beneficiary 

can seek an equitable surcharge for breach of fiduciary duties by an ERISA trustee). But the Court 

further found that, in those cases, equitable surcharge sought to redress a breach of fiduciary duty 

by a fiduciary of the Plan. Goldberg, however, was never such a fiduciary according to GC 

America’s allegations. 

The statutory definition of a plan fiduciary includes a person who exercises any 

discretionary authority or control over the management of the Plan, management or disposition of 

Plan assets, or administration of the Plan. 29 U.S.C. § 1002(21)(A). Assuming Goldberg received 

and handled settlement funds, a portion of which was owed to GC America, that does not confer 

upon it a fiduciary duty with respect to the Plan. See Chapman v. Klemick, 3 F.3d 1508, 1510 

(11th Cir. 1993) (finding that settlement proceeds from a plan beneficiary’s tort claim were not 

plan assets but funds to which the plan had a contractual claim for reimbursement); McCotter v. 

Longo, No. 95 C 5985, 1997 WL 158325, at *5 (N.D. Ill. Mar. 31, 1997) (“[A]n attorney does not 

become a fiduciary under ERISA by mere receipt of settlement funds on behalf of a plan 

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beneficiary.”); see also Health Cost Controls v. Bode, No. 93 C 3447, 1994 WL 53783, at *4 

(N.D. Ill. Feb. 18, 1994) (holding that “imposing upon a plan beneficiary’s lawyer the status of 

fiduciary to an ERISA plan is not warranted by the statutory definition” and granting summary 

judgment in favor an attorney who had disbursed settlement funds to his client without first 

satisfying the fund’s lien for reimbursement). 

Turning to the FAC, GC America now contends that it is not asserting that Goldberg is a 

Plan fiduciary according to the statutory definition in § 1002(21)(A). Rather, GC America argues 

that Goldberg owed a duty to the Plan akin to a fiduciary duty. For this claim, it relies on Rule 

1.15 of the Illinois Rules of Professional Conduct and Western States Insurance Co. v. Louis E. 

Olivero & Associates, 670 N.E.2d 333 (Ill. App. Ct. 1996), for the proposition that state law 

imposes a fiduciary obligation on Illinois attorneys to distribute or preserve property for a 

lienholder when the attorney takes possession of property that is subject to a lien or claim by a 

third party. In Western States, the state appellate court held that a law firm was liable for 

conversion for failing to satisfy an insurer’s subrogation claim out of its client’s settlement 

proceeds; the court also found that the law firm had an affirmative duty to disburse the insurer’s 

share of the settlement funds under Rule 1.15. Western States, 670 N.E.2d at 334–36. However, 

Western States is inapposite for several reasons: (1) the plaintiff insurer was a named payee on the 

settlement checks because the clients had executed a release providing that they would satisfy the 

insurer’s claim; (2) the clients and law firm explicitly promised to pay the insurer its share of the 

settlement funds once the checks cleared; and (3) the plaintiff’s claim was under state law and not 

ERISA. 

More importantly, GC America identifies no authority for the proposition that an equitable 

surcharge is appropriate equitable relief against a defendant who is not a fiduciary of the Plan 

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under ERISA’s statutory definition, but a fiduciary under state law. The Seventh Circuit has 

“consistently refused to create federal common law remedies or implied causes of action under 

ERISA.” Bauwens v. Revcon Tech. Grp., Inc., 935 F.3d 534, 538 (7th Cir. 2019) (citations 

omitted). Considering the Seventh Circuit’s strict approach for interpreting remedies and causes of 

action under ERISA, the Court declines to conclude that Goldberg should be considered a 

fiduciary of the Plan. Consequently, equitable surcharge is not an appropriate form of relief as to 

Goldberg. 

In sum, GC America has pleaded facts sufficient to support its claim for equitable relief 

under ERISA in the form of a constructive trust or equitable lien in its favor, injunctive relief, and 

declaratory relief. However, GC America is not entitled to an equitable surcharge against 

Goldberg under § 502(a)(3). Accordingly, Goldberg’s motion to dismiss the FAC is denied for GC 

America’s claims for a constructive trust or equitable lien, injunctive relief, and declaratory relief 

under ERISA, but it is granted for GC America’s claim for an equitable surcharge under ERISA. 

II. GC America’s Motion for Default Judgment Against Hood 

The Court next considers GC America’s motion for default judgment against Hood. GC 

America requests that the Court find Hood liable for $1,732,846.51 and declare that GC America 

has a first and top priority lien and constructive trust on the Award proceeds. 

Federal Rule of Civil Procedure 55(a) allows default to be entered against a party who has 

failed to plead or otherwise defend in an action. Fed. R. Civ. P. 55(a). As a result of an entry of 

default, “the well-pleaded allegations of a complaint relating to liability are taken as true.” VLM 

Food Trading Int’l, Inc. v. Ill. Trading Co., 811 F.3d 247, 255 (7th Cir. 2016) (citation omitted). 

In this case, Hood has failed to answer or otherwise respond to the original complaint since it was 

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filed in 2020. As a result, the Court entered default against him on July 13, 2021. Since then, 

however, GC America has filed an amended complaint. 

Numerous district courts have held that an entry of default against a defaulting defendant 

as to a plaintiff’s original complaint was moot or that the entry of default should be vacated if the 

plaintiff filed an amended complaint after the court’s entry of default. See, e.g., Peters Broad. 

Eng’g v. 24 Capitol LLC., No. 1:22-CV-236, 2023 WL 2388695, at *1 (N.D. Ind. Feb. 17, 2023) 

(denying plaintiff’s motion for default judgment where plaintiff did not seek a new entry of 

default after it filed an amended complaint); Mwani v. Al Qaeda, 600 F. Supp. 3d 36, 53 (D.D.C. 

2022) (“When an amended complaint becomes operative, a default entered as to the prior 

complaint is generally deemed mooted.”); Anselme v. Griffin, No. 3:20-CV-00005, 2021 WL 

2152512, at *3 (W.D. Va. May 26, 2021) (“[D]istrict courts in other circuits routinely have 

vacated or set aside ‘as moot’ a defendant’s default on a prior, superseded complaint once the 

plaintiff's amended complaint is the operative pleading in the case—even if the plaintiff simply 

repleaded her claims against that defendant.); Wahoo Int’l, Inc. v. Phix Dr., Inc., No. 13CV1395-

GPC BLM, 2014 WL 6810663, at *4–5 (S.D. Cal. Dec. 2, 2014) (determining that the defaulting 

defendant did not need to be served with the amended complaint but vacating the prior entry of 

default); Allstate Ins. Co. v. Yadgarov, No. 11-CV-6187, 2014 WL 860019, at *8 (E.D.N.Y. Mar. 

5, 2014) (noting that “several courts have found that once the original complaint is superseded, a 

clerk’s entry of default on that pleading is mooted”); see also Massey v. Helman, 196 F.3d 727, 

735 (7th Cir. 1999) (“[W]hen a plaintiff files an amended complaint, the new complaint 

supersedes all previous complaints and controls the case from that point forward.”). But see

DeCurtis v. Upward Bound Int’l, Inc., No. 09 CIV. 5378, 2012 WL 4561127, at *6 (S.D.N.Y. 

Sept. 27, 2012) (concluding that the court had jurisdiction to enter default judgment against the 

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17 

defendant as to the amended complaint because the defendant was already in default when the 

plaintiff filed the amended complaint, and the amended complaint added no new claims against 

the defendant). 

Here, the Court entered default against Hood as to the original complaint in July 2021 

before GC America filed the FAC in April 2022, but GC America has not moved for a new entry 

of default as to the FAC since then. Accordingly, in light of the case law discussed above, the 

Court directs GC America to show cause in writing why the Court should not vacate its prior 

entry of default and require GC America to serve Hood with the FAC. GC America’s motion for 

default judgment is thus denied due to the Court’s concern about whether its entry of default can 

still stand in light of the amended complaint. 

Even without the questionable validity of the prior entry of default, the Court would still 

deny GC America’s motion for default judgment as to Hood as premature. In cases where 

defendants are joint and severally liable, it is proper to enter default judgment as to fewer than all 

defendants with respect to liability. Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 

722 F.2d 1319, 1324 (7th Cir. 1983); see Sack v. Seid, No. 01 C 6474, 2002 WL 31409573, at *1 

(N.D. Ill. Oct. 24, 2002) (“[W]hen different results as to different parties are not logically 

contradictory or inconsistent, such as in the case of joint and several liability, default judgment 

against non-answering defendants is appropriate.” (citing Marshall & Isley Tr. Co. v. Pate, 819 

F.2d 806, 812 (7th Cir.1987))). Yet “in certain circumstances a default judgment is inappropriate 

if it results in inconsistency among judgments.” Marshall & Isley Tr. Co, 819 F.2d at 811. Such 

circumstances are cases of joint liability or when there is a “single res in controversy.” In re 

Uranium Antitrust Litig., 617 F.2d 1248, 1257 (7th Cir. 1980). Here, the Award proceeds—

totaling at least $7 million—are the single res in controversy. GC America alleges that Goldberg 

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and Hood each continue to possess a portion of the Award proceeds. (First Am. Compl. ¶ 22.) In 

its motion for default judgment, GC America also requests that the Court declare that GC 

America has a first and top priority lien and constructive trust on the Award proceeds. Goldberg, 

however, is still actively contesting whether the portion of the Award proceeds allegedly 

distributed to it should be subject to a lien or constructive trust. Therefore, at this juncture, the 

Court finds it inappropriate to grant GC America’s motion because of the risk of inconsistent 

judgments related to the Award proceeds. 

CONCLUSION 

 For the foregoing reasons, Goldberg’s motion to dismiss (Dkt. No. 69) is granted in part 

and denied in part. As the Court concludes that it would be futile for GC America to amend the 

complaint to remedy the deficiency in the equitable surcharge claim, that dismissal is with 

prejudice as to Goldberg. GC America’s motion for default judgment against Hood (Dkt. No. 55) 

is denied without prejudice. GC America is further directed to show cause in writing why the 

Court should not vacate its prior entry of default and require GC America to serve Hood with the 

First Amended Complaint. 

ENTERED: 

Dated: September 27, 2023 __________________________ 

 Andrea R. Wood 

 United States District Judge 

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