Opinion ID: 629015
Heading Depth: 2
Heading Rank: 4

Heading: Recovery for Breach of Fiduciary Duty

Text: 26 ERISA allows for an action to enforce and seek appropriate relief because of a breach of fiduciary duty. 29 U.S.C. Sec. 1132(a)(2). Section 1109 of ERISA makes [a]ny person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries personally liable. Id. Sec. 1109(a). 27 The Supreme Court held in Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985), that any recovery for a violation of section 1109 goes to the plan and not a beneficiary. Id. at 140, 105 S.Ct. at 3089. The Court relied upon the language in section 1109 and Congress's evident concern for mismanagement of plan assets to hold the recovery must be to the plan itself. Other courts have also recognized that any recovery from an action for breach of fiduciary duty goes to the plan as a whole and not an individual beneficiary. Simmons v. Southern Bell Tel. & Tel. Co., 940 F.2d 614, 617 (11th Cir.1991); Hozier v. Midwest Fasteners Inc., 908 F.2d 1155, 1162 & n. 7 (3d Cir.1990); Bryant v. International Fruit Product Co., 886 F.2d 132, 135 (6th Cir.1989); Sommers Drug Stores Co. v. Corrigan Enterprises, Inc., 793 F.2d 1456, 1463 (5th Cir.1986), cert. denied, 479 U.S. 1034 & 1089, 107 S.Ct. 884 & 1298, 93 L.Ed.2d 837 (1987). In Harsch v. Eisenberg, 956 F.2d 651 (7th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 61, 121 L.Ed.2d 29 (1992), we approved of the Ninth Circuit's reasoning in Sokol v. Bernstein, 803 F.2d 532, 535 (9th Cir.1987), which stated liability for a breach of fiduciary duty runs to the plan and not beneficiaries as individuals. Harsch, 956 F.2d at 657. 28 Plaintiff claims ERISA allows her to individually recover from defendants for their breach of fiduciary duties. She relies upon several ERISA sections without clearly stating which particular section allows her to personally recover. An action to recover from a breach of fiduciary duty occurred is distinct from an action to recover plan benefits under section 1132(a)(1)(B) of the Act. In McMahon v. McDowell, 794 F.2d 100 (3d Cir.), cert. denied, 479 U.S. 971, 107 S.Ct. 473, 93 L.Ed.2d 417 (1986), the Third Circuit held that when a plaintiff's ERISA claim is based upon a breach of fiduciary duty, the plaintiff must bring the action under section 1132(a)(2) and not section 1132(a)(1)(B). Id. at 109. Similarly, Lynn Anweiler cannot attempt to restyle her action as a personal claim for benefits when she has continually alleged a breach of fiduciary duty claim. 29 Plaintiff focusses her claim on section 1132(a)(3) of the Act in her petition for rehearing and argues she may personally recover from defendants' breach of their fiduciary duties under this section although she may not recover under section 1132(a)(2). Section 1132(a)(3) allows a beneficiary to bring a civil action to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or ... to obtain the appropriate equitable relief ... to redress such violations. 29 U.S.C. Sec. 1132(a)(3). A fiduciary's breach of his or her fiduciary duties violates provisions of subchapter I of ERISA. See id. Sec. 1104. This panel, in agreement with the district court, previously held that section 1132(a)(3) did not allow plaintiff any individualized relief. The recent Supreme Court case Mertens v. Hewitt Assocs., --- U.S. ----, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993), however, sheds some important light on the issue. 30 In Mertens, the Court held that the appropriate equitable relief in section 1132(a)(3) included only typical remedies available in equity and not legal remedies like compensatory damages or monetary relief. Mertens, --- U.S. at ----, 113 S.Ct. at 2069. The Court limited its holding to the narrow battleground chosen by the parties and decided the issue of what forms of relief are available under section 1132(a)(3), not to whom the relief can go or whether a remedial wrong had even been alleged. Id. --- U.S. at ----, 113 S.Ct. at 2067-68. Nevertheless, Mertens clearly indicates the importance and availability of equitable relief. Moreover, the Secretary of Labor in an amicus curiae brief argues Mertens dictates the availability of equitable relief to an individual under section 1132(a)(3) for a fiduciary's breach of duty. Therefore, in light of Mertens and in deference to the Secretary's interpretation of the law which he is authorized to enforce, we hold that an individual may seek equitable relief from a breach of fiduciary duty under section 1132(a)(3). 4 Equitable relief running to an individual falls within the scope of both 1132(a)(3)'s language and ERISA's broad remedial purpose. See 29 U.S.C. Sec. 1001(b). 31 Plaintiff seeks a constructive trust on the insurance policy proceeds as equitable relief under section 1132(a)(3) which is a typical remedy available in equity. But it is an equitable maxim that a party coming before a court in equity must come with clean hands. International Union v. Local Union No. 589, 693 F.2d 666, 672 (7th Cir.1982). Although the district court did not consider whether plaintiff was entitled to equitable relief because it held she could not recover under section 1132(a)(3) as a matter of law, it is not necessary to remand the case when the record so clearly shows that plaintiff is not entitled to any equitable relief. Plaintiff's husband received double benefits from February 1982 until 1988 when Aetna finally learned Mr. Anweiler was also receiving social security disability benefits. It is obvious from plaintiff's own arguments that she knew at the time that her husband should not receive double benefits since she maintains her husband contacted Aetna earlier than 1988. Additionally, as explained above, in 1981 when he was first awarded social security disability benefits, his AEP disability plan benefits were reduced because of the social security benefits. When Mr. Anweiler died in 1989, he still owed Aetna $46,227.01. Even with the $37,000 life insurance policy, Aetna is still short $9,000 because of the overpayment. Plaintiff cannot escape these facts and is not entitled to any equitable relief. 32 Therefore, despite defendants' breach of their fiduciary duties, plaintiff has no equitable claim to the proceeds from Mr. Anweiler's life insurance policy.