Opinion ID: 165323
Heading Depth: 2
Heading Rank: 2

Heading: Suit Against a Fiduciary for Breach of Fiduciary Duty

Text: 24 Ms. Callery, and amici Secretary of Labor and AARP, assert that the limited availability of monetary damages in Mertens and Great-West is inapplicable in this case because those cases involved contract breaches by non-fiduciaries, rather than a claim against a fiduciary for a breach of fiduciary duty. Ms. Callery asserts that the monetary relief she seeks was typically available in equity for a breach of fiduciary duty. Eaves v. Penn, 587 F.2d 453, 462 (10th Cir.1978) (Traditional trust law provides for broad and flexible equitable remedies in cases involving breaches of fiduciary duty.). In a breach of trust action against a trustee, monetary relief may be awarded based 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 that the remedies of the beneficiary against the trustee are exclusively equitable. Restatement (Second) of Trusts § 197. This issue has never been squarely addressed by the Tenth Circuit. 25 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 duty by failing to adequately explain plan coverage and limitations. The Seventh Circuit awarded the equitable remedy of restitution, in the form of reinstatement in the plan, id., totally dissimilar to the relief sought here. In Strom 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 becoming ineffective by the time of her husband's death. The court noted that such claims 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), concluding that the remedy was typically available in equity because plaintiff's claim is based on the alleged breach of a fiduciary duty, a claim that has always been within the exclusive jurisdiction of equity. Id. at 145. 26 As noted above, the Supreme Court has rejected this broad definition of equitable remedy as any remedy that a court of equity could grant in favor of those categories of relief that were typically available in equity. Great-West, 534 U.S. at 219, 122 S.Ct. 708 (rejecting the argument that the common law of trusts provides petitioners with equitable remedies that allow them to bring this action under § 502(a)(3)). 27 Importantly, the cases relied upon by Ms. Callery were 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 Bowerman's reasoning that reinstatement is equitable is still valid); Kishter v. Principal Life Ins. Co., 186 F.Supp.2d 438, 445 (S.D.N.Y.2002) (stating that the Second Circuit's reasoning in Strom has been superseded by Great-West Life ). While the arguments of amici that we should look to the common law of trusts 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. 28 Further, other courts have rejected the distinction made in Strom and Bowerman based 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 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 nonfiduciary, 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 for the fiduciary's breach constituted legal relief unavailable under § 502(a)(3). Id. 29 Similarly, in Rego v. Westvaco Corp., 319 F.3d 140, 144-46 (4th Cir.2003), Rego requested an order of specific performance requiring defendants to issue him stock in compensation for their breach of fiduciary duty. After the district court determined the claim was not equitable, he argued, on appeal, that at common law, actions for breach of fiduciary duty could only be brought in equity. Id. at 145. After considering Mertens and Great-West and finding that the Supreme Court had squarely rejected the argument, the court stated that the relevant question is not whether a given type of case would have been brought in a court of equity, but whether a given type of relief was available in equity courts as a general rule. Id. Ultimately, the court refused to award monetary damages 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 damages should be awarded because the suit is by a beneficiary against a fiduciary, 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 relief for losses as a result of breach of fiduciary duty was a claim for compensatory damages not constituting equitable relief); Rogers v. Hartford Life & Accident Ins. Co., 167 F.3d 933, 944 (5th Cir.1999) (noting the Supreme Court firmly closed 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 not affect the question of whether compensatory legal damages constitute `appropriate equitable relief'). 30 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 compensatory damages as appropriate equitable relief under § 502(a)(3) of ERISA. 31 AFFIRMED.