Opinion ID: 165323
Heading Depth: 2
Heading Rank: 1

Heading: Appropriate Equitable Relief

Text: 7 The Supreme Court has addressed the meaning of appropriate equitable relief under § 502(a)(3) in several opinions, including Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 209-21, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), and Mertens v. Hewitt Associates, 508 U.S. 248, 251-63, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). In both cases, the Court unequivocally rejected attempts to impose personal liability for a contractual obligation to pay money under § 502(a)(3), holding that the term equitable relief in § 502(a)(3) refers to those categories of relief that were typically available in equity (such as injunction, mandamus, and restitution, but not compensatory damages). Mertens, 508 U.S. at 256, 113 S.Ct. 2063; see also Great-West, 534 U.S. at 210, 122 S.Ct. 708. 8 In Mertens, a class of former steel industry employees participating in a qualified pension plan brought suit against a non-fiduciary, seeking monetary relief under § 502(a)(3). Mertens, 508 U.S. at 250, 113 S.Ct. 2063. The Court concluded that although the employees often dance around the word, what [they] in fact seek is nothing other than compensatory damages in the form of monetary relief for damages resulting from the alleged breach of fiduciary duty. Id. at 255, 113 S.Ct. 2063. Money damages are, of course, the classic form of legal relief. Id. 9 In Great-West, the Court further elaborated on the meaning of appropriate equitable relief. In that case, Great-West provided coverage to the defendant-beneficiary, who was severely injured in a car accident, pursuant to a plan that included a reimbursement provision. Great-West, 534 U.S. at 207, 122 S.Ct. 708. Great-West sought to recover monies paid by a third party to the beneficiary under the reimbursement provision through § 502(a)(3). Id. at 208. The Court rejected its claim, holding that Great-West was merely seeking, in essence, to impose personal liability on respondents for a contractual obligation to pay money — relief that was not typically available in equity. Id. at 210, 122 S.Ct. 708. Reaffirming its previous holding in Mertens, the Court stated that we rejected a reading of the statute that would extend the relief obtainable under § 502(a)(3) to whatever relief a court of equity is empowered to provide in the particular case at issue (which could include legal remedies that would otherwise be beyond the scope of the equity court's authority). Id. (citing Mertens, 508 U.S. at 257-58, 113 S.Ct. 2063). The Court specifically rejected the argument that the monetary payment sought was equitable relief, stating that an injunction to compel the payment of money past due under a contract, or specific performance of a past due monetary obligation, was not typically available in equity. Id. at 210-11, 113 S.Ct. 2063. 10 The Tenth Circuit has followed this reasoning, concluding that generally monetary compensation for economic or other harm is unavailable under ERISA. Moffett v. Halliburton Energy Servs., Inc., 291 F.3d 1227, 1234 (10th Cir.2002); see also Millsap v. McDonnell Douglas Corp., 368 F.3d 1246, 1251-54 (10th Cir.2004) (concluding that back pay was appropriately classified as legal relief). 11 In her complaint, Ms. Callery seeks payment of insurance on the life of John Callery in the amount of $100,000 and equitable relief providing for payment of the insurance on the life of John Callery. Aplt.App. 8-9. In her opposition to the Rule 12(c) motion, she is more specific. She asks the court to enjoin the defendants from not paying her the life insurance benefits. Aplt.App. 69. In the alternative, she seeks an order estopping Defendant's from denying the claim. Id. at 70. She also claims that equitable remedies such as constructive trust or equitable lien might be appropriate, as well as restitution or specific performance. Id. at 70, 74. 12 Ms. Callery necessarily avoids the term compensatory damages. As the Court explained, [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,' as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant's breach of legal duty. And [m]oney damages are, of course, the classic form of legal relief. Great-West, 534 U.S. at 210, 122 S.Ct. 708 (internal citations and quotations omitted) (emphasis in original). 13 To the extent Ms. Callery seeks payment of the policy proceeds, such relief is barred under § 502(a)(3). To the extent she seeks injunctive relief compelling the payment of the policy proceeds, Ms. Callery has dismissed the insurance company from the case and has not alleged that her situation satisfies the limitations placed upon the grant of injunctive relief in equity. Great-West, 534 U.S. at 211 n. 1, 122 S.Ct. 708. Ms. Callery's claim might be most accurately construed as one for reliance damages, because she claims that the lack of notice prevented her from obtaining life insurance on her former husband from another source. Included in the record is Ms. Callery's affidavit suggesting an insurable interest — her former husband provided child support for their children. Aplee. App. 20-21. Regardless, such relief is compensatory and not typically available in equity. Dan B. Dobbs, Law of Remedies § 12.3(1), at 50; see also Caffey v. UNUM Life Ins. Co., 302 F.3d 576, 583 (6th Cir.2002). 14 In the alternative, Ms. Callery argues that following Mertens and Great-West, numerous courts continue to allow monetary relief under § 502(a)(3). She relies upon Administrative Committee of Wal-Mart Stores, Inc. Associates' Health & Welfare Plan v. Varco, 338 F.3d 680, 687-88 (7th Cir.2003) and In re Carpenter, No. 00-2348, 2002 WL 1162277, at -2 (4th Cir. June 3, 2002). These cases merely reflect that awards of equitable restitution damages are still permitted under the Supreme Court's decisions. In Great-West, the Court stated that restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, was typically available in equity and therefore is an appropriate equitable remedy. 534 U.S. at 213. Such restitution is limited to situations where the money or property can be traced to particular funds or property in the defendant's possession. Id. 15 Ms. Callery, however, is not seeking to regain particular funds or property. She argues that the full amount of the insurance policy is the appropriate award of restitution damages under equitable principles. However, restitution recoveries are based upon a defendant's gain, not on a plaintiff loss. Great-West, 534 U.S. at 229, 122 S.Ct. 708 (Ginsburg, J., dissenting). Using this approach, restitution damages might equal the premiums paid by Ms. Callery to Star Buffet (ignoring that these amounts were probably forwarded to U.S. Life), rather than the face amount of the policy (the loss to Ms. Callery). These cases simply do not support full compensatory damages, as she requests. In fact, Ms. Callery has already been refunded the premium payments made after her divorce; she has thus already received restitution damages. 16 Next, Ms. Callery argues that the Supreme Court's decision in Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), supports her claim. In Varity, the issue before the Court was whether individual beneficiaries harmed by an administrator's breach of fiduciary obligations may bring suit. 516 U.S. at 492, 116 S.Ct. 1065. Importantly, the issue of whether the relief sought, namely reinstatement, was equitable was conceded and not before the Court. Id. at 508, 116 S.Ct. 1065. Nevertheless, Ms. Callery argues that the real benefit conveyed was not reimbursement, but rather the monetary benefit associated with reinstatement to a solvent plan. However, Ms. Callery never sought relief in the form of reinstatement. In any event, even if the insurance company was still a party and we were to reinstate Ms. Callery to the policy, this, like specific performance of the contract, would entitle her to exercise the contract. The terms of the contract, of course, do not entitle her to payment, because they exclude coverage of former spouses. Accordingly, Ms. Callery's claim for full payment of the face value of the policy is not analogous to Varity, in which the plaintiffs sought reinstatement in the plan in question. 17 Ms. Callery's second argument involving Varity is based on the Court's statement that § 502 of ERISA is a `catchall' provision[ that] act[s] as a safety net, offering appropriate equitable relief for injuries ... not elsewhere adequately remed[ied]. Id. at 512, 116 S.Ct. 1065. Relying on Varity, she argues that there is no reason to believe Congress would want to immunize breaches of ERISA's statutory requirements that result in great harm to beneficiaries by denying those beneficiaries any remedy. Aplt. Br. at 28. 18 An identical argument was rejected by the Supreme Court in Mertens, where the Court stated that vague notions of a statute's `basic purpose' are nonetheless inadequate to overcome the words of its text regarding the specific issue under consideration, especially considering the complex and detailed structure of ERISA. 508 U.S. at 261-62, 113 S.Ct. 2063; see also Great-West, 534 U.S. at 220-21, 122 S.Ct. 708 (rejecting the same argument); Millsap, 368 F.3d at 1259 (rejecting the same argument). 19 Ms. Callery also argues that if she has no remedy for the undisputed violations of ERISA, the Defendants may ignore ERISA's requirements with impunity. Aplt. Br. at 28. But Ms. Callery has a remedy under ERISA; under § 502(a)(3) she is entitled to appropriate equitable relief. Though the equitable relief she might obtain (i.e. plan compliance with notice requirements in the future or premium returns) would not be as attractive as compensatory damages, the limitation of remedy is the product of the statute and we must enforce it. 20 Next, Ms. Callery argues that the Tenth Circuit has provided equitable remedies under § 502(a)(3) in order to allow monetary relief in past cases, citing Downie v. Independent Drivers Ass'n Pension Plan, 934 F.2d 1168 (10th Cir.1991). In Downie, the court used its equitable powers to restore the parties to their original positions in order to affect the beneficiary's ability to receive future payments. Id. at 1170-71. This is a clear equitable remedy and is distinct from the relief sought in this case. 1 21 Ms. Callery also asserts that her claim is distinguishable because this case involves an aleatory contract-one that was dependent upon some fortuitous event that was beyond the control of the parties involved. Restatement (Second) of Contracts § 232 cmt. c (1981). Ms. Callery asserts that with regard to aleatory contracts, the Restatement supports allowing the beneficiary to reach the profits or unjust enrichment realized by the breaching party. The Restatement merely recognizes the rule that a beneficiary may reach any profits resulting from wrongful disposition of trust property by the trustee, even if the transaction was one that involved a great risk of loss or possibility of profit. Restatement (Second) of Trusts § 202 cmt. c. Ms. Callery is not attempting to reach profits realized by Star Buffet through improper use of her premiums, and thus this section of the Restatement does not support her case. 22 Ms. Callery's final argument is that other equitable relief traditionally available at common law would be appropriate in this case, including equitable estoppel, accounting for profits, and reformation. Although other circuits have recognized equitable estoppel in limited circumstances in the context of ERISA, the Tenth Circuit has not done so. Miller v. Coastal Corp., 978 F.2d 622, 625 (10th Cir.1992); see also Kaus v. Standard Life Ins. Co., 176 F.Supp.2d 1193, 1198-99 (D.Kan.2001). 2 Miller left open the possibility that estoppel might be applied in egregious cases, 978 F.2d at 625, but Ms. Callery has not alleged such circumstances (lies, fraud or an intent to deceive) in this case. With regard to Ms. Callery's claims for accounting for profits and reformation, Ms. Callery did not assert these arguments before the district court. New arguments presented for the first time on appeal are not properly before the court and, absent extraordinary circumstances, will not be considered. McDonald v. Kinder-Morgan, Inc., 287 F.3d 992, 999 (10th Cir.2002). 23