Montanile was seriously injured by a drunk driver, and his ERISA plan paid more than $120,000 for his medical expenses. Montanile later sued the drunk driver, and obtained a $500,000 settlement. Pursuant to the plan’s subrogation clause, the plan administrator sought reimbursement. Montanile’s attorney refused, and subsequently informed the plan that the fund would be transferred from his trust account to Montanile unless the plan objected. The plan did not respond, and Montanile received the settlement. Six months later, the Board sued Montanile under Section 502(a)(3). The U.S. Supreme Court held that, while basis of the plan administrator’s claim was equitable, the administrator sought a legal remedy, (which was therefore not available under ERISA), insofar as the administrator sought recovery from the participant’s general assets.
“The specific methods by which equity courts might have awarded relief from a defendant’s general assets only confirm that the Board seeks legal, not equitable, remedies. While equity courts sometimes awarded money decrees as a substitute for the value of the equitable lien, they were still legal remedies, because they were ‘wholly pecuniary and personal.’ The same is true with respect to deficiency judgments. Equity courts could award both of these remedies as part of their ancillary jurisdiction to award complete relief. But the treatises make clear that when equity courts did so, ‘the rights of the parties are strictly legal, and the final remedy granted is of the kind which might be conferred by a court of law.’ But legal remedies — even legal remedies that a court of equity could sometimes award — are not ‘equitable relief’ under § 502(a)(3).
“The swollen assets doctrine also does not establish that the relief the Board seeks is equitable. Under the Board’s view of this doctrine, even if a defendant spends all of a specifically identified fund, the mere fact that the defendant wrongfully had assets that belonged to another increased the defendant’s available assets, and justifies recovery from his general assets. But most equity courts and treatises rejected that theory.”
Montanile v. Board of Trustees of the Elevator Industry Health Benefit Plan, No.14-723, 2016 WL 228344 (Jan. 20, 2016).
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