MEMORANDUM OF DECISION AND ORDER
Plaintiff brought this action pursuant to the Employee RetirementIncome Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 etseq. (Counts I, II, III), federal common law (Counts IV, V, VI,VII), and state common law (Counts VIII, IX, X, XI) against DefendantsEllen Green, Lloyd Green, and their attorneys, Jack H. Simmons and thelaw firm of Berman & Simmons, P. A. See Amended Complaintand Request for Injunctive Relief ("Amended Complaint") (Docket Item No.64). On December 22, 2003, the Court granted Plaintiff's "EmergencyMotion for Preliminary Injunction" (Docket Item No. 40) on Counts I andII and enjoined Defendants Ellen Green and Lloyd Green from withdrawing,transferring, or removing certain funds in their possession, custody, or control1 Now before the Court are several motionsfor summary judgment:(1) Plaintiff's Motion for Partial Summary Judgment on Counts II andIII of the Amended Complaint (Docket Item No. 94); (2) Motion for SummaryJudgment of Defendants Ellen Green and Lloyd Green on Counts I and II(Docket Item No. 103); and (3) Motion for Summary Judgment of DefendantsJack H. Simmons and Berman & Simmons, P.A. on Count III (Docket ItemNo. 107). For the reasons set forth below, the Court will grant summaryjudgment in favor of Plaintiff on Count II and deny both Plaintiff's andDefendants' motions for summary judgment with respect to Count III.2
I. Facts
Plaintiff Karen L. Mank ("Plaintiff) is the plan administrator of theHannaford Health Plan ("the Plan"), an "employee welfare benefit plan"within the meaning of ERISA. Plaintiff's Supporting Statement of MaterialFacts ("PSSMF") (Docket Item No. 100) ¶ 1. Hannaford Bros. Co. (the "Company"), a Mainecorporation with its principal place of business in Scarborough, Maine,established the Plan to provide health benefits to its employees.Id. ¶¶ 5, 7. The Plan is funded by The Hannaford Bros. Co.Tax Exempt Employee Benefits Trust (the "Trust"), and contributions tothe Trust are made by both the Company and its employees. Id.¶ 8.
Defendant Ellen Green, who is an employee of the Company, hasparticipated in the Plan and is a "Covered Person" under the terms of thePlan. Id. ¶ 10. On June 18, 2001, Mrs. Green was involved inan accident in which a vehicle struck her while she was walking (the"accident"). Id. ¶ 11. She suffered injuriesrequiring medical care, and she incurred significant medical expensesarising from those injuries. Id. ¶¶ 11-12. In accordance withthe terms of the Plan, the Plan paid medical benefits totaling$141,335.75 on behalf of Mrs. Green after she was injured in theaccident. Id. ¶ 14. The Plan includes a provision entitled"Right of Recovery or Reimbursement."3 Id. ¶ 16 andSecond Affidavit of Karen L. Mank (Mank Aff. II) (Docket Item No. 96),Ex. 1 at 42-43. Mrs. Green retained Attorney Simmons and Berman & Simmons torepresent her in a legal action seeking recovery in connection with theaccident. PSSMF ¶ 18. On July 31, 2001, Mrs. Green completed andsigned a request for information from the Plan relating to certainmedical claims for injuries in the accident. Id. ¶ 19.Specifically, Mrs. Green described the accident, provided the name andaddress of Attorney Simmons, and agreed as follows: I/We am/are aware of the right of recovery provision contained in the Plan. I/We express my/our agreement to be bound by the provision. I/We understand, however, that my/our failure to express such agreement shall in no way affect the rights of the Company under the provision. I/We further agree that I/We shall not do anything to prejudice the rights of the Company in this matter.Id. ¶ 19 and Mank Aff. II, Ex. 2. On October 3, 2001,Mrs. Green completed and signed another request for information relatingto medical claims for injuries in the accident which included the samelanguage regarding the Plan's right-of-recovery pro vision as wasincluded in the July 31, 2001, request for information. Id.¶ 20 and Mank Aff. II, Ex.3.
The parties agree that settlement funds totaling $300,000 weredeposited in the Berman & Simmons client trust account on January 22,2002. Defendants' Consolidated Statement of Material Facts in Support ofMotions for Summary Judgment ("DCSMF") (Docket Item No. 109) ¶ 16. Onor about February 1, 2002, $100,060.95 in fees and costs from thesettlement proceeds were deposited into the Berman & Simmonsoperating account, along with other unrelated funds. PSSMF ¶¶ 42-43;DCSMF ¶ 18. Between February 8, 2002, and March 8, 2002, Berman & Simmons madepayments from the settlement proceeds to Ellen Green totaling$187,627.10.4 Id. ¶ 25. Mrs. Green recovered for bothher medical bills and other damages, but there was no breakdown betweenthese amounts. Id. ¶ 23. From the settlement proceeds,Berman & Simmons also made payments to various healthcare providers.Id. ¶ 24. Mrs. Green, Attorney Simmons, and Berman &Simmons never made any payment to the Plan. Id. ¶ 26.
On February 4, 2002, Berman & Simmons transferred $300,000 from itsoperating account to its so-called "Melon account," an interest-bearingaccount with KeyBank.5 Id. ¶ 44; DCSMF ¶ 20. On June27, 2002, Berman & Simmons transferred the balance of its Melonaccount to its operating account. PSSMF ¶ 47. On July 2, 2002, andJuly 3, 2002, respectively, Berman & Simmons then made additionaltransfers from the operating account, first to the firm's payroll andpayroll tax withholding accounts and then to the partners (includingAttorney Simmons) as part of the firm's distribution to the partners forthe period ending June 30, 2002.6 PSSMF ¶ 48, 49. AttorneySimmons deposited the amount of his firm distribution into a personaljoint checking account. PSSMF ¶ 51. Attorney Simmons subsequently hasmade both withdrawals from and deposits into this checking account.Defendants' Statement of Additional Material Facts (Docket Item No. 109)¶¶ 5-6.
By letter dated May 24, 2002, the Plan sent Mrs. Green a copy of theright-of-recovery provision (as amended in March 2002) and a Recovery ofPlan Assets Notice, requesting that she complete and return the noticewithin one month. PSSMF ¶ 27. On June 5, 2002, Mrs. Green called andspoke by telephone with a Plan representative. Id. ¶ 28. Sheconfirmed that she had received the Notice and advised that her legalclaims had been settled in January 2002. Id. Mrs. Green refusedto disclose the terms of the settlement and reiterated that AttorneySimmons continued to represent her. Id. On June 13, 2002, thePlan's legal counsel, Seth W. Brewster, sent a letter to AttorneySimmons. Id. ¶ 29. In the letter, Attorney Brewster askedAttorney Simmons to advise him "when the Health Plan will be reimbursedfor the payments made on behalf of Ms. Green." Amended Complaint, Ex. D.Attorney Simmons responded to the Plan's June 13, 2002 letter by letterdated June 19, 2002, in which he stated:
The case was settled and the monies distributed a long time ago. For your information, there was very little coverage from the tortfeasor considering the nature and extent of Mrs. Green's injury. In any event, without regard to legal issues involving questions of equitable deduction, the fact of the matter is that we were never contacted by Hannaford Bros. and Hannaford Health Plan. Our tort file has long been closed. PSSMF ¶ 30 and Amended Complaint, Ex. E. Prior to February 2003(when Plaintiff filed this action), Defendants refused to provide anyinformation to the Plan or to make any payments to the Plan.7Id. ¶ 32.
II. Standard
Summary judgment is appropriate if the record shows "that there is nogenuine issue as to any material fact and that the moving party isentitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Anissue is "genuine" if, based on the record evidence, a reasonable jurycould return a verdict for the nonmoving party. Anderson v. LibertyLobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986). "`Material' means that a contested fact has the potential tochange the outcome of the suit under the governing law if the disputeover it is resolved favorably to the nonmovant." McCarthy v.Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995)(citations omitted).
The party moving for summary judgment must demonstrate an absence ofevidence to support the nonmoving party's case. Celotex Corp. v.Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986). In determining whether this burden has been met, the court mustview the record in the light most favorable to the nonmoving party andgive that party the benefit of all reasonable inferences in its favor.Nicolo v. Philip Morris, Inc., 201 F.3d 29, 33 (1st Cir. 2000).Once the moving party has made a preliminary showing that no genuineissue of material fact exists, the nonmovant must "produce specificfacts, in suitable evidentiary form, to establish the presence of atrialworthy issue." Triangle Trading Co. v. Robroy Indus., Inc.,200 F.3d 1, 2 (1st Cir. 1999) (citation and internal punctuationomitted); Fed.R.Civ.P. 56(e). Cross motions for summary judgment do not alter the basic standard for summary judgment;rather, they require the court to determine whether either of the partiesdeserves judgment as a matter of law on the undisputed facts. AdriaInt'l Group, Inc. v. Ferre Dev., Inc., 241 F.3d 103, 107 (1st Cir.2001).
III. Discussion
A. Counts I and II against the Greens
Plaintiff seeks summary judgment against the Greens with respect toCount II and asks the Court to impose a constructive trust on $83,941.21currently held in the Greens' Peoples Bank accounts pursuant to apreliminary injunction previously issued by this Court. The Greenscounter with their own request for summary judgment on Counts I and II.The parties agree that the availability of the remedy sought by Plaintiffunder section 502(a)(3) of ERISA turns on whether Plaintiff's request forrelief is properly characterized as a request for legal or equitablerestitution. See 29 U.S.C. § 1132(a)(3) (authorizing a planfiduciary to bring an action "to obtain other appropriate equitablerelief to redress violations of plan terms).
In Great-West Life & Annuity Insurance Company v. Knudson,534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), the Supreme Courtconsidered whether section 502(a)(3) authorized an action to recoversettlement proceeds pursuant to an ERISA plan's reimbursement provisionthat, in accordance with a state court order, were paid by two checks:one to a state-law special needs trust to benefit the injured planbeneficiary, respondent Janette Knudson, and the other to her attorney(who, after deducting his own fees and costs, deposited the funds in a client trustaccount).8 The petitioners, Great-West Life & Annuity InsuranceCompany and the plan sponsor, brought an action against respondent andher then-husband to recover the amount of medical benefits previouslypaid on her behalf pursuant to the plan Knudson, 534 U.S. at207-08. Despite the petitioners' attempt to characterize their claim forrestitution as one for equitable relief, the Supreme Court concluded that"[h]ere-petitioners seek, in essence, to impose personal liability onrespondents for a contractual obligation to pay money-relief that was nottypically available in equity." Id. at 210. According to theSupreme Court, "for restitution to lie in equity, the action generallymust seek not to impose personal liability on the defendant, but torestore to the plaintiff particular funds or property in the defendant'spossession." Id. at 214. Because the funds being sought by thepetitioners were not in the respondents' possession, [t]he basis for petitioners' claim is not that respondents hold particular funds that, in good conscience, belong to petitioners, but that petitioners are contractually entitled to some funds for benefits that they conferred. The kind of restitution that petitioners seek, therefore, is not equitable — the imposition of a constructive trust or equitable lien on particular property — but legal — the imposition of personal liability for the benefits that they conferred upon respondents.Id. The Supreme Court concluded that because thepetitioners sought legal, rather than equitable, relief, the action wasnot authorized by section 502(a)(3) of ERISA. Id. at 221.Since Knudson, courts have allowed actions for equitablerestitution under section 502(a)(3) in circumstances in which thedefendant possessed identifiable funds from a third-party recovery which, pursuant to a plan provision, belongedin good conscience to the plan.9 See, e.g., Bombardier AerospaceEmployee Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough,354 F.3d 348, 358 (5th Cir. 2003), reh'g en banc den., 2004 WL 63546(5th Cir. Jan 13, 2004), petition for cert. filed, 72 U.S.L.W.3513 (Feb. 5, 2004); Administrative Committee of the Wal-Mart Stores,Inc. Associates' Health and Welfare Plan v. Varco, 338 F.3d 680,687-88 (7th Cir. 2003), petition for cert. filed, 72 U.S.L.W.3452 (Dec. 23, 2003).
After evaluating the evidence then on the record, this Court previouslyconcluded, in the context of Plaintiff's motion for preliminaryinjunctive relief against the Greens, that "the Plan is seeking equitablerelief [from the Greens] in the form of equitable restitution pursuant tothe Plan's right-of-recovery provision." Mank, 297 F. Supp.2dat 302-03. The Court's injunctive order was based on the Plan'sright-of-recovery provision and Plaintiff's preliminary showing of theexistence of identifiable proceeds from a third-party recovery that werein the Greens' possession Specifically, the Court concluded that$83,941.21 of particular funds that belong in good conscience to the Plan(that is, identifiable proceeds from the Green settlement) existed inthree Peoples Bank accounts in the Greens' names. Id. at 303.
The Greens offer no new arguments with respect to these particularissues, and the Court will not revisit its initial conclusions withrespect to the proper characterization of Plaintiff's request for reliefor the existence and amount of identifiable proceeds from the Green settlement in the Greens' possession10 In accordance withthis Court's preliminary injunction, the Court now finds that $83,941.21of the Green settlement remains identifiable and in the Greens'possession at this time. Accordingly, the question before the Court atthis stage of the proceedings is whether the interests of equity areserved by imposing a constructive trust on these funds in favor ofPlaintiff.
The remedy of equitable restitution sought by Plaintiff under section502(a)(3) is subject to the traditional equitable considerations. SeeKnudson, 534 U.S. at 210 (indicating that the term "equitable reliefin section 502(a)(3) "must refer to `those categories of relief that were typically available inequity. . . .") (quoting Mertens v. Hewitt Associates,508 U.S. 248, 256, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993)). The Court ofAppeals for the First Circuit previously offered guidance on the weighingof equities in the context of a traditional equitable action forrestitution under ERISA's federal common law: "[t]he trial court shouldconsider whatever factors it may reasonably believe shed light on thefairness of reimbursement, and weigh those factors against the backdropof general equitable considerations and the guiding principles andpurposes of ERISA." Kwatcher v. Massachusetts Service EmployeesPension Fund, 879 F.2d 957, 967 (1st Cir. 1989), abrogated onother grounds by Raymond B. Yates, M.D., P.C. Profit Sharing Plan v.Hendon, 124 S.Ct. 1330, 158 L.Ed.2d 40 (2004). The Court findsthis guidance instructive in the instant case with respect to Plaintiff'sclaim for equitable restitution under section 502(a)(3).
Plaintiff argues that the equities of this case weigh in favor ofgranting her the relief she seeks from the Greens. Plaintiff asserts thatMrs. Green agreed to abide by the terms of the Plan when she originallyaccepted benefits under the Plan and that she twice acknowledged thePlan's right of recovery following her accident. The Greens counter thatit would be inequitable to impose the constructive trust that Plaintiffhas requested. Specifically, the Greens argue that the Plan slept on itsrights by failing to take action when Mrs. Green informed the Plan thatshe was pursuing a claim against a third party. According to the Greens,the Plan's failure to act constitutes a waiver of its right to pursuereimbursement from Mrs. Green. The Greens argue that they acted on theassumption that the Plan would not be asserting a claim and, as a result,were deprived of any opportunity to negotiate a settlement that mighthave avoided the instant litigation and the attempted seizure of their bank accounts. The Greens alsoargue that it would be contrary to good conscience to deprive Mrs. Greenof the entirety of the remaining settlement proceeds. Mrs. Greenestimates that her total damages relating to the accident wereapproximately $1 million, and the Greens claim that it is inequitable toallow the Plan to recover Mrs. Green's remaining $83,941.21 in settlementproceeds because it imposes a much higher proportional burden on her thanupon the Plan.11
After weighing the equities of this situation, the Court concludes thatit is not inequitable to permit the Plan to enforce its right-of-recoveryprovision at this time with respect to the remaining identifiableproceeds in the Greens' possession. As the Court of Appeals for the FirstCircuit has noted:
"A primary purpose of ERISA is to ensure the integrity and primacy of the written plans . . . [so that] the plain language of an ERISA plan should be given its literal and natural meaning." Health Cost Controls, 139 F.3d at 1072 (citing Burnham v. Guardian Life Ins. Co., 873 F.2d 486, 489 (1st Cir. 1989)) (emphasis added). Against this plain legislative purpose, if the ERISA plan expressly provides that its members are obligated to reimburse the plan for "the value of services provided, arranged, or paid for," we do not think it can be considered "unfair" to require plan members to abide by the agreement. See Ryan, 78 F.3d at 127 ("`Enrichment is not "unjust" where it is allowed by the express terms of the . . . plan.'") (citation omitted),. . . Harris, 208 F.3d at 279. The Plan contains expresslanguage providing for a right of recovery with respect to third-partyrecoveries. Further, Mrs. Green signed two requests for information thatcontained clear disclosures about the Plan's right-of-recovery provisionMrs. Green agreed to abide by the Plan's right-of-recovery provision,both by her acceptance of benefits and her signature on the two requestsfor information. The Court is not persuaded that the Plan's failure toact more promptly precludes Plaintiff from seeking equitable restitutionof the remaining identifiable proceeds from the settlement in the Greens'possession12 Accordingly, the Court will grant summary judgment onCount II in favor of Plaintiff.
B. Count III against Attorney Simmons and Berman& Simmons, P.A.
In her motion for partial summary judgment, Plaintiff requests that aconstructive trust in the amount of $57,394.54 be imposed on certainassets in the possession of Berman & Simmons and/or Attorney Simmonson a theory of equitable restitution so as to ensure that the Plan isfully reimbursed for the medical expenses that it paid on behalf of Mrs.Green or, in the alternative, that the Court grant her other appropriateequitable relief with respect to Count III. Attorney Simmons and Berman& Simmons seek summary judgment on Count III as well. For the reasonsset forth below, the Court concludes that Plaintiff is seeking legal,rather than equitable, restitution against Attorney Simmons and Berman & Simmons, but that the parties have not hadan opportunity to conduct discovery on the facts or brief the legalissues that would enable the Court to determine whether Plaintiff isentitled to any other equitable relief with respect to CountIII. Accordingly, the Court will not grant summary judgment on Count IIIat this stage in the proceedings.
1. Equitable Restitution
Plaintiff argues that any settlement funds or assets in an attorney'spossession are subject to the Plan's right to reimbursement. According toPlaintiff, Knudson stands for the proposition that identifiableproceeds from a settlement or other recovery in the control of any nameddefendant may be recovered under the principles of equitable restitutionif such proceeds belong in good conscience to the plaintiff. Plaintiffurges the Court to use various principles of equitable tracing toconclude that Attorney Simmons and/or Berman & Simmons possessidentifiable proceeds from Mrs. Green's settlement.
Among the arguments offered by Attorney Simmons and Berman &Simmons is their assertion that Plaintiff cannot demonstrate that theypossess identifiable proceeds from Mrs. Green's settlement at this timeand that, as a result, Plaintiff seeks legal, rather than equitable,restitution against them.13 In the Court's view, this argument is dispositive of Plaintiff's claim for restitution against AttorneySimmons and Berman & Simmons under Count III.
As the Court has previously noted, Knudson provided theframework for a proper claim for equitable restitution: "a plaintiffcould seek restitution in equity, ordinarily in the form of aconstructive trust or an equitable lien, where money or propertyidentified as belonging in good conscience to the plaintiff could clearlybe traced to particular funds or property in the defendant's possession."Knudson, 534 U.S. at 213. If the defendant does not possessparticular funds or property that belongs in good conscience to theplaintiff, then the plaintiff is seeking legal, rather than equitable,restitution. See id. at 214. The Court concludes on theundisputed facts of this case that Plaintiff is seeking legal, ratherthan equitable, restitution from Attorney Simmons and Berman &Simmons because the record does not demonstrate that either of thoseDefendants possesses identifiable proceeds from the Green settlement atthis stage in the proceedings.
The record reflects without dispute that Berman & Simmons depositedthe $100,060.95 in attorney fees and costs for the Green settlement intoits firm operating account on February 1, 2002 (along with otherunrelated funds). On February 4, 2002, Berman & Simmons transferredan amount well in excess of $100,060.95 to its Melon account. Berman& Simmons made additional deposits to the Melon account between Marchand May of 2002. The entire Melon account balance was transferred to theoperating account in late June of 2002 and then to the firm's payroll andtax withholding accounts for distribution to the firm's equity participants(including Attorney Simmons) on July 3, 2002.
Plaintiff asks the Court to conclude that she seeks particularfunds rather than some funds from Attorney Simmons and Berman& Simmons. To do so, she suggests that the Court should trace$57,394.54 — the difference between the amount paid by the Plan forMrs. Green's medical benefits and the amount of identifiable proceedsfrom the settlement still in Mrs. Green's possession at this time —on the following path: from the firm's client trust account to itsoperating account to its Melon account back to the operating account and,if necessary, to the firm's payroll and payroll tax withholding accountsand, ultimately, to Attorney Simmons (either to his personal jointchecking account or his home in Falmouth, Maine). While courts have notyet fleshed out the parameters of the identifiable proceeds inquiry, theCourt feels certain that the exercise proposed by Plaintiff is not in thespirit of Knudson, in which the Supreme Court describedequitable restitution in terms of actions to recover amounts "identifiedas belonging in good conscience to the plaintiff [that] could beclearly traced to particular funds or property in thedefendant's possession." Knudson, 534 U.S. at 213 (emphasisadded). In such an instance, [a] court of equity could then order a defendant to transfer title (in the case of the constructive trust) or to give a security interest (in the case of the equitable lien) to a plaintiff who was, in the eyes of equity, the true owner. But where "the property [sought to be recovered] or its proceeds have been dissipated so that no product remains, [the plaintiff's] claim is only that of a general creditor," and the plaintiff "cannot enforce a constructive trust of or an equitable lien upon other property of the [defendant]." Restatement of Restitution, supra, § 215, Comment a, at 867. Id. 213-14.
Here, the funds at issue can scarcely be described as "particular" or"clearly" traceable. Berman & Simmons received its portion of thesettlement funds more than two years ago, and these funds have traveled(along with other funds of the firm) back and forth through severaldifferent accounts and to the equity members of the firm (includingAttorney Simmons). The Court determines on the specific facts of thiscase that the funds sought by Plaintiff have become so dissipated thatPlaintiff cannot be considered to be seeking particular funds that belongin good conscience to the Plan — that is, proceeds from the Greensettlement. As a result, the Court concludes that Plaintiff is seekinglegal, rather than equitable, restitution in Count III of her AmendedComplaint. Such relief is not authorized under section 502(a)(3). SeeKnudson, 584 U.S. at 221.
2. Other Appropriate Equitable Relief
In her reply brief in support of her motion for partial summaryjudgment and in her response to Defendants' motion for summary judgmenton Count III, Plaintiff argues that she should prevail on Count IIIbecause the "other appropriate equitable relief sought by Plaintiff undersection 502(a)(3) contemplates other equitable remedies even if equitablerestitution is not available because there are no identifiable proceedsfrom the Green settlement in the possession of Attorney Simmons or Berman& Simmons. In support of her argument, Plaintiff relies onGreenwood Mills, Inc. v. Burris, 130 F. Supp.2d 949 (M.D. Tenn.2001) (finding that "[a] lawyer who is fully aware of his client'sobligation under an ERISA plan to honor the subrogation interest of hisemployer may be held liable under [section 502(a)(3) of ERISA]" andawarding equitable relief in the form of disgorgement of profits wherethe lawyer had knowledge of a plan's subrogation provision and counseled the plan beneficiary to lie to planfiduciaries); see also Great-West Life & Annuity Ins. Co. v.Bullock, 202 F. Supp.2d 461, 465 (E.D.N.C. 2002) (indicating thatthe court "would find a cause of action lies [under section 502(a)(3)]where there are allegations of attorney wrongdoing or his intentionaleffort to `enable' plan participants to avoid plan provisions.").Defendants, on the other hand, draw the Court's attention to cases inwhich courts have concluded that a plan beneficiary's attorney whoreceives settlement funds (or other funds in recovery) from a third partydoes not have any duty enforceable under section 502(a)(3) of ERISA tohonor the ERISA plan's subrogation or reimbursement rights with respectto the settlement proceeds if the attorney has no professional orcontractual relationship with the plan. See, e.g., Hotel Employees& Restaurant Employees International Union Welfare Fund v.Gentner, 50 F.3d 719 (9th Cir. 1995); Maryland ElectricalIndustry Health Fund v. Levitt, 155 F. Supp.2d 482, 484 (D. Md.2001).
Discovery in this case was previously limited to the existence andlocation of any identifiable proceeds from the Green settlement inDefendants' possession. See Order (October 8, 2003) (Docket ItemNo. 29). As a result of this limitation on discovery, the parties havenot been afforded the opportunity to develop a record that offers afactual basis for evaluating whether any other equitable relief iswarranted or for thoroughly and responsively briefing the legal questionof whether "other appropriate equitable relief is available to Plaintiffagainst those Defendants under section 502(a)(3) of ERISA with respect toCount III.14 As a result, the Court is not in a position to determinewhether other equitable relief is available or appropriate in this case andwill deny summary judgment on Count III.15
IV. Conclusion
Accordingly, it is ORDERED that:
(1) Plaintiffs Motion for Partial Summary Judgment be, and it ishereby, GRANTED with respect to Count II and DENIEDwith respect to Count III;
(2) Defendants Ellen Green and Lloyd Green's Motion for SummaryJudgment on Count I and II be, and it is hereby, DENIED;
(3) Defendants Jack H. Simmons and Berman & Simmons's Motion forSummary Judgment on Count III be, and it is hereby, DENIED;
(4) a constructive trust be, and it is hereby, placed on the amount ofthe identifiable proceeds subject to this Court's preliminary injunctionof December 22, 2003, in the amount of Eighty-Three Thousand Nine HundredForty-One Dollars and Twenty-One Cents ($83,941.21), see supraat 2, n. 1, and, further, that Defendants Ellen Green and Lloyd Green be,and they hereby are, ORDERED to pay said amount to Plaintiffwithin thirty (30) days of the date of this Order; and (5) the Scheduling Order in this case be modified to reopen discoveryand the motion deadlines be adjusted accordingly to afford the parties anopportunity to file additional dispositive motions if they wish to do so.
1. Specifically, the Court concluded that $83,941.21 in identifiableproceeds from a third-party settlement remained in the possession of theDefendants Ellen Green and Lloyd Green in three accounts at Peoples Bankand enjoined Ellen and Lloyd Green: (1) from withdrawing, transferring, or removing all funds in her or their Peoples Bank CD account that has a current balance of Ten Thousand Thirty-One Dollars and Six Cents ($10,031.06); (2) from withdrawing, transferring, or removing all funds in her or their Peoples Heritage savings account that has a current balance of Sixty-One Thousand Four Hundred Seventy-Nine Dollars and Fourteen Cents ($61,479.14); and (3) from withdrawing, transferring, or removing any more than Eight Thousand Nine Hundred Sixty-Four Dollars ($8,964.00) from her or their Peoples Heritage checking account such that a balance of Twelve Thousand Four Hundred Thirty-One Dollars and One Cent ($12,431.01) must remain in that account.Mank v. Green, 297 F. Supp.2d 297, 305 (D. Me. 2003).
2. Plaintiff has not asked for summary judgment on Count I (entitled"ERISA: Mandatory Injunction-the Greens"), but the Greens have requestedsummary judgment on this count. The Court previously has issued apreliminary injunction in this case, and Plaintiff no longer appears toseek any additional injunctive relief against the Greens under Count I.Rather, she seeks the equitable relief described in Count II, which theCourt will grant. The Court will deny Defendants' request for summaryjudgment on Count I.
3. At the time of the accident, the Plan's right-of-recoveryprovision read, in relevant part: A Covered Person who recovers payment from a third party shall reimburse the Plan for the amount of benefit payments made, in full and without reduction for attorneys' fees or costs, from the proceeds received from the third party, whether the proceeds are paid by way of settlement, judgment, or otherwise, and the Plan shall have an equitable interest in the amount recovered, or to be recovered, for the amount of benefit payments made. The Plan shall have the right to withhold future benefit payments to which a claimant or a Covered Person through whom the claimant derives his or her claim may be entitled until the obligation to the Plan under the foregoing provisions of this Section, plus interest, has been satisfied. This right to offset shall not limit the right of the Plan to recover an erroneous or excess payment in any other manner, and the Plan shall equally have the right to institute legal action against a Covered Person for failure to reimburse the Plan or to honor its equitable interest in the amount recovered from a third party, and the Covered Person shall be liable in such event for all costs of collection, including reasonable attorneys' fees. For purposes of this Section, the "amount of benefit payments made" shall include in appropriate cases the reasonable cash value of any benefits provided in the form of services.Hannaford Health Plan at 42-43, attached as Ex. 1 to Mank Aff.II.
4. The Court previously concluded that "[t]here is simply noevidence in this record that any of the settlement proceeds were actuallyallocated to be payment for [Mr. Green's] claim rather than a settlementof Ellen Green's claims." Mank, 297 F. Supp.2d at 303. Therecord now before the Court continues to reflect that Berman &Simmons made disbursements from the settlement proceeds only to itself,Mrs. Green, and several health care providers and fails to indicate thatany specific portion of the settlement was actually apportioned to Mr.Green's loss of consortium claim or that Berman & Simmons paid any ofthe settlement proceeds to Lloyd Green or to Ellen and Lloyd Greenjointly.
5. The record does not reflect the precise balance of the operatingaccount after the $300,000 transfer on February 4, 2002.
6. Defendants assert that the transfer to the Melon account, thetransfer back to the operating account, and the transfers to the payrolland tax withholding accounts included the $100,060.65 in fees and costsfrom the Green settlement. Plaintiff does not respond to thisqualification with respect to the transfer to the Melon account andresponds only that the transfers may have included such amountwith respect to the transfers back to the operating account and to thepayroll and tax withholding accounts. See Defendants' OpposingStatement of Material Facts (Docket Item No. 113) ¶ 44, 47, 48;Plaintiff's Reply Statement of Facts (Docket Item No. 119) ¶¶47-48.
7. On June 24, 2002, the Plan's counsel sent another letter toAttorney Simmons. PSSMF ¶ 31. However, this letter was not includedin the record. As a result, the content of the letter is unknown.
8. The settlement allocated $13,828.70 to the plan for reimbursementof the approximately $400,000 paid for Ms. Knudson's medical expenses,which the plan did not accept. See Knudson, 534 U.S. at207.
9. The Court recognizes that other courts have read Knudsonmore narrowly and have concluded that a plan fiduciary's action toenforce a reimbursement provision through a constructive trust or anequitable lien is a legal action even if the defendant has possession ofidentifiable funds from a third-party recovery. See, e.g.,QualChoice, Inc. v. Rowland, — F.3d —, 2004 WL 1047581(6th Cir. May 11, 2004); Westaff (USA) Inc. v. Arce,298 F.3d 1164, 1166-67 (9th Cir. 2002). The Court declines to follow thesecases in favor of the approach taken by the Bombardier and Varcocourts.
10. Plaintiff asserts that the law-of-the-case doctrine prohibitsthe Court from revisiting the legal issues addressed in the preliminaryinjunction order, while the Greens argue that the Court's earlier rulingwas designed to predict the probable outcome of the action and does notpreclude them from arguing the merits of their case at this stage in theproceedings. However, the Greens' summary judgment motion and responsivepleadings offer virtually no new arguments or facts; indeed, the Greens'motion is almost identical to their objection to Plaintiff's motion forpreliminary injunctive relief. Faced with a similar situation, the Courtof Appeals for the First Circuit stated: We acknowledge that we have repeatedly emphasized that conclusions and holdings regarding the merits of issues presented on appeal from a grant of a preliminary injunction are to be understood as statements as to probable outcomes. E.g., A.M. Capen's Co. v. American Trading and Prod. Corp., 74 F.3d 317, 322 (1st Cir. 1996); Narragansett Indian Tribe v. Guilbert, 934 F.2d 4, 6 (1st Cir. 1991). The concern informing this caveat arises when we are asked to rule on the propriety of a district court's grant of a preliminary injunction (or otherwise issue a preliminary ruling) without benefit of full argument and a well-developed record. In this case, however, the record before the prior panel was "sufficiently developed and the facts necessary to shape the proper legal matrix [we]re sufficiently clear," Cohen II, 991 F.2d at 904, and nothing in the record subsequently developed at trial constitutes substantially different evidence that might undermine the validity of the prior panel's rulings of law.Cohen v. Brown University, 101 F.3d 155, 169 (1st Cir.1996), cert. denied, 520 U.S. 1186, 117 S.Ct. 1469,137 L.Ed.2d 682 (1997). Presented with only bare assertions, rather thananalysis or authority, that the prior ruling was incorrect, theCourt of Appeals declined to "change its mind." Id. The Greens have notoffered any arguments directly in response to the Court'sconclusions at the preliminary injunction stage, nor does the recordnow developed at the summary judgment stage "constitute[]substantially different evidence that might undermine the validity"of this Court's prior ruling. See id. Therefore, the Court's prior rulingwith respect to the nature of the relief sought against the Greensand the existence and amount of identifiable proceeds from thesettlement in the Greens' possession is treated by the Court as thelaw of this case.
11. Tied to this argument is the Greens' assertion that the Planshould be barred by the make-whole doctrine. Specifically, the Greensargue that Mrs. Green, as a plan participant, should be made whole (or asclose thereto as possible) for her injuries before the Plan is permittedto exercise its reimbursement rights. However, "where the terms of anERISA plan confer upon it an unqualified entitlement to reimbursement forthe value of services provided to a member, the ERISA plan administratorneed not demonstrate that the settlement fund, from which reimbursementis sought, fully compensated the plan member." Harris v. HarvardPilgrim Health Care, Inc., 208 F.3d 274, 281 (1st Cir. 2000). Here,the Plan calls for reimbursement "for the amount of benefit paymentsmade, in full and without reduction for attorneys' fees or costs."Hannaford Health Plan, Ex. 1 to Mank Aff. II, at 42. Accordingly, theCourt concludes that the make-whole doctrine is not applicable toPlaintiff's claim for equitable restitution.
12. The Greens make a passing reference to the doctrine of lachesand suggest that Plaintiff's failure to seek recovery more quickly shouldbar her attempt to recover the remaining identifiable proceeds in theGreens' possession. However, in the Court's view, the Greens have notmade the necessary showings for a successful laches defense: anunreasonable delay by Plaintiff and resulting prejudice to them. SeeK-Mart Corp. v. Oriental Plaza, Inc., 875 F.2d 907, 911 (1st Cir.1989). In particular, the Greens have not demonstrated that they havebeen prejudiced by Plaintiff's delay in bringing this action. Indeed,while Mrs. Green originally received settlement funds sufficient to fullyreimburse the Plan for the medical benefits paid on Mrs. Green's behalf,only a portion of that amount remains identifiable and in the Greens'possession at this time. As a result, the Greens arguably have benefitedfrom the Plan's failure to act more promptly, and the record contains noevidence of any actual prejudice suffered by the Greens.
13. Attorney Simmons and Berman & Simmons also argue that CountIII does not state a legally cognizable claim pursuant to section502(a)(3) because it is outside the scope of permissible equitableactions under section 502(a)(3) and is inconsistent with the plain termsof the Plan. They point out that any proceeds paid to them as fees andcosts are no longer in Mrs. Green's control or possession and also thatneither Attorney Simmons nor Berman & Simmons is a "Covered Person"as defined in the Plan. They further argue that Mrs. Green's portion ofthe settlement proceeds was more than adequate to satisfy the Plan'srecovery right and that their fees and cosls should not be subject to aconstructive trust because Plaintiff failed to seek the funds from Mrs.Green while the full amount sought still remained identifiable and inMrs. Green's possession-that is, at most, the funds that belong in goodconscience to the Plan were distributed in their entirety to Mrs. Green.Attorney Simmons and Berman & Simmons also argue that Plaintiff'sattempt to impose a constructive trust on the funds paid to Berman &Simmons must fail because the firm has the status of a bona fidepurchaser with respect to its receipts of those funds. Because it isreadily apparent to the Court that Plaintiff cannot prevail against theseDefendants on the identifiable proceeds issue, it is unnecessary for theCourt to reach any of the other arguments raised by the parties withrespect to Plaintiff's claim for restitution under Count III, and theCourt expresses no opinion on those issues. That is, even if eachcontested legal issue were decided in Plaintiff's favor, she could notsucceed in her motion for summary judgment on that claim for restitutionbecause she does not seek equitable restitution, as is requiredby section 502(a)(3).
14. At oral argument, counsel for Defendants argued that the recordbefore the Court permits the Court to conclude that there has been nowrongdoing on Defendants' part and that, therefore, summary judgment intheir favor is appropriate. To support this position, Defendants point toAttorney Simmons's affidavit, which is part of the summary judgmentrecord before the Court and which states that it was not until June of2002 that he received a letter from Plaintiff's counsel informing himthat the Plan might have a claim with respect to the Green settlement.However, Attorney Simmons's voluntary statement regarding his state ofmind has not been subject to cross-examination or rebuttal by Plaintiffbecause of the Court's limitation on discovery and, for that reason, doesnot provide a basis for granting summary judgment on Count III.
15. The Court notes that several of the cases cited by the partiespredate Knudson and, further, that the Court of Appeals for theFirst Circuit has not evaluated the rationales set forth in Gentner,Greenwood Mills, and Bullock or otherwise expressed itsopinion as to whether and, if so, under what circumstances an attorneymay be liable under section 502(a)(3) for a violation of an ERISA plan'sright-to-recovery provision. The Court expresses no opinion herein onthese issues.