Montanile v. Bd. of Trs. of Nat’l Elevator Indus. Health Benefit Plan, 577 U.S. ___ (2016)




NOTE:?Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U.?S. 321 .



Certiorari to the United States Court of Appeals for the Eleventh Circuit

No. 14?723.?Argued November 9, 2015?Decided January 20, 2016

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One-Sentence Takeaway: Where an ERISA-plan participant has dissipated a third-party settlement on nontraceable items, the plan administrator may not sue to attach the participant?s separate assets because such a lawsuit does not seek ?appropriate equitable relief? under section 502(a)(3) of ERISA.



Employee benefits plans regulated by the Employee Retirement Income Security Act of 1974 (ERISA or Act) often contain subrogation clauses requiring a plan participant to reimburse the plan for medical expenses if the participant later recovers money from a third party for his injuries. Here, petitioner 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, obtaining a $500,000 settlement. Pursuant to the plan?s subrogation clause, respondent plan administrator (the Board of Trustees of the National Elevator Industry Health Benefit Plan, or Board), sought reimbursement from the settlement. Montanile?s attorney refused that request and subsequently informed the Board that the fund would be transferred from a client trust account to Montanile unless the Board objected. The Board did not respond, and Montanile received the settlement.

Six months later, the Board sued Montanile in Federal District Court under ?502(a)(3) of ERISA, which authorizes plan fiduciaries to file suit ?to obtain .?.?. appropriate equitable relief .?.?. to enforce .?.?. the terms of the plan.? 29 U.?S.?C. ?1132(a)(3). The Board sought an equitable lien on any settlement funds or property in Montanile?s possession and an order enjoining Montanile from dissipating any such funds. Montanile argued that because he had already spent almost all of the settlement, no identifiable fund existed against which to enforce the lien. The District Court rejected Montanile?s argument, and the Eleventh Circuit affirmed, holding that even if Montanile had completely dissipated the fund, the plan was entitled to reimbursement from Montanile?s general assets.

Held:?When an ERISA-plan participant wholly dissipates a third-party settlement on nontraceable items, the plan fiduciary may not bring suit under ?502(a)(3) to attach the participant?s separate assets. Pp.?5?15.

(a)?Plan fiduciaries are limited by ?502(a)(3) to filing suits ?to obtain .?.?. equitable relief.? Whether the relief requested ?is legal or equitable depends on [1] the basis for [the plaintiff?s] claim and [2] the nature of the underlying remedies sought.? Sereboff v. Mid Atlantic Medical Services, Inc., 547 U. S. 356 . Pp.?5?9.

(1)?This Court?s precedents establish that the basis for the Board?s claim?the enforcement of a lien created by an agreement to convey a particular fund to another party?is equitable. See Sereboff, 547 U.?S., at 363?364. The Court?s precedents also establish that the nature of the Board?s underlying remedy?enforcement of a lien against ?specifically identifiable funds that were within [Montanile?s] possession and control,? id., at 362?363?would also have been equitable had the Board immediately sued to enforce the lien against the fund. But those propositions do not resolve the question here: whether a plan is still seeking an equitable remedy when the defendant has dissipated all of a separate settlement fund, and the plan then seeks to recover out of the defendant?s general assets. Pp.?5?7.

(2)?This Court holds today that a plan is not seeking equitable relief under those circumstances. In premerger equity courts, a plaintiff could ordinarily enforce an equitable lien, including, as here, an equitable lien by agreement, only against specifically identified funds that remained in the defendant?s possession or against traceable items that the defendant purchased with the funds. See 4 S. Symons, Pomeroy?s Equity Jurisprudence ?1234, pp. 692?695. If a defendant dissipated the entire fund on nontraceable items, the lien was eliminated and the plaintiff could not attach the defendant?s general assets instead. See Restatement of Restitution, ?215(1), p. 866. Pp.?8?9.

(b)?The Board?s arguments in favor of the enforcement of an equitable lien against Montanile?s general assets are unsuccessful. Sereboffdoes not contain an exception to the general asset-tracing requirement for equitable liens by agreement. See 547 U.?S., at 365. Nor does historical equity practice support the enforcement of an equitable lien against general assets. And the Board?s claim that ERISA?s objectives are best served by allowing plans to enforce such liens is a ?vague notio[n] of [the] statute?s ?basic purpose? .?.?. inadequate to overcome the words of its text regarding the specific issue under consideration.? Mertens v. Hewitt Associates, 508 U. S. 248 . Pp.?9?14.

(c)?The case is remanded for the District Court to determine, in the first instance, whether Montanile kept his settlement fund separate from his general assets and whether he dissipated the entire fund on nontraceable assets. P.?14.

593 Fed. Appx. 903, reversed and remanded.

Thomas, J., delivered the opinion of the Court, in which Roberts, C.?J., and Scalia, Kennedy, Breyer, Sotomayor, and Kagan, JJ., joined, and in which Alito, J., joined except for Part III?C. Ginsburg, J., filed a dissenting opinion.