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MARTZ v. KURTZ

August 1, 1995

RICHARD W. MARTZ, as Trustee of the BUILDING TRADES HEALTH AND WELFARE FUND, Plaintiff,
v.
GERALD F. KURTZ and JAMA LYNN KURTZ,



The opinion of the court was delivered by: SYLVIA H. RAMBO

 Plaintiff, Richard W. Martz, in his capacity as Trustee of the Building Trades Health and Welfare Fund, filed this action pursuant to § 502(a)(3)(B) of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. § 1132(a)(3)(B). Presently before the court are the parties' cross motions for summary judgment.

 In its motion, Plaintiff contends that, as a matter of law, the Fund is entitled to full reimbursement of all monies advanced to Gerald Kurtz on behalf of his daughter, Jama Lynn. On crossmotion, Defendants make two arguments in support of an award of summary judgment in their favor. First, Defendants argue that Jama Lynn is not bound to reimburse the Fund because she neither filed an Application for Benefits with the Fund, nor signed an "Assignment of Claim" agreement. Additionally, Defendants contend that Jama Lynn is not bound by either the terms of the summary plan description of the Fund ("the summary plan") or the "Assignment of Claim" agreement ("the agreement") signed by Gerald Kurtz. Defendant Gerald F. Kurtz admits that he is bound by the documents, but claims he is not responsible for reimbursing the Fund because he never received any of the monies recovered by Jama Lynn through her settlement of third party litigation and underinsured motorist claims.

 Arguing in the alternative, Defendants next contend that should the Court find that the Fund is entitled to reimbursement, the amount due should be reduced by a pro rata share of attorney's fees and costs relating to the third party and underinsured motorist settlements obtained by Jama Lynn. Defendants argue that it is undisputed that they can owe no more than the $ 15,254.26, plus interest, presently deposited with the Court.

 I. Background

 The following facts are undisputed unless otherwise noted. The Building Trades Health and Welfare Fund (the "Fund") is an "employee welfare benefit plan" as defined by Section 3(1) of ERISA, 29 U.S.C. § 1002(1). Defendant, Gerald F. Kurtz, is a "participant" of the Fund, as defined by Section 3(7) of ERISA, 29 U.S.C. § 1002(7). Defendant, Jama Lynn Kurtz, daughter of Gerald F. Kurtz, is and/or was a "beneficiary" of the Fund, as defined by Section 3(8) of ERISA, 29 U.S.C. § 1002(8). The contractual rights and duties of the parties are set forth in the summary plan.

 During the summer of 1991, 17 year old Jama Lynn Kurtz suffered personal injuries when she was involved in a motor vehicle accident caused by the negligence of a third party. As a result of the accident, Defendant Jama Lynn Kurtz incurred medical expenses of at least $ 34,750.00. Thereafter, Defendant Gerald F. Kurtz made a claim for benefits with the Fund seeking payment of certain accident-related medical bills incurred by his daughter. At the Fund's request, Defendant Gerald F. Kurtz executed an "Assignment of Claim" agreement, ("the agreement"). *fn1" The Fund paid medical bills in the amount of $ 21,084.97 on behalf of Jama Lynn. All payments were made before Jama Lynn reached the legal age of majority. Defendant Jama Lynn Kurtz has never personally filed an application for benefits with the Fund, nor signed an "Assignment of Claim" agreement.

 In the beginning of 1994, counsel for Defendant informed the Fund that Jama Lynn Kurtz recovered $ 33,333.30 through a third party settlement and an additional $ 24,166.70 through an underinsured motorist arbitration. At the time of recovery, Jama Lynn was eighteen years old and thus, an adult under Pennsylvania law. Under the summary plan description, however, her status as a dependent continued. *fn2" In the spring of 1994, the Fund requested that Defendants reimburse the Fund for all medical expenses paid and/or advanced at their request, to wit $ 21,084.97. Defendants contend that they owe the Fund nothing.

 Defendants allege that because Jama Lynn was a minor at the time the Fund paid medical bills on her behalf, the Fund is not entitled to reimbursement from her as a matter of law. Defendants maintain that under Pennsylvania law Mr. Kurtz was obligated to pay for the medical expenses of Jama Lynn while she was a minor, whether or not he obtained insurance. Accordingly, only Mr. Kurtz is potentially liable to the Fund. Further, because Jama Lynn did not obtain any third party recovery until after she turned eighteen, none of the recovered money was ever under Mr. Kurtz's control. Thus, Defendants contend, neither Jama Lynn nor Mr. Kurtz is bound to reimburse the Fund.

 Finally, Defendants argue in the alternative that should the court find for Plaintiff, Defendants are only liable for the amount advanced less certain attorney's fees and costs. The court will address these issues seriatim.

 II. Legal Standards For Summary Judgment

 The court will consider these crossmotions under the accepted standard for the award of summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Summary judgment is appropriate where there are no remaining issues of material fact to be decided, and one party is entitled to judgment as a matter of law. Hankins v. Temple University, 829 F.2d 437, 440 (3d Cir. 1987). In examining Rule 56 motions, the court must consider "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S. Ct. 2505, 2511-12, 91 L. Ed. 2d 202 (1986).

 The parties' burdens at summary judgment may be described in the following way: once the moving party has shown an absence of evidence to support the claims of the non-moving party, the non-moving party must do more than simply sit back and rest on the allegations of her complaint. She must "go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on the file,' designate 'specific facts showing that there is a genuine issue for trial'" Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). If the non-movant bears the burden of persuasion at trial, the moving party may meet its burden by showing that the evidentiary materials of record, if reduced to admissible form, would be insufficient to carry the non-movant's burden at trial. Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir.), cert. dismissed, 483 U.S. 1052, 108 S. Ct. 26, 97 L. Ed. 2d 815 (1987).

 III. Discussion

 Plaintiff has pleaded three claims in the complaint, each of which purport to arise from 29 U.S.C. § 1132(a)(3)(B). Count I is styled as an "Enforcement of Assignment of Claims Agreement and Summary Plan Description" claim; Count II as a federal common law breach of contract claim; and Count III as a federal common law unjust enrichment claim. Because no motions to dismiss were filed in the captioned action, this court has not yet had the opportunity to evaluate the propriety of the pleadings. Accordingly, before reaching the merits of each claim and determining whether material factual disputes exist, the court will first ascertain whether each count is properly pleaded pursuant to ERISA, 29 U.S.C. § 1132(a)(3)(B).

 A. Claims Properly Brought Pursuant to 29 U.S.C. § 1132(a)(3)

 Section 1132(a)(3) provides as follows:

 
(a) Persons empowered to bring a civil action. A civil action may be brought-
 
. . . .
 
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this title or the terms of the plan.

 29 U.S.C. § 1132(a). Here, the parties do not dispute that Plaintiff, a fiduciary of the ERISA fund, brings the captioned action to obtain reimbursement of monies advanced to Defendants for Jama Lynn Kurtz's medical expenses. Upon reading the complaint, however, the court is uncertain whether Plaintiff is seeking legal or equitable relief. Each count of the complaint prays for both specific performance and compensatory damages. Specific performance is an equitable remedy while compensatory damages are a legal remedy. With respect to § 1132(a)(3), this court is empowered to grant only equitable remedies. Thus, insofar as Plaintiff is alleging legal claims, the claims are improperly before this court. *fn3"

  The "approach of applying federal common law where ERISA provides the plaintiff no explicit remedy has been followed and/or cited by a number of other courts, including the Third Circuit." Travitz v. Northeast Dept. ILGWU H. & W. Fund, 818 F. Supp. 761, 769 (M.D. Pa. 1993) (citing cases), aff'd, 13 F.3d 704 (3d Cir.), and cert. denied, U.S. , 128 L. Ed. 2d 888, 114 S. Ct. 2165 (1994). Section 1132 creates an equitable remedy for certain persons aggrieved by a violation of the terms of the ERISA fund's plan; however, the statute does not specifically define the remedy. Federal courts have characterized such a remedy as arising under the federal common law of unjust enrichment. See Provident Life & Accident Ins. Co. v. Waller, 906 F.2d 985 (4th Cir.), cert. denied, 498 U.S. 982, 112 L. Ed. 2d 524, 111 S. Ct. 512 (1990) (applying federal common law of unjust enrichment) Travitz, 818 F. Supp. at 769-771 (same). More recently, the United States Court of Appeals for the Ninth Circuit stated in dicta that "to state a claim under section 1132(a)(3), . . . [the plaintiff] must ...


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