Eldridge v. Wachovia Corp. Long-Term Disability

• Decision Date: 23 August 2005
• Docket Number: No. CIV.A. 1:04-CV-2082-TWT.,CIV.A. 1:04-CV-2082-TWT.
• Citation: 383 F.Supp.2d 1367
• Parties: Teresa ELDRIDGE, Plaintiff, v. WACHOVIA CORPORATION LONG-TERM DISABILITY PLAN, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

383 F.Supp.2d 1367

Teresa ELDRIDGE, Plaintiff, v. WACHOVIA CORPORATION LONG-TERM DISABILITY PLAN, et al., Defendants.

No. CIV.A. 1:04-CV-2082-TWT.

United States District Court, N.D. Georgia, Atlanta Division.

August 23, 2005.

Pamela Ilene Atkins, Kurt Russell Ward, Galler & Atkins, Atlanta, GA, for Plaintiff.

Halima Horton, Mark L. Keenan, McGuire Woods LLP, Atlanta, GA, for Defendants.

OPINION AND ORDER

THRASH, District Judge.

This is an action for disability benefits. It is before the Court on the Plaintiff's Motion to Dismiss Defendants' Counterclaim and First Amended Counterclaim [Doc. 14]. For the reasons set forth below, the Plaintiff's Motion is GRANTED IN PART AND DENIED IN PART.

I. BACKGROUND

Plaintiff Teresa Eldridge began her employment at Defendant Wachovia Corporation in May 1987. She was covered under the Defendant Wachovia Long-Term Disability Plan ("the Plan"). Defendants Liberty Mutual Insurance Company and Liberty Life Assurance Company of Boston acted as claims administrators of the Plan. Eldridge continued to work at Wachovia until the onset of her alleged disability around October 8, 1999. At that time, Eldridge was a senior vice president at Wachovia.

When Eldridge stopped working for Wachovia, she began to receive short-term disability payments pursuant to Wachovia's non-ERISA payroll plan. Once her short-term disability payments ended, Eldridge was considered for long-term disability ("LTD") benefits. The Defendants approved Eldridge's claim for LTD benefits under the Plan and paid her benefits from July 1, 2000, to around June 1, 2002. (Defs.' First Am. Countercl. ¶ 4.) In 2002, the Defendants reviewed Eldridge's claims and discontinued her benefits. She appealed the denial of benefits, but the decision to terminate benefits was upheld.

On January 7, 2002, Eldridge applied for Social Security disability benefits. The Social Security Administration rendered a decision finding that Eldridge was precluded from working due to her condition and thereby entitled to such benefits. In May 2003, she received a Notice of Award which explained that Eldridge would receive Social Security disability benefits dating back to January 2001. She received these benefits in a lump sum of $33,671.55 representing past due benefits. She received a monthly award of $1,574.00 going forward. For the period between January 1, 2001, through June 1, 2002, Eldridge was awarded both LTD benefits from the Plan in the amount of $3,833.35 per month and retroactive Social Security benefits in the amount of $1,574.00 per month. The Plan documents provide that a participant is required to repay the Plan for any award of Social Security disability benefits that duplicates the participant's LTD benefits. Eldridge has not, to date, repaid the Plan any amount of Social Security benefits she received that duplicate the LTD benefits received under the Plan.

On July 16, 2004, Eldridge filed suit against the Defendants, asserting claims for wrongful termination of benefits and associated torts. Defendants Wachovia, Liberty Life, and the Plan filed counterclaims to recover duplicative benefits from Eldridge. The Defendants assert claims for restitution, unjust enrichment, and specific performance of the Plan's offset provision. Eldridge moves to dismiss the Defendants' counterclaims.

II. MOTION TO DISMISS STANDARD

A complaint should be dismissed under Rule 12(b)(6) only where it appears beyond doubt that no set of facts could support the plaintiff's claims for relief. Fed.R.Civ.P. 12(b)(6); see Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Linder v. Portocarrero, 963 F.2d 332 (11th Cir.1992). In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in the light most favorable to the plaintiff. See Quality Foods de Centro America, S.A. v. Latin American Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir.1983). Generally, notice pleading is all that is required for a valid complaint. See Lombard's, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th Cir.1985), cert. denied, 474 U.S. 1082, 106 S.Ct. 851, 88 L.Ed.2d 892 (1986). Under notice pleading, the plaintiff need only give the defendant fair notice of the plaintiff's claim and the grounds upon which it rests. Id.

III. DISCUSSION

The Plaintiff moves to dismiss the Defendants' counterclaims for restitution, unjust enrichment, and specific performance. She contends that the Defendants assert only legal claims for breach of contract which are not allowed by ERISA. The Defendants style their first counterclaim as a claim for "equitable restitution of duplicative payments." (First Am. Countercl. ¶ 12.) They argue that they are entitled to seek this relief under section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3). Section 502(a) provides, in pertinent part:

(a) 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 subchapter 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 subchapter or the terms of the plan.

29 U.S.C. § 1132(a) (emphasis added). The Defendants contend that their claim for restitution is authorized by section 502(a)(3)(B), characterizing restitution as a form of equitable relief. In Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), the Supreme Court rejected a similar argument. It held that the term "equitable relief" in section 502(a)(3) refers only to "those categories of relief that were typically available in equity," id. at 210, 122 S.Ct. 708 (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 251, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993)), and that "not all relief falling under the rubric of restitution is available in equity." Id. at 212. The Court went on to say that "whether [the relief] is legal or equitable depends on `the basis for [the plaintiff's] claim' and the nature of the underlying remedies sought." The Court noted:

In cases in which the plaintiff "could not assert title or right to possession of particular property, but in which nevertheless he might be able to show just grounds for recovering money to pay for some benefit the defendant had received from him," the plaintiff had a right to restitution at law through an action derived from the common-law writ of assumpsit. In such cases, the plaintiff's claim was considered legal because he sought "to obtain a judgment imposing a merely personal liability upon the defendant to pay a sum of money." Such claims were viewed essentially as actions at law for breach of contract (whether the contract was actual or implied).

Id. at 213, 122 S.Ct. 708. The Court went on to say:

In contrast, a plaintiff could seek restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, where money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession. 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]." Thus, for restitution to lie in equity, the action generally must seek not to impose personal liability on the defendant, but to restore to the plaintiff particular funds or property in the defendant's possession.

Id. at 213-15, 122 S.Ct. 708 (citations and footnote omitted).

The petitioners in Knudson had paid medical expenses for the respondent, a beneficiary under a health plan covered by ERISA. Knudson, 534 U.S. at 207, 122 S.Ct. 708. The health plan provided the Plan a right to recover from the beneficiary any payments paid by the Plan and recovered from a third party. Id. The petitioners sought to enforce this reimbursement provision. Id. But the funds to which the petitioners claimed entitlement were not in the respondents' possession. Id. at 214, 122 S.Ct. 708. The Court found that "[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." Id. This kind of restitution — the extension of personal liability rather than the imposition of a constructive trust on particular property — was a legal, and not equitable, remedy. Id. Consequently, the Court held that section 502(a)(3) of ERISA did not authorize the petitioners' claim for restitution. Id.

There is a split among the circuits as to whether Knudson permits claims for restitution to proceed under section 502(a)(3). The United States Courts of Appeals for the Fourth, Fifth, Seventh, and Tenth Circuits have construed the Court's holding in Knudson narrowly. These courts have permitted claims seeking restitution of funds due, so long as such funds are specifically identifiable and are within the possession or control of the beneficiary. See, e.g., Mid Atl. Med. Services, LLC v. Sereboff, 407 F.3d 212, 218-19 (4th Cir.2005); Admin. Comm. of Wal-Mart Assocs. Health & Welfare Plan v. Willard, 393 F.3d 1119, 1124-25 (10th Cir.2004); Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot & Wansbrough, 354 F.3d 348, 356 (5th Cir.2003), cert. denied, 541 U.S. 1072, 124 S.Ct. 2412, 158 L.Ed.2d 981 (2004); Admin. Comm. of Wal-Mart Stores, Inc. Associates Health & Welfare Plan v. Varco, 338 F.3d 680, 687-88 (7th Cir.2003), cert. denied, ...