International Painters Pension Fund v. Aragones

• Decision Date: 12 June 2008
• Docket Number: Case No. 8:07-cv-1138-T-23TBM.
• Parties: INTERNATIONAL PAINTERS AND ALLIED TRADES INDUSTRY PENSION FUND; Gary J. Meyers, Plaintiffs, v. Ana ARAGONES, Defendant.
• Court: U.S. District Court — Middle District of Florida

643 F.Supp.2d 1329

INTERNATIONAL PAINTERS AND ALLIED TRADES INDUSTRY PENSION FUND; Gary J. Meyers, Plaintiffs, v. Ana ARAGONES, Defendant.

Case No. 8:07-cv-1138-T-23TBM.

United States District Court, M.D. Florida, Tampa Division.

June 12, 2008.

COPYRIGHT MATERIAL OMITTED

Elizabeth A. Coleman, Kent Cprek, Shanna Cramer, Jennings Sigmond, P.C., Philadelphia, PA, Frank Eugene Hamilton, III, Frank Hamilton & Associates, PA, Tampa, FL, for Plaintiffs.

Ana Aragones, Brandon, FL, pro se.

ORDER

STEVEN D. MERRYDAY, District Judge.

Pursuant to 28 U.S.C. § 636 and Local Rule 6.01(b), a December 21, 2007, order (Doc. 13) refers the plaintiffs' motion (Doc. 11) for a default judgment to United States Magistrate Judge Thomas B. McCoun III for a report and recommendation. No party objects to the April 11, 2008, report and recommendation (Doc. 20) and the time for filing objections has expired.

Accordingly, after careful consideration, the Magistrate Judge's report and recommendation (Doc. 20) is ADOPTED, and the plaintiffs' motion (Doc. 11) for a default judgment is GRANTED. In defaulting, the defendant admits that she and her husband executed an agreement electing to receive only sixty payments from the plan and that she nonetheless knowingly received and retained one hundred thirty additional benefit payments, all of which were plan assets. With explicit knowledge of the plan's right to the assets, the defendant held the assets of the plan and disposed of the assets (if she did) at her own risk. Of course, not every beneficiary becomes a fiduciary of the plan after receiving and retaining an overpayment or other plan asset to which the beneficiary is not entitled.

The Clerk is directed to (1) enter judgment in favor of the plaintiffs, International Painters and Allied Trades Industry Pension Fund and Gary J. Meyers, and against the defendant, Ana Aragones, in the amount of $141,387.34, (2) terminate any pending motion, and (3) close the case.

REPORT AND RECOMMENDATION

THOMAS B. McCOUN III, United States Magistrate Judge.

THIS MATTER is before the court on referral by the Honorable Steven D. Merryday for a Report and Recommendation on Plaintiff's Motion for Entry of Judgment by Default (Doc. 11).¹ By their motion, Plaintiffs seek entry of default judgment against Defendant with damages in the principal sum of $94,752.18 plus $37,995.89 in interest and attorney's fees and costs in the amount of $8,639.27 for a total amount of $141,387.34. The court conducted a hearing on the motion on February 28, 2007.²

I.

Rule 55 of the Federal Rules of Civil Procedure authorizes the entry of default "when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend." Fed.R.Civ.P. 55(a). Unless the plaintiff's claim is for a sum certain or a sum that can be made certain by computation, in which case the Clerk may enter default judgment, the plaintiff must move for default judgment. Fed.R.Civ.P. 55(b)(1). A defaulted defendant is deemed to admit the plaintiff's well-pleaded allegations of fact; the defendant is not, however, held to admit facts that are not well-pleaded or to admit conclusions of law. Tyco Fire & Sec., LLC v. Alcocer, 218 Fed.Appx. 860, 862-63 (11th Cir.2007) (emphasis in the original) (quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.1975)). "Thus, before entering a default judgment for damages, the district court must ensure that the well-pleaded allegations in the complaint, which are taken as true due to the default, actually state a substantive cause of action and that there is a substantive, sufficient basis in the pleadings for the particular relief sought." Tyco Fire, 218 Fed.Appx. at 863; Fid. & Deposit Co. of Md. v. Williams, 699 F.Supp. 897, 899 (N.D.Ga.1988). Moreover, allegations relating to the amount of damages are not admitted by virtue of default, and the court must determine the amount and character of damages to be awarded. Miller v. Paradise of Port Richey, Inc., 75 F.Supp.2d 1342, 1346 (M.D.Fla. 1999).

II.

A.

The salient facts establishing Plaintiffs' entitlement to judgment are set out in Plaintiffs' Complaint (Doc. 1), the instant motion (Doc. 11), and memorandum in support (Doc. 12). Plaintiff International Union of Painters and Allied Trades ("IUPAT") Industry Pension Fund ("Plan") is a trust fund and a "multi employer plan" and "employee benefit plan" in contemplation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461.³ Plaintiff Gary J. Meyers is a fiduciary of the Plan. Defendant Ana Aragones was the assigned beneficiary of the monthly pension benefits of Dean Aragones under this Plan.

Dean Aragones was a participant in the Los Angeles County Painting Industry Pension Trust Fund ("LA County Plan"). Effective May 1, 1991, Mr. Aragones retired. He elected, with his wife's consent that his accrued benefit under the plan be paid in "the 60 Months and Certain Life Annuity Form." See (Doc. 11-2 at 8). The initial benefit amount was $586.19 per month. In September 1991, the benefit was changed to a disability retirement benefit and increased to $714.19 per month. See id. at 3. Ultimately, this amount increased to a net monthly amount of $736.36 at his death. Id. Mr. Aragones died in September 1994 after receiving forty-one payments. Defendant, as beneficiary, was entitled to receive an additional nineteen monthly benefit payments under the terms of the LA County Plan and their election of benefits. By letter dated October 1, 1994, the LA County Plan notified Defendant that the remaining guaranteed payments were payable to her through April 1996. Id. at 33. Enclosed with the letter was the first payment of her benefits. Defendant elected to receive her payments by direct deposit into her account with Bank of America, Richmond, Virginia. Id. at 4.

Defendant was paid the sixtieth monthly benefit in April 1996. According to Plaintiffs, an administrative error occurred at the time of the merger between the LA Plan and the Plan that entered Defendant's payment into the Fund computer system without a cutoff date. As a result of the error, Defendant continued to receive benefits beyond April 1996. In all, Defendant received 130 additional benefit payments. See (Doc. 1). After a comprehensive review of beneficiary payment records, the Plan uncovered the overpayments to Defendant and terminated Defendant's monthly payments as of February 2007. On May 7, 2007, the Plan sent Defendant a formal notice of overpayment and debt collection with right to appeal seeking to recover the overpaid benefits. See (Doc. 1-2 at 2-3). According to Plaintiffs, Defendant has neither responded to this request nor made any repayment to the Plan despite her knowledge that she was not entitled to this money. Plaintiffs filed suit in June 2007.

Plaintiffs claim that Defendant violated the terms of the Plan by cashing benefit checks after April 1996 (Count I), and on the same basis, they allege breach of contract (Count II) and conversion (Count III). They further assert that Defendant is a fiduciary of the fund to the extent that she has received benefits not due to her, and they seek imposition of an ERISA trust (Count IV) and a constructive trust (Count V). Finally, they assert a claim for unjust enrichment (Count VI).⁴ At present, Plaintiffs seek an award of damages measured by the overpayments to the Defendant, interest on that sum, and attorney's fees and costs. The Defendant failed to file a responsive pleading or otherwise defend the action. Plaintiff moved for entry of default against Defendant, see (Doc. 3), and the Clerk entered default against the Defendant pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. See (Doc. 4). Plaintiff filed the instant motion for default judgment pursuant to Rule 55(b). Defendant failed to respond to the motion, and although noticed for the hearing, she failed to appear for the hearing on the motion.

III.

Plaintiffs raise alternative theories for recovery of their losses under 29 U.S.C. § 1132(a)(2), (3). See (Doc. 12). On the premise that the terms of the Plan have been violated by Defendant's receipt of the 130 overpayments, they seek recovery of the funds on a theory of equitable restitution and/or unjust enrichment, or alternatively, they urge that Defendant is personally liable as a fiduciary under the Act and may be ordered to repay the sum of the overpayments and interest in lieu of profits. Finally, they urge their right to an ERISA trust or other equitable lien on the res of the overpaid sum. While it is clear that Defendant has breached the terms of the Plan in receiving 130 payments to which she was not entitled, the award of damages pursuant § 1132(a)(2) or (3) under any of these theories is problematic.

A.

As for the claim that Defendant is personally liable as a fiduciary by virtue of her receipt and disposition of funds of the Plan, Plaintiffs cite to 29 U.S.C. § 1132(a)(2), which provides that a civil action may be brought by the Secretary, a participant, beneficiary or fiduciary "for appropriate relief under section 1109." Id. Section 1109 provides for the personal liability of "any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter" and requires that such person "make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of the assets of the plan by the fiduciary...." 29 U.S.C. § 1109(a). Under the Act, a "fiduciary" is a person who "exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets." 29 U.S.C. § 1002(21)(A)(i) (emphasis added).

Citing the latter part of this definition, Plaintif...