Silverman v. Miranda

• Decision Date: 04 January 2013
• Docket Number: No. 06–cv–13222 (BSJ)(GWG).,06–cv–13222 (BSJ)(GWG).
• Citation: 918 F.Supp.2d 200
• Parties: Leon SILVERMAN, James Crowley, Janet Sachs, Herbert Pobiner, Louis Flacks, and Paul Berkman, as Trustees of the Union Mutual Medical Fund, and Union Mutual Medical Fund, Plaintiffs, v. George MIRANDA, Robert Bellach, Anthony Cerbone, Martin Sheer, and John Does 1–6 in their capacities as Trustees of Teamsters Local 210 Affiliated Health and Insurance Fund, and Crossroads Healthcare Management, LLC, Defendants.
• Court: U.S. District Court — Southern District of New York

918 F.Supp.2d 200

Leon SILVERMAN, James Crowley, Janet Sachs, Herbert Pobiner, Louis Flacks, and Paul Berkman, as Trustees of the Union Mutual Medical Fund, and Union Mutual Medical Fund, Plaintiffs,

v.George MIRANDA, Robert Bellach, Anthony Cerbone, Martin Sheer, and John Does 1–6 in their capacities as Trustees of Teamsters Local 210 Affiliated Health and Insurance Fund, and Crossroads Healthcare Management, LLC, Defendants.

No. 06–cv–13222 (BSJ)(GWG).

United States District Court, S.D. New York.

Jan. 4, 2013.

Robert J. Kipnees, Lowenstein Sandler PC, John Albert Fialcowitz, Lowenstein Sandler LLP, Roseland, NJ, for Plaintiffs.

Thomas Albert Thompson, Thomas A. Thompson, Law Offices, Yonkers, NY, Roland Richard Acevedo, Seiff Kretz & Abercrombie, New York, NY, for Defendants.

Memorandum and Order

BARBARA S. JONES, District Judge.

In 2006, plaintiffs Leon Silverman, James Crowley, Janet Sachs, Herbert Pobiner, Louis Flacks, and Paul Berkman as Trustees of the Union Mutual Medical Fund (“UMMF”), and the UMMF (collectively “Plaintiffs”) brought suit against defendants George Miranda, Robert Bellach, Anthony Cerbone, Martin Sheer, and John Does 1–6 in their capacities as Trustees of Teamsters Local 210 Affiliated Health and Insurance Fund (“Local 210 Fund”), and Crossroads Healthcare Management, LLC (collectively “Defendants”) alleging underpayment of employer contributions in violation of various collective bargaining agreements (“CBAs”) governed by the Employee Retirement Income Security Act (“ERISA”).

Before the Court are Plaintiffs' Motion for a Sum Certain and Defendants' Motion for Partial Summary Judgment, which the Court now consolidates for decision. For the reasons that follow, Defendants' Motion for Partial Summary Judgment is DENIED and Plaintiffs' Motion for a Sum Certain is GRANTED in part and DENIED in part.

PROCEDURAL BACKGROUND

This action was first filed on November 15, 2006. (Dkt. 1.) After extensive discovery and motion practice, this Court issued an Order granting summary judgment for Plaintiffs with respect to liability on Counts I and II of the First Amended Complaint.¹ ( 785 F.Supp.2d 375.) That Order also directed Defendants to provide Plaintiffs with an accounting identifying (1) all monies from a prior settlement with Duane Reade, Duane Reade, Inc., and DRI I, Inc. (the “Duane Reade Settlement”); and (2) all monies received pursuant to certain CBAs in which UMMF was named from January 1, 2005, to the date of the Order. ( Id. at 393.) In an Order dated June 27, 2011, this Court granted in part and denied in part Defendants' Motion for Reconsideration. ² (Dkt. 181.)

On March 23, 2012, Plaintiffs filed the instant Motion for a Sum Certain, requesting summary judgment from this Court as to the amount owed by Defendants. (Dkt. 184.) On the same day, Defendants filed their Motion for Partial Summary Judgment, seeking a determination that a lesser amount was owed. (Dkt. 193.)

LEGAL STANDARD

Fed.R.Civ.P. 56 provides that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” See also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is “material” if it “might affect the outcome of the suit under the governing law” and an issue of fact is “genuine” if the “evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The burden of showing that no genuine dispute exists as to any material fact rests with the movant and all ambiguities or factual inferences are drawn in favor of the party opposing summary judgment. See id. at 255, 106 S.Ct. 2505.

When both parties move for summary judgment, “neither side is barred from asserting that there are issues of fact, sufficient to prevent the entry of judgment, as a matter of law, against it.” Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir.1993). “[T]he court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.” Schwabenbauer v. Bd. of Ed. of City Sch. Dist. of City of Olean, 667 F.2d 305, 314 (2d Cir.1981). Summary judgment is appropriate “where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” Kinsella v. Rumsfeld, 320 F.3d 309, 311 (2d Cir.2003) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).

DISCUSSION

Since Defendants' Motion for Partial Summary Judgment urges that dissipation of the claimed funds limits any recovery by Plaintiffs, the Court considers this motion before turning to the merits of Plaintiffs' Motion for a Sum Certain. Except where indicated, all material facts are undisputed. Where a fact is disputed, the Court draws all reasonable inferences against the party that brought the motion.

I. Defendants' Motion for Partial Summary Judgment

Defendants argue that principles of equity and restitution preclude Plaintiffs' recovery beyond the sum of the lowest intermediate balances of the Local 210 Fund's Operating and Dental Accounts. (Defs.' Mem. of Law in Supp. of Mot. for Partial Summ. Judg. (“Support Memorandum”) at 1–2.) Specifically, Defendants urge that Plaintiffs cannot recover because “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.” Knudson, 534 U.S. at 213–14, 122 S.Ct. 708 (citing Restatement (First) of Restitution § 215 (1937), Comment a (internal quotations and alterations omitted)).

Plaintiffs respond that their claim is an equitable lien by agreement and therefore exempt from both the tracing rules applied to restitutionary recovery and the lowest intermediate balance rule. (Pls.' Mem. of Law in Opp. to Mot. for Partial Summ. Judg. (“Plaintiffs' Opposition”) at 1–2.) Defendants object that Plaintiffs have pursued only equitable restitution throughout this litigation and are therefore estopped from arguing that their claim is an equitable lien by agreement. (Defs.' Reply Mem. of Law in Supp. of Mot. for Partial Summ. Judg. (“Defendants' Reply”) at 1–2.)

First and foremost, neither party disputes that restitution can be either legal or equitable. Great–W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002). “The Supreme Court has delineated what forms of equitable restitution are available under § 502(a)(3), distinguishing permissible forms of equitable restitution such as employment of a constructive trust or of an equitable lien from forms of legal restitution.” Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 103 (2d Cir.2005) (citing Knudson, 534 U.S. at 213, 122 S.Ct. 708). Thus, an equitable lien is a permissible form of equitable restitution under section 502(a)(3) of ERISA. Defendants focus instead on the Supreme Court's recognition that “an equitable lien sought as a matter of restitution, and an equitable lien by agreement, of the sort at issue in Barnes [ v. Alexander, 232 U.S. 117, 34 S.Ct. 276, 58 L.Ed. 530 (1914) ], were different species of relief.” Sereboff v. Mid Atl. Med. Services, Inc., 547 U.S. 356, 364–65, 126 S.Ct. 1869, 164 L.Ed.2d 612 (2006) (internal quotations omitted). Relying on this distinction, Defendants maintain that Plaintiffs are attempting impermissibly to raise a new claim not originally advanced in this litigation. (Defs.' Reply at 1–2.)

Under the Federal Rules of Civil Procedure, a plaintiff's pleadings must “give the defendant fair notice of what [a] ... claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). “Because a failure to assert a claim until the last minute will inevitably prejudice the defendant, courts in this District have consistently ruled that ‘it is inappropriate to raise new claims for the first time in submissions in opposition to summary judgment.’ ” Beckman v. U.S. Postal Serv., 79 F.Supp.2d 394, 407 (S.D.N.Y.2000) (quoting Bonnie & Co. Fashions, Inc. v. Bankers Trust Co., 170 F.R.D. 111, 119 (S.D.N.Y.1997)). However, “a complaint need not correctly plead every legal theory supporting [a] claim.” Beckman, 79 F.Supp.2d at 407. Where the “allegations of fact made in the complaint” and the “evidence upon which [the] plaintiffs rely” are “completely descriptive of the transactions and of the roles of the actors in them” as well as the “evidence and allegations relevant to a determination” of the claim at issue, it cannot be said that a defendant was not properly on notice. Marbury Mgmt., Inc. v. Kohn, 629 F.2d 705, 711 (2d Cir.1980).

In this case, Plaintiffs have always sought relief under section 502(a)(3) of ERISA. This provision allows for “appropriate equitable relief,” which includes an equitable lien by agreement. See29 U.S.C. § 1132(a)(3)(B) (2012). Plaintiffs also cited both Barnes and Sereboff—cases that discuss equitable liens by agreement and on which they now rely—in order to argue that the Court could award equitable relief as early as their opposition to Defendants' first Motion to Dismiss. ( See Dkt. 12 at 20–24.) Since Plaintiffs' theory regarding an equitable lien by agreement stems from the same arguments, factual allegations, authority, and evidence on which they have relied throughout this litigation,there is no prejudice or lack of fair notice to Defendants.

The next question is whether Plaintiffs in fact have an equitable lien by agreement. In Sereboff, the Supreme Court cited Barnes...