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Trustees of the Carpenter's Health and Welfare Trust Fund of St. Louis v. Brunkhorst

June 9, 2006

TRUSTEES OF THE CARPENTERS' HEALTH AND WELFARE TRUST FUND OF ST. LOUIS, PLAINTIFFS,
v.
BRIAN BRUNKHORST AND THOMAS C. RICH, DEFENDANTS.



The opinion of the court was delivered by: Herndon, District Judge

MEMORANDUM AND ORDER

I. Introduction and Procedural Background

Pending before the Court is Plaintiffs' motion for summary judgment (Doc. 65). Defendants oppose the motion. Based on the pleadings and the applicable case law, the Court grants Plaintiffs' motion for summary judgment.

On June 6, 2005, Plaintiffs, Terry Nelson, John Mulligan, Patrick J. Sweeney, III, Renee Bell, Thomas Heinsz, John Fischer, Dave Caputa, Kenneth Stricker, James Schmid, Kirk Vereman, Al Bond and Angelo Lancia, as Trustees of the Carpenter's Health and Welfare Trust Fund of St. Louis ("the Plan") filed a three-count First Amended Complaint against Brian Brunkhorst and Thomas C. Rich (Doc. 44). The First Amended Complaint alleges that "[t]his is an action by Plan fiduciaries to enjoin actions and practices of Defendants which violate the terms of the Plan, and for other equitable relief to redress such violations and enforce the terms of the Plan." (Doc. 44, ¶ 3). Count I is against Defendants Brunkhorst and Rich for temporary restraining order and injunction; Count II is against Brunkhorst for construction and declaration of rights under express trust (Settlement Trust); and Count III is against Brunkhorst for construction and declaration of rights under express trust (Plan Asset Trust).

Originally, the Plan filed a complaint and a motion for Temporary Restraining Order and Injunction on May 16, 2005 (Docs. 1 & 2).*fn1 That same day, District Judge Catherine Perry held a hearing on Plaintiffs' motion for temporary restraining order, entered a Temporary Restraining Order against Defendants and set the matter for preliminary injunction hearing on May 27, 2005 (Doc. 5). Thereafter, Defendants entered their limited appearance (Doc. 16), filed a motion to dismiss (Doc. 19) and filed a motion to remand/transfer (Doc. 21). On May 27, 2005, Judge Perry held a hearing, denied the motion to remand, extended the Temporary Restraining Order to June 7, 2005, and transferred the case to this Judicial District (Docs. 26 & 27).

On June 1, 2005, with consent of the parties, the Court extended the Temporary Restraining Order to June 13, 2005 (Doc. 34). On June 6, 2005, Plaintiffs filed their First Amended Complaint (Doc. 44). On June 13, 2005, the Court held a hearing on Plaintiffs' request for preliminary injunction and entered a Preliminary Injunction (Docs. 48 & 49). On September 26, 2005, the Court denied Defendants' motion to dismiss (Doc. 60). Thereafter, Plaintiffs filed their motion for summary judgment (Doc. 66), Defendants filed their response (Doc. 69) and Plaintiffs filed their reply (Doc. 74). The Court now turns to address the merits of the motion.

Plaintiffs argue that they are entitled to summary judgment as to Count I of the First Amended Complaint as state law must be excluded from consideration in determining Brunkhorst's claim to future benefits. Further, Plaintiffs contend that they are entitled to summary judgment on Counts II and III of the First Amended Complaint in which they seek a declaration of their rights and obligations of Defendants and the Plan under two express trusts as Brunkhorst's obligation to reimburse the Plan for benefits paid remains unsatisfied. Defendants object to summary judgment arguing, inter alia, that a permanent injunction and declaratory judgment would violate the state court's order regarding Defendant Rich's common fund doctrine claim, that the Plan document does not expressly require Brunkhorst to bear his own attorney's fees and that the action for construction and declaration of rights under express trusts and for specific performance is not "equitable" nor authorized by ERISA and that Brunkhorst, as a beneficiary to the Plan Asset Trust, was unaware of the existence of the trust and, therefore, could not have intended to create it.*fn2 The Court agrees with Plaintiffs.

II. Facts

The Plan is an employee benefit plan subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiffs are the Trustees of the Plan, having its principal administrative office within the City of Saint Louis, Missouri. The assets of the Plan are held by the Trustees in trust, pursuant to a written trust agreement. Defendant Brunkhorst is and at all relevant times was a member and participant of the Plan, eligible as such for Plan benefits. On July 15, 2002, Brunkhorst received and signed an agreement with the "Carpenters' Health and Welfare Trust Fund of St. Louis." The Plan document contains provisions requiring a participant to reimburse the Plan for benefits paid on account of an injury in the event the participant receives recovery from a third party on account of the same injury. Defendant Rich is Brunkhorst's attorney in a tort suit titled Brunkhorst v. Landmark Tavern, No. 02 L 38, in the Circuit Court of Randolph County, Illinois.*fn3 The Plan advanced a total of $39,845.68 in benefits on account of Brunkhorst's injuries. Brunkhorst settled the tort suit for $21,000.00.

Defendant Rich filed a motion to adjudicate liens in the tort suit and mailed a copy of the motion to the Plan. In response, the Plan's attorney, via letter dated February 9, 2005, informed Rich of the Plan's provisions requiring Brunkhorst to reimburse benefits paid without reduction for attorney's fees or other claims and of the Plan provisions for enforcement of Brunkhorst's reimbursement obligation by setting off future benefits. The Plan, on advice of counsel, did not appear at the hearing of the motion to adjudicate liens. On February 16, 2005, the Randolph County Circuit Court entered an order dividing the settlement: $9,151,31 to Rich for fees and expenses; $6,282.90 to the Plan; $200.00 to Chester Memorial Hospital; and $5,365.79 to Brunkhorst.

On March 17, 2005, the Plan, through a letter to Brunkhorst, acknowledged the receipt of $6,282.90 towards his reimbursement obligation and informed him that the Trustees decided to set off his remaining indebtedness by withholding future benefits as provided in the Plan. On April 29, 2005, Rich sent the Plan a letter informing it that he had filed a motion for temporary restraining order and permanent injunction in the tort suit seeking to prohibit the Plan from disrupting Brunkhorst's health, welfare and vacation benefits. Thereafter, Plaintiffs filed this cause of action.

III. Summary Judgment

Summary judgment is proper where the pleadings and affidavits, if any, "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); Oats v. Discovery Zone, 116 F.3d 1161, 1165 (7th Cir. 1997)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). The movant bears the burden of establishing the absence of fact issues and entitlement to judgment as a matter of law. Santaella v. Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997)(citing Celotex, 477 U.S. at 323). The Court must consider the entire record, drawing reasonable inferences and resolving factual disputes in favor of the non-movant. Regensburger v. China Adoption Consultants, Ltd., 138 F.3d 1201, 1205 (7th Cir. 1998)(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)).

In response to a motion for summary judgment, the non-movant may not simply rest upon the allegations in his pleadings. Rather, the non-moving party must show through specific evidence that an issue of fact remains on matters for which he bears the burden of proof at trial. Walker v. Shansky, 28 F.3d 666, 670-71 (7th Cir. 1994), aff'd, 51 F.3d 276 (citing Celotex, 477 U.S. at 324). In reviewing a summary judgment motion, the court does not determine the truth of asserted matters, but rather decides whether there is a genuine factual issue for trial. Dykema v. Skoumal, 261 F.3d 701, 704 (7th Cir. 2001)(citing Anderson, 477 U.S. at 249). No issue remains for trial "unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not sufficiently probative, summary judgment may be ...


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