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Trustees for the Iron Workers St. Louis District Council Pension Trust v. Edwards

April 7, 2010

THE TRUSTEES FOR THE IRON WORKERS ST. LOUIS DISTRICT COUNCIL PENSION TRUST, PLAINTIFFS,
v.
LE RAE M. EDWARDS, DEFENDANT.



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

MEMORANDUM & ORDER

I. Introduction

This matter was before the Court on Plaintiffs' Motion for Temporary Restraining Order ("TRO") and Preliminary Injunction (Doc. 5). Plaintiffs seek the reimbursement of certain payments from the Pension Plan, which they claim were mistakenly made to Defendant as the surviving spouse beneficiary of her husband, who was a Plan participant. Plaintiffs claim Defendant was to receive one lump sum payment of $56,103.34. However, she received eight additional payments, each in the amount of $56,103.34. Therefore, Plaintiffs now seek to recover $448,826.72, in "mistaken" Pension Plan payments.

In an expedited hearing on January 29, 2010 (Doc. 8), the Court granted a TRO, the written order issuing on February 1, 2010 (Doc. 9), but declined to issue a preliminary injunction at that time. Instead, the Court conducted a preliminary injunction hearing on February 8, 2010 (Doc. 16), taking the matter under advisement. A further order was issued following the preliminary injunction hearing (Doc. 15), whereby the Court, pursuant to the Parties' agreement to amend the TRO, directed that $206,802.19 from Defendant's Savings Account and $112,700.00 from her Checking Account be paid into the Court registry, to be held on deposit, pending further resolution of this case.

Also on February 8, 2010, after the preliminary injunction hearing, the Court issued an order (Doc. 13) directing Plaintiffs to file a memorandum tracing the proceeds at issue in this case. Plaintiffs filed said memorandum on February 11, 2010 (Doc. 17). The following day, the Court issued an order (Doc. 18) appointing counsel for Defendant, finding that the requisite elements had been met under Pruitt v. Mote, 503 F.3d 647, 654-55 (7th Cir. 2007). The Court also granted Plaintiffs' Motion to Continue Injunction (Doc. 19), finding that additional time was necessary for Defendant's newly-appointed counsel to review the case file. Thus, the Court extended its TRO, issued February 1, 2010 (as amended by its February 8, 2010 order), through February 26, 2010 (Doc. 20). During the interim, Defendant filed a Motion to Delay Ruling on the Preliminary Injunction (Doc. 23), which the Court granted (Doc. 24), again extending its TRO, as amended, through April 7, 2010. Recently, Plaintiffs have filed a Renewed Motion for Preliminary Injunction and Motion for Expedited Ruling on the Merits (Doc. 26), to which Defendant has responded (Doc. 27) and Plaintiffs replied (Doc. 28). Thus, as part of this Order, the Court will also consider Plaintiffs' Renewed Motion and the related filings (Docs. 26, 27 & 28), as well as Plaintiffs' Memorandum Regarding Traceable Proceeds (Doc. 17)

The Court specifically notes that in her Response (Doc. 27, ¶ 1), Defendant states that she "has no objection to a Preliminary Injunction being issued for the funds being held in the Court's registry [to] remain in the Court's registry pending an adjudication of Plaintiffs' Complaint." However, she questions whether Plaintiffs have properly shown that the proceeds at issue can be properly traced to the 2008 Pontiac Torrent, asserting that her mother is a co-owner of the vehicle and additional payments were made from Defendant's own funds towards the vehicle purchase (Id. at ¶ 5). She also argues that because some of her own funds were used to purchase a house located at 202 South Park Street, Ava, Illinois, the proceeds also used to purchase the house are now "wholly intermingled" with her own funds and are "no longer particularly identifiable" (Id.). In support of her argument that the vehicle and house should not be considered as part of the proceeds of which Plaintiffs seek reimbursement, Defendant cites Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213 (2002) (Id. at ¶ 4). In their Reply, Plaintiffs contend that they are, in fact, entitled to a constructive trust on any proceeds from the mistaken payments traceable to either the purchase of the 2008 Pontiac Torrent or the house located in Ava, Illinois, citing to Lumenite Control Technology, Inc. v. Jarvis, 252 F. Supp. 2d 700, 704 (N.D. Ill. 2003) in support (Doc. 28, pp 1-2). After taking the Parties' briefs, oral arguments, and evidence presented at the preliminary injunction hearing under advisement, in accordance with FEDERAL RULE OF CIVIL PROCEDURE 52, the Court finds and concludes the following, as discussed herein.

II. Findings of Fact

1. Plaintiffs are the Trustees of the Iron Workers St. Louis District Council Pension Trust.

2. Plaintiffs have filed suit against defendant Le Rae Edwards to recover certain Pension Plan payments and for equitable relief under Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a), pursuant to Section 3.08(A) of the Plan.*fn1

3. Defendant is an individual and surviving spouse of Gregory Edwards, a former Participant in the Pension Plan who died on July 20, 2008.*fn2

4. On March 4, 2009, Defendant signed a Lump Sum Consent Form, which sought a lump-sum distribution of the entire Death Benefit attributable to the death of her spouse, Gregory Edwards, under the Plan.*fn3 This Form was submitted to the Plan Administrator, American Benefit Plan Administrators, Inc. ("ABPA").

5. ABPA sent Defendant a letter, dated March 17, 2009, which explained that pursuant to her request, the benefit under the Plan would be processed as a Lump Sum Benefit, in the amount of $56,103.34, after taxes.

6. A check in the amount of $56,103.34 from Plan funds was issued by ABPA, dated April 1, 2009.

7. ABPA sent Defendant eight additional monthly payments of $56,103.34, by check, from May 2009 through December 2009, totaling $448,826.72.

8. Defendant deposited these eight additional checks into her accounts (a Savings Account and a Checking Account) at the First State Bank of Campbell Hill.

9. In January 2010, ABPA sent Defendant two separate letters, explaining that it had mistakenly overpaid the benefit funds as a "a result of an inexplicable error," in an amount totaling $448,826.72. ABPA requested that Defendant refund the overpayment in full.

10. Defendant has not refunded any of the requested amount to Plaintiffs.

11. Before the events giving rise to this suit, Defendant was severely injured in an automobile accident in September 2006. As a result, she has suffers from partial brain damage, which affects her ability to comprehend and process information as well as she did before the accident. However, Defendant's diminished mental capacity has not yet required her to have an appointed guardian or other power of attorney.

12. During the hearing, it was also established that Defendant suffers certain physical ...


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