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    Local 109 Retirement v. First Union National, 4th Cir. (2003)

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    The United States Court of Appeals for the Fourth Circuit affirmed the district court's dismissal of a retirement fund's lawsuit against a bank seeking to recover money owed under a certificate of deposit. The appellate court held that the relief sought was legal, not equitable, and therefore the district court lacked jurisdiction under ERISA. The basis for the retirement fund's claim was a simple breach of contract, a legal claim. Characterizing the lawsuit as seeking equitable remedies such as accounting and restitution did not make the underlying claim equitable. Additionally, dismissing the related state law claim without prejudice was not an abuse of discretion once the federal claim was dismissed.

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    Local 109 Retirement v. First Union National, 4th Cir. (2003)

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    The United States Court of Appeals for the Fourth Circuit affirmed the district court's dismissal of a retirement fund's lawsuit against a bank seeking to recover money owed under a certificate of deposit. The appellate court held that the relief sought was legal, not equitable, and therefore the district court lacked jurisdiction under ERISA. The basis for the retirement fund's claim was a simple breach of contract, a legal claim. Characterizing the lawsuit as seeking equitable remedies such as accounting and restitution did not make the underlying claim equitable. Additionally, dismissing the related state law claim without prejudice was not an abuse of discretion once the federal claim was dismissed.

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    Filed: 2003-01-23 Precedential Status: Non-Precedential Docket: 02-1216

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    The United States Court of Appeals for the Fourth Circuit affirmed the district court's dismissal of a retirement fund's lawsuit against a bank seeking to recover money owed under a certificate of deposit. The appellate court held that the relief sought was legal, not equitable, and therefore the district court lacked jurisdiction under ERISA. The basis for the retirement fund's claim was a simple breach of contract, a legal claim. Characterizing the lawsuit as seeking equitable remedies such as accounting and restitution did not make the underlying claim equitable. Additionally, dismissing the related state law claim without prejudice was not an abuse of discretion once the federal claim was dismissed.

    Copyright:

    Public Domain
    Download as PDF or read online from Scribd
    Download as pdf
    27 views4 pages

    Local 109 Retirement v. First Union National, 4th Cir. (2003)

    Uploaded by

    Scribd Government Docs
    The United States Court of Appeals for the Fourth Circuit affirmed the district court's dismissal of a retirement fund's lawsuit against a bank seeking to recover money owed under a certificate of deposit. The appellate court held that the relief sought was legal, not equitable, and therefore the district court lacked jurisdiction under ERISA. The basis for the retirement fund's claim was a simple breach of contract, a legal claim. Characterizing the lawsuit as seeking equitable remedies such as accounting and restitution did not make the underlying claim equitable. Additionally, dismissing the related state law claim without prejudice was not an abuse of discretion once the federal claim was dismissed.

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    UNPUBLISHED

    UNITED STATES COURT OF APPEALS


    FOR THE FOURTH CIRCUIT
    LOCAL 109 RETIREMENT FUND;
    GEORGE PAPAGEORGE, Trustee,
    Plaintiffs-Appellants,
    v.
    FIRST UNION NATIONAL BANK,
    Defendant-Appellee.

    No. 02-1216

    Appeal from the United States District Court


    for the Eastern District of Virginia, at Alexandria.
    Claude M. Hilton, Chief District Judge.
    (CA-01-1155)
    Argued: December 3, 2002
    Decided: January 23, 2003
    Before MICHAEL and GREGORY, Circuit Judges, and
    James H. MICHAEL, Jr., Senior United States District Judge
    for the Western District of Virginia, sitting by designation.

    Affirmed by unpublished per curiam opinion.

    COUNSEL
    ARGUED: Joseph Semo, FEDER, SEMO, CLARK & BARD, P.C.,
    Washington, D.C., for Appellants. Rebecca Everett Kuehn, LECLAIR
    RYAN, Alexandria, Virginia, for Appellee. ON BRIEF: Terence G.
    Craig, Michael I. Baird, FEDER, SEMO, CLARK & BARD, P.C.,
    Washington, D.C., for Appellants. Grady C. Frank, Jr., Jerry L. Hall,
    LECLAIR RYAN, Alexandria, Virginia, for Appellee.

    LOCAL 109 RETIREMENT FUND v. FIRST UNION

    Unpublished opinions are not binding precedent in this circuit. See


    Local Rule 36(c).

    OPINION
    PER CURIAM:
    A retirement fund and its trustee sue a bank under the Employee
    Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001
    et seq., and state law to recover on a certificate of deposit. We agree
    with the district court that this action is not authorized by ERISA
    because the relief sought is legal, not equitable. We therefore affirm
    the dismissal.
    I.
    Local 109 Retirement Fund (the Retirement Fund) and Local 109
    Welfare Fund (the Welfare Fund) are plans covered by ERISA. In the
    1970s the Welfare Fund purchased a certificate of deposit from a
    bank that is now owned by First Union National Bank (First Union).
    Under its terms the certificate would be rolled over until surrendered.
    In the late 1980s administrators of both funds embezzled money
    from the funds and destroyed documents that would have left a paper
    trail of their wrongdoing. These administrators were ultimately
    removed, the two plans were merged, and the Retirement Fund
    became the surviving plan. George Papageorge was appointed as the
    new trustee for the Retirement Fund, and one of his tasks was to marshall the assets of the original funds. He discovered in an abandoned
    safe deposit box the original certificate of deposit that had been purchased by the Welfare Fund. He attempted to redeem the certificate,
    but First Union denies that it owes any money on the certificate. First
    Union relies in part on New Jersey law, which creates a rebuttable
    presumption that after fifteen years a bank has paid off an account.
    See N.J. Stat. Ann. 17:16W-2 & 17:16W-4. The Retirement Fund
    and Papageorge (together, "Papageorge") brought this action against
    First Union in the U.S. District Court for the Eastern District of Virginia. Papageorge asserts a claim under ERISA, seeking to recover

    LOCAL 109 RETIREMENT FUND v. FIRST UNION

    monies owed under the certificate of deposit and requesting an


    accounting, restitution, and disgorgement. He also seeks damages
    under New Jersey state law. The district court dismissed the action,
    holding that it lacked jurisdiction under ERISA and declining to exercise supplemental jurisdiction over the state law claim. Papageorge
    appeals.
    II.
    Papageorge must seek equitable relief for the district court to have
    jurisdiction. ERISA authorizes a federal action "by a [plan] participant, beneficiary, or fiduciary (A) to enjoin any act or practice which
    violates [ERISA] 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 [ERISA] or the terms of the plan." 29
    U.S.C. 1132(a)(3). The use of the limiting phrase "other appropriate
    equitable relief" allows an action in district court only when the relief
    sought falls within the "categories of relief that were typically available in equity." Great-West Life & Annuity Ins. Co. v. Knudson, 534
    U.S. 204, 210 (2002) (internal quotation marks omitted). A plaintiffs
    decision to label his claim as one seeking traditional forms of equitable relief is not dispositive. See id. at 210-18 (concluding that the
    plaintiffs were seeking legal relief, despite their characterization of
    their suit as one for an injunction and restitution). Our inquiry must
    focus on "the basis for [the plaintiffs] claim and the nature of the
    underlying remedies sought." Id. at 213 (alteration in original) (quoting Reich v. Continental Casualty Co., 33 F.3d 754, 756 (7th Cir.
    1994)). See also Bauhaus USA, Inc. v. Copeland, 292 F.3d 439, 450
    (5th Cir. 2002) (Weiner, J., dissenting).
    Here, the basis for Papageorges claim is a simple breach of contract a legal claim. Banks have legal title to the funds deposited
    with them and are free to loan, reinvest, and commingle those funds.
    See Santee Timber Corp. v. Elliott, 70 F.2d 179, 181 (4th Cir. 1934).
    As a general rule, banks are considered to be in debtor-creditor relationships with their depositors. See Beane v. First Natl Bank & Trust
    Co., 92 F.2d 382, 384 (4th Cir. 1937). A banks agreement in a certificate of deposit or other instrument to repay a specified amount of
    money (plus interest) is quintessentially a legal agreement.

    LOCAL 109 RETIREMENT FUND v. FIRST UNION

    Papageorges effort to categorize his lawsuit as one seeking equitable remedies does not work. Thus, his argument that the money
    deposited belonged to a trust does not, without more, convert the
    deposit itself into a trust or place the special responsibilities of a
    trustee on the bank. See Santee, 70 F.2d at 181-83. Moreover, Papageorge does not point to any wrongdoing by the bank that would permit a court to impose a constructive trust. Cf. Restatement of Restitution, 160 (discussing constructive trusts). Because no trust or trust
    relationship flows from the certificate of deposit, the traditional equitable remedies to protect a trust, such as accounting, restitution, and
    disgorgement, are not available here. Finally, Papageorges apparent
    inability to overcome the state law presumption (assuming the presumption applies) that certificates of deposit of a certain age have
    been paid does not convert his legal claim into an equitable one. The
    fact that a legal claim might face impediments to its proof does not
    mean there is an inadequate remedy at law.
    Finally, because the district court properly dismissed Papageorges
    federal claim, the court did not abuse its discretion in dismissing his
    related state law claim without prejudice. See Jordahl v. Democratic
    Party of Va., 122 F.3d 192, 203 (4th Cir. 1997).
    The judgment of the district court is
    AFFIRMED.

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