Summary
The United States District Court for the Eastern District of Virginia grants Beacon Sales Acquisition, Inc.’s motion for a temporary restraining order under ERISA. The order temporarily restrains Jeanne A. Rodek from dissipating settlement proceeds sufficient to preserve the Beacon Plan’s claimed $220,194.09 reimbursement interest. The court finds a likelihood of success, irreparable harm, favorable equities, and a public interest in preserving self-funded ERISA plan assets, and requires a $5,000 bond.
Topics
Practice areas
Questions Presented
- Whether the Plan demonstrated a likelihood of success on its ERISA claim to enforce an equitable lien against specifically identifiable settlement funds.
- Whether dissipation of the settlement funds would cause irreparable harm by eliminating the Plan's ability to obtain equitable relief.
- Whether the balance of equities and the public interest supported a temporary restraining order preserving the settlement proceeds.
- What security bond was required under Federal Rule of Civil Procedure 65(c).
Holdings
- A plan administrator is likely to succeed under ERISA § 502(a)(3) when the plan expressly establishes a reimbursement right and identifies both a particular settlement fund and the plan's particular share of that fund. The Beacon Plan satisfied those requirements because it identified the settlement proceeds and its share based on the medical benefits it paid.
- Dissipation of specifically identifiable settlement funds would cause irreparable harm because, under Montanile, an ERISA plan may lose its equitable remedy if the funds are dissipated and the plan must pursue the beneficiary's general assets.
- The balance of equities and the public interest favored a limited temporary restraining order preserving enough settlement proceeds to secure the Plan's asserted $220,194.09 interest.
- The court required Plaintiff to post a $5,000 bond as security under Federal Rule of Civil Procedure 65(c).
Key quotations
“Preliminary injunctions and temporary restraining orders are “extraordinary remed[ies] never awarded as of right.”” (Section II)
“To be eligible for a preliminary injunction or a temporary restraining order, Plaintiff must demonstrate each of the following factors by a “clear showing”: (1) a likelihood of success on the merits; (2) irreparable harm in the absence of preliminary injunctive relief; (3) the balance of equities between the parties tips in favor of the party seeking such relief; and (4) the public interest favors equitable relief.” (Section II)
“Defendant, Jeanne A. Rodek is TEMPORARILY RESTRAINED from dispersing, disposing, or otherwise dissipating settlement proceeds held either by herself or in trust by the law firm of Kimmel, Carter, Roman, Peltz & O’Neil, P.A. so that less than $220,194.09 remain in trust until such time as the Court can hold a preliminary injunction hearing” (Conclusion)
Factual background
Jeanne Rodek was a participant in the Beacon Sales Health & Welfare Plan, which paid $220,194.09 in medical benefits after she sustained injuries in an automobile accident. Rodek later obtained a $2.1 million settlement in litigation arising from the accident, despite having notice of the Plan's contractual reimbursement right. Rodek directed her counsel to disburse the remaining settlement proceeds, and counsel declined to hold the funds pending resolution of the Plan's claim.
Procedural history
Beacon Sales Acquisition, as fiduciary of the Beacon Sales Health & Welfare Plan, filed this ERISA action after Defendant failed to reimburse the Plan from a personal-injury settlement. The district court considered the motion, supporting memorandum, declarations, Plan documents, and oral argument, and granted a temporary restraining order pending a preliminary-injunction hearing.
Remand instructions
No remand. Defendant was temporarily restrained from dispersing, disposing of, or otherwise dissipating settlement proceeds so that at least $220,194.09 remained in trust. Plaintiff was directed to serve the order, post a $5,000 bond, and the TRO was set to remain in effect through March 25, 2026, when a preliminary-injunction hearing was scheduled.