Glencoe v. Teachers Ins Annuity ( 2000 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CATHERINE L. GLENCOE, 
Plaintiff-Appellant,
v.
TEACHERS INSURANCE AND ANNUITY  No. 99-2417
ASSOCIATION OF AMERICA, a New
York Corporation,
Defendant-Appellee.

Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CA-99-15-2)
Argued: September 26, 2000
Decided: October 19, 2000
Before WIDENER, WILLIAMS, and MICHAEL, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: William H. Scharf, Charleston, West Virginia, for Appel-
lant. Earle Duncan Getchell, Jr., MCGUIRE, WOODS, BATTLE &
BOOTHE, Richmond, Virginia, for Appellee. ON BRIEF: Sean F.
Murphy, David R. Weiser, MCGUIRE, WOODS, BATTLE &
BOOTHE, McLean, Virginia, for Appellee.
2 GLENCOE v. TEACHERS INSURANCE AND ANNUITY ASSOC.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Catherine Glencoe, in a derivative and individual capacity, sued
Teachers Insurance and Annuity Association of America (TIAA)
under ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), and
§ 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B), alleging that TIAA
breached a fiduciary duty in managing a Tax Sheltered Annuity
(TSA). The district court granted summary judgment to TIAA on the
grounds that TIAA did not breach a fiduciary duty and that ERISA
does not authorize the relief sought by Glencoe. We affirm.
I.
We state the facts in the light most favorable to Glencoe, the non-
movant in the summary judgment proceedings. See Anderson v. Lib-
erty Lobby, Inc., 477 U.S. 242, 255 (1986). Glencoe’s father died in
March 1991, and she was the designated beneficiary of a TSA that her
father had maintained with TIAA. Income from a TSA is not taxed
until it is withdrawn from the account. See 26 U.S.C. § 403(b). Glen-
coe alleges that TIAA benefit counselors gave her incorrect tax
advice, telling her that in order to avoid substantial tax penalties she
was required to withdraw the entire amount within five years of her
father’s death. In fact, tax laws allowed her to keep the funds in the
TSA for her lifetime as long as she made certain minimum withdraw-
als each year. Glencoe claims that she relied on this incorrect advice
in withdrawing most of the funds from the TSA. She alleges that she
would have left the maximum amount possible in the TSA if TIAA
had not provided her with incorrect advice. Glencoe seeks "restitu-
tion" to the fund not only for the amount of tax she paid upon with-
drawal of the funds but also for the total amount of money she
withdrew.
GLENCOE v. TEACHERS INSURANCE AND ANNUITY ASSOC. 3
II.
Extracontractual damages are prohibited under ERISA §§ 502(a)(2)
and 502(a)(3)(B).* See Mertens v. Hewitt Assocs., 508 U.S. 248, 255-
56 (1993) (interpreting § 502(a)(3)(B)); Massachusetts Mut. Life Ins.
Co. v. Russell, 473 U.S. 134, 144 (1985) (interpreting § 502(a)(2)).
Although Glencoe characterizes her claim for the tax she paid as one
of restitution, she is really seeking extracontractual damages. See
Farr v. U.S. West Communications, Inc., 151 F.3d 908, 916 (9th Cir.
1998) ("Plaintiffs may not recover their tax benefit losses under
§ 502(a)(3) despite the fact that that conclusion leaves Plaintiffs with-
out a remedy for an alleged breach of fiduciary duty under ERISA.");
Novak v. Andersen Corp., 962 F.2d 757, 761 (8th Cir. 1992) (holding
that ERISA does not authorize relief for tax losses associated with
employer’s failure to give statutorily required notice of rollover
option).
Even if Glencoe’s claim for the tax burden is characterized as one
for compensatory, rather than extracontractual damages, ERISA still
prohibits relief. Glencoe may not recover under § 502(a)(2) because
she is clearly seeking personal damages, rather than damages on
behalf of the plan itself. See Russell, 473 U.S. at 144 ("Congress did
not intend . . . to authorize any relief except for the plan itself."). She
may not recover under § 502(a)(3)(B) because compensatory damages
are prohibited. See Mertens, 508 U.S. at 255 (holding that relief avail-
able includes "those categories of relief that were typically available
in equity (such as injunction, mandamus, and restitution, but not com-
pensatory damages)").
Finally, Glencoe is not entitled to a full restoration of all of the
funds withdrawn. Even if ERISA otherwise allowed such a recovery,
a full restoration of benefits would be a substantial windfall to Glen-
coe and therefore inequitable.
*Section 502(a)(2) provides that plan beneficiaries may seek relief
under 29 U.S.C. § 1109. Section 1109(a) in turn provides that a plan
fiduciary who breaches a fiduciary duty is liable for "equitable or reme-
dial relief as the court may deem appropriate." Section 502(a)(3)(B) pro-
vides that plan beneficiaries may seek "appropriate equitable relief" to
redress violations of the plan or ERISA.
4 GLENCOE v. TEACHERS INSURANCE AND ANNUITY ASSOC.
Because we conclude that ERISA prohibits the relief Glencoe
seeks, we need not decide whether TIAA breached a fiduciary duty.
We therefore affirm the grant of summary judgment in favor of
TIAA.
AFFIRMED