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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND : ROY ESSEX, et al. : v. : Civil Action No. DKC 2003-3276 : DOUGLAS A. RANDALL, et al. : MEMORANDUM OPINION Presently pending and ready for resolution in this

Employment Retirement Income Security Act of 1974 ("ERISA") case are (1) the motion of Plaintiffs Roy Essex, Eric Weiss, Frank Stegman, Ritchie Brooks, William Johnson, and John Woodall, as Trustees of the Warehouse Employees Union Local No. 730 Health & Welfare Trust Fund ("the Fund"), for default judgment against Defendant Douglas Randall on the original complaint, pursuant to Fed.R.Civ.P. 55(b)(2) (paper no. 19); and (2) the motion of Plaintiffs for summary judgment against Defendants Randall and James F. Farmer on the original and amended complaints, pursuant to Fed.R.Civ.P. 56 (paper no. 20). The issues are fully briefed

and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. grants in part and For the reasons that follow, the court in part the motion for default

denies

judgment against Randall, denies without prejudice as moot the motion for summary judgment against Randall, and grants in part

and denies in part the motion for summary judgment against Farmer. I. Background The following facts are undisputed. The Fund is an employee benefits plan that provides health and welfare benefits to its participants and their eligible dependents, subject to the terms of a Plan of Benefits ("the Plan"). The Plan provides benefits

to a participant for an injury for which a third party may be liable, but only if the participant agrees to subrogate or assign his right of recovery from the third party to the Fund. On May 24, 2000, Defendant Randall, a participant in the Fund, was injured in an automobile accident. He required

medical treatment and was unable to work for approximately five months. On August 7, 2000, Randall executed the Fund's Assignment and Subrogation Agreement ("Agreement"). D. See paper no. 20, Exh.

Paragraph 4 of the Agreement provides: The Claimant, in consideration for the payment by the Fund of . . . benefits arising from his or her injury, which constituted good, valuable and sufficient consideration, does hereby assign, transfer and subrogate to the Fund any and all sums of money received, now due and owing to him or later received from a Third Party. . . . Any sums recovered by the Claimant from the Third Party . . . either by judgment or settlement and regardless of whether such sums are designated as reimbursement for medical expenses incurred or anticipated or past or future wage losses as pain and suffering or as any other form of damages shall be applied first to reimburse the Fund.

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Paragraph 7 provides notice to the Fund of payments received by Claimant: The Claimant agrees to notify the Fund promptly in writing if suit is filed by the Claimant or on Claimant's behalf against any Third Party . . . . The Claimant also agrees to notify the Fund promptly if the Claimant receives any award as a result of litigation or if the Claimant receives payment from any source whatsoever for claims arising from or related to the injury . . . . Other pertinent provisions of the Agreement include paragraph 8, which requires that no settlement between the claimant and third party be given "without prior notice to and written consent from the Fund," and paragraph 10, which states that if the claimant "fails to comply with any provision of this Agreement[,] the Claimant shall be responsible for any costs or attorneys' fees incurred by the Fund to enforce this Agreement and further agrees to pay interest on any amounts owed to the Fund . . . ." Randall's attorney, Defendant Farmer, signed a separate provision that stated: "I acknowledge the terms of the Agreement . . . and agree to be bound by its terms in representing the Claimant in connection with any claim related to or arising out of the injury which is the subject of this Agreement." After Defendants executed the Agreement, the Fund paid $2,532.16 in medical benefits to various medical providers on Randall's behalf and $7,114.34 in accident and sickness benefits to Randall for the time he was unable to work as a result of the 3

injuries received from the accident, for a total of $9,646.50. See paper no. 27, Exh. B. On or about September 11, 2001, Randall recovered $20,000 in a settlement with the third party liability insurer of John Anderson, accident. the other of driver that involved in was the paid May to 24, 2000 as

Some

settlement

Farmer

attorney's fees. Between September 2001 and July 2002, representatives of the Fund repeatedly contacted Farmer and Randall by telephone and in writing to ascertain the status of any lawsuit by Randall in connection with the accident, but received no response to phone messages or written requests for information. the Fund was a told by party an unrelated party In August 2002, Randall had

that to

received

third

recovery

relating

the

accident.

Between October 2002 and February 2003, representatives of the Fund continued to attempt to contact Farmer and Randall, but, again, received no response. Farmer finally contacted the Fund by telephone on September 3, 2003, and stated that (1) Randall had received a third-party recovery approximately eighteen months prior; (2) at the time of the recovery, Farmer had "overlooked" the fact that Randall had subrogated his right to recovery to the Fund; and (3) Farmer had not responded to the Fund's requests for information because he

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hoped that the Fund would "simply forget about its lien." paper no. 20, Exhs. J, K.

See

Despite these admissions, to the

court's knowledge neither Farmer nor Randall has paid any money to the Fund. On November 14, 2003, Plaintiffs filed a complaint with this court. Their complaint, as later amended, asserts an equitable

lien pursuant to

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