06-3162 Janice B. Leckey v. Paul W. Stefano

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 06-2483, 06-3161 & 06-3162
JANICE B. LECKEY; JANICE B. LECKEY,
Executrix of the Estate of Evelyn O. Knapp,
a/k/a Evelyn Olliffe Knapp, Deceased also
known as JANICE BURGER LECKEY
Appellant
v.
PAUL W. STEFANO; FRANK W. JONES,
Administrators of the Estate of William
E. Knapp, Deceased, and Trustees of the
Insurance Trust of William Knapp, deceased
Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil Action No. 95-cv-00108)
District Judge: Honorable David S. Cercone
Argued April 24, 2007

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*Honorable Harold A. Ackerman, United States District
Judge for the District of New Jersey, sitting by designation.
2
Before: McKEE and AMBRO, Circuit Judges
ACKERMAN, * District Judge
(Opinion filed: August 31, 2007)
William R. Caroselli, Esquire
Caroselli, Beachler, McTiernan & Conboy
312 Boulevard of the Allies
8th Floor
Pittsburgh, PA 15222
Edward C. Leckey, Esquire (Argued)
1034 Fifth Avenue
Pittsburgh, PA 15219
Counsel for Appellant
David A. Strassburger, Esquire (Argued)
Harry F. Kunselman, Esquire
Strassburger, McKenna, Gutnick & Potter
444 Liberty Avenue
Suite 2200 Four Gateway Center
Pittsburgh, PA 15222
Counsel for Appellee
Mary Beth Buchanan
United States Attorney

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1 To make this opinion more readable, we refer to Evelyn and
William Knapp by their first names. This permits us to avoid
using confusing generic terms such as “Appellant,” “Decedent,”
3
Eileen J. O’Connor
Assistant Attorney General
Kenneth L. Greene, Esquire
Michelle B. Smalling, Esquire (Argued)
Department of Justice, Tax Division
Post Office Box 502
Washington, D.C. 20044
Counsel for Amicus Curiae
Commission of Internal Revenue
OPINION OF THE COURT
AMBRO, Circuit Judge
This is a battle for William Knapp’s estate. It is in
federal court because he kept much of his wealth in employee
benefit trusts that were subject to the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C.
§§ 1001–1461. Boiled down, plaintiff Janice Leckey, on behalf
of herself and the estate of her deceased mother Evelyn Knapp
(who initiated this suit before she died), claims that both ERISA
and the terms of the various plans gave Evelyn 1 an interest in

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and “Plaintiff.”
4
her husband’s ERISA benefits. He, however, took lump-sum
distributions of almost all of his plan assets before he died
without Evelyn’s consent and placed them in trusts that paid her
some—but not all—of the money. The remainder went, through
William’s estate plan, to his children from a previous marriage.
In two orders—one granting partial summary judgment
and one entering final judgment after a bench trial—the District
Court denied Leckey any relief. This is a complicated case
because it involves two different ERISA plans and three
different kinds of ERISA causes of action.
One, brought under 29 U.S.C. § 1132(a)(2), is a
derivative suit to redress the loss to the plan itself when William
(allegedly) withdrew assets improperly. A threshold question
in this claim is whether he had a duty to seek Evelyn’s consent
before taking a distribution at all. The District Court concluded
that he did as a matter of law under the Retirement Equity Act
of 1984 (“REA”), Pub. L. No. 98-397, 98 Stat. 1426 (codified
in scattered sections of titles 26 and 29), an amendment to
ERISA. We disagree because we give effect to a Treasury
Department regulation that interprets the Act differently. We
hold, rather, that whether the duty attached is a fact issue that
depends on the contents of the plan instrument. Unfortunately,
because the plan instrument has been lost and the parties offer
different versions, both of which are supported by some

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2 Leckey’s third cause of action, brought under 29 U.S.C.
§ 1132(a)(1)(B), is not pressed on appeal, as we explain in Part
II, infra.
5
evidence, we must remand for a factual finding on this issue.
We also vacate the District Court’s findings that the plan itself
suffered no loss because it is contrary to our holding in In re
Schering-Plough Corp. ERISA Litigation, 420 F.3d 231, 235–36
(3d Cir. 2005), and we vacate the Court’s finding that William’s
actions did not damage Evelyn or Leckey because it is clearly
erroneous.
The second cause of action, brought under 29 U.S.C.
§ 1132(a)(3), seeks equitable relief for William’s improper
withdrawal from a different ERISA plan. On this claim, the
District Court granted summary judgment to Leckey on the
issue of liability but did not believe it could grant a remedy after
the bench trial. Having examined the record and the law, we
see no legal or factual impediment to imposing a constructive
trust on traceable assets that were wrongfully withdrawn, and so
we remand for consideration of that remedy.2
I. Facts & Procedural History
As noted, Janice Leckey sues both in her personal
capacity and as executrix of the estate of her mother Evelyn
Knapp. The nominal defendants are Paul Stefano and Frank
Jones as administrators of the estate of William Knapp and

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6
trustees of his residuary trust, both of which are part of his
unified estate plan. Stefano and Jones are Pittsburgh attorneys
appointed by the state probate court to act in these capacities.
The real parties-in-interest are Charles Knapp and Linda
Sumser, William’s children by his first marriage and the
primary beneficiaries of the residuary trusts. (For ease of use,
we refer to the defendants collectively as the “Residual
Beneficiaries” throughout this opinion.)
This dispute centers on the propriety of William
removing certain assets from two employee-benefit-plan trusts
without Evelyn’s written consent. The plans were operated by
the American Carbyde Corporation (“AmCarb”), which William
formed in 1985. Initially, AmCarb had three owners: William
(71%), Charles Knapp (20%), and Leckey (9%). In November
1985, Charles Knapp withdrew his interest by having AmCarb
buy back his interest, and William’s share rose to 88%,
Leckey’s to 12%.
Before he formed AmCarb, William had significant
assets invested in the employee benefit plans of two former
employers, both of which were in Chapter 7 bankruptcy
liquidation in 1985. All four plans in which William had assets
were set to terminate, and so he created the AmCarb Profit
Sharing Plan (and a related AmCarb Profit Sharing Trust) to
allow him to continue deferring tax on his assets. He named
himself administrator of the Plan and trustee of the Trust. He
also named Leckey a trustee of the Trust, though she later

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3 Specifically, he transferred real estate in the Virgin Islands
and an orange grove in Florida worth a total of $273,595, a
limited partnership interest worth $24,000, and cash in the
amount of $208,199.
4 The exact amount withdrawn is unclear, and the District
Court did not resolve the issue because it ruled that the statute
of limitations barred any dispute about the withdrawal.
7
testified that her role was almost entirely passive.
William transferred just over $500,000-worth of assets
into the Profit Sharing Trust, all of which derived from his
former employee benefit plans.3 He effected this by taking a
lump-sum distribution of his accrued benefits in all previous
plans, in effect rolling over assets in one set of plans to another.
Evelyn signed a written consent to the election, thus waiving her
right to receive the benefits in the form of a qualified joint and
survivor annuity (“qualified annuity”). William was the only
participant in the AmCarb Profit Sharing Plan, and AmCarb
never contributed anything to it, as it never achieved
commercial success.
In 1985, William withdrew some $50,0004 from the Trust
and placed the money in individual accounts. In 1992, when he
began winding up AmCarb, he withdrew the balance and again
placed the money in individual accounts. To effect the 1992
transfer, William hired attorney James Wirtz. Using the copy
of the Profit Sharing Plan and Profit Sharing Trust instruments

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5 Whether these were correct copies of the plan and trust
instruments in force at the time is disputed. The substance and
import of the dispute are discussed at length in Part III.A.2,
infra.
8
that William provided,5 Wirtz concluded that nothing prevented
William from withdrawing the assets at his leisure. At
William’s direction, Wirtz developed a three-part estate plan.
Important for our purposes is that William removed
substantially all of the assets from the Profit Sharing Trust
(though he did not formally wind it up) and placed them in
“Insurance Trust B,” a residuary trust that, upon his death,
provided Evelyn with income for life. After her death, the trust
corpus was to go to the Residual Beneficiaries (to repeat,
William’s children from a previous marriage). The trust corpus
is largely intact and will remain so until this litigation is
resolved.
In 1986, AmCarb created a pension plan (the “AmCarb
Pension Plan”) and a related trust (the “AmCarb Pension
Trust”). William named himself administrator of the Pension
Plan and trustee of the Pension Trust. He and Leckey were the
only eligible participants. AmCarb contributed a total of
$72,000 to the Pension Trust between 1986 and 1987. In 1992,
William withdrew all of the money from the Trust and placed it
in individual accounts. Upon realizing that Leckey was entitled
to some of the money, he transferred $10,386 from his personal
brokerage account back into the Trust account (and

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9
subsequently caused the Trust to pay her that money). That
same year he formally wound up AmCarb, and the IRS
approved the termination of the Pension Plan effective
December 31, 1991.
William died in 1993, and Evelyn and Leckey brought
this action in 1995. The essential claim is that William
wrongfully withdrew funds from both AmCarb trusts and
deposited them in personal accounts, which had the effect of
depriving Evelyn of the death benefits that she would have
received had the funds remained in the trusts. This claim is
based both on an ERISA requirement that distributions be paid
out in the form of a qualified annuity unless the spouse signs a
written consent to an alternate form of distribution, as well as
plan language to that effect. It is undisputed that William’s
distributions did not take the form of qualified annuities. It is
similarly undisputed that Evelyn did not consent in writing to
these alternate forms of distribution.
As noted, Leckey translates these facts and allegations
into three causes of action: (1) wrongful denial of benefits, 29
U.S.C. § 1132(a)(1)(B); (2) breach of fiduciary duty causing a
loss to the plan, 29 U.S.C. § 1132(a)(2); and (3) a request for
individual, equitable relief to redress a violation of the REA’s
qualified annuity requirement, 29 U.S.C. § 1132(a)(3). The
District Court granted summary judgment in Leckey’s favor on
the issue of whether the plans were subject to the ERISA
qualified annuity requirement. It then held a bench trial on the

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6 The District Court had jurisdiction under 28 U.S.C. § 1331.
We have appellate jurisdiction under 28 U.S.C. § 1291. We
review questions of fact for clear error and questions of law de
novo. Hooven v. Exxon Mobil Corp., 465 F.3d 566, 572 (3d Cir.
2006).
7 In her brief, Leckey appears to abandon her § 1132(a)(1)(B)
because it would be futile to sue a plan that no longer has any
assets. While we have held that common-law principles of
successor liability can aid ERISA plaintiffs in similar situations,
see Teamsters Pension Trust Fund of Philadelphia & Vicinity v.
Littlejohn, 155 F.3d 206, 208 (3d Cir. 1998), we presume that
counsel knows facts not before us that made this path
unattractive here.
10
issues of whether William breached his fiduciary duties in bad
faith, caused a loss to the plan, and damaged Evelyn or Leckey.
Following that trial, it concluded that William’s actions caused
losses neither to the plan nor to the plaintiffs. Therefore, it
entered judgment in favor of the Residual Beneficiaries, and
Leckey appealed.6
II. The § 1132(a)(1)(B) Claim
Section 1132(a)(1)(B) allows ERISA plan beneficiaries
to sue their plans for benefits owed. For reasons we cannot
discern from the record, the District Court did not award Leckey
relief under this section, and Leckey does not press the matter
on appeal.7 Thus, we shall not address this claim further.

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11
III. The § 1132(a)(2) Claim – The Profit Sharing Trust
Section 1132(a)(2) allows plan beneficiaries to sue plan
fiduciaries personally for breaching their fiduciary duties. A
violation of those duties allows, by way of § 1109, three
remedies: (1) making good on the loss caused by the breach, (2)
restoring any profits made using the assets of the plan, and (3)
any other equitable or remedial relief the court deems
appropriate. Section 1132(a)(2) actions are derivative in nature
inasmuch as the plaintiff must assert a loss to the ERISA plan
itself (not merely an individual claim for extracontractual
damages). Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S.
134, 147 (1985); see also Graden v. Conexant Sys., Inc., ___
F.3d ___, slip op. at 8 (3d Cir. July 31, 2007). Consequently,
the plan takes legal title to any recovery, which then inures to
the benefit of the participants and beneficiaries who were
injured.
Here, Leckey claims that William breached his fiduciary
duty by withdrawing assets from the Profit Sharing Trust in a
form other than a qualified annuity without Evelyn’s consent.
The District Court, however, ruled that this claim failed as a
matter of law. To review that decision, we must resolve three
issues: (1) whether William had a duty to take distributions only
in the form of a qualified annuity; (2) if so, whether he breached
that duty; and (3) if so, whether that breach caused a loss to the
plan. We also address whether Leckey or Evelyn was damaged
by William’s act and whether the District Court properly ruled

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12
that any objection to the 1985 transfer is barred by the statute of
limitations.
A. Whether the Profit Sharing Plan Was Subject
to a Qualified Annuity Requirement
1. The Retirement Equity Act
Resolving cross-motions for summary judgment, the
District Court ruled that the REA required William to obtain
Evelyn’s consent before transferring money out of the Profit
Sharing Trust in a form other than a qualified annuity.
The REA amended ERISA. Its primary purpose was to
protect surviving beneficiaries when their ERISA-participating
spouses predecease them. See S. REP. N O . 98-575, at 12 (1984).
Under the REA, when a participant dies before becoming
eligible to receive distributions of vested benefits, the surviving
spouse is entitled to a qualified pre-retirement annuity. 29
U.S.C. § 1055(a)(2). (Under prior law, it was permissible for
plans to provide that participants dying before becoming eligible
to take distributions forfeited all accrued and vested benefits,
thus leaving their surviving spouses with nothing.) In addition,
the REA requires that plan fiduciaries pay out almost all benefits
in the form of qualified annuities unless both spouses consent in
writing to another form of distribution. 29 U.S.C. § 1055(a)(1)
(“[I]n the case of a vested participant who does not die before
the annuity starting date, the accrued benefit payable to such

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13
participant shall be provided in the form of a qualified joint and
survivor annuity . . . .”). Requiring the written consent of the
non-participating spouse was purposeful: the Senate Finance
Committee wrote that it included the rule “because the
Committee believes that a spouse should be involved in making
choices with respect to retirement income on which the spouse
may also rely.” Id. Thus, it was Congress’s intent not just to
provide the non-participating spouse income in the form of a
qualified annuity, but also to ensure that he or she had a right to
be involved in pension-related decisions.
While the REA’s default rule that benefits must be paid
out in the form of a qualified annuity applies to most ERISA
plans, plans meeting the following three conditions are exempt
from the requirement:
(i) such plan provides that the participant’s
nonforfeitable accrued benefit (reduced by any
security interest held by the plan by reason of a
loan outstanding to such participant) is payable in
full, on the death of the participant, to the
participant’s surviving spouse (or, if there is no
surviving spouse or the surviving spouse consents
in the manner required under subsection (c)(2) of
this section, to a designated beneficiary),
(ii) such participant does not elect the payment of
benefits in the form of a life annuity, and

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14
(iii) with respect to such participant, such plan is
not a direct or indirect transferee (in a transfer
after December 31, 1984) of a plan which is
described in subparagraph (A) or (B) or to which
this clause applied with respect to the participant.
29 U.S.C. § 1055(b)(1)(C). In layman’s terms, this means that,
for a plan to be exempt, it must (1) provide that accrued benefits
go to the participant’s spouse on his death, (2) not allow
payment to the participant alone in the form of a life annuity,
and (3) not have received money from a plan subject to the
qualified annuity requirement.
The parties agree that the Profit Sharing Plan met prongs
(i) and (ii). The question is whether the Plan was a “transferee”
of plans to which the requirements applied. Treasury
Department regulations that interpret the REA provide:
If through a merger, spinoff, or other transaction
having the effect of a transfer, benefits subject to
the [qualified] annuity requirements of sections
401(a)(11) and 417 are held under a plan that is
not otherwise subject to such requirements, such
benefits will be subject to the [qualified] annuity
requirements even though they are held under
such plan. Even if a plan satisfies the [qualified]
annuity requirements, other rules apply to these
transactions. . . . A transfer made before January

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15
1, 1985, and any rollover contribution made at
any time, are not transactions that subject the
transferee plan to the [qualified] annuity
requirements with respect to a participant. If a
plan is a transferee plan with respect to a
participant, the [qualified] annuity requirements
do not apply with respect to other plan
participants solely because of the transfer.
26 C.F.R. § 1.401(a)-20(Q&A 5) (emphasis added).
As the District Court ruled, this regulation seems to
exempt “rollover contributions” from the class of transfers that
can trigger the qualified annuity requirement. Leckey argues
that the Court misread the regulation. Specifically, she contends
that the regulation merely provides that rollover contributions do
not subject the entire plan to the qualified annuity requirement;
rollover contributions do, however, subject the individual
participant to them.
This reading is untenable because the regulation
specifically states that a rollover contribution is not a transaction
that subjects the transferee plan to the requirements “with
respect to a participant.” 26 C.F.R. § 1.401(a)-20(Q&A 5). The
wording of the regulation is obviously administrative argot, but
the District Court correctly concluded that it does not classify
rollover contributions as transfers within the scope of
§ 1055(b)(1)(C). Thus, rollovers do not trigger the joint and

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16
survivor annuity requirements at all.
The Commissioner of Internal Revenue promulgated
§ 1.401(a)-20 pursuant to his power to prescribe all regulations
necessary to the enforcement of the Internal Revenue Code. 26
U.S.C. § 7805. Specifically, the Code regulates whether a plan
qualifies for tax-deferred status, which turns in part on its
compliance with the qualified annuity requirement. 26 U.S.C.
§§ 401(a)(11) & 417. Thus, it is within the power of the
Commissioner to promulgate regulations concerning whether an
ERISA plan complies with these requirements.
The question here is whether the regulation’s distinction
between rollover contributions and transfers accords with
Congress’s intent in enacting § 1055(b)(1)(C). The
Commissioner, who is participating as amicus curiae, argues
that the term “rollover” is used to describe a distribution of a
participant’s benefits from an ERISA trust followed by the
participant contributing those benefits into another qualified
ERISA trust.
This definition is consistent with the Code. Section 402
defines “eligible rollover distributions” as “any distribution to
an employee of all or any portion of the balance to the credit of
the employee in a qualified trust.” 26 U.S.C. § 402(c)(4).
“Eligible rollover distributions” are excluded from income (and
thus not taxable) if they are actually “rolled over” (i.e.,
contributed) to another qualified retirement plan within 60 days.

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17
26 U.S.C. § 402(c)(1). Thus, the Commissioner’s definition of
rollover as a distribution followed by a contribution between
two qualified retirement plans comes directly from the Code. It
is important to note that rollovers are voluntary transactions that
plan beneficiaries undertake for the purpose of deferring tax or
shielding assets from creditors. See 11 U.S.C. § 541(b)(7)
(excluding contributions to ERISA plans from a debtor’s
bankruptcy estate).
In contrast, the Commissioner interprets “transfer” in
§ 1055(b)(1)(C) as meaning an involuntary (from the
participant’s perspective) movement of benefits among ERISA
plans—typically incident to a merger, acquisition, spin-off, or
the like. He argues that this interpretation is sensible in light of
how “transfer” is used in nearby sections of ERISA. In §
1054(g), ERISA prevents employers from amending plans to
decrease benefits in many circumstances. The provision applies
to “transfers” and to “plan mergers and other transactions having
the effect of a direct transfer, including consolidations of
benefits attributable to different employers within a multiple
employer plan.” 29 U.S.C. § 1054(g)(4)(B). This language
suggests that “transfer” refers to involuntary movements of plan
assets, not individual rollovers. Moreover, this section uses the
“transferee plan” language of § 1055 to refer exclusively to
involuntary transfers.
Perhaps more on point, § 1058 directly regulates plan
mergers with the following language:

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18
A pension plan may not merge or consolidate
with, or transfer its assets or liabilities to, any
other plan after September 2, 1974, unless each
participant in the plan would (if the plan then
terminated) receive a benefit immediately after
the merger, consolidation, or transfer which is
equal to or greater than the benefit he would have
been entitled to receive immediately before the
merger, consolidation, or transfer (if the plan had
then terminated).
29 U.S.C. § 1058. Here again, ERISA uses the word “transfer”
to refer to involuntary movements of substantially all of a plan’s
assets, not to voluntary, individual-scale rollovers.
Putting together the “cardinal rule that a statute is to be
read as a whole” with the statutory interpretation canon ejusdem
generis (a general term following specific terms should be
limited to things similar to the specific terms), we can conclude
that ERISA uses the word “transfer” to refer to involuntary
movements of plan assets by plan administrators, not to
distributions taken and reinvested by plan participants in another
ERISA plan. Cf. Circuit City Stores, Inc. v. Adams, 532 U.S.
105, 114–15 (2001) (“‘[W]here general words follow specific
words in a statutory enumeration, the general words are
construed to embrace only objects similar in nature to those
objects enumerated by the preceding specific words.’”) (quoting
2A N. Singer, Sutherland on Statutes and Statutory Construction

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19
§ 47.17 (1991)); King v. St. Vincent’s Hosp., 502 U.S. 215, 221
(1991); see also Tavarez v. Klingensmith, 372 F.3d 188, 190 (3d
Cir. 2004) (noting that the rule of reading a statute as a whole
and ejusdem generis can work together to make the meaning of
a statute plain).
In addition, the Commissioner argues that even if a plan
receiving a rollover contribution is in some sense a “transferee,”
it is not a “transferee . . . of a plan,” as it must be for the
qualified annuity requirement to attach. 29 U.S.C.
§ 1055(b)(1)(C)(iii) (emphasis added). Rather, it is a transferee
of an individual. The text is ambiguous because it is not clear
whether the phrase “of a plan” means merely that the transferred
assets are in some way traceable to a previous ERISA plan or
that the plan itself, acting through its administrator, actively
transferred the assets. The Commissioner’s reading is
persuasive because, in the rollover context, the plan from which
the assets are transferred is entirely passive—to the point that
calling the new plan its “transferee” is unnatural. The
participant receives a distribution of his benefits free and clear
of all encumbrances; thus, the assets received are no longer
attributable to the previous plan in any meaningful sense.
The Commissioner also argues that the REA’s legislative
history supports the transfer/rollover distinction. The relevant
House report explains that a plan not otherwise subject to the
qualified annuity requirement becomes so if it “(1) receives a
direct transfer of assets in connection with a merger, spin-off, or

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20
conversion of the plan, or (2) receives a direct transfer of assets
solely with respect to a participant.” H.R. REP. N O . 98-655 (Pt.
2) (1984). From this it appears that Congress intended to reach
involuntary movements of assets, not voluntary contributions
from a participant that came out of a previous distribution from
another plan.
Further supporting the Commissioner’s arguments is that
while employers can, under some circumstances, effect transfers
of substantially all plan assets to other plans without the
participants’ consent, rollovers are by definition voluntary on
the participant’s part. Thus, transferring assets from a plan to
which the qualified annuity requirement applies to one to which
it does not could effectively void the requirement. Hence,
§ 1055(b)(1)(C)(iii) prevents that result by applying the
requirement to the transferee plan. Rollovers, however, are a
different story. When an employee receives a distribution from
a plan subject to the qualified annuity requirement, it must come
in the form of a qualified annuity unless the spouse consents at
that time to have it paid in another form. Here, William elected
to take all of his distributions from his prior plans in lump-sum
form, and Evelyn consented in writing to that election. App. at
738. Thus, Congress’s purpose of involving the spouse in the
distribution decision was realized; it would not further that
purpose to subject the AmCarb plans to the qualified annuity
requirement.
Given the use of “transfer” in other sections of ERISA

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8 Parroting the language of the REA, it required that any
benefit payout be in the form of a qualified annuity unless
Evelyn consented in writing to another form.
21
and the way the Commissioner’s interpretation dovetails with
the REA’s history and purpose, it easily passes muster. Because
we hold that 26 C.F.R. § 1.401(a)-20(Q&A 5) properly
interprets the REA, we vacate the District Court’s ruling that the
regulation is invalid. Applying the regulation to this case, we
hold that the REA does not subject the Profit Sharing Plan to the
qualified annuity requirement.
2. The Profit Sharing Plan Instrument
In the alternative, Leckey argues that the Profit Sharing
Plan instrument contained qualified annuity provisions. She
relies on one version of the Profit Sharing Plan instrument. The
Residual Beneficiaries counter that Leckey’s version was never
adopted by AmCarb’s board and is therefore invalid. The
question we resolve is whether the record evidence supports
granting summary judgment on this issue for either; if so, we
will not waste the parties’ time with a remand.
At trial, Leckey called Richard Cramer, William’s
personal attorney. Cramer testified that he drafted the Profit
Sharing Plan and Profit Sharing Trust instruments at William’s
direction. Leckey submitted a version of the plan that contained
qualified annuity language. 8 The cover page and the first page

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9 As we have throughout this opinion, we continue referring
to Janice Leckey as “Leckey.” In this Part, when referring to
Edward Leckey, we use his full name.
22
of the body of the plan are dated “7/1/85.” The table of
contents, however, which is between the cover page and the
body text, is dated “6/26/86.” Based on the date on the body of
the plan (and not on personal recollection), Cramer testified that
this version was in force no later than July 1985. Specifically,
he testified that it was his firm’s practice at the time
scrupulously to type onto each draft the last date on which it was
revised. Leckey also put in evidence a letter from Cramer to
William dated July 2, 1985. The letter states that it includes the
latest draft of the plan, trust instrument, a board resolution
adopting the plan, and various other documents for him to sign
and return. Leckey then admitted in evidence a letter dated July
8, 1985, from Edward Leckey,9 another of William’s attorneys,
stating that he had enclosed executed copies of the documents
sent on July 2. Unfortunately, the enclosures themselves were
lost, so Cramer could not produce them, but he testified that he
believed that an executed board resolution was enclosed.
On cross-examination, the Residual Beneficiaries
submitted a June 3, 1985, letter from Cramer to William and the
enclosed draft of the Profit Sharing Plan. This version did not
have a qualified annuity requirement; rather, it allowed William
to have his benefits paid out in any form he chose. Next, they
submitted a June 10, 1985, memorandum from Cramer to his

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23
file. According to it, Cramer spoke with Edward Leckey that
day about the Profit Sharing Plan. Edward Leckey told him that
William and his son Charles were having a variety of
disagreements over the business and that William might turn the
business over to Charles earlier than expected. Because of this,
William was concerned about Charles being able to take control
of the Profit Sharing Plan, which William wanted to avoid, as
virtually all of the money in it was his. The June 3 version of
the plan allowed the AmCarb board to remove the Profit Sharing
Trust’s trustees and the Profit Sharing Plan’s administrator at
any time. Thus, William wanted the plan and trust instruments
redrafted to protect his positions in the event of a change in
corporate control.
The Residual Beneficiaries also put in evidence a letter
from Cramer to William dated June 11, 1985, stating that it
enclosed revised versions of the Profit Sharing Plan and Profit
Sharing Trust instruments. Specifically, the letter stated: “[t]he
documents now designate you [William] as trustee and prevent
your removal absent judicial determination of cause for
removal.” They further put in evidence the version of the Plan
instrument sent with the June 11 letter; it contained revisions
consistent with the transmittal letter. It did not include a
qualified annuity requirement. Next, the Residual Beneficiaries
submitted a June 26, 1985, letter from Edward Leckey to
Cramer, stating that enclosed were an executed copy of the
Profit Sharing Trust instrument, an executed board resolution
adopting the new Profit Sharing Plan, and the altered pages of

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24
the Plan instrument. The letter also indicated that William
would like additional revision to secure the trustees’ ability to
administer and dispose the assets in the Trust. This letter,
Cramer testified, was the impetus for making the revisions
contained in the July 1, 1985 version and for sending his July 2,
1985, letter to William. Cramer acknowledged that his July 2,
1985, letter referenced changes to the plan administrator’s and
trustees’ powers but did not mention the addition of a qualified
annuity requirement. Moreover, Cramer testified that he did not
actually remember when he added that requirement; he merely
surmised from the date on the body of the plan that its addition
must have been part of the July 1 round of the revisions. He did
not recall so much as speaking with William or Edward Leckey
about the requirement.
The Residual Beneficiaries questioned Cramer about an
IRS form that his firm submitted on June 27, 1986, requesting
a determination that the Profit Sharing Plan was qualified for
tax-deferred status. Next to a question asking whether the plan
defines the term “joint and survivor annuity,” neither the “yes”
nor the “no” box was checked. Next to a question asking how
distribution may be made, the boxes “lump sum” and
“substantially equal installments” were checked; the “annuity
contracts” box was not checked. Next to the question “Does this
plan comply with the payment of benefits provisions of section
410(a)(11),” which is the Code’s qualified annuity requirement,
“N/A” was typed in. In various places on the form, the
responses referenced sections of the profit sharing plan. When

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10 We note that the Residual Beneficiaries argue that the
District Court actually resolved this issue at trial. They point to
a finding of fact that reads “the plan document [that Leckey
argues for] could not have been the draft of the Amcarb Profit
Sharing Plan submitted to [William] Knapp [on] July 2, 1985.”
Leckey v. Stefano (Leckey II), No. 95-108 (W.D. Pa. Jun. 6,
25
compared to the alleged July 1 version (with the Qualified
annuity requirement), the page number references were often off
by a page or two.
On redirect, Leckey put in evidence a copy of the plan
instrument that was certified by the IRS as the version in its
files. It contained the qualified annuity requirement and was
identical to Leckey’s alleged July 1 version. Moreover, on a
schedule of the IRS form (which, Cramer testified, would have
been submitted with the form itself, though it bore no date), the
response referenced section 6.04 of the plan—the section with
the qualified annuity requirement, and referenced the correct
page number for that section on the alleged July 1 version.
Aside from Cramer’s testimony and the related exhibits,
the only other relevant evidence offered at trial was James
Wirtz’s testimony that the copy of the Profit Sharing Plan that
William gave him did not contain the qualified annuity
language. William hired Wirtz for advice on removing assets
from the Profit Sharing Trust and Pension Trust. The District
Court, without concluding which copy of the Profit Sharing Plan
was actually in force,10 found that William did not intentionally

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2007), at 4. They argue that by negative inference the District
Court must have accepted their version. We see their point, but
in that same opinion the Court entered a finding that “the above
discrepancies [in the various versions of the plan] do not prove
when the spousal protection language was incorporated into the
AmCarb Profit Sharing Plan.” Id. at 6. In addition, the Court
wrote in a previous order that the issue of which version
governed would not be decided at trial because it was
unnecessary in light of the Court’s interpretation of the REA.
Leckey v. Stefano (Leckey I), No. 95-108 (W.D. Pa. Par. 26,
2004), at 21 (granting in part and denying in part cross-motions
for summary judgment).
We harmonize these statements as follows: the version
that Leckey presented was not itself the version that William
received on July 2, 1985, but the Court did not actually resolve
whether the qualified annuity requirement was in the version
that he did receive. Thus, we cannot agree that the Court
resolved this factual issue.
In any event, we are loathe to deem an issue of fact
decided when the Court’s language is so unclear and when the
Court itself wrote in a previous opinion that it would not decide
the issue. To do so would risk deferring to a finding of fact that
was never made.
26
mislead Wirtz by providing him a copy without the qualified
annuity language.
From all this evidence, the only thing clear is that which
plan was in force is a material, disputed issue of fact with
credible evidence on both sides of the question. Thus, summary

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27
judgment would not be appropriate, see FED . R. CIV . P. 56( C),
and we must remand for the District Court to make a factual
finding on this issue.
B. Bad Faith
The District Court, citing our opinion in Burke v.
LaTrobe Steel Co., 775 F.2d 88, 91–92 (3d Cir. 1985), ruled that
in an ERISA breach-of-fiduciary-duty claim based on failure to
follow the terms of the plan instrument, the plaintiff must show
that the trustee failed to do so “in bad faith.” We believe that
the Court read Burke too broadly. In Firestone, the Supreme
Court wrote that trust law fills in the details of ERISA
fiduciaries’ duties and how courts review their actions.
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110–12
(1989). The Second Restatement, in a section that the Firestone
Court quoted and relied on, explains the degree of fault required
to establish a trustee’s breach of fiduciary duty:
a. Scope of the rule. Ordinarily a trustee
does not commit a breach of trust if he does not
intentionally or negligently do what he ought not
to do or fail to do what he ought to do. In other
words, he does not commit a breach of trust
unless he is personally at fault. He may, however,
commit a breach of trust where he is not
personally at fault, as where he acts under a
mistake of law or fact, as is stated in the

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28
comments which follow.
b. Mistake of law as to existence of duties
and powers. A trustee commits a breach of trust
not only where he violates a duty in bad faith, or
intentionally although in good faith, or
negligently, but also where he violates a duty
because of a mistake as to the extent of his duties
and powers. This is true not only where his
mistake is in regard to a rule of law, whether a
statutory or common-law rule, but also where he
interprets the trust instrument as authorizing him
to do acts which the court determines he is not
authorized by the instrument to do. In such a
case, he is not protected from liability merely
because he acts in good faith, nor is he protected
merely because he relies upon the advice of
counsel. If he is in doubt as to the interpretation
of the instrument, he can protect himself by
obtaining instructions from the court. The extent
of his duties and powers is determined by the trust
instrument and the rules of law which are
applicable, and not by his own interpretation of
the instrument or his own belief as to the rules of
law.
c. Mistake of fact or law in the exercise of
powers or performance of duties. When the

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29
question whether the trustee has committed a
breach of trust depends not upon the extent of his
powers and duties, but upon whether he has acted
with proper care or caution, the mere fact that he
has made a mistake of fact or of law in the
exercise of his powers or performance of his
duties does not render him liable for breach of
trust. In such a case he is liable for breach of trust
if he is negligent, but not if he acts with proper
care and caution.
Thus, if the trustee is authorized to invest
trust funds in such securities as a prudent man
would purchase, he is not liable if he invests in
bonds which on the facts known to him are the
sort in which prudent men would invest, although,
owing to facts which he did not know and was not
negligent in not knowing, the bonds were not in
fact properly secured.
RESTATEMENT (SECOND ) OF T RUSTS § 201 cmts. a–c (1959).
Thus, when a trustee exercises his authority, a mere mistake will
not render him liable for a loss. Only fault—in the form of bad
faith or negligence—will. When, on the other hand, a trustee
takes action that exceeds his authority, he is strictly liable for
any loss (and accountable for any profit). While this may seem
harsh, “[a] trustee who is in doubt as to the interpretation of the
instrument can protect himself by obtaining instructions from

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30
the court.” Firestone, 489 U.S. at 112 (citing G. BOGERT & G.
BOGERT , L AW OF T RUSTS AND T RUSTEES § 559 (2d rev. ed.
1980); R ESTATEMENT (S ECOND ) OF T RUSTS § 201 cmt. b;
United States v. Mason, 412 U.S. 391, 399 (1973)).
Our prior decision in Burke dealt with a mistake in the
exercise of the trustee’s powers: the plaintiffs accused the
administrator of improperly denying their claim for pension
benefits when they refused to comply with a work-recall
request. Determining who is eligible for benefits—far from
being ultra vires—is one of a plan administrator’s key
functions. See 29 U.S.C. § 1102(a)(1) & (b)(4). Thus, Burke
held that to allege properly a breach of fiduciary duty, a plaintiff
must allege more than mere error in discharging that duty.
Burke, 775 F.2d at 91–92. Rather, he must allege some kind of
fault. Id.
In our case, William allegedly distributed trust assets in
an unauthorized form. If true, this is a mistake in the extent of
his powers, not in his exercise of them. Thus, following the
Restatement as Firestone requires, fault is not an element of the
breach. Firestone, 489 U.S. at 112 (quoting R ESTATEMENT
(S ECOND ) OF T RUSTS § 201 cmt. b). Moreover, even under a
fault standard, Leckey has met her burden because an
administrator who breaches “clear and unambiguous language”
in the plan is not relieved of liability by acting in good faith,
Burke, 775 F.2d at 92 (citing Delgrosso v. Spang, 769 F.2d 928,
938 (3d Cir. 1985)); see also R ESTATEMENT (S ECOND ) OF

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31
T RUSTS § 201 cmt. c. If Leckey is correct that the plan included
a qualified annuity requirement, the language of that
requirement was clear:
[U]nless the Participant elects otherwise in the
manner provided herein, the normal form of
benefit distribution for a . . . married Participant
shall be a qualified joint and survivor annuity. . .
. In order for a waiver of a qualified joint and
survivor annuity . . . to be effective, the waiver
must be in writing and must be consented to by
the Participant’s spouse. The spouse’s consent to
a waiver must be witnessed by a plan
representative or notary public. App. at 162.
Given the clarity of this requirement, failing to
follow it establishes fault under our precedent.
We reject the District Court’s finding that confusion over
which version of the plan instrument was in place could
somehow justify William’s actions. At all relevant times, he
was administrator of the AmCarb Profit Sharing Plan, trustee of
the AmCarb Profit Sharing Trust, and controlling shareholder
and President of AmCarb. He directed the creation of the Plan
and Trust, oversaw the various revisions, administered both, and
presided over and controlled the board that adopted it. In short,
any confusion as to which version the AmCarb board put into
effect was William’s own creation. To use this self-created
confusion to excuse the breach of fiduciary duties owed to a

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32
plan beneficiary would turn ERISA and trust law topsy.
In addition, William is ineligible for the advice of
counsel defense. Even if it is available in this context (and the
Restatement disavows it), an element of the defense is providing
the attorney with complete and accurate information. See
Howard v. Shay, 100 F.3d 1484, 1489 (9th Cir. 1996); accord
Chao v. Hall Holding Co., Inc., 285 F.3d 415, 430 (6th Cir.
2002) (adopting Howard). It is undisputed that William did not
provide to Wirtz the alleged July 1, 1985, version of the plan.
If that were the plan adopted by the AmCarb board, then
William did not provide complete and accurate information, and
so seeking and following the advice of counsel cannot exonerate
him.
C. Loss to the Plan
The District Court, applying its findings of fact to ERISA
law, concluded that William’s breach did not cause a loss to the
Profit Sharing Plan. In analyzing whether that finding is wrong,
we begin with the text of § 1132(a)(2). It allows beneficiaries
to sue “for appropriate relief under section 1109.” Section 1109
states, in relevant part, that “[a]ny person who is a fiduciary
with respect to a plan who breaches any of the responsibilities,
obligations, or duties imposed upon fiduciaries by this
subchapter shall be personally liable to make good to such plan
any losses to the plan resulting from each such breach.” From
this, the elements of a § 1132(a)(2) claim appear to be (1) a plan

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33
fiduciary (2) breaches an ERISA-imposed duty (3) causing a
loss to the plan. See Roth v. Sawyer-Cleator Lumber Co., 61
F.3d 599, 602 (8th Cir. 1995). Assuming that the plan
contained a qualified annuity requirement, we have already
explained that William was a plan fiduciary and that he
breached his duty with the requisite level of fault. As to the
third element, the Supreme Court held in Massachusetts Mutual
that § 1132(a)(2) actions must be brought on behalf of the plan
itself—and must, therefore, seek to restore losses to the plan.
Mass, Mut. Life Ins. Co., 473 U.S. at 147. It is not a vehicle for
individual relief; rather, § 1132(a)(1) and (3) provide individual
relief. See Great-West Life & Annuity Ins. Co. v. Knudson, 534
U.S. 204, 213 (2002) (holding that § 1132(a)(3) provides
individual, equitable relief); 29 U.S.C. § 1132(a)(1)(B)
(providing for individual recovery of wrongly withheld
benefits). This is, of course, not to say that beneficiaries should
not expect to benefit from § 1132(a)(2) actions. As
beneficiaries, any assets restored to the plan will be distributed
to them in accordance with the plan instrument.
The question, then, is whether William’s breach caused
a loss to the plan. Explaining how district courts should
determine whether there has been a loss to the plan, the Eighth
Circuit Court of Appeals has counseled that “a comparison must
be made between the value of the plan assets before and after
the breach.” Roth, 61 F.3d at 603 (8th Cir. 1995). Here, the
comparison is stark: before William withdrew assets from the
plan, it held nearly $500,000; when he finished, it was all but

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34
bereft of assets. Hence, a loss to the plan.
The Residual Beneficiaries argue, however, that this
action is a paradigm for individual recovery, not recovery on
behalf of the plan, as William’s breach only took assets out of
one participant’s account. Indeed, the Profit Sharing Plan only
had one participant, so any loss to the plan is also a loss to one
person’s account. In Schering-Plough, 420 F.3d at 235–36, we
held that losses need not be to all plan beneficiaries to be
attributable “to the plan” in the § 1132(a)(2) sense; rather, it is
possible for a loss to the plan to affect only a subset of
beneficiaries. Id. In that case, the plaintiffs were former
employees who had selected a particular investment package in
their employer’s 401(k) plan—one that they alleged was
imprudent and should not have been offered. We held that the
investment losses, though allocated to individual accounts, were
still suffered “by the plan,” and so § 1132(a)(2) was available.
Under that logic, had but one person selected the imprudent
package, he still would have been able to bring suit. Thus, there
is nothing per se improper about an § 1132(a)(2) suit in which
the plan suffers a loss that happens only to affect one
individual’s account. This result seems all the more correct in
the context of a single-participant plan. We cannot imagine that
Congress intended to cut off § 1132(a)(2) liability (which is, in
most cases, the only means for recovering personally from a
breaching fiduciary) because of the happenstance that the plan
has only one participant.

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11 We acknowledge that the Supreme Court has granted
certiorari in LaRue, partially (we assume) on the basis of its
tension with Schering-Plough and similar cases in other circuits.
See Brief for the United States of America as Amicus Curiae,
LaRue v. DeWolff, Boberg & Assocs., Inc., No. 06-856 (U.S.
pet. for cert. filed Nov. 6, 2006) (approving of Schering-Plough
and arguing that the Court grant certiorari and reverse).
Because of the differences in facts and posture, it is unclear
whether the Supreme Court’s decision will affect our case.
Therefore, we merely apply our Court’s precedent.
35
The Residual Beneficiaries do, however, cite cases that
emphasize the number of people affected by the alleged breach
of duty. In particular, they cite LaRue v. DeWolff, Boberg, &
Assocs., 450 F.3d 570, 574, clarified on panel reh’g 458 F.3d
359, 362 (4th Cir. 2006), in which the Fourth Circuit Court of
Appeals held that an individual alleging that his plan account
lost money because the administrator failed to carry out his
investment instructions does not assert a loss to the plan. LaRue
is complicated by the fact that the plaintiff did not argue to the
District Court a § 1132(a)(2) violation, and did not plead a loss
to the plan. Still, LaRue is in tension with Schering-Plough
because it emphasizes that the loss only affected one
beneficiary, whereas we read Schering-Plough as focusing on
whether the plan itself actually lost money no matter the number
of individual accounts affected. 11 The Residual Beneficiaries
also cite Matassarin v. Lynch, 174 F.3d 549, 566 (5th Cir.
1999), in which the Fifth Circuit Court of Appeals held that a
§ 1132(a)(2) claim could not proceed because it would only

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36
inure to the benefit of some of the plan’s beneficiaries. The
rationale, however, is principally that there was no loss at all.
Thus we do not read it as disagreeing with our decision in
Schering-Plough.
The other cases that the Residual Beneficiaries cite do
not support their position. In Horan v. Kaiser Steel Retirement
Plan, 947 F.2d 1412, 1418 (9th Cir. 1991), the plaintiffs did not
claim that the administrators’ decision to pay benefits directly
rather than by purchasing an annuity had harmed the plan; in
fact, the Court pointed out that it had improved the plan’s
bottom line. Here, on the other hand, William left the plan
nearly bereft of assets. Similarly, in Lee v. Burkhardt, 991 F.2d
1004, 1009 (2d Cir. 1993), the plaintiffs sought individual
damages stemming from the administrator’s failure to give
notice as to how the plan was funded; there was no colorable
allegation of loss to the plan.
In sum, we follow the text: § 1132(a)(2) provides a
proper cause of action when a beneficiary can show a loss
suffered by the plan. Nothing in the text makes the number of
beneficiaries affected relevant. Here, assuming Leckey’s
version of the plan instrument, William improperly emptied the
plan of assets. That loss was suffered by the plan, and so
§ 1132(a)(2) is available. The District Court’s findings to the
contrary were premised on a misunderstanding of the law, and
we vacate them.

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12 We note that we are more than skeptical of this testimony,
as the “expert” was not an actuary and did not claim any
expertise in annuity pricing. He was, rather, a general securities
broker, and his methodology (if it can be called that) was taking
the average price of current qualified annuities and discounting
for the passage of time. He did not price actual 1992 annuities.
37
D. Damages
At trial, the Residual Beneficiaries introduced evidence
showing that William placed the assets that he took out of the
Profit Sharing Trust into a residuary trust that provided Evelyn
income for life (principal to the Residual Beneficiaries upon his
death). From that trust she received some $172,000 while she
was alive. The Beneficiaries’ expert testified that she would
only have received some $145,000 had the Trust assets been
used to purchase a qualified annuity.12 On that basis, the
District Court found that Evelyn was not damaged by William’s
breach of duty.
We take a very different view of the damages issue:
when William misappropriated plan assets, a constructive trust
arose immediately for Evelyn’s ultimate benefit. See A USTIN
W. S COTT & W ILLIAM F. F RATCHER, T HE L AW OF T RUSTS
§ 426.4 (4th ed. 1988) (“Where the title to property is acquired
by one person under such circumstances that he is under a duty
to surrender it, a constructive trust immediately arises.”
(emphasis added)); see also R ESTATEMENT (F IRST) OF

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38
R ESTITUTION § 160 (1937). It encumbered all misappropriated
assets and their proceeds. R ESTATEMENT (F IRST) OF
R ESTITUTION § 205. When residuary trust assets were paid to
Evelyn during her life, they came out of money encumbered by
the constructive trust, and so those payments reduced the
amount over which the constructive trust was imposed.
Essentially, when the residuary trust paid money to Evelyn, it
was merely conveying the legal title to assets of which she
already held beneficial title (via the constructive trust) . Thus,
the payments can (and indeed must) be used to reduce the
amount of money that the Profit Sharing Trust can recapture
both from the residual trust and in damages from William’s
estate.
We cannot accept the Residual Beneficiaries’ argument
that Evelyn received all to which she was entitled. Had William
never removed the assets from the Profit Sharing Trust, Evelyn
would have acceded to them on his death. Assuming that the
plan contained a qualified annuity requirement, she had a right
to object to any removal of trust assets other than in that form,
and we cannot know to what she would have agreed had
William not removed the assets. If the plan contain a qualified
annuity requirement, William died after illegally removing
assets from the Trust, and so the proper remedy for this 29
U.S.C. § 1132(a)(2) violation is to restore those assets. See 29
U.S.C. § 1109(a). Moreover, any proceeds from the assets
removed are properly characterized as the profits from a breach
of trust and must also be restored. Id..

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39
E. The 1985 Transfer
Leckey’s § 1132(a)(2) claim comprises William’s
transfers of assets in 1985 and 1992. The District Court granted
summary judgment in the Residual Beneficiaries’ favor on the
1985 transfer because the statute of limitations expired before
Leckey brought this suit. We agree.
ERISA provides a six-year statute of limitations. 29
U.S.C. § 1113(a). Leckey admits that she filed suit more than
six years after the alleged breach, but she notes that, in cases of
fraud or concealment, the statute does not begin to run until the
breach was or should have been discovered. 29 U.S.C.
§ 1113(c). To invoke that provision, however, the defendant
must have taken “affirmative steps to hide its breach of
fiduciary duty.” Ranke v. Sanofi-Synthelabo, Inc., 436 F.3d
197, 204 (3d Cir. 2004). Here, Leckey asserts that William
actively concealed the breach from her by describing an account
that contained the withdrawn funds as a “personal account.”
Even if this were sufficient to raise a fair inference of active
concealment (which we doubt), Leckey’s own deposition
testimony is fatal: she admitted to knowing that William
habitually took money out of the Profit Sharing Trust for living
expenses as early as 1987. Thus, her own admission establishes
that she knew money was leaving the Trust in a form other than
a qualified annuity by that time. The limitations period, then,
expired no later than 1993—before this suit was filed in 1995.

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40
IV. The § 1132(a)(3) Claim – the Pension Plan
Section 1132(a)(3) allows ERISA beneficiaries to sue “to
enjoin any act or practice which violates any provision of
[ERISA] or the terms of the plan, or to obtain other appropriate
equitable relief to redress such violations or to enforce any
provisions of [ERISA] or the terms of the plan” (internal
subparagraph and clause divisions omitted). Here, Leckey
seeks equitable relief to redress William’s violation of ERISA
by improperly withdrawing assets from the Pension Trust. The
District Court, however, denied relief. To determine whether
this was correct, we address the following issues: (1) whether
the withdrawal violated ERISA, and (2) whether an equitable
remedy is available.
A. Whether William Violated ERISA by
Withdrawing Assets from the Pension Trust
Finding a violation of ERISA is a prerequisite to
awarding relief under § 1132(a)(3). The parties agree that the
Pension Plan is subject to the qualified annuity requirement of
§ 1055. In its summary judgment order, the District Court
recited as undisputed facts:
In January 1992, W. Knapp transferred all
of the funds from the AmCarb Pension Plan into
a brokerage account in his name only. E. Knapp
never consented to such transfer. In May 1992,

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41
W. Knapp transferred approximately $10,386,
representing the amount of benefits due J.
Leckey, back into the AmCarb Pension Plan’s
bank account. J. Leckey was subsequently paid
that amount. The balance of the AmCarb
Pension Plan withdrawals, approximately
$61,614, remained in W. Knapp’s personal
brokerage account until his death in February
1993. Under the terms of the AmCarb Pension
Plan, any balance in W. Knapp’s pension
account at the time of his death was to be
distributed to his spouse, E. Knapp.
Leckey I, at 5–6. Thus, it is undisputed that William transferred
money out of the Pension Trust without complying with those
requirements.
These findings appear sufficient to establish an ERISA
violation, but one of the District Court’s conclusions at trial
complicates the issue. First, it stated in a footnote that it “finds
no evidence of bad faith by [William] Knapp in the termination
of, and distribution of assets from, the AmCarb Pension Plan.”
Leckey II, at 14 n.7. This relates back to the Court’s conclusion
that, “[i]n order to succeed on [the] breach of fiduciary duty
[§ 1132(a)(2)] claims, Plaintiff must prove that Knapp failed to
follow the terms of the plan in bad faith.” Id. at 12 (citing
Seborowski v. Pittsburgh Press Co., 188 F.3d 163, 170 (3d Cir.
1999)). It is true that making out a valid claim under

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13 In Varity Corp. v. Howe, 516 U.S. 489, 510 (1996), the
Supreme Court noted that § 1132(a)(3)’s language is broad
enough to cover violations of any of ERISA’s provisions. Id.
42
§ 1132(a)(2) requires proving a breach of fiduciary duty, which,
in certain circumstances, requires a showing of fault (negligence
or bad faith). See Part III.B, supra. But this claim is brought
under § 1132(a)(3), and making out such a claim does not
require bad faith; it merely requires a violation of ERISA.13
Thus, the District Court’s conclusion that William did not act in
bad faith is not relevant to this claim. All that matters is the
District Court’s conclusion on summary judgment that
William’s withdrawal from the Pension Plan violated ERISA.
See Leckey I, at 22.
B. Whether an Appropriate Equitable Remedy Is
Available
Despite finding a violation of ERISA, the District Court
did not order relief on Leckey’s § 1132(a)(3) claim. The two
reasons it gave were a lack of bad faith, which the previous
section has explained is not relevant, and a lack of “evidence
that the pension plan suffered any loss.” Leckey II, at 14. But
§ 1132(a)(3) actions are individual actions, not actions on behalf
of the plan. See Varity Corp., 516 U.S. at 510. Hence, the
§ 1132(a)(2) requirement of showing loss to the plan does not
apply. Id.

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43
The real impediment to awarding relief under §
1132(a)(3) is that only traditional equitable remedies are
available. See Mertens v. Hewitt Assocs., 508 U.S. 248, 256
(1993); accord Great-West, 534 U.S. at 209–10. Legal
remedies like money damages—and even legal restitution—are
not allowed. Great-West, 534 U.S. at 213. Thus, we can only
accord Leckey relief if she has properly requested a remedy
traditionally available in equity.
In her complaint, Leckey requested that the District
Court “[g]rant mandatory injunctive relief directing that the
defendant Administrators and Trustees transfer to [Leckey] all
assets which were wrongfully distributed from the AmCarb
Pension Plan, together with interest thereon.” App. at 95.
While styled as a request for injunctive relief, it is clear from the
language that Leckey requested a restitutionary remedy; that is,
she asked the Court to disgorge assets rightfully hers.
According to the Supreme Court, not all restitutionary
remedies were traditionally available in equity; rather equity
would restore only “money or property identified as belonging
in good conscience to the plaintiff [that] could be easily traced
to particular funds or property in the defendant’s possession.”
Great-West, 534 at 213 (citing 1 D OBBS , L AW OF R EMEDIES
§ 4.3(1), at 587–88; R ESTATEMENT (F IRST) OF R ESTITUTION
§ 160 cmt. a; 1 G. P ALMER, L AW OF R ESTITUTION §§ 1.4, 3.7
(1978)). Here, Leckey alleges that the funds wrongfully
withdrawn from the Pension Trust were deposited in a Charles

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Schwab brokerage account that is currently an asset of the
William’s estate (and thus under the control of the nominal
defendants). The Residual Beneficiaries admit that the account
is an asset of the estate. App. at 1082. Because some of the
disputed assets are in an intact, traceable fund, equitable relief
in the form of a constructive trust is available. RESTATEMENT
(F IRST) OF R ESTITUTION § 160; see also Skretvedt v. E.I.
DuPont De Nemours, 372 F.3d 193, 213 (3d Cir. 2004). The
details, however, we leave for the District Court to determine on
remand in accordance with common-law tracing rules.
It is difficult to determine the precise grounds for the
District Court’s refusal to accord Leckey relief for William’s
violation of the qualified annuity requirement imposed on the
Pension Plan, but the Residual Beneficiaries argue that one of
them (in addition to those already discussed) was its finding that
neither Leckey nor Evelyn was damaged by William’s breaches
of duty. Indeed, the District Court did enter a blanket finding of
fact that “[t]here is no evidence that Evelyn Knapp . . . was
harmed by any alleged breach of fiduciary duties on the part of
her husband.” Leckey II, at 11. With regard to the Pension
Plan, this finding is clearly erroneous. The evidence indicates
(and, indeed, no one disputes) that the money from the Pension
Trust went into William’s personal brokerage account, where it
stayed until he died. Upon his death, the account became an
asset of his estate, and nominal defendant Stefano himself
testified that Evelyn received nothing from that account after
William’s death. App. at 1082. Because ERISA required that

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the Pension Trust money be paid in the form of a qualified
annuity from which she would have benefitted, she was
obviously damaged by William’s transfer of the funds to a
source from which she received nothing. While declaring a
finding of the District Court clearly erroneous is not something
we take lightly, we see nothing in the record supporting its
assertion that Evelyn was not damaged.
V. Conclusion
We affirm the District Court’s grant of summary
judgment on the issue of the 1985 transfer. We vacate its entry
of judgment in favor of the Residual Beneficiaries on the
remainder of the § 1132(a)(2) claim and remand for further
proceedings. The key issue on remand is factual: whether the
plan instrument in force contained a qualified annuity
requirement. If not, the claim fails. If so, the Court will have
to determine the damages.
We also vacate the District Court’s entry of judgment in
favor of the Residual Beneficiaries on the § 1132(a)(3) claim
and remand for further proceedings. Because an ERISA
violation is established (and a finding of bad faith is not
required), the only remaining issue is the imposition of an
appropriate equitable remedy, which we leave to the District
Court consistent with our discussion in Part IV of this opinion.
On both claims, we leave open all issues not decided in

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this opinion, including whether any set-off or contribution
against Leckey is appropriate given her position as co-trustee.

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