Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan (14-723)

argument 14-723

Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan

Supreme Court of the United States 59 min 6 speakers 8 chapters transcribed 7 days ago official recording ↗

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What is the central ERISA dispute in Montanile v. Board of Trustees?

John G. Roberts 0:00

We will hear argument this morning in case fourteen seven hundred two three, Montaneo versus the Board of Trustees of the National Elevator Industry Health Benefit Plan. Mr Stress?

Paul D. Clement 0:13

Thank you, Mr Chief Justice, and may it please the Court. In this ERISA case, a fiduciary has sued a beneficiary to establish and enforce an equitable lien by agreement. As this court has repeatedly acknowledged, an equitable lien is enforceable only against specific property and its traceable product in the defendant's possession.

Elena Kagan 0:36

Mr Spears, there there's some fuzziness about the facts in this case and maybe at the outset you can clarify them. Different figures are given about how much money from this settlement Actually delivered. To your client. And also What did your client do with it? Did he put it with his general assets or did he sep keep it in a separate fund? Maybe you can

Paul D. Clement 1:12

I I want to start with what's in the record and then I want to add some color that I think will provide context. So as far as what's in the record, there was a genuine issue of dispi of material fact on how much dissipation there was. One thing that's clear from the record is that before we get to

Elena Kagan 1:26

dissipation,

Paul D. Clement 1:27

how much did he receive? Yes. So he that's clear. He received over time, after all expenses were out, about two hundred thousand dollars. I think that is clear from the record. What is also clear procedurally, and this is important, and this is page uh sixty-four of the joint appendix, is that he took the position in opposing summary judgment that he has very little of the money remaining, and he cited a declaration and an attached sheet that I admit are confusing.

Anthony M. Kennedy 1:53

And this $200,000, did he put it in a general account or was it set aside in a specific account?

Paul D. Clement 2:00

There's nothing in the record to indicate that, um, but I think as far as the rules work, it wouldn't matter because the rules for equitable lien by agreement, the tracing rules, are actually very robust, Justice Kagan. And so as equity evolved, you cannot dissipate money by putting it in its own account and spending it. Something called the lowest intermediate balance rule developed to prevent against precisely the kind of mischief that we would reason. Yeah. But

Elena Kagan 2:26

Mr Striss it does make a difference because If he just put it And say in the bank account where he had all of his other uh money. then how how could we say that he spent all of the proceeds on childcare and living expenses. If you have one mixed pot How can we say, oh yes, this came from the settlement and not from his general funds?

Paul D. Clement 2:51

It's a very fair question, Justice Ginsburg, and there there are settled tracing rules uh uh at equity and it worked as follows. If you took money and it was cash and you put it in a bank account Um what was presumed was that unless your total cash assets dipped below the amount that you got. that the spending that you did was not out of that. The creditors' rights were not impaired. So the only way we would prevail on remand, I want to be clear about the modesty of the position that we're taking here, the only way we would prevail on remand. is if he got the money and he spent it down all of his money, not just the settlement, but all of the cash that he had down below the the the amount of the settlement.

Paul D. Clement 3:36

That's why this is very important.

John G. Roberts 3:38

Well I don't know if it's the right Latin phrase or pro tanto or something. I mean you would lose i it it it doesn't have to spend it uh all the way down. Whatever is left would be subject to tracing.

Paul D. Clement 3:51

Yes, y y Mr. Chief Justice, that's correct. But the point I was trying to make is there's a big difference between the way equity worked, which was to have a a sensible rule, the lowest intermediate balance, and what I view as the extreme swollen asset theory that never was applied in equity that my friend Mr. Cottiel's advocating. Under the swollen asset theory, Um if you get new money in the future, if you spend below the lowest intermediate balance, but then you start earning income, people can come and garnish your wages. So the the point that I'm making here is that the equitable lien by agreement remedy is actually far more robust than one would think uh if one read the briefs of the other side of the