The opinion of the court was delivered by: JAMES WARE
Plaintiff, a participant in an ERISA regulated profit sharing plan, has filed suit against Great American Insurance Company, American National Fire Insurance Company and Agricultural Insurance Company ("Insurance Companies") to enforce a bond issued by these defendants. The defendant Insurance Companies seek to have this lawsuit dismissed on the ground that plaintiff lacks standing to pursue it. On October 9, 1991, the Special Master assigned to this case recommended that the motion be denied. Subsequently, defendant Insurance Companies requested this Court to review the decision of the Special Master and rule in their favor. Having reviewed the governing statutes, and for reasons discussed more fully below, the motion to dismiss is denied.
Plaintiff filed suit seeking recovery of benefits allegedly due him as a participant of a profit sharing plan ("the Plan") created by his employer, Belko Electric Corporation. Plaintiff predicates his rights on various provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq.
ERISA requires that every fiduciary of an employee benefits plan be bonded to protect the plan against losses due to fraudulent and dishonest administration of the plan. 29 U.S.C. § 1112. Fiduciaries of the Plan were bonded by defendant Insurance Companies.
Plaintiff's First Amended Complaint alleges that as a result of conduct and transactions prohibited by ERISA, assets of the Plan were divested so as to effectively deprive plaintiff of his benefits. Specifically, plaintiff alleges that when the Plan terminated, every participant in the Plan except plaintiff received full distribution. He alleges that this was a result of fraudulent conduct. Pursuant to his Third Cause of Action, plaintiff seeks to have the issues of fraudulent and dishonest conduct adjudicated and, if successful, to have insurance policy proceeds paid to the Plan. See First Amended Complaint, p.
Defendant Insurance Companies claim that plaintiff does not have standing to make a claim on bonds issued to benefit the Plan. They allege that the Plan, as the insured, is the only real party in interest who has standing to prosecute a claim on the policy. See Defendant's Points and Authorities, pp. 3-4. Plaintiff, on the other hand, contends that the ERISA statute authorizes him to prosecute such a claim. See Plaintiff's Opposition to Motion, pp. 15-22.
The issue that is raised from this motion is whether a plan participant can sue a non-fiduciary insurance company under 29 U.S.C. § 1132(a)(3)(B) to enforce and seek redress for violations of 29 U.S.C. § 1112.
As there are no cases which confront this issue, this appears to be a matter of first impression.
A. Standing to Sue Under ERISA
It is clear that Congress enacted ERISA to protect participants of employee benefit plans. One concern of Congress was that participants in employee benefit plans were being deprived of their benefits: