>US District Judge George Daniels of the US District Court for the Southern District of New York ruled that the fees paid by the New York District Council of Carpenters Pension Fund to Savasta and Company were not recoverable as disgorgement because the money did not represent identifiable union assets in Savasta’s possession. Such claims were not permitted under ERISA because disgorgement of professional fees in this case would not qualify as equitable relief, the court said.
“For restitution to lie in equity, the relief sought must be to restore to (a) plaintiff particular funds or property in the defendant’s possession, not to impose personal liability on the defendant,” Daniels wrote in his ruling. “The fees (paid to Savasta) do not amount to illegal profits or ill-gotten gains derived directly from the defendants’ alleged culpable acts. These fees were paid for services rendered by (the) defendants pursuant to their alleged agreement with the fund.”
>Daniels also ruled that the fund’s professional malpractice allegations against Savasta were filed too late and dismissed them.
>According to the ruling, the fund charged in its lawsuit that the actuary firm conspired with the fund’s former board chairman, Frederic Devine, to help Devine win changes under which the fund would provide additional benefits. “Defendants allegedly withheld appropriate and accurate information regarding the fund’s financial condition from the fund’s Board of Trustees and they advised the board that the overall condition of the fund was sound,” according to the ruling. “Specifically, defendants purportedly failed to accurately advise the board as to the impact that various benefit improvements would have upon the actuarial condition of the fund.”
>The case is New York District Council of Carpenters Pension Fund v. Savasta, S.D.N.Y., No. 99 CV 11362 (GBD), 12/27/04.