UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RAYMOND J. SWEENEY, on behalf of
himself; RISK ENTERPRISE
MANAGEMENT LIMITED, formerly
known as The Home Insurance
Company,
Plaintiffs-Appellants,

v.

ARTHUR R. MOORE; ALAN J.
CHERMAK; ROBERT D. CUSTER;
                                   No. 96-1699
ROBERT J. FANNING; CLINTON O.
GOWAN, JR.; MATTHEW B.
HERNANDEZ; MARC E. LEBLANC;
CARL A. MOORE; RONALD J.
PALMERICK; BRUCE J. STOCKWELL;
SHEET METAL WORKERS NATIONAL
PENSION FUND,
Defendants-Appellees.

SECRETARY OF LABOR,
Amicus Curiae.
RAYMOND J. SWEENEY, on behalf of
himself; RISK ENTERPRISE
MANAGEMENT LIMITED, formerly
known as The Home Insurance
Company,
Plaintiffs-Appellees,

v.

ARTHUR R. MOORE; ALAN J.
CHERMAK; ROBERT D. CUSTER;
                                                               No. 96-1732
ROBERT J. FANNING; CLINTON O.
GOWAN, JR.; MATTHEW B.
HERNANDEZ; MARC E. LEBLANC;
CARL A. MOORE; RONALD J.
PALMERICK; BRUCE J. STOCKWELL;
SHEET METAL WORKERS NATIONAL
PENSION FUND,
Defendants-Appellants.

SECRETARY OF LABOR,
Amicus Curiae.

Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonie M. Brinkema, District Judge.
(CA-96-140-A)

Argued: May 6, 1997

Decided: July 18, 1997

Before HAMILTON and MOTZ, Circuit Judges, and
LEGG, United States District Judge for the
District of Maryland, sitting by designation.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: James J. McGuire, MAYER, BROWN & PLATT, New
York, New York, for Appellants. William W. Carrier III, TYDINGS
& ROSENBERG, L.L.P., Baltimore, Maryland, for Appellees. Eliza-
beth Hopkins, UNITED STATES DEPARTMENT OF LABOR,
Washington, D.C., for Amicus Curiae. ON BRIEF: Nicholas W.
Lobenthal, MAYER, BROWN & PLATT, New York, New York, for
Appellants. J. Hardin Marion, Lawrence J. Quinn, Jennifer C.
Holmes, TYDINGS & ROSENBERG, L.L.P., Baltimore, Maryland,
for Appellees. J. Davitt McAteer, Acting Solicitor of Labor, Allen H.
Feldman, Associate Solicitor for Special Appellate and Supreme
Court Litigation, UNITED STATES DEPARTMENT OF LABOR,
Washington, D.C., for Amicus Curiae.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

These appeals were taken from a Final Order issued by the United
States District Court for the Eastern District of Virginia on April 9,
1996, denying Raymond J. Sweeney's motion for summary judgment
and granting defendants' motion to dismiss. The trial court dismissed
Counts I, II, and III of Mr. Sweeney's Complaint without prejudice,
and it dismissed Counts IV, V, and VI with prejudice.

Mr. Sweeney filed an appeal on behalf of himself and his insurer,
Risk Enterprise Management, Ltd. In his appeal, Mr. Sweeney con-
tends that the trial court erred by holding that he is not a fiduciary of
the Sheet Metal Workers' National Pension Fund ("Fund") and, there-
fore, not entitled to reimbursement of attorney's fees from the Fund.

                     3
Defendants filed a cross-appeal, contending that all claims should
have been dismissed with prejudice.1

I.

This action arose from Mr. Sweeney's representation, in the late
1980s and early 1990s, of the Fund, which is an employee benefit
plan regulated by the Employee Retirement Income Security Act
("ERISA"), 29 U.S.C. § 1001 et seq. During that period, Fund chair-
man Edward J. Carlough, now deceased, squandered millions of Fund
dollars bankrolling an extravagant personal lifestyle for himself and
his girlfriend. Mr. Sweeney, Carlough's nephew, served as counsel to
the Fund and to the two trustee committees that, inter alia, purchased
a mansion and two private airplanes for Mr. Carlough's use. After Mr.
Carlough's questionable expenditures were exposed, participants and
trustees of the Fund filed lawsuits against several of the Fund's offi-
cials and attorneys, including Mr. Sweeney, to recover losses associ-
ated with these purchases.2

In the first lawsuit, Loonie v. Carlough et al. , Civil Action No. 93-
1569A (E.D.Va.), a participant -- on behalf of the Fund -- sued Mr.
Sweeney for breaching his alleged fiduciary duties to the Fund. The
district court dismissed the action, finding: (i) that Mr. Sweeney was
not a fiduciary, and (ii) that ERISA imposed no liability on non-
fiduciaries. No appeal was taken.

In the second suit, Custer v. Sweeney, et al. , Civil Action No. 94-
910A (E.D.Va.), a trustee -- again on behalf of the Fund -- sued Mr.
Sweeney alleging breach of fiduciary duty. On September 30, 1994,
_________________________________________________________________
1 The trial court dismissed Counts I, II, and III without prejudice,
allowing Mr. Sweeney to refile only if this Court, in the related case of
Custer v. Sweeney, et al., Civil Action No. 94-910A (E.D.Va.), were to
reverse the trial court and hold that Mr. Sweeney was a de facto fidu-
ciary. Because this Court upheld the trial court's finding that Mr.
Sweeney was not a fiduciary, Custer, 89 F.3d 1156 (4th Cir. 1996), this
contingency can never come to pass. Accordingly, the basis for the
Fund's cross-appeal is extinguished.
2 On October 26, 1995, Mr. Sweeney pled guilty to making false state-
ments in Fund documents in connection with his representation.

                    4
the trial court granted Mr. Sweeney's motion to dismiss, finding that
"just being counsel to an ERISA plan" was not sufficient to establish
fiduciary status. (J.A. 330). The court, however, dismissed the Com-
plaint without prejudice, granting the Fund leave to amend if it could
obtain additional facts to establish that Mr. Sweeney was a fiduciary.

The Fund subsequently filed an amended complaint in Custer
alleging that Mr. Sweeney, based on his control of the questionable
purchases, was a de facto fiduciary. Again, Mr. Sweeney argued that
he was not a fiduciary. The district court dismissed the Fund's
renewed fiduciary claims with prejudice, concluding that the attempt
to plead Mr. Sweeney's fiduciary status was "at best hopeless or at
worst contrived." (J.A. 340-41). The district court's decision was
affirmed by this Court on appeal. Custer v. Sweeney, et al., 89 F.3d
1156, 1163 (4th Cir. 1996).3

In February 1996, Mr. Sweeney filed this action against the Fund
and its trustees, seeking reimbursement for and advancement of attor-
neys' fees he incurred defending himself against these lawsuits. His
six-count complaint raised two state law contract claims (Counts IV
and VI) and four ERISA claims (Counts I, II, III, and V). In the
ERISA claims, Mr. Sweeney alleges that defendants violated the
Trust Agreement setting up the Fund and that the trustees breached
a fiduciary duty owed to him.

In his motion for summary judgment, Mr. Sweeney relied upon a
clause in the Trust Agreement providing that the Fund must advance
and reimburse attorney's fees to its fiduciaries when they are sued in
their fiduciary capacities. He claimed that, because the Fund had
charged that he was a fiduciary in its prior suits, the Trust Agreement
_________________________________________________________________

3 In yet another action, Moore, et al. v. Sweeney, et al., Civil Action
No. CL941029, currently pending in the Circuit Court of the City of
Alexandria, Mr. Sweeney faces legal malpractice claims previously dis-
missed for lack of jurisdiction from the two federal cases, Loonie and
Custer. This state court action was stayed pending the outcome of the
Custer appeal, 89 F.3d 1156, and is now proceeding.

                    5
required the Fund to pay his legal bills unless and until a court deter-
mined that he had breached his fiduciary duties. 4

In response, the Fund resisted Mr. Sweeney's motion for summary
judgment and also moved to dismiss the complaint pursuant to Fed.
R. Civ. P. 12(b)(6). The Fund argued that Mr. Sweeney was not enti-
tled to attorneys' fees because, in both Loonie and Custer, Mr.
Sweeney had denied that he was a fiduciary, and the courts had
entered judgment in his favor on that basis. The Fund also argued
that, because its suits against Mr. Sweeney had alleged gross wrong-
doing, paying his legal bills would violate various provisions of
ERISA.

The district court denied Mr. Sweeney's motion for summary judg-
ment and granted the Fund's motion to dismiss. The court found that
the attorneys' fees provision of the Trust Agreement applied only to
fiduciaries. It held that the central issue was whether Mr. Sweeney
_________________________________________________________________
4 Article IV, § 3p of the Trust Agreement reads:

             As permitted by law, when and if a legal proceeding, govern-
             ment investigation or suit of any kind or nature is instituted
             against one or more fiduciaries of the Fund, including, but not
             limited to, the Trustees or the person designated by the Trustees
             as the "Fund Administrator," in their individual capacities, aris-
             ing out of their actions as fiduciaries or their service to the Fund,
             said fiduciary(ies) may hire local counsel approved by the Fund
             to represent them. In these circumstances, as permitted by law,
             said legal counsel will be compensated by the Fund for such rep-
             resentation until a final court decision or a final government
             agency decision if no court appeal is filed, finds that such fidu-
             ciary in his individual capacity (1) has breached his fiduciary
             obligations under ERISA; (2) by doing so has caused a loss to
             the Fund or has gained by use of Fund assets; and (3) is therefore
             liable in his individual capacity for damages or to return any
             profit occasioned by such breach to the Fund, complaining per-
             son, persons, entity, or entities. If the Fund expends money for
             counsel pursuant to this paragraph, and the individual liability
             described herein is so finally determined against one or more
             fiduciaries, each individual found liable shall reimburse the Fund
             for amounts expended for his counsel.

(J.A. 13).

                       6
was a fiduciary and, therefore, entitled to invoke the provision.
Because Mr. Sweeney consistently had denied fiduciary status, and
because all courts ruling on the issue uniformly had agreed with him,
the district court concluded that Mr. Sweeney was not a fiduciary and
thus not entitled to payment of his attorneys' fees.

Accordingly, the trial court dismissed without prejudice Mr.
Sweeney's ERISA claims (Counts I, II, and III), subject to this
Court's review in Custer, 89 F.3d 1156. The district court dismissed
with prejudice Mr. Sweeney's state law claims (Counts IV and VI) as
preempted by ERISA and his claim for fiduciary breach (Count V) on
the ground that the Fund owed him no fiduciary duty. Mr. Sweeney
filed this appeal to contest the dismissal of Counts I, II, and III.5

II.

In his appeal, Mr. Sweeney contends that the district court erred.
He argues that each suit filed against him was authorized by the Fund,
and that each suit alleged that he served as a fiduciary of the Fund.
Mr. Sweeney argues that, by virtue of the plain Trust language, the
Fund must pay his legal bills unless and until a judicial finding is
made that he was engaged in wrongdoing.6
_________________________________________________________________
5 A district court's dismissal for failure to state a claim upon which
relief may be granted is reviewed de novo. Randall v. United States, 30
F.3d 518, 522 (4th Cir. 1994) (citing Schatz v. Rosenberg, 943 F.2d 485,
489 (4th Cir. 1991), cert. denied, 112 S. Ct. 1475 (1992)), cert. denied,
115 S.Ct. 1956 (1995).
6 To support his argument, Mr. Sweeney argues by analogy from liabil-
ity insurance cases. Insurance policies typically include clauses requiring
the insurer to defend any lawsuit against the insured that is within the
scope of the policy. Generally, the insurer's "duty to defend" is triggered
by the facial allegations of the complaint rather than the insurer's assess-
ment of the underlying facts. See Jenkins v. Montgomery Indus., Inc., 77
F.2d 740, 743-44 (4th Cir. 1996); Phoenix Mut. Life Ins. Co. v. Adams,
30 F.3d 554, 560-61 (4th Cir. 1994); Singer v. Black & Decker Corp.,
964 F.2d 1449, 1452-53 (4th Cir. 1992); Provident Life & Accident Ins.
Co. v. Waller, 906 F.2d 985, 992-94 (4th Cir.), cert. denied, 498 U.S. 982
(1990). By analogy, Mr. Sweeney contends that the Fund is obliged to
pay his legal bills because, in each of its prior complaints, the Fund
alleged that he was a fiduciary.

                    7
Mr. Sweeney does not dispute that the Trust Agreement limits
advancement and reimbursement to fiduciaries. As plainly stated in
section 3p of the Agreement, when a suit is instituted "against one or
more fiduciaries of the Fund . . . arising out of their actions as fidu-
ciaries . . . said fiduciary(ies)" may be reimbursed for legal expenses.
(J.A. 13). As a threshold matter, therefore, this Court must determine
whether Mr. Sweeney is a fiduciary.

Mr. Sweeney contends that the Fund should be bound by its
repeated allegations that he is a fiduciary. The Court is unpersuaded
by this argument. First, although in prior cases the Fund alleged that
Mr. Sweeney was a fiduciary, he repeatedly denied this categoriza-
tion. Second, even here, Mr. Sweeney's own complaint never alleges
that he is a fiduciary. Third, the district and appellate courts consider-
ing the issue in Loonie and Custer uniformly concluded that Mr.
Sweeney was not a fiduciary, entering judgment in his favor on that
basis. Mr. Sweeney cannot deny that he is a fiduciary for purposes of
liability yet now contend that he is a fiduciary for purposes of reim-
bursement. In sum, the Court finds that Mr. Sweeney has not met the
threshold requirement for reimbursement and advancement of attor-
ney's fees under the Trust Agreement.

Moreover, denying advancement does not threaten the underlying
goals of ERISA. The Court disagrees with Mr. Sweeney's contention
that a denial will encourage wasteful litigation and will discourage
qualified individuals from providing professional services to pension
plans. Mr. Sweeney was compensated for the legal services he pro-
vided to the Fund. There is no shortage of attorneys willing to per-
form this kind of legal work. Typically, professionals such as Mr.
_________________________________________________________________
The Court finds this case law inapplicable in the ERISA context. The
relationship between an insurer and insured is strikingly different from
that of a Fund and its fiduciary. In the insurance context, the duty to
defend arises in a private contract between the parties. Mr. Sweeney,
however, was neither a party nor a third-party beneficiary to the Trust
Agreement. Moreover, insurers are not subject to the complex federal
regulations that govern pension funds, such as the duties to conserve plan
assets, to prevent waste, and to limit expenditures to reasonable and pru-
dent activities that are in the best interest of plan participants.

                     8
Sweeney can protect themselves from malpractice-type charges by
purchasing professional liability insurance. Section 3p of the Trust
Agreement was intended to protect fiduciaries such as trustees who
are not compensated for their services.

Accordingly, this Court concludes that the district court did not err
in finding that Mr. Sweeney was not a fiduciary and, therefore, was
not entitled to reimbursement or advancement of attorneys' fees under
the Trust Agreement.

III.

For the foregoing reasons, we affirm the judgment of the district
court.

AFFIRMED

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