District Court Defines Surcharge Broadly

A New York district court held that surcharge could include not only make-whole relief, but also consequential, exemplary, or punitive damages in limited circumstances where malice or fraud is involved. Plaintiff Janet D'Iorio alleged that Winebow breached its fiduciary duty by failing to provide an SPD and by making material misrepresentations about whether her commissions were included as income in determining LTD benefits. The court considered the extent of surcharge damages available to Plaintiff. Winebow argued that the surcharge remedy is limited to restitution, i.e., the benefit payments D'Iorio would have received had her commissions been taken into account. The district court, however, was of the view that surcharge was not limited to make-whole relief, but was a remedy that was intended to provide all manner of compensatory damages. The court thus concluded that, under a surcharge theory, D'Iorio was entitled to pursue at trial consequential damages,