Colleen P. Lehr; Paul E, Lehr v. PERRI ELECTRIC, INC., a California Corporation;

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
COLLEEN P. LEHR; PAUL E, LEHR,
Plaintiffs-Appellants,
v.
PERRI ELECTRIC, INC., a California
Corporation; et al.,
Defendants-Appellees.
No. 19-17199
D.C. No.
2:17-cv-01188-WBS-AC
MEMORANDUM*
Appeal from the United States District Court
for the Eastern District of California
William B. Shubb, District Judge, Presiding
Argued and Submitted November 17, 2022
San Francisco, California
Before: S.R. THOMAS, BENNETT, and SUNG, Circuit Judges.
Dissent by Judge BENNETT.
Appellants Colleen and Paul Lehr appeal from the district court’s order
granting summary judgment to Appellees Frank Perri, Perri Electric, Inc. (“Perri
Electric”), the Perri Electric, Inc. Profit Sharing Plan (“the Plan”), and the Profit
FILED
JAN 3 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.

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Sharing Trust Fund, in which the court determined that Appellees lacked statutory
standing under the Employee Retirement Security Act of 1974 (“ERISA”), 29
U.S.C. §§ 1001 et seq. We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review the district court’s decision to grant summary judgment de novo. See
Desire, LLC v. Manna Textiles, Inc., 986 F.3d 1253, 1259 (9th Cir.), cert. denied,
142 S. Ct. 343 (2021) (citation omitted). We affirm. Because the parties are
familiar with the factual and procedural history of the case, we need not recount it
here.
I
The Lehrs’ central claim is that the money paid by the Trustee to Perri
Electric should have been paid to the Plan. However, the judgment in Ms. Lehr’s
criminal case ordered payment to Perri Electric, not the Plan. More importantly,
the stipulated judgment in the bankruptcy adversary proceeding directed payment
to Perri Electric. The judgment included money owed to the corporation and the
Plan. The district court correctly found no mandate, “in either the criminal case or
the bankruptcy proceeding,” requiring that the Trustee’s initial payment to Perri
Electric be remitted to the Plan.
The Lehrs argue that the corporation should have applied the initial
installment payment to the Plan. However, a debtor in bankruptcy “cannot
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designate to which liability its payments will be allocated.” United States v.
Technical Knockout Graphics, Inc. (In re Technical Knockout Graphics, Inc.), 833
F.2d 797, 802 (9th Cir. 1987); see also Gerwer v. Salzman (In re Gerwer), 353
B.R. 66, 71–72 (B.A.P. 9th Cir. 2000) (citation omitted) (noting that the creditor
can apply the payments “as it ‘sees fit,’” and that bankruptcy courts lack the
equitable power to order allocation). If the Lehrs wished to require allocation, that
provision should have been included in the stipulated bankruptcy judgment.
II
The remaining question is whether Ms. Lehr had standing as a former Plan
participant to assert a breach of fiduciary duty claim against the corporation. To
establish standing under ERISA, a former employee must make a “colorable
claim” that she is a plan participant. Leeson v. Transam. Disability Income Plan,
671 F.3d 969, 977 (9th Cir. 2012) (quoting Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 117 (1989)); see 29 U.S.C. § 1132(a)(1)(B).
Here, standing is foreclosed by our decision in Parker v. Bain, 68 F.3d 1131
(9th Cir. 1995). In Parker, we held that a plaintiff lacks standing under ERISA
where they breach their fiduciary duty to the plan by embezzling funds in excess of
their claimed account balance. 68 F.3d at 1140–41. Here, the money allegedly
owed to the Plan by Ms. Lehr far exceeds her claimed account balance. She
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attempts to distinguish Parker by asserting that the payment to Perri Electric
should eliminate the offset. However, that logic is circular because, pursuant to the
bankruptcy judgment, Perri Electric was not under an obligation to allocate the
money to the Plan. Moreover, as Appellees point out, the amount owed by Ms.
Lehr to the Plan likely far exceeds the amount paid to the corporation. Therefore,
under Parker, the district court correctly concluded that Ms. Lehr lacked standing
to assert an ERISA breach of fiduciary duty claim. We do not, of course, opine as
to whether any other Plan participant, or the Plan itself, had an ERISA cause of
action.
AFFIRMED.
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1
Kaur v. Garland, No. 19-17199
BENNETT, Circuit Judge, dissenting:
I respectfully dissent because the Lehrs have established a genuine dispute
of material fact as to whether Ms. Lehr’s restitution payment constituted a Plan
asset. Both the criminal judgment ordering restitution and subsequent bankruptcy
judgment directing payment pursuant to the criminal judgment are ambiguous as to
the intended effect of payment. In my view, a reasonable fact finder could
conclude that the restitution payment was intended to compensate the Plan rather
than Perri Electric. Moreover, by finding that the Lehrs lack statutory standing
because the restitution payment was unambiguously not a Plan asset, the majority
effectively precludes other Plan participants from challenging defendants’ use of
the restitution payment under ERISA.
The majority concludes that the restitution payment was not a Plan asset
because the criminal and bankruptcy judgments directed payment to Perri Electric
rather than the Plan. But this ignores the Lehrs’ argument that payment could have
been ordered to Perri Electric in its capacity as a fiduciary of the Plan. See 29
U.S.C. § 1002(21)(A). There is evidence in the record to support this view. Ms.
Lehr’s plea agreement states that “the parties agree that the Court may order
restitution in an amount up to $326,846, as that was the amount [Ms. Lehr]
represented was in the plan accounts when she” falsified the document at issue.
The factual basis for the plea agreement discusses only Ms. Lehr’s embezzlement
FILED
JAN 3 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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2
from the Plan—it does not discuss any money she stole directly from Perri Electric
or indirect costs to Perri Electric stemming from her criminal conduct. The district
court ordered restitution in the exact amount contemplated by the plea agreement,
$326,846, an amount based solely on Ms. Lehr’s theft from the Plan. The
bankruptcy court subsequently approved a stipulated judgment authorizing “an
interim distribution of $326,846 . . . based on the restitution awarded by the
Judgment in a Criminal Case.”
I believe a trier of fact could conclude that the purpose of the restitution
payment was to remediate Ms. Lehr’s theft from the Plan. While the designation
of Perri Electric as the payee of the restitution judgment could support that Perri
Electric was the sole intended beneficiary of the restitution payment, that does not
flow from the record as a matter of law, looking at the facts in the light most
favorable to the Lehrs. See Soc. Techs. LLC v. Apple Inc., 4 F.4th 811, 816 (9th
Cir. 2021). While both the restitution order and the bankruptcy judgment could
have mentioned the Plan and did not, so too could they have specified that the
money was going to Perri Electric for its own account. If Ms. Lehr stole only from
the company, it would not be necessary to specify that the restitution payment was
intended to compensate Perri Electric’s own account. But here she stole from both
Perri Electric and the Plan, and the theft addressed in the restitution order was from
the Plan. See 29 U.S.C. § 1002(21)(A).

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3
The majority also finds that this litigation amounts to a debtor’s attempt to
impermissibly allocate a bankruptcy payment. In re Technical Knockout Graphics,
Inc., 833 F.2d 797, 802 (9th Cir. 1987). But this conclusion assumes that the
bankruptcy judgment was meant to give Perri Electric unfettered discretion to
spend the money as it wished. If the Lehrs are correct that the bankruptcy
judgment was intended to restore monies to the Plan, the Lehrs are simply seeking
to enforce the bankruptcy judgment and not usurp Perri Electric’s supposed sole
and unfettered discretion.
Contrary to the majority’s assertion, its holding effectively deprives any Plan
participant of a cause of action to challenge the defendants’ allocation of the Lehrs’
restitution payment. If the Lehrs’ restitution payment was not a Plan asset,
defendants could not have violated any fiduciary duty in using the payment to
cover business expenses. Because the relevant provisions of ERISA only create
liability for violating fiduciary duties, innocent Plan participants are left with no
recourse against defendants under the statute. See 29 U.S.C. §§ 1104, 1109.
I agree that the Lehrs may lack statutory standing for other reasons. For
example, it is unclear under our decision in Parker v. Bain whether an embezzler
can ever restore their interest in a Plan by repaying the amount they owe. See 68
F.3d 1131, 1140-41 (9th Cir. 1995). In addition, documentary evidence in the
record does not establish either the amount of money that should have been in the

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4
Plan or the value of Ms. Lehr’s stake in the Plan. The district court declined to
address these issues below, and they may well entail other questions of fact. I
would remand for consideration of these alternative standing arguments in the first
instance.

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