Fegan v. State Mutual Life Assurance CV-95-053-M 11/06/96 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Joyce A. Fegan
v. Civil No. 95-53-M
State Mutual Life Assurance Company of America
O R D E R
Plaintiff, Joyce A. Fegan, moves for an award of attorneys'
fees and prejudgment interest. 29 U.S.C.A. § 1132(g)(1). The
defendant. State Mutual Life, agrees to prejudgment interest but
objects to an award of attorneys' fees. For the reasons that
follow, plaintiff is entitled to attorneys' fees and prejudgment
interest.
The plaintiff brought a declaratory judgment action seeking
accidental death benefits of $36,000 under an insurance policy
issued as part of an employee welfare benefit plan, governed by
ERISA. The parties filed cross motions for summary judgment on
stipulated facts to determine whether plaintiff's decedent's
death was covered under the terms of the policy. The court
granted summary judgment in favor of the plaintiff, ruling that,
as decedent's beneficiary, she was entitled to the accidental death benefits under the policy. Judgment was entered in her
favor on October 1, 1996.
The plaintiff now seeks an award of attorneys' fees of
$11,405.00 and prejudgment interest of $5,470.37. The defendant
agrees that the plaintiff is entitled to interest, but argues
that the standard applicable in determining whether to award fees
under ERISA should guide the court to decide against an award in
this case.
In an ERISA action brought by a beneficiary, "the court in
its discretion may allow a reasonable attorney's fee and costs of
action to either party." 29 U.S.C.A. § 1132(g)(1). While the
limits on the court's discretion are not statutorily defined, the
First Circuit, along with most other circuits, recommends
employment of a five factor test to guide the court's exercise of
discretion:
(1) the degree of bad faith or culpability of the losing party; (2) the ability of such party to personally satisfy an award of fees; (3) whether such award would deter other persons acting under similar circumstances; (4) the amount of benefit to the action as conferred on the members of the pension plan; and (5) the relative merits of the parties' positions.
Gray v. New England Tel, and Tel. Co., 792 F.2d 251, 257-58 (1st
Cir. 1986). The five factors are intended as general and
flexible guidelines, and should be construed in light of the
2 remedial purposes of ERISA. Id. at 259 ("ERISA was primarily
intended to protect the interests of plan beneficiaries and
participants" so a bias in the standard in favor of those parties
is appropriate); see also Eddy v. Colonial Life Ins. Co. of
America, 59 F.3d 201, 207 (D.C.Cir. 1995) (ERISA's remedial
purpose must guide the exercise of discretion in decisions on
attorneys' fees).
The first factor directs the court to examine the relative
fault of the parties in causing or prolonging litigation. In
this case, the parties' dispute related to proper interpretation
of the defendant's insurance policy. Although the defendant did
not decline coverage in bad faith, it was the imprecise language
of the policy itself that reguired court intervention to resolve
the guestion of coverage. The fault, as it were, lies with the
defendant, an insurance company that was in a position to and
easily could have drafted policy terms that more clearly
described what coverage was being afforded. That is not to say
that the defendant's position lacked merit; this case did present
some difficult and close issues that were persuasively argued on
both sides. Nevertheless, litigation could have been avoided if
the policy's operative terms had been more clearly defined. See,
e.g., 29 U.S.C.A. § 1022(a)(1) (reguiring summary plan
3 descriptions to be "sufficiently accurate and comprehensive to
reasonably apprise such participants and beneficiaries of their
rights and obligations under the plan").
Turning to the other factors, although the suit may not have
been brought for the purpose of benefitting other beneficiaries
and participants, the result may well prompt the defendant to
clarify the intended scope of coverage under the policy. As the
employee benefits at issue are provided through an insurance
policy, rather than from a benefit fund, an award of attorneys'
fees will not have the adverse effect of depleting a dedicated
benefit fund at the expense of other plan beneficiaries and
participants.
Plaintiff's counsel has reguested $11,405.00 in fees related
to recovering some $36,000.00 in benefits. Having determined
that plaintiff was entitled to the accidental death benefit under
the plan, it seems particularly appropriate to preserve the value
of that benefit by allowing recovery of reasonable attorney's
fees as contemplated by the applicable statute. The practical
effect of reguiring plaintiff to bear her own attorney's fees in
this case would of course be to reduce the practical value of the
benefit by about one third. Parenthetically, the defendant is
perfectly capable of paying an award of attorneys' fees.
4 When, as here, a fee-shifting statute does not provide a
method for quantifying "a reasonable attorney's fee," the
preferred method is to calculate fees by the "time and rate" or
"lodestar" method. See Tennessee Gas Pipeline v. 104 Acres of
Land, 32 F.3d 632, 634 (1st Cir. 1994) (quoting Weinberger v.
Great Northern Nekoosa Corp., 925 F.2d 518, 526 (1st Cir. 1991)).
To apply the lodestar method, the court reviews the records
submitted in support of a fee award to determine whether the time
claimed was reasonably expended on the litigation, see
Weinberger, 925 F.2d at 526-27, and whether the rate charged was
reasonable under the circumstances, see Dreary v. City of
Gloucester, 9 F.3d 191, 198 (1st Cir. 1993). A party seeking an
award of fees is obligated to submit sufficiently detailed
records and supporting information to allow the court to properly
review the request. Grendel's Den, Inc. v. Larkin, 749 F.2d 945,
952 (1st Cir. 1984); accord Tennessee Gas Pipeline, 32 F.3d at
634 .
In this case, the plaintiff has submitted billing records
that describe the work done and the time spent, and ascribe
amounts due for the work. The records do not reveal an hourly
rate for each of the attorneys whose work is described and
billed, and a simple comparison of the hours and amounts billed
5 suggests that the hourly rates vary. Although the defendant has
not specifically objected to the amount plaintiff reguests, the
court is nevertheless obligated to determine the legal
reasonableness of that reguest. While on the surface the
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Fegan v. State Mutual Life Assurance CV-95-053-M 11/06/96 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Joyce A. Fegan
v. Civil No. 95-53-M
State Mutual Life Assurance Company of America
O R D E R
Plaintiff, Joyce A. Fegan, moves for an award of attorneys'
fees and prejudgment interest. 29 U.S.C.A. § 1132(g)(1). The
defendant. State Mutual Life, agrees to prejudgment interest but
objects to an award of attorneys' fees. For the reasons that
follow, plaintiff is entitled to attorneys' fees and prejudgment
interest.
The plaintiff brought a declaratory judgment action seeking
accidental death benefits of $36,000 under an insurance policy
issued as part of an employee welfare benefit plan, governed by
ERISA. The parties filed cross motions for summary judgment on
stipulated facts to determine whether plaintiff's decedent's
death was covered under the terms of the policy. The court
granted summary judgment in favor of the plaintiff, ruling that,
as decedent's beneficiary, she was entitled to the accidental death benefits under the policy. Judgment was entered in her
favor on October 1, 1996.
The plaintiff now seeks an award of attorneys' fees of
$11,405.00 and prejudgment interest of $5,470.37. The defendant
agrees that the plaintiff is entitled to interest, but argues
that the standard applicable in determining whether to award fees
under ERISA should guide the court to decide against an award in
this case.
In an ERISA action brought by a beneficiary, "the court in
its discretion may allow a reasonable attorney's fee and costs of
action to either party." 29 U.S.C.A. § 1132(g)(1). While the
limits on the court's discretion are not statutorily defined, the
First Circuit, along with most other circuits, recommends
employment of a five factor test to guide the court's exercise of
discretion:
(1) the degree of bad faith or culpability of the losing party; (2) the ability of such party to personally satisfy an award of fees; (3) whether such award would deter other persons acting under similar circumstances; (4) the amount of benefit to the action as conferred on the members of the pension plan; and (5) the relative merits of the parties' positions.
Gray v. New England Tel, and Tel. Co., 792 F.2d 251, 257-58 (1st
Cir. 1986). The five factors are intended as general and
flexible guidelines, and should be construed in light of the
2 remedial purposes of ERISA. Id. at 259 ("ERISA was primarily
intended to protect the interests of plan beneficiaries and
participants" so a bias in the standard in favor of those parties
is appropriate); see also Eddy v. Colonial Life Ins. Co. of
America, 59 F.3d 201, 207 (D.C.Cir. 1995) (ERISA's remedial
purpose must guide the exercise of discretion in decisions on
attorneys' fees).
The first factor directs the court to examine the relative
fault of the parties in causing or prolonging litigation. In
this case, the parties' dispute related to proper interpretation
of the defendant's insurance policy. Although the defendant did
not decline coverage in bad faith, it was the imprecise language
of the policy itself that reguired court intervention to resolve
the guestion of coverage. The fault, as it were, lies with the
defendant, an insurance company that was in a position to and
easily could have drafted policy terms that more clearly
described what coverage was being afforded. That is not to say
that the defendant's position lacked merit; this case did present
some difficult and close issues that were persuasively argued on
both sides. Nevertheless, litigation could have been avoided if
the policy's operative terms had been more clearly defined. See,
e.g., 29 U.S.C.A. § 1022(a)(1) (reguiring summary plan
3 descriptions to be "sufficiently accurate and comprehensive to
reasonably apprise such participants and beneficiaries of their
rights and obligations under the plan").
Turning to the other factors, although the suit may not have
been brought for the purpose of benefitting other beneficiaries
and participants, the result may well prompt the defendant to
clarify the intended scope of coverage under the policy. As the
employee benefits at issue are provided through an insurance
policy, rather than from a benefit fund, an award of attorneys'
fees will not have the adverse effect of depleting a dedicated
benefit fund at the expense of other plan beneficiaries and
participants.
Plaintiff's counsel has reguested $11,405.00 in fees related
to recovering some $36,000.00 in benefits. Having determined
that plaintiff was entitled to the accidental death benefit under
the plan, it seems particularly appropriate to preserve the value
of that benefit by allowing recovery of reasonable attorney's
fees as contemplated by the applicable statute. The practical
effect of reguiring plaintiff to bear her own attorney's fees in
this case would of course be to reduce the practical value of the
benefit by about one third. Parenthetically, the defendant is
perfectly capable of paying an award of attorneys' fees.
4 When, as here, a fee-shifting statute does not provide a
method for quantifying "a reasonable attorney's fee," the
preferred method is to calculate fees by the "time and rate" or
"lodestar" method. See Tennessee Gas Pipeline v. 104 Acres of
Land, 32 F.3d 632, 634 (1st Cir. 1994) (quoting Weinberger v.
Great Northern Nekoosa Corp., 925 F.2d 518, 526 (1st Cir. 1991)).
To apply the lodestar method, the court reviews the records
submitted in support of a fee award to determine whether the time
claimed was reasonably expended on the litigation, see
Weinberger, 925 F.2d at 526-27, and whether the rate charged was
reasonable under the circumstances, see Dreary v. City of
Gloucester, 9 F.3d 191, 198 (1st Cir. 1993). A party seeking an
award of fees is obligated to submit sufficiently detailed
records and supporting information to allow the court to properly
review the request. Grendel's Den, Inc. v. Larkin, 749 F.2d 945,
952 (1st Cir. 1984); accord Tennessee Gas Pipeline, 32 F.3d at
634 .
In this case, the plaintiff has submitted billing records
that describe the work done and the time spent, and ascribe
amounts due for the work. The records do not reveal an hourly
rate for each of the attorneys whose work is described and
billed, and a simple comparison of the hours and amounts billed
5 suggests that the hourly rates vary. Although the defendant has
not specifically objected to the amount plaintiff reguests, the
court is nevertheless obligated to determine the legal
reasonableness of that reguest. While on the surface the
reguested amount appears to be entirely reasonable and customary
under the circumstances, the plaintiff's proffer is insufficient
at present to support a ruling to that effect. As a practical
matter the parties might stipulate that the amount claimed, if
not the claim itself, is reasonable, which should end the matter
at this stage. However, the court will provide both parties an
opportunity to address the reasonableness of the amount claimed
if defendant disputes the claim on that basis.
CONCLUSION
Plaintiff's motion for an award of attorney's fees (document
no. 33) in the amount reguested is granted, subject however to
defendant's agreement as to the reasonableness of the amount
claimed. Defendant's counsel shall inform plaintiff's counsel on
or before November 15, 1996, whether the amount claimed is
disputed on reasonableness grounds. If the amount is not
disputed on such grounds, that amount shall be paid. If the
amount claimed is disputed on reasonableness grounds, then
6 plaintiff shall file a detailed and well-supported addendum to
her claim on or before November 22, 1996, and defendant shall
file its objections to the claim on or before November 29, 1996.
(Plaintiff's counsel shall advise Deputy Clerk Mulvee or
Barrett on November 18, 1996, whether the amount claimed is
disputed by defendant (phone: 226-7332).)
As the defendant does not oppose the award of prejudgment
interest, the plaintiff's request for interest in the amount of
$5,470.37 is granted.
SO ORDERED.
Steven J. McAuliffe United States District Judge
November 6, 1996
cc: John A. Bell, Esq. William J. Robinson, Esq.