Hess v. Reg-Ellen Machine Tool Corp.

367 F. App'x 687
CourtCourt of Appeals for the Seventh Circuit
DecidedMarch 9, 2010
DocketNo. 09-3394
StatusPublished

This text of 367 F. App'x 687 (Hess v. Reg-Ellen Machine Tool Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hess v. Reg-Ellen Machine Tool Corp., 367 F. App'x 687 (7th Cir. 2010).

Opinion

ORDER

This is the fourth lawsuit brought in federal court by Michael Havrilesko on behalf of his clients, John and James Hess, against-Reg-Ellen Machine Tool Corporation and its Employee Stock Ownership Plan (ESOP) arising out of changes in the value of their retirement accounts. After prevailing yet again on summary judgment, the defendants were awarded attorneys’ fees. Havrilesko now contests that fee award. We affirm.

In 2000 and 2002, the Hesses, former employees of Reg-Ellen, sued Reg-Ellen and its ESOP claiming that they ignored the Hesses’ investment requests, thereby violating the plan and the Employee Retirement and Income Security Act (“ERISA”). See 29 U.S.C. § 1132(a)(1)(B). Those two suits were consolidated into a single case. The district court granted summary judgment for the defendants, concluding that the defendants’ actions were not arbitrary or capricious and thus in accord with the terms of the plan. We affirmed. Hess v. Reg-Ellen Mach. Tool Corp. (Hess I), 423 F.3d 653, 666 (7th Cir.2005). The Hesses sued the company and the plan again, claiming this time that the defendants improperly denied the Hesses’ requests to rollover their accounts into a new plan, to segregate and liquidate their accounts, and to diversify their investments. The district court granted summary judgment for the defendants, and we affirmed again, stating, “We trust that this is the last time that we, or any other court, will be seeing this case: two lawsuits are enough.” Hess v. Reg-Ellen Mach. Tool Corp. Employee Stock Ownership Plan (Hess II), 502 F.3d 725, 730 (7th Cir .2007).

But we spoke too soon. Less than a month after arguing Hess II in our court, the plaintiffs filed another suit asserting that the defendants’ denial of their diversification and segregation requests constituted a breach of their fiduciary duty. The district court granted summary judgment for the defendants because res judicata barred the Hesses’ claim. It also ruled that even if it addressed the merits, their claim failed.

The district court next granted the defendants’ request for $46,054.70 in attorneys’ fees incurred after Hess II, see N.D. [690]*690III. R. 54.3, to be split equally by the Hesses and their attorney, Havrilesko. The court concluded fees were proper under 29 U.S.C. § 1132(g)(1): the Hesses’ claim was not substantially justified because it was barred by res judicata; it was not maintained in good faith because the Hesses pressed on with this suit in spite of our warning in Hess II; and no special circumstances made an award of fees unjust. Additionally, the court concluded fees were proper under 28 U.S.C. § 1927 because the Hesses’ attorney multiplied proceedings unreasonably and vexatiously.

ERISA authorizes the award of reasonable attorneys’ fees to the prevailing party and we recognize a modest, rebutta-ble presumption in favor of awarding these fees. See 29 U.S.C. § 1132(g)(1); Laborers’ Pension Fund, v. Lay-Com, Inc., 580 F.3d 602, 615 (7th Cir.2009); Herman v. Central States, Se. & Sw. Areas Pension Fund, 423 F.3d 684, 695-96 (7th Cir.2005). A party is entitled to attorneys’ fees unless the loser had “substantial justification” in bringing suit. See Sullivan v. William A. Randolph, Inc., 504 F.3d 665, 672 (7th Cir.2007). This means that the losing party’s position is more than nonfrivolous, though less than meritorious. Herman, 423 F.3d at 696; Harris Trust & Sav. Bank v. Provident Life & Accident Ins. Co., 57 F.3d 608, 617 n. 4 (7th Cir.1995).

? urges us to review the fee award de novo based on his belief that “the standard of review for a district court’s findings in a fee petition case should be the same as that for summary judgment.” It’s not. We review a grant of attorneys’ fees under both 29 U.S.C. § 1132(g)(1) and under 28 U.S.C. § 1927 for an abuse of discretion. See Laborers’ Pension Fund, 580 F.3d at 615 (29 U.S.C. § 1132(g)(1)); Dal Pozzo v. Basic Mach. Co., 463 F.3d 609, 614 (7th Cir.2006) (28 U.S.C. § 1927). And we’ve explained why: the district court is in a superior position to understand the litigation, and we want to avoid excessive intrusion into what are essentially factual matters. See Robinson v. City of Harvey, 489 F.3d 864, 872 (7th Cir.2007); Divane v. Krull Elec. Co., 319 F.3d 307, 314 (7th Cir.2003).

[4] Havrilesko contends that he was substantially justified in bringing the current case because our decision in Harzewski v. Guidant Corp., 489 F.3d 799, 806 (7th Cir.2007), held that a former pension plan participant may sue a plan administrator for breach of fiduciary duty. But just as nothing prohibited the plaintiffs in Harzewski from bringing their fiduciary-duty claims under our pre-Harzewski case law, nothing barred the Hesses from doing so in their earlier lawsuits. Because they could have brought this claim earlier, res judicata bars it. See Hicks v. Midwest Transit, Inc., 479 F.3d 468, 471 (7th Cir. 2007); Simon v. Allstate Employee Group Med. Plan, 263 F.3d 656, 658 (7th Cir. 2001); 1901 Corp. v. Town of Cicero, 220 F.3d 522, 529 (7th Cir.2000).

Havrilesko next contends that because he supplied an undisputed affidavit asserting that the defendants told him he that could bring “additional” claims, he created a genuine issue whether the defendants were “equitably estopped” from raising the res judicata defense. As the district court correctly concluded, this argument was frivolous because this lawsuit contained no “additional” claims. A “claim” consists of the underlying factual events rather than the legal theories advanced. Alvear-Velez v.

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Bluebook (online)
367 F. App'x 687, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hess-v-reg-ellen-machine-tool-corp-ca7-2010.