Free Order on Motion for Attorney Fees - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 vs. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CHARLES M. BREWER, Ltd. Profit Sharing Plan and Trust, a retirement plan; CHARLES M. BREWER, Ltd. Restated Pension Plan, a retirement plan; and CHARLES M. BREWER, Defendants. Currently before the Court are: (1) Plaintiff's motion for reconsideration of the Court's August 29, 2006 Findings of Fact & Conclusions of Law; and (2) Defendants' motion for attorney's fees pursuant to ERISA § 502(g)(1), 29 U.S.C. § 1132(g)(1) and Local Rule 54.2. I. Motion for Reconsideration Having reviewed and considered the Plaintiff's motion for reconsideration, and finding no cause to alter the Court's Findings of Fact & Conclusions of Law as to liability, the motion is DENIED in all respects except as to the award of costs to Defendants. The motion for reconsideration is GRANTED as to the award of costs. The awarding of costs is left to the sound discretion of the court. See 29 U.S.C. § 1132(g)(1) ("the court in its discretion may allow a reasonable attorney's fee and costs of action to either party"). This Court determined, as detailed in the Findings of Fact & Conclusions of Law, that Plaintiff had been underpaid benefits in excess of $200,000 at the time he filed his complaint. However, the Court also found that Plaintiff was not entitled to 1
CIV 02-2218

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

STUART J. REILLY, Plaintiff,

CASE NO. CIV. 02-2218-PHX-BTM ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR RECONSIDERATION AND DENYING DEFENDANTS' MOTION FOR ATTORNEY'S FEES

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any further benefits after Defendants made their second "make-up" payment to him on May 13, 2004 and, in fact, he had been overpaid by approximately $47,000. Thus, Plaintiff's continuation of the litigation beyond that point was unnecessary and the ultimate vindication of Defendants' position in the Court's rulings would support the awarding of costs to Defendants. However, Defendants are not entitled to costs expended prior to their

deliverance of the required payments to Plaintiff and there is good reason to award Plaintiff his costs of litigation for the period up until May 13, 2004. Plaintiff's prosecution of his claim successfully resulted in his receiving large, additional sums. Plaintiff's claim to costs for the period until he received full payment are buttressed by the fact that costs have been awarded to a plan beneficiary against whom summary judgment was entered when such judgment only became appropriate once the plan performed the actions requested in the beneficiary's complaint. See, e.g., Boyadjian v. CIGNA Companies, 973 F.Supp. 500, 504 (D.N.J. 1997). As this Court has determined that both Plaintiff and Defendants were successful in part in the litigation, and costs could potentially be awarded to both parties for differing periods, no award of costs is appropriate in this case. The Court exercises its discretion in determining that neither party can be deemed to have sufficiently prevailed in the entirety of the litigation so as to warrant an award of costs in this matter. Accordingly, upon

reconsideration, this Court's prior award of costs to Defendants is vacated. II. Motion for Attorney's Fees The Court DENIES Defendants' motion for attorney's fees entirely. The awarding of attorney's fees, like costs, is left to the discretion of the court. See 29 U.S.C. § 1132(g)(1). As is explained more fully below, this Court, after consideration of the factors specified in Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir. 1980), finds that no award of fees is appropriate in this case. To begin, this Court is cautioned by the Ninth Circuit's admonition that: "As a general rule, ERISA employee plaintiffs should be entitled to a reasonable attorney's fee if they succeed on any significant issue in litigation which achieves some of the benefit the

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parties sought in bringing suit." Smith v. Cmta-Iam Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984) (citation omitted). Plaintiff's suit did achieve the payment of over $200,000 in unpaid benefits. While these payments were made voluntarily by Defendants almost two years before trial, and thus Defendants could be seen as a prevailing party in the litigation from that point forward, awarding Defendants attorney's fees is not appropriate in this case. ERISA's purposes would not be furthered by a judgment requiring a plan beneficiary, who correctly determined that his benefits were underpaid at the time of his filing suit, to cover the plan's attorney's fees when he continued to push his case beyond the point at which he received the payment which the Court, after a full trial, ultimately determined was due to him. See Smith, 746 F.2d at 589 ("a district court considering a motion for attorney's fees under ERISA should apply its discretion consistent with the purposes of ERISA, those purposes being to protect employee rights and to secure effective access to federal courts"). Moreover, as was acknowledged by counsel for Defendants in his declaration in support of Defendants' motion for attorney's fees, "ERISA has often been described as one of the most complex statute[s] passed by Congress." Decl. of Michael A. Vanic at ¶ 12. While Plaintiff ultimately did not prevail in pursuing this action beyond May of 2004, his arguments, especially concerning the effect of Alternative II-D, are not considered specious given the complicated nature of the law involved. Thus, Plaintiff's continued litigation should not be deemed to have been "bad faith" conduct and he should not be

24 25 26 27 28 punished by requiring him to pay his opponent's attorney's fees. Accord Corder v. Howard Johnson & Co., 53 F.3d 225, 231 (9th Cir. 1994) ("We have frequently expressed our disfavor of awards of attorney's fees against individual ERISA plaintiffs who seek pension benefits to which they believe they are entitled." (citation omitted)). 3
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The remaining Hummell factors do not overwhelmingly favor one side or the other. For instance, it is unclear whether Plaintiff, even though he is a longtime practicing attorney who sold his Arizona home for $1.55 million in May 2005, could satisfy an award of attorney's fees in excess of $600,000. In addition, considering the error in plan benefit calculations that Plaintiff's suit revealed and the attendant increase in the benefit payout to at least one other plan beneficiary, it is not clear that this Court would wish to deter similar conduct in the future. Finally, while Defendants can rightfully claim that an assessment of the relative merits of the parties' positions favors an award of fees, as Defendants prevailed on all issues at both summary judgment and trial, the Court already explained above that Plaintiff's position was not frivolous. Accordingly, the Court has considered all of the Hummell factors and determined that Defendants' motion for attorney's fees should be denied. Conclusion Plaintiff's motion for reconsideration [Doc. #309] is GRANTED IN PART AND

17 18 19 20 21 22 23 24 25 26 27 28 Hon. Barry Ted Moskowitz United States District Judge 4
CIV 02-2218

DENIED IN PART. The award of costs to Defendants in the judgment is vacated. The motion is denied in all other respects. Defendants' motion for attorney's fees [Doc. #304] is DENIED.

IT IS SO ORDERED. DATED: November 9, 2006

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