Opinion
Civil Action No. 3:98-CV-0848-D
May 4, 2000
MEMORANDUM OPINION AND ORDER
Following the settlement of this ERISA action, plaintiff Alton G. Martin ("Martin") moves the court to award attorney's fees and costs against defendant Metropolitan Life Insurance Company ("MetLife"). Having considered the relevant factors, the court denies the motion for the reasons that follow.
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001-1461.
The court sets out in this memorandum opinion and order its findings of fact and conclusions of law. See Fed.R.Civ.P. 52(a).
I
Martin was an employee of Sears, Roebuck Company ("Sears") from July 1969 to November 1992 and a participant in the company's Long Term Disability Insurance Plan ("the Plan"). Sears provided Plan benefits through an insurance policy issued by MetLife.Martin alleges that he suffered from severe back, hip, and knee pain, and a heart condition known as cardiomyopathy. On October 18, 1991 Martin began receiving monthly disability payments based on a finding of "total disability" under the Plan. After reviewing Martin's on-going claim, MetLife concluded that his condition did not meet the definition of total disability. Based on its review of Martin's medical information, MetLife identified alternate occupations that Martin could perform consistent with his qualifications and physical restrictions. MetLife terminated Martin's long-term disability benefits effective November 29, 1995.
Martin sued MetLife and the Plan in November 1997, alleging violations of ERISA. The parties settled the case and the court administratively closed it in February 1999. The court filed a final judgment of dismissal in February 2000.
Martin initiated this lawsuit in the Eastern District of Texas. That court transferred the case to this forum in April 1998.
Martin states that he accepted a settlement offer that MetLife made in June 1994.
II
In most ERISA actions by a plan beneficiary, the court in its discretion may allow reasonable attorney's fees to either party. § 29 U.S.C. § 1132(g)(1); Bellaire Gen. Hosp. v. Blue Cross Blue Shield of Mich., 97 F.3d 822, 832 (5th Cir. 1996). In exercising this discretion, the court must perform a two-part analysis. First, the court determines whether the party is entitled to an award of attorney's fees in light of the relevant factors. Second, if the party is so entitled, the court calculates the proper amount of the fee award. Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1459 (5th Cir. 1995).
The court determines whether a party is entitled to attorney's fees by weighing five factors: (1) the degree of the opposing party's culpability or bad faith; (2) the ability of the opposing party to pay the fees; (3) whether an award of attorney's fees would deter other persons who will be acting under similar circumstances; (4) whether the party seeking attorney's fees sought to benefit all ERISA participants or beneficiaries or to resolve a significant legal issue; and (5) the relative merits of the parties' positions. Pitts v. American Sec. Life Ins. Co., 931 F.2d 351, 358 (5th Cir. 1991); Iron Workers Local #272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir, 1980). No single factor is decisive, and some factors may be inapplicable to a specific case, "but together they are the nuclei of concerns that a court should address in applying" ERISA. Wegner v. Standard Ins. Co., 129 F.3d 814, 821 (5th Cir. 1997) (quoting Bowen, 624 F.2d at 1266). It is an abuse of discretion to give one factor ( e.g., culpability or bad faith) dispositive weight. See Riley v. Administrator of the Supersaver 401k Capital Accumulation Plan for Emps. of Participating AMR Corp. Subsidiaries, ___F.3d ___, ___, 2000 WL 381448, at *2 (5th Cir. May 1, 2000) (dicta). The court must also consider any relevant factors that are not explicitly enumerated in the five-part formulation. Id. In Riley, a decision filed on May 1, 2000 after the conclusion of briefing on Martin's motion, the panel wrote:
The discussion of attorney's fees in Riley is dicta because the Plan did not appeal the district court's judgment denying a fee award. See id. at *1 ("As the Plan did not appeal or brief the question of its entitlement to attorneys' fees under ERISA, that issue is not before us."); see id. at *2 (noting that attorney's fees discussion is dicta).
Albeit dicta under these circumstances, we are constrained to write and publish this analysis to dispel any mistaken belief among the courts of this circuit or potential ERISA litigants that alone the factor of culpability and bad faith somehow supplants the other Bowen factors and conclusively determines the outcome of the attorneys' fees issue. To the contrary, Bowen makes clear that (1) the list of five factors to be considered in an ERISA § 502(g) attorneys' fees case is a non-exhaustive, ejusdem generis list ("[A] court should consider such factors as the following [five factors]. . . . [I]n any individual case, however, other considerations may be relevant as well.") and (2) none among the five listed factors is entitled to greater weight — much less unilaterally determinative powers — than any of the others ("No one of these factors is necessarily decisive, and some may not be apropos in a given case, but together they are the nuclei of concerns that a court should address in applying Section 502(g)."). In sum, when considering a request for attorneys' fees under § 502(g) of ERISA, the court should consider and explicate the five Bowen factors, and should do so without giving predominance or preclusive effect to any one of them; and the court should also consider relevant non- Bowen factors, if there are any.Id. at *2 (footnote omitted).
III A
The court first considers the degree of the opposing party's culpability or bad faith. A party's conduct may rise to the level of bad faith for egregious conduct, such as the pursuit of frivolous claims or breach of fiduciary duty. See, e.g., Freedman v. Texaco Marine Servs., Inc., 882 F. Supp. 580, 584-585 (E.D. Tex. 1995) (holding that defendant's "indefensible" interpretation of plan could possibly constitute bad faith); Wright v. Nimmons, 641 F. Supp. 1391, 1408 (S.D. Tex. 1986) (stating that defendant who breached fiduciary duty acted in bad faith). A party may still be culpable for conduct that does not rise to the level of bad faith. See, e.g., Dial v. NFL Player Supp. Disability Plan, 174 F.3d 606, 614 (5th Cir. 1999) ("[A]lthough the Court stops short of accusing [defendant] of acting in bad faith, [it] is clearly responsible for its erroneous interpretation that was in direct conflict with the plain meaning of the settlement agreement."); Wegner, 129 F.3d at 821 (affirming district court's holding that, although not bad faith, defendant's frivolous justification weighed in favor of awarding attorney's fees); Texas Commerce Bancshares, Inc. v. Barnes, 798 F. Supp. 1286, 1289 (W.D. Tex. 1992) ("though not necessarily bad faith," defendants' culpability for actions significant).
Martin has failed to establish that MetLife acted in bad faith. Rather, his evidence indicates that MetLife based its decision on medical opinions and information available at the time it decided to terminate Martin's benefits. See P. Br. at 2-3. The letters that plaintiff relies upon to show bad faith are dated after the Administrator's denial of benefits in December 1995. See PXS B, C, and D. The court holds that MetLife's position in the litigation was not groundless and that it did not act in bad faith. See Ramsey v. Colonial Life Ins. Co., 12 F.3d 472, 480 (5th Cir. 1994) (affirming district court ruling that defendant did not act in bad faith when denial of coverage based on genuine legal issues); Harms v. Cavenham Forest Indus., Inc., 1993 WL 262699, at *1 (E.D. La. July 6, 1993) (holding that fact that defendants argued different interpretations of plans did not lead to conclusion that defendants acted in bad faith). The court holds that the first factor weighs against awarding attorney's fees and costs to Martin.
B
The second factor takes into account the ability of the opposing party to pay the fees. Martin asserts, and MetLife does not dispute, that MetLife is a major insurance company that is able to pay attorney's fees and costs. The second factor weighs in favor of awarding such fees and costs to Martin.
C
The third factor addresses whether an award of attorney's fees would deter other persons who will be acting under similar circumstances. This factor is related to the bad faith factor. Where there is no finding of bad faith or culpability, this factor becomes irrelevant because there is no behavior the court seeks to deter. See Johnson v. Harvey, 1998 WL 781590, at *2 (E.D. La. Nov. 10, 1998) (concluding factor not a significant concern where there has been no adjudication proscribing conduct to be deterred in the future); Hixson v. Liberty Corp., 964 F. Supp. 218, 227 (W.D. La, 1997) ("Because this court does not find bad faith on the part of the defendant, an award of fees would not serve to deter future negative conduct."); Boggs v. Boggs, 1997 WI., 627599, at *1 (E.D. La. Oct. 10, 1997) (deterrence factor related to bad faith factor). Because the court has not found culpability or bad faith on the part of MetLife, it concludes that an award of fees would have no deterrent effect. This factor weighs against an award of fees and costs.
D
Under the fourth factor, the court assesses whether the party seeking attorney's fees seeks to benefit all ERISA participants or beneficiaries or to resolve a significant legal issue. In asserting his claims, Martin sought to recover disability benefits that he was owed as a Plan participant. He sought to benefit only himself rather than all ERISA participants or beneficiaries. See Harms v. Cavenham Forest Indus., Inc., 984 F.2d 686, 694 (5th Cir. 1993). Martin has not identified in his motion a significant legal issue that he maintains his case presented. Instead, Martin merely asserts that he "does not believe this factor is germane." P. Br. at 14. The fourth factor weighs against an award of attorney's fees.
E
Under the fifth factor, the court considers the relative merits of the parties' positions. Martin advances a conclusory argument, contending that "[c]learly, in this case, Plaintiff was entirely correct, and Defendant was clearly in error." P. Br. at 14. Because this case settled, there was no adjudication of the merits. In such circumstances, courts are reluctant to award attorney's fees. See Webb v. Cytec Indus., 1999 WL 407718, at *2-*3 (E.D. La. June 16, 1999) (denying fee request where no finding of liability made either at trial or upon motion for summary judgment); Johnson, 1998 WL 781590, at *2 (noting that court found no precedent for fee award in private settlement of ERISA claim).
Because the court holds that the Bowen factors weigh against an award of fees, it need not consider the twelve factors enumerated in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).
There is no evidence that MetLife's position was so weak as to justify an award of fees. See Izzarelli v. Rexene Prods. Co., 24 F.3d 1506, 1526 (5th Cir. 1994) (where party's claim not groundless, fifth factor does not support fee award); Sunbeam-Oster Co. Group Benefits Plan v. Whitehurst, 102 F.3d 1368, 1378 (5th Cir. 1996) (affirming denial of award where relative merits of parties' positions "not overwhelmingly stacked" on one side); Pitts, 931 F.2d at 358 (affirming denial of fees where there was "some merit to each party's position"). The fifth factor weighs against an award of attorney's fees.
F
The court concludes that there are no additional factors, apart from the five already discussed, that affect the court's assessment of Martin's entitlement vel non to attorney's fees in this case.
G
There is no presumption in favor of awarding attorney's fees to a prevailing beneficiary in an action brought under ERISA. Harms, 984 F.2d at 694. Having assessed the factors in the aggregate as the nuclei of concerns that the court should address in applying ERISA, the court holds that Martin should not recover his attorney's fees and costs from MetLife.
* * *
Accordingly, plaintiff's March 21, 2000 motion to assess attorney's fees and expenses is denied.
SO ORDERED.