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Diane Nelson v. Unum Group

May 12, 2011

DIANE NELSON,
PLAINTIFF,
v.
UNUM GROUP, A DELAWARE CORPORATION, AND FEES DOES 1 THROUGH 20, DEFENDANT.



The opinion of the court was delivered by: Cathy Ann Bencivengo United States Magistrate Judge

ORDER REGARDING PLAINTIFF'S APPLICATION FOR ATTORNEYS

Before the Court is plaintiff Diane Nelson's motion for attorneys' fees. Nelson and defendant Unum Group ("Unum") reached a settlement of this case at the Early Neutral Evaluation Conference. As part of the settlement agreement, the parties agreed plaintiff could submit a fee application to the undersigned. The defendant could submit objections. The Court's award is final and the total cannot exceed an agreed ceiling of $18,247.19. [Doc. No. 10.] The parties executed the settlement and the case was dismissed with prejudice on April 18, 2011. [Doc. No. 15.]

Plaintiff submitted her application for fees on March 9, 2011. Defendant filed its opposition on March 28, 2011. Plaintiff submitted her reply on April 1, 2011. The Court finds this application suitable for determination on the papers and without oral argument in accordance with Civil Local Rule 7.1(d)(1).

Background

Nelson was employed as the IT Director at a law firm. On October 5, 2007, Nelson resigned from work due to health complaints of major depression, dizziness and headaches. Nelson made a claim to Unum for Total Disability Benefits, on or about April 30, 2008.

On September 8, 2008, Unum concluded based on its review of Nelson's records as of that date, that a total disability finding based on psychiatric restrictions was not supported for the period of October 5, 2007 to March 31, 2008. Unum did determine that psychiatric restrictions were supported on and after March 31, 2008, and paid benefits commencing June 29, 2008 (after a 90-elimination period) until July 16, 2008, after which Unum concluded Nelson was no longer totally disabled as a result of depression.

With regard to her balance disorder and headaches, Unum concluded based on the records it had, that although Nelson had a vestibular abnormality, it did not impact her functionality such that it made her eligible for benefits after July 16, 2008. On November 26, 2008, Unum notified Nelson it rejected her claim for total disability.

On December 8, 2008, Nelson retained James Mitchell, of Mitchell*Gilleon Law Firm, to represent her and obtain a reversal of Unum's rejection of her disability claim. Mitchell reviewed Nelson's medical records sporadically for the next eight months. On or about August 7, 2009, Mitchell sent a letter to Unum advising the defendant that Mitchell's condition continued to deteriorate and her most recent medical examinations, from June 2009, indicated a diagnosis of multiple sclerosis, which was subsequently confirmed.

Upon receipt of Mitchell's letter with Nelson's recent medical evaluations, Unum re-evaluated Nelson's claim. On October 14, 2009, Unum reinstated her benefits and paid retroactive benefits based on Nelson's last day of work, October 5, 2007, and the 90-day elimination period.

Nelson filed this lawsuit on November 15, 2010 in state court. It was removed to federal court by the defendant on December 20, 2010. Nelson's complaint alleges breach of contract and breach of the implied covenant of good faith and fair dealing, stating that defendant failed to provided benefits due her under her disability policy and did so in bad faith. Nelson sought recovery of damages, including her attorneys' fees.

Brandt fee recovery

The parties settled Nelson's allegations that Unum failed to properly investigate and evaluate her claim, thereby denying her benefits in bad faith. Had Nelson established that Unum handled her claim in bad faith, in addition to contract damages and emotional distress damages, she could collect her reasonable attorneys' fees incurred to obtain her contract benefits. Brandt v. Superior Court, 37 Cal.3d 818, 817 (1985). As part of the settlement, the parties agreed that Nelson could submit her claim for Brandt fees -- those fees reasonably incurred to obtain the benefits due under the policy.

Nelson submitted an application for $18,128.26 for work done between December 8, 2008 and October 3, 2009 by Mitchell and his associate Nicole Geske. This amount represents 20% of the retroactive policy benefits awarded Nelson in October, 2009, and is, according to Mitchell, a unilateral reduction he made from the contingency fee arrangement he had with Nelson, because "the case was resolved fairly quickly without the need for filing a lawsuit."*fn1 This number therefore reflects neither an amount actually incurred by Nelson, or the actual reasonable time spent at a reasonable rate. Consequently ...


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