United States District Court, S.D. California
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFF'S MOTION FOR ATTORNEYS' FEES AND
PREJUDGMENT INTEREST [DOC. NO. 59]
Michael M. Anello United States District Judge.
Keith McBean, Trustee of the Teresa McGee Living Trust dated
January 4, 2012 (“Plaintiff”), filed a motion for
attorneys' fees and prejudgment interest shortly after
judgment was entered in this case. Doc. No. 59
(“Mtn.”). Defendant By Referral Only, Inc.
(“Referral”) filed a response in opposition [Doc.
No. 62 (“Oppo.”)], to which Plaintiff replied
[Doc. No. 66 (“Reply”)]. The Court found the
matter suitable for determination on the papers and without
oral argument pursuant to Civil Local Rule 7.1.d.1. Doc. No.
67. For the reasons stated herein, the Court GRANTS
IN PART AND DENIES IN PART Plaintiff's motion.
filed this action for relief under the Employee Retirement
Income Security Act of 1974, as amended
(“ERISA”), 29 U.S.C. § 1001 et
seq., against Defendants United of Omaha Life Insurance
Company (“United”) and Referral alleging causes
of action for benefits pursuant to 29 U.S.C. §
1132(a)(1)(B), and for breach of fiduciary duties pursuant to
29 U.S.C. § 1132(a)(3). Doc. No. 14 (“FAC”).
The Court previously entered summary judgment in favor of
Plaintiff and against Referral on Plaintiff's second
cause of action for equitable surcharge for the face value of
the Policies, or $143, 550.00, and against Plaintiff on all
other claims. Doc. No. 46 (“Order”).
for Attorneys' Fees
Plaintiff requests an award of attorneys' fees in the
amount of $98, 640.00 pursuant to 29 U.S.C. § 1132(g)(1)
because he achieved success on his claim for equitable relief
and the factors set forth by the Ninth Circuit in Hummell
v. S. E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir.
1980) support a fee award. See Mtn at 6-9. Plaintiff
further contends the amount of fees requested is reasonable
under the lodestar analysis. Id. at 9-16. Referral
opposes an award of attorneys' fees, arguing the factors
set forth by Hummell do not support a fee award and
if an award is warranted, the fees should be reduced to $40,
590.00. Oppo. at 3-8.
Entitlement to Attorneys' Fees
authorizes a court, in its discretion, to award “a
reasonable attorney's fee and costs of action to either
party.” 29 U.S.C. § 1132(g)(1). Analyzing whether
a fee award is appropriate in a particular case is a two-step
process. First, the Court must decide whether the litigant
“has achieved some degree of success on the
merits” that is more than “trivial” or
“procedural.” Simonia v. Glendale
Nissan/Infiniti Disability Plan, 608 F.3d 1118, 1119
(9th Cir. 2010) (quoting Hardt v. Reliance Standard Life
Ins. Co., 560 U.S. 242, 255 (2010)). Second, if the
litigant has achieved some degree of success on the merits,
the Court considers the Hummell factors: (1) the
degree of the opposing party's culpability or bad faith;
(2) the ability of the opposing party to satisfy an award of
fees; (3) whether an award of fees against the opposing party
would deter others from acting under similar circumstances;
(4) whether the parties requesting fees sought to benefit all
participants and beneficiaries of an ERISA plan or to resolve
a significant legal question regarding ERISA; and (5) the
relative merits of the parties' positions.
Hummell, 634 F.2d at 453.
Hummell factors “are intended to guide the
court's exercise of its discretion, ” but,
“none is necessarily decisive; various permutations and
combinations can support an award of attorney fees.”
Credit Managers Ass'n of S. Cal. v. Kennesaw Life
& Accident Ins. Co., 25 F.3d 743, 749 (9th Cir.
1994) (citations and quotation marks omitted). Additionally,
courts in the Ninth Circuit “ordinarily grant a
prevailing beneficiary in an ERISA action reasonable
attorneys' fees and costs, absent special circumstances
cautioning against it.” Boston Mut. Ins. v.
Murphree, 242 F.3d 899, 904 (9th Cir. 2001).
Some Degree of Success on the Merits
court can fairly call the outcome of the litigation some
success on the merits without conducting a lengthy inquir[y]
into the question whether a particular party's success
was substantial or occurred on a central issue.”
Hardt, 560 U.S. at 255 (internal quotation marks
omitted). Here, judgment was entered on the second cause of
action in favor of Plaintiff and against Referral. Order. The
parties do not dispute that Plaintiff achieved some degree of
success on the merits. See Oppo. Thus, the Court
finds that it has the statutory discretion to award Plaintiff
attorneys' fees and turns to weighing the
Hummell factors. See Hardt, 560 U.S. at
255; see also Simonia, 608 F.3d at 1121.
Referral's Culpability or Bad Faith
argues this factor is met because the Court found Referral
breached its fiduciary duty by “wrongly advising
decedent that she need not do anything other than to continue
to pay premiums to maintain her life insurance after she
became too ill to continue full-time employment.” Mtn.
at 3. Referral essentially argues it did not act in bad
faith. See Oppo. at 3-4. “Although bad faith
is a factor that would always justify an award, it is not
required.” Smith v. CMTA-IAM Pension Trust,
746 F.2d 587, 590 (9th Cir. 1984). Here, the Court did not
specifically find that Referral acted in bad faith.
See Order at 17-18 (explaining that a statement is a
misrepresentation even when the person misinforms by saying
that something is true when they do not know whether it is
true or not). However, “from a legal perspective,
[Referral is] ‘culpable' in that [it was] found to
owe Plaintiff a legal duty that [it was] not
fulfilling.” See Caplan v. CNA Fin. Corp., 573
F.Supp.2d 1244, 1248 (N.D. Cal. 2008). Accordingly, this
factor weighs in favor of awarding fees.
Referral's Ability to Satisfy an Award of Fees
contends it does not have the ability to satisfy an award of
fees. Oppo. at 4. “The relative ability of the parties
to satisfy an award of fees is . . . relevant. Generally,
when an employee participant brings suit under ERISA, whether
it is against the trustees or the employer, the resources
available to the pensioner are limited.”
Smith, 746 F.2d at 590. Thus, “while the
opposing party's inability to satisfy an award weighs
against awarding fees, evidence that the opposing party is
able to pay does not affirmatively weigh in favor of awarding
fees.” Mull v. Motion Picture Indus. Health
Plan, No. LA CV 12-06693-VBF, 2017 U.S. Dist. LEXIS
135347, at *19 (C.D. Cal. Feb. 27, 2017).
Jeff Robbins, the managing director of Referral, declares
that Referral “is in financial straits and . . .
reports a loss of approximately $45, 000.00 in 2017, a loss
of approximately $53, 000.00 in 2018, and for Q1 of the
current year, a loss of approximately $49, 000.00.”
Doc. No. 62-1 (“Robbins Decl.”) ¶ 4. Robbins
further declares Referral cannot afford the judgment entered
against it, does not have the ability to raise the money, and
“is struggling to stay in business as it is”
because “any debt will threaten the continued viability
of the company.” Id. Plaintiff avers that this
is insufficient evidence of Referral's inability to pay
because it does not provide a “clear picture of its
financial status.” Reply at 4. For example, Plaintiff
asserts that Referral “failed to provide more concrete
information such as a financial statement, profit and loss
statements or a company balance sheet.” Id. at
4. While Referral's evidence is not overwhelming,
Plaintiff presented the Court with no contrary evidence.
Thus, the Court finds this factor weighs slightly in favor of
Deterrence of Others in Similar Circumstances
factor requires the Court to consider whether an award of
fees against Referral would deter others from similar conduct
in the future. Plaintiff argues that because the Court
clarified “the duties and obligations as the
administrator of the Plan, [Referral] most likely will not be
as careless in the future in carrying out those
duties.” Mtn. at 9. Referral appears to argue awarding
fees would not deter others from similar conduct because the
information Referral provided to Decedent was mistaken, not
made in bad faith and not purposefully incorrect.
See Oppo. at 4 (explaining that Referral is
“guilty of committing an honest mistake”).
“ERISA does not authorize an award of compensatory or
punitive damages for bad faith behavior.” Oster v.
Standard Ins. Co., 768 F.Supp.2d 1026, 1033 (N.D. Cal.
2011). “As a result, courts acknowledge that an award
of attorneys' fees and costs is a way of deterring
violations of ERISA.” Id.; see alsoCarpenters S. Cal. Admin. Corp. v. Russell, 726 F.2d
1410, 1416 (“If defendant employers face the prospect
of paying attorney's fees for successful plaintiffs, they
will have added incentive to comply with ERISA.”).
Here, “an award of fees would not act as a deterrence
against bad faith conduct, but it would ...