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Paulson v. Principal Life Insurance Co.

United States District Court, W.D. Washington, Tacoma

October 26, 2017




         This matter comes before the Court on the Plaintiff's Motion for an Award of Attorneys' Fees under 29 U.S.C. § 1132 (g)(1). Dkt. 40. The Court has considered the pleadings filed regarding the motion and the remaining file.

         In this Employee Retirement Income Security Act, 29 U.S.C. § 1001, et. seq., (“ERISA”) case, the Plaintiff sought a declaration that he was entitled to long-term disability benefits under an employment benefit plan. Dkt. 1. The Defendant paid the benefits for a period of time, but in April of 2015, contended that Plaintiff no longer met the policy's definition of disability. Id. On August 9, 2017, Plaintiff's motion for summary judgement was granted and judgment was entered against the Defendant on September 11, 2017. Dkts. 36 and 39. Plaintiff now moves for $83, 184.00 in attorneys' fees. Dkt. 40. For the reasons provided below, the motion (Dkt. 40) should be granted.


         Plaintiff was a long-haul truck driver. Dkt. 1. His employer offered a long-term disability plan as part of his benefits package. Dkts. 1 and 21-1, at 1-123. In December 2008, Plaintiff suffered an industrial accident, and on October 24, 2009 began receiving long-term disability benefits under the plan. Dkts. 1 and 21-1, at 160. He began working as a real estate agent in 2010. Dkt. 21-3, at 51.

         In April of 2015, the Defendant terminated his benefits, claiming that as a real estate agent, he was able to earn a median income of $65, 290.00, which was in excess of the $60, 000.00 which he could earn and still receive benefits under the plan. Dkts. 21-1, at 198-201. Plaintiff inquired of the decision, and after receiving a market survey, which showed that that median wage was $50, 000.00, Defendant asserted that Plaintiff was a real estate broker, not a real estate agent. Dkt. 21-1. Defendant asserted that the national median wage for brokers was over $80, 000.00. Id.

         Plaintiff filed an appeal on October 26, 2015, explaining that he was a real estate agent not a broker, and that the median income for either an agent or broker in this region was still below $60, 000.00. Dkts. 21-3, at 41-200; and 21-4. The appeal was denied; Defendant asserted that Plaintiff was a real estate broker, and that, in any event, Plaintiff was capable of performing duties of three other jobs which paid a median wage of more than $60, 000.00. Dkt. 21-2.

         Plaintiff filed a second appeal, asserting he was an agent, not a broker, and that he could not perform the three other jobs. Dkt. 21-1, at 316-323. He submitted a Labor Market Study in which a vocational expert supported his positions. Id. Defendant denied the second appeal but did not discuss Plaintiff's arguments or the evidence he submitted. Id., at 225-228.

         Plaintiff filed this case on April 7, 2016. Dkt. 1. The parties filed cross motions for summary judgment. Dkts. 23 and 24. A bench trial was held on August 8, 2017 and the Court issued an oral ruling on August 9, 2017, finding in favor of Plaintiff. Dkts. 31 and 33. The Defendant was ordered to pay Plaintiff long-term disability benefits from April 30, 2015 to the date of the judgment (September 11, 2017), plus interest, and reinstate Plaintiff's benefits. Dkt. 39. On October 10, 2017, Defendant filed a notice of appeal. Dkt. 43.

         Plaintiff now moves for an award of attorneys' fees in the amount of $83, 184.00. Dkt. 40. Defendant opposes the motion, arguing that either the motion should be denied or the amount awarded should be reduced. Dkt. 45.


         A. AWARD OF FEES

         Under ERISA's civil enforcement provision, 29 U.S.C. § 1132 (g)(1), courts have discretion to award reasonable attorneys' fees and costs, where a party has achieved “some degree of success on the merits.” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 256 (2010).

         Plaintiff prevailed on summary judgment and was awarded back benefits, interest and a reinstatement of future benefits so long as he meets the requirements of the plan. Accordingly, he has achieved “some degree of success on the merits.” Hardt, at 256. After making this determination, courts in the Ninth Circuit then examine the factors set forth in Hummell v. S.E. Rykoff Co., 634 F.2d 446 (9th Cir. 1980) in deciding whether to award fees under 29 U.S.C. § 1132 (g)(1). Simonia v. Glendale Nissan/Infiniti Disability Plan, 608 F.3d 1118, 1119 (9th Cir. 2010). Those factors are:

(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of fees; (3) whether an award of fees against the opposing parties 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, at 453. When applying the Hummell factors, courts “must keep at the forefront ERISA's remedial purposes that should be liberally construed in favor of protecting participants in employee benefit plans.” McElwaine v. U.S. W., Inc., 176 F.3d 1167, 1172 (9th Cir. 1999)(internal quotations and citation omitted). Further, the courts in the Ninth Circuit “also apply a special circumstances rule in which a successful ERISA participant should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust.” Id. Further, “no single Hummell factor is necessarily decisive.” Simonia, at 1122. Each of these factors will be examined below.

         1. The Degree of the Opposing Parties' Culpability or Bad Faith

         This factor counsels somewhat in favor of an award of fees. There is some evidence that the Defendant acted in its own interest rather than as a fiduciary for the Plaintiff. It failed to take into account or even discuss evidence that was contrary to its decision to deny Plaintiff's benefits in its written decisions. The Defendant did not acknowledge it had committed an error about the nature of Plaintiff's work. Instead, it forced Plaintiff to file a lawsuit to have his benefits reinstated. Although Defendant asserts that Plaintiff rejected vocational assistance and attempted to minimize his income, it does not show that Plaintiff acted in bad faith such that an award of fees is improper.

         2. Ability of Defendant ...

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