Nutt et al v. Kees et al
ORDER granting 133 Motion for Attorney Fees. The Court assesses attorney's fees and costs against Mr. Kees, without a multiplier or joint and several liability. Plaintiff's are directed to make and submit to the Court within 10 days fro m the entry of this Order a calculation of the amount of attorneys' fees and costs attributable to the claims against Mr. Kees. Mr. Kees will have 14 days from the date plaintiffs submit their calculation of attorneys' fees and costs to respond. The Court denies plaintiffs' motion to amend judgment. Signed by Judge Kristine G. Baker on 5/11/2015. (jak)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
KEVIN NUTT AND LISA NUTT
Case No. 3:10-cv-00307-KGB
STAFFORD KEES, ET AL.
On September 30, 2014, the Court entered Findings of Fact and Conclusions of Law and
Judgment in favor of plaintiffs Kevin and Lisa Nutt and against defendants Stafford Kees,
Osceola Therapy and Living Center, Inc. (“OTLC”), Osceola Nursing Home, LLP, and Osceola
Healthcare, PLLC, in the amount of $233,471.97 (Dkt. Nos. 123, 124). Before the Court is
plaintiffs’ motion for attorneys’ fees, costs, and expenses and motion to alter judgment (Dkt.
Nos. 133, 136). Separate defendant OTLC responded to these motions (Dkt. Nos. 137, 138),
whereas separate defendant Mr. Kees did not.
Motion For Attorneys’ Fees, Expenses, And Costs
Plaintiffs move the Court for an award of attorneys’ fees, expenses, and costs pursuant to
29 U.S.C. § 1132(g)(1) and Federal Rule of Civil Procedure 54. Section 1132(g)(1) provides
that, in the types of actions like the one brought here, the Court “in its discretion may allow a
reasonable attorney’s fee and costs of action to either party.” To receive attorneys’ fees and
costs under § 1132(g)(1), a fee claimant must have achieved some degree of success on the
merits. McDowell v. Price, 731 F.3d 775, 783 (8th Cir. 2013) (citing Hardt v. Reliance Standard
Life Ins. Co., 560 U.S. 242 (2010)).
In ERISA cases, the Court must consider the Eighth Circuit’s Westerhaus factors to
determine whether it should award attorneys’ fees. Lawrence v. Westerhaus, 749 F.2d 494, 496
(8th Cir. 1984). Westerhaus directs district courts to consider:
(1) the degree of the opposing parties’ culpability or bad faith; (2) the ability of
the opposing parties to satisfy an award of attorneys’ fees; (3) whether an award
of attorneys’ fees against the opposing parties could deter other persons acting
under similar circumstances; (4) whether the parties requesting attorneys’ fees
sought to benefit all participants and beneficiaries of an ERISA plan or to resolve
a significant legal q[ue]stion regarding ERISA itself; and (5) the relative merits of
the parties’ positions.
Westerhaus, 749 F.2d at 496. Importantly, the Westerhaus factors require consideration, not
regurgitation, as they are merely “general guidelines.” Martin, 299 F.3d at 972.
Although plaintiffs seek costs under Rule 54, the Court finds that the Westerhaus analysis
applies equally in determining whether to award costs in an ERISA case. See Harley v. Minn.
Mining & Mfg. Co., No. Civ. 4-96-488 JRT/RLE, 2003 WL 22283345, at 1-2* (D. Minn. Sept.
23, 2003) (“[T]he Eighth Circuit . . . consistently has applied the Westerhaus analysis in
reviewing both attorney’s fees and cost awards.”). Accordingly, there is no presumption in favor
of awarding attorneys’ fees or costs, as there otherwise would be in non-ERISA cases being
decided under Rule 54. See Martin v. Ark. Blue Cross & Blue Shield, 299 F.3d 966, 971-72 (8th
Cir. 2002); Harley, 2003 WL 22283345, at 2*; see also 168th & Dodge, LP v. Rave Reviews
Cinemas, LLC, 501 F.3d 945, 958 (8th Cir. 2007) (holding that, under Rule 54(d)(1), “[a]
prevailing party is presumptively entitled to recover all of its costs” (citation omitted)). The
Court notes that the categories of costs recoverable under ERISA are still limited to the costs
recoverable under 28 U.S.C. § 1920, and plaintiffs must show that the costs they seek are
recoverable. See Harley, 2003 WL 22283345, at 1*.
Plaintiffs argue that attorneys’ fees and costs should be assessed against Mr. Kees and
OTLC. The Court now turns to the Westerhaus factors. First, while the Court has made
Findings of Fact and Conclusions of Law regarding Mr. Kees’s bad faith, the Court did not make
such findings regarding OTLC’s culpability.
Second, although Mr. Kees petitioned for
bankruptcy, plaintiffs now have produced evidence that he allowed that petition to be dismissed.
Further, Mr. Kees is receiving or has received $474,000.00 in payments from the purchase and
sale agreement with Jim Cooper and/or his assigns. OTLC, on the other hand, claims that it is an
entity with no assets and no longer owns any nursing home facilities. Third, an award of
attorneys’ fees and costs against Mr. Kees and OTLC would deter other persons from acting
similarly under similar circumstances. But, again, Mr. Kees’s conduct is more culpable than
OTLC’s conduct, and his conduct is the type of conduct that the Court should seek to deter by
imposing a fee and cost award. Fourth, plaintiffs sought to resolve a significant legal question
regarding ERISA itself, namely the novel theory of successor liability. Fifth, though plaintiffs
ultimately prevailed on their claims, this was a very close case as to OTLC, whose position was
reasonable. See Rote v. Titan Tire Corp., 611 F.3d 960, 964 (8th Cir. 2010) (noting that district
court found that “[t]his was not a close case” in affirming award of attorney’s fees). The Court
denies plaintiffs’ requests that a multiplier and joint and several liability be applied to the
attorneys’ fees and costs in this case, as the Westerhaus factors only support attorneys’ fees and
costs being assessed against Mr. Kees. See Walker v. U.S. Dep’t of Hous. & Urban Dev., 99
F.3d 761, 772 (5th Cir. 1996) (“A court may impose joint and several liability in setting fees.”
Having considered the Westerhaus factors as applied to this case, the Court determines
that attorneys’ fees and costs should be assessed against Mr. Kees but should not be assessed
against separate defendants OTLC. Thus, the Court assesses attorneys’ fees and costs against
Mr. Kees, not OTLC, without a multiplier or joint and several liability. Plaintiffs are directed to
make and submit within 10 days from the entry of this Order a calculation of the amount of
attorneys’ fees and costs attributable to the claims against Mr. Kees. Mr. Kees will have 14 days
from the date plaintiffs submit their calculation of attorneys’ fees and costs to respond.
Motion To Amend Judgment
Plaintiffs also move the Court to amend Judgment in this case pursuant to Federal Rules
of Civil Procedure 52 and 59. Rule 52(b) provides that the Court “may amend its findings—or
make additional findings—and may amend the judgment accordingly.” Rule 59 also allows
motions to amend a judgment. Plaintiffs argue that the Court should amend its Judgment to
provide equitable relief in the form of a surcharge and constructive trust. ERISA permits plan
participants and beneficiaries to seek “other appropriate equitable relief,” which is limited to
relief that was “typically available in equity.” Pichoff v. QGH of Springdale, Inc., 556 F.3d 728,
731 (8th Cir. 2009) (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 256-57 (1993)); see 29
U.S.C. § 1132(a)(3)(B).
Plaintiffs argue that they should be awarded a surcharge making defendants liable for the
“consequential damages of their actions, including but not limited to the financial hardship and
impact on [p]laintiffs’ household as a result of carrying such large medical bills, the impact on
[p]laintiffs’ credit history, and the financial stress and anxiety caused to [p]laintiffs in order to
compensate fully for the consequence of the breach” (Dkt. No. 136, at 4 (citation and internal
quotation marks omitted)). They cite Silva v. Metropolitan Life Insurance Co., 762 F.3d 711
(8th Cir. 2014), and McCravy v. Metropolitan Life Insurance Co., 690 F.3d 176 (4th Cir. 2012),
both of which are based on the Supreme Court’s decision in CIGNA Corp. v. Amara, 131 S. Ct.
1866 (2011), as support for this request. However, in all of these cases, the “make-whole” relief
awarded by the courts amounted to the unpaid medical bills, as opposed to mere premium
refunds, and did not include the types of damages plaintiffs seek here under the equitable
surcharge remedy. See Amara 131 S. Ct. at 1880 (finding that the district court’s injunctions
requiring the plan administrator to pay to already retired beneficiaries money owed them under
the plan as reformed was justified under the equitable surcharge remedy, which traditionally
allowed equity courts “to provide relief in the form of monetary ‘compensation’ for a loss
resulting from a trustee’s breach of duty, or to prevent the trustee’s unjust enrichment); Silva,
762 F.3d at 724-25 (citing McCravy, 690 F.3d at 182-83) (“Silva’s counsel and the Department
of Labor, appearing as an amicus, agreed that the appropriate remedy under § 1132(a)(3) is the
payment of benefits that were seemingly owed under the Plan.”). Plaintiffs have not cited any §
1132(a)(3) cases awarding the types of damages they seek here. For these reasons, the Court
denies plaintiffs’ motion for an equitable surcharge remedy.
Plaintiffs also contend that the Court should impose a constructive trust on the funds that
are payable to Mr. Kees as a result of the purchase and sale agreement between Mr. Kees and
Jim Cooper and/or his assigns. Based on the record, Mr. Cooper owes to Mr. Kees $474,000.00,
to be paid in 120 monthly installments (T.T. 288-89). “A constructive trust is imposed when a
defendant has possession of particular funds or property that in good conscience belong to the
plaintiff.” Parke v. First Reliance Standard Life Ins. Co., 368 F.3d 999, 1008 (8th Cir. 2004)
(citation omitted). Plaintiffs “must specifically identify the particular funds or property in order
to obtain the constructive trust; it is not enough that the defendant merely owes the plaintiff some
money.” Id. Such relief seeks “not to impose personal liability on the defendant, but to restore
to the plaintiff particular funds or property in the defendant’s possession.” Pichoff, 556 F.3d at
731-32 (quoting Annuity Ins. Co. v. Knudson, 534 U.S. 204, 212 (2002)).
Here, it appears to the Court that the funds on which plaintiffs seek a constructive trust do
not in good conscience belong to them, as those funds come from the purchase and sale
agreement and are not directly connected to plaintiffs in any way. Conversely, in Great-West
Life & Annuity Insurance Co. v. Knudson, which plaintiffs cite, an insurance company had paid
benefits under a health plan to a beneficiary after a car wreck rendered her quadriplegic. 534
U.S. 204, 207-08 (2002). After the beneficiary recovered in tort for her injuries from a third
party involved in the car accident, the insurance company sought a constructive trust on those
recovered funds to reimburse it for the payment of benefits. Id. at 207-08. The health plan
provided for such recovery. Id. at 207. The Supreme Court denied the constructive trust because
the funds were not in the beneficiary’s possession, but other courts have imposed constructive
trusts in similar situations where the funds were in possession of the defendant. See, e.g.,
Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356, 362 (2006).
Based on the record, the Court determines this case is not analogous to the cases cited.
For these reasons, the Court denies plaintiffs’ motion for a constructive trust.
In sum, the Court grants in part plaintiffs’ motion for attorneys’ fees, expenses, and costs
(Dkt. No. 133). The Court assesses attorneys’ fees and costs against Mr. Kees, without a
multiplier or joint and several liability. Plaintiffs are directed to make and submit to the Court
within 10 days from the entry of this Order a calculation of the amount of attorneys’ fees and
costs attributable to the claims against Mr. Kees. Mr. Kees will have 14 days from the date
plaintiffs submit their calculation of attorneys’ fees and costs to respond. The Court denies
plaintiffs’ motion to amend judgment.
SO ORDERED this 11th day of May, 2015.
KRISTINE G. BAKER
UNITED STATES DISTRICT JUDGE
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