Zorn v. Principle Life Insurance Company
Filing
97
ORDER stating that the Court denies Zorn's request for attorney's fees and costs. The Court awards Zorn $172,000 in accrued benefits. The Court further awards Zorn $44,486 in pre-judgment interest. The total amount thus awarded to Zorn is $216,486. Signed by Judge B. Avant Edenfield on 2/28/2012. (loh)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
STATESBORO DIVISION
JOSEPH CHRIS ZORN,
Plaintiff,
v.
6:09-cv-81
PRINCIPAL LIFE INSURANCE
COMPANY,
Defendant.
ORDER
I. INTRODUCTION
On January 12, 2012, this Court granted
Plaintiff Joseph Chris Zorn’s (“Zorn”)
motion for summary judgment. See Doc.
90. The Court ordered the parties to brief
the damages owed by Defendant Principal
Life Insurance Company (“PLIC”). See id.
at 16. Having considered the briefs, the
Court orders the following.
II. ANALYSIS
A. Accrued Benefits
A successful plaintiff in an ERISA case
is entitled to recover the benefits due under
the terms of the plan. See 29 U.S.C. §
1132(a)(1)(B). Zorn states that he is owed
$ 172,000 in accrued benefits. See Doc. 93
at 2. PLIC takes no issue with this
calculation. See Doc. 96 at 1. Accordingly,
the Court AWARDS Zorn $172,000 in
accrued benefits.
B. Pre-Judgment Interest
“[T]he award of prejudgment interest
under ERISA is a matter committed to the
sound discretion of the trial court . . . .”
Moon v. Am. Home Assurance Co., 888 F.2d
86, 89-90 (11th Cir. 1989).
“But in any event a trial court does not
have unbridled discretion to deny the award.
. . . ‘[T]he only way the wronged party can
be made whole is to award him interest from
the time he should have received the
money.’” Hembree v. Ga. Power Co., 637
F.2d 423, 430 (5th Cir. 1981) (citation
omitted). Furthermore, “good faith is not a
defense to the assessment of prejudgment
interest.” Id.
PLIC contends that the Court should
deny Zorn’s request for pre-judgment
interest. First, PLIC points out that Zorn
“delayed resolution of this case by, among
other things, waiting more than two years to
file his lawsuit following the final denial of
his claim in August 2007.” Doc. 96 at 3.
PLIC argues that awarding pre-judgment
interest has no deterrent value against
wrongful conduct because PLIC had cause
for denying Zorn’s claim. See id. at 3.
Zorn, however, filed his suit nearly a
year before the statute of limitations on his
claim expired. See Doc. 90 at 11. Zorn has
unilaterally moved for an extension of time
before the judgment in this case only once.
See Doc. 36. Because Zorn filed his action
within the limitations period and prosecuted
his case with reasonable promptness, the
Court dismisses PLIC’s arguments. Finding
that prejudgment interest is necessary to
make Zorn whole, the Court deems interest
to be appropriate in this case.
Because ERISA is silent regarding the
pre-judgment interest rates, a trial court acts
within its discretion when it uses state law to
calculate the pre-judgment interest rate. See
Instead, district courts must consider any
of five factors when deciding a motion for
attorney’s fees and costs under ERISA:
Florence Nightingale Nursing Serv., Inc. v.
Blue Cross/Blue Shield of Ala., 41 F.3d
1476, 1484 (11th Cir. 1995). Therefore, this
Court looks to Georgia’s statutorily
mandated post-judgment interest rate. See
Smith v. Am. Int ’l Life Assurance Co. of
N.Y., 50 F.3d 956, 957-58 (11th Cir. 1995)
(approving use of Georgia law by analogy);
Kinser v. Plans Admin. Comm. of Citigroup,
Inc., 2008 WL 762200, at *1 (M.D. Ga.
Mar. 18, 2008).
(1) the degree of the opposing
parties' culpability or bad faith; (2)
the ability of the opposing parties to
satisfy an award of attorney's fees;
(3) whether an award of attorney's
fees against the opposing parties
would deter other persons acting
under similar circumstances; (4)
whether the parties requesting
attorney's fees sought to benefit all
participants and beneficiaries of an
ERISA plan or to resolve a
significant legal question regarding
ERISA itself; and (5) the relative
merits of the parties' positions.
The Georgia Code establishes the postjudgment interest rate as “the prime rate as
published by the Board of Governors of the
Federal Reserve System, as published in
statistical release H.15 or any publication
that may supersede it, on the day the
judgment is entered plus 3 percent.”
O.C.G.A. § 7-4-12(a).
Florence Nightingale Nursing, 41 F.3d at
1485. “[N]o 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 . . . .” Wright v. Hanna Steel Corp.,
270 F.3d 1336, 1344 (1 1th Cir. 2001).
The January 12, 2012 prime rate was
3.25%. See Doc. 93-5 at 1. Thus, the
interest rate the Court adopts in accordance
with O.C.G.A. § 7-4-12(a) is 6.25%.
Compounding the interest monthly on the
accrued benefits due Zorn since December
18, 2004, the Court AWARDS Zorn $44,486
in pre-judgment interest. See Doc. 93-4 at 1.
1. Culpability or Bad Faith
“Bad faith usually is accompanied by
the presence of fraud or deceit. . . .
Generally, courts will not find bad faith
where the party had valid grounds on which
to deny the claim.” Clarke v. Unum Life Ins.
Co. of Am., 14 F. Supp. 2d 1351, 1357 (S.D.
Ga. 1998) (internal citation omitted).
C. Attorney’s Fees
“[T]he court in its discretion may allow
a reasonable attorney's fee and costs of
action to either party.”
29 U.S.C. §
1132(g)(1). “The law provides no
presumption in favor of granting attorney's
fees to a prevailing claimant in an ERISA
action.” Freeman v. Cont’l Ins. Co., 996
F.2d 1116, 1119 (11th Cir. 1993).
The Court finds no culpability or bad
faith on PLIC’s part. As the Court noted,
“[t]his is a close case.” Doc. 90 at 11. PLIC
based its decision to terminate Zorn’s
benefits on testimony from Zorn’s family,
surveillance video, an independent medical
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examination, and other reports about Zorn’s
involvement in his family’s businesses.
PLIC investigated Zorn for three years
before terminating his benefits. See id. at 3,
7. Thus, the Court cannot say that PLIC
acted with bad faith in terminating Zorn’s
benefits.
deterrence value where benefits
determination “was a fairly individualized
and fact-specific decision”).
4. Significance of the Suit
Zorn sued only for his benefit.
Moreover, Zorn’s suit did not involve a
significant or unique legal question. As
explained supra, the outcome in this case
has little deterrent value. Accordingly, this
factor weighs in favor of PLIC.
2. Ability of PLIC to Satisfy an
Award
PLIC concedes that it has the means to
satisfy an award of attorney’s fees. See Doc.
96 at 8. This factor, however, “is weighed
more for exclusionary than for inclusionary
purposes.” Gribble v. CIGNA Healthplan of
Tenn., Inc., 1994 WL 514529, at *4 (6th Cir.
Sept. 20, 1994). Thus, this factor alone does
little to convince the Court that a fee award
is proper.
5. Relative Merits
This Court has stated that “[t]his is a
close case.” Doc. 90 at 11. Although Zorn
ultimately prevailed, evidence supported
PLIC’s decision to terminate his benefits.
Thus, this factor also weighs against
granting Zorn’s request for attorney’s fees.
Having considered all five factors, the
Court DENIES Zorn’s request for attorney’s
fees and costs.
3. Deterrence Value
Awarding attorney’s fees would not
have any appreciable value in deterring
wrongful plan administration. As stated
supra, PLIC did not act in bad faith.
Furthermore, PLIC’s reasons for
terminating Zorn’s benefits were peculiar to
Zorn’s situation. PLIC had reason to believe
that Zorn was still fully capable of
performing work for his businesses. See
Doc. 90 at 14 (discussing Zorn’s work for
his companies). Thus, PLIC’s investigation
focused on Zorn and his particular
interaction with those businesses. PLIC’s
decision to terminate was highly
individualized and fact specific, and
awarding fees in the face of such a decision
would deter little future behavior. See
Stefansson v. Equitable Life Assurance
Soc’y of the U.S., 2007 WL 988716, at *3
(M.D. Ga. Mar. 29, 2007) (finding no
III. CONCLUSION
THE COURT AWARDS ZORN
$172,000 IN ACCRUED BENEFITS.
THE COURT FURTHER AWARDS
ZORN $44,486 IN PRE-JUDGMENT
INTEREST. THE TOTAL AMOUNT
THUS AWARDED TO ZORN IS $216,486.
THIS CASE IS CLOSED.
This 28th day of February 2012.
B
R AVANT EDENFIELO, JIJDGE
UNITED STATES DISTRICT cour
SOUTHERN DISTRICT OF GEORGIA
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