Werb v. ING Group et al
Filing
100
MEMORANDUM OPINION AND ORDER: 1. Werb shall submit within ten days of the date of this Order an affidavit documenting his reasonable fees and costs incurred in this action; 2. ReliaStar may submit a responsive affidavit within ten days thereafter; 3. Werb shall submit within ten days of the date of this Order an affidavit regarding the prejudgment interest he seeks for the period through January 31, 2007; and 4. ReliaStar may submit a responsive affidavit within ten days thereafter (Written Opinion). Signed by Judge Susan Richard Nelson on 4/11/12. (LPH)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Michael Werb,
Civil No. 08-5126 (SRN/JJG)
Plaintiff,
MEMORANDUM OPINION
AND ORDER
v.
ReliaStar Life Insurance Company, and
the Goodrich Long Term Disability Plan,
Defendants.
Mark M. Nolan, Nolan, Thompson & Leighton, 710 Lawson Commons, 380 St. Peter St.,
St. Paul, MN 55102, for Plaintiff.
William D. Hittler, and Gregory A. Bromen, Nilan Johnson Lewis PA, 400 One Financial
Plaza, 120 South Sixth St., Minneapolis, MN 55802, for Defendants.
SUSAN RICHARD NELSON, United States District Judge
This matter is before the Court on Plaintiff Michael Werb’s letter request to
reconsider this Court’s limited award of attorney fees (Doc. No. 87). The request for
reconsideration was granted and the Court permitted briefing from both parties and heard
oral argument on the issue. (Doc. Nos. 89, 97.) For the reasons stated below, this Court
grants Werb’s request for a broader award of attorney fees and prejudgment interest.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Werb was employed by Goodrich Corporation and participated in its long-term
disability (“LTD”) benefit plan. Goodrich funded the plan, which is governed by the
Employee Retirement Income Security Act (“ERISA”), through an insurance policy
issued by ReliaStar Life Insurance Company.
As the result of a work-related car accident in 1997, Werb experienced ongoing
disabling pain. ReliaStar denied his claim for LTD benefits, arguing that Werb had
released his claim in a 2002 settlement agreement with Goodrich. In September 2008,
Werb thus initiated this action against ReliaStar and Goodrich challenging the denial.
(Doc. No. 1.) Almost a year later, during the pendency of the case, ReliaStar informed
Werb that it was voluntarily reconsidering his claim for LTD benefits on the merits, and
then denied his claim again, contending that Werb had released his claim and that Werb
had failed to establish that he was disabled.
The parties then cross-moved for summary judgment. The Court (Judge Schiltz)
denied Werb’s motion and denied Defendants’ motion insofar as judgment was sought by
ReliaStar but granted the motion insofar as judgment was sought by Goodrich because the
settlement indisputably released Werb’s claim against Goodrich. Werb v. ReliaStar Life
Ins. Co., No. 08-CV-5126 (PJS/JJG), 2010 WL 3269974, *13 (D. Minn. Aug. 17, 2010).
Under that agreement, Werb released Goodrich from any and all liability on any and all
claims Werb had “against Goodrich, or its insurers, including but not limited to claims . . .
pursuant to ERISA.” (Doc. No. 61-9.) With respect to ReliaStar, however, the Court
noted that although Werb clearly released his ERISA claims against “Goodrich and its
insurers,” it was less clear whether ReliaStar was an “insurer” and who was the “insured”
party. Id. The Court, noting that the policy did not define “insured,” concluded that a
genuine issue of material fact remained as to whether ReliaStar was an “insurer” of
Goodrich. Id. at *14. The Court ordered the parties to complete discovery on that
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question, remanded the matter to ReliaStar for a determination as to whether Werb was
disabled, and directed them to then file motions for summary judgment. (Doc. No. 46.)
On remand to the insurer, ReliaStar determined that Werb is disabled. (Doc. No.
60, at 11.) Werb amended his Complaint to replace Goodrich as a defendant with the
plan. (Doc. Nos. 47, 47-2, 49.) Werb and the Defendants (with the plan substituted for
Goodrich) then cross-moved, again, for summary judgment. This Court ruled that the
release of Goodrich, its affiliates, and its insurers, does not extend to Werb’s claim for
benefits because ReliaStar is the insurer of Werb, not Goodrich. (Doc. No. 86.)
Plaintiff also requested an award of attorney fees and costs. This Court recognized
that Werb had satisfied the threshold requirement of “some success on the merits.” Hardt
v. Reliance Std. Life Ins. Co., ___ U.S. ___, 130 S. Ct. 2149, 2156-58 (2010). But it also
recognized that much of the litigation concerned contract-law issues regarding the scope
of the release, rather than any issue under ERISA, such as whether Werb was disabled.
The Court thus limited the fees and costs Werb could recover to those (1) attributable to
the issue of whether he was disabled on the merits, and (2) incurred from the time
ReliaStar announced it would reconsider its original decision to the time it found him
disabled.1 Werb now seeks reconsideration of that limitation on fees as well as
prejudgment interest.
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After the April 22, 2011 hearing on the parties’ cross-motions for summary
judgment, ReliaStar informed Werb, on July 25, 2011, that it was terminating his
disability claim effective February 1, 2007 due to Werb’s failure to provide information
and appear for a medical examination. (Doc. No. 96, Ex. B.) Werb filed an appeal of that
decision on January 4, 2012. This Court issued its summary judgment Order on January
20, 2012.
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II.
DISCUSSION
A.
Attorney Fees and Costs
ERISA provides that in actions by plan participants or beneficiaries, “the court in
its discretion may allow a reasonable attorneys’s fee and costs of action to either party.”
29 U.S.C. § 1132(g)(1). As this Court previously concluded, there is no question that
Werb meets the threshold standard of showing “some success on the merits.” Hardt, 130
S. Ct. at 2156-58. The Eighth Circuit has disavowed any presumption of fees and costs in
an ERISA action. Martin v. Arkansas Blue Cross and Blue Shield, 299 F.3d 966, 971-72
(8th Cir. 2002). Rather, the Court applies the factors outlined in Lawrence v. Westerhaus:
“(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.”
749 F.2d 494, 496 (8th Cir. 1984) (quoting Iron Workers Local No. 272 v. Bowen, 624
F.2d 1255, 1266 (5th Cir. 1980)). Accord Hardt, 130 S. Ct. at 2156-58 (2010) (clarifying
that such factors do not control resolution of the threshold requirement, but not
foreclosing “the possibility that once a claimant has satisfied this requirement, and thus
becomes eligible for a fees award under § 1132(g)(1), a court may consider the five
factors” delineated by the court below as well as in Westerhaus).
On reconsideration, the Court concludes that although much of the litigation in this
action concerned the generic contractual question of the scope of a release in the context
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of a settlement of a separate action by Werb, the ultimate issue–throughout the protracted
administrative and judicial proceedings–was always one of his entitlement to ERISA
benefits. Werb’s Complaint sought relief under ERISA. (Doc. No. 1.) Defendants raised
the issue of Werb’s alleged release of his ERISA claims as an affirmative defense of
accord and satisfaction. (Doc. No. 4.)
With respect to the Lawrence v. Westerhaus factors, the Court finds that (1)
Defendants’ repeated denial of benefits, only to then reverse that decision, reflects some
“culpability or bad faith”; (2) Defendants are capable of satisfying an award of attorneys’
fees; (3) an award of fees could likely deter other plan sponsors or administrators acting
under similar circumstances; (4) Werb’s claim for benefits resolves a significant legal
question regarding ERISA and that resolution could also inure to the benefit of other plan
participants and beneficiaries; and (5) the merits of the parties’ positions regarding the
scope and effect of the release, given the complexity of the issue, were relatively equal.
The Court concludes that Werb may recover his reasonable fees and costs incurred
in this action without limitation as to the type of issue for which they were incurred.
B.
Prejudgment Interest
Werb also seeks prejudgment interest. “[C]ourts may award prejudgment interest
as ‘other appropriate equitable relief’ under § 1132(a)(3)(B) when benefits are wrongfully
delayed.” Parke v. First Reliance Std. Life. Ins. Co., 368 F.3d 999, 1006 (8th Cir. 2004).
“[P]rejudgment interest should generally be granted unless exceptional circumstances
render such an award inequitable.” Gordon v. Northwest Airlines, Inc. Long-Term
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Disability Income Plan, 606 F. Supp. 2d 1017, 1040 (D. Minn. 2009).
ReliaStar contends that any such request here is premature, however, because the
question of whether Werb is entitled to benefits after January 31, 2007, is currently on
administrative appeal. It thus asks the Court to defer the question of prejudgment interest
until that issue is completely resolved. The Court disagrees. At present, there is no
dispute that Werb was denied benefits through January 31, 2007. The outcome of Werb’s
administrative appeal of his disability benefits for the period after that date, while perhaps
resulting in an additional period of benefits, will have no impact on the fact that he was
entitled to benefits through that date. Thus, Werb may submit an affidavit documenting
the amount of prejudgment interest he seeks for the period through January 31, 2007.
III.
ORDER
Based on the foregoing, and all the files, records and proceedings herein, IT IS
HEREBY ORDERED that:
1.
Werb shall submit within ten days of the date of this Order an affidavit
documenting his reasonable fees and costs incurred in this action;
2.
ReliaStar may submit a responsive affidavit within ten days thereafter;
3.
Werb shall submit within ten days of the date of this Order an affidavit
regarding the prejudgment interest he seeks for the period through January 31, 2007; and
4.
ReliaStar may submit a responsive affidavit within ten days thereafter.
Dated: April 11, 2012
s/ Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
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