Western-Southern Life Assurance Company v. Lee et al

Filing 42

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that plaintiffs renewed motion for attorneys fees and costs [Doc. # 35 ] is granted in part and denied in part. Plaintiff shall be permitted to recover attorneys fees in the amount of $4,652 and costs in the amount of $356.62 incurred in connection with this interpleader action to be paid out of the interpleaded funds prior to any other distribution. IT IS FURTHER ORDERED that the Clerk of the Court shall pay from the interpleaded funds cur rently on deposit in the registry of the Court the sum of $5,008.62 to plaintiff Western-Southern Life Assurance Company representing its attorneys fees and costs as awarded. The check is to be made payable to Western-Southern Life Assurance Com pany and mailed to plaintiffs counsel as follows: Bradley Arant Boult Cummings LLP, Attn: Jason A. Walters, 1819 Fifth Avenue North, Birmingham, AL 35203. IT IS FURTHER ORDERED that the balance of the interpleaded funds shall be awarded, in equal par ts and with any accrued interest, after deduction of the applicable administrative fee, to defendants Walter Armour and Frederick White. IT IS FURTHER ORDERED that, pursuant to E.D. Mo. L.R. 13.04(D)(2), defendants Walter Armour and Frederick White each shall provide to the Court within 10 days from the issuance of this Order his: (1) Social Security number on a completed and signed Internal Revenue Service Form W-9; and (2) current full mailing address where the disbursement check should be s ent. A copy of I.R.S. Form W-9 is available on the Courts website. Per the redaction requirements of E.D. Mo. L.R. 2.17, defendants may provide this information either in person or by mail to the Clerks Office for ex parte review. Signed by District Judge Carol E. Jackson on 5/6/15. (JAB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
WESTERN-SOUTHERN LIFE
ASSURANCE COMPANY,
Plaintiff,
vs.
SAMUEL H. LEE, JR., et al.,
Defendants.

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Case No. 4:13-CV-2499 (CEJ)

MEMORANDUM AND ORDER
Plaintiff Western-Southern Life filed this interpleader action pursuant to 28
U.S.C. § 1335, asking the Court to determine which of the defendants are entitled
to receive the proceeds of a life insurance policy issued to decedent Katie M.
Clemons-Lee. Named as defendants are Samuel H. Lee, Jr., Tameka Lee, Walter
Armour, and Frederick White. Service was achieved on all defendants, and answers
were timely filed by defendants Samuel H. Lee, Jr. and Tameka Lee.

Defendant

Walter Armour failed to answer or otherwise enter an appearance in the matter and
is in default.

On February 13, 2014, defendant White filed a military power of

attorney, pursuant to 10 U.S.C. § 1044b, appointing his wife Sherrie J. Lee-White
as his attorney-in-fact.

Defendant White did not file an answer or otherwise

respond to the complaint, and the power of attorney he submitted expired on June
1, 2014. [Doc. #15]. Also, he did not respond to an order directing him to inform
the Court of his current military status by February 13, 2015. [Doc. #38].
On March 25, 2014, plaintiff deposited $56,122.01 into the registry of the
Court.

Thereafter, the Court granted plaintiff’s motion to be dismissed from the

case.

The plaintiff’s request for attorneys’ fees and costs was denied without

prejudice.
On December 9, 2014, defendant Samuel H. Lee, Jr. filed a memorandum
asking that the policy proceeds be paid to defendants Armour and White, in
accordance with the decedent’s 2009 change of beneficiary form. He also stated
his desire to “abandon the interpleader” so that the proceeds could be paid to the
other defendants.

[Doc. #30].

On December 31, 2014, defendant Tameka Lee

filed a memorandum stating that she wished to forfeit her rights to the policy
proceeds. [Doc. #36].
Plaintiff

filed

a

renewed

motion

for

attorney’s

fees

and

costs,

contemporaneously submitting copies of invoices to support its request for fees and
costs for in camera review. The plaintiff seeks $12,981.22 in attorney’s fees, and
$356.62 in costs, for a total of $13,337.84.
I.

Legal Standard

A disinterested stakeholder who brings an interpleader action may be entitled
to recover attorney’s fees and costs in the bringing the action. S & W Foreclosure
Corp. v. Okenfuss, No. 4:09-CV-353 (CDP), 2010 WL 106675, at *1 (E.D. Mo. Jan.
6, 2010).

The court’s authority to grant an award is discretionary; it is not an

absolute right.

Amer. Life Ins. Co. of N.Y. v. Karnes, No. 07-40353-CV-C-NKL,

2007 WL 4365732, at *3 (W.D. Mo. Dec. 11, 2007). “In the usual case the fee will
be relatively modest, inasmuch as all that is necessary is the preparation of a
petition, the deposit in court or posting of a band, service on the claimants, and the
preparation of an order discharging the stakeholder.” 7 Charles Alan Wright et al.,
Federal Practice and Procedure § 1719 (3d ed. 1998); see also Hunter v. Federal

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Life Ins. Co., 111 F.2d 551, 557 (8th Cir. 1940) (stating that an interpleader action
“does not usually involve any great amount of skill, labor or responsibility,” and as
such, “the amount allowed for [attorney’s] fees should be modest.”).
Federal district courts have excluded insurance companies from the general
rule of awarding reasonable attorney’s fees to disinterested stakeholders who bring
interpleader actions under three theories.

See Unum Life Ins. Co. of Amer. V.

Kelling, 170 F. Supp. 2d 792, 794 (M.D. Tenn. 2001) (explaining the exceptions to
permitting

insurance

companies

to

recovery

attorney’s

fees

and

costs

in

interpleader actions); see also Hearing v. Minnesota Life Ins. Co., No. C13-4101LTS, 2014 WL 3587406, at *8 (N.D. Iowa July 21, 2014) (same).
courts

suggest insurance

companies

should not

be

First, some

compensated, because

conflicting claims to proceeds are part of such companies’ “ordinary course of
business.” See Metro. Life Ins. Co. v. Mitchell, 966 F. Supp. 2d 97, 105 (E.D.N.Y.
2013); see also Feehan v. Feehan, No. 09-CIV-7016, 2011 WL 497852, at *7
(S.D.N.Y. Jan. 10, 2011) (collecting cases). Second, courts have denied attorney’s
fees to insurance companies because such companies are, by definition, interested
stakeholders; filing an interpleader action immunizes the company from further
liability under the contested policy.

See Kelling, 170 F. Supp. 2d at 794-95;

Mitchell, 966 F. Supp. 2d at 105.
Third, courts have also carved out insurance companies from the general rule
because an award for fees and costs would unnecessarily deplete the fund that is
the subject of preservation through the interpleader action. See Paul Revere Life
Ins. Co. v. Riddle, 222 F. Supp. 867, 869 (E.D. Tenn. 1963) (denying attorney’s
fees and noting that if the court held otherwise, every stakeholder with conflicting

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claims could interplead the funds, deposit them in a court registry, gain protection
from further liability, and “in effect, cause the successful claimant to bear the
costs”); see also Hunter, 111 F.2d at 556 (“[T]here would be no justification for
seriously depleting the fund deposited in the court by a stakeholder through the
allowance of large fees to his counsel.”).

The Eighth Circuit, however, has not

adopted a clear exception for insurance companies, providing its most recent
guidance in 1940. See Hearing, 2014 WL 3587406, *5-7 (noting that “the Eighth
Circuit has stated a ‘stakeholder should not ordinarily be out of pocket for the
necessary expenses and attorney’s fees incurred by him’”) (quoting Hunter, 111
F.2d at 557). As such, the Court will determine a reasonable and modest amount
to compensate the plaintiff for bringing this action.
II.

Discussion
A.

Attorney’s Fees

The broad rule governing an award of attorney’s fees in an interpleader
action is reasonableness.

Protective Life Ins. Co. v. Kridner, Civ. No. 12-582

(JRT/JJG), 2013 WL 1249205, at *4 (D. Minn. Mar. 27, 2013). In determining what
fees are reasonable, courts consider the following factors: (1) whether the case is
simple or complex; (2) whether the stakeholder performed unique services for the
claimants or the court; (3) whether the stakeholder acted in good faith and with
diligence; (4) whether the services rendered benefitted the stakeholder; and (5)
whether the claimants improperly protracted the proceedings. Id.; see also Noeller
v. Metro. Life Ins. Co., 190 F.R.D. 202, 207 (E.D. Tex. 1999) (citing Charles Alan
Wright et al., Federal Practice and Procedure § 1719 (3d ed. 1998)).

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The stakeholder seeking fees has the burden of proving the reasonableness
of the request. Kridner, 2013 WL 1249205, at *5. “[A]ny ‘uncertainties in a fee
application due to nonspecific entries are resolved against the applicant.’”

Id.

(quoting In re OEM Indus. Corp., 135 B.R. 247, 251 (Bankr. W.D. Pa. 1991)). The
general starting point for calculating reasonable attorney’s fees is the “lodestar,”
which is calculated by multiplying a reasonable hourly rate by the number of hours
reasonably expended on the case. See Fish v. St. Cloud State Univ., 295 F.3d 849,
851 (8th Cir. 2002).

A court is not required to reach a lodestar determination,

however, and may attempt to identify specific hours that should be eliminated or
simply reduce the award within its discretion. Hensley v. Eckerhart, 461 U.S. 424,
436-37 (1983).
Two law firms represented Western-Southern Life in this action, Bradley
Arant Boult Cummings LLP in Birmingham, Alabama and Armstrong Teasdale LLP as
local counsel in St. Louis, Missouri. The two firms report spending 43 hours on the
matter.

Their hourly rates range from $180 an hour for a paralegal (12 hours),

$245-270 for associates (11.3 hours), and $300-400 for partners (19.5 hours), for
a total of $12,981.22 in attorney’s fees.

They also report costs of $356.62,

consisting of copy charges, mailing costs, and legal research fees.

The total

amount sought, $13,337.84, represents 23.77% of the value of the funds
deposited.
In calculating the lodestar, a reasonable hourly rate “is usually the ordinary
rate for similar work in the community where the case has been litigated.” Fish,
295 F.3d at 851. Because the hourly billable rates for the partners, associates, and
paralegal that worked on this matter are not unusual for the area and not

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challenged here, the Court will accept their hourly rates as reasonable. See, e.g.,
Texas Life Ins. Co. v. Packman, No. 4:13-CV-2019 (JAR), 2014 WL 1400182, at *2
(E.D. Mo. Apr. 10, 2014) (findings rates of $350 and $400 per hour for a partner
working on an interpleader matter in the St. Louis metropolitan region to be
acceptable); Transamerica Life Ins. Co., Inc. v. Lambert, No. 4:12-CV-1253 (CAS),
2013 WL 328792, at *3 (E.D. Mo. Jan. 29, 2013) (adopting rates of $300-350 an
hour per partner and $215 an hour for associates in the St. Louis region).
Recoverable expenses in an interpleader action are “properly limited to the
attorney fees billed to prepare the complaint, obtain service of process on the
claimants to the fund, and secure the plaintiff’s discharge from liability and
dismissal from the lawsuit.”

Dusseldorp v. Ho, 4 F. Supp. 3d 1069, 1071 (S.D.

Iowa 2014); see also Trustees of Dirs. Guild of America-Producer Pension Benefits
Plans v. Tise, 234 F.3d 415, 426 (9th Cir. 2000) (“Because the interpleader plaintiff
is supposed to be disinterested in the ultimate disposition of the fund, attorneys’
fee awards are properly limited to those fees that are incurred in filing the action
and pursuing [] release from liability, not in litigating the merits of the adverse
claimants’ positions.”) (emphasis in original).
The billing records submitted by plaintiff’s counsel for in camera review are
sufficiently detailed to allow the Court to complete a meaningful review.

After

carefully reviewing the reported hours spent on the matter, the Court finds 15.7 of
the hours reported to be reasonable in bringing the action, during which counsel
prepared the complaint and accompanying documents, arranged for service of
process on the claimants in Texas, Florida and Missouri, deposited the funds into
the court registry, and filed a motion seeking discharge.

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The sole element that enhanced the complexity of this case was the active
military status of defendant Frederick White, analysis of the Servicemembers Civil
Relief Act, and subsequent grant of power of attorney to his wife. The Court has
accepted additional reported hours in light of this nuance.

This factor and

defendant Walter Armour’s failure to answer or appear in the matter protracted the
litigation, causing plaintiff to participate in a court ordered scheduling conference to
discuss the status of the case and set discovery deadlines. The time reported in
preparing for and attending this conference has also been adopted. Thus, for the
15.7 hours reasonably expended in this matter at the respective hourly rates per
attorney who engaged in these tasks, Western-Southern Life will be awarded
$4,652 in attorney’s fees.
The reported hours considered excessive and disallowed for attorney’s fees
include any apparent duplicative work and time spent by the two law firms in
coordinating and discussing the matter with each other. See U.S. Foodservice, Inc.
v. Daignault, Civ. No. 10-40103-FDS, 2011 WL 576606, at *3 (D. Mass. Feb. 9,
2011) (“While it is hardly unreasonable for national and local counsel to consult and
coordinate, [] it is unclear why that work should come at the expense of the
fund.”). The award is further reduced to exclude any other excessive, redundant,
or unnecessary hours.

Hensley, 461 U.S. at 434.

Also, any hours of work

performed “to protect the interest of the stakeholder and research its liability, or to
update the client regarding the status of the case” are not compensable. Packman,
2014 WL 1400182, at *2.

Finally, plaintiff is not entitled to recover fees for

attorney-client communications or unspecified legal research. Hearing v. Minnesota
Life Ins. Co., No. C13-4101-LTS, 2014 WL 3587406, at *8 (N.D. Iowa July 21,

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2014); see also Kridner, 2013 WL 1249205, at *5 (“[A]ny uncertainties in a fee
application due to nonspecific entries are resolved against the applicant.”) (internal
quotations and citation omitted).
B.

Costs

Plaintiff’s request for costs is governed by Fed. R. Civ. P. 54(d) and 28 U.S.C.
§ 1920. Allowable costs in most cases are limited to the categories set forth in 28
U.S.C. § 1920.

Expenses not on the statutory list must be borne by the party

incurring them. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-42
(1987).

The court must carefully scrutinize the claimed costs and the support

offered for them. Farmer v. Arabian Amer. Oil Co., 3749 U.S. 227, 232-33 (1964);
Alexander v. Nat’l Farmers Org., 696 F.2d 1210, 1212 (8th Cir. 1982).
Taxable costs include: (1) fees of the clerk and marshal; (2) fees for printed
or electronically recorded transcripts necessarily obtained for use in the case; (3)
fees and disbursements for printing and witnesses; (4) fees for exemplification and
the costs of making copies of any materials where the copies are necessarily
obtained for use in the case; (5) docket fees under 28 U.S.C. § 1923; and (6)
compensation of court appointed experts and interpreters under 28 U.S.C. § 1828.
28 U.S.C. § 1920.
Plaintiff requests an award of costs in the amount of $356.62. It is unclear
from the documents submitted how plaintiff arrived at this figure.

Nevertheless,

plaintiff would be entitled to recover at least the amount of the filing fee ($400.00).
Because the amount requested is less than the minimum amount that may be
awarded under § 1920, the plaintiff’s request will be granted.

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C.

Conclusion

Finally, the fees and costs awarded must not significantly diminish the value
of the asset.

Karnes, 2007 WL 4365732, at *3.

In determining an equitable

percentage, the Court finds instructive the amounts other federal courts have
awarded for attorney’s fees and costs in relation to the value of interpleaded funds.
See, e.g., Hearing, 2014 WL 3587406, at *15 (3%); Kridner, 2013 WL 1249205, at
*9 (6.1%); Lambert, 2013 WL 328792, at *5 (1.7%); Columbus Life Ins. Co. v.
Hill, No. 2:09-CV-0947 (FCD/DAD), 2010 WL 3717285, at *3 (E.D. Cal. Sept. 16,
2010) (5%); Karnes, 2007 WL 4365732, at *3 (6.7%); Unum Life Ins. Co. of Am.
v. Kaleo, No. 6:05CV544ORL-22DAB, 2006 WL 1517257, at *3 (M.D. Fla. May 24,
2006) (3.13%); Primerica Life Ins. Co. v. Walden, 170 F. Supp. 2d 1195, 1200
(S.D. Ala. 2001) (awarding less than 1%).
Plaintiff will be awarded $4,652 in attorney’s fees and $356.62 in costs, for a
total of $5,008.62.

This amounts to 8.9% of the total fund, a percentage that

recognizes a reasonable amount of work completed in the case without significantly
diminishing the value of the asset.
Because defendants Samuel H. Lee, Jr. and Tameka Lee have disclaimed all
interest in the interpleaded funds, judgment will be entered in favor of defendants
Walter Armour and Frederick White.
*

*

*

*

*

For the reasons discussed above,
IT IS HEREBY ORDERED that plaintiff’s renewed motion for attorney’s fees
and costs [Doc. #35] is granted in part and denied in part. Plaintiff shall be
permitted to recover attorney’s fees in the amount of $4,652 and costs in the

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amount of $356.62 incurred in connection with this interpleader action to be paid
out of the interpleaded funds prior to any other distribution.
IT IS FURTHER ORDERED that the Clerk of the Court shall pay from the
interpleaded funds currently on deposit in the registry of the Court the sum of
$5,008.62 to plaintiff Western-Southern Life Assurance Company representing its
attorney’s fees and costs as awarded.

The check is to be made payable to

“Western-Southern Life Assurance Company” and mailed to plaintiff’s counsel as
follows:

Bradley Arant Boult Cummings LLP, Attn:

Jason A. Walters, 1819 Fifth

Avenue North, Birmingham, AL 35203.
IT IS FURTHER ORDERED that the balance of the interpleaded funds shall
be awarded, in equal parts and with any accrued interest, after deduction of the
applicable administrative fee, to defendants Walter Armour and Frederick White.
IT IS FURTHER ORDERED that, pursuant to E.D. Mo. L.R. 13.04(D)(2),
defendants Walter Armour and Frederick White each shall provide to the Court
within 10 days from the issuance of this Order his: (1) Social Security number on a
completed and signed Internal Revenue Service Form W-9; and (2) current full
mailing address where the disbursement check should be sent.
A copy of I.R.S. Form W-9 is available on the Court’s website.

Per the

redaction requirements of E.D. Mo. L.R. 2.17, defendants may provide this
information either in person or by mail to the Clerk’s Office for ex parte review.

____________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE

Dated this 6th day of May, 2015.

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