PVH Corp. v. Estate of Steven Houle et al

Filing 20

OPINION & ORDER re: 16 MOTION for Attorney Fees filed by PVH Corp. For the reasons set forth above, IT IS HEREBY ORDERED that PVH's application for attorneys' fees and costs is DENIED. IT IS FURTHER ORDERED that PVH shall serve copies of this Order on the Interpleader-Defendants via first-class mail and to file a certificate of such service no later than February 17, 2017. The Clerk is also respectfully directed to terminate the motion pending at docket number 16 and to close this case. (Signed by Judge Richard J. Sullivan on 2/15/2017) (cla)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PVHCORP.,
lnterpleader-Plaintiff,
-v-

No. 16-cv-1401 (RJS)
OPINION & ORDER

ESTA TE OF STEVEN HOULE and
LEAH KEITH-HOULE,

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Interpleader-Defendants.

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RICHARD J. SULLIVAN, District Judge:

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Now before the Court is a motion filed by Interpleader-Plaintiff PVH C rp.""('1P\TH") for
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reasonable attorneys' fees and costs that it incurred in connection with this litigation. (Doc. No.
16.) For the reasons set forth below, PVH's motion is denied.
I. BACKGROUND
On March 3, 2007, Steven Houle enro lled in an employee retirement plan (the "Plan")
administered by his employer, PVH, and named his then wife, Leah Keith-Houle, as his sole
primary beneficiary. (Doc. No. 1 ("Compl. ")

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10.) Although Mr. Houle and Ms. Keith-Houle

divorced on September 11 , 2013, Mr. Houle never changed his beneficiary election before he died
on October 8, 2014. (Id at ~ii 11 - 13; Doc. No. 1-3.) On January 9, 2015, Mr. Houle ' s Estate filed
an objection with PVH to any payout of the Plan ' s $48,756.79 in proceeds (the "Plan Proceeds")
to Ms. Keith-Houle.

(Comp!.~

14.)

On February 23 , 2016, PVH, in its capacity as administrator and fiduciary of an employee
retirement plan covered by the Employment Retirement Insurance Security Act of 1974
(" ERISA"), initiated this action by filing a Complaint seeking a declaratory judgment as to whether
the Estate or Ms. Keith-Houle was the proper beneficiary of the Plan Proceeds. (Doc. No. 1.) On

June 6, 2016, the Court issued an Order finding that Ms. Keith-Houle was the proper beneficiary
under the Plan and entered a declaratory judgment to that effect. (Doc. No. l S at 1 (citing Kennedy
v. Plan Adm 'r for DuPont Sav. & Inv. Plan, SSS U.S . 28S (2009).) In addition, the Court directed
PVH to file its contemplated motion for attorneys' fees and a declaration in support of the motion.
The Court is now in receipt of PY H's unopposed motion for $12,066 in attorneys ' fees and
$637.87 in costs incurred in connection with bringing this action, to be paid from the Plan
proceeds. (Doc. Nos. 16, 17 ("Mem.").) The Court is also in receipt of the declaration of Robert
J. Kipnees, which attaches PVH's attorneys' contemporaneous time records. (Doc. No. 18.)

II.

DISCUSSION

A Court has discretion to award reasonable attorneys' fees and costs in an interpleader
action to: " ( 1) a disinterested stakeholder, (2) who had conceded liabi lity, (3) has deposited the
disputed funds into court, and (4) has sought a discharge from liability." Septembertide Pub. , B. V
v. Stein & Day, Inc., 884 F.2d 67S, 683 (2d Cir. 1989); Estate of Heiser v. Bank of Baroda, N. Y
Branch, No. l l-cv-1602 (LGS), 2013 WL 4780061 , at *2 (S.D.N.Y. July 17, 2013). Even so,
" 'the decision to award fees and costs is left to the sound discretion of the district court, ' and
'courts need not award attorneys ' fees in interpleader actions where the fees are expenses incurred
in the ordinary course of business."' Guardian Life Ins. Co. v. Gilmore, 4S F. Supp. 3d 310, 32021 (S.D.N.Y. 2014) (quoting Metro. Life Ins. Co. v. Mitchell, 966 F. Supp. 2d 97, 104 (E.D.N.Y.
2013)). Accordingly, courts generally decline to award attorneys ' fees and costs in interpleader
suits in connection with the payment of insurance policies.

Id. (collecting cases); see also

Travelers Indem. Co. v. Israel, 3S4 F.2d 488, 490 (2d Cir. l 96S) (" We are not impressed with the
notion that whenever a minor problem arises in the payment of insurance policies, insurers may,
as a matter of course, transfer a part of their ordinary cost of doing business of their insureds by
bringing an action for interpleader." ). This is particularly true where the issues presented are "not
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complex," the suit does not present "any unique problems," and only a modest amount of funds
are at stake. Feehan v. Feehan, No. 09-cv-7016 (DAB) (THK), 2011 WL 497852, at *8 (S.D.N.Y.
Jan. 10, 2011 ).

In fact, si nce an interpleader relieves the company "of multiple suits" and

discharges the company from liability, courts have concluded that "such actions are brought
primarily in the company's own self-interest." Metro. L{fe Ins. Co., 966 F. Supp. 2d at 104- 05
(alterations omitted). As a result, " [s]everal courts" have applied the Second Circuit's rationale in

Travelers " beyond the classic insurance context to disputes over pension benefits," finding that
" [c]onflicting claims to benefits owed to beneficiaries under an employee welfare benefit
plan ... are inevitable." Croskey v. Ford Motor Co.-UAW, No. Ol-cv-1094 (MBM), 2002 WL
974827, at * 10 (S.D.N.Y. May 6, 2002) (declining to award pension fund attorneys' fees in
interpleader case requiring resolution of "conflicting claims to benefits," which "is an activity that
a pension fund frequently undertakes in its ordinary course of business").
Here, it is true that PVH is a disinterested stakeholder who, faced with competing claims
by Keith-Houle and Houle's Estate to the Plan Proceeds, offered to deposit the disputed funds with
the Court, and sought a discharge from liability by bringing this action for a declaratory judgment.

See Septembertide Pub., B. V, 884 F.2d at 683. Even so, as a plan administrator, PVH must
recognize that resolution of conflicting claims to benefits is clearly an activity that it must
undertake in its ordinary course of business. F urthermore, aside from the fact that Keith-Houle
and Houle's Estate declined to appear in this action (Mem. 4), PVH fails to point to any uniquely
complicated issues that were implicated in this litigation or " unique problems" that it faced.
Indeed, this case never proceeded to discovery, was resolved without any motion practice, and
turned on a straightforward application of United States Supreme Court precedent. (See Doc. No.
15); see also Croskey, 2002 WL 974827, at *I 0 (finding, in di spute over survivor benefits, that
·' rn]either the record in this case, nor [fee applicant 's] arguments based upon that record, suggest
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any extraordinary circumstances that make this dispute any different from the types of disputes
typically encountered by pension funds") . The Court is particularly reluctant to grant PVH's fee
application given the very large percentage (specifically, over 25%) of the Plan 's very modest
proceeds that have been requested by PVH as attorneys' fees. See Hartford L{fe Ins. Co. v. Pollorff,
No. 5:13-cv-77 (MAD) (DEP), 2014 WL 1393751, at *7 (N.D.N.Y. Apr. 9, 20 14) (declining to
award fees in a "straightforward interpleader action over a modest fund").

"Considering the

equitable nature of interpleader relief and the relativel y small amount of funds available ... to the
vying claimants," the Court finds that "it would be unfair and inequitable to deplete" over 25% of
the Plan's proceeds by awarding them as attorneys' fees and costs. See Unum Life Ins. Co. ofAm.

v. Scoll, No. 3:10-cv-538 (DJS), 20 12 WL 233999, at *3 (D. Conn. Jan. 24, 2012) (alterations
omitted) (holding similarly).

III.

CONCLUSION

For the reasons set forth above, IT IS HEREBY ORDERED that PVH's application for
attorneys' fees and costs is DENIED. IT IS FURTHER ORDERED that PVH shall serve copies
of this Order on the Interpleader-Defendants via first-class mail and to file a certificate of such
service no later than February 17, 2017. The Clerk is also respectfully directed to terminate the
motion pending at docket number I 6 and to close this case.
SO ORDERED.
Dated:

February 15, 2017
New York, New York
RI
RD J. ULLIV AN
UNITED STA TES DISTRICT JUDG E

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