Maley et al v. Minnesota Life Insurance Company

Filing 35

REPORT AND RECOMMENDATIONS that the District Court DENY Defendant's 29 Motion for Attorney Fees. Signed by Judge Andrew W. Austin. (klw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
GENEVIE ILENE MALEY, et al.
VS.
MINNESOTA LIFE INSURANCE CO.

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A-15-CV-394-LY

REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
TO:

THE HONORABLE LEE YEAKEL
UNITED STATES DISTRICT JUDGE
Before this Court are Defendant’s Motion for Attorney’s Fees (Dkt. No. 29) and Plaintiffs’

Objection to Defendant’s Motion for Attorney’s Fees (Dkt. No. 32). The undersigned submits this
Report and Recommendation to the United States District Court pursuant to 28 U.S.C. § 636(b) and
Rule 1(h) of Appendix C of the Local Court Rules of the United States District Court for the Western
District of Texas.
I. GENERAL BACKGROUND
Brock Maley, the decedent, was insured under a life insurance policy purchased by his
employer, Dell USA. The policy was underwritten by Defendant Minnesota Life Insurance
Company. The plan at issue provided for $85,000 in basic life insurance benefits and $85,000 in
supplemental benefits. All parties agree that the plan is governed by the Employee Retirement
Income Security Act of 1974 (“ERISA”).
At different times, Brock Maley had listed either Genevie Ilene Maley or Holly Drowley,
Plaintiffs, as beneficiaries of the plan. But, at the time of his death, Drowley was listed as the sole
beneficiary. Both Maley and Drowley filed for the benefits, and Minnesota Life notified the
plaintiffs of their competing claims. Drowley and Maley subsequently came to an agreement to split
the benefits equally with each receiving $85,000. After Maley and Drowley had signed the

settlement agreement, Minnesota Life realized that the supplemental life benefits were not payable
to the beneficiaries due to an ERISA provision. It is undisputed that Brock Maley had committed
suicide within two years of the effective date, so ERISA prohibited the payment of the supplemental
life insurance benefits. Minnesota Life then altered the settlement agreement to include only the
basic life insurance benefits. Maley and Drowley agreed to split the remaining $85,000, but then
brought suit to recover the supplemental life insurance benefits. They asserted a breach of contract
claim on the original settlement agreement. The court found that Maley and Drowley’s claims were
preempted by ERISA, and entered a judgment in favor of Minnesota Life. Dkt. No. 27. Minnesota
Life now brings this claim for attorney’s fees under 29 U.S.C. § 1132(g)(1).
II. ANALYSIS
ERISA provides that: “[i]n any action under this subchapter . . . by a participant, beneficiary,
or fiduciary, the court in its discretion may allow reasonable attorney’s fees and costs of action to
either party.” 29 U.S.C. § 1132(g)(1). Any party who has achieved “some degree of success on the
merits” may request attorney’s fees, not merely the “prevailing party.” Hardt v. Reliance Std. Life
Ins. Co., 560 U.S. 242, 255 (2015). This success cannot be mere “trivial success on the merits” or
a “purely procedural victor[y].” Id. (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 686 (1983)).
Instead, the party satisfies this standard when “the court can fairly call the outcome of the litigation
some success on the merits without conducting a ‘lengthy inquir[y] into the question whether the
particular party’s success was substantial or occurred on a central issue.’” Id. (quoting Ruckelshaus,
463 U.S. at 688). Here, the parties agree that the judgment qualifies as “some degree of success on
the merits” for Minnesota Life.
However, the parties disagree on whether the five factors from Iron Workers Local No. 272
v. Bowen, 624 F.2d 1255 (5th Cir. 1980), should be applied to determine if Minnesota Life is entitled
to attorney’s fees. In Hardt, the Supreme Court stated that the Bowen factors “bear no obvious
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relation to § 1132(g)(1)’s text or to our fee-shifting jurisprudence” and that courts are not required
to address the factors in determining awards of attorney’s fees. Id. at 255. However, the “factors
are discretionary.” LifeCare Mgmt. Servs. LLC v. Ins. Mgmt. Adm’rs Inc., 703 F.3d 835, 847 (5th
Cir. 2013). Courts are not required to assess the Bowen factors, but many find it helpful to do so.
See, e.g., Johnson v. United Healthcare of Tex., Inc., 167 F. Supp. 3d 825, 834 (W.D. Tex. 2016)
(applying the Bowen factors); Rhea v. Alan Ritchey, Inc., No. 4:13-CV-00506, 2015 WL 4776115
(E.D. Tex. Aug. 12, 2015) (same); Rossi v. Precision Drilling Oilfield Servs. Corp., No. A-10-CV841, 2013 WL 12113201 (W.D. Tex. July 26, 2013) (same).
In Bowen, the court named five factors that a court should look to when determining whether
to award attorney’s fees in an ERISA action. The factors are:
(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 would 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 question regarding ERISA itself; and (5) the relative merits of the parties’
positions.
Bowen, 624 F.2d at1266. “No 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. . . .”
Id. Moreover, these factors are not exclusive, and a court is free to address other concerns. Id. at
1266-67; see also Hardt, 560 U.S. at 256 (noting that courts have discretion in awarding attorney’s
fees).
This Court agrees with Maley and Drowley that the factors weigh against the award of
attorney’s fees in this case. First, there is no evidence that the plaintiffs filed this suit in bad faith.
Maley and Drowley believed that the original settlement agreement controlled payment of the
benefits. The fact that the claims were preempted does not create bad faith on the part of the
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plaintiffs. The second factor also weighs heavily against awarding attorney’s fees to Minnesota Life
as individual plaintiffs are unlikely to be able to satisfy an award of fees. The third and fourth
factors also weigh against awarding attorney’s fees to Minnesota Life. Minnesota Life did not seek
to benefit all participants and beneficiaries in its defense of the claim, and the suit did not resolve
a significant legal question. Moreover, there is no indication that a fee award here would deter other
plaintiffs acting in similar circumstances. See Johnson, 167 F. Supp. 3d at 834. Although ultimately
Minnesota Life prevailed here, plaintiffs had good faith arguments for their position. Thus, though
the fifth factor weighs slightly in favor of awarding fees, the other factors weigh against it.
Accordingly, a discretionary award of attorney’s fees is not warranted in this case.
III. RECOMMENDATIONS
For all of the reasons set forth above the undersigned RECOMMENDS that the District
Court DENY Defendant’s Motion for Attorney’s Fees (Dkt. No. 29).
IV. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing
objections must specifically identify those findings or recommendations to which objections are
being made. The District Court need not consider frivolous, conclusive, or general objections. See
Battle v. United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations
contained in this Report within fourteen (14) days after the party is served with a copy of the Report
shall bar that party from de novo review by the District Court of the proposed findings and
recommendations in the Report and, except upon grounds of plain error, shall bar the party from
appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the
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District Court. See 28 U.S.C. § 636(b)(1)(c); Thomas v. Arn, 474 U.S. 140, 150-53, 106 S. Ct. 466,
472-74 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en
banc).
SIGNED this 10th day of November, 2016.

_____________________________________
ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE

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