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Tomasko v. Weinstock

September 5, 2006

RONALD T. TOMASKO, PLAINTIFF,
v.
IRA H. WEINSTOCK, P.C., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court are two issues that were presented on appeal to the United States Court of Appeals for the Third Circuit and remanded to this Court for further proceedings consistent with their opinion. Tomasko v. Weinstock, 80 Fed. App'x. 779, 783 (3d Cir. 2003). The first issue concerns Plaintiff's, Ronald T.Tomasko, and Defendants', Ira H. Weinstock, et al., Motions for Attorney's Fees. On August 15, 2002, this Court denied either party an award of attorney's fees. (Doc. 123 at 13.) Both parties appealed the Court's denial of attorney's fees, and on November 17, 2003, the Third Circuit Court of Appeals remanded the Order. Tomasko, 80 Fed. App'x at 783. The second issue involves clarification of equitable relief for breach of fiduciary duty or denial of benefits. In its August 15, 2002 Memorandum, this Court concluded that Defendants breached their fiduciary duty. (Doc. 123 at 6-7.) Plaintiff appealed because the Court did not indicate what relief, if any, it was ordering for Defendants' breach. Id. at 784. The United States Court of Appeals for the Third Circuit remanded for clarification as to what equitable relief, if any, should be awarded not only for breach of fiduciary duty, but also for Defendants' failure to make appropriate contributions into Plaintiff's pension accounts. Id. at 784. For the reasons set forth in this Memorandum, both Plaintiff's and Defendants' Motions for Attorney's Fees will be denied. In addition, prejudgment interest will be awarded to Plaintiff.

BACKGROUND

Plaintiff commenced a three (3) count action on December 7, 1998. (Doc. 123 at 2.) As noted in previous memoranda regarding this action, the dispute in this case centered on a compensation arrangement that existed between Plaintiff and Defendants. (Doc. 100 at 11.) A non-jury trial was held in October of 2001 and on December 18, 2001 the Court entered an order finding that the $6,100 that Defendants paid Plaintiff on January 17, 1997 was earned in 1996, and therefore, Defendants had to make appropriate contributions to the ERISA plan for the $6,100. (Doc. 123 at 2.) The Court further concluded that Plaintiff was not entitled to anything else in the form of compensation or bonuses. (Id.)

After the December 2001 judgment, both parties filed cross-motions for reconsideration and/or amendment of judgments and cross-motions for attorney's fees. (Id. at 1.) On August 15, 2002, the Court found that it did not discuss Count III in its 2001 memorandum. (Id.) The Court then concluded that Defendants breached their fiduciary duty under § 502(A)(2) of the Employee Retirement Income Security Act of 1974 ("ERISA") as amended, 29 U.S.C. § 1132(a)(1)(B) regarding the $6,100 that Defendants paid on January 17, 1997 but not to the additional $8,100 Plaintiff sought but was denied. (Id.) In addition, the Court denied both parties' motions for attorney's fees under § 502(g) of ERISA. (Id.)

Both parties appealed the judgments of this Court. On November 17, 2003 the Third Circuit Court of Appeals affirmed the judgment that Plaintiff was entitled to contributions to its ERISA plans based on the $6,100 of additional compensation earned in 1996. Tomasko, 80 Fed. App'x. at 784. It vacated the portion of the Court's order denying attorney's fees to both parties and remanded for consideration of the Ursic factors. Id. at 783. It further remanded for clarification as to: (1) whether the Court intended, in the exercise of its discretion, to grant any equitable relief to Plaintiff for Defendants' breach of fiduciary duty; and (2) on what basis it intended to grant such relief. Id. at 784.

The Court has reviewed Defendants' Brief in Support of Motion for Attorney's Fees (Doc. 113), Plaintiff's Brief in Opposition to Motion for Attorney's Fees (Doc. 117), Defendants' Reply Brief in Support of Motion for Attorney's Fees (Doc. 119), Plaintiff's Supplemental Brief in Support of Plaintiff's Motion for Attorney's Fees and In Opposition to Defendants' Motion for Attorney's Fees (Doc. 156) and Defendants' Supplemental Brief in Opposition to Plaintiff's Motion for Attorney's Fees and In Support of Defendants's Motion for Attorney's Fees (Doc. 157.) The matter is now ripe for disposition.

DISCUSSION

1. Attorney's Fees - Legal Standard

Section 502(g)(1) of ERISA provides that "the 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) (2006). The statute itself does not offer criteria to aid a court in its exercise of discretion. However, the Court of Appeals set forth five factors that a court must consider when determining whether to grant an award of attorney's fees. McPherson v. Employees' Pension Plan of Am. Re-Ins. Co., Inc., 33 F.3d 253, 254 (3d Cir. 1994) (citing Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983)). The five factors are:

(1) the offending parties' culpability or bad faith;

(2) the ability of the offending parties to satisfy an award of attorneys' fees against the offending parties;

(3) the deterrent effect of an award of attorneys' fees against the offending parties;

(4) the benefit conferred on members of the pension plan as a whole;

(5) the relative merits of the parties' position.

Id. Upon remanding the issue of attorney's fees, the Court of Appeals articulated that a District Court must undertake an analysis of all five factors. Tomasko, 80 Fed. App'x. at 783 (emphasis added). However, "No single criterion articulated in Ursic is decisive. They should be considered in balance and relationship to others." Vintilla v. United States Steel Corp. for Employee Pension Benefits, 642 F. Supp. 295, 296 (W.D. Pa. 1986), aff'd, 815 F.2d ...


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