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Tomasko v. Weinstock

July 29, 2008

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 is an issue presented on appeal to the United States Court of Appeals for the Third Circuit and remanded to this Court for further proceedings consistent with that court's opinion. Tomasko v. Weinstock, 255 Fed. App'x 676 (3d Cir. 2007). The issue presented concerns Plaintiff Ronald T. Tomasko's Motion for Attorney's Fees. (Docs. 172.) On August 15, 2002, this Court denied attorney's fees to both parties. (Doc. 123.) Both parties appealed the denial, and on November 17, 2003 the Third Circuit Court of Appeals remanded the Order. Tomasko v. Weinstock, 80 Fed App'x 779 (3d Cir. 2003). On September 5, 2006, the Court again considered Plaintiff Tomasko and Defendants Ira H. Weinstock, P.C.'s motions for attorneys fees, and denied both motions. (Docs. 102, 106, 158.) Both parties appealed the Court's denial of attorney's fees, and on November 26, 2007, the Third Circuit Court of Appeals remanded the Order as to Plaintiff Tomasko's attorney's fees. Tomasko v. Weinstock, 255 Fed. App'x 676 (3d Cir. 2007). For the reasons set forth below, Plaintiff Tomasko's Motion for Attorney's Fees (Doc. 172) will be granted in part and denied in part.

BACKGROUND

Plaintiff Ronald T. Tomasko commenced a three (3) count action on December 7, 1998. (Doc. 123, at 2.) As noted in previous memoranda, 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 $6100 that Defendants paid Plaintiff on January 17, 1997 was earned in 1997, and therefore, Defendants had to make appropriate contributions to the ERISA plan for the $6100. (Doc. 123 at 2.) The Court further concluded that Plaintiff was not entitled to anything else in 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 attorneys' fees. (Id. at 1.) On August 15, 2002, the Court noted 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 $6100 that Defendants paid on January 17, 1997, but not regarding the additional $8100 Plaintiff sought but was denied. (Id.) In addition, the Court denied both parties' motions for attorneys' fees under § 502(g) of ERISA. (Id.) This decision was appealed to the Third Circuit Court of Appeals, and was remanded on November 17, 2003. Tomasko v. Weinstock, 80 Fed App'x 779 (3d Cir. 2003). The Court again considered the issue of attorneys' fees, and again denied fees for both parties. (Doc. 158.) The parties both appealed, and the Third Circuit Court of Appeals affirmed the Court's decision as to Defendants' attorney's fees petition, and vacated and remanded the issue as to Plaintiff's attorney's fees. Tomasko v. Weinstock, 255 Fed. App'x 676 (3d Cir. 2007). The matter is now ripe for disposition.

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). The statute itself does not offer criteria to aid a court in its exercise of discretion. "There is no presumption that a successful plaintiff in an ERISA suit should receive an award [of attorney's fees] in the absence of exceptional circumstances." "[T]he defendant in an ERISA action usually bears the burden of attorney's fees for the prevailing plaintiff or plaintiff class, thus 'encourag[ing[ private enforcement of the statutory substantive rights, whether they be economic or non-economic, through the judicial process." Brytus v. Spang & Co., 203 F.3d 238, 242 (3d Cir. 2000) (quoting REPORT OF THE THIRD CIRCUIT TASK FORCE, COURTAWARDEDATTORNEYFEES15 (Oct. 8, 1985), reprinted at 108 F.R.D. 237, 250).

The Third Circuit Court of Appeals set forth five (5) 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 (5) 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 attorneys' fees, the Third Circuit Court of Appeals articulated that the District Court must undertake an analysis of all five (5) factors. However, "[n]o single criterion articulated in Ursic is decisive. They should be considered in balance and relation 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 697 (3d Cir. 1987). Therefore, the Court will analyze the five (5) Ursic factors as they relate to Plaintiff Tomasko's request for attorney's fees.

DISCUSSION

I. Prevailing Party

A prevailing party is one who succeeds on any significant issue in the litigation. See generally Foley v. I.B.E.W. Local 98 Pension Fund, 271 F.3d 551 (3d Cir. 2001). Although Plaintiff Tomasko was not successful in all aspects of this case, he was the prevailing party as to certain claims. Specifically, the Court previously found that Defendants breached their fiduciary duty under § 502(A)(2) of ERISA regarding the $6100 that Defendants paid on January 17, 1997 and that Plaintiff was entitled to a pension plan contribution of that amount. "Attorneys' fees may be awarded to prevailing parties in actions brought under [ERISA]." McPherson, 33 F.3d at 254. But, "there is no presumption that a successful plaintiff in an ERISA suit should receive an award in the absence of exceptional circumstances." Id. (citing Ellison v. Shenango, Inc. Pension Bd., 956 F.2d 1269, 1273 (3d Cir. 1992)). As Plaintiff Tomasko is a prevailing party, the Court will consider Plaintiff Tomasko's application for attorney's fees pursuant to these standards.

II. Bad Faith or Culpability

The first factor in determining whether to award attorney's fees in an ERISA case is the offending party's bad faith or culpability. McPherson, 33 F.3d at 254. The Court must consider whether the losing party acted with bad faith or culpability. Asprino v. Independence Blue Cross/Pa. Blue Shield, Civ. A. No. 96-7788, 1998 WL 96447, at *3 (E.D. Pa. Mar. 3, 1998). A party is not culpable simply because it did not prevail in litigation. McPherson, 33 F.3d at 257. Bad faith normally suggests an ulterior motive or sinister purpose. Id. at 256. "A losing party may be culpable, however, without having acted with an ulterior motive." Id. Culpable conduct is generally defined as conduct which is "blameable; censurable; . . . at fault; involving the breach of a legal duty or the commission of a fault. . . . Such conduct normally involves something more than simple negligence . . . . [On the other hand, it] implies that the act or conduct spoken of is reprehensible or wrong, but not that it involves malice or a guilty purpose."

Id. at 256-57 (quoting BLACK'S LAW DICTIONARY (6th ed. 1990)).

Previously, this Court held that Plaintiff Tomasko acted in bad faith by misleading his employer, Defendants Weinstock, regarding his future plans of employment.

However, the Third Circuit Court of Appeals held that "when analyzing Ursic's first factor, [the court should] only consider[ ] good or bad faith which ha[s] a direct bearing on the plaintiff's obtaining, or the defendant's withholding, of the ERISA benefits at issue." Tomasko, 255 Fed. App'x at 681-82. The Third Circuit Court of Appeals further held that Tomasko's culpability of conduct only pertained to his behavior in changing jobs, and not to whether he had earned the disputed compensation. Id. at 681. As this conduct did not pertain to ERISA liability, it is not relevant to this first factor. Id.

As Plaintiff Tomasko has not demonstrated bad faith or culpable conduct with respect to the ERISA benefits at issue, the first Ursic factor weighs in favor of Plaintiff for an award of fees.

III. The Losing Party's Ability to Satisfy a Fee Award

The second Ursic factor is "the ability of the offending parties to satisfy an award of attorneys' fees." Ursic, 719 F.2d at 673. As noted by the Third Circuit Court of Appeals, when considering Plaintiff Tomasko's fee petition as a prevailing party, the Court will only consider the offending party's ability to pay. This factor focuses only on Defendant Weinstock'sability to pay.In their brief, Defendants stated that "[t]he Defendants' ability to pay attorney's fees is really not in question, however the amount of attorney's fees sought is clearly unreasonable. . . ." (Doc. 111, at 12.) A reasonableness inquiry is not appropriate at this juncture; rather, the inquiry is whether the ...


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