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Davis v. Reliance Standard Life Insurance Co.

May 11, 2010

ALESHA DAVIS
v.
THE RELIANCE STANDARD LIFE INSURANCE COMPANY



The opinion of the court was delivered by: Goldberg, J.

MEMORANDUM OPINION

As Plaintiff's substantive claims in this ERISA case have already been settled by the parties, the only issue before the Court is whether Plaintiff is entitled to attorney's fees under 29 U.S.C. § 1132(g). After considering the factors set forth by Third Circuit precedent, attorney's fees and costs will not be awarded because we cannot properly determine whether Defendant was culpable or acted in bad faith nor can we discern the relative merits of the parties' positions.

I. FACTUAL AND PROCEDURAL BACKGROUND

On April 8, 2008, Plaintiff, Alesha Davis, filed an amended complaint, raising claims under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and state law.*fn1 The amended complaint alleged the following:

Plaintiff was employed at Option Care, Inc., as a nurse beginning in June 2003. At that time, she purchased short and long term disability insurance from Defendant, The Reliance Standard Life Insurance Company. On March 3, 2005, Plaintiff became totally disabled and stopped working. On March 9, 2005, she filed a claim for disability. Defendant approved the claim and began paying short term benefits, however these benefits were stopped prematurely in July 2005. After repeated requests by Plaintiff, Defendant subsequently paid out the remaining short terms benefits. On June 8, 2006, Plaintiff was approved for long term benefits, however Defendant reduced these benefits after 5 months, in anticipation of Plaintiff's upcoming Social Security eligibility. In May 2007, the long term benefits were discontinued based on a lack of necessary medical information, however Plaintiff claims that the appropriate medical information was eventually provided. (See generally, Am. Compl.).

On May 12, 2008, Defendant filed a motion to dismiss, arguing that Plaintiff's claims under the short term disability policy were governed by ERISA, and therefore her state law claims were preempted. On December 12, 2008, we found that Defendant's motion was more properly viewed as a motion for summary judgment, and thus, we denied the motion without prejudice.

On September 4, 2009, the parties met with Magistrate Judge L. Felipe Restrepo for a settlement conference.*fn2 The parties agreed to settle the case for the sum of five thousand dollars ($5,000.00), however Plaintiff reserved her right to seek attorney's fees under ERISA.

The parties disagree as to the significance of the $5,000.00 settlement. Plaintiff argues that, after having received full, short term disability benefits, she was entitled to $3,627.75 of unpaid long term disability benefits. Thus, according to Plaintiff, the final settlement exceeded the total amount of unpaid benefits by more than 27%. (Pl.'s Mot., pp. 3-4). Defendant counters that the $5,000.00 settlement was a "nuisance value." Defendant cites to the amended complaint which alleges conditions that could have caused total disability and would have made Plaintiff eligible for over $300,000.00 in benefits. (Def.'s Resp., p. 5). Defendant further points out that Plaintiff has ignored the numerous state law claims that she brought related to the short term disability benefits.

On October 5, 2009, Plaintiff moved for attorney's fees and costs under 29 U.S.C. § 1132(g).*fn3

In doing so, Plaintiff never requested a hearing or an opportunity to supplement the record before this Court.

II. LEGAL ANALYSIS

"ERISA allows a prevailing party to recover 'a reasonable attorney's fee and costs of action.'" Hahnemann University Hosp. v. All Shore, Inc., 514 F.3d 300, 310 (3d Cir. 2008) (quoting 29 U.S.C. § 1132(g)(1)).*fn4 Before awarding attorney's fees or costs, a court must consider the five factors announced in Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983). Those 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; (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; and (5) the relative merits of the parties' position[s]." Id.

It is not necessary that a "party must demonstrate all of them in order to warrant an award of attorney's fees, but rather they are elements a court must consider in exercising its discretion." Fields v. Thompson Printing Co., 363 F.3d 259, 275 (3d Cir. 2004). The Third Circuit considers analysis and consideration of each of these five factors to be mandatory, but allows the district court to consider additional factors if relevant. Anthuis v. Colt Industries Operating Corp., 971 F.2d 999, 1012 (citing Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir. 1980) ...


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