Opinion
CIVIL ACTION No. 01-2194, SECTION "J" (5).
June 16, 2003.
ORDER AND REASONS
Before the Court is the Motion to Set Attorney's Fees, Costs and Interest Rate (Rec. Doc. 56), filed by plaintiff, Joy Acosta. Defendants oppose the motion. The motion, set for hearing on Wednesday, June 11, 2003, is before the Court on briefs without oral argument.
BACKGROUND
On April 3, 2003, this Court entered an order granting summary judgment in favor of plaintiff, Joy Acosta, on her claims brought under ERISA for benefits owed her under a deferred compensation plan provided by defendant Bank of Louisiana ("BOL") for her husband, a former longtime BOL officer. In that order, the Court found that BOL had breached its agreement with Raymond Acosta, whether it applied a de novo review or abuse of discretion standard in considering plaintiff's claims. The Court thus found that plaintiff (as designated beneficiary for her now deceased spouse) was entitled to a benefit of $200,000 payable in 120 installments, which should have commenced in October, 2000. In addition, under the terms of the Deferred Compensation agreement, plaintiff was entitled to contractual interest because her husband had deferred receipt of payments under the agreement when he reached age 65.
Plaintiff subsequently filed the instant motion, seeking an award of attorney's fees pursuant to 29 U.S.C. § 1132(g)(1), interest based on the prevailing U.S. Treasury rate on the date that Raymond Acosta became eligible for the payments, and costs. BOL opposes an award of attorney's fees arguing, inter alia, that BOL's denial of benefits was not in bad faith, that BOL cannot afford to pay the fees, and that imposing a fee award would not have a deterrent effect. BOL also argues that interest should be calculated at the treasury bill rate in effect each month the payment would have been due, if Raymond Acosta had not deferred payment of his benefits. BOL has not submitted any opposition to plaintiff's bill of costs.
APPLICABLE LEGAL STANDARDS
Section 502(g) of ERISA provides that "the court in its discretion may allow a reasonable attorney's fee and costs . . . to either party." 29 U.S.C. § 1132(g)(1). Although such awards are discretionary, courts apply the five factors set forth in Iron Workers Local No. 272 v. Bowen in determining whether to award fees. 624 F.2d 1255 (5th Cir. 1980). The Bowen 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." Id. at 1266.
Once a court determines that the Bowen factors support a fee award, it utilizes the "lodestar method" to calculate the amount of the award.Weqner v. Standard Ins. Co., 129 F.3d 814, 822 (citations omitted). The lodestar amount may then be reduced or enhanced based on the factors provided in Johnson v. Georgia Highway Express, 488 F.2d 717-19 (5th Cir. 1974).
The Johnson factors are: (1) the time and labor required for the litigation; (2) the novelty and complication of the issues; (3) the skill required to properly litigate the issues; (4) whether the attorney had to refuse other work to litigate the case; (5) the attorney's customary fee; (6) whether the fee is fixed or contingent; (7) whether the client or case circumstances imposed any time constraints; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) whether the case was "undesirable;" (11) the attorney-client relationship and whether that relationship was long-standing; and (12) awards made in similar cases. Johnson, 488 F.2d at 717-19.
DISCUSSION Attorney's Fees
Applying these precedents, the Court finds that plaintiff is entitled to an award of attorney's fees.The Bowen Factors
Turning first to the Bowen factors, the first factor concerns the bad faith or culpability of a party. Bowen, 624 F.2d at 1266. In considering the first factor, the Court notes that it explicitly found that BOL's denial of benefits would not survive scrutiny under an abuse of discretion standard, because the interpretation of the plan administrator "directly contradict[ed] the plain meaning of the plan language." Order of April 3, 2003 at 15-16, quoting Gosselink v. American Tel. Tel., Inc., 272 F.3d 722, 727 (5th Cir. 2001). Given this, while the Court does not conclude that BOL acted in bad faith, the Court finds that the frivolousness of BOL's defense renders it culpable to a degree that satisfies the first factor of the Bowen analysis. See, Weqner, 129 F.3d at 821.
As for the second Bowen factor, the ability to satisfy an award of fees, BOL argues that it cannot afford to pay the fee because it is "less than a One Hundred Million Dollar bank presently operating under a Memorandum of Understanding." Rec. Doc. 57 at 2. Given the fact that the fee award herein is for less than $20,000, and BOL has submitted no concrete evidence that it cannot satisfy such an award, the Court finds that this factor also supports the award of fees.
The third Bowen factor addresses the deterrent effect of a fee award on other parties. While the Court agrees with BOL that the particular situation at issue in this case is unlikely to arise again, the Court finds that an award herein may well deter other institutions from attempting to terminate a plan to the detriment of the rights of vested participants, in the hope that because there are few qualified participants (or, as in this case, only one), the termination will go unchallenged. Thus, the Court finds that the third Bowen factor is satisfied.
The fourth Bowen factor considers whether the party requesting fees sought to benefit all participants of an ERISA plan or resolve a significant legal question. Because plaintiff herein was the only plan participant, and the Court's decision rested on well-established law, plaintiff has failed to meet this prong of the Bowen test.
Last, Bowen directs the Court to consider the relative merits of the parties' positions. The Court's prior order granting summary judgment in plaintiff's favor demonstrates the meritoriousness of plaintiff's position vis-a-vis the defendants' position; accordingly, the fifth Bowen factor also weighs in favor of a fee award to plaintiff. Thus, the Court finds that a fee award is justified in this case because four of the fiveBowen factors are met.
The Lodestar
Having concluded that plaintiff is entitled to attorney's fees, the Court must conduct a lodestar analysis to determine the amount of the award. Weqner, 129 F.3d at 822. The lodestar is calculated by multiplying the number of compensable hours reasonably expended by a rate that is considered appropriate in the community. Shipes v. Trinity Industries, 987 F.2d 311, 319-20 (5th Cir. 1993).
In this case, plaintiff's counsel, Matthew Block, has supplied affidavits indicating that he worked 115.20 hours on this matter, and that paralegal Renee Chiasson spent 8.7 hours working on the case. Plaintiff's counsel proposes an hourly rate of $160.00 per hour for his time and $50.00 per hour for Chiasson's time.
Counsel for defendants has not traversed the hours worked or the hourly rates charged. Moreover, the Court has carefully reviewed the affidavits and finds that they do not contain excessive or duplicative time. See, Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993). The hourly rates sought represent the customary billing rates for plaintiff's counsel, and are in line with the prevailing market rate in this district. See, Louisiana Power Light Co. v. Kellstrom, 50 F.3d 319, 328 (5th Cir. 1995). Accordingly, the Court finds that the lodestar for attorney Matthew Block is $18,432 (115.20 hours X $160.00); the lodestar for Chiasson is $435 (8.7 hours X $50.00).
The Johnson Factors
Plaintiff argues that the lodestar awards in this case should be enhanced by consideration and application of the Johnson factors. However, the lodestar may not be adjusted due to any Johnson factor if that factor has already been taken into consideration in determining the lodestar. Shipes, 987 F.2d at 319-20. In this case, of those Johnson factors that were applicable, all but the Sixth — whether the fee charged is fixed or contingent — were taken into account in determining the lodestar. However, as this circuit has recognized, the Supreme Court has barred the use of the contingency fee factor as a basis for enhancing a lodestar award. See, Shipes, 987 F.2d at 323 ("[W]e now hold that the contingent nature of the case cannot serve as a basis for enhancement of attorneys' fees awarded to prevailing plaintiffs under traditional fee shifting provisions."). Thus, no legal basis exists for enhancing the attorney fee award above the lodestar amount, and plaintiff is entitled to an award of $18,867 ($18,432 + $435, representing the lodestar of both Block and Chiasson) for attorney's fees.
See supra, note 1.
Interest
In her motion, plaintiff argues that interest on the past amounts due should be calculated at a rate of 6.01%, the prevailing rate on July 23, 1995, when Raymond Acosta elected to defer payments which were due on his 65th birthday. BOL counters that the interest rate should vary monthly in accordance with treasury bill rate in effect at each point a new monthly payment would have been due.
The Court's review of the Agreement indicates that BOL has the better side of this argument. Under the Agreement, interest on deferred payments was to "be paid in an amount to be negotiated between the parties but if agreement cannot be reached then the interest shall be in accordance with the 5 year T-note rate." Agreement, ¶ 2. Thus, the treasury bill rate was a default rate which appears to have been selected as a convenient vehicle to assure that interest at a fair market rate would be paid in the absence of a negotiated rate. To adopt plaintiff's argument would mean that the parties intended for one side to enjoy a windfall rather than to ensure that fair market interest was received for what was essentially a loan of the money by Raymond Acosta to BOL. As it happens, interest rates have trended downward since 1995, so imputing the 6.01% rate would benefit plaintiff; however, if rates had trended upward, the "snapshot" approach would have represented a windfall to BOL. On the facts before the Court, the Court finds that interest should be calculated at the five-year treasury bill rate applicable for each month an underpayment took place.
This was the intention of the Court's statement in its Order Reasons entered April 3, 2003 that Acosta was "entitled to interest in accordance with the five-year treasury note rate prevailing at the applicable time," although the Court acknowledges this statement was not as clear as it could have been.
Accordingly,
IT IS ORDERED that plaintiff's Motion to Set Attorney's Fees, Costs and Interest Rate (Rec. Doc. 56) should be and is hereby GRANTED, and plaintiff is hereby awarded attorney's fees in the amount of $18,867; interest to be calculated as set forth herein; and costs in the amount of $2466.53.