United States District Court, E.D. Michigan, Northern Division
FRANCES M. WOLF, Plaintiff,
CAUSLEY TRUCKING, INC., A Michigan Corporation, and GREGORY CAUSLEY, Defendants.
ORDER DENYING DEFENDANT'S MOTION FOR ATTORNEY
FEES AND COSTS
L. LUDINGTON, United States District Judge
matter involves an action under the civil enforcement
provision of the Employment Retirement Income Security Act
(“ERISA”), 29 USC § 1132. Plaintiff Frances
M. Wolf brought this action to recover death benefits
following the death of her husband, Randy Rieck
(“Rieck”). Rieck was Vice President and Director
of Maintenance at Defendant Causley Trucking, Inc.
(“Causley Trucking”) a closely-held corporation
wholly owned by Rieck's uncle, Defendant Gregory Causley
“Defendants”). After Mr. Rieck's death,
Plaintiff applied for benefits under Causley Trucking's
Death Benefit Only Plan (the “Plan”). Wolf was
awarded $206, 405.39.
with the benefits determination, Wolf filed an appeal with
Causley, who upheld the determination. Wolf filed suit in the
Saginaw County Circuit Court, which was removed by Defendants
to this Court on July 16, 2015 on the grounds that Wolf's
claims were preempted by ERISA. Wolf filed an amended
complaint on August 13, 2015. On August 31, 2015, Defendants
moved to dismiss all but the first count of Wolf's
amended complaint for denial of benefits under the plan. Wolf
then moved to remand the action on September 17, 2015. On
February 5, 2016, the Court denied Wolf's motion to
remand, and granted Defendants' motion to dismiss in
part. Plaintiff's denial of benefits claim (Count I) and
her estoppel claim (Count IV) survived in their entirety, and
her breach of fiduciary duty claim (Count II) survived in
part. The matter was referred to Magistrate Judge Patricia T.
Morris. The parties filed cross-motions for summary judgment
on December 16, 2016.
March 23, 2017, Judge Morris issued her report, recommending
that Defendants' motion be granted and Plaintiff's
motion be denied. Plaintiff timely filed objections. On May
23, 2017, the Court entered an order overruling
Plaintiff's objections, adopting the report and
recommendation, granting Defendants' motion for summary
judgment, and denying Plaintiff's motion to vacate the
administrative decision. On the same day, judgment was
entered for Defendants and Plaintiff's complaint was
dismissed. On June 21, 2017, Plaintiff filed a notice of
appeal. Thereafter, Defendants filed the instant motion
seeking $130, 623 in attorney fees and $2, 386.53 in costs.
For the reasons that follow, the motion will be denied.
November 17, 2004, Causley Trucking purchased several
universal life insurance policies from Principal Life
Insurance Company on the lives of certain key employees
including Rieck. (Doc. 33 at PGID 387). Causley Trucking was
the owner and beneficiary of the policy and paid all premiums
for the policy. (Doc. 11, Ex. 2, at PGID 223; Doc. 40 at PGID
723-24). On November 30, 2004, the Board of Directors of
Causley Trucking adopted a “Resolution Authorizing A
Death Benefit Only Plan, ” which set forth the terms of
the Death Benefit Only Plan (“Plan”). (Doc. 8 Ex.
A). The Plan was created to “provide death benefits to
the beneficiaries of [Causley Trucking's] eligible
employees, if death occurs while the employee remains in the
employment of [Causley Trucking] or has retired from
employment after attaining age 65 with a minimum of 20 years
of service.” (Id. at ¶ 1). The Plan
provides that the “Board of Directors shall determine
which employees, hereafter referred to as
‘Participants, ' are eligible for the Plan and the
amount of death benefits payable on the life of each
Participant under the Plan.” (Id. at ¶
Plan provides that Causley Trucking would enter into a DBO
agreement with each participant. (Id.). The Plan
further stated that Causley Trucking “may wish to
purchase life insurance policies” to ensure sufficient
assets to “meet its obligation to pay the death
benefits provided for under this Plan.” (Id.
at ¶ 3). These “key man” insurance policies
were also intended to ensure the company would have
sufficient assets available to replace the deceased
employee's value to the company and carry on until it
could find a suitable replacement employee. (Doc. 40 at PGID
725-26). Causley Trucking was “designated as owner and
beneficiary of any such policies purchased and all rights and
benefits accruing from such policies shall belong solely to
[Causley Trucking]. Participants shall have no rights or
interest in such policies.” (Id.). Causley, as
president of Causley Trucking, would be the administrator and
fiduciary of the Plan. (Id. at ¶ 4). Finally,
the Plan provides that the “Plan's funding policy
shall be that all the death benefits payable under the Plan
shall be provided out of the general assets of [Causley
Trucking]. Such general assets shall include any insurance
proceeds received by the Corporation at the death of a
Participant.” (Id. at ¶ 7).
to the Plan, Causley Trucking entered into a DBO agreement
with Rieck on November 30, 2004 (“RDBOA”). (Doc.
8 Ex. B). The RDBOA provides that Rieck, the
“Participant, ” was entitled to “payments
in the amount no less than the cash value of the
policy in equal installments over 10 years to the
Participant's spouse while living.” (Id.
at ¶ 1) (emphasis added). Notably, the RDBOA does not
define “cash value.”
to the Summary of Policy Values provided by Principal Life,
the policy had a fixed face value of $1, 059, 496,
representing the amount payable to Causley Trucking at
Rieck's death. (Doc. 40 at PGID 724; Doc. 36 Ex. 6 at
PGID 499-502). As set forth in Principal Life's Summary
of Policy Values, the surrender value of the policy at
Rieck's death was $206, 405, less a “surrender
charge” of $24, 706, yielding a “net surrender
value” of $181, 699. Doc. 36 Ex. 6 at 499-502. Rieck
passed away on August 7, 2014; Plaintiff was his beneficiary
under the Plan and RDBOA. (Doc. 8 ¶ 9; Doc. 33, at PGID
391). Although “cash value” was undefined in the
RDBOA, Plan Administrator Causley determined by reference to
industry usage that “cash value” referred to the
net surrender value of the policy, or the value of the policy
if cancelled prior Rieck's death, and not to the fixed
face value of the policy. Id.
complaint alleged that one or two weeks prior to Rieck's
death, Causley informed Plaintiff that she would receive
$400, 000 under the Plan. (Doc. 8 at ¶ 22). After
Rieck's death, Causley advised Plaintiff that payment
would be approximately $300, 000, and later $350, 000.
(Id. at ¶¶ 23-24). Plaintiff alleged that
Causley then arbitrarily reduced the death benefits amount to
$206, 405.39. (Id. at ¶ 25). Defendants contend
that Plaintiff misunderstood Causley's statements, as he
was not intending to represent to Plaintiff that she would
receive more than cash value of the policy. Rather, Causley
intended to convey to Plaintiff that the $400, 000 comprised
the death benefit under the RDBOA of roughly $200, 000,
in addition to $25, 000 from a separate life
insurance policy the company provided to Rieck, and $175, 000
from a separate life insurance policy Rieck purchased for
himself through his company retirement plan account.
(See Doc. 40 at PGID 727).
argue that they should be awarded fees and costs as the
King factors weigh in favor of such an award.
Sec'y of Dep't of Labor v. King, 775 F.2d
666, 669 (6th Cir. 1985). Specifically, Defendants
argue that Plaintiff maintained claims lacking any basis in
law or fact, took unsupportable legal positions, and took
other vexatious action such as prematurely appealing the
Court's denial of remand, and repeatedly litigating the
issue of remand without filing a procedurally proper motion.
Mot. at 2-3, ECF No. 54. Defendants also argue that Plaintiff
is financially capable of satisfying the award of fees and
costs, and that entering such an award in this case would
deter similarly situated Plaintiffs from filing baseless
claims. Id. at 11.
contends that the King factors militate against an
award in this case. Specifically, she argues that she pursued
this action in good faith, with an honest belief that she was
entitled to additional benefits under the RDBOA. Resp. at 3,
ECF No. 56. Plaintiff argues she believed she was entitled to
additional benefits because the language of the RDBOA was
unclear, and because Mr. Causley made three different
representations to her regarding the money she would receive
under the plan. Id. at 3-4. Plaintiff also contends
that she is not financially capable of financing a fee award,
that a fee award would have a chilling effect on ERISA
beneficiaries' ability to protect their rights, and that
her arguments in this case had merit. Resp. at 5-9, ECF No.
parties also contest the reasonableness of fees requested in
this case, including the hours worked and rates charged by
defense counsel. As the Court finds a fee award is not
warranted, the Court will not address the reasonableness of
the fees requested.
to 29 U.S.C § 1132(g), “the court in its
discretion may allow a reasonable attorney's fee and
costs of action to either party.” The party seeking
fees need not be a “‘prevailing party' to be
eligible for an attorney's fees award.” Hardt
v. Reliance Standard LifeIns. Co., 560 U.S.
242, 252 (2010). Rather, they must simply achieve “some
success on the merits.” Id. at 256. “The
punishment of bad faith litigants is a legitimate purpose
under ERISA, but not the only purpose.” Armis ...