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Foust v. Lincoln National Life Insurance Co.

United States District Court, D. Utah, Central Division

November 21, 2019

DON FOUST, Plaintiff,
v.
LINCOLN NATIONAL LIFE INSURANCE COMPANY, Defendant.

          ORDER AND MEMORANDUM OF DECISION

          TENA CAMPBELL, U.S. DISTRICT COURT JUDGE

         Plaintiff Don Foust filed this action against Defendant Lincoln National Life Insurance Company (“Lincoln”), claiming Lincoln's denial of certain insurance benefits violated the Employee Retirement Income Security Act (“ERISA”). On September 24, 2019, the court agreed and granted Mr. Foust's motion for summary judgment. See Foust v. Lincoln Nat'l Ins. Co., No. 2:17-cv-01208-TC, 2019 WL 4645416 (D. Utah Sept. 24, 2019).

         Mr. Foust now requests 10% prejudgment interest on the benefits awarded, $400.00 in costs, and $117, 647.00 in attorney's fees. (ECF No. 52.) Lincoln does not challenge the rate of prejudgment interest or the award of costs.[1] The sole disputed matter is the request for attorney's fees.

         ANALYSIS

         I. Entitlement to Fees

         In an ERISA action, “the court in its discretion may allow a reasonable attorney's fee and costs of action to either party.” 29 U.S.C. § 1132. The Tenth Circuit has established five factors for the court to weigh in determining whether to award attorney's fees:

(1) the degree of the opposing party's culpability or bad faith; (2) the opposing party's ability to satisfy an award of fees; (3) whether an award of fees would deter others from acting under similar circumstances; (4) whether the party requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties' positions. Gordon v. U.S. Steel Corp., 724 F.2d 106, 109 (10th Cir. 1983). No. single factor is dispositive and a court need not consider every factor in every case.

Cardoza v. United of Omaha Life Ins. Co., 708 F.3d 1196, 1207 (10th Cir. 2013).

         Reviewing the factors, the court elects to award fees to Mr. Foust.

         First, although both parties agree that Lincoln did not act in bad faith, Lincoln still has some level of culpability for wrongfully denying Mr. Foust's claim. In particular, the court notes that it found Lincoln's denial to be not only incorrect, but arbitrary and capricious, suggesting a level of blameworthiness that goes beyond a mistaken or negligent denial of a claim. See, e.g., McPherson v. Emps.' Pension Plan of Am. Re-Ins. Co., Inc., 33 F.3d 253, 256-57 (3d Cir. 1994) (“[B]ad faith normally connotes an ulterior motive or sinister purpose. . . . A losing party may be culpable, however, without having acted with an ulterior motive. In a civil context, culpable conduct is commonly understood to mean conduct that is blameable [or] censurable.”) (internal quotations omitted).

         Second, while Lincoln faults Mr. Foust for not providing evidence of Lincoln's ability to pay fees, Lincoln also provides no evidence showing that it could not pay fees. So at best, this factor is neutral. Third, an award of attorney's fees is likely to provide at least some deterrent effect. See, e.g., Carpenters S. Cal. Admin. Corp. v. Russell, 726 F.2d 1410, 1416 (9th Cir. 1984) (“If defendant employers face the prospect of paying attorney's fees for successful plaintiffs, they will have added incentive to comply with ERISA.”). The fourth factor favors Lincoln, as the suit was not brought to favor all participants or beneficiaries and did not resolve any unique legal questions. But the fifth favors Mr. Foust. Although Mr. Foust did not prevail on every aspect of his claim, on the whole his position was far more meritorious.

         In sum, the first, third, and fifth factors favor providing Mr. Foust with an award of attorney's fees.

         II. Amount of Award

         In determining the amount of attorney's fees to award, the court uses the lodestar method, which requires determining “the number of hours reasonably expended on the litigation multiplied by a reasonable ...


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