Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03506/USCOURTS-cand-3_04-cv-03506-34/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Employee Benefits

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JOSEPH N. MINIACE,

Plaintiff,

 v.

 PACIFIC MARITIME ASSOCIATION,

Defendant.

____________________________________/

PACIFIC MARITIME ASSOCIATION,

MARITECH CORPORATION, 

Counterclaimant and CrossClaimants.

 v.

JOSEPH N. MINIACE, JEANNETTE M.

COBURN, MICHAEL E. CORRIGAN,

BENMARK, INC., CORRIGAN & COMPANY,

BENMARK WEST,

Counterdefendant and Crossdefendants. /

No. C 04-03506 SI

ORDER DENYING IN PART AND

GRANTING IN PART CROSSDEFENDANT’S MOTION FOR FEES

AND COSTS

Cross-defendant Jeannette Coburn has filed a motion for attorneys’ fees and expenses. The

motion is scheduled for hearing on April 4, 2008. Pursuant to Civil Local Rule 7-1(b), the Court finds

this matter appropriate for resolution without oral argument, and hereby VACATES the hearing.

Having considered the arguments of the parties and the papers submitted, and for good cause shown,

the Court hereby DENIES Coburn’s motion for attorneys’ fees and GRANTS Coburn’s motion for costs.

Case 3:04-cv-03506-SI Document 499 Filed 03/28/08 Page 1 of 4
United States District Court

For the Northern District of California

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DISCUSSION

The background of this case is discussed in the Court’s March 30, 2007 Order setting forth

findings of fact and conclusions of law. In that order, the Court dismissed or denied all claims brought

by Pacific Maritime Association and Maritech Corporation (collectively “PMA”) against crossdefendant Jeanette Coburn. In so doing, the Court ruled that Coburn, not PMA, was entitled to the

benefits paid out upon the death of Coburn’s husband, Thomas McMahon, because there was no

evidence that Coburn had acted improperly and because PMA had already recovered more than what

it had expended in connection with McMahon’s Secured Employee Benefit Plan (“SEBP”). As a result,

it is uncontested that Coburn received over $10 million in death benefits, in addition to over $2 million

in retirement and insurance benefits, which were not at issue in this litigation. Coburn now seeks to

recover her reasonable attorneys’ fees and costs incurred in defending this action. Coburn argues that

she is entitled to these fees and costs because there is a presumption in favor of awarding fees to parties

who prevail in litigation to enforce or defend their rights under the Employee Retirement Income

Security Act of 1974 (“ERISA”). PMA does not object to the award of costs, and does not object to the

amount of fees requested, but argues that under the circumstances of this case, Coburn is not entitled

to recover her attorneys’ fees.

ERISA provides that “[i]n any action under this subchapter . . . by a participant, beneficiary, or

fiduciary, 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 Ninth Circuit utilizes a five-part equitable test for assessing

whether attorneys’ fees should be awarded: (1) the degree of the opposing party’s culpability or bad

faith; (2) the ability of the opposing party to satisfy an award of fees; (3) whether an award of fees

against the opposing party 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.

Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980). The Ninth Circuit has explained that

“[n]o one of the Hummell factors . . . is necessarily decisive, and some may not be pertinent in a given

case.” Carpenters S. Cal. Admin. Corp. v. Russell, 726 F.2d 1410, 1416 (9th Cir. 1984). When applying

the Hummell factors, the Court “must keep at the forefront ERISA’s remedial purposes that ‘should be

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liberally construed in favor of protecting participants in employee benefit plans.’” McElwaine v. US

West, Inc., 176 F.3d 1167, 1172 (9th Cir. 1999) (quoting Smith v. CMTA-IAM Pension Trust, 746 F.2d

587, 589 (9th Cir. 1983)). There is a presumption in favor of awarding attorneys’ fees to a successful

ERISA participant unless special circumstances “would render such an award unjust.” Id. (“[A]

successful ERISA participant should ordinarily recover an attorney’s fee unless special circumstances

would render such an award unjust.” (internal quotation marks omitted)); see also Elliot v. Fortis

Benefits Ins. Co., 337 F.3d 1138, 1148 (9th Cir. 2003) (same); Smith, 746 F.2d at 589 (same). 

After considering each of the five Hummell factors and the special circumstances of this case,

the Court finds that an award of attorneys’ fees is not appropriate and would be unjust. First, the Court

agrees with PMA that this case is different from most ERISA cases, primarily because PMA did not

violate ERISA and because although Coburn herself was blameless, the funds Coburn received were

the direct result of multiple breaches of fiduciary duty by Coburn’s husband, not the direct result of his

service to PMA. Less significant is the possibility that were PMA ordered to pay Coburn’s attorneys’

fees of over $1 million, it would eat up the entire amount PMA did receive from McMahon’s death and

would mean that PMA would not be reimbursed for its expenditures towards McMahon’s SEBP.

Compared to the windfall received by Coburn, it is apparent that this negative result for PMA would

be inequitable and unjust.

The Court does not find the balance of the Hummell factors to alter its determination with respect

to the special circumstances of this case. The Court finds the first factor to weigh, at most, slightly in

Coburn’s favor. While the Court did find that PMA acted negligently, it was less culpable than

McMahon and Joseph Miniace. Moreover, PMA’s claim was not unreasonable and therefore not

brought in bad faith. Cline v. Indus. Maint. Eng’g & Contracting, 200 F.3d 1223, 1236 (9th Cir. 2000)

(“[I]n order to avoid a finding of bad faith under the Hummell factors, plaintiffs must have a reasonable

belief that they could prove an actionable ERISA claim.”). The Court finds the second Hummell factor,

which looks at PMA’s ability to pay for attorneys’ fees, to be neutral. Although PMA does not dispute

that it is able to satisfy an award of attorneys’ fees, the circumstances of this case are such that Coburn,

who has been on the receiving end of significant death benefits, is also clearly able to pay her own fees.

While recognizing that the second factor generally looks only to the opposing party’s ability to pay, the

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Court finds that this case presents a unique situation similar to that of Honolulu Joint Apprenticeship

and Training Comm. of United Ass’n Local Union No. 675 v. Foster, 332 F.3d 1234 (9th Cir. 2003), in

which the Ninth Circuit found this factor neutral because the employee’s legal fees had been paid by

another entity and thus it was undisputed that “both parties [were] equally capable of paying attorney’s

fees,” id. at 1239.

As to the third and fourth factors, the Court finds that they weigh somewhat against the award

of fees to Coburn. The unique circumstances of this case are such that there is little need to deter other

employers from bringing similar lawsuits. While Coburn’s defense of her receipt of death benefits was

understandable, the Court does not see how Coburn sought to benefit anyone but herself. This leaves

the last factor, which examines the relative merits of the parties’ positions. Coburn’s position was

obviously more meritorious than that of PMA, but this factor, in combination with the slight weight of

the first factor, does not override the opposing weights of the third and fourth factors. Finding otherwise

would work an inequity against PMA, as the special circumstances of this case render an award of

attorneys’ fees to Coburn unjust. McElwaine, 176 F.3d at 1172. Accordingly, the Court DENIES

Coburn’s motion for attorneys’ fees and GRANTS Coburn’s motion for costs in the amount of

$66,940.05.

CONCLUSION

For the foregoing reasons and for good cause shown, the Court hereby DENIES IN PART and

GRANTS IN PART Coburn’s motion for fees and costs [Docket No. 489]. 

IT IS SO ORDERED.

Dated: March 28, 2008 

SUSAN ILLSTON

United States District Judge

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