## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 10

- 2112 J ACK MAN F INANCIAL C O RP ., Plai nt i f f

-Appe l l ant, v. H UMAN A I NSURANCE C O ., D efend a nt-A pp ellee.

Appeal from the United States District Court fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 1:08- cv-05784

— Ch arl es R. N orgle, Judge .
A RG UE D M AR CH 29, 2011

— D ECI DE D M AY 31, 2011

Befo re R OV NER, W I L L I A MS, a nd H A MI L T ON, C ircu it Judges. H A MI L T ON, C ircu it Judge. W hen K unta Tor re nce was ki l l ed i n a c aracc i dent, he held a life i nsurance pol i cy th r o ug h h i s empl o y erthat n am ed hi s br o th era s th e so le b enefi ci ar y. H i s br othe r w as al so i n the sam e ca r an d died at the sa m e t im e as Torren ce. A “facil ity-of

paym ent” clau se i n Torr ence’ s g ro up l i f e insurance p lan all ow ed the insu rer, i f th e nam ed b e n efi ciary w as not l i vi ng, to c h oose a s ubsti tute benefi ci ar y fro m2 N o. 10

- 2112 amonga l i sto fr el at i ve s an d the de ceas ed ’ s es ta te
. The insur erdi d s o , c ho o singt o pa y To r r en ce ’ s ch i l dr en . Lo ng before the i ns ure r had don e s o , how ever, the futu re ad m in ist ra to r of To rre n c e’s es ta te (h is m ot h er ) se p ar at ely executed a n ass i gnm ent o fthe sam e l i f e i nsurance proce eds to a fi nanci ng co m pany thathad fund ed T or re n c e’s fu n er al. T h e a ss ign ee , p lain tiff Ja c km an Financi al Corpor ati on, bro ught thi s ER I SA case ag ai nst th e insu rer to recover the proc eed s fro m t h e l ife insu ran ce p oli cy. Th e d istri ct cou rt gra nt ed sum m ary j ud gm ent t o the insurer, defendant H um an a I nsurance C om p an y, con clud in g th at th e insu rer prop erly ex erci sed i ts ri ght under the pol i cy by se lecti ng a substi tute b e n e fi c i a r y u n d e r th e f a c i l i t y - o f

- p a y men tc l a u s e . We a g r e e w i th th a tr e a s o n i n ga n d a ffi r m.

I. F ac t s an d Pr oc e dural Backg r oun d A s a n em plo yee o fa N or th Ca rol i na co m pany, Ku nta To r r en ce pa r ti ci pat ed i n a n empl o y ee l i f e i ns ur an ce a nd w el f ar e be nefi ts pla n adm i ni ste re d b y defendant-a pp el l ee H um ana Insurance. Tor ren ce’ s g ro up l i f e insurance pla n prov i ded that, i n th e event ofhi s death, $1 5, 000 w oul d be pai d to hi s nam ed benefi ci ar y. Tor ren c e cho se hi s br o th erA d ai r t o b e th e so l e be ne fi ci ar y . The g r o up pla n al so i ncl ud ed a “ f aci l i ty- of

- p ay m en t” cl ause, wh i ch pr o v i de d: i fthe b en efi ci ar y he o r s he na m ed i s no t al i ve a t th e Em pl o y ee ’ s dea th, th e p ay m en t wi l l b e m ade a t Our op tio n, to a n y on e o r m or e o f th e fo llow in g:N o. 10

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• Y ou r sp ou se ;

• Y ou r c h ild re n ;

• Your par ents;

• Y ou r brothe rs and sisters; or

• Your e sta te. I n gene ra l, a f acility- of

- paym ent c l ause provi des f or “p aym en t to a nam ed ben efi cia r y o r to a m em ber of a na m ed cl as s o r, i n the a l ternat i ve , t o a ny pe r so n f o und by the insurerto be equi tabl y e nti tl ed. ” Forcie r v. M et ropolit an Li f eIns . Co. , 4 69 F
. 3d 17 8, 1 84 ( 1s t Ci r . 2 00 6) , quo ting 4 Cou cho n Ins ur an ce 3 d § 6 1: 14 ( 20 05 )
. S ee a l so 2 A J o hn Al a n Ap p l e ma n & J e a n Ap p l e ma n, I n s u r an c e L a w & Pr a c t i ce § 1163 ( 1966 ) ( “f aci l i ty ofpaym ent c l auses gi ve the insurerthe opti on o fpayi ng to any perso n poss e s s i ng the qu a l i fi c a t i o ns s e t f o r th i n the c l a us e ” ) ; 16 6 A
. L.R. 10 ( 1947 ) ( f aci l i ty- of

- paym ent c l ause cre ate s “ an appoint m ent, by the par ti es to an i nsurance contr act, ofper sons orcl ass es ofper sons w h o m ay r ecei ve paym en t o fthe b en efi ts o r pr o ce eds a cc r ui ngunde r the con tract” ). Torr ence and the nam ed benefi ci ar y were ki l l ed si m ult ane o us l y i n a c arc rasho n Apr i l 1 , 2 00 7. On Apri l 1 1th, th ei r mothe r Nanc y Kel l y e xe cut ed a co nt r ac t as si g ni ng $ 10, 66 4
. 9 3 o fT o r r e nc e ’ s l i f e i ns ur a nc e p o l i c y p r o c e e ds to pla i ntiff

- appell ant J ackm an Financi al, a fi nance com pany thatadvances fund s f orfuneralexpenses , as secur i ty f orJ ackm an Financi al ’ s l oan to pay f or To r r e nc e ’ s fun e r a l

. T he a s s i g nme nts t a t e d:4 N o. 10

- 2112 th e unde r si g ne d [ Kel l y ] he r eby ir r ev o cabl y a ss i g ns an d t r an sfer s o ve r t o J ac k m anF i na nc i alCo r p. the su m of $1 0,6 64 .93 , or so m u c h t h er eo f as is av aila b le f r o m th e pr o ce eds o f th e f o l l o wi ng po l i ci es : #s Gro up n u mb e r 6 1 7 9 1 2 I D # 0 0 2 9 3 9 3 5 0 o fth e Hu ma n a I NSUR A N CE COM PA N Y w hi ch m ay b e or i s due to th e unde r si g ne d a s benefici ar y o r b y r ea so n o fa ny o th erqua l i fi ca ti o n. On Apr i l 1 3th, t wo da y s a fte r K el l y si g ne d the a ss i g nm en t to J ackm an Financi al, a N or th Caro l i na co urt app oin ted K el l y a dm i ni str ato r ofTor re nce’s e sta te. That s am e day, Ke l l y s i g n e d a Hu ma n a B e n e fi c i a r y F o r m i d e n t i fy i ng h er se lf, “N an c y T . K elly

— Ad m i ni st r at o r o fEs ta te , ” as the benefi ci ar y o fTor re nce’ s pl an. Laterthat m onth, J ackm an Fi nanci alpai d the funeralhom e a nd se nt H um ana a re quest f orpa ym en t fro m Tor re nce’ s l i f e i nsurance p olic y p ro c ee d s, at ta c h in g t h e a ss ign m en t fro m K elly an d th e f o r m K elly sign ed cla im in g t o b e t h e p lan be n efici ar y. On M ay3 , 2 00 7, Hum an a se nta l et te r to K el l y e xp lai nin g tha t Torren ce’s group plan i nc lud ed a f acili ty-ofpaym ent c l ause and stat in g th at the c om pany r equi re d ad dit i onali nfo rm ati on fro m Kell y “ to deter m i ne be ne fit paym ent. ” Hu m ana a cknowle dged havi ng r ecei ved a co py of th e assi gnm ent fro m J ackm an Financi al, as wel l a s th e Ben efi ci ar y F o r m si g ne d b y Kel l y . The l et te r, quo tingfr o m the pl an, no te d tha t Hum an a w oul d “re l y upon an affi davi t t o deter m i ne be nefi t paym en t, u n les s W e re c eiv e w rit te n n ot ice of va lid cla im bef or e paym ent i s m ade. ” Hu m ana r equeste d that aN o. 10

- 2112 5

m em bero fTor re nce’ s f am i l y c om ple te i ts encl ose d f or m affi davi t. Thr ee months l at er, a fte r Hum an a i ss ue d a s ec o nd noti ce t o K el l y with the sa m e r equest f oran a ffi davi t, K ell y com p leted th e affi d avit an d iden tified T o rrenc e’s livin g re l at ive s. O n A u gu st31 , 200 7, H u m an a s en t K elly a l et te r a ckno w ledg i ngr ec ei pt o fhe r a ffi dav i t. The l ett eri ncl ud ed the f ol l owing l anguage : Ou r re cor ds i nd i cate tha t the l i ste d benefi ci ar i es f or any a vai l abl e l i f e i nsuranc e procee ds ar e [ re dacted c h i l d r e n ’ s n a me s , ] mi n o r chi l d r e n . P l e a s e n o t e we are un able t o i ssu e li fe i ns ura nc e proc eed s to a m inor. W e r equi re guar dianshi p pap er s fro m t h e pr obat e c ou rt
. . . . H u m an a d eliv er ed K elly a se c on d id en tic al n o tic e in N ove m ber20 07. I n e a r l y De c e mbe r 2 0 0 7, the S up e r i o r Co ur t o fRowan Cou nty, Nor thCa r o l i na , iss ue d a n o r dera utho r i zing H u m an a to “del i veral l fund s due” t o Torr ence’ s m i nor chi l dren t o the c ar e o fthe cour t. On Decem ber28 , 20 07, H um ana co m m unica ted to Kell y that i t had co m ple ted i ts r ev i ew a nd i ss ue d ch ecks to ta l i ng$ 16 , 05 3. 29 t o the cle rk of th e sup erior cou rt forthe be ne fi t of T orrenc e’s ch i l dr en . Jac km an Fin an c ial filed su it in an Illin ois st at e c ou rtin Se ptem ber20 08 to re cove r the a m ount i t had advanced f orTor re nce’ s funeralc osts. H um ana r em ove d the ca se t o th e fe d e r a l di s t r i c tc o u r t, a s s e r t i n gth a tth e c l a i ms n e c e s s a r i l y a r o s e u n d e r th e E mp l o y e e R e t i r e me n tI n c o me6 N o. 10

- 2112 Se curi ty A ct o f19 74 ( E R I SA). J ackm an Financi althen a me n d e d i t s c o mp l a i n tb y d e l e t i n gi t s s t a t e l a w c l a i ms and add i ng a sin gl e cl ai m f ordeni alo fbene fi ts und er E R I SA
. W he n a p urp orted assignee ofa p lan ben efi ciary b r i ng s a c o l o r a b l e c l a i m f o r p l a n b e ne fi t s u nd er 29 U. S
. C. § 1 13 2(a) ( 1) ( B), a f edera l di str i ct c ourthas subj ect m att er j u ris d ict ion u n d er E R ISA . See , e . g. , Ken ne dy v. Conne ct i cu t Gen e r al Li

f eIns . Co. , 9 24 F.2 d 6 98 , 7 00 ( 7th Ci r . 1 99 1)
. The d istri ct cou rt grante d H um an a’s m otion for su m m ary j ud gm ent a nd deni ed J ackm an Financi al ’ s m oti on f or r e c o ns i de r a t i o n. J a c k manF i na nc i a l h a s a pp e a l e d.

II
. Dis cu s s i on A. H um a na ’s D ecisio n to P a y th e C hil dren W e review de novo a d ist r ict cou rt’s grant of sum m ary j ud gm en t and de nial of a cros s-m otion for su m m ary j ud gm ent. S ee Prat eIns t al l at i ons, Inc. v. Chi cago Regi onal C o un cil o

f C a rpen ters , 6 07F
. 3d 46 7, 4 70 ( 7th Ci r . 2 010). U nd er29 U .S.C
. § 1132 ( a) ( 1) ( B), federa l co urts al so re vi ew de nov o an ERIS A pl an adm i ni str ato r’s d en i alo f benefi ts unle ss the pl an gi ve s the adm i ni str ato r disc re ti onar y a uthor i ty to deter m i ne el i gibi l i ty forbene fi ts. Se e Fires tone Tire & RubberCo
. v. Bruch , 48 9 U.S. 101, 11 5 ( 1989 )
. Because the g ro up pl an here gave H um ana di scr eti onar y a uthor i ty to adm i ni ste r i t, we in stead eval uate w hetherH um ana’ s d eci si on t o deny benefi ts to J ackm an Fi nan ci alwas arbi tr ar y a nd capr i ci ous. Se e M ar rs v. M otorola, Inc. , 577 F.3d 783 , 786 (7th C ir. 2009). U nd er the arb itrary and cap rici ou s s t a nd ard , w e overturn the adm in ist ra tor ’ s deci si on o nl y where ther e i s a nN o. 10

- 2112 7

W e d o n o tr e a c h th e se c o n d st e p o f Ja c k m a n F i n a n c i a l ’s 1 ar gum ent, thatKel l y ha d author i t y t o m ake the as s i gnm en t (co n tin u ed ...) abse nce o fr eas oni ng to support i t. S ee H ess v. Reg -E llen M ac hi neTool Corp. , 42 3 F
. 3d 653, 65 8 ( 7th Ci r. 2005) ; Tegtm eier v. M idw est O pera ting E ng ineers P ensio n Trust Fun d, 3 90 F
. 3d 10 40 , 1 04 5 ( 7th Ci r . 2 004). W e a ppl y the sta nd ar d as a n abuse ofdi scr eti on s tandard. S ee H ol m s t r om v. M e t r opol i t an Li f eIns . Co. , 615 F.3d 75 8, 76 7 n .7 ( 7th C i r . 2 0 1 0 )
. App l y i ngtha ts t a nd a r d h e r e , we a g r ee w i th the di str i ct c ourtthatH um ana’s d ecis i on t o pay th e p ro c ee d s o f T or re n c e’s life ins u ra n c e p lan to h is ch il d ren w as no t an ab us e of its discretion. Th e facil ity-of

pa y men tc l a us e i n To r r e nc e ’ s g r o up p l a n pr o v i ded H um ana with the opti on o fpayi ng the l i f e insurance pr o ce eds to an y o f fi ve na m ed en ti ti es o r g r o up s ifthe nam ed benefi ci ar y had di ed. H um ana di d exactl y that. Pl aint i ffJ ac k m anF i na nc iala r g ue s th atKel l y ’ s as si g nm ent o fthe proce eds effe cti vel y e nti tl ed pla i nti ffto re cei ve them and that H um an a acted arbi tr ar i l y b y i gnor i ng the as si gnm ent. Fo r pla i nti ffto acqui re a ri ght t o the pr oce eds, however, Kell y her sel fm ust hav e h ad such a ri ght to ass i gn. P l ai nti ffargues that Kell y, as adm i ni str atoro fTor re nce’ s e sta te, had the author i ty to disb urse or assign th e proc eed s from the p lan w hich , plaintiff co nt en ds, b ec ame pa r t o fTo r r en ce ’ s es ta te i n the ab se nc e o fa na m ed be ne fi ci ar y . W e di sa g r ee wi thpl ainti ff’ s r eas oni ng be cause i t f ai l s t o com e t o gr i ps with the f aci l i ty- of

- paym ent c l ause i n the pol i cy. 18 N o. 10

- 2112

(
. . . c on t i nu e d) 1 t wo days be f or e s he r ec ei ved o f fi c i al l et t er s ofadm i ni s t ra t i on f ro m the No rth Car ol i na c our t s . J ac km an Fi nan c i al m ai nt ai ns t hatKel l y’ s a u thori t y a s adm i ni s t ra t or r el at ed ba c k t o the tim e o f T or ren ce’s d eath un d er N or th C aro lina law

. B eca u se n e i t h e r th e p o l i c y n o r it s p r o c e e d s b e c a m e p a r to f T o r r e n c e ’s es t at e, i ti s i rr el ev an t w he t he r Kel l y’ s author i t y a s adm i ni s t ra t or r el at ed ba c k. A f aci l i ty- of

- paym ent c l ause i s o ne pra cti c al sol uti on t o the pr obl em s that a ri se w hen an i nsured per son die s w i thout an eff ect ive desi gnati on o fa benefi ci ar y. Rather th an req u irin g a co u rtto d ec id e t h ro u gh a p ot en tia lly ex pen si ve i nt er pl eadera ct i o n, the c l au se a l l o ws the i nsurersi m plyto choo se one orm or e be nefi ci ar i es, pre su m ab ly in line w ith w h at th e in su re d p ro b ab ly w ou ld ha ve want ed i fhe o r s he ha d k no wn th atthe b en efi ci ary desi gnati on w as not eff ecti ve. See gener al l y Fre nc h v
. Lan ham , 57F
. 2d 422, 42 2- 23 ( D.C. Ci r. 19 32) ( noti ng tha t th e pur po se o fthe f ac i l i ty
- o f

- pay m en t cl ause i s f o r the i ns ur ert o b e ab l e to issue a pr o m pt va l i d pa y m en t, i nclud ing p aym en t for fun eral exp en ses). W he n a facil ity-of-pay m en t clause ap p li es, it confers b ro ad d isc re tio n on an in su re r in m ak in g cer ta i n be n efit d et er m in at ion s. Se e, e . g. , Fo rcier, 4 69 F
. 3d at1 85 ( des cr ibi ng how a fa c i l i ty- of

- paym ent c l ause “puts bo th the pol i cyhol der a nd th e p ar ti ci pant on no ti ce that, i n the abse nce of a ben efi ciary de signat ion, p aym en t by [the insu rer] to any m em ber ( s) o fan e num er ate d cl ass ‘ w i l l di schar ge [ the c o mpa ny ’ s ] l i a b i l i t y f o r the a mou nt so pa i d’ ” )
. By us i ngs ucha c l au se , a n i ns ur erc anc o nt r ac t f o r v ar y i ngN o. 10

- 2112 9 degre es ofdi scr eti on with re spect to the di str ibuti on o f i nsurance proce eds. S ee i d. ; B r o w n v . M etrop o lita n L ife Ins. Co. , 1 00 F
. 2d 98 , 9 9- 10 0 (D.C. Ci r . 1 93 8) ( r ec o g ni zingthe va lid ity o ff aci l i ty-of-p ay m en t c lau se s); La Raw v. Pr ude nt i al Ins
. C o. o

f A m er ica , 1 2 F
. 2d 14 0, 1 42 ( D. C. Ci r . 1 92 6) ( r i g ht o f election as to w hom pa ym en t sha llbe m ad e un d er a f ac i l i ty
- o f

- pay m en t cl au se “ undo ubt edl y r es ts wi ththe com p an y”). The f ac i l i ty
- o f

- pay m en t cl au se i n To r r en ce ’ s g r o up pla n g ave H um ana the o pti on o fdi str ibuti ng the pol i cy p ro c ee d s t o a n y of t h e list ed rela tiv es o r t h e e st at e id en tifi ed i n the cl ause. L ike the f aci l i ty- of

- paym ent c l ause i n Fo rcier, the c l a us e i n To r r e nc e ’ s g r o up p l a n mad e H um ana’s r i ght t o choos e a ny o ne o fthe l i ste d enti ti es u n c on d i ti onal, enabl i ng the co m pany to m ake i ts sel ecti on a m ong them

. S ee Fo rcier, 469 F. 3d at 185. A lthough Torr ence’ s e sta te w as one ofthe p os sibl e r eci pie nts, as w as K el l y a s Tor re nce’ s m othe r, H um ana was under no o bl i gat ion to sel ect ei thero fthem as the substi tute benefi ci ar y. U nl ess and unti l such a se l ecti on was mad e

— and i t nev erwas

— K el l y never h ad an i nter est i n To r r e nc e ’ s l i f e i ns ur a nc e p o l i c y o r i n i ts pr o c e e ds that she c oul d assi gn to pl ai nti ffeit h er in herper sonal ca pac i tyo r a s admi ni st r at o r o fTo r r en ce ’ s es ta te
. Pl ainti ff’ s cl ai m to co l l ect base d on Kell y’ s a ssi gnm ent f ai l s. Pl ai nti ffneverthel ess co ntends thatH um ana’ s deci si on to pa y To r r en ce ’ s ch i l dr enwas a rbi tr ar y a nd c apr i ci o us b e c a u s e Hu ma n a kn e w ab o u tKe l l y ’ s a s s i g n me n to fthe pla n proc eeds to pla i nti ffand coul d have use d i ts discretion to select T orrenc e’s estate as be ne fi ciary. Plaintiff10 N o. 10

- 2112 is c or re c t t h at H u m an a c ou ld h av e u se d its d isc re tio n in thi s way, but i t nee d not hav e done so. H um ana w as not re quir ed to bai l p lai nti ffo ut fro m an i m prudent busi ness ri sk. W here an ERI SA adm i ni str ato r m ake s a n i n for m ed d ec isio n an d art icu lat es a p lau sib le re as on fo r i t s d ec isi on, thati nfor m ed expla nati on i s s uffi ci ent forus t o up hol d i ts deci si on. S ee M ot ev. Ae t na Li f eIns . Co. , 50 2 F. 3d 601, 60 6 ( 7th Ci r. 200 7). The tot al i ty ofthe evi dence ind icates th at H um an a d ecid ed to distribut e the plan ’s p roceed s t o T orrenc e’s children based on th e facil ity-of

paym ent cl ause and the affi davi t provi ded by Kell y. H um ana e xplai ned th i s ba si s f ori ts deci si on by des cr ibi ng i n i ts c o r r es po nde nc e wi thKel l y thr o ug ho ut 20 07the d isc r et i o n g r an te d t o i t byTo r r en ce ’ s g r o up pl an . I t di d no t ne ed to ex pl ain the “ r ea so ni ngb eh i nd the re aso ns. ” H erm a n v . Cen tral Sta tes, So uth east & So uth w est Are as Pe ns i on Fun d, 423 F. 3d 684, 693 ( 7th C ir . 2005), quoti ng Gall o v. Am oc o Corp. , 102 F.3d 918 , 922 (7th C ir. 1996 ).

B
. H um a na ’s R equest fo r Fees H u m an a a sk s t h is c ou rtfor a n aw ar d of re as on ab le at to r ne y fee s i n i ts f av o r, th o ug h i t di d no t se ekthe m i n the d ist ric t c ou rt . E R ISA a u th or ize s a n aw ar d of re as on ab le att or ney fees to ei therparty a t the co urt’ s di scr eti on. S ee 29 U
. S. C. § 1 132( g) ( 1)
. W e ha ve r eco gni zed a “m odest pr es um pti o n” i n f av o r ofa war di ngfee s to the pr ev ai l i ng pa r t y, tho ugh tha t pr e s umpt i o n c a n b e r e b ut t e d. S ee Laborers’Pension Fund v. Lay-C om , Inc. , 5 8 0 F
. 3 d 6 0 2 , 6 15 ( 7th Ci r. 20 09) , quoti ng Se nese v. Chic ago Are a I
. B. ofN o. 10

- 2112 11 T. Pen s i on Fun d, 237 F. 3d 819, 826 ( 7th Cir
. 20 01 ). Here, w e fi nd th at Jackm an Finan cial’ s p ositi on and th e surr o un di ngc i r c ums t ances e ff e c t i v e l y r e b utthe p r e s umpti on, so we deny H um ana’ s r equest. I n deter m i ni ng w h et her a fee aw ar d i s a pp ro pri ate und erERIS A , we have l ong re cogni zed two te st s, bo th of w hi ch ask w hether the l osing party had a leg iti m ate basi s t o bring i ts sui t. S ee P r o d u c t i o n & Ma i n t e n a n c eE mpl oye e s ’Lo ca l 50 4, La bo rers’Int ’ l U ni on v. Roadm as t e rCorp. , 954 F. 2d 1397, 1402 ( 7th Cir
. 1992 )
. U nd er the fi rs t t est, an aw ard of fees to a su cce ssful d efend an t in an E R I SA sui t “may b e de ni e d i fthe p l a i nt i ff’ s p o s i t i o n wa s b oth

‘ s ub s t a nt i a l l y j us t i fi e d’

— m eani ng so m et hi ng m or e than no n- f r i vo l o us , b uts o m ethi ngl ess tha n mer i to r i o us

— an d ta k e n i n g o o d f a i th, o r i f s pe c i a l c i r c ums t a nc e s m ake an aw ar d unj ust. ” S ee H e r m an , 42 3 F.3d at 69 6; H arris Trus t & Savi ngs Bank v
. Pr ovi de ntLi f e& Acc i de ntIns . Co. , 57F. 3d 608, 616-17 (7th C ir. 1995). Under the s ec o nd t es t, we con si derthe f o l l o wi ng fac to rs : ( 1) the degre e o fthe off ending party ’ s cul pabi l i ty orbad f ai th; ( 2) the abi l i ty ofthe off ending partyto sat i sfy per so n al l y a n award ofat torney fees ; ( 3) wh ether ana war d o fa tt o r ne y fee s woul d de te r o th erpe r so ns acting under s i m i l arci rcum sta nces; ( 4) the am ount o f benefit co nfe rr ed on m em ber s o fthe pla n as a whole ; and, ( 5) the re l ati ve m er i ts ofthe parti es’ posi ti ons. S ee Sul l i van v. Wil li am A. Rand ol p h , Inc. , 50 4 F
. 3d 665, 67 1 ( 7th Ci r. 20 07) ; B re w erv. Protexall, Inc. , 50 F. 3d 453, 45 8 ( 7th Ci r . 1 99 5)
. Thi s fi ve- f ac to r t es t i s o fte n us ed i n c o nj unc ti o n wi ththe “ su bs ta nt i al ly j us ti fi ed” t es t an d12 N o. 10

- 2112 lar ge ly in vo lve s t h e s am e i n q u iry . See , e . g. , H e r m an , 423 F. 3d at 696; Bo w er m an v. Wal-M art Store s, Inc. , 22 6 F
. 3d 574, 59 3 ( 7th Cir. 2 000) ( concl ud i ng tha t r ega rdl ess o f whi cht es t i s us ed, the que st i o n a sked is es se nt i al l y the sa m e); Q uinn v. Blue Cross & Blue Shie ld Ass’ n , 16 1 F. 3d 472, 478 (7th C ir. 1998) (sam e). H um ana a sse rt s that i t s houl d be aw ar ded at torney f ees bec ause J ackm an Financi al ’ s pos i ti on was notsubsta nti al l y j usti fi ed. The q uesti on is clo se, bu t we dis agr ee. Th e i n d i c a t i o n s h e r e a r e th a tJ a c k ma n F i n a n c i a l ’ s c o mpla i nt was fi l ed i n go od f ai th in an at tem pt to r eco ver the o utsta nd i ng ba l ance i t was o w ed. I n the days f ol l owing her son’ s death, Kell y intended to assi gn Torr ence’ s pl an pro ceeds to J ac km an Financi alto co ver the c o s to fh e r s o n’ s fun e r a l

. I ta pp e a r s tha tn e i ther J ackm an Financi alnorKell y knew abo ut o r consi dered the f aci l i ty- of

- paym ent c l ause i n Torr ence’ s g ro up pl an at th e tim e the assignm en t w as ex ecu t e d . L ong before H um ana p aid the pol i cy proce eds, J ackm an Financi al gave H um ana t i m el y no tic e of i ts cl ai m and the basi s f or it. A lthou gh the su it w as no t suc cess ful, i t had an u nd erst an dab l e f o unda ti o n. H um ana a l so ar gues that an award offees i n i ts f avo r w oul d deter fu tu re cond uct bysi m i l ar l y s i tuate d per so ns a nd wou l d c o ns er ve pl an e xpe ns es . On th e m er i ts, we agr ee w i th H um an a th at w here an insurance pl anc o nt ains a s i m i l arf ac i li ty- o f

- pay m en t pr o vi si o n, the insureri s abl e t o sele ct a subst i tute benefi ci ar y a t i ts d isc re t i o n . T h ird p ar tie s s ee kin g t o re c ov er by filing su it w i l l l i kel y b e unsuccessful. N eve rthel ess , we do notN o. 10

- 2112 13 b elie ve th at aw ar d in g f e e s t o H u m an a in th is c as e, in l i g ht o f th e as si g nm en t an d J ac k m an F i na nc i al ’ s p ayment ofthe funeralexpenses i n re l i ance upon i t, wil l have any m or e dete rr ent e ff ect than o u r c l earst ate m ent that a f aci l i ty- of

- paym ent pr ovi si on g ra nts the i n sure r b ro a d d isc re tio n . Fu tu re p ot en tia l be n efic iar ies , as w ell as ass i gnees o fsuch p ot enti albene fi ci ar i es, sho uld t ake he ed a s t o th e b r o a d s e l e c t i o n a u th o r i t y g r a n t e d t o t he i nsurerthr ough these cl auses

— l ongs tan ding f eatures ofinsur ance pol i ci es. W e d o not d i sco unt the possibi l i ty of f ee aw ar ds i n future cas es i fsi m i l arf aci l i ty- of

- paym ent c l auses defeatfuture unsuccessful chal l enges to i ns ur er s’ e xe r ci se s o fdi sc r et i o n.

III
. Conc l us i on T he f acili ty-of- p aym en t cla u s e i n T orrenc e’s group l ife i ns u ra n c e plan g ave H um ana the autho ri ty to choos e a be ne fi ci ar y fr o m the pr e- determi ne d l i stl ai d o uti n the p lan . B ec au se H u m an a a c te d w i t h i n its righ ts an d n ot in a m anner that w as arbi tr ary or capri ci ous, we A FFIRM the j ud gm ent o fthe dist ri ct c ourt
.

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