UNITED STATES DISTRICT COURT

IN THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

TIMOTHY O’CALLAGHAN, 

Plaintiff, 

Case No. 2:09-cv-10196

v. Hon. George Caram Steeh

SPX CORPORATION, a Delaware

Corporation,

Defendant.

______________________________________________________________________

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S

MOTION FOR PREJUDGMENT INTEREST AND ATTORNEY FEES (#17)

Pending before the court is plaintiff Timothy O’Callaghan’s December 7, 2009

“Motion For Prejudgment Interest and Attorney Fees.” Defendant SPX Corporation filed

its response on December 21, 2009. Plaintiff failed to file a reply. For the reasons stated

below, plaintiff’s motion will be granted in part and denied in part.

I. Background

The facts of this case were set forth in this court’s prior “Order Granting Plaintiff’s

Motion For Judgment On The Pleadings And Denying Defendant’s Motion for Judgment

On The Pleadings” on November 23, 2009. In that opinion, the court granted plaintiff’s

motion, finding defendant’s decision to discontinue O’Callaghan’s long-term disability

benefits was arbitrary and capricious. In the present motion, O’Callaghan requests an

award of prejudgment interest and attorney fees, pursuant to 29 U.S.C. § 1132(g).

II. Attorney Fees

O’Callaghan argues that the court in its discretion may allow reasonable attorney

fees and costs in an ERISA action. There are five factors that the court must examine

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when considering an award of attorney’s fees.

A district court must consider the following facts in deciding whether

to award attorney fees[:] (1) the degree of the opposing party’s

culpability or bad faith; (2) the opposing party’s ability to satisfy an

award of attorney’s fees; (3) the deterrent effect of an award on other

persons under similar circumstances; (4) whether the party requesting

fees sought to confer a common benefit on all participants and

beneficiaries of an ERISA plan or resolve significant legal questions

regarding ERISA; and (5) the relative merits of the parties’ positions.

Shelby County Health Care Corp. v. Southern Council of Industrial Workers Health and

Welfare Trust Fund, 203 F.3d 926, 936 (6th Cir. 2000). Therefore the court will make

findings on each factor.

I. The opposing party’s culpability or bad faith

The decision to overturn the plan administrator’s decision as arbitrary and capricious

does not necessarily indicate culpability or bad faith. Heffernan v. UNUM Life Insurance

Company, 101 Fed. Appx. 99, 109 (6th Cir. 2004). The court does not find that the

defendant acted with a high degree of culpability or bad faith.

The evidence before the court does not indicate that the plan administrator ignored

evidence favorable to the plaintiff, namely the opinions of O’Callaghan’s treating physician.

Rather, the plan administrator erroneously placed more weight and credence on the

opinions of its own physicians, while unreasonably discounting the opinions of Plaintiff’s

treating physician and a determination made by Social Security. Although the decision was

arbitrary and capricious, there is nothing to indicate it was made in bad faith. Therefore,

this factor weighs against an award of attorney fees.

ii. The opposing party’s ability to satisfy an award of attorney’s fees

It is uncontested that defendant has the ability to satisfy an award of attorney's fees.

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This factor weighs in favor of an award of fees.

iii. The deterrent effect of an award on other persons under similar

circumstances

The Sixth Circuit has held that “the deterrent effect of a fee award on other plan

administrators – is one that is likely to have more significance in a case where the

defendant is highly culpable.” Foltice v. Guardsman Products, 98 F.3d 933, 937 (6th Cir.

1996). “Honest mistakes are bound to happen from time to time, and fee awards are likely

to have the greatest deterrent effect where deliberate misconduct is in the offing.” Id.

There is nothing in the record to indicate deliberate misconduct on the part of the

defendant. Thus, awarding attorney’s fees would not have a deterrent effect. Again, this

factor weighs against an award of fees.

iv. Whether the party requesting fees sought to confer a common benefit

on all participants and beneficiaries of an ERISA plan or resolve

significant legal questions regarding ERISA

The court find that this factor weighs against an award of fees. This claim was

resolved on facts relating to this plaintiff only. Further, there is nothing in this matter that

could resolve new or significant legal questions regarding ERISA. Thus, the court’s holding

will not confer a common benefit to all plan participants and beneficiaries, nor will it resolve

any significant legal questions.

v. The relative merits of the parties’ positions

Both parties’ proffered positions that had merit. Although defendant’s position was

not sufficiently persuasive on the merits of this case, it certainly was not frivolous.

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Accordingly, the court denies plaintiff’s motion for attorney’s fees.

III. Prejudgment interest

Even though ERISA does not require the court to award prejudgment interest to the

plaintiff, it has long been recognized that the court has the discretion to award prejudgment

interest according to general equitable principles. Ford v. Uniroyal Pension Plan, 154 F.3d

613, 616 (6th Cir. 1998). “An award of prejudgment interest serves to compensate the

beneficiary for the lost interest value of money wrongly withheld from him or her.” Hoover

v. Provident Life and Accident Insurance Company, 290 F.3d 801, 810 (6th Cir. 2002)

(internal citations omitted). Clearly, O’Callaghan was denied the use of his benefits and

is entitled to prejudgment interest on those withheld benefits.

Federal law does not prescribe a rate for prejudgment interest; this is a matter left

to the trial court’s discretion. The Sixth Circuit allows the use of the 52-week Treasury Bill

rate prescribed in 28 U.S.C. § 1961 for post-judgment interest (“blended rate of interest”)

as a guide for the calculation of prejudgment interest. Ford, 154 F.3d at 618. The blended

rate of interest averages the 52-week United States Treasury Bill interest rate over the

relevant time period. Caffey v. Unum Life Insurance Company, 302 F.3d 576, 585 (6th Cir.

2002). 

Defendant is directed to file a document within twenty-one days setting forth for each

month between April 30, 2007 to the present, the amount payable to plaintiff. The

document must also contain, for each monthly payment, a calculation of prejudgment

interest, using the “steam-of-benefits model” endorsed by the Sixth Circuit in Caffey at the

blended rate of interest. “The stream-of-benefits model calculates the interest due on each

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monthly payment of disability benefits beginning with the date that each payment was due.”

Id.

IV. Conclusion

WHEREFORE, IT IS HEREBY ORDERED that plaintiff’s motion for attorney’s fees

is DENIED. Plaintiff’s motion for prejudgment interest is GRANTED. 

Dated: January 20, 2010

S/George Caram Steeh 

GEORGE CARAM STEEH

UNITED STATES DISTRICT JUDGE

CERTIFICATE OF SERVICE

Copies of this Order were served upon attorneys of record on

January 20, 2010, by electronic and/or ordinary mail.

S/Josephine Chaffee

Deputy Clerk

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