Court Opinion

ID: 809340
Source: CourtListenerOpinion
Date Created: 2012-09-27 15:34:19+00
Date Added: 2024-06-11T18:00:34.105819
License: Public Domain

Case: 11-15146          Date Filed: 09/27/2012   Page: 1 of 8

                                                                        [DO NOT PUBLISH]

                      IN THE UNITED STATES COURT OF APPEALS

                                   FOR THE ELEVENTH CIRCUIT
                                    ________________________

                                            No. 11-15146
                                        Non-Argument Calendar
                                      ________________________

                               D.C. Docket No. 0:10-cv-60698-KAM

MELISSA C. CROSS,

llllllllllllllllllllllllllllllllllllllll                             Plaintiff - Appellant,

                                               versus

THE QUALITY MANAGEMENT GROUP, LLC,
THE QUALITY MANAGEMENT GROUP, LLC
DEFINED BENEFIT PENSION PLAN,

llllllllllllllllllllllllllllllllllllllll                             Defendants - Appellees.

                                     ________________________

                          Appeals from the United States District Court
                              for the Southern District of Florida
                                 ________________________

                                           (September 27, 2012)

Before MARCUS, FAY and EDMONDSON, Circuit Judges.

PER CURIAM:
               Case: 11-15146     Date Filed: 09/27/2012    Page: 2 of 8

      Appellant Melissa C. Cross (now “Schneeberger”) appeals from the district

court’s denial of her motion for attorneys’ fees and costs under 29 U.S.C. §

1132(g)(1), the attorneys’ fees provision of the Employee Retirement Income Security

Act (“ERISA”), 29 U.S.C. § 1002 et seq. Appellees The Quality Management Group,

LLC (“QMG”) and the QMG Defined Benefit Pension Plan (“the Plan”) (collectively,

“the Defendants”) cross-appeal the district court’s denial of their motion for

attorneys’ fees under § 1132(g)(1). In the underlying ERISA action, Schneeberger

claimed that she was 100% vested in her pension benefits under the Defendants’ Plan,

while the Plan calculated Schneeberger’s vesting at 60%. The parties settled the

action based on a 75% vesting calculation, and then both parties moved the district

court for awards of attorneys’ fees. Exercising its discretion, the district court denied

both motions for fees.

      On appeal, Schneeberger argues that: (1) the district court applied an improper

legal standard in denying her fees by using a five-factor test in contravention of Hardt

v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149 (2010); and (2) the district court

clearly erred in finding that the Defendants did not litigate in bad faith and in

assessing Schneeberger’s claims. The Defendants argue that the district court abused

its discretion in how it assessed the five-factor test to deny them fees. After careful

review, we affirm.

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      We review orders on attorney’s fees for abuse of discretion, “which occurs if

the court fails to apply the proper legal standard or to follow proper procedures in

making the determination, or bases an award upon findings of fact that are clearly

erroneous,” or “commits a clear error of judgment.” Gray ex rel. Alexander v. Bostic,

613 F.3d 1035, 1039 (11th Cir. 2010) (quotation omitted). Clear error in factual

findings occurs when, “although there is evidence to support [them], the reviewing

court on the entire evidence is left with the definite and firm conviction that a mistake

has been committed.” Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc.,

299 F.3d 1242, 1246 (11th Cir. 2002) (quotation omitted). “If the district court’s

account of the evidence is plausible in light of the record viewed in its entirety, the

court of appeals may not reverse it [for clear error] even though convinced that had

it been sitting as the trier of fact, it would have weighed the evidence differently.”

Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573-74 (1985). We review

the district court’s application of law de novo. Johnson, 299 F.3d at 1246.

      Section 1132(g)(1) of 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.A. § 1132(g)(1). In interpreting this provision, the Supreme Court in Hardt

directed, first, that “a fees claimant must show ‘some degree of success on the merits’

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before a court may award attorney’s fees under § 1132(g)(1).” 130 S. Ct. at 2158.

It then said: “We do not foreclose the possibility that once a claimant has satisfied

this requirement, and thus becomes eligible for a fees award under § 1132(g)(1), a

court may consider . . . five factors . . . in deciding whether to award attorney’s fees.”

Id. at 2158 n.8. These five factors are:

      (1) the degree of opposing parties’ culpability or bad faith; (2) ability of
      opposing parties to satisfy an award of attorneys’ fees; (3) whether an
      award of attorneys’ fees against the opposing parties would deter other
      persons acting under similar circumstances; (4) whether the parties
      requesting attorneys’ fees sought to benefit all participants and
      beneficiaries of an ERISA plan or to resolve a significant legal question
      regarding ERISA itself; and (5) the relative merits of the parties’
      positions.

Id. at 2154 n.1 (quotation omitted).

      First, we are unpersuaded by Schneeberger’s argument that the district court

applied an incorrect legal standard in assessing the motions for attorneys’ fees. As

the record shows, the approach sanctioned by the Supreme Court in Hardt is exactly

the one taken by the district court in this case. The district court began by quoting

from Hardt, and recognizing that “the Court has broad discretion to award fees and

costs ‘as long as the fee claimant has achieved “some degree of success on the

merits.”’” D. Ct. Order at 3 (quoting Hardt, 130 S. Ct. at 2152). It continued: “Once

that requirement is satisfied, the Court may consider a five-factor test developed prior

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to Hardt in determining whether an award of fees and costs is appropriate,” and cited

the five factors. D. Ct. Order at 3-4. Applying this two-part approach, the district

court first laid out the parties’ arguments as to whether they had achieved “some

success on the merits,” specifically noting that “the parties entered into a settlement

agreement which provided Plaintiff a distribution based upon a 75% vesting in the

plan,” and that “Plaintiff . . . claims some success on the merits and notes that prior

to the instant lawsuit being filed Defendants[] claimed she was only entitled to a

determination of 60% vesting.” D. Ct. Order at 3. It then found: “[I]n the end,

Plaintiff received 15% more than that to which Defendants initially claimed she was

entitled.” D. Ct. Order at 4. The district court proceeded by applying the five-factor

test to each of the parties, and ultimately concluded that neither were entitled to fees.

In so doing, the district court properly applied Hardt’s steps -- that is, it first

determined that Schneeberger had obtained “some degree of success on the merits,”

and then applied the five-factor test that Hardt expressly did not foreclose. Hardt, 130

S. Ct. at 2158 & n.8. There was thus no error in the district court’s recitation, or

application, of the Hardt test.

      Schneeberger appears to suggest that the district court should simply have

determined whether she obtained “some degree of success on the merits,” and stopped

there. But Hardt did not say this -- rather, it allowed for the application of the five

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factors before a district court ultimately determined a party’s entitlement to fees.

Indeed, in Hardt itself, the district court had first determined whether the fees

claimant was a prevailing party, and then had applied the five-factor test. Id. at 2155.

After agreeing with the district court’s interpretation of “prevailing party,” the

Supreme Court concluded that the “District Court properly exercised its discretion to

award Hardt attorney’s fees in this case.” Id. at 2159. The Supreme Court thereby

sanctioned the district court’s secondary use of the five-factor test, which was the

same approach taken by the district court did in the case before us.

      Nor are we persuaded by either parties’ claims that the district court clearly

erred in making findings under the five-factor test, or abused its discretion in

ultimately denying either party fees. As for the first prong -- whether either party

acted in bad faith -- neither appellate brief has made a compelling showing. Both

seem to suggest that the other exhibited bad faith by taking litigating positions that

were in dispute, or by causing some amount of delay in the litigation process.

However, we have said in various contexts that bad faith is more than mere

negligence; it is “the conscious doing of a wrong,” United States v. Gilbert, 198 F.3d
1293, 1299 (11th Cir. 1999), “where an attorney knowingly or recklessly pursues a

frivolous claim or engages in litigation tactics that needlessly obstruct the litigation

of non-frivolous claims,” Schwartz v. Millon Air, Inc., 341 F.3d 1220, 1225-26 (11th

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                 Case: 11-15146        Date Filed: 09/27/2012        Page: 7 of 8

Cir. 2003), or “deliberate deception, gross negligence or recklessness,” Am. Bankers

Ins. Co. of Fla. v. Northwestern Nat’l Ins. Co., 198 F.3d 1332, 1336 (11th Cir. 1999).

Even assuming that these parties may have taken unreasonable positions in the course

of the litigation, they have not submitted sufficient proof of deliberate wrongdoing

in order to show that the district court clearly erred in making these findings.1

       The parties also fail to explain how the district court clearly erred in making

its remaining findings. The parties do not mention prong 2 of the test, and offer

nothing more than conclusory assertions as to why the district court clearly erred in

deciding prongs 3 and 4.

       As for the last one -- the relative merits of the parties’ positions --

Schneeberger claims that the district court should not have relied on the Defendants’

description of the Plan, and should not have found that her reliance on her marital

settlement agreement, rather than the Plan, was “untenable.” But not only did the

district court expressly say that it “consider[ed] the record in its entirety,”

Schneeberger did not contest the Defendants’ description of the Plan, so we do not

see how this could have amounted to clear error. Moreover, it is clear that “[t]he

       1
          At most, Schneeberger points to a “threatening” letter and text message from her former
husband, Karl Cross, a manager of QMG and Trustee of the Plan. While we agree that a coercive
letter could result in bad faith, we do not believe it rose to this level here, especially considering
the substance of the settlement offer made in the communications. Indeed, they proposed a 75%
vesting calculation and $5000 in attorneys’ fees, which actually offered more than Schneeberger
ultimately received.

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award of benefits under any ERISA plan is governed in the first instance by the

language of the plan itself.” Liberty Life Assur. Co. of Boston v. Kennedy, 358 F.3d
1295, 1302 (11th Cir. 2004) (quotation omitted). Thus, it is unclear how her reliance

on non-Plan documents, when such documents existed, was tenable. See, e.g., Mack

v. Kuckenmeister, 619 F.3d 1010, 1018 (9th Cir. 2010) (“[A] [qualified domestic

relations order] only renders enforceable an already-existing interest. [It] does not

somehow create a right to plan benefits or create a right to enforce a state law

order.”).

       In short, as the district court observed, the Defendants sought to defend against

Schneeberger’s claim for 100% of vesting that was not legitimate, and Schneeberger

legitimately sought more than 60% of vesting based on her employment records.

Both parties’ positions had some merit, but neither had relatively more merit than the

other. As a result, the district court did not clearly err in making this finding, nor did

it abuse its discretion in how it weighed the factors to deny attorneys’ fees to both

parties.

       AFFIRMED.

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