Melissa C. Cross v. The Quality Management Group, LLC , 491 F. App'x 53 ( 2012 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 11-15146
Non-Argument Calendar
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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.
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Appeals from the United States District Court
for the Southern District of Florida
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(September 27, 2012)
Before MARCUS, FAY and EDMONDSON, Circuit Judges.
PER CURIAM:
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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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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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