Life Partners Inc v. Life Insurance Co , 203 F.3d 324 ( 2000 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 99-50064
Consolidated with 99-50332
Summary Calendar
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LIFE PARTNERS, INC., JOHN MORONEY,
Plaintiffs-Appellees,
versus
LIFE INSURANCE CO. OF NORTH AMERICA,
Defendant-Appellant.
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Appeals from the United States District Court
for the Western District of Texas
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October 27, 1999
Before POLITZ, HIGGINBOTHAM, and WIENER, Circuit Judges.
PER CURIAM:
In this appeal from an adverse declaratory judgment and
injunctive relief in an ERISA dispute, Defendant-Appellant Life
Insurance Co. of North America (“LINA”) asks us to reverse the
district court’s grant of summary judgment in favor of Plaintiffs-
Appellees John Moroney and Life Partners, Inc. LINA complains that
the district court erred in concluding that New York law does not
govern Moroney’s assignment of his life insurance policy rights to
Life Partners. LINA further complains that the district court
erred in awarding Moroney and Life Partners attorneys’ fees.
Subsequent to the district court’s entry of judgment in favor
of Moroney and Life Partners, LINA complied with the district
court’s order by recognizing the assignment of Moroney’s rights to
Life Partners. It is not within our power to invalidate that
assignment. Consequently, there is no live case or controversy
with respect to the validity of the assignment on which we or the
district court can pass judgment: Federal courts do not render
advisory opinions. United States v. Texas Tech. University, 17
F.3d 279, 286 (5th Cir. 1999). LINA’s appeal with respect to the
validity of the assignment is thus moot.
We turn now to LINA’s complaint that the district court erred
in awarding Moroney and Life Partners attorneys’ fees. We review
the district court’s decision to award attorneys’ fees for an abuse
of discretion. Wegner v. Standard Ins. Co., 129 F.3d 814, 820-21
(5th Cir. 1997). The fees in question were awarded pursuant to
ERISA, 29 U.S.C. § 1132(g)(1). “Although the decision to award
attorneys’ fees is discretionary, the court should consider the
following five factors in its analysis: (1) the degree of the
opposing parties’ culpability or bad faith; (2) the ability of the
opposing parties to satisfy an award of attorneys’ fees; (3)
whether an award of attorneys’ fees against the opposing party
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.” Wegner, 129 F.3d at
821.
Here, the district court considered each of the five Wegner
factors. The decision to award attorneys’ fees was predicated in
part on the court’s findings that LINA’s position “bordered on
being frivolous” and that the relative merits of the parties’
positions clearly favored Moroney and Life Partners. While we do
not question the district court’s findings with respect to these
issues, we conclude that the court abused its discretion in
applying the findings to the entire duration of the underlying
litigation.
As the district court itself ruled, the initial complaint
filed by Moroney and Life Partners failed to state a claim on which
relief could be granted because it alleged only state causes of
action that were preempted by ERISA. Until Moroney and Life
Partners amended their complaint on June 8, 1998 to state a cause
of action under ERISA, LINA’s defense to the claims was valid and
meritorious. We therefore conclude that Moroney and Life Partners
should not have been awarded attorney’s fees incurred prior to the
amending of the complaint on June 8, 1998. Accordingly, we affirm
the district court’s order awarding attorneys’ fees but vacate the
amount of that award and remand for a redetermination of the proper
amount of such fees, consistent with this opinion.
AFFIRMED IN PART, REVERSED AND REMANDED IN PART.