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Peer v. Liberty Life Assurance Company of Boston

United States District Court, S.D. Florida

August 8, 2019

THERESA PEER, Plaintiff,



         This cause is before the Court upon Defendant's Motion for Attorney's Fees [DE 71], Plaintiff's Motion for Attorney's Fees [DE 48], and Defendant's Motion for Appellate Attorney's Fees [DE 86].[1] Plaintiff's Motion is granted in part and denied in part. Defendant's Motions are granted. Because the Court's award of fees to Defendant warrants a detailed explanation, the Court sets forth the unusual history of this case below. Next, the Court addresses the merits of the parties' competing motions for attorney's fees.

         The History of Litigation in this Case

         Plaintiff initiated this action in March of 2017. Plaintiff alleged that she was totally disabled, that she had an insurance policy with Defendant, that the policy contained a waiver-of- premium-benefit for insureds who were totally disabled, and that Defendant had wrongfully denied Plaintiff that benefit. DE 1.

         In July of 2017, Plaintiff filed a motion for summary judgment seeking a determination that she was entitled to her waiver-of-premium-benefit. On August 2, 2017, Defendant responded to Plaintiff's motion by informing the Court that it had voluntarily reinstated Plaintiff's requested benefit and that it had done so retroactively so that Plaintiff would have no gap in coverage. When Defendant reinstated Plaintiff's benefit, Defendant also offered to pay Plaintiff's counsel a reasonable attorney fee so that the case could be closed and Defendant could avoid additional litigation costs. See DE 86 at 3. Defendant contended that because of its reinstatement of Plaintiff's benefit, the case had become moot. DE 21 at 3.

         When the Court received notification from Defendant that Plaintiff had received the relief sought in her Complaint retroactively, the Court could see no reason to disagree with Defendant that the case had become moot. Accordingly, the Court issued an order to show cause, to Plaintiff, seeking an explanation why the case should not be closed:

On or before Friday August 4, 2017 at 5:00 pm Plaintiff must show cause, in writing, why Plaintiff's Motion for Summary Judgment should not be denied as moot in light of Defendant's Response in Opposition. The Court notes that if the Motion for Summary Judgment is denied as moot and the case is administratively closed, the parties would remain free to litigate attorney's fees.

DE 22. Plaintiff responded to the Court's order to show cause, but Plaintiff's response was difficult to understand. By way of example, the response included the following block paragraph:

A defendant's statement that it has changed its position cannot suffice to satisfy the heavy burden [of mootness]. (United States v. Concentrated Phosphate Export Assn., 393 U.S. 199, 203 (1968). In the context of the present action, that last statement bears repeating. A defendant's statement that it has changed its position cannot satisfy its heavy burden. (Id.) In the present context, it is not even clear that Liberty Life has made any statement at all. There is one sentence in argument authored by Liberty's attorney. That is all. It is supported neither by the record nor by affidavit. As an officer of the Court, Peer's attorney can attest to the fact that this sentence was the first notice of any kind given to Peer's attorney in any form that Liberty had changed its position and allegedly voluntarily reinstated Peer's waiver of premium benefit. It may also be said that this change had not been communicated previously to anyone other than possibly Liberty's lawyer. It is further not even clear whether it was intended to communicate an internal communication, whether it reflected a future event intended to take place thereafter or what “voluntarily” might mean. “Reservation of rights” language in insurance industry communications for example indicates that no predicate right has necessarily been found to have been fulfilled, merely that temporarily benefits under an insurance policy are being paid. The absolutely extraordinary and far-reaching effect Liberty's lawyer's argument was apparently intended to have on Peer's claims in the pending action is frankly beyond belief.

DE 23 at 3-4.[2] What the Court could discern from Plaintiff's response was that Plaintiff's counsel represented that her motion for summary judgment was not moot, that the Court should not accept Defendant's counsel's representation that the benefit had been reinstated and that litigation should continue. Thus, even though the Court could not discern what remained to be adjudicated in the case, the Court accepted Plaintiff's demand for a formal ruling on her motion for summary judgment and the Court ordered that briefing on the motion for summary judgment would resume. DE 24.

         Motion practice continued. Plaintiff eventually conceded that her waiver of premium benefit had been reinstated by Defendant and, as a result, the Court denied Plaintiff's motion for summary judgment as moot. DE 40. Plaintiff contended that the mootness of her motion for summary judgment did not mean that her entire case was moot, but the Court could not discern how this was so. Plaintiff's Complaint did contain certain references to events in the future and a desire for the Court to adjudicate something about those events, but the Court could see no legal basis (and Plaintiff provided none) for the Court to adjudicate hypothetical future events. The Court's confusion was sufficiently great that the Court employed a case management procedure that it had never employed before-the Court ordered Plaintiff to file a statement of the remaining issues in the case that needed adjudication. DE 41. Plaintiff's response to the Court's order again was difficult for the Court to comprehend. Plaintiff's response included the following:

The relief available under ERISA's reticulated remedial provision embraces a declaration by the Court determining Peer to be entitled to the benefits being sought, but this declaratory relief still is outstanding and as yet not found by the Court. (It might strike the Court as odd that Liberty has not admitted expressly that Peer met the definition of “Disability” under the policy nor agreed by stipulation filed with the Court that Peer is “Disabled” or even deemed “Disabled” by Liberty.) Peer has been called upon previously by the Court to explain what relief is required by ERISA, 29 U.S.C. §1132(a)(1)(B) in the face of Liberty's argument that the case was mooted by Liberty's administrative reinstatement of Peer's benefits. (Liberty even made the extraordinary claim that its unilateral decision to reinstate Peer to benefit status deprived this Court of subject matter jurisdiction and consequently that the Court should dismiss the present action as moot.) On short notice Peer was fortunate to be able to locate a case disposing of just an argument in Lamuth v. Hartford Life and Accident Ins. Co., 30 F.Supp. 3D 1036 (E.D. Wash., 2014) (“For the reasons that follow, the Court finds that Dr. Lamuth's claim for payment of benefits is moot, but her claim for a clarification of rights regarding the Pre-existing Condition Limitation and her date of Disability is not.”) (Id., 1043.) Peer was also able to locate Dr. Lamuth's memorandum of law arguing that her case was not moot and filed that memorandum in the present action. (Doc. No. 24.) It is less clear here that in Lamuth, that Liberty has actually determined Peer eligible for benefits, Peer is therefore in even more need of and indeed entitled by 29 U.S.C. §1132(a)(1)(B) to a finding by this Court that Peer has met the definition of “Disabled” under the Liberty policy. (Cf. Lamuth, supra, 1042.) (“Hartford granted Dr. Lamuth's claim . . . Hartford explained that Dr. Lamuth ‘is eligible for benefits under the terms of the Policy. . .'”) Without such a finding that Peer is “Disabled” and entitled to benefits under the Liberty policy, Peer is similarly unable to determine the date of her “Disability” with any certainty. That date, whether as reinstated by Liberty or determined by the Court fixes the date for commencement of the annual review by Liberty of Peer's entitlement to benefits under the Liberty policy. The Liberty policy, namely, proceeds from year to year with benefits certified at one year intervals each year and with a three-month window preceding each subsequent anniversary date for Liberty to review Peer's continued “Disability.” In short Peer is entitled to a determination by a finding by the Court that she is “Disabled” under the Liberty policy. Not only that, but Peer is entitled to an order clarifying her right to future benefits under the Liberty policy, pursuant to 29 U.S.C. §1132(a)(1)(B). These are statutory rights, granted by ERISA itself in its reticulated remedial provision, to wit, 29 U.S.C. §1132(a)(1)(B).

DE 45 at 3. In a detailed order, the Court attempted to analyze Plaintiff's remaining issues for trial. DE 46. The Court divided Plaintiff's remaining issues into three broad categories. First, Plaintiff sought relief on issues that were moot. For example, Plaintiff stated that she wanted a determination that she was disabled in the present, but the Court had already denied Plaintiff's motion for summary judgment on that very issue as moot. DE 46 at 2. Second, Plaintiff stated that she wanted the Court to adjudicate her disability status in the future. The Court ruled as follows: “The Court also fails to see, and Plaintiff fails to provide any cogent legal argument, how the Court may adjudicate Plaintiff's disability status in the future.” Third and finally, Plaintiff sought relief as follows: “In clarification of Peer's future benefits, what time frames apply to the dates beginning the anniversaries upon which Liberty is allowed to review Peer's entitlement to benefits in the future” and “If the Court must make such [disability] determination independent of Liberty's reinstatement of Peer's benefits, do Liberty's procedural violations require that the Court apply the de novo standard of review, regardless of any discretionary provision in the Liberty policy.” Id. at 3-4. With respect to this final category, the Court ruled that if Plaintiff felt that her case was not moot, she was required to file an amended complaint that clearly explained the factual and legal basis entitling her to that relief. Id.

         Plaintiff accepted the Court's offer to amend her Complaint. Her amended complaint, however, was filed in violation of the Local Rules of this District. Plaintiff's amended complaint incorporated forty-six paragraphs from her original complaint, a practice that was prohibited by Local Rule 15.1. The Court struck Plaintiff's amended complaint and ordered Plaintiff to file a new amended complaint. DE 49. Plaintiff's second amended complaint, however, instead of incorporating her original complaint, block quoted her original complaint, even though the original complaint contained claims that had been held by the Court to be moot. DE 50.

         Plaintiff's second amended complaint continued to confuse the Court as the Court still could not discern the relief that Plaintiff was seeking and how the Court could provide that relief. As a result, for the second time the Court utilized an unusual case management procedure and issued interrogatories directly to Plaintiff's counsel:

By 2/27/18, Plaintiff shall file a Notice answering the following questions: (1) Does this case present only questions of law such that it could be resolved on motions for summary judgment? (2) Are there fact issues that need to be resolved by a fact-finder? (3) If the answer to question 2 is yes, what are the fact issues that must be resolved by a fact-finder?

DE 52. Plaintiff responded to the Court's order by stating that there were no factual issues for the Court to decide, but that there were legal issues that remained to be decided. The Court therefore set a status conference for Plaintiff's counsel to explain to the Court, in person, what relief needed adjudication. Before the status conference, however, Defendant filed a motion to dismiss, arguing, inter alia, that the second amended complaint should be dismissed because it mirrored the original complaint which the Court had held to be moot. DE 59.

         At the status conference, the Court heard argument on the motion to dismiss. Because the second amended complaint quoted the original complaint's claims that the Court ruled were moot, the Court granted the motion to dismiss as to those claims. On whatever remained, however, the Court reasoned that the best vehicle to resolve those claims (which Plaintiff contended were purely legal issues) was a motion for judgment on the pleadings. The Court therefore ordered Defendant to file a motion for judgment on the pleadings and denied the remainder of the motion to dismiss in the interim. Defendant complied, arguing in its motion for judgment on the pleadings that (just as the Court had previously ruled) the Court could not adjudicate the future disability of the Plaintiff and that without an adverse benefits determination for Plaintiff to contest there was no case or controversy between the parties. DE 66.

         In contrast to the targeted legal argument raised in the Defendant's motion, Plaintiff's response cited inapplicable case law and did not respond to the motion in a cogent way, including the following:

Defendant conspicuously avoids the issue of how, having granted Peer beneficiary status after Peer filed her Motion for Summary Judgment, Peer can be construed by the Court to be anything other than Totally Disabled under the terms of the Plan. This is the necessary and unavoidable conclusion which the Court must draw as a matter of law in construing the contract which Defendant now proffers as its policy. What ERISA itself provides as relief in 29 U.S.C. §1132 a)(1)(B) are three independent phrases separated by the disjunctive “or.” (“A civil action may be brought - (1) by a participant or beneficiary - (B) to recover benefits due him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan . . . .”)(Id.), (Emphasis added.) Now that the terms of Peer's plan have been examined above, what significance does the word “or” actually have? As it happens, on April 9, 2018 the Supreme Court based the entire rationale of its majority opinion on that two-letter word “or.” (See Encino Motorcars, LLC v. Navarro, - U.S. - (2018), (holding that service advisors at car dealerships are exempt from the Fair Labor Standards Act, 29 U.S.C. §201 et seq.). The Court wrote that “or” is almost always disjunctive. (Id.), citing and quoting United States v. Woods,571 U.S. 31, 45 (2013). The Court rejected the so-called “distributive canon” of statutory construction, holding that the context favored “the ordinary disjunctive meaning of ‘or' for at least three reasons. First, application of the distributive canon would mix and match some of three nouns -“salesman, partsman, or mechanic” with one of two gerunds - “selling or servicing, ” leaving it to the reader to figure out the precise combinations. Secondly, the distributive canon has the most force when “an ordinary, disjunctive reading is linguistically impossible.” The Court added: “Third, a narrow distributive phrasing is an unnatural fit here because the entire exemption bespeaks breadth.” The Court favored “the more natural reading.” (Id.) 20. β€œβ€œOr” means ...

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