Aetna Casualty and Surety Company of Illinois reimbursed the Trust for $ 71,351.28. Aetna made the payments under a fiduciary responsibility insurance policy purchased by the Trust, which named the Trust's fiduciaries as insureds.
This leaves $ 89,526.89 in fees which the Trust paid to Sachnoff and for which no one has reimbursed the Trust. The problem with determining who should reimburse the Trust for this amount is that Sachnoff's services benefited six of the defendants. Two of these defendants prevailed on some of the issues which were tried in this case, which means that their amount of reimbursement ultimately should be lower than the other defendants'. Apparently Sachnoff's records do not permit clear calculation of how many hours it spent doing what, which complicates how to determine each defendant's reimbursement liability.
There are two proposals for reimbursement, one from Libco and Engle, and the other from Dardick and Zuckerman.
Libco and Engle submit that Engle, Dardick, Zuckerman, and Aetna agreed to attribute one-third of the Sachnoff costs to Engle and the other two-thirds to Dardick and Zuckerman. Libco and Engle suggest that the court adopt this same division, then offset any fee amounts which the Trust owes to Dardick and Zuckerman against the amount of Dardick and Zuckerman's reimbursement to the Trust.
Dardick and Zuckerman for their part propose that the court attribute 50% of the Sachnoff fees to the defense of Libco and Engle, and 50% to them. They likewise adopt the Libco/Engle suggestion that the court offset any fees owed to them against their amount of reimbursement, and propose that these fees be split according to the number of principal issues in the case, three. By this formula, Dardick and Zuckerman would end up reimbursing the Trust one-sixth of the Sachnoff fees, since 50% would be Libco and Engle's responsibility and since Dardick and Zuckerman prevailed on two of the three principal issues.
The court will adopt Dardick and Zuckerman's reimbursement proposal, but only in part. Choosing between the two proposals is not easy, as none of the parties justified its proposed split between Libco/Engle and Dardick/Zuckerman. The parties' agreement with Aetna, for example, in no way binds this court, although it may result in litigation -- hopefully elsewhere -- as to who is contractually responsible for the Sachnoff fees. The split proposed by Dardick and Zuckerman, however, seems to mirror the reality of this litigation more accurately. As noted earlier, Sachnoff defended six persons and entities in this suit. Nevertheless, two of these entities, Telco and Telvest, were so closely aligned with Libco and Engle that this court will aggregate them with Libco and Engle for purposes of reimbursement.
Thus, 50% of the remaining Sachnoff fees should be borne by Libco and Engle, and the other 50% should be borne by Dardick and Zuckerman.
This leaves the court with Dardick and Zuckerman's request for offset. As noted earlier, Dardick and Zuckerman seek to offset two-thirds of their reimbursement amount because they prevailed on two of the three principal claims in this case. Dardick and Zuckerman's suggestion that this court approximate the amount of the Sachnoff fees which the Trust properly should have paid on behalf of Dardick and Zuckerman according to a rough split of claims runs contrary to Hensley v. Eckerhart, 461 U.S. 424, 435-36, 76 L. Ed. 2d 40, 103 S. Ct. 1933 n.11, (1983), where the Court rejected "a mathematical approach comparing the total number of issues in the case with those actually prevailed upon." It also runs against this court's express holding in its earlier opinion:
In holding that Dardick and Zuckerman are entitled to reimbursement for prevailing on [two of the three claims], the court is aware of the difficulty of attributing each dollar of legal costs to one claim or another. Because ERISA prohibits trusts from reimbursing the legal expenses of breaching fiduciaries, and Dardick and Zuckerman did breach their fiduciary duties in one respect, they must bear the burden of demonstrating that any legal expenses for which they seek reimbursement are attributable solely to plaintiffs' unsuccessful claims.