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Fontaine v. Metropolitan Life Insurance Co.

United States District Court, N.D. Illinois, Eastern Division

June 3, 2014

MARY C. FONTAINE, Plaintiff,
v.
METROPOLITAN LIFE INSURANCE COMPANY, Defendant.

MEMORANDUM OPINION & ORDER

JOAN B. GOTTSCHALL, District Judge.

On March 27, 2014, the court granted Mary Fontaine's motion for entry of judgment, finding that she qualified as disabled under two Metropolitan Life Insurance Company policies and that she was therefore entitled to benefit payments under those policies. The court denied Fontaine's request for attorneys' fees, however, finding that MetLife was "substantially justified" in denying her claim. Fontaine now moves for reconsideration of the court's order insofar as it denied her attorneys' fees. For the reasons stated below, Fontaine's motion is granted.

I. BACKGROUND

The facts of this case are set forth in the court's order dated March 27, 2014. See Fontaine v. Metro. Life Ins. Co., No. 12 C 8738, 2014 WL 1258353, at *16 (N.D. Ill. Mar. 27, 2014). Fontaine was a partner at the law firm of Mayer Brown in Chicago, where she practiced in the firm's structured finance group for thirty years. In 1997, she began having problems with her vision. She was diagnosed with myopic macular degeneration, a condition that results in a loss of vision in the center of the visual field. After her eyesight deteriorated over the course of several years, Fontaine finally decided in 2011 that her vision had become so impaired that she could no longer do her job. She filed a claim for disability benefits with MetLife, but MetLife denied her claim, finding that she was not disabled under the policies.

On March 27, 2014, the court granted Fontaine's motion for entry of judgment, finding that Fontaine had shown that her disability left her unable to perform any of her material job duties as a structured finance partner. In granting Fontaine's motion, the court noted several aspects of MetLife's denial that it found troubling, including MetLife's continued reliance on two nontreating reviewing physicians (Drs. Nelson and Hauser) who went beyond their areas of expertise in suggesting that "anxiety" or "burn out" contributed to Fontaine's "insecurity" in her job and that Fontaine's past job performance meant that she had the present ability to do her job. Nevertheless, the court denied Fontaine's request for attorneys' fees, finding that MetLife's position was "substantially justified" because it was "not... entirely frivolous." Id. at *16.

II. LEGAL STANDARD

A court may grant a motion for reconsideration if the movant "points to evidence in the record that clearly establishes a manifest error of law or fact." In re Prince, 85 F.3d 314, 324 (7th Cir. 1996). The parties may not introduce evidence previously available but unused in the prior proceeding or tender new legal theories. Id. The Seventh Circuit has explained that a "manifest error" occurs when "the [c]ourt has patently misunderstood a party, or has made a decision outside the adversarial issues presented to the [c]ourt by the parties, or has made an error not of reasoning but of apprehension." Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990); see also Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000) (describing "manifest error" as a "wholesale disregard, misapplication, or failure to recognize controlling precedent").

III. ANALYSIS

Fontaine argues that the court should reconsider its decision to deny attorneys' fees because that denial relied on a misunderstanding of the substantial justification test as articulated by the Seventh Circuit in Production & Maintenance Employees' Local 504, Laborers' Int'l Union v. Roadmaster Corp., 954 F.2d 1397, 1404 (7th Cir. 1992). In Roadmaster, the court explained that "[e]ven if not frivolous, a party's position still may not be substantially justified; substantial justification means more than merely not frivolous, but less than meritorious.'" Id. (quoting Bittner v. Sadoff & Rudoy Indus., 728 F.2d 820, 830 (7th Cir. 1984)). Fontaine contends that by denying fees because MetLife's position was "not entirely frivolous, " the court applied a standard that was overly lenient to MetLife. Under a correct application of the standard, she claims, the court should have awarded her attorneys' fees.

The court agrees with Fontaine that, by equating a substantially justified position with a nonfrivolous position, the court misapplied the substantial justification test to this case. As Roadmaster and subsequent decisions make clear, "substantial justification means more than merely not frivolous...." 954 F.2d at 1404 (emphasis added) (internal quotation marks omitted); see also Herman v. Cent. States, S.E. and S.W. Areas Pension Fund, 423 F.3d 684, 696 (7th Cir. 2005) (defining "substantially justified" as "something more than non-frivolous, but something less than meritorious"). The court's error constitutes a "misapplication" of controlling precedent, thus entitling Fontaine to reconsideration of the fees issue. See Oto, 224 F.3d at 606,

The court therefore considers the attorneys' fees issue anew. As the court noted in its previous order, the Supreme Court last addressed the issue of attorneys' fees in ERISA cases in Hardt v. Reliance Standard Life Insurance Co., 560 U.S. 242, 254 (2010). In Hardt, the district court had found that the plan administrator's decision to deny disability benefits was not based on substantial evidence. Hardt, 560 U.S. at 248. The court criticized the plan administrator's reliance on a reviewing physician's report that was incomplete, the "extremely vague and conclusory" basis for the reviewing physician's medical conclusions, and the reviewing physician's failure to cite medical evidence in support of his conclusions and address a treating physician's contrary medical findings. Id. The court also found that the plan administrator had improperly rejected much of the evidence the plaintiff had submitted. Id. The court remanded the case to the plan administrator to reassess the plaintiff's claims. Id.

The plaintiff then moved for attorneys' fees. In deciding whether to award fees, the district court first considered whether the plaintiff was a "prevailing party"-a necessary condition to awarding fees under Fourth Circuit precedent. Id. at 249. Because the court's remand order "sanctioned a material change in the legal relationship of the parties, " the court concluded that the plaintiff was a prevailing party. Id. The court next considered five factors to determine whether an award of attorneys' fees was appropriate: "(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 249 n.1 (internal quotation marks omitted). The court concluded that an award of attorneys' fees award was appropriate under the five-factor test. Id. at 250.

The Fourth Circuit vacated the district court's order awarding fees, finding that because the remand order "did not require [the plan administrator] to award benefits to [the plaintiff], " it did not constitute an "enforceable judgment on the merits, " thus precluding the plaintiff from establishing prevailing-party status. Id. (internal quotation marks omitted). The Supreme Court in turn reversed the Fourth Circuit, holding that "a court in its discretion may award fees and costs to either party... as long as the fee claimant has achieved some degree of success on the merits.'" Id. at 245 (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694 (1983)). The Court further held that the plaintiff had achieved some degree of success on the merits and that the district court had properly exercised its discretion to award fees. Id. at 256.

Here, it is undisputed that Fontaine achieved "some degree of success on the merits." Indeed, Fontaine achieved all that she could have achieved in this court-obtaining not merely a remand order but a final judgment entitling her to benefits. There is no question that the court may in its discretion award attorneys' fees ...


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