Scarangella v. Group Health Inc.
877 F. Supp. 2d 78
S.D.N.Y.2012Background
- Village Fuel contracted with GHI to provide health insurance; Plaintiff enrolled in 2002 but coverage terminated retroactively June 1, 2002 due to alleged misrepresentations.
- GHI asserted equitable restitution, equitable rescission, and equitable reformation claims; Village Fuel filed crossclaims including equitable restitution.
- GHI and Village Fuel disputes were litigated in SDNY; following motions for summary judgment, the court granted partial relief and dismissed several claims; Plaintiff settled with GHI and withdrew his claim against Village Fuel; GHI dismissed remaining crossclaims against Village Fuel.
- Village Fuel moved for ERISA attorneys’ fees under 29 U.S.C. § 1132(g)(1) seeking $303,814.32; Judge Ellis issued an R&R recommending partial award and the district court adopted in part but ultimately denied fees.
- The court held Village Fuel did not obtain “some degree of success on the merits” and was not the prevailing party; Chambless factors were not reached because the basic threshold was not met; fees denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Village Fuel obtain some degree of success on the merits? | Village Fuel had 100% success against GHI on the reformation theory. | No substantial success on merits; most claims were dismissed on procedural grounds or settled. | No sufficient success on merits. |
| Is Village Fuel the prevailing party for ERISA fee shifting? | Settlement defeats of GHI against Plaintiff sweep in Village Fuel as prevailing. | Lack of judicial imprimatur and lack of unequivocal victory means no prevailing party. | Village Fuel not the prevailing party. |
| If some success existed, are Chambless factors satisfied? | Factors support fee award. | No successful outcome; factors in Chambless do not rescue a lack of merit victory. | Not reached; no success merited, so Chambless analysis unnecessary. |
Key Cases Cited
- Hardt v. Reliance Standard Life Insurance Co., 130 S. Ct. 2149 (Supreme Court 2010) (some degree of success on merits required for ERISA fees)
- Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869 (2d Cir. 1987) (five-factor test for awarding fees in ERISA cases)
- Hensley v. Eckerhart, 461 U.S. 424 (Supreme Court 1983) (reasonable percentage of fees limited to reasonable work performed)
- Buckhannon Bd. & Care Home, Inc. v. West Virginia Dept. of Health & Human Resources, 532 U.S. 598 (Supreme Court 2001) (catalyst theory does not apply to ERISA fee requests)
- Taaffe v. Life Insurance Co. of America, 769 F. Supp. 2d 530 (S.D.N.Y. 2011) (settlement does not automatically establish prevailing party status)
- Toussaint v. JJ Weiser, Inc., 648 F.3d 108 (2d Cir. 2011) (illustrates what constitutes some success on the merits in the Second Circuit)