Yesterday, in Peer v. Liberty Life Assurance Co. of Bos., No. 19-13974, __F.3d__, 2021 WL 1257440 (11th Cir. Apr. 6, 2021) , the Eleventh Circuit reversed the district court’s award of attorneys’ fees under ERISA’s fee-shifting provision in 29 U.S.C. § 1132(g)(1) against Plaintiff-Appellee Theresa Peer’s attorney since this provision cannot support a fee award against counsel.
The underlying dispute involves a claim for waiver of life insurance premiums. Defendant-Appellee-Cross Appellant Liberty Life denied Peer’s waiver of premium claim but then reinstated her coverage retroactive to the original termination date within five months after Peer hired counsel and filed her lawsuit. The district court found that the claim was moot, but Peer continued to pursue the action, which resulted in the district court utilizing “an unusual case management procedure” and issuing interrogatories directly to Peer’s attorney. The court ultimately dismissed the benefit claim as moot and found that Peer’s second claim was seeking an advisory opinion about her rights in the future if Liberty Life were to deny her claim again. The court found that there was no claim for adjudication and the right to future benefits was unripe.
Peer appealed and the Eleventh Circuit affirmed the decision. Liberty Life then sought an award of attorneys’ fees against Peer and her attorney under 29 U.S.C. § 1132(g)(1). The district court granted Liberty Life’s request but only against Peer’s attorney, not against Peer. The court reasoned that her attorney kept the court in a “systemic state of confusion” and should have known that Peer’s case was moot and there was no further justiciable controversy between the parties. Peer’s attorney appealed and Liberty Life cross-appealed the fee order for being assessed solely against Peer’s attorney and not Peer.
The Eleventh Circuit agreed with Peer’s attorney that ERISA’s fee-shifting provision is not to sanction attorney misconduct and cannot be used as a basis to assess fees against Peer’s attorney. The court listed several reasons for this holding: (1) the statute does not mention that attorneys or counsel can be ordered to pay fees and because it is silent on who must pay a fee award, it does not allow a court to award fees against a party’s lawyers; (2) fee-shifting caselaw under ERISA does not justify an award against counsel where the five-factor test is only focused on the parties and not counsel; (3) this holding minimizes disruption to the lawyer-client relationship, as demonstrated here where Peer’s attorney argued that his client, and not he, should be liable for fees; (4) this holding comports with the longstanding rule that clients are responsible for the actions of their lawyers; and (5) allowing a fee award under ERISA would circumvent procedures to sanction attorney misconduct.
The court instructed the district court to consider whether Peer’s attorney could have been sanctioned under 28 U.S.C. § 1927, Federal Rule of Civil Procedure 11(c), or the court’s inherent authority, and whether the ERISA fee award should be broadened to apply against Peer.
LEAVE YOUR MESSAGE
We know how to get your insurance claim paid. Call today at: