Opinion
00 CV 2130 (ILG)(RML)
December 10, 2002
REPORT AND RECOMMENDATION
By order dated November 22, 2002, the Honorable LI. Leo Glasser, United States District Judge, referred the pending motions concerning attorney's fees and costs to me for Report and Recommendation. For the reasons stated below, I respectfully recommend that plaintiff Travelers Insurance Company be awarded $25,000 in attorney's fees and costs out of the interpleader fund.
BACKGROUND AND FACTS
On or about March 28, 1996, plaintiff Travelers Insurance Company ("plaintiff" or "Travelers") issued a life insurance policy, Contract No. 7338412 (the "Policy"), on the life of Zenifer Garcia ("Garcia"). (Declaration of Jaimie L. Fried, dated May 29, 2002 ("Fried Decl."), ¶ 3 and Ex. A.) Garcia passed away on November 21, 1999. (Id. ¶ 3.) At the time of her death, the Policy was for $78,771.00. (Id.) Defendant George Europe ("Europe"), whom Garcia had described as her fiancée in March 1996, was designated as the beneficiary under the Policy. (Id.) Garcia died intestate, and to date no administrator has been appointed for the estate.
Europe had been living with Garcia when she named him as the beneficiary under the Policy, but was no longer living with her at the time of her death. (Transcript of Oral Argument, dated June 22, 2001 ("Tr.), at 4.) He now resides in Tobyhanna, Pennsylvania. (Affidavit of George Europe, sworn to July 3, 2002, ¶ 1.)
On December 29, 1999, shortly after Garcia's death, attorney Todd J.W. Bowen sent Travelers a letter informing Travelers that he represented Garcia's eldest daughter, Lydia Mohammad ("Mohammad"), and that Mohammad would be seeking court intervention regarding the distribution of the insurance proceeds. (Id. ¶ 4 and Ex. B.) In February 2000, Bowen further advised Travelers that his office would also be representing Garcia's five other daughters, all of whom were under the age of eighteen, as well as Garcia's estate, and that all of his clients would be asserting a claim to the proceeds of the Policy. (Id. ¶ 4.) Bowen also advised Travelers' counsel that at least two other cases were proceeding in state court — one in family court and one in New York State Supreme Court — that bore on the issue of who was entitled to the Policy's proceeds. (Id.)
Europe is the father of one of those daughters, Zeann Europe. (See Fried Decl., Ex. E.) Garcia and Europe never married.
The action in family court was apparently a custody dispute, in which Mohammad sought an order of custody for two of Garcia's other children, including Zeann Europe. George Europe was represented in that matter by his current counsel, Mahendra M. Ramgopol, Esq.
On April 12, 2000, Travelers filed the instant interpleader action, under the Federal Interpleader Act, 28 U.S.C. § 1335, 1397 and 2361, for the purpose of determining the proper beneficiary or beneficiaries of the Policy. It then went about locating and serving Europe, Mohammad, and Garcia's minor daughters, whom Bowen had ceased representing. (Id. ¶¶ 5, 6.) On August 7, 2000, Europe answered the interpleader complaint and counterclaimed against Travelers for the proceeds of the Policy. Upon receiving a copy of Garcia's death certificate from Europe in December 2000, Travelers tendered a check for $78,771.00 to the Clerk of the Court for deposit in an interest-bearing escrow account. (Id. ¶ 9, Ex. F.)
On April 25, 2001, Europe moved for summary judgment, and on May 18, 2001 Travelers filed an opposition to that motion and moved to dismiss Europe's counterclaims. On June 22, 2001, Judge Glasser held oral argument on the motions. Judge Glasser denied Europe's motion for summary judgment and granted plaintiffs motion to dismiss his counterclaims, holding that Travelers' interpleader action had "been brought in an entirely appropriate fashion," given the circumstances. (Tr. at 18.)
Although Mohammad has been represented in this action by attorney Lawrence Kramer, neither Mohammad nor any of Garcia's other daughters has filed a claim to the proceeds of the Policy. On July 24, 2001, the court appointed Eli Uncyk, Esq. as guardian ad litem for Garcia's minor daughters. Mr. Uncyk then submitted a Report to this court, dated September 26, 2001, in which he stated that there were "no facts and legal basis or theory upon which [Garcia's minor children] can lay claim to the policy proceeds on the life of the late Zenifer Garcia, or otherwise interpose any Answer to the plaintiffs Complaint."
On December 21, 2001, the parties entered into a stipulation to dismiss this action with prejudice. (See Fried Decl. Ex. H.) The parties stipulated that the proceeds of the Policy are to be paid out to Europe, with the exception of $25,000, which has been set aside pending the parties' dispute concerning attorney's fees and costs.
DISCUSSION
It is undisputed that, generally speaking, "[a] disinterested stakeholder who asserts interpleader is entitled to be awarded costs and attorney's fees." Septembertide Publishing. B.V. v. Stein Day, Inc., 884 F.2d 675, 683 (2d Cir. 1989). In Septembertide, the Second Circuit stated that a stakeholder may recover fees and costs if the court finds that "(1) the party seeking fees is a disinterested stakeholder, (2) who had conceded liability, (3) has deposited the disputed funds into court, and (4) has sought a discharge from liability." Id. at 683. Accordingly, courts routinely award attorney's fees and costs to disinterested stakeholders when those fees and costs are attributable to the interpleader action and are not for expenses incurred as a part of the stakeholder's ordinary conduct of business. See, e.g., Correspondent Servs. Corp. v. J.V.W. Investments Ltd., 204 F.R.D. 47, 49-50 (S.D.N.Y. 2001); Merrill Lynch Pierce Fenner Smith Inc. v. Clemente, No. 98 Civ. 1756, 2001 WL 11070, at * 7 (S.D.N.Y. Jan. 4, 2001); Atlantic Bank of New York v. Homeowners Fin. Corp., No. 97 CIV. 1274, 1999 WL 144508, at *6 (S.D.N.Y. Mar. 17, 1999). The fees and costs "are generally awarded against the interpleader fund." Septembertide Publishing. B.V., 884 F.2d at 683. Whether and how much to grant in costs and fees is within the sound discretion of the district court. Travelers Indem. Co. v. Israel, 354 F.2d 488, 490 (2d Cir. 1965).
Here, Travelers has met all of the above criteria. It is a disinterested stakeholder that claims no interest in the proceeds of the Policy; it has deposited the entire sum of the Policy with the court; and it has sought discharge from liability. Travelers states that it spent approximately $47,714.11 on preparing, filing, and litigating this interpleader action, and it therefore argues that it is entitled to the $25,000 set aside by the court from the interpleader fund. In support of its claim, it has submitted contemporaneous attorney time records, specifying dates, hours expended, and the nature of the work done. See New York State Ass'n for Retarded Children. Inc. v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983).
In opposition, Europe argues that Travelers is not entitled to any attorney's fees or costs because it should never have brought this interpleader action in the first place. Consistent with his arguments throughout this litigation, he claims that because none of Garcia's daughters ever brought an actual claim to the proceeds of the Policy, there was never a justiciable controversy and Travelers should simply have paid the proceeds over to Europe. He accuses Travelers of acting in "bad faith," of failing to perform its obligations under the Policy, of bringing a "baseless" action, and of attempting to shift its ordinary business expenses to him. (See Memorandum of Law in Opposition to Travellers' [sic] Motion for Attorneys' Fees and in Support of Defendant George Europe's Cross Claim for Full Balance of the Interpleaded Fund Together with Interest, Costs, and Attorney's Fees.) He does not, however, challenge plaintiffs counsel's hourly rates or the amount of time plaintiffs attorneys spent responding to his motions and otherwise litigating this case.
As explained above, Judge Glasser has already held explicitly that Travelers acted properly in bringing this interpleader action, having been advised by an attorney representing Garcia's daughters that he planned to seek court intervention regarding the proceeds of the Policy. (See Tr. at 18.) Although Mr. Uncyk ultimately opined in his report that Garcia's daughters have no legitimate claim to those proceeds, he did not suggest, nor could he, that Travelers acted inappropriately in commencing this interpleader action. Indeed, it is beyond dispute that Travelers acted in good faith as a disinterested stakeholder. Accordingly, it is entitled to attorney's fees and costs.
I have conducted an independent review of plaintiffs counsel's time records and I find that Travelers' counsel has only requested reimbursement for charges related directly to this litigation. I also find counsel's hourly rates — ranging from $120 for a paralegal to $340 for a senior attorney — in line with rates generally awarded for comparable work in this district. Finally, I find the number of hours expended reasonable under the circumstances. Mr. Europe and his counsel opted to litigate this case aggressively by asserting a counterclaim, bringing a motion for summary judgment, and engaging plaintiffs counsel and the court in protracted conferences and arguments. This court respectfully suggested to Europe's counsel on more than one occasion that his strategy, which was certain to result in increased litigation costs, could diminish Europe's eventual recovery. Having made a conscious and informed decision to adopt an approach that caused plaintiff to incur greater fees and costs than would normally be expected in an interpleader action, Europe must take responsibility for that choice. Accordingly, the $25,000 plaintiff requests is not excessive considering the amount of work plaintiffs counsel was required to do for this case. See, e.g., Correspondent Servs. Corp., 204 F.R.D. at 49 (awarding $17,965.58 in fees and expenses incurred in connection with interpleader action).
Europe's cross-motion for $25,000 in attorney's fees should be denied as lacking any statutory or contractual authority. 17 U.S.C. § 505, which Europe cites for the proposition that he is entitled to fees and costs, applies only to copyright actions. Furthermore, Europe has not submitted any documentation to support his claim for $25,000 in attorney's fees.
CONCLUSION
For the foregoing reasons, I respectfully recommend that plaintiff be awarded $25,000 in attorney's fees and costs and that Europe's motion for attorney's fees be denied. Objections to this report and recommendation must be filed with the Clerk of the Court, courtesy copies to Judge Glasser and my chambers, within ten (10) business days to preserve appellate review. See 28 U.S.C. § 636 (b)(1).