Jackling v. Brighthouse Life Ins. Co.

WILLIAM T. JACKLING, Plaintiff, v. BRIGHTHOUSE LIFE INSURANCE COMPANY, et al., Defendants.

No. 20-CV-6995-MJP

United States District Court, W.D. New York

April 28, 2022

DECISION AND ORDER

MARK W. PEDERSEN UNITED STATES MAGISTRATE JUDGE

Before the Court is Defendant Brighthouse Life Insurance Company's motion seeking costs pursuant to 28 U.S.C § 1927.^[1] (Nov. 17, 2021, ECF No. 29.) Plaintiff has not filed any opposition.^[2] For the reasons stated below, the Court grants Defendant's motion seeking costs and awards Defendant's counsel a portion of the requested amount.^[3]

PROCEDURAL AND FACTUAL HISTORY

Defendant seeks recovery of costs pursuant to 28 U.S.C. § 1927 because Plaintiff's counsel's actions forced Defendant to engage in “unnecessary motion practice” in filing a motion to dismiss. (Def.'s Mot. Seeking Costs ¶ 3, ECF No. 29.) Defendant originally requested a recovery of costs pursuant to 28 U.S.C. § 1927 in its motion to dismiss. (Mot. to Dismiss ¶ 2, ECF No. 13-1.) Defendant asserts it was forced to conduct unnecessary motion practice because Plaintiff's counsel included and later failed to remove unnecessary defendants from this action.^[4] (Compl. at 1, ECF No. 1-1.) Plaintiff's counsel identified several defendants other than Brighthouse Life Insurance Company in his complaint “Travelers, ” “Metlife, ” “Genworth, ” and “Brighthouse Financial.” (Compl. ¶¶ 5-8, ECF No. 1-1.)

Defendant's removal petition put Plaintiff's counsel on notice of Defendant Brighthouse's position that it was the only proper defendant. (Not. of Removal ¶¶ 1219, ECF No 1.) Defendant attached Jason Frain's affirmation, which indicated that “Brighthouse Life Insurance Company is the sole entity responsible to the insured under the policy.” (Aff. of Jason Frain ¶ 10, ECF No. 1-3.) Defendant attached exhibits to Mr. Frain's affirmation supporting its position. (Aff. of Jason Frain, Exs. A-D, ECF Nos. 1-4, 1-5, 1-6, 1-7.)

As the Court discussed in its decision and order (“D. &amp O.”) concerning the companion case, between that time and Defendant's eventual motion to dismiss the unnecessary defendants (ECF No. 13), Defendant presented Plaintiff's counsel with additional opportunities to dismiss the unnecessary defendants. See Jackling v. Brighthouse Life Ins. Co., No. 20-CV-6899-MJP, 2022 WL 831497, at *2 (W.D.N.Y. Mar. 21, 2022) (discussing procedural history). The Court will incorporate that discussion by reference.

Notably, Plaintiff's counsel responded to the motion to dismiss only in the companion case. Plaintiff's counsel stated:

There remains concern on the part of Plaintiff whether he should rely upon the word of the Defendants who have only provided self-serving documents claiming that these defendants are no longer responsible for the claims of the Plaintiff.

Id. (quoting Pl.'s Resp. to Def.'s Mot. to Dismiss at 1, ECF No. 21) The Court dismissed the unnecessary defendants in its order dated October 18, 2021. (ECF No. 24.)

In its order, the Court also directed the parties to meet and confer on the issue of costs. (Id.) Plaintiff's counsel indicated to the Court that the parties did not come to a resolution. (Letter Mot. for Hr'g, ECF No. 26.) Accordingly, the Court held a hearing on November 23, 2021, where both Plaintiff's and Defendant's counsel appeared and had an opportunity to be heard.^[5] (ECF No. 31.)

STANDARD OF LAW

The Court may require “[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably . . . to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.” 28 U.S.C. § 1927. When analyzing a motion pursuant to this statute, the Court must find that “(1) the challenged claim was without a colorable basis and (2) the claim was brought in bad faith, i.e., motivated by improper purposes such as harassment and delay.” Enmon v. Prospect Capital Corp., 675 F.3d 138, 143 (2d Cir. 2012) (quoting Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 336 (2d Cir. 1999)). Although “inferences of bad faith are disfavored, ” see Eiseman v. Greene, 204 F.3d 393, 396 (2d Cir. 2000), a finding of “[b]ad faith can be inferred when the actions taken are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose.” Gissendaner v. Credit Corp. Sols., Inc., 358 F.Supp.2d 213, 224 (W.D.N.Y. 2019) (quoting Schlaifer Nance & Co., 194 F.3d at 338).

DISCUSSION

Attorneys who practice before this Court “assume responsibilities to their client, to the opposing parties and their counsel and to the Court.” Hart v. Blanchette, No. 13-CV-6458CJS, 2019 WL 1416632, at *1 (W.D.N.Y. Mar. 29, 2019), report and recommendation adopted sub nom. Hart v. Crab Addison, Inc., No. 13-CV-6458 CJS, 2021 WL 2002996 (W.D.N.Y. May 19, 2021). One such responsibility, common both to Fed.R.Civ.P. 11 and 28 U.S.C. § 1927, is that attorneys must ensure that claims have “legal and factual support, ” when “considered in light of the reasonable beliefs of the individual making the claim.” Schlaifer Nance & Co., 194 F.3d at 337 (internal quotations omitted); cf. W.D.N.Y. L. R. Civ. P. 11(a) (noting that where attorneys “fail[] . . . to complete the necessary preparations” for “appear[ing] before the Court, ” the Court may issue sanctions).

Here, Plaintiff's counsel lacked “evidentiary support” for the “factual contention” that the unnecessary defendants needed to be included in this litigation. Fed.R.Civ.P. 11(b); see also Ipcon Collections LLC v. Costco Wholesale Corp., 698 F.3d 58, 63 (2d Cir. 2012) (“Sanctions may be . . . imposed when court filings . . . are not supported by existing law, lack evidentiary support, or are otherwise frivolous.”). The Court so ruled (Order, Jackling as Executor v Brighthouse, No. 20-CV-6899-MJP, ECF No. 34) and Plaintiff has yet to advance any such evidentiary support or factual contention other than his apprehension at relying on Defendant's self-serving statements. (Pl.'s Resp. to Def.'s Mot. to Dismiss at 1, Jackling as Executor v Brighthouse, No. 20-CV-6899-MJP, ECF No. 21.)^[6]

Based on Plaintiff's counsel's failure to investigate, the Court will infer bad faith. While counsel's inclusion of the unnecessary defendants in the complaint, standing alone, would not transgress 28 U.S.C. § 1927, the Court infers from his repeated failures to remove those defendants that his purpose was an “improper” one, “such as delay, ” amounting to bad faith. Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir. 1986). The removal petition (ECF No. 1) and correspondence noted in the companion case, see 2022 WL 831497, at *3 (citing “correspondence from Defendant's counsel dated January 12, 2021 (ECF No. 13-13)”), should have prompted Plaintiff's counsel to determine whether the unnecessary defendants should have been voluntarily removed. Plaintiff's counsel failed to do so. At the hearing on this matter, Plaintiff's counsel simply stated he was relying on “blind faith” on Defendant's counsel's representations about the unnecessary defendants. (Recording of Nov. 23, 2021, Proceedings, ECF No. 35, on file with the Court.) Even then, Plaintiff's counsel had failed to examine whether the unnecessary defendants were, in fact, unnecessary. Cf. W.D.N.Y. Loc. R. Civ. P. 11(a) & (b) (sanctions may be imposed on counsel where counsel fails “to complete the necessary preparations” for “appear[ing] before the Court” and the Court finds “that sanctions . . . would be inadequate or unjust to the defaulting party”). A finding of bad faith is warranted because a cursory examination of the Defendant's documents, or an independent inquiry, would have obviated the need for Defendant's motion to dismiss. No reason, other than a desire to delay and obfuscate, explains Plaintiff's counsel's conduct. Accordingly, the Court finds that assessing fees on Plaintiff's counsel under 28 U.S.C. § 1927 is warranted.

Calculating Attorney's Fees

Section 1927 allows the Court to require payment of “excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.” Defendant seeks a recovery of attorney's fees in the amount of $3, 180.00. (Decl. of Jeffrey R. Kingsley, Esq., (“Kingsley Decl.”) ¶ 20, ECF No. 29-1.) Accordingly, the Court will employ the lodestar method because it is the “starting point” for determining a fees award. See Millea v Metro-North R. Co., 658 F.3d 154, 166 (2d Cir. 2011) (“While the lodestar is not always conclusive, its presumptive reasonability means that, absent extraordinary circumstances, failing to calculate it as a starting point is legal error.”).

It is the starting point also because “the Supreme Court's directive that fee award calculations be ‘objective and reviewable,' impl[ies] [that] the district court should at least provide the number of hours and hourly rate it used to produce the lodestar figure.” Id. (quoting Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 554 (2010)).

Courts calculate the “lodestar” figure by “multiplying] ‘the number of hours reasonably expended' by a ‘reasonable hourly rate.'” Schneider on behalf of A.T. v. City of Buffalo, No 18-CV-1431 V(SR), 2021 WL 5042502, at *3 (W.D.N.Y. Oct. 29, 2021) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). Once calculated, there is a “strong presumption” that the lodestar figure is reasonable, but this presumption “may be overcome in those rare circumstances in which the lodestar does not adequately take into account a factor that may be properly considered in determining a reasonable fee.” Ceglia v. Zuckerberg, No. 10-CV-00569A(F), 2012 WL 503810, at *4 n. 6 (W.D.N.Y. Feb. 14, 2012 (citing Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 553-54 (2010)); see also McPhaul v. Ingisht Mgmt. Partners, No....