acting similarly under like circumstances, (4) the relative merits of the parties' positions, and (5) whether the action conferred a common benefit on a group of pension plan participants.
An application of these factors to the case before this Court indicates that Plaintiff should be awarded her attorney's fees.
The relative merits of the parties' positions, which is the fourth Chambless factor, weigh heavily in favor of Plaintiff's recovery for her attorney's fees. Federal statutory and regulatory law indicate clearly that Plaintiff is entitled to half the proceeds of the policy. Under ERISA, a surviving spouse is entitled to not less than fifty percent of the amount of the annuity. 29 U.S.C. §§ 1055(a)(1) & (d). Any doubt on the part of TIAA-CREF that the alleged abandonment of Mr. Diaz, or his "intention" to deprive Plaintiff of her proceeds, might preclude Plaintiff's entitlement is answered directly by 26 C.F.R. § 1.401(a)-20 A-27 (1991). That section provides that for Plaintiff's rights to be terminated, she must either (1) consent to the termination, or (2) have abandoned Mr. Diaz within the meaning of local law, and a court must have issued an order to such effect. There is no indication that the Estate ever suggested that a court order of abandonment existed. Accordingly, upon receipt of the Estate letter of January 29, 1991, TIAA-CREF should have concluded that Plaintiff was plainly entitled to her half of the policy proceeds.
The second Chambless factor, the ability of the offending party to satisfy an award of attorney's fees, also favors Plaintiff. TIAA-CREF clearly has the resources to pay Plaintiff's attorney's fees.
The degree of the offending party's culpability or bad faith, which is the first Chambless factor, weighs slightly in Plaintiff's favor. A sophisticated party, such as TIAA-CREF, with substantial experience in the area of ERISA law, should have recognized that state law, which the Estate relied upon in its memorandum, had no relevance to issues clearly arising under federal ERISA law and should have realized that a court order of abandonment was required. TIAA-CREF forced Plaintiff to file suit and then moved to interplead the funds. In short, Plaintiff was forced to initiate legal action to recover proceeds which TIAA-CREF should have paid Plaintiff upon receipt of the Estate's legal memorandum based on irrelevant law. Plaintiff, the statutorily designated recipient of ERISA funds, should not bear the legal expenses resulting from TIAA-CREF's refusal to distribute the funds.
As for the third factor, whether an award of attorney's fees would deter other persons from acting similarly under like circumstances, an award of attorney's fees here should encourage ERISA fiduciaries to exercise a reasonable degree of diligence in separating frivolous claims from those with merit prior to seeking a court determination and to act in a timely fashion.
The fifth Chambless factor, whether an action confers a common benefit on a group of pension plan participants, is not met here. Of course, the absence of one of the five factors need not preclude an award of attorney's fees.
Following the rule of Chambless, this is an appropriate case for an award to Plaintiff of her attorney's fees. Plaintiff is ordered to file and serve on TIAA-CREF an application for such fees, to be paid by TIAA-CREF and not the fund, within 20 days after the filing of this Opinion and Order.
Because the litigation fees in this matter were incurred due to TIAA-CREF's failure to exercise an appropriate amount of diligence in investigating the merits of the Estate's claim, this Court will not exercise its discretion in favor of awarding attorney's fees to TIAA-CREF, which would reduce the funds distributed to Plaintiff.
Plaintiff's motions for summary judgment and for attorney's fees are granted. Defendant TIAA-CREF's motions for discharge from further liability on the annuity insurance contracts and for attorney's fees are denied.
IT IS SO ORDERED.
Dated: New York, New York
April 13, 1992
Robert P. Patterson, Jr.