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HARRIS TRUST AND SAV. BANK v. JOHN HANCOCK MUT.

March 30, 2001

HARRIS TRUST AND SAVINGS BANK, AS FORMER TRUSTEE OF THE SPERRY MASTER RETIREMENT TRUST NO. 2 (AND ITS SUCCESSOR, THE UNISYS MASTER TRUST), AND THE BANK OF NEW YORK, AS TRUSTEE OF THE UNISYS MASTER TRUST, PLAINTIFFS,
V.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, DEFENDANT. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, THIRD-PARTY PLAINTIFF, V. CHASE MANHATTAN BANK, N.A., COUNTERCLAIM DEFENDANT, AND SPERRY CORPORATION AND THE RETIREMENT COMMITTEE OF SPERRY CORPORATION, THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Chin, District Judge.

  MEMORANDUM DECISION

On November 22, 2000, I issued an Opinion in this case finding that defendant and third-party plaintiff John Hancock Mutual Life Insurance Co. ("Hancock") had breached its fiduciary duties to the Sperry Rand Master Retirement Trust No. 2 (and its successor, the Unisys Master Trust) (together, the "Trust") under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001 et seq. See Harris Trust & Sav. Bank v. John Hancock Mut. Life Ins. Co., 122 F. Supp.2d 444 (S.D.N Y 2000).

In the Opinion, I directed plaintiffs to submit a proposed judgment together with an affidavit setting forth interest calculations as well as an application for attorneys' fees and costs. 122 F. Supp.2d at 466. In this seemingly never-ending case, that direction triggered the filing of four proposed judgments, a set of objections to the first proposed judgment together with a response thereto as well as a surreply, two motions for an order amending the Court's findings of fact, six memoranda of law, twenty affidavits (or declarations), numerous exhibits, and a request by Hancock for the appointment of a special master or magistrate judge to conduct further proceedings in this seventeen-year old case.

The following issues are presented: (1) the amount of damages awarded for Hancock's failure to release excess funds; (2) prejudgment interest on the award of damages for Hancock's failure to release excess funds; (3) the amount of damages awarded with respect to the allocation and excess risk charge claims; (4) prejudgment interest on the damages awarded with respect to the allocation and excess risk charge claims; (5) the amount to be awarded for attorneys' fees; (6) the amount to be awarded for costs, including expert witness fees; (7) prejudgment interest on any award of attorneys' fees and costs; and (8) equitable relief. I address each issue in turn.

1. Damages for Failure to Release Excess Funds

In the Opinion, I awarded damages to the Trust for Hancock's failure to release excess funds based on Professor Ibbotson's use of the actual overall Sperry Trust case rate. Hancock argues that was error because Professor Ibbotson should have used the "new money" rate rather than the case rate. Hancock further argues that "[i]n the end," Professor Ibbotson, Mr. Annin, and Dr. Babbel (Hancock's expert) "agreed that the proper measure of what the rollout amounts earned in GAC 50 was the new money rate." (Def. Mem. in Supp. of Mot. to Am. Findings of Fact at 6).

Hancock's argument is disingenuous and is based on a mischaracterization of the testimony. Mr. Annin did not testify "[i]n the end" that the proper measure was the new money rate. Rather, Mr. Annin testified solely as a rebuttal witness to lay a foundation for the admission of a chart that provided an alternative theory of damages that the Trust was relying on only if Dr. Babble's analysis were accepted. (See Tr. at 1830, 1834, 1905, 1908, 1913, 1916, 1927-28). During Mr. Annin's testimony, the following exchange occurred:

MS. KRAMER: . . . He was instructed to run this model based on the admissions made by Dr. Babbel during his testimony.
MR. PEAK: Yes, and I would like to know how it corrects for something Dr. Babbel said.
THE COURT: Tell me what the instructions were with respect to these last two pages.
THE WITNESS: I really have no qualifications as to liabilities. We were told to calculate the model using this new liability stream.
Q. So you are not here to testify as to the quantum of liability. All you are doing for us is the math.

A. That's correct.

(Tr. at 1927-28). In fact, as I did not accept Dr. Babbel's analysis, Mr. Annin's testimony as well as Exhibit 1280 are irrelevant. Likewise, Professor Ibbotson did not admit any error in his analysis and he did not adopt Dr. Babbel's analysis. (See, e.g., Tr. at 1189-90).

This aspect of Hancock's motion for an order amending the Court's findings of fact is denied.

2. Interest on Damages for Failure to Release Funds

Hancock objects to the use of the Sperry Trust rate of return to calculate prejudgment interest on damages for Hancock's failure to release funds for the period after July 1, 1997 on the technical grounds that the Trust did not submit "any admissible, competent evidence with respect to the [Trust's] rate of return for that time period." (Def. Obj. at 24).*fn1 The objection is overruled. The Opinion did not direct the Trust to submit such documentation and I am satisfied that Mr. Annin had sufficient information to make the calculations. Moreover, in response to Hancock's objection, the Trust has now submitted the documentation.

3. Damages for Allocation/Excess Risk Charge Claims

The parties apparently agree that the award of $5,724,528 in damages for the allocation and excess risk charge claims should be reduced because the Court's denial of the scaling claim affected the damages calculations. The parties' motions for an order amending the Court's findings of fact are granted to the extent that the damages awarded ...


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