United States District Court, D. Maryland, Southern Division
J. HAZEL UNITED STATES DISTRICT JUDGE.
interpleader action, Plaintiff Safeco Insurance Company of
America (Safeco) brought suit against Defendant Jane Dern and
Defendant Sasscer, Clagett & Bucher (Sasscer) requesting
that it be authorized to deposit funds due under a settlement
agreement into the Registry of the Court, that it be deemed
to have executed its obligations under the settlement
agreement, and that it be dismissed from the action,
discharged of further liability related to the settlement
agreement, and awarded attorneys' fees and costs
associated with this interpleader action. ECF No. 1. Safeco
has since deposited funds due under the settlement agreement
and been discharged from further liability. ECF No. 17. Now
pending before the Court are Plaintiff's Motion for
Attorneys' Fees, ECF No. 19, and Defendant Sasscer's
Motion for Attorneys' Fees, ECF No. 20. No Hearing is
necessary. See Loc. R. 105.6 (D. Md. 2016). For the
following reasons, Plaintiff's Motion for Attorneys'
Fees will be granted, and Defendant Sasscer's Motion for
Attorneys' Fees will be denied without prejudice.
October 7, 2016, Plaintiff Safeco and Defendant Dern entered
into a settlement agreement that resolved prior litigation in
the Dern v. Liberty Mutual Insurance Company, Case
No. 8:15-cv-01737-GJH. ECF No. 1 ¶ 2. Defendant Sasscer
represented Defendant Dern in the prior litigation.
Id. ¶ 1. The settlement agreement stated that
Safeco would tender $150, 000 jointly payable to Dern and
Sasscer in exchange for a full and final release of any and
all claims in the prior litigation. Id. ¶ 24.
Dern later refused to acknowledge the settlement agreement,
would not endorse a settlement check, and filed a Motion to
Re-Open the Case. Id. ¶ 5; see also
Docket in Case No. 8:15-cv-01737-GJH (“Related Case
Docket”), ECF Nos. 50-1 & 53 ¶ 2. Sasscer
withdrew its representation of Dern with the Court's
permission and asserted an attorneys' lien on the
settlement proceeds for its fees. ECF No. 1 ¶ 4. Dern
has indicated in various filings that she disputes the
services provided and/or the fees to be paid to Dern's
Prior Counsel from the settlement proceeds. Id.
Court denied Dern's Motion to Re-Open the Case and
granted Safeco's Motion to Enforce Settlement Agreement.
Id. ¶ 16. Dern appealed the decision to the
U.S. Court of Appeals for the Fourth Circuit, but the appeal
was dismissed. Id. ¶ 19. Dern then filed a
Motion for Reconsideration, which the Court of Appeals
denied. Id. ¶ 23. When Dern continued to refuse
to abide by the settlement agreement's terms, Safeco
filed this interpleader action. Id. ¶ 24.
Defendant Dern failed to answer and Safeco moved for
Clerk's Entry of Default, which the Court granted. ECF
Nos. 13 & 15. Defendant Sasscer answered Safeco's
Complaint and filed a cross-claim against Defendant Dern. ECF
No. 9. On September 11, 2018, the Court granted Safeco's
Consent Motion to Interplead Funds. ECF No. 17. On October 4,
2018, Safeco deposited the Disputed Funds with the Court. ECF
Nos. 17-18. Pursuant to the Court's September 11, 2018
Order, the settlement agreement was deemed executed and
Safeco was discharged from any liability relating to the
deposited funds. ECF No. 17. Safeco and Defendant Sasscer
have now moved for attorneys' fees. ECF Nos. 19 & 20.
Safeco's Motion for Attorneys' Fees
is within the discretion of the court to award the
[interpleader] costs including a reasonable attorneys'
fee out of the deposited fund.” Wells Fargo Bank,
N.A. v. Eastham, No. CV DKC 16-0386, 2016 WL 2625281, at
*4 (D. Md. May 9, 2016) (citing Coppage v. Ins. Co. of
North America, 263 F.Supp. 98, 100 (D. Md. 1967));
see also Bank of Am., N.A. v. Jericho Baptist Church
Ministries. Inc., No. PX 15-02953, 2017 WL 319521, at *1
(D. Md. Jan. 23, 2017) (noting that “[t]he Court
retains broad discretion to award the stakeholder its costs,
including reasonable attorneys' fees, out of the
deposited fund.”). The rationale is that
“[b]ecause the stakeholder is considered to be helping
multiple parties to an efficient resolution of the dispute in
a single court, ” granting attorneys' fees to the
stakeholder is often justified. Stonebridge Life Ins. Co.
v. Kissinger, 89 F.Supp.3d 622, 627 (D.N.J. 2015)).
Attorneys' fees and costs are, however, appropriate only
when the interpleader plaintiff acts “as a mere
stakeholder, which means that the party has admitted
liability, has deposited the fund in court, and has asked to
be relieved of any further liability.”
Jericho, 2017 WL 319521, at * 1 (citing 7 Charles
Alan Wright et al., Federal Practice and Procedure
§ 1719 (3d ed. 2001)).
“[w]hen an award of costs and attorneys' fees to a
stakeholder in a successful interpleader action is equitable,
it should also be modest.” Jericho, 201 7 WL
319521, at *2. “By its very nature [an interpleader
fee] is of a relatively small amount simply to compensate for
initiating the proceedings.” Id. (citing
Ferber Co. v. Ondrick, 310 F.2d 462, 467 (5th Cir.
1962)). In general, a stakeholder's ability to recoup
attorneys' fees and costs is limited, because the
interpleader process “does not usually involve any
great amount of skill, labor or responsibility.”
Id. (citing Lewis v. Atlantic Research
Corp., No. 98-0070-H, 1999 WL 701383, at *7 (W.D. Va.
Aug. 30, 1999)). An award of attorneys' fees should be
“properly limited to the preparation of the petition
for interpleader, the deposit of the contested funds with the
court, and the preparation of the order discharging the
courts in this jurisdiction have, in recent interpleader
cases, denied requests for attorneys' fees entirely or
made a substantial deduction to the award request. See
Eastham, 2016 WL 2625281 at *5 (noting that
“[p]laintiff could have taken steps to assuage its
concern regarding multiple potential claimants to the
Disputed Funds without initiating an interpleader action that
required five additional parties to spend time and money in
litigation.”); 7 Charles A. Wright, Arthur R. Miller
& Mary K. Kane, Federal Practice and Procedure
§ 1719 (3d ed. 2001) (“courts often deny costs and
fees when an interpleader brings an action ‘prematurely
or without sufficient basis for believing that it will be
subjected to multiple vexation'”); see
Jericho, 2017 WL 319521 at *3 (cutting attorneys'
fees that were “spent on matters outside the
interpleader action itself”).
Safeco is a “mere stakeholder” because it
“has admitted liability, has deposited [the disputed
funds] in court, and has asked to be relived of any further
liability.” Jericho, 2017 WL 319521, at * 1
(citing 7 Charles Alan Wright et al., Federal Practice
and Procedure § 1719 (3d ed. 2001)); ECF No. 17.
The remaining issue is whether Safeco had sufficient basis
for concern to initiate the interpleader action. The
settlement agreement at issue instructed Safeco to issue a
check for $150, 000 jointly to Defendants Dern and Sasscer.
However, Defendant Dern has refused to acknowledge the
settlement agreement and threatened not to endorse a
settlement check if tendered by Defendant. Therefore, Safeco
could not discharge itself of its obligations under the
settlement agreement by issuing a settlement check jointly to
Defendants because Defendant Dern refused to endorse such a
check. Safeco could not follow the terms of the settlement
agreement without potentially subjecting itself to claims by
both defendants to a portion of the disputed funds. Given
that, without initiating an interpleader action, Safeco could
not “have taken steps to assuage its concern regarding
multiple potential claimants” to the $150, 000 in
disputed funds, attorneys' fees are appropriate.
Eastham, 2016 WL 2625281 at *5.
support of its request for attorneys' fees, Safeco
submits a declaration of its attorney and a detailed
description of the work performed by its attorneys in
connection with the interpleader action. ECF No. 19-2. These
materials indicate that Safeco's attorneys incurred $6,
944 in attorneys' fees in connection with this
interpleader matter and that the fees charged by Safeco's
attorneys are within the local guidelines and are reasonable.
Id. ¶¶ 7 11; see also Loc. R.
App. B (D. Md.). Safeco is therefore awarded $6, 944 in
attorneys' fees, which will be disbursed from the
interpleader funds deposited with the Registry of the Court.
Realignment of Parties and Defendant Sasscer's Motion for
court determines that a stakeholder has properly invoked
interpleader, directs funds to be deposited with the court,
and discharges the stakeholder from liability with respect to
the deposited funds, the second stage of the interpleader
action begins. Eastham, 2016 WL 2625281 at *2.
“During the second stage, a scheduling order is issued
and the case continues between the claimants to determine
their respective rights.” Metro. Life Ins. Co. v.
Vines, No. WDQ-10-2809, 2011 WL 2133340, at *2 (D.Md.
May 25, 2011). At this point “[t]he claimants engage in
the ‘normal litigation processes, including pleading,
discovery, motions, and trial.'” Id.
Although a Clerk's Entry of Default has been entered
against Defendant Dern as to Safeco's Interpleader
Complaint, Defendant Sasscer has not moved for entry of
default against Dern as to its cross-claim. Therefore,
Sasscer's motion for attorneys' fees cannot be
resolved in the present posture. After all, Dern has
indicated in various filings that she disputes the services
provided and/or the fees to be paid to Defendant Sasscer
(Dern's prior counsel) from the settlement proceeds. ECF
No. 1 ¶ 4. At this point, however, the Court will
realign the parties-designating Sasscer as the plaintiff for
future proceedings with Dern remaining as the Defendant.