Nationwide Retirement Solutions, Inc. v. PEBCO,Inc.

Nationwide Retirement Solutions, Inc. ("NRS"), appealed a circuit court judgment awarding PEBCO,Inc. over a million dollars in attorney fees and $29,132.01 in expenses. In 2007, participants in the State of Alabama Public Employees Deferred Compensation Plan filed a class action against Nationwide Life Insurance Company ("NL"), NRS, the Alabama State Employees Association ("ASEA"), and PEBCO, Inc., alleging breach of fiduciary duty, conversion, and breach of contract in the administration of the Plan. The parties filed a "Stipulation of Settlement," which the trial court approved in its final order entered in 2011. Pursuant to the settlement, NL and NRS paid $15.5 million to the participants in the Plan and $2.9 million in attorney fees to settle class claims against all defendants, including ASEA and PEBCO. In its findings of fact, the trial court stated: "ASEA is being permitted to retain more than $12 million in sponsorship payments that it allegedly received unlawfully, and ASEA is receiving full release from any liability." A day before the parties filed their "Stipulation of Settlement," Nationwide moved for an order barring ASEA and PEBCO from filing any indemnification claims. The trial court granted the order except for claims for attorney fees and costs. "[I]n light of Nationwide's substantial contributions to the settlement," the court wrote that it was "fair and reasonable that ASEA and PEBCO be barred from pursuing any claims against Nationwide for reimbursement, indemnification, or contribution other than claims for attorney fees and costs ...." A month before entering its final order in the class action, the trial court ordered severance of ASEA and PEBCO's claim for fees and directed the Circuit Court clerk to docket that claim as "a separate and independent action," with ASEA and PEBCO as plaintiffs and NL and NRS as defendants. The trial court found that the indemnification clause in the agreement required that NRS pay the fees and costs incurred by ASEA and PEBCO in defending the class action. Noting that NRS "has contended, and still contends, that indemnification is improper based on the language of the agreement and the attending facts," the trial court stated that it "has held hearings on that issue and by prior order has ruled that indemnification is appropriate. The instant action was filed to enforce indemnification." The court ordered NRS to pay PEBCO $863,988.50 in attorney fees and $15,297.54 in expenses for the class-action litigation, and $210,039 in attorney fees and $13,834.47 in expenses for litigating the severed cross-claim. NRS timely appealed that decision to the Supreme Court. The Supreme Court reversed and remanded: "[b]ecause NRS did not fail to perform those duties under the agreement that ultimately gave rise to the class action, it did not, as a matter of law, breach the indemnification clause in the agreement. . . . Alabama does not permit a party to seek indemnification for defending against its own allegedly wrongful acts." View "Nationwide Retirement Solutions, Inc. v. PEBCO,Inc. " on Justia Law