Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

In Leprino Foods Company v. Factory Mutual Insurance Company,  (10th Circuit 2011)  Leprino stored millions of pounds of cheese in a warehouse (Gress). The cheese became tainted by damaged fruit containers stored near the cheese. Leprino sued Gress and Gress settled with Leprino for $2.4 million. Leprino also made a claim to their insurance company, Factory Mutual. Factory Mutual denied the claim relying on the policy’s Exclusion Clause and Leprino sued Factory Mutual for breach of contract. The District Court found that Leprino had adequately proved that the damages were covered and not excluded under the policy’s Exclusion Clause. The Court awarded judgment for the full amount of the loss, $14 million, plus prejudgment interest, totaling $23 million. Factory Mutual appealed stating that the insurance claim amount should be offset by the settlement amount obtained from Gress. The Tenth Circuit Court found that the judgment should be offset by the settlement amount from Gress, but ordered that the attorney’s fees and costs in obtaining that settlement must be shouldered by Factory Mutual reasoning that, “...if an insurer wrongfully denies coverage, even in good faith, it must pay its proper share of expenses incurred by the insured in recovering from a third party when the benefits of the recovery also inure to the insurer.” Louisville & Jefferson Cnty. Metro. Sewer Dist. v. Travelers Ins. Co. 753 F.2d 533 (6th Cir. 1985). The court also held that any evidence introduced in a trial must have some probative value, if it does not, it must be excluded under Rule 402 of the Federal Rules of Evidence.
 

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Regional Air v. Canal Insurance involved a property damage claim between an insurer (Canal) and an insured (Regional).  It went to appraisal and the Regional was awarded about $44,000.  But, Regional felt it was owed more and went to federal court.  Ultimately, the federal court found the appraisal ok, but a jury awarded Regional an additional $12,000 in storage costs.  The question became who was the prevailing party since the prevailing party gets attorneys fees. 

The trial court erred in entering judgment for only $12,000; the judgment should have been for the full amount awarded -- the $44,000 plus the $12,000.  This clearly makes the insured the prevailing party because it was more than the written settlement amount offered by Canal. 

The trial court erred in finding that Regional was not entitled to attorneys fees.  The notice of the loss was sufficient to satisfy the proof of loss requirement.  In addition, the statute, 36 Okla. Stat. § 3629, mandates attorneys fees to the prevailing party.  Thus, the case was remanded to the trial court to determine attorneys fees. 

Regional was not entitled to interest on the judgment, however.  Regional was only entitled to interest on the verdict -- the amount awarded by the jury, not the amount awarded under the appraisal process because that was what the statute provides. 

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In Anchondo, the Tenth Circuit discusses the ins and outs of attorneys fees applications and objections.  The plaintiff was successful in getting a class action settlement for violations of the Fair Debt Collection Practices Act and then was awarded fees on top of that.  The defendant thought the fee award was too high -- Plaintiffs counsel was apparently awarded all their hours at a set hourly rate.  But the trial court is in the best position to determine whether the tasks billed for were necessary, and the trial court need not address all factors in making a fee award.  Further, while certain travel hours could have been discounted, the defendant did not ask that the hours be discounted -- so the court wouldn't do it now on appeal.  And, the court remanded the case to the trial court to award appellate attorneys fees.

Here the court refused to find that just because there were multiple firms that the time should be discounted.  Apparently, the time records were clear and concise, and the conferences between the two firms was not excessive.  There was not much duplicative work.  The court indicated it might have considered reducing the hourly rate for travel, but it wasn't argued.  Defendants were placed in the position of arguing its position was so bad, anyone could have handled the case, there was no need for experienced national counsel to become involved.  The Tenth Circuit declined to adopt this view of the case.

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