Assurance Company of America v. Ironshore Specialty Insurance Company

D. Nevada

Assurance Company of America v. Ironshore Specialty Insurance Company

DecidedAugust 26, 2019

Docket2:13-cv-02191

StatusUnknown

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Assurance Company of America v. Ironshore Specialty Insurance Company, (D. Nev. 2019).

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1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 ASSURANCE COMPANY OF AMERICA, et ) 4 al., ) ) Case No.: 2:13-cv-2191-GMN-CWH 5 Plaintiffs, ) 6 vs. ) ORDER ) 7 IRONSHORE SPECIALTY INSURANCE ) COMPANY, ) 8 ) Defendant. ) 9 ) 10 11 Pending before the Court is the Motion for Attorney’s Fees, (ECF No. 148), filed by 12 Plaintiffs Assurance Company of America and Northern Insurance Company of New York 13 (collectively “Plaintiffs”). Defendant Ironshore Specialty Insurance Company (“Defendant”) 14 filed a Response, (ECF No. 154), and Plaintiffs filed a Reply, (ECF No. 157). For the reasons 15 stated herein, Plaintiffs’ Motion is GRANTED in part and DENIED in part. 16 I. BACKGROUND 17 This case arises from a dispute over insurance coverage for various underlying lawsuits 18 in Nevada state court. (Second Am. Compl. ¶ 3, ECF No. 15). On March 24, 2017, the Court 19 conducted a one-day bench trial to determine whether Defendant owed equitable contribution 20 to Plaintiffs for the defense and settlement of these underlying lawsuits. (See Trial Minutes, 21 ECF No. 131). That same day, and after a full consideration of the briefs and oral arguments, 22 the Court issued its ruling on the bench in favor of Plaintiffs in the amount of $488,233.00. 23 (Id.). On October 12, 2017, the Court issued a written explanatory Order providing additional 24 detail as to its ruling. (Written Order, ECF No. 133). Subsequently, the Clerk of Court entered 25 judgment in favor of Plaintiffs in accordance with the Court’s ruling at trial. (Judgment, ECF 1 No. 146). Plaintiffs now move for attorney’s fees and prejudgment interest pursuant to Nevada 2 Rule of Civil Procedure (“NRCP”) 68(f) and N.R.S. § 17.130(2). (Mot. Atty. Fees, ECF No. 3 148). 4 II. LEGAL STANDARD 5 Federal Rule of Civil Procedure 54(d)(2) allows a party to file a motion for attorney’s 6 fees if it: (1) is filed within 14 days after judgment is entered; (2) identifies the legal basis for 7 the award; and (3) indicates the amount requested or an estimate thereof. “A federal court 8 sitting in diversity applies the law of the forum state regarding an award of attorneys' 9 fees.” Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). 10 III. DISCUSSION 11 1. Prejudgment Interest 12 Plaintiffs request $132,989.12 in prejudgment interest. (Mot. Atty. Fees 2:14–3:14). In 13 diversity actions, state law governs the award of prejudgment interest. In re Exxon Valdez, 484 14 F.3d 1098, 1101 (9th Cir. 2007). N.R.S. § 17.130(2) provides that “the judgment draws interest 15 from the time of service of the summons and complaint until satisfied.” This interest is 16 “compensation for use by defendant of money to which plaintiff is entitled from the time the 17 cause of action accrues until the time of judgment.” Ramada Inns, Inc. v. Sharp, 711 P.2d 1, 2 18 (Nev. 1985). Defendant does not object to Plaintiffs’ calculation in their Response. (See Resp., 19 ECF No. 154). Accordingly, the Court grants Plaintiffs’ request for prejudgment interest at the 20 statutorily proscribed rate. 21 2. Attorney’s Fees 22 Plaintiffs request $122,257.50 in attorney’s fees under NRCP 68(f). (Mot. Atty. Fees 23 3:15–4:16). Under NRCP 68(f), a party may recover attorney's fees if the opposing party 24 rejects an offer of judgment and fails to obtain a more favorable outcome. The purpose of the 25 offer of judgment rule is to promote and encourage the settlement of lawsuits and save money 1 for the court system, the parties, and the taxpayers. Muihe v. A.N. Las Vegas Cab Co., 799 P.2d 2 559, 561 (Nev. 1990). The Ninth Circuit has held that a state's offer of judgment rule is 3 substantive, and therefore a federal court sitting in diversity jurisdiction should follow the 4 state's offer of judgment rules. MRO Commc'ns, Inc. v. AT&T, 197 F.3d 1276, 1281 (9th Cir. 5 1999) (citing Alyeska Pipeline Serv. v. Wilderness Society, 421 U.S. 240, 259 (1975)).1 Here, 6 Plaintiffs made an offer of judgment to Defendant on March 19, 2015, for $250,000.00. (Mot. 7 Atty. Fees 2:5–6). At the bench trial on March 24, 2017, the Court awarded Plaintiffs damages 8 totaling $488,233.00. (See Trial Minutes, ECF No. 131). The Court therefore has discretion to 9 issue attorney’s fees under NRCP 68(f). 10 When deciding whether to award penalties under the offer of judgment rule, the court's 11 discretion is governed by the Beattie factors: “(1) whether the plaintiff’s claim was brought in 12 good faith; (2) whether the defendants' offer of judgment was reasonable and in good faith in 13 both its timing and amount; (3) whether the plaintiff's decision to reject the offer . . . was 14 grossly unreasonable or in bad faith; and (4) whether the fees sought by the offeror are 15 reasonable and justified in amount.” Beattie v. Thomas, 668 P.2d 268, 247 (Nev. 1983). No 16 one Beattie factor is dispositive, and the court need not necessarily make explicit findings as to 17 all of the factors. Nat'l Union Fire Ins. v. Pratt and Whitney, 815 P.2d 601, 606 (Nev. 1991); 18 Certified Fire Prot. Inc. v. Precision Constr., 283 P.3d 250, 258 (Nev. 2012). In cases where 19 the defendant is the offeree, courts look to whether the defenses were litigated in good faith. 20 Yamaha Motor Co., U.S.A. v. Arnoult, 955 P.2d 661, 673 (Nev. 1998). 21 Upon review of the above factors, the Court declines to award attorney's fees in this 22 case. Although Plaintiffs’ offer of judgment was reasonable and brought in good faith, the 23 court cannot conclude that Defendant’s decision to reject the offer of judgment was “grossly 24 25 1 In its Response, Defendant argues that the Court should apply federal law because NRCP 68(f) conflicts with Federal Rule of Civil Procedure 68, which concerns a defendant’s offer of judgment and not a plaintiff’s. (Resp. 8:3–26). As the Court declines to grant attorney’s fees under either law, the Court need not rule on this issue. 1 unreasonable.” Beattie, 668 P.2d at 247. This case presented difficult legal issues, which the 2 parties were simultaneously litigating in two other parallel actions. See American Zurich 3 Insurance Company, et al. v. Ironshore Specialty Insurance Company, 2:14–cv–00060–TLN– 4 DB; Assurance Company of America, et. al. v. Ironshore Specialty Insurance Company, 2:15– 5 cv–00460–JAD–PAL. At the time of Plaintiffs’ offer of judgment, Defendant had obtained a 6 favorable ruling in its California action and later obtained a similar ruling from a different 7 judge in this district. Am. Zurich Ins. Co. v. Ironshore Specialty Ins. Co., No. 2:14–CV–00060– 8 TLN–KJ, 2014 WL 3687727 (E.D. Cal. July 23, 2014); Assurance Co. of Am. v. Ironshore 9 Specialty Ins. Co., No. 2:15–CV–00460–JAD–PAL, 2017 WL 3666298, at *2 (D. Nev. Aug. 10 24, 2017). Although this Court found early in the instant case that Defendant had a duty to 11 defend in at least one of its underlying actions, the Court did not issue its more expansive 12 summary judgment ruling until July 29, 2015, which was after Plaintiffs’ offer of judgment.

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1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 ASSURANCE COMPANY OF AMERICA, et ) 4 al., ) ) Case No.: 2:13-cv-2191-GMN-CWH 5 Plaintiffs, ) 6 vs. ) ORDER ) 7 IRONSHORE SPECIALTY INSURANCE ) COMPANY, ) 8 ) Defendant. ) 9 ) 10 11 Pending before the Court is the Motion for Attorney’s Fees, (ECF No. 148), filed by 12 Plaintiffs Assurance Company of America and Northern Insurance Company of New York 13 (collectively “Plaintiffs”). Defendant Ironshore Specialty Insurance Company (“Defendant”) 14 filed a Response, (ECF No. 154), and Plaintiffs filed a Reply, (ECF No. 157). For the reasons 15 stated herein, Plaintiffs’ Motion is GRANTED in part and DENIED in part. 16 I. BACKGROUND 17 This case arises from a dispute over insurance coverage for various underlying lawsuits 18 in Nevada state court. (Second Am. Compl. ¶ 3, ECF No. 15). On March 24, 2017, the Court 19 conducted a one-day bench trial to determine whether Defendant owed equitable contribution 20 to Plaintiffs for the defense and settlement of these underlying lawsuits. (See Trial Minutes, 21 ECF No. 131). That same day, and after a full consideration of the briefs and oral arguments, 22 the Court issued its ruling on the bench in favor of Plaintiffs in the amount of $488,233.00. 23 (Id.). On October 12, 2017, the Court issued a written explanatory Order providing additional 24 detail as to its ruling. (Written Order, ECF No. 133). Subsequently, the Clerk of Court entered 25 judgment in favor of Plaintiffs in accordance with the Court’s ruling at trial. (Judgment, ECF 1 No. 146). Plaintiffs now move for attorney’s fees and prejudgment interest pursuant to Nevada 2 Rule of Civil Procedure (“NRCP”) 68(f) and N.R.S. § 17.130(2). (Mot. Atty. Fees, ECF No. 3 148). 4 II. LEGAL STANDARD 5 Federal Rule of Civil Procedure 54(d)(2) allows a party to file a motion for attorney’s 6 fees if it: (1) is filed within 14 days after judgment is entered; (2) identifies the legal basis for 7 the award; and (3) indicates the amount requested or an estimate thereof. “A federal court 8 sitting in diversity applies the law of the forum state regarding an award of attorneys' 9 fees.” Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). 10 III. DISCUSSION 11 1. Prejudgment Interest 12 Plaintiffs request $132,989.12 in prejudgment interest. (Mot. Atty. Fees 2:14–3:14). In 13 diversity actions, state law governs the award of prejudgment interest. In re Exxon Valdez, 484 14 F.3d 1098, 1101 (9th Cir. 2007). N.R.S. § 17.130(2) provides that “the judgment draws interest 15 from the time of service of the summons and complaint until satisfied.” This interest is 16 “compensation for use by defendant of money to which plaintiff is entitled from the time the 17 cause of action accrues until the time of judgment.” Ramada Inns, Inc. v. Sharp, 711 P.2d 1, 2 18 (Nev. 1985). Defendant does not object to Plaintiffs’ calculation in their Response. (See Resp., 19 ECF No. 154). Accordingly, the Court grants Plaintiffs’ request for prejudgment interest at the 20 statutorily proscribed rate. 21 2. Attorney’s Fees 22 Plaintiffs request $122,257.50 in attorney’s fees under NRCP 68(f). (Mot. Atty. Fees 23 3:15–4:16). Under NRCP 68(f), a party may recover attorney's fees if the opposing party 24 rejects an offer of judgment and fails to obtain a more favorable outcome. The purpose of the 25 offer of judgment rule is to promote and encourage the settlement of lawsuits and save money 1 for the court system, the parties, and the taxpayers. Muihe v. A.N. Las Vegas Cab Co., 799 P.2d 2 559, 561 (Nev. 1990). The Ninth Circuit has held that a state's offer of judgment rule is 3 substantive, and therefore a federal court sitting in diversity jurisdiction should follow the 4 state's offer of judgment rules. MRO Commc'ns, Inc. v. AT&T, 197 F.3d 1276, 1281 (9th Cir. 5 1999) (citing Alyeska Pipeline Serv. v. Wilderness Society, 421 U.S. 240, 259 (1975)).1 Here, 6 Plaintiffs made an offer of judgment to Defendant on March 19, 2015, for $250,000.00. (Mot. 7 Atty. Fees 2:5–6). At the bench trial on March 24, 2017, the Court awarded Plaintiffs damages 8 totaling $488,233.00. (See Trial Minutes, ECF No. 131). The Court therefore has discretion to 9 issue attorney’s fees under NRCP 68(f). 10 When deciding whether to award penalties under the offer of judgment rule, the court's 11 discretion is governed by the Beattie factors: “(1) whether the plaintiff’s claim was brought in 12 good faith; (2) whether the defendants' offer of judgment was reasonable and in good faith in 13 both its timing and amount; (3) whether the plaintiff's decision to reject the offer . . . was 14 grossly unreasonable or in bad faith; and (4) whether the fees sought by the offeror are 15 reasonable and justified in amount.” Beattie v. Thomas, 668 P.2d 268, 247 (Nev. 1983). No 16 one Beattie factor is dispositive, and the court need not necessarily make explicit findings as to 17 all of the factors. Nat'l Union Fire Ins. v. Pratt and Whitney, 815 P.2d 601, 606 (Nev. 1991); 18 Certified Fire Prot. Inc. v. Precision Constr., 283 P.3d 250, 258 (Nev. 2012). In cases where 19 the defendant is the offeree, courts look to whether the defenses were litigated in good faith. 20 Yamaha Motor Co., U.S.A. v. Arnoult, 955 P.2d 661, 673 (Nev. 1998). 21 Upon review of the above factors, the Court declines to award attorney's fees in this 22 case. Although Plaintiffs’ offer of judgment was reasonable and brought in good faith, the 23 court cannot conclude that Defendant’s decision to reject the offer of judgment was “grossly 24 25 1 In its Response, Defendant argues that the Court should apply federal law because NRCP 68(f) conflicts with Federal Rule of Civil Procedure 68, which concerns a defendant’s offer of judgment and not a plaintiff’s. (Resp. 8:3–26). As the Court declines to grant attorney’s fees under either law, the Court need not rule on this issue. 1 unreasonable.” Beattie, 668 P.2d at 247. This case presented difficult legal issues, which the 2 parties were simultaneously litigating in two other parallel actions. See American Zurich 3 Insurance Company, et al. v. Ironshore Specialty Insurance Company, 2:14–cv–00060–TLN– 4 DB; Assurance Company of America, et. al. v. Ironshore Specialty Insurance Company, 2:15– 5 cv–00460–JAD–PAL. At the time of Plaintiffs’ offer of judgment, Defendant had obtained a 6 favorable ruling in its California action and later obtained a similar ruling from a different 7 judge in this district. Am. Zurich Ins. Co. v. Ironshore Specialty Ins. Co., No. 2:14–CV–00060– 8 TLN–KJ, 2014 WL 3687727 (E.D. Cal. July 23, 2014); Assurance Co. of Am. v. Ironshore 9 Specialty Ins. Co., No. 2:15–CV–00460–JAD–PAL, 2017 WL 3666298, at *2 (D. Nev. Aug. 10 24, 2017). Although this Court found early in the instant case that Defendant had a duty to 11 defend in at least one of its underlying actions, the Court did not issue its more expansive 12 summary judgment ruling until July 29, 2015, which was after Plaintiffs’ offer of judgment. 13 Assurance Co. of Am. v. Ironshore Specialty Ins. Co., No. 2:13–CV–2191–GMN–CWH, 2015 14 WL 4579983 (D. Nev. July 29, 2015). The legal landscape between the parties’ cases at the 15 time Plaintiffs made their offer was far from settled. The Court therefore finds that Defendant 16 litigated in good faith. 17 In their Reply, Plaintiffs do little to counter these points. Instead, Plaintiffs rest on the 18 Court’s discretion and the reasonableness of Plaintiffs’ requested fees. (Reply 1:26–2:12, ECF 19 No. 157). Although Plaintiffs’ requested fees do not appear unreasonable, the Court finds that 20 the Beattie factors on balance weigh against an award in this case. See Gallagher v. Crystal Bay 21 Casino, LLC, No. 3:08–CV–00055–ECR, 2012 WL 1409244, at *5 (D. Nev. Apr. 20, 2012) 22 (stating that when the factors weigh both for and against attorney’s fees, “the Court is loath to 23 award attorneys’ fees in the absence of bad faith or unreasonableness . . ..”). Accordingly, the 24 Court denies Plaintiffs’ request. 25 / / / 1 IV. CONCLUSION 2 IT IS HEREBY ORDERED that Plaintiffs’ Motion for Attorney’s Fees, (ECF No. 3 148), is GRANTED in part and DENIED in part. 4 IT IS FURTHER ORDERED that Plaintiffs are awarded prejudgment interest in the 5 amount of $132,989.12. 6 7 DATED this __2_6__ day of August, 2019. 8 9 ___________________________________ Gloria M. Navarro, Chief Judge 10 United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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