CX Reinsurance Company Limited v. Devon Johnson

977 F.3d 306
CourtCourt of Appeals for the Fourth Circuit
DecidedOctober 14, 2020
Docket19-1516
StatusPublished
Cited by5 cases

This text of 977 F.3d 306 (CX Reinsurance Company Limited v. Devon Johnson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CX Reinsurance Company Limited v. Devon Johnson, 977 F.3d 306 (4th Cir. 2020).

Opinion

PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 19-1516

CX REINSURANCE COMPANY LIMITED, f/k/a CNA Reinsurance Company Limited,

Plaintiff - Appellee,

v.

DEVON S. JOHNSON,

Defendant - Appellant,

and

BENJAMIN L. KIRSON,

Defendant.

Appeal from the United States District Court for the District of Maryland, at Greenbelt. Paul W. Grimm, District Judge. (8:15-cv-03132-PWG)

Argued: September 8, 2020 Decided: October 14, 2020

Before NIEMEYER, AGEE, and THACKER, Circuit Judges.

Vacated and remanded by published opinion. Judge Niemeyer wrote the opinion, in which Judge Agee and Judge Thacker joined.

ARGUED: Samuel D. Cowin, GALLAGHER EVELIUS & JONES LLP, Baltimore, Maryland, for Appellant. Ellen Duffy Jenkins, RUBERRY STALMACK & GARVEY, LLC, Chicago, Illinois, for Appellee. ON BRIEF: David G. Sommer, Paul S. Caiola, GALLAGHER EVELIUS & JONES LLP, Baltimore, Maryland, for Appellant. Stuart M.G. Seraina, KRAMON & GRAHAM, P.A., Baltimore, Maryland; Edward F. Ruberry, RUBERRY, STALMACK & GARVEY, LLC, Chicago, Illinois, for Appellee.

2 NIEMEYER, Circuit Judge:

Local Rule 109 of the District of Maryland requires generally that “any motion

requesting the award of attorneys’ fees must be filed within fourteen (14) days of the entry

of judgment,” and noncompliance constitutes a “waiver of any claim for attorneys’ fees.”

D. Md. R. 109.2.a (emphasis added). This language parrots Federal Rule of Civil

Procedure 54, which requires generally that “[a] claim for attorney’s fees . . . must be made

by motion . . . filed no later than 14 days after the entry of judgment.” Fed. R. Civ. P.

54(d)(2) (emphasis added). The issue in this case is whether the defendant’s motion for

attorneys fees was timely (1) when filed 18 days after an order granting voluntary dismissal

was entered but not set out in a separate document, as required by Rule 58 and (2) when

filed 13 days after an order was entered disposing of the defendant’s timely filed “post-

judgment” motion under Rule 59(e).

In this case, the district court, in a six-page “Memorandum Opinion and Order,”

granted the plaintiff’s contested motion for voluntary dismissal of its complaint under Rule

41(a)(2) and entered an order of dismissal, which included the direction to the Clerk of

Court “to close this case.” No “separate document,” however, set out the order as a

“judgment,” as required by Rule 58(a). After the defendant filed a Rule 59(e) post-

judgment motion three days later to modify the order of dismissal and after the court denied

that motion, the defendant filed a motion for attorneys fees. That motion was filed 18 days

after the district court entered its order of dismissal in the case but 13 days after the district

court disposed of the defendant’s Rule 59(e) motion. The court held that its Local Rule

required that the defendant’s motion be filed within 14 days of the entry of judgment and

3 that because the defendant filed his motion 18 days after it entered the order of dismissal

with prejudice, the motion was untimely. The court rejected the defendant’s argument that

his Rule 59(e) motion extended the judgment date until the court disposed of that motion.

It also rejected the defendant’s argument that in disregarding the extension resulting from

his Rule 59(e) motion, the district court rendered its Local Rule in conflict with Rule 54.

The district court explained that because its “[l]ocal rules are construed as standing orders

of the district court” (emphasis added), they are exempted from any requirement to be

consistent with Rule 54.

We vacate and remand the district court’s order denying as untimely the defendant’s

motion for attorneys fees. Rule 58(a)’s separate-document requirement was not satisfied,

and therefore the “entry of judgment” did not occur on the date that the district court entered

its dismissal order. The dismissal order thus did not trigger the time for filing motions for

attorneys fees under either Local Rule 109 or Federal Rule 54. Moreover, the district

court’s interpretation of its Local Rule with respect to a Rule 59(e) motion’s effect on the

date of judgment was inconsistent with Rule 54, in violation of Rule 83 (requiring local

rules to be “consistent with . . . federal statutes and rules”).

I

CX Reinsurance Company Limited (“CX Re”) commenced this action against

Benjamin L. Kirson, a policyholder, in October 2015, seeking the rescission of commercial

general liability insurance policies issued to Kirson with respect to residential buildings

that Kirson owned in Baltimore, Maryland. CX Re alleged that, in applying for the

4 policies, Kirson had falsely represented that there had never been any lead-paint violations

in the buildings.

Shortly after CX Re commenced its action, Devon S. Johnson obtained a state-court

judgment against Kirson for personal injuries caused by lead-paint exposure at one of

Kirson’s residential properties. Contending that his judgment against Kirson fell within

the coverage of the CX Re policies, Johnson was permitted to intervene as a defendant in

CX Re’s rescission action in order to protect his interest in the proceeds of the policies.

After CX Re and Kirson reached a settlement agreement and Kirson was dismissed

from the action, CX Re nonetheless continued to seek rescission of its policies with

Johnson as the defendant. But on June 4, 2018, CX Re filed a motion for voluntary

dismissal of its action with prejudice under Federal Rule of Civil Procedure 41(a)(2).

Johnson opposed this motion, arguing that CX Re was only attempting to avoid a ruling

that might adversely affect other related actions.

In a six-page “Memorandum Opinion and Order” dated June 15, 2018, the district

court granted CX Re’s motion for a voluntary dismissal and dismissed CX Re’s complaint

with prejudice. After addressing the payment of costs in the action and the return of

materials obtained by discovery, the opinion and order directed the Clerk of Court “to close

this case.” The dismissal order was then entered in the docket. No separate document set

out a “judgment,” and the civil docket does not indicate the entry of any “judgment.”

Three days after the district court entered its order of dismissal, Johnson filed a

motion to modify the dismissal order, thereafter treating his motion as a Rule 59(e) motion.

The district court denied that motion on June 20, 2018.

5 Thirteen days after the court denied Johnson’s Rule 59(e) motion — on July 3, 2018

— Johnson filed a motion for attorneys fees. He maintained that while CX Re had

“vigorously assert[ed] that it did not know of the basis for its rescission claim until 2015,”

it had actually “known about and possessed the lead violation notice on which the claim

was based since 2008.” Johnson thus argued that under the “bad faith” exception to the

American rule for attorneys fees, Federal Rule of Civil Procedure 11, and 28 U.S.C. § 1927,

he was entitled to recover attorneys fees. He also claimed fees incurred in obtaining certain

documents in discovery that CX Re withheld until compelled to produce them.

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977 F.3d 306, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cx-reinsurance-company-limited-v-devon-johnson-ca4-2020.