Henlopen Hotel Corp. v. Aetna Insurance

38 F.R.D. 155, 1965 U.S. Dist. LEXIS 10050
CourtDistrict Court, D. Delaware
DecidedSeptember 28, 1965
DocketCiv. A. Nos. 2503, 2529, 2493
StatusPublished
Cited by10 cases

This text of 38 F.R.D. 155 (Henlopen Hotel Corp. v. Aetna Insurance) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Henlopen Hotel Corp. v. Aetna Insurance, 38 F.R.D. 155, 1965 U.S. Dist. LEXIS 10050 (D. Del. 1965).

Opinion

LAYTON, District Judge.

In connection with jury verdicts, for plaintiffs in the above captioned cases, [156]*156motions have been filed for the purpose of:

(1) Taxing attorneys’ fees as a part of the costs.

(2) Taxing expert witness fees as costs.

(3) Amending the judgments to include interest at 6% to commence on certain stated dates.

These two cases are only a few of the many filed in this District Court and the State Courts of Delaware to recover damages to summer cottages and other structures along the Delaware Coast during the Great Atlantic Storm of March, 1962. In every case, and with but slightly varying language, these structures were covered by policies of insurance insuring both the building and contents for loss occasioned solely by wind but not by ocean water or spray.

An opinion was filed on June 24, 1965, concluding (1) that attorneys’ fees were not taxable as part of costs but (2) that expert witness fees were to be so taxed. Thereafter, plaintiffs’ counsel filed a motion for a reargument as to the first point citing authorities not brought to the attention of this Court when the matter was first briefed and argued. As the result of considering these new authorities, the Court has concluded that attorneys’ fees should be taxed as costs. Accordingly, the original opinion of June 24, 1965, has been vacated and this opinion substituted in its place.

The first ground of the motion is for the taxation of attorneys’ fees as part of the costs.

Plaintiffs concede at the outset that in the state courts of the United States, as opposed to England, attorneys’ fees do not constitute costs.1 This is equally true in the federal courts. Compare Title 28 U.S.C. § 1920.2 However, plaintiffs point to Title 18 Del.C., Section 1105 3 and argue that the provisions of that statute are applicable to the assessment of costs in federal courts in diversity cases. Defendant denies this and relies on Title 28 U.S.C. § 1920 as the sole source of power in a federal court to tax costs. Since this section does not include attorneys’ fees as an item of costs, defendants argues that this Court is wholly without power to grant this portion of plaintiffs’ motion.

Two decisions of the Supreme Court of the United States involving the recovery of attorneys’ fees under state statutes seem to point to an acceptable disposition of this question. In People of Sioux County v. National Surety Co., 276 U.S. 238, 241-244, 48 S.Ct. 239, 240, 241, 72 L.Ed. 547 (1928), the Court speaking through Mr. Justice Stone, said:

“State statutes allowing the recovery of attorney’s fees in special classes of actions have been upheld as constitutional by this court, (authorities cited), and they have been given effect in suits brought in the federal courts. (Authorities cited.)
[157]*157******
“The present statute, * * * [substantially like See. 1105], provides that in the cases specified the court ‘shall allow the plaintiff a reasonable sum as an attorney’s fee, in addition to the amount of his recovery, to be taxed as a part of the costs.’
* # ^ if # #
“* * * Disregarding mere matters of form it is clear that it is the policy of the state to allow plaintiffs to recover an attorney’s fee in certain eases, and it has made that policy effective by making the allowance of the fee mandatory on its courts in those cases. It would be at least anomalous if this policy could be thwarted and the right so plainly given -destroyed by removal of the cause to the federal courts.
“That the statute directs the allowance, which is made to plaintiff, to be added to the judgment as costs are added does not make it costs in the ordinary sense of the traditional, arbitrary and small fees of court officers, attorneys’ docket fees and the like, allowed to counsel by R.S. §§ 823, 824 [the prototype of the present 28 U.S.C. 1920].
“The present allowance, since it is not costs in the ordinary sense, is not within the field of costs legislation covered by R.S. §§ 823, 824. That the particular mode of enforcing the right provided by the statute —i. e., by taxing the allowance as costs — is not available to the federal courts under R.S. §§ 823, 824, does not preclude the recovery. Since the right exists the federal courts may follow their own appropriate procedure for its enforcement by including the amount of the fee in the judgment.” (Authorities cited.)

In Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), the Court had before it a New Jersey statute providing that in any stockholder’s derivative action in which plaintiff’s interest as a shareholder is less than 5% of the value of all outstanding shares and has a market value of less than $50,000, he may be required to give bond for the reasonable expenses, including counsel fees, which the corporation may incur in defense of the action. The lower court refused to require plaintiff to enter into such a bond upon defendant’s application. Mr. Justice Jackson speaking for the majority said, inter alia:

“ * * * But Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 and its progeny have wrought a more far-reaching change in the relation of state and federal courts and the application of state law in the latter whereby in diversity cases the federal court administers the state system of law in all except details related to its own conduct of business. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231. The only substantial argument that this New Jersey statute ■is not applicable here is that its provisions are mere rules of procedure rather than rules of substantive law.
“Even if we were to agree that the New Jersey statute is procedural, it would not determine that it is not applicable. Rules which lawyers call procedural do not always exhaust their effect by regulating procedure. But this statute is not merely a regulation of procedure. With it or without it the main action takes the same course. However, it creates a new liability where none existed before, for it makes a stockholder who institutes a derivative action liable for the expense to which he puts the corporation and other defendants, if he does not make good his claims. Such liability is not usual and it goes [158]*158beyond payment of what we know as ‘costs.’ If all the Act did was to create this liability, it would clearly be substantive. But this new liability would be without meaning and value in many cases if it resulted in nothing but a judgment for expenses at or after the end of the case.

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HENLOPEN HOTEL CORPORATION v. Aetna Insurance Company
251 F. Supp. 189 (D. Delaware, 1966)

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Bluebook (online)
38 F.R.D. 155, 1965 U.S. Dist. LEXIS 10050, Counsel Stack Legal Research, https://law.counselstack.com/opinion/henlopen-hotel-corp-v-aetna-insurance-ded-1965.