Westfield Insurance Company v. Indemnity Insurance Company of North America et al

Filing 123

OPINION: Judgment is entered in favor of Westfield Insurance Company and against Indemnity Insurance Company of North America in the sum of $586,824.21; and enters judgment in favor of Star Insurance Company and against Indemnity Insurance Compa ny of North America in the sum of $617,920.26. The Clerk is directed to enter this Opinion, and a Judgment pursuant to Fed. R. Civ. P. 58, in each of these two consolidated cases, but Westfield Insurance Company and Star Insurance Company are on ly entitled to one recovery. Westfield's Rule 54(b) Motion for Entry of Judgment (Case No 16-3298 d/e 121 , Case No. 14-3040 d/e 131 ) is DENIED as moot. All other motions are denied as moot. This case is CLOSED. See written Opinion. Entered by Judge Sue E. Myerscough on 03/31/2021. (SKN)

3:16-cv-03298-SEM-TSH # 123

Page 1 of 12

E-FILED

Wednesday, 31 March, 2021 09:37:14 AM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
WESTFIELD INSURANCE
COMPANY,
Plaintiff,
v.
INDEMNITY INSURANCE
COMPANY OF
NORTH AMERICA, et al.,
Defendants.
INDEMNITY INSURANCE
COMPANY OF
NORTH AMERICA,
Plaintiff,
v.
HOLLIS SHAFER et al.,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

No. 16-cv-3298

No. 14-cv-3040

OPINION
SUE E. MYERSCOUGH, U.S. DISTRICT JUDGE:
Pending before the Court is Defendant/Counter-Plaintiff Star
Insurance Company’s (Star) Submission Concerning the Paule
Camazine Firm’s Involvement in the Underlying Marsh Litigation
Page 1 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 2 of 12

(Case No. 16-3298 d/e 120) (Star Supplemental Filing 120).1 Star
and Westfield Insurance Company (Westfield) paid the costs to
defend the defendants (Underlying Defendants) in an underlying
action Alvin Marsh, et al. v. Brian R. Bradshaw, et al., Scott
County, Illinois Case No. 2010-L-3 (Underlying Action or Marsh
Litigation). Westfield and Star agreed to share the costs of
defending the Underlying Action equally. The Underlying
Defendants prevailed in the Underlying Action. See Opinion
entered October 28, 2019 (Case No. 16-3298 d/e 111, Case No. 143040 d/e 121) (Summary Judgment Opinion), at 25-26.
Star and Westfield now seek reimbursement from Indemnity
Insurance Company of North America (Indemnity) for the defense
costs in the Underlying Action. This Court has determined that
Indemnity is obligated to pay a pro rata one-third share of the
defense costs to Star and Westfield, plus prejudgment interest at 5
percent per annum from December 17, 2013 to date of judgment.
Opinion entered October 28, 2019 (Case No. 16-3298 d/e 111, Case
No. 14-3040 d/e 121) (Summary Judgment Opinion), at 63-64.

Star filed the Star Submission only in Case No. 16-3298. Most filings cited in this Opinion
were filed in both of the cases that were consolidated through the dispositive motion phase of
the cases, Case Nos. 14-3040 and 16-3298.
1

Page 2 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 3 of 12

The Court directed the parties to meet, confer, and submit an
agreed calculation of the fees and costs paid by Westfield and Star
to defend the Underlying Action, the pro rata share owed by
Indemnity to Westfield and Star, and the appropriate amount of
prejudgment interest. If the parties could not agree, the Court
directed the parties to file their own calculations. The Court would
then resolve the dispute and enter final judgment. Id. at 64-65.
Indemnity and Westfield agreed that Westfield paid
$1,290,443.44 in defense costs for the Underlying Action. They
agreed that according to the Summary Judgment Opinion,
Indemnity’s pro rata share of Westfield’s defense costs was
$430,145.31, the prejudgment interest through October 28, 2019
was $105,320.91, and Indemnity’s total obligation to Westfield
pursuant to the Summary Judgment Opinion was $535,466.22 as
of October 28, 2019. Agreed Calculation Regarding Fees and Costs
Pursuant to Opinion Dated October 28, 2019 (Case No. 16-3298
d/e 113, Case No. 14-3040 d/e 123), at 2.2

By the Court’s calculation, one-third of $1,290,443.44 is $430,147.81. The Court, however,
adopts the $430,145.31 figure to which Westfield and Indemnity agreed. Further, Indemnity
and Westfield’s agreement on these amounts does not waive or forfeit either party’s right to
appeal the Summary Judgment Opinion.
2

Page 3 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 4 of 12

Star and Indemnity did not agree to the amount of Indemnity’s
pro rata share of its defense costs and accrued prejudgment
interest. Pursuant to this Court’s instructions, Star filed its own
calculations. Defendant/Counter-Plaintiff Star Insurance
Company’s Submission of Damage Calculations, Including
Prejudgment Interest as Ordered by the Court (Case No. 16-3298
d/e 115, Case No. 14-3040, d/e 126) (Star Submission 115), at 3-5.
Star stated that it paid $1,380,965.44 in defense costs for the
Underlying Action. According to Star, Indemnity’s pro rata share
was $460,321.81, the prejudgment interest was $116,184.39 as of
December 2, 2019, and the total obligation of Indemnity to Star
under the Summary Judgment Opinion was $576,506.20 as of
December 2, 2019. Id.
Star claims that it paid $90,522.00 more that Westfield in
defense costs. Star, in particular, claims that it paid over
$75,000.00 more in fees to an attorney who defended the
Underlying Action. Westfield and Star both paid attorney fees to
the law firm of Hodge, Dwyer, and Driver, which firm subsequently
became part of the law firm of Hepler Broom (The two law firms are
collectively referred to as Hodge, Dwyer). Westfield asserted at
Page 4 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 5 of 12

summary judgment that it paid $1,155,807.78 in fees to Hodge,
Dwyer for its half of the defense costs incurred by that firm.
Plaintiff Westfield Summary Judgment (Case No. 16-3298 d/e 89,
Case No. 14-3040 d/e 99), at 27. Star asserted at summary
judgment that it paid $1,178,067.90 in attorney fees to Hodge,
Dwyer. Plaintiff Star Insurance Company’s Motion for Summary
Judgment (Case No. 16-3298 d/e 93, Case No. 14-3040 d/e 103)
(Star Summary Judgment Motion), at 16.3
Indemnity’s response to the Star Submission demonstrates
that $22,172.90 of the fees paid by Star to Hodge, Dwyer were
actually for legal fees incurred in analyzing coverage issues and not
for defending the Underlying Action. Response and Objection to
Calculation of Star Insurance Company (Case No. 16-3298 d/e 116,
Case No. 14-3040 d/e 127) (Indemnity Objection 116), at 2-4. The
Court, therefore, determines that Star paid $1,155,895.00 in fees to
Hodge, Dwyer to defend the Underlying Action.
Star also claims that it paid $54,915.72 in fees to the law firm
of Paule Camazine and Blumenthal (Paule Firm). See Plaintiff Star

Star broke the fees paid down to $246,067.90 paid to Hodge, Dwyer & Driver and
$932,000.00 paid to Hepler Broom. Star Summary Judgment Motion, at 16.
3

Page 5 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 6 of 12

Insurance Company’s Motion for Summary Judgment (Case No. 163298 d/e 93, Case No. 14-3040 d/e 103), at 16. Westfield did not
pay any fees to the Paule Firm.
Indemnity disputed whether the Paule Firm defended the
Defendants in the Underlying Action. Indemnity Objection 116, at
4. This Court directed Star to submit competent evidence to
establish the nature of the Paule Firm’s involvement in the
Underlying Action, including the identity of its client and the nature
of the work performed for that client. Opinion entered January 16,
2020 (Case No. 16-3298 d/e 119), at 5.4
In response, Star submitted the affidavit of Nicholas J.
Meinheit, Assistant Vice President-Litigation/Managing Claims
Attorney for Star’s parent company, AmeriTrust Group, Inc. Star
Supplemental Filing120, Exhibit 1, Affidavit of Nicholas J. Meinheit
Concerning the Paule Camazine Firm’s Defense of Sandstone in the
Underlying Marsh Action (Meinheit Affidavit).
Meinheit had primary claims handling responsibility in the
Underlying Action for Star. Meinheit Affidavit ¶ 3. On September

4

The January 16, 2020 Opinion was not entered in Case No. 14-3040.

Page 6 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 7 of 12

27, 2010, Star issued a reservation of rights letter to the Underlying
Defendants (Star Letter). Star agreed to defend the Underlying
Defendants under a reservation of rights. Star stated in the Star
Letter that it assigned the defense to attorney Keith Henson of the
Paule Firm. Meinheit Affidavit, Exhibit A, Star Letter, at 1. On
November 3, 2010, attorney Jennifer Martin of Hodge, Dwyer sent a
letter to Star (Hodge, Dwyer Letter). Meinheit Affidavit, Exhibit B,
Hodge, Dwyer Letter. Martin stated that, under Illinois law, Star
had a conflict of interest due to its reservation of rights and the
Underlying Defendants were entitled to pick their own defense
counsel. Martin stated that the Underlying Defendants had
retained Hodge, Dwyer to defend them in the Underlying Action.
Martin further stated that the Underlying Defendants would waive
the conflict and agree to attorney Henson of the Paule Firm acting
as primary defense counsel as long as Hodge, Dwyer was co-counsel
and Star reimbursed costs incurred by Hodge, Dwyer in defending
the Underlying Action. Hodge, Dwyer Letter, at 2-3.
Meinheit states that Star agreed, and Henson represented the
Underlying Defendants in the Underlying Action as co-counsel with
Martin and other members of Hodge, Dwyer. Meinheit Affidavit ¶ 9.
Page 7 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 8 of 12

The billings submitted by Star for both the Hodge, Dwyer firm and
the Paule firm show Henson and Hodge, Dwyer lawyers (Martin and
Edward Dwyer and others) worked together to defend the
Underlying Action. Henson primarily worked on the pleading,
discovery, and pretrial phases of the case. See Star Summary
Judgment Motion, Exhibit S, Hodge, Dwyer Billings, at Star
000419-28, 00467-70, 000473-76, 000486-89, 000497-98,
000507-11, 000514-17, 000522-25, and 000611-14 (references to
legal services performed with attorney Henson); and Exhibit V,
Paule Firm Billings, at Star 002832-34, 002836-38, 004563,
004608-09, 004626-29, 004639.5 Based on this evidence, the
Court finds that the Paule Firm represented the Defendants in the
Underlying Action as co-counsel with the Hodge, Dwyer firm.
The Paule Firm submitted billings to Star for $54,915.72 in
fees and costs to defend the Underlying Action. Star Summary
Judgment Motion, Exhibit V, Paule Firm Billings. This Court
previously found that the fees were reasonable, noting that
Indemnity did not challenge the reasonableness of any of the

Page citations to Hodge, Dwyer Billings and Paule Firm Billings are to Bates Stamp page
number.
5

Page 8 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 9 of 12

billings submitted by either Star or Westfield at summary judgment.
See Summary Judgment Opinion, at 27-28, 58. Star, therefore, is
entitled to recover a pro rata share of the Paule Firm’s fees from
Indemnity.
Indemnity has not challenged the reasonableness of any of the
other expenses paid by Star to defend the Underlying Action. The
Court previously found them to be reasonable at summary
judgment, and Star is entitled to recover from Indemnity a pro rata
share of those other expenses. The Court, therefore, finds that Star
paid $1,358,792.54 in defense costs ($1,380,965.44 - $22,172.90).
Indemnity’s pro rata share of the obligation to pay those fees,
therefore, is $452,930.85.
Westfield and Star are entitled to 5 percent per annum
prejudgment interest from December 17, 2013. The agreed amount
of Indemnity’s pro rata share of Westfield’s costs was $430,145.31.
Five percent interest on $430,145.31 is $21,507.27 ($430,145.31 x
.05). The interest that accrued for the seven years of 2014 through
2020 is $150,550.89 ($21,507.27 x 7). The per diem interest for the
14 days beginning of December 17, 2013 through December 31,

Page 9 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 10 of 12

2013 and the 90 days from January 1, 2021 through March 31,
2021 is $6,128.10 ($21,507.27 ÷ 365 x 104). The total is:
Indemnity Pro rata share
of Westfield’s payment of
defense costs

$430,145.31

Annual Interest for 2014-2020

$150,550.89

Per Diem Interest for
December 17-31, 2013 and
January 1-March 31, 2021

$

Total due Westfield

$586,824.21

6,128.10

The Court, therefore, enters judgment in favor or Westfield and
against Indemnity in the sum of $586,824.21.
Indemnity’s pro rata share of defense costs incurred by Star is
$452,938,85. Five percent interest on $452,938.85 is $22,646.94
($452,930.85 x .05). The interest that accrued for the years 2014
through 2020, therefore, is $158,528.58 ($22,646.94 x 7). The per
diem interest for the 14 days beginning December 17, 2013 through
December 31, 2013 and the 90 days from January 1, 2021 through
March 31, 2021 is $6,452.83 ($22,646.94 ÷ 365 x 104). The total
is:
Indemnity Pro rata share
of Star’s payment of
defense costs

$452,938.85
Page 10 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 11 of 12

Annual Interest for 2014-2020

$158,528.58

Per Diem Interest for
December 17-31, 2013 and
January 1-March 31, 2021

$

Total due Star

$617,920.26

6,452.83

The Court, therefore, enters judgment in favor or Star and against
Indemnity in the sum of $617,920.26.
Because the Court hereby enters final judgment, Westfield’s
Rule 54(b) Motion for Entry of Judgment (Case No 16-3298 d/e
121, Case No. 14-3040 d/e 131) is denied as moot.
CONCLUSION
THEREFORE, this Court enters judgment in favor of
Westfield Insurance Company and against Indemnity Insurance
Company of North America in the sum of $586,824.21; and
enters judgment in favor of Star Insurance Company and
against Indemnity Insurance Company of North America in the
sum of $617,920.26. The Clerk is directed to enter this
Opinion, and a Judgment pursuant to Fed. R. Civ. P. 58, in
each of these two consolidated cases, but Westfield Insurance
Company and Star Insurance Company are only entitled to one
Page 11 of 12 

3:16-cv-03298-SEM-TSH # 123

Page 12 of 12

recovery. Westfield’s Rule 54(b) Motion for Entry of Judgment
(Case No 16-3298 d/e 121, Case No. 14-3040 d/e 131) is
DENIED as moot. All other motions are denied as moot. This
case is CLOSED.
ENTER:

March 31, 2021

s/ Sue Myerscough
UNITED STATES DISTRICT JUDGE

Page 12 of 12