The Hanover Insurance Company v. Northern Building Company et al
Enter MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 7/2/2013. Mailed notice (jdh)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
The Hanover Insurance Company,
Northern Building Company, et al.,
Memorandum Opinion and Order
(“Hanover”) filed a complaint against defendants, Northern Building
Company and Thomas VanDuinen (collectively “Northern Building”),
alleging that they breached an indemnity agreement relating to a
At the close of discovery, both parties
filed summary judgment motions.
On September 4, 2012, I entered a
Memorandum Opinion and Order granting Hanover’s motion and denying
Northern Building’s motion. The judgment did not include the amount
Northern Trust appealed, and the Seventh Circuit
remanded the case for further proceedings on the relief to which
plaintiff is entitled. The parties have further briefed the amount
to which Hanover is entitled.
I enter judgment in the amount of
A full description of the background of this case may be found
at Hanover Ins. Co. v. Northern Building, Co., 891 F. Supp. 2d 1019
(N.D. Ill. 2012).
For the purposes of this opinion, the following
facts are undisputed.
Northern Building was a subcontractor for
the safety upgrades to Midway airport in 2008, and Hanover was its
In consideration for Hanover’s issuance of the
bonds for the Midway project, it required Northern Building to sign
exclusive right to settle any claims or lawsuits arising out of the
Agreement, Northern Building would have to reimburse Hanover for
costs associated with settling any bond claims.
The Agreement requires Northern Building to:
exonerate, indemnify, and save harmless [Hanover] from
and against every claim, demand, liability, cost, charge,
suit, judgment and expense which [Hanover] may pay or
incur, including, but not limited to, loss, interest,
court costs and consultant and attorney fees . . . in
defending any suit, action, mediation, arbitration, or
any other proceeding to obtain release from liability
whether [Hanover], in its sole discretion, elects to
employ its own attorney or permits or requires [Northern
Building] to defend [it].
On September 22, 2010, Hanover settled a covered lawsuit for
$127,452.78. At that time, Hanover demanded that Northern Building
indemnify it for the costs associated with litigating and settling
that suit. Northern Building refused, claiming that Hanover should
never have been involved in that lawsuit, and arguing on that basis
that Northern Building is not responsible for Hanover’s attorney
Hanover filed this suit against Northern Building seeking
Hanover claims that its damages total $76,016.69, comprising:
a) $366.78 in claim payments, after set-off from recovery of
contract funds; and b) $75,649.91 in legal fees and expenses
incurred in resolving bond claims, conducting extensive litigation,
and enforcing the terms of the Agreement.
Hanover supports its
claim with the affidavit of its in-house counsel, John A. McDevitt.
Mr. McDevitt states that Hanover hired the law firm of Hinshaw &
Culbertson LLP to assist it in (i) investigating the bond claims,
(ii) enforcing the Agreement, and (iii) investigating Northern
Building’s financial condition.
Mr. McDevitt further states that
Hanover has continually notified Northern Building of the bond
claims and requested that Northern Building indemnify and hold
Hanover harmless from pending claims and to post collateral.
Northern Building makes four arguments against Hanover’s fee
First, it claims that Hanover has failed to provide
adequate support for its fee request.
Second, it argues that the
amount that Hanover seeks is unreasonable. In its third and fourth
arguments, Northern Building revisits ground settled by my summary
judgment ruling, urging that the motion should be denied because
Hanover failed to settle the related lawsuit in good faith and
because Northern Building never breached the indemnity agreement in
Northern Building also argues that Hanover is not legally
entitled to relief because its motion is an untimely request for
attorneys’ fees under Fed. R. Civ. P. (“Rule”) 54, which requires
prevailing parties to request fees “no later than 14 days after
the entry of judgment”. This motion, however, is about damages
under its contract. It does not arise under Rule 54.
the first place.
$53,504.44 in my summary judgment ruling, because Northern Building
failed to raise a genuine issue of material fact regarding the
amount of the fees.
Northern Building’s arguments, therefore,
apply only to the additional $22,512.25 Hanover requests, which
represents the attorneys’ fees it has incurred since the summary
request for the remaining $22,512.25, I note that where, as here,
parties are in federal court based on diversity jurisdiction “the
requirements of proof are governed by federal rather than state
law.” Taco Bell Corp. v. Continental Cas. Co., 388 F.3d 1069, 1076
Constructors, Inc., 597 F.Supp.2d 842, 847 (E.D. Wisc. 2009)
(explaining that “the method of quantifying a reasonable fee is a
procedural issue governed by federal law in a diversity suit”).
“An indemnity clause is designed to make the wronged party
whole—to put it in the same position it would have occupied had the
other side kept its promise.” Medcom Holding Co. v. Baxter Travenol
Labs, Inc., 200 F.3d 518, 519 (7th Cir. 2000).
Northern Building first argues that Hanover’s proof of fees is
insufficient because it has failed to attach bills or time sheets
to its motion. The Seventh Circuit, however, does not require that
level of detail where indemnification contracts are at issue.
Medcom Holding Co., 200 F.3d at 520.
To assist district courts in
their fee inquiries under indemnification contracts, the Seventh
Circuit has urged district courts to eschew detailed, hour-by-hour
reviews of lawyers’ bills as we are required to do under the feeshifting mandates. See id. (noting that “[i]temization is required
under fee-shifting statutes . . . [but] is far less common when
businesses pay their own lawyers”).
“Instead of doing a detailed,
hour-by-hour review after the fashion of a fee-shifting statute,
therefore, the district judge should [undertake] an overview of
[the] aggregate costs to ensure that they were reasonable in
relation to the stakes of the case.”
Id. at 521. Here, Hanover
incurred a reasonable amount of in attorneys’ fees given that the
claimants sought to recover $205,947.78. Northern Building’s claim
that Hanover’s proof is insufficient to justify an award of fees,
therefore, is unavailing.
Second, Northern Building argues that Hanover’s fees are
objectively unreasonable in relation to the work its attorneys
performed. I must accept Hanover’s requested fees as reasonable, so
long as the fees Hanover paid were those “that commercial parties
would have incurred and paid knowing that they had to cover the
outlay themselves.” Id.
In other words, so long as Hanover’s fees
are “not pie-in-the-sky numbers that one litigant seeks to collect
from a stranger but would never dream of paying itself,” I will not
find them unreasonable. Id. at 520. Moreover, if Hanover “actually
paid [these bills] in the ordinary course of its business,” it is
entitled to the presumption of reasonableness. Id. (emphasis in
After all, that was the purpose of the Agreement—for
Northern Building to make Hanover whole, “which means reimbursement
for commercially-reasonable fees no matter how the bills are
Here, Hanover retained Hinshaw & Culbertson LLP, initially,
and currently Watt, Tieder, Hoffar & Fitzgerald, LLP, and was
willing to pay their fees even when Hanover’s success was not yet
“expended” the money to pursue its indemnification claim, and
Northern Building has not claimed that Hanover has not paid its
Therefore, Hanover is entitled to a presumption that
the fees are reasonable.
In its third attempt to defeat Hanover’s request, Northern
Building argues that Hanover did not act in good faith in settling
the underlying matter. Here, Northern Building rehashes an argument
I rejected at summary judgment.2
Northern Building has not shown
an adequate basis for revisiting my previous conclusion on that
issue. See Caisse Nationale de Credit Agricole v. CBI Indus., Inc.,
90 F.3d 1264, 1269 (7th Cir. 1996) (“[m]otions for reconsideration
serve a limited function: to correct manifest errors of law or fact
or to present newly discovered evidence.”).
Acknowledging that I previously found no evidence of bad
faith, Northern Building attempts to distinguish its present
argument by framing it instead as an absence of good faith. But
Hanover offers neither authority nor reasoned analysis to support
this putative distinction.
attempts to prove Hanover’s bad faith by observing that Hanover’s
attorneys’ fee request continues to increase, from $26,742.49 in
the Complaint to $53,504.44 at the time of the summary judgment
motion to its current request of $76,016.69.
But from all that
litigation over the fees is ongoing.
Northern Building also argues that it never breached the
This argument was likewise unavailing on summary
judgment. Again, Northern Building has not shown any basis for
reconsidering my previous ruling.
Finally, Northern Building argues that it is entitled to an
evidentiary hearing or a jury trial on the issue of fees.
argument rests on the premise that because the remedy Hanover seeks
is money, it is therefore a legal remedy and requires a jury trial.
Northern Building’s argument is unavailing because there is no
genuine factual issue on reasonableness of the amount sought.
For the foregoing reasons, Hanover’s motion for damages in the
amount of $76,016.69 is granted.
Dated: July 2, 2013
Elaine E. Bucklo
United States District Judge
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