Continental Western Insurance Company v. Country Mutual Insurance Company
ORDER: Continental Western Insurance Company is awarded attorneys' fees and defense costs in the amount $240,146.18, as well as pre-judgment interest of $10,394.72, for a total of $250,540.90. The Clerk of Court shall enter judgment accordingly. Signed by Chief Judge Nancy J. Rosenstengel on 9/10/2020. (mlp)
Case 3:17-cv-01231-NJR-GCS Document 84 Filed 09/10/20 Page 1 of 12 Page ID #1966
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
Case No. 3:17-CV-1231-NJR-GCS
COUNTRY MUTUAL INSURANCE
MEMORANDUM AND ORDER
ROSENSTENGEL, Chief Judge:
Pending before the Court is Continental Western Insurance Company’s
(“Continental”) petition for fees (Doc. 70) related to its defense of Hamel Fire Protection
District in three separate but consolidated state court actions stemming from a 2012 motor
vehicle accident (“the Underlying Lawsuits”). Continental seeks a total of $253,739.93 in
fees from Defendant Country Mutual Insurance Company (“Country Mutual”),
including attorneys’ fees, costs, and pre- and post-judgment interest. For the following
reasons, the Court grants the petition for fees, but reduces the amount awarded to
On November 9, 2017, Continental initiated this declaratory judgment action
against Country Mutual to determine which insurance company’s policy provided
primary coverage for Hamel Fire in the Underlying Lawsuits (Doc. 1). On June 13, 2018,
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Country Mutual filed a counterclaim for declaratory judgment (Doc. 25). Both insurance
companies contended that the other’s policy provided primary coverage over and above
any coverage provided by its own policy.
At summary judgment, the Court found that Country Mutual’s “Other Insurance”
clause provided primary coverage for Hamel Fire, its insured by definition (Doc. 54). The
Court further declared that Country Mutual had a duty to defend Hamel Fire in the
Underlying Lawsuits, including the duty to reimburse Continental for the cost of
defending Hamel Fire. Finally, any coverage provided for Hamel Fire under the
Continental policy was excess over the insurance provided by the Country Mutual policy.
The Court further stated:
“because the Court’s ruling is dispositive of the matter,
Continental Mutual’s claims in Count IV for Equitable Subrogation and Count V for
Unjust Enrichment, as well as Country Mutual’s claims in Count IV for Equitable
Subrogation and Count V for Unjust Enrichment, are DISMISSED with prejudice.”
At that point, judgment was entered, and the case was closed (Doc. 55). Country
Mutual filed a Notice of Appeal (Doc. 56). After an unsuccessful mediation, the Seventh
Circuit Court of Appeals entered a jurisdictional order noting that the district court
should have calculated the issue of damages before entering judgment. The parties then
filed an agreed motion for voluntary dismissal of the appeal, which was granted. Upon
learning that damages were still at issue in the matter (although not from the parties
themselves but on sua sponte review of the Seventh Circuit’s docket), the undersigned
directed the parties to brief the issue of damages (Doc. 66).
Continental filed its brief regarding the calculation of damages on June 15, 2020
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(Doc. 70), along with supporting documentation. After an extension of time, Country
Mutual filed its response on July 13, 2020, along with a request for an evidentiary hearing
(Doc. 73). That request initially was granted (Doc. 75). Continental then moved to strike
the evidentiary hearing, arguing that such a hearing would be unnecessary considering
Country Mutual had ample opportunity to provide any evidence and to set forth any and
all objections to the claimed attorneys’ fees and defense costs within its briefing (Doc. 77).
Continental also filed a separate reply brief (Doc. 76).
The Court granted the motion to strike the evidentiary hearing and converted the
hearing to oral argument on the issue of damages (Doc. 78). The hearing was set for
August 27, 2020. On August 25, 2020, without any advance notice or leave of Court,
Country Mutual filed an affidavit from Stephen Mudge, an attorney who represented
Country Mutual’s insured in the Underlying Lawsuits (Doc. 81). The affidavit purported
to dispute the accuracy of several billing entries in Continental’s billing records.
On August 27, 2020, the Court heard argument on the issue of damages. Because
Country Mutual’s affidavit was filed out of time and without leave of Court—and with
no explanation as to why it was being filed—the Court struck the affidavit from the
record (Doc. 83).
Equitable Subrogation and Unjust Enrichment
Having determined on summary judgment that Country Mutual’s “Other
Insurance” clause provided primary coverage for Hamel Fire and that Country Mutual
had a duty to defend Hamel Fire in the Underlying Lawsuits, including the duty to
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reimburse Continental for the cost of defending Hamel Fire, the Court should have then
turned to the remaining counts:
Continental’s claims for equitable subrogation and
Equitable subrogation is “designed to place the ultimate responsibility for a loss
upon the one on whom in good conscience it ought to fall and to reimburse the innocent
party who is compelled to pay.” Cincinnati Ins. Co. v. Soc’y Ins., No. 14-CV-1319, 2015 WL
1058649, at *3 (C.D. Ill. Mar. 5, 2015) (quoting Reich v. Tharp, 167 Ill. App. 3d 496, 500, 521
N.E.2d 530, 533 (Ill. App. Ct. 1987)). The elements of an equitable subrogation claim by
one insurer against another are as follows: “(1) the defendant carrier must be primarily
liable to the insured for a loss under a policy of insurance; (2) the plaintiff carrier must be
secondarily liable to the insured for the same loss under its policy; and (3) the plaintiff
carrier must have discharged its liability to the insured and at the same time extinguished
the liability of the defendant carrier. Home Ins. Co. v. Cincinnati Ins. Co., 213 Ill. 2d 307,
323, 821 N.E.2d 269, 280 (Ill. 2004). Equitable subrogation claims do not depend on the
existence of an agreement and “can arise simply from the fact of payment.” Mut. Serv.
Cas. Ins. Co. v. Elizabeth State Bank, 265 F.3d 601, 626 (7th Cir. 2001).
To recover under a theory of unjust enrichment, a plaintiff must demonstrate that
the defendant “voluntarily accepted a benefit which would be inequitable for [it] to retain
without payment.” Nat’l Cas. Co. v. White Mountains Reinsurance Co. of Am., 735 F.3d 549,
559–60 (7th Cir. 2013) (quoting People ex rel. Hartigan v. E & E Hauling, Inc., 153 Ill.2d 473,
180 Ill.Dec. 271, 607 N.E.2d 165, 177 (1992)). In Illinois, “[t]he theory of unjust enrichment
is based on a contract implied in law . . . where there is a specific contract which governs
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the relationship of the parties, the doctrine of unjust enrichment has no application.” Id.
Here, whether under the theory of equitable subrogation or unjust enrichment,
Continental is entitled to recoup all expenses incurred in defending Hamel Fire with
respect to the Underlying Lawsuits. In its summary judgment order, the Court found that
Country Mutual had a duty to defend Hamel Fire according to the terms of its policy,
that the coverage provided for Hamel Fire under Continental’s policy was excess over
the insurance provided by the Country Mutual policy, and that Continental defended
Hamel Fire throughout the litigation and settlement of the three Underlying Lawsuits.
Moreover, Country Mutual received the benefit of Continental paying for all defense
costs, and it would be inequitable for Country Mutual to retain that benefit without
reimbursing Continental for its costs. The only remaining issue, therefore, is the amount
of fees to which Continental is entitled.
Continental’s Calculation of Damages
Attorneys’ Fees and Costs
“The party seeking the fee award bears the burden of proving the reasonableness
of the hours worked and the hourly rates claimed.” Spegon v. Catholic Bishop of Chicago,
175 F.3d 544, 550 (7th Cir. 1999). The petition must specify the services performed, by
whom they were performed, the amount of time spent, and the hourly rate charged.
Kaiser v. MEPC Am. Properties, Inc., 164 Ill. App. 3d 978, 984, 518 N.E.2d 424, 427 (Ill. App.
In determining whether a fee is reasonable, a court must then consider additional
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factors such as the skill of the lawyers, the nature of the case, the novelty and/or difficulty
of the issues and work involved, the importance of the matter, the degree of responsibility
required, the usual and customary charges for comparable services, the benefit to the
client, and “whether there is a reasonable connection between the fees and the amount
involved in the litigation.” Abellan v. Lavelo Prop. Mgmt., LLC, 948 F.3d 820, 835 (7th Cir.
2020) (quoting Kaiser v. MEPC Am. Props., Inc., 518 N.E.2d 424, 427 (1987)). The “best
evidence of whether attorney’s fees are reasonable is whether a party has paid them.”
Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 653–54 (7th Cir. 2011) (quoting Cintas
Corp. v. Perry, 517 F.3d 459, 469–70 (7th Cir. 2008)); Westfield Ins. Co. v. Indemnity Ins. Co.
of North America, 423 F.Supp.3d 534, 556 (C.D. Ill. 2019) (the fact that an insurance
company paid the fees supports the inference that the fees were reasonable).
Here, Continental has submitted documentation of all defenses fees and costs it
paid in defending Hamel Fire. Specifically, it has provided an affidavit from Keith Keller,
an employee of Continental who is familiar with the defense provided to Hamel Fire in
the Underlying Lawsuits (Doc. 70-1). Keller attested that, following the law firms’
submission of their invoices, Continental reviewed—and in some instances downwardly
adjusted—the invoices before ultimately paying them (Id.). Keller also attested that
Continental incurred $39,669.02 in costs, including court reporting, professional medical
record review and analysis, printing services, and forensic crash analysis costs.
Continental notes that it incurred these costs even though its ultimate ability to recoup
those costs was uncertain at the time (Id.).
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Continental further provided detailed billing records for the attorneys who
provided the defense to Hamel Fire (Docs. 70-2, 70-3). The billing records contain
descriptions of the work performed, the amount of time spent, the attorney who
performed the work, and the hourly billing rate (Id.). In total, Continental seeks attorneys’
fees and defense costs in the amount $240,146.18.
With regard to the factors the Court should consider in determining whether the
requested fee is reasonable, Continental explains that it initially retained Douglas Heise,
an attorney at Heyl Royster Voelker & Allen PC to represent Hamel Fire in the
Underlying Lawsuits. Mr. Heise has over 30 years of litigation experience and significant
experience defending individuals involved in auto accidents, including in trucking
litigation. Mr. Heise and the law firm of Heyl Royster represented Continental from May
2013 through July 2015, charging only $160 per hour for partners and $140 per hour for
associates. Continental notes that these rates are in line with, and arguably lower than,
the usual and customary rates charged by attorneys in this jurisdiction. In total,
Continental paid Heyl Royster $20,466.94 for its services.
Thereafter, Continental Western transferred the defense of Hamel Fire in the
Underlying Lawsuits to James Temple and Joseph Skryd at the law firm of Mulherin
Rehfeldt & Varchetto PC. Mr. Temple has decades of experience in civil litigation, while
Mr. Skryd has more than 25 years of civil litigation experience in areas including trucking
liability. Mr. Skryd also has been lead counsel in more than 220 jury, bench, and
arbitration trials. The Mulherin Rehfeldt law firm defended Hamel Fire from April 2015
until the resolution and dismissal of the Underlying Lawsuits in October 2018, charging
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only $155 per hour for partners and $140 per hour for associates. In total, Mulherin
Rehfeldt incurred attorneys’ fees of $180,010.30, which Continental Western paid in full.
With regard to the degree of responsibility required, Continental argues that Mr.
Heise, Mr. Temple, and Mr. Skryd took on full responsibility in the management of the
Underlying Lawsuits, including litigation strategy and discovery. Continental further
asserts that the Underlying Lawsuits were more complex than a typical motor vehicle
collision case. The accident involved a semi-truck that collided with an ambulance,
implicating both individuals and private and municipal entities. There also were
substantial injuries to the plaintiffs, which required significant medical record review and
analysis, several depositions, and forensic accident reconstruction. The cases also
involved cross-claims, which further complicated the issues.
With regard to the importance of the case, Continental argues that the injuries to
the plaintiffs placed a significant amount of money at issue in potential damages.
Additionally, damages could potentially have been borne by two municipal fire districts,
lending additional complexity and importance to the case.
Next, Continental asserts that Hamel Fire reaped significant benefits from the
defense provided by the above-referenced attorneys. Continental points out that Hamel
Fire was released from the Underlying Lawsuits without being required to contribute any
significant sums to the settlements.
Finally, Continental claims that there is a reasonable connection between the fees
and the labor required to defend Hamel Fire in the Underlying Lawsuits. It argues that
the complexity of the Underlying Lawsuits resulted in protracted litigation and extensive
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discovery. Two of the lawsuits were pending for nearly six years before they were
dismissed in October 2018. The third lawsuit was pending for well over three years until
it, too, was dismissed. And the litigation involved significant discovery and motion
practice, mediation, extensive review of medical records, and accident reconstruction
In response to Continental’s fee request, Country Mutual asserts that Continental’s
brief is devoid of the evidentiary support required to meet its burden. First, it claims that
the affidavit from Keith Keller is insufficient because he was not an attorney who worked
on the cases. Next, it contends that a fee petition must consist of detailed records
containing facts and computations upon which the charges are predicated, but that such
information is lacking here. It claims the attorney invoices, with no work product or
explanation, do not meet the required evidentiary standard. It also asserts Continental
did not even attempt to meet the factors set out by Illinois law to determine the
reasonableness of a requested fee. With respect to the attorney billing entries, Country
Mutual generally claims there “are multiple attorneys performing the same tasks, and
there are no other records provided in connection with the work allegedly performed to
justify the fees sought.” (Doc. 73 at p. 4). Country Mutual does not, however, point to any
specific billing entries that are insufficiently described, duplicative, or otherwise
deficient. It also provides no evidence disputing the reasonableness of the fees.
Country Mutual’s position that Continental’s brief is devoid of evidentiary
support to meet its burden is mindboggling. Continental submitted hundreds of pages of
attorney billing records, including the time spent and descriptions of all work completed.
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It also provided an affidavit attesting that the fees were actually paid. Rather than dispute
specific time entries, Country Mutual generally objected to the lack of evidentiary
support for those time entries. But each entry included a description of the work
performed, the attorney’s name, the amount of time spent, and the hourly rate charged.
That is all that is required under Illinois law. See Kaiser, 18 N.E.2d at 427. Continental also
fully explained why the fees were reasonable using the very factors cited by Country
Mutual in its briefing. And, of course, an insurer’s payment of the defense costs is
evidence of their reasonableness. Accordingly, the Court finds “there is a reasonable
connection between the fees and the amount involved in the litigation.” See Abellan, 948
F.3d at 835. Continental shall be awarded the full amount of fees and costs requested.
Continental also asserts it is entitled to pre-judgment interest at five percent per
annum, from the date the Underlying Lawsuits were dismissed to the date judgment
originally was entered in this case on September 3, 2019. Continental calculates it is owed
$10,394.72 in pre-judgment interest. Country Mutual argues pre-judgment interest is not
allowable because the Court has not yet awarded any sums to Continental, and the
amount of defense fees “are not currently ascertainable nor was Country ever provided
any indication of the amounts claimed.”
Illinois authorizes pre-judgment interest at five percent per annum on any money
due pursuant to a written contract. 815 ILL. COMP. STAT. § 205/2. It is well established that
§ 205/2 “applies to actions by one insurer against another insurer for reimbursement of
defense costs owed under insurance policies.” Westfield Ins. Co. v. Indem. Ins. Co. of N. Am.,
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423 F. Supp. 3d 534, 559 (C.D. Ill. 2019), reconsideration denied, No. 14-CV-3040, 2020 WL
223609 (C.D. Ill. Jan. 15, 2020); see also Statewide Ins. Co. v. Houston General Ins. Co., 397
Ill.App.3d 410, 425, 336 Ill.Dec. 402, 920 N.E.2d 611, 623-24 (Ill App. Ct. 2009) (“Houston
General failed to fulfill its duty to defend and indemnify JCC. Therefore, the award of
prejudgment interest to Statewide was proper.”). Furthermore, “the fact that the amount
of the award was in dispute during this time does not preclude the trial court from
awarding prejudgment interest for that period.” Marcheschi v. Illinois Farmers Ins. Co., 298
Ill. App. 3d 306, 314, 698 N.E.2d 683, 689 (Ill. App. Ct. 1998).
Here, Continental calculates it is owed $10,394.72 in pre-judgment interest, from
October 22, 2018—the date the Underlying Lawsuits were dismissed—to September 3,
2019—the date judgment originally was entered in this matter. The Court agrees. On
September 3, 2019, the Court declared that Country Mutual had a duty to defend Hamel
Fire in the Underlying Lawsuits, including the duty to reimburse Continental for the cost
of defending Hamel Fire. Furthermore, the amount owed was readily ascertainable here,
unlike the cases cited by Country Mutual where there was a disparity between the fees
sought and those awarded. See Couch v. State Farm Ins. Co., 279 Ill.App.3d 1050 (Ill. App.
Ct. 1996); Santa’s Best Craft LLC v. Zurich American Ins. Co., 408 Ill.App.3d 173 (Il. App. Ct.
2010). Continental is entitled to the full amount sought; thus, the sum due is easily
calculated. Continental shall be awarded $10,394.72 in pre-judgment interest.
Finally, basing its calculation on the Court’s original September 3, 2019 judgment,
Continental claims it is owed $3,199.03 in post-judgment interest as the prevailing party.
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Under 28 U.S.C. § 1961, “[i]nterest shall be allowed on any money judgment in a
civil case recovered in a district court . . . .” As noted in Moran Foods, Inc. v. Mid-Atl. Mkt.
Dev. Co., LLC, 500 F. Supp. 2d 1079, 1081 (N.D. Ind. 2007), however, the majority of circuits
have interpreted the post-judgment interest statute to require both a monetary amount
and a final, appealable judgment. See also R.E.I. Transp., Inc. v. C.H. Robinson Worldwide,
Inc., No. 05-57-GPM, 2007 WL 4225669, at *3 (S.D. Ill. July 10, 2007), aff’d sub nom. REI
Transp., Inc. v. C.H. Robinson Worldwide, Inc., 519 F.3d 693 (7th Cir. 2008). Because neither
of those requirements presently exists in this case, Continental shall not be awarded the
post-judgment interest it requests. Nonetheless, upon the entry of an amended judgment
in this case, post-judgment interest will begin accruing at the rate established by 28
U.S.C. § 1961.
For these reasons, Continental Western Insurance Company is awarded attorney’s
fees and defense costs in the amount $240,146.18, as well as pre-judgment interest of
$10,394.72, for a total of $250,540.90. The Clerk of Court shall enter judgment accordingly.
IT IS SO ORDERED.
DATED: September 10, 2020
NANCY J. ROSENSTENGEL
Chief U.S. District Judge
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