Wright v. American Safety Casualty Insurance Company

Filing 16

MEMORANDUM AND ORDER granting 6 Defendant's Motion to Strike and plaintiffs prayer for attorney fees is hereby stricken from the amended complaint.. Signed by District Judge John W. Lungstrum on 2/4/2014. (ses)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

UNITED STATES OF AMERICA,
for the use and benefit of
LAWRENCE KEVIN WRIGHT,

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Plaintiff,
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v.
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AMERICAN SAFETY CASUALTY
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INSURANCE COMPANY,
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Defendant.
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_______________________________________)

Case No. 13-4137-JWL

MEMORANDUM AND ORDER
This matter comes before the Court on defendant’s motion to strike plaintiff’s
prayer for attorney fees (Doc. # 6). For the reasons set forth below, the motion is
granted, and plaintiff’s attorney fee request is hereby stricken from the amended
complaint.
Pursuant to the Miller Act, 40 U.S.C. § 3133, plaintiff claims that he worked on
a construction project for the United States Environmental Protection Agency and that
defendant failed to pay his claim under the performance bond that it executed as surety
for the project. Plaintiff’s amended complaint includes a prayer for attorney fees.
Defendant moves to strike that request pursuant to Fed. R. Civ. P. 12(f), see id. (“The
court may strike from a pleading an insufficient defense . . . .”), on the basis that the

Miller Act does not authorize an award of attorney fees. See F.D. Rich Co. v. United
States ex rel. Industrial Lumber Co., 417 U.S. 116, 130-31 (1974) (Miller Act does not
provide a basis for attorney fee award for prevailing party).
As plaintiff points out, however, in F.D. Rich, the Supreme Court continued to
recognize the usual exceptions to the American Rule that generally requires each side
to pay its own attorney fees in the absence of an applicable statutory or contractual fee
provision. See id. at 129. Plaintiff asserts two separate bases for a possible attorney fee
award in this case.
First, plaintiff contends that there might be a contractual basis for attorney fees
here, and he argues that defendant has not shown that there is no such fee provision in
its bond. Although defendant responds that its form bond does not in fact contain such
a provision, the Court need not interpret the bond at this time. Plaintiff concedes in his
brief that he has not reviewed the bond; thus, plaintiff did not have any good faith basis
for including a claim for contractual attorney fees, see, e.g., Fed. R. Civ. P. 11 (noting
requirements for proper assertions in signed and filed documents), and any such claim
therefore must be stricken.
Second, plaintiff argues that he may recover attorney fees because of defendant’s
bad faith in refusing to pay his claim. As a preliminary matter, the Court rejects
defendant’s argument that such a claim for equitable relief may not be included in a
plaintiff’s complaint because plaintiff is not entitled to such relief “as a matter of law.”
Defendant misapprehends the Court’s task at this stage, which is not to make sure that
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plaintiff is entitled to legal relief (relief “as a matter of law”), but rather to dismiss claims
on which plaintiff, as a matter of law, cannot prevail. Plaintiff is certainly entitled to
include any claim for relief, legal or equitable, in his complaint, as long as he has a good
faith basis for asserting that claim.
Defendant is correct, however, that no claim for bad-faith attorney fees could yet
have arisen at the time plaintiff asserted the claim. In Towerridge, Inc. v. T.A.O., Inc.,
111 F.3d 758 (10th Cir. 1997), the Tenth Circuit distinguished the two categories of bad
faith conduct for which fee-shifting is permitted (abuse of the judicial process during the
course of litigation; bringing an action in bad faith or defending action through the
assertion of a colorless defense) from a third category for which no fee-shifting is
allowed (bad faith in the acts giving rise to the substantive claim). See id. at 768.
Plaintiff asserts that defendant’s conduct falls within the category allowing fee-shifting
for the assertion of a colorless defense, based on defendant’s failure to honor his demand
for payment. That conduct more properly falls within the third category, however, as
plaintiff’s substantive claim arose from defendant’s failure to pay his claim. In
Towerridge, the Tenth Circuit held specifically that an award of bad-faith attorney fees
“may not be premised solely on prelitigation conduct.” See id. at 765; see also id. at 766
(Supreme Court precedent indicates that exception does not reach “bad-faith conduct not
occurring during the course of the litigation itself”); id. at 766 (sibling circuits have also
held that exception “does not reach purely prelitigation bad-faith conduct”); id. at 769
(“we refuse to approve fee-shifting under the bad-faith exception where the wrongful
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conduct consists solely of prelitigation bad-faith acts”).1
Thus, plaintiff may recover bad-faith attorney fees only if defendant acts in bad
faith in asserting a colorless defense during the course of the litigation itself. Defendant
could not have committed any such act at the time that plaintiff filed his amended
complaint, as defendant had not yet appeared in the action. If defendant does engage in
such conduct, plaintiff will be free to pursue an award of attorney fees under the badfaith exception (or as a sanction pursuant to Fed. R. Civ. P. 11), even if such a claim
were not included in his complaint. Defendant cannot have had a good-faith basis for
assertion of the claim before it arose, however, and accordingly the claim will be
stricken.2

1

Despite this clear holding in Towerridge resolving this issue, plaintiff
inexcusably failed to address that holding in relying on other language in the opinion,
while defendant inexplicably failed to cite the holding in its reply after plaintiff cited the
case in his response brief.
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The Court notes, however, that it does not share defendant’s concern that the
inclusion of a premature attorney fee claim in the complaint would allow plaintiff to
exert “leverage” on defendant improperly. No doubt counsel for both sides can
rationally consider the possibility and probability of a fee award under the circumstances
of the case in conducting their negotiations, whether or not such a claim appears in the
complaint.
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IT IS THEREFORE ORDERED BY THE COURT THAT defendant’s motion
to strike (Doc. # 6) is granted, and plaintiff’s prayer for attorney fees is hereby stricken
from the amended complaint.

IT IS SO ORDERED.

Dated this 4th day of February, 2014, in Kansas City, Kansas.

s/ John W. Lungstrum
John W. Lungstrum
United States District Judge

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