Vaughn v. Konecranes, Inc.
MEMORANDUM OPINION AND ORDER: Konecranes' 161 Motion to Supplement Judgment is DENIED. Signed by Judge Danny C. Reeves on 9/19/2016. (STC)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
GEORGE VINCENT VAUGHN,
KONECRANES, INC., et al,
Civil Action No. 5: 14-136-DCR
This matter is pending for consideration of Defendant/Third Party Plaintiff Konecranes,
Inc.’s (“Konecranes”) “Motion to Supplement Judgment.” [Record No. 161] Konecranes asks
the Court to enter a supplemental judgment that sets forth the exact amount of attorneys’ fees
and costs that it alleges it is entitled to receive from Third Party Defendant Central Motor
Wheel of America, Inc. (“CMWA”). For the following reasons, Konecranes’s motion will be
Plaintiff Vincent Vaughn filed this action against Konecranes in the Bourbon Circuit
Court based on work-related injuries that he allegedly sustained as a result of Konecranes’
defective product. Konecranes removed the matter to this Court on April 9, 2014, and filed
third-party claims against other entities, including Vaughn’s employer, CMWA. [Record No.
1] Konecranes asserted that it was entitled to indemnification against CMWA for any
judgment entered against it on the plaintiff’s claim. However, Konecranes’ request for
indemnification did not include a specific request for attorneys’ fees incurred in connection
with the legal proceedings against the plaintiff. [Record No. 24] Instead, Konecranes sought
to recover from CMWA its “costs herein expended, including attorneys’ fees,” referring to the
third-party proceeding against CMWA, rather than indemnification for attorneys’ fees in its
action against the plaintiff. [Id.]
Konecranes argument that it is entitled to indemnification from CMWA is based on an
indemnity clause in the parties’ contract. This clause provides:
INDEMNIFICATION. KONECRANES SHALL NOT BE LIABLE AND
BUYER SHALL RELEASE, INDEMNIFY, AND HOLD KONECRANES . . .
HARMLESS FROM ANY CLAIMS, DEMANDS, DAMAGES,
REGARDLESS OF THEIR TYPE INCLUDING, BUT NOT LIMITED TO,
DIRECT, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR SPECIAL,
ACCOUNTS, GRIEVANCES, LOSSES, AND EXPENSES, WHETHER
KNOWN OR UNKNOWN, PRESENT OR FUTURE, ANY AND ALL
LIABILITY, OR FROM ANY AND ALL MANNER OF ACTIONS . . .
EXCEPT TO THE EXTENT CAUSED BY THE SOLE NEGLIGENCE OF
[Record No. 105, Ex. 4, pp. 9-10]
On March 2, 2015, CMWA moved for summary judgment, arguing that it should not
be liable for indemnification under common law or under the above-referenced contractual
provision. [Record No. 105] CMWA made two arguments against indemnification regarding
the contractual indemnification provision.
First, it contended that the provision was
unenforceable as applied in this case because the provision included an exception under which
Konecranes was prohibited from seeking indemnification for its own negligence. Second,
CMWA argued that the provision was unconscionable.
Konecranes responded to CMWA’s motion and also moved for summary judgment.
[Record No. 112] Konecranes argued that the indemnity provision was enforceable, as applied
in this case, because it was not solely negligent in the underlying action as required under the
indemnification clause. It further contended that CMWA’s unconscionability argument was
On April 15, 2015, the Court entered summary judgment in Konecranes’ favor.
[Record No. 138] The undersigned concluded that the plaintiff had failed to produce any
evidence of Konecranes negligence or demonstrate that its alleged negligence caused the
plaintiff’s injury. Thereafter, on May 29, 2015, the Court granted CMWA’s motion for
summary judgment, in part, and granted Konecrane’s motion for summary judgment, in part.
[Record No. 148]
The Court found that, while common law indemnification was not
appropriate, the contractual indemnification clause was enforceable.
Regarding contractual indemnification, the Court considered the two arguments
outlined in the parties’ motions:
(i) the “sole negligence” exception and (ii) the
unconscionability allegation. Ultimately, the undersigned determined that the provision in
issue was generally enforceable. However, the “sole negligence” exception did not apply
because Konecranes was not solely negligent. As a result, “the parties’ agreement obligate[d]
CMWA to indemnify Konecranes in this action.” [Id.] Judgment was entered in favor of
Konecranes on the plaintiff’s claims and on its contractual indemnity claim against CMWA,
but in favor of CMWA on Konecranes’ common law indemnity claim. [Record No. 149] Both
the plaintiff and CMWA appealed.
On March 1, 2016, the Sixth Circuit affirmed both decisions. [Record No. 161, Exs. 1,
2] Konecranes then filed this “Motion to Supplement Judgment” on July 14, 2016. [Record
No. 161] In this motion, Konecranes asserts that it has repeatedly “requested that CMWA
reimburse its attorneys’ fees and costs associated with this litigation for the purpose of
satisfying the judgment against it,” but CMWA has declined to do provide reimbursement.
[Id.] Konecranes describes its motion as an attempt to collect under the judgment entered
against CMWA. [Id.] Konecranes asserts that this Court awarded its attorneys’ fees when it
decided that CMWA was bound under the parties’ contractual indemnification agreement and
entered judgment to that effect. [Id.] However, as explained below, this Court’s judgment
does not entitle Konecranes to attorneys’ fees under the contractual indemnification
Konecranes argues that a Rule 54(d) motion is not the appropriate vehicle to obtain the
attorneys’ fees that it seeks to recover. It claims that, because the award of attorneys’ fees is
controlled by the substantive law governing the action, Rule 54(d) is inapplicable. Konecranes
is correct that the award of attorneys’ fees is a core issue governed by the substantive law in
its action against CMWA and that this determination renders a Rule 54(d) motion
inappropriate. However, the import of the fact that the attorneys’ fees was a core (rather than
a collateral) issue in the proceedings is that Konecranes was required to prove that it was
entitled to attorneys’ fees during the proceedings before this Court in the CMWA action (and
before the claim had been resolved by this Court’s judgment). Because Konecranes failed to
demonstrate that it was entitled to attorneys’ fees during the requisite stage of the proceedings,
the judgment previously entered does not entitle Konecranes to attorneys’ fees. Moreover,
Konecranes has missed all deadlines under the Federal Rules of Civil Procedure for seeking
to alter the judgment. As a result, Konecranes is not presently entitled to attorneys’ fees and
may not utilize a different motion to retroactively alter the result.
Under Rule 54(d) of the Federal Rules of Civil Procedure, “[c]laims for attorneys’ fees
and related nontaxable expenses shall be made by motion unless the substantive law governing
the action provides for the recovery of such fees as an element of damages to be proved at
trial.” Fed. R. Civ. P. 54(d)(2)(A). This rule distinguishes legal fees that are sought as
damages based on the substantive law of the claim before the trial court with legal fees that
are “collateral to the merits and awarded only after” the adjudication of the relevant claims
and entry of judgment. See Clarke v. Mindis Metal, Inc., No. 95-5517, 1996 WL 616677, at
*3 (Oct. 24, 1996). If attorneys’ fees are collateral such that they are to be awarded after the
claims have been resolved, then under Rule 54(d), the litigant must claim the fees by filing a
motion pursuant to that Rule within 14 days following entry of judgment. Fed. R. Civ. P.
54(d)(2)(A); see Clarke, 1996 WL 616677 at *3.
Conversely, if attorneys’ fees are to be awarded as an element of damages according to
the substantive law governing the action, the fees must be sought and proved before the
conclusion of the proceedings rather than after judgment has already been entered via a Rule
54(d) motion. Indeed, “Rule 54(d)(2) is not applicable to attorneys’ fees recoverable as an
element of damages”. Capital Asset Research Corp. v. Finnegan, 216 F.3d 1268, 1270 (11th
Cir. 2000) (citing Fed. R. Civ. P. 54 Advisory Committee’s Note). As a result, when a party
seeks an award of attorneys’ fees as damages under the substantive law governing the action,
“the correct procedure is to plead the attorney’s fees at trial.” Dryvit Systems, Inc. v. Great
Lake Exteriors, Inc., 96 Fed. Appx. 310, 311 (6th Cir. 2004); see also Rissman v. Rissman,
229 F.3d 586, 587-88 (7th Cir. 2000) (noting that, when attorneys’ fees are awarded pursuant
to the substantive law, the party “must raise its claim in time for submission to the trier of fact,
which means before trial rather than after”).
The issue regarding whether Konecranes is entitled to attorneys’ fees under the
indemnification provision is a substantive issue that must have been raised and proved when
Konecranes sought relief on the claims raised, not a collateral issue that arose after the claims
had already been resolved.
The sole issue between Konecranes and CMWA was the
enforcement of the contractual indemnification provision and the relief that Konecranes was
entitled to seek under that provision. Accordingly, the substantive law governing this action
was the indemnification provision, and any issue regarding the relief that Konecranes could
seek under this provision—including attorneys’ fees—was an element of damages Konecranes
was required to raise and prove during that proceeding.
In Kentucky, litigants generally are not entitled to attorneys’ fees unless the court
makes the specific determination that an award of these fees is appropriate. Kentucky follows
the “American Rule,” under which a party cannot recover attorneys’ fees as damages unless
there is “a specific contractual provision allowing for recovery fees or a fee-shifting statute . .
. .” Aetna Cas. & Sur. Co. v. Com., 179 S.W.3d 830, 842 (Ky. 2005) (citation omitted). Absent
an express contractual provision, the court may award damages in its discretion, but is not
required to do so. Accordingly, a determination that a general indemnification provision is
enforceable would not operate as an award of attorneys’ fees under Kentucky law.
In this case, attorneys’ fees would have only been awarded if this Court had made a
specific finding that they were appropriate. The contractual indemnification provision at issue
does not specifically grant Konecranes indemnification for attorneys’ fees. Instead, it is a
general indemnification provision that provides relief for “grievances, losses, and expenses . .
. .” [Record No. 105, Ex. 4, pp. 9-10] As a result, this provision alone is not sufficient to
entitle Konecranes to attorneys’ fees under Kentucky law. Instead, Konecranes would have
only been entitled to these fees if it had raised the issue and demonstrated that an award of
attorneys’ fees was warranted in the case.
In summary, this Court’s judgment in Konecranes’ favor did not include an award of
attorneys’ fees because Konecranes failed to raise the issue and, as such, this Court did not
find that an award was appropriate. In the Complaint, Konecranes requests attorneys’ fees
“herein expended” in the matter against CMWA, and asks to be indemnified “for the full
amount of any judgment” entered in the plaintiff’s case. However, it failed to request
indemnification for attorneys’ fees arising out of the plaintiff’s case. [Record No. 24]1
Similarly, in its motion for summary judgment, Konecranes focused solely on the issue of
whether the indemnification provision was enforceable. [Record No. 112] Konecranes
nowhere demonstrated that the contractual provision entitled it to attorneys’ fees, or even
indicated that it was seeking attorneys’ fees. Accordingly, Konecranes failed to satisfy its
burden of demonstrating that it was entitled to attorneys’ fees during the appropriate
proceeding, as it was required to do under Rule 54(d) of the Federal Rules of Civil Procedure,
and this Court’s judgment does not entitle it to an award of these fees.
Moreover, Konecranes cannot now move this Court to alter the judgment to provide
for attorneys’ fees because all relevant deadlines have passed—a fact that Konecranes seems
to implicitly acknowledge by its failure to cite any relevant authority under which it moves to
“Supplement Judgment.” For the reasons stated above, Rule 54(d) does not apply and
Konecranes could not have used a motion under that Rule to obtain attorneys’ fees, even if it
filed this motion before the Rule’s deadline of 14 days after judgment had not passed. Fed. R.
To the extent that Konecranes seeks attorneys’ fees for its expenses in its proceeding against
CMWA, this is a collateral issue because it is not raised under the indemnification provision.
Accordingly, this issue must have been raised in a Rule 54(d) provision. Because the deadline
for Konecranes to proceed under this Rule has passed, Konecranes is no longer able to pursue
Civ. P. 54(d). Moreover, the time has passed for Konecranes to seek relief using the other
post-judgment avenues for relief as provided by the Federal Rules of Civil Procedure. For
example, under Rule 59, a motion to alter or amend the judgment must be filed “no later than
28 days after the entry of judgment.” Fed. R. Civ. P. 59(e). Also, under Rule 60, a party
seeking relief from a judgment for mistake or inadvertence—as would be appropriate here—
must file that motion within “a year after the entry of the judgment . . . .” Fed. R. Civ. P. 60(c).
Inasmuch as the judgment was entered on May 29, 2015, all relevant deadlines have passed.
Konecranes did not demonstrate that it was entitled to attorneys’ fees when it was
required to do so. Further, Konecranes’ request for attorneys’ fees is not timely and this Court
cannot now consider whether Konecranes is entitled to those fees. Accordingly, it is hereby
ORDERED that Konecranes’ Motion to Supplement Judgment [Record No. 161] is
This 19th day of September, 2016.
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