The Humane Society of the United States et al v. National Union Fire Insurance Company of Pittsburgh, PA
MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 7/11/2016. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
THE HUMANE SOCIETY OF THE
UNITED STATES, et al.
Civil Action No. DKC 13-1822
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA.
In this multi-faceted insurance coverage dispute, several
matters are ready for resolution.1
First, Plaintiffs The Humane
Society of the United States (“HSUS”), Jonathon Lovvorn, and
Kimberly Ockene (collectively, the “Plaintiffs”) seek leave to
dispute whether Plaintiffs have satisfied – or can satisfy their discovery obligations concerning legal defense costs being
(ECF Nos. 89; 92; 93).
For the following reasons,
Plaintiffs’ motion for leave to amend will be denied, and the
court will grant the parties 60 days of additional discovery
regarding defense costs in the underlying Feld Litigation.
Overlapping related litigation is also pending in Maryland
state courts. The parties have been notifying this court of the
progress of that litigation, but it is unclear how those results
affect this suit.
Plaintiffs’ Motion for Leave to Amend
A more complete recitation of the factual background can be
(See ECF No. 84, at 1-7).
The initial complaint in
this case was filed in the Circuit Court for Montgomery County,
action to this court.
(ECF No. 1).
As currently applicable,
Defendant in connection with a lawsuit filed against them by
organization dedicated to protecting animals, and Mr. Lovvorn
and Ms. Ockene are employed as attorneys with HSUS.
to Plaintiffs, Defendant:
Coverage and Kidnap and Ransom/Extortion
Policy No. 01-932-56-98, for the policy
period June 1, 2009, to June 1, 2010 (the
“2009-2010 D&O Policy”)] by refusing to pay
the losses that Plaintiffs may, are, or will
be obligated to pay because of the Feld
(ECF No. 2 ¶ 36).
Plaintiffs also seek a declaratory judgment
that Defendant is obligated to pay all losses that Plaintiffs
may become legally obligated to pay in the Feld Litigation.
(Id. ¶ 46).
The original scheduling order set August 15, 2013, as the
deadline for the amendment of pleadings.
(ECF No. 11, at 2).
Although the discovery deadlines were extended, the deadline to
amend pleadings and add parties was not modified.
discovery on or before October 10, 2014, and file dispositive
motions by November 20.
(ECF No. 62).
(ECF No. 68).
On July 30, 2015, the court issued a
memorandum opinion and order granting in part and denying in
part Defendant’s motion for summary judgment.
(ECF Nos. 84;
The court entered judgment in favor of Defendant on a
portion of Plaintiffs’ breach of contract claim, concluding that
“no coverage is available for HSUS under [Coverage C of] the
2009-2010 [D&O] Policy.”
(ECF No. 84, at 25).
plaintiffs, Mr. Lovvorn and Ms. Ockene.
(See id. at 25-39).2
The parties participated in telephonic conferences on August 26
The court determined that a genuine dispute exists
regarding whether Mr. Lovvorn and Ms. Ockene are entitled to
coverage under Coverage A of the 2009-2010 D&O Policy.
Defendant did not move for summary judgment under Coverage B of
the 2009-2010 D&O Policy, and the court’s prior memorandum
opinion did not address Plaintiffs’ claim for coverage under
and September 9.
On September 8, Plaintiffs for the first time
(See ECF No. 86).
In response to the court’s letter order confirming matters
pending motion for leave to amend.
(ECF No. 90).
responded in opposition (ECF No. 91), and Plaintiffs replied
(ECF No. 94).
In the proposed amended complaint, Plaintiffs
judgment under two additional insurance policies that Defendant
sold to HSUS: Policy No. 965-95-51, for the period January 1,
Professional Liability Insurance for Corporate Counsel, Policy
No. 01-950-29-84, for the period June 1, 2009, to June 1, 2010
(See ECF No. 90-2).3
(the “Employed Lawyers Policy”).
B. Standard of Review
The deadline established by the scheduling order for the
amendment of pleadings was August 15, 2013, and that deadline
has long since passed.
(ECF No. 11).
must do more than satisfy the liberal standard of Fed.R.Civ.P.
According to Plaintiffs, Defendant denied coverage under
the Employed Lawyers Policy on April 13, 2015. (ECF Nos. 94, at
8; 94-2). Plaintiffs gave notice under the 2007-2008 D&O Policy
on August 24, and Defendant denied coverage on October 28. (ECF
Nos. 94, at 8; 94-1).
16(b)(4), which calls for “good cause” to modify a scheduling
See Nourison Rug Corp. v. Parvizian, 535 F.3d 295, 298-
99 (4th Cir. 2008); Elat v. Ngoubene, 993 F.Supp.2d 497, 519-20
(D.Md. 2014) (applying a two-prong test under Rules 16(b)(4) and
15(a) in analyzing an untimely motion for leave to amend).
“A schedule may be modified only for good cause and with
the judge’s consent.”
Fed.R.Civ.P. 16(b)(4); see Nourison, 535
management tools provided by Rule 16.
Therefore, after the
deadlines provided by a scheduling order have passed, the good
cause standard must be satisfied to justify leave to amend the
The movant satisfies the good cause requirement
brought the proposed claims in a reasonably timely manner.
Montgomery v. Anne Arundel County, Md., 182 F.App’x 156, 162 (4th
(D.Md. 2002); Potomac Elec. Power Co. v. Elec. Motor Supply,
Inc., 190 F.R.D. 372, 375 (D.Md. 1999) (“Properly construed,
determining good cause are the “danger of prejudice to the nonmoving party, the length of delay and its potential impact on
judicial proceedings, the reason for the delay, and whether the
movant acted in good faith.”
Tawwaab v. Va. Linen Serv., Inc.,
729 F.Supp.2d 757, 768–69 (D.Md. 2010) (citation and internal
quotation marks omitted).
As Judge Williams explained:
Courts in the [United States Court of
Appeals for the] Fourth Circuit deny leave
to amend a complaint past the deadline
established by a scheduling order where the
moving party has been careless in developing
his claims or where he has failed to
satisfactorily account for his failure to do
Restaurants Corp., 220 F.R.D. 439, 441
(D.Md. 2004) (denying plaintiff’s motion to
join an additional defendant five months
after the court imposed deadline because
deadline that the original defendant might
not be the right party) with Long v. Blair,
(S.D.W.Va. May 12, 2010) (holding that good
cause existed where the plaintiff did not
establish a sufficient evidentiary basis to
support new claims until after the deadline
for amending his complaint and moved to
amend immediately after the new evidence
came to light).
Id. at 769.
The dictates of Rule 16(b) are not to be taken
lightly, as “a judge’s scheduling order is not a frivolous piece
of paper, idly entered, which can be cavalierly disregarded by
(citation and internal quotation marks omitted).
consider Rule 15(a).
See Nourison, 535 F.3d at 299; Marcum v.
Zimmer, 163 F.R.D. 250, 254 (S.D.W.Va. 1995) (“[T]he focus of
Once the movant has met the burden of showing
good cause, however, the inquiry shifts to Rule 15(a), which
provides that “court[s] should freely give leave [to amend a
Denial of leave to amend is appropriate “only when the amendment
would be prejudicial to the opposing party, there has been bad
faith on the part of the moving party, or the amendment would be
Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th
Cir. 1999) (emphasis in original) (quoting Johnson v. Oroweat
Foods Co., 785 F.2d 503, 509 (4th Cir. 1986)).
Leave to amend
may be denied as futile “if the proposed amended complaint fails
to satisfy the requirements of the federal rules,” including
federal pleading standards.
Katyle v. Perm Nat. Gaming, Inc.,
637 F.3d 462, 471 (4th Cir. 2011) (quoting United States ex rel.
Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir.
Plaintiffs’ proposed amendments add claims for breach of
contract and declaratory judgment under two additional insurance
policies that Defendant sold to HSUS, the 2007-2008 D&O Policy
and the Employed Lawyers Policy.
In their motion, Plaintiffs
addressed only the liberal standards of Rule 15(a) regarding
amendments to pleadings.
According to Plaintiffs:
The [c]ourt should grant Plaintiffs’
motion for leave to amend because: (1)
Plaintiffs have a good-faith basis to add
claims under the 2007-2008 D&O Policy and
[Defendant] has breached . . . its coverage
obligations under these policies;
amendment; and (3) amendment is not futile.
. . . [I]n granting [Defendant] summary
judgment [on Plaintiffs’] claim for coverage
under Coverage C . . . in the 2009-2010 D&O
Policy, the [c]ourt opened the prospect for
coverage under the 2007-2008 D&O Policy,
causing Plaintiffs to give notice under [the
2007-2008 D&O Policy].
“granting Plaintiffs’ motion to amend will promote interests of
judicial economy by allowing disputes over coverage under all
avoiding costly and unnecessarily duplicative litigation and the
Plaintiffs argue that they have a good-faith basis for
asserting additional claims under the 2007-2008 D&O Policy and
the Employed Lawyers Policy.
Plaintiffs misapprehend the
federal standards established by Rule 15(a), as courts should
deny leave to amend a pleading when there has been bad faith on
the part of the movant. See Edwards, 178 F.3d at 242.
16(b) and their burden to show good cause to modify the existing
According to Defendant, Plaintiffs’ failure to address good
sufficient to warrant denial.
Defendant argues that:
Plaintiffs would not have been able to meet
their burden . . . because they cannot show
that they were diligent in seeking leave to
amend in light of their admission that they
believed, as far back as 2010, that the
2007-2008 D&O Policy and the . . . Employed
Lawyers Policy covered the Feld Litigation.
Despite this belief, Plaintiffs waited more
[o]rder deadline for amendments, close to a
year after the 15-month discovery period
ended, and nearly two months after this
[c]ourt decided [Defendant’s] dispositive
motion, to file a [m]otion for [l]eave to
[a]mend their complaint.
satisfy Rule 16(b), Defendant contends that Rule 15(a) mandates
denial of Plaintiffs’ motion because Plaintiffs acted in bad
faith and, furthermore, because the proposed amended complaint
would unfairly prejudice Defendant.
(Id. at 2).
identified Plaintiffs’ failure even to address Rule 16(b) that
Plaintiffs presented arguments regarding good cause.
Plaintiffs’ contentions appear for the first time in their reply
brief, the court is inclined not to consider them.
(D.Md. 2006) (“The ordinary rule in federal courts is that an
treatment, it is also a sign of a lack of diligence — without
which the court is hard-pressed to conclude that good cause
exists to modify the scheduling order.
See Rassoull, 209 F.R.D.
Even considering the arguments advanced in the reply brief,
modifying the scheduling order under Rule 16(b).
As noted, the
factors courts consider in evaluating good cause are the “danger
of prejudice to the non-moving party, the length of delay and
its potential impact on judicial proceedings, the reason for the
delay, and whether the movant acted in good faith.”
729 F.Supp.2d at 768–69 (citation and internal quotation marks
In their motion, Plaintiffs must demonstrate that the
reasons for their delay justify a departure from the rules set
by the court in the scheduling order.
According to Plaintiffs,
“[t]he facts underpinning the claims that Plaintiffs now seek to
add to their complaint – claims for coverage under [Defendant’s]
2007-2008 D&O Policy and Employed Lawyers Policy – did not come
to ripen . . . until long after the August 15, 2013 deadline for
amendment had passed.”
(ECF No. 94, at 6).
denied coverage under both the Employed Lawyers Policy on April
13, 2015, and the 2007-2008 D&O Policy on October 28, 2015,
(citing Tawwaab, 729 F.Supp.2d at 768 (“The Fourth Circuit has
noted that a finding of ‘good cause’ is justified under Rule
16(b) where at least some of the evidence needed for a plaintiff
to prove his or her claim did not come to light until after the
amendment deadline.” (citation omitted)))).
Here, Plaintiffs were aware of the two additional policies
memorandum opinion and order.
Plaintiffs filed the complaint on
May 23, 2013, demanding coverage under only the 2009-2010 D&O
Policy; they deliberately elected not to include any claim under
either the 2007-2008 D&O Policy or the Employed Lawyers Policy
in the complaint.
The court’s August 15, 2013 scheduling order
April 13, 2015, while the summary judgment motion was pending;
Plaintiffs only gave notice under the 2007-2008 D&O Policy on
August 24, and Defendant denied coverage on October 28.5
intent to seek leave to file an amended complaint.
(See ECF No.
The underlying facts were long known to Plaintiffs, and
Plaintiffs could have included some claims under the 2007-2008
D&O Policy and the Employed Lawyers Policy when they commenced
scheduling order deadline.6
Instead, they waited until more than
two months following the summary judgment opinion to seek leave
to amend the complaint.
See Howard v. Inova Health Care Servs.,
302 F.App’x. 166, 181 (4th
Cir. 2008) (“[A] motion to amend
There is some discrepancy as to the date on which
Plaintiffs’ reply brief includes a “Timeline of Key Dates” that
identifies August 24 as the date on which Plaintiffs gave
(ECF No. 94, at 8).
According to Defendant’s denial
letter attached by Plaintiffs, however, Defendant wrote: “While
it appears that the Feld Litigation was a Claim first made
against [the Fund for Animals (“FFA”)], and thus against the
Organization, during the policy period of the [2007-2008 D&O
Policy], it was not reported to [Defendant] . . . until August
25, 2015, more than seven years after the policy period ended.”
(ECF No. 94-1, at 5).
Here, for instance, Plaintiffs’ motion for leave to file
an amended complaint was filed on September 28, 2015,
approximately one month after they gave notice under the 20072008 D&O Policy and one month before Defendant formally denied
Plaintiffs add claims for breach of contract and
declaratory relief under the 2007-2008 D&O Policy in their
proposed amended complaint.
(See ECF No. 90-2, at 20).
their motion, Plaintiffs explain that they “anticipate that
[Defendant] will deny coverage under [the 2007-2008 D&O
Policy].” (ECF No. 90-1, at 3).
pleading becomes apparent.” (quoting Deasy v. Hill, 833 F.2d 38,
41 (4th Cir. 1987))).
Lack of diligence and carelessness are the
“hallmarks of failure to meet the good cause standard.”
justification for their substantial delay in seeking to include
claims under the 2007-2008 D&O Policy and the Employed Lawyers
surprise to Plaintiffs.
They had ample time during the course
of this litigation to have pursued coverage under the additional
See Crouch v. City of Hyattsville, Md., No. DKC-09-
2544, 2012 WL 718849, at *4 n.7 (D.Md. Mar. 5, 2012) (“[T]o
amend his complaint, Plaintiff need not have waited until he had
all the evidence he needed to prove his claims.”).
diligence in seeking leave to amend the complaint, they have not
satisfied Rule 16, and their motion will be denied.
“When considering a motion for leave to amend, ‘the
court may take into account the stage of the proceedings,’ such
as whether the parties have completed discovery.”
F.Supp.2d at 520 (quoting Skinner v. First Am. Bank of Virginia,
64 F.3d 659, 1995 WL 507264, at *2 (4th Cir. 1995) (unpublished
By failing to move for leave to amend until
after the court ruled on Defendant’s summary judgment motion,
“conduct any necessary follow-up discovery . . . .
were granted, [Defendant] would also be prejudiced because of
the obvious delay and because of the time and expense already
ARAMARK Corp., No. 1:12-CV-01584-ELH, 2014 WL 1248296, at *26
(D.Md. Mar. 25, 2014), aff’d, 582 F.App’x 151 (4th Cir. 2014);
see Hammer v. Peninsula Poultry Equip. Co., No. RDB-12-1139,
2013 WL 97398, at *4 (D.Md. Jan. 8, 2013) (“Undue prejudice to
opposing party to invest more time and expense in new litigation
preparation.” (citation omitted)).
Here, Plaintiffs filed the
pending motion nearly one year after discovery concluded and
summary judgment motion.
Such a delay prejudices Defendant,
which rightly argues that “Plaintiffs’ proposed new claims would
involve development of . . . different defenses, potentially
including the designation of additional experts by [Defendant].”
(ECF No. 91, at 13 n.8).
The remaining arguments Plaintiffs advance in support of
their motion do not address Rule 16(b)’s standard of good cause.
First, Plaintiffs contend that the court’s September 9, 2015
letter order extended the deadline for pleading amendments by
establishing a briefing schedule for the pending motion.
ECF No. 94, at 2-5).
Plaintiffs’ argument is unavailing, as it
modification of the scheduling order.
In permitting Plaintiffs
to file the pending motion, the court did not relieve Plaintiffs
of their burden to satisfy the dictates of Rule 16(b) and show
good cause for modifying the existing scheduling order.
Reyazuddin v. Montgomery Cty., Md., No. DKC-11-0951, 2012 WL
27241, at *6 (D.Md. Jan. 4, 2012).
Nowhere in the September 9
letter order did the court purport to adjust the scheduling
order or waive Plaintiffs’ obligation to comply with the federal
judicial economy similarly fails to address the proper standard
motion to amend will promote interests of judicial economy by
allowing disputes over coverage under all three [p]olicies to be
(ECF No. 90-1, at 5; see ECF No. 94, at
The interests of judicial economy do not demonstrate
diligence and good cause under Rule 16(b).
See Reyazuddin, 2012
WL 27241, at *6.
scheduling order under Rule 16(b), their remaining arguments in
support of leave to amend under Rule 15 need not be considered.7
Plaintiffs’ motion will be denied, and the complaint will remain
orders previously issued in this case.
Discovery Regarding Legal Defense Costs
The court also requested that the parties submit memoranda
remaining discovery disclosures and which party bears the burden
of demonstrating the reasonableness of expenses.”
see ECF Nos. 89; 92; 93).
(ECF No. 88;
Although not styled as a motion, in
effect, Plaintiffs seek an extension of discovery in order to
Plaintiffs’ discovery failings.
Although the court need not analyze Plaintiffs’ motion
under Rule 15(a), it should be noted that denial of leave to
amend is appropriate when the amendment would prejudice the nonmoving party.
Edwards, 178 F.3d at 242.
Here, the court
determines that Defendant would be prejudiced by Plaintiffs’
The dispute stems from the legal fees and expenses incurred
by Plaintiffs in the underlying Feld Litigation.
only requests damages in excess of $75,000.00, but does not
(ECF No. 2, at 9-11).
At some point
approximately $178,000.00 of defense costs were paid.
Nos. 89, at 7; 92, at 6).
More recently, Plaintiffs seek to
supplement their responses to include $938,102.61 in additional
fees and expenses.
(See ECF No. 89, at 6-10).
this issue is a dispute over which party bears the burden of
proof - either production or persuasion - on the reasonableness
of the costs.
Plaintiffs somewhat blithely contend that they satisfied
their discovery obligation because the legal billing documents
were provided to Defendant via Donna Roberts, a claims-handling
agent, in reference to a different insurance policy.
relevant case law too far when they state that Defendant bears
the burden to challenge those bills for reasonableness in the
On the other hand, given the procedural posture
of this case, Plaintiffs’ failure to provide discovery in a
Rather, a brief period of follow-up discovery will remedy any
B. Standard of Review
damages, and specified attorney invoices, and proof of payments
related to the Feld Litigation.
(See id. at 7; ECF No. 92, at
supplement disclosures in a timely fashion:
(1) In General.
A party who has made a
disclosure under Rule 26(a) - or who has
responded to an interrogatory, request for
production, or request for admission - must
supplement or correct its disclosure or
(A) in a timely manner if the party
learns that in some material respect
incomplete or incorrect, and if the
additional or corrective information
has not otherwise been made known to
the other parties during the discovery
process or in writing; or
(B) as ordered by the court.
Failure to supplement with newly-obtained relevant information
subjects a party to sanctions under Rule 37(c):
(1) Failure to Disclose or Supplement. If a
identify a witness as required by Rule 26(a)
or (e), the party is not allowed to use that
information or witness to supply evidence on
a motion, at a hearing, or at a trial,
justified or is harmless. In addition to or
instead of this sanction, the court, on
motion and after giving an opportunity to be
(A) may order payment of the reasonable
expenses, including attorney’s fees,
caused by the failure;
(B) may inform the jury of the party’s
sanctions, including any of the orders
listed in Rule 37(b)(2)(A)(i)-(vi).
37(c) is to be guided by several factors: (1) the surprise to
the party against whom the evidence would be offered; (2) the
ability of that party to cure the surprise; (3) the extent to
which allowing the evidence would disrupt the trial; (4) the
importance of the evidence; and (5) the nondisclosing party’s
explanation for its failure to disclose the evidence.
Rack And Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592,
597 (4th Cir. 2003).
1. Supplemental Discovery
Wilmer Cutler Pickering Hale and Dorr LLP (“WilmerHale”) for
work through August 2013 in excess of $178,000.00.
formal supplementation has been made.
Defendant asserts that it
inquired in e-mails and voicemail messages whether Plaintiffs
intended to supplement those responses.
(ECF No. 92, at 9).
Plaintiffs state, however, that Defendant knew that there would
Roberts, a claims handler for a different policy, on March 10,
2014, and April 2, 2014, for an additional $781,030.77, provided
(Id. at 8-10).
In Maryland, “[t]he party seeking an award of fees must
ordinarily applicable for proof of contractual damages.”
Trustees, Cmty. Coll. of Baltimore Cty. v. Patient First Corp.,
444 Md. 452, 485 (2015) (citing Bankers & Shippers Ins. Co. of
New York v. Electro Enterprises, Inc., 287 Md. 641, 661 (1980)).
Plaintiffs must concede that, in order to meet their burden at
It is difficult to understand, then, how Plaintiffs
records in discovery in this litigation.
In apparent agreement
with that proposition, Plaintiffs propose that they be allowed
to supplement discovery with those invoices already sent to Ms.
Roberts and any additional invoices incurred while Defendant’s
motion for summary judgment was briefed.
(ECF No. 89, at 25).
Accordingly, Plaintiffs will be ordered to supplement discovery
concerning defense costs within 7 days.
2. Plaintiffs’ Ultimate Burden of Proof
Plaintiffs bear the burden to offer sufficient evidence of
moving parties produced more than the bare records themselves to
demonstrate damages in the form of defense costs.
after a bench trial at which the plaintiff called two fact, but
no expert, witnesses, Judge Bennett noted, “Maryland law governs
the reasonableness of the attorney’s fees and expenses in this
The burden under Maryland law to prove the reasonableness
and necessity of attorney’s fees and expenses rests on [the
plaintiff], and [it] must prove its claim for attorney’s fees
with competent evidence.”
Indus. Enterprises, Inc. v. Penn Am.
Ins. Co., No. RDB-07-2239, 2009 WL 9057727, at *7 (D.Md. June
12, 2009) (citations omitted), amended, No. RDB-07-2239, 2009 WL
3647372 (D.Md. Nov. 3, 2009), and rev’d and remanded, 637 F.3d
481 (4th Cir. 2011).
Judge Bennett continued:
The professional relationship between [the
plaintiff] and Patton Boggs also establishes
the reasonableness of the legal expenses.
Because Penn America breached its duty to
defend, it did not provide any billing
guidelines to [the plaintiff] (e.g. limits
on recoverable fees and expenses, format of
billing, etc.) and it did not object to [the
plaintiff’s] choice of counsel.
during this time period, [the plaintiff] was
paying its legal bills despite its virtual
[The plaintiff’s president]
also testified that he was very pleased with
the legal work performed by Patton Boggs,
and their ten-year professional relationship
clearly supports his testimony. Under these
circumstances, the payment of actual defense
costs by [the plaintiff] is strong evidence
that such costs are reasonable as a matter
See Imgarten v. Bellboy Corp., 383
F.Supp.2d 825, 836 (D.Md. 2005).
Indus. Enterprises, Inc., 2009 WL 9057727, at *9.
In Imgarten, a former employee sought attorney fees and
costs against his employer after asserting a claim under the
Maryland Wage Payment and Collection Law, Md. Code Ann., Lab. &
Empl. § 3-501 et seq.
Again, after a trial, the court reasoned:
The starting place is a calculation of the
number of hours worked times the hourly
From the inception of the litigation
to the hearing on, and briefing of, the
worked a total of 4,917 hours and billed
Imgarten $916,681. While this sum is hefty,
it is reasonable in terms of the litigation
as a whole.
. . . Imgarten paid his legal fees and
expenses as they accrued.
bills are not, therefore, abstract invoices
that have piled up, unpaid, year after year.
decisions, and Imgarten, by paying them, has
attested to their reasonableness.
Thus, Judge Bennett’s use of the phrase “as a matter of law”
should not be interpreted as stating that the fact that bills
are paid is conclusive on the issue.
Also instructive is Patient First Corp., 444 Md. at 486-87
(citations and footnotes omitted), where the absence of detail
in the records was fatal to the claim:
It is likely well within the discretion
of a trial court to award fees based on
detailed billing statements supported by the
judgment of an experienced corporate counsel
who had judged the bills to be reasonable
and necessary to the company’s defense when
he authorized their payment.
complete redaction of all description of the
services rendered in the billing statements
renders the court’s determination here an
act of faith rather than of discretion.
This was not a redaction of a few isolated
items that might be sensitive or privileged,
descriptions of the services rendered by the
law firm. In the absence of any description
of the services rendered, all one reviewing
the report is left to do is to check the
No explanation was offered at
trial for the redaction of this information.
Nor could we find anything in the record
that might explain it.
Undoubtedly, a conscientious general
counsel would have carefully scrutinized the
reasonable for his company to pay the fees
that were billed.
A court charged with
making a fee award must make a similar
judgment as to fees — whether it is
reasonable for an opposing party to be
obligated to pay them.
While it is
certainly not necessary for the court to
fly-speck the bill, without access to the
redacted portion of the bill, it would be
difficult for the court to give conclusive
weight to the opinion of [the plaintiff’s]
General Counsel, which itself was likely
based on the missing information.
seems only fair that the opposing party
would have at least the opportunity to point
Plaintiffs must, then, produce sufficient evidence of the amount
It may not be essential to produce
expert testimony, but something more than bare, sparse records
To date, Plaintiffs have produced only some of the
billing records in discovery, and it is not even apparent from
remaining amounts sought; once they do, it will be possible to
examine their completeness.
Plaintiffs contend that they “are not required . . . to
show in the first instance that the defense costs they paid and
Plaintiffs, however, either concern legal issues distinct from
those presented here or involve factual situations that make
For example, Port E. Transfer, Inc. v. Liberty
Mut. Ins. Co., 330 Md. 376 (1993), addresses the reasonableness
of a settlement agreement negotiated by the insurer.
after the insurer settled underlying claims against the insured,
the insured refused to pay adjusted policy premiums – which had
increased after the settlements – and the insurer brought suit
for breach of contract.
The insured denied liability, arguing
that the insurer’s settlements were unreasonable and not made in
Id. at 378-80.
In effect, the insured challenged
the reasonableness of the settlement in order to defend against
the insurer’s breach of contract action.
The Maryland Court of
[I]n a case such as this, although the
ultimate burden of proof of its [breach of
contract] claim remains at all times with
the insurer, the burden of production of
evidence of violation by the insurer of an
implied condition of good faith is upon the
We believe this allocation of the
burden of production will provide adequate
protection for the party claiming bad faith,
proceedings and unnecessary production of
evidence concerning matters not legitimately
Id. at 386.
Similarly, Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v.
(D.Md. Mar. 31, 2014), concerns the reasonableness of settlement
agreements negotiated by the insured after the insurers refused
The insured resolved claims against it, and the
insurers then challenged the reasonableness of the settlements.
Judge Blake concluded:
[The insurers] have the initial burden of
production, such that they must produce
sufficient evidence to raise a triable issue
If the Insurers satisfy their
burden of production, then [the insured] has
the ultimate burden of persuasion to show
insurers’] motion for summary judgment seeks
a ruling that they may challenge the
reasonableness of the Trust’s settlements
and that [the insured] bears the ultimate
burden of persuasion on reasonableness, it
will be granted.
Id. at *4 (citations omitted).
Both cases cited heavily by
reasonableness of settlement agreements – not the recovery of
This case is different.
The issue of reasonableness is not
a true affirmative defense here; rather, it is an assertion by
Defendant that for at least some of the legal defense costs
sought, Plaintiffs will not be able to carry their burden as
See 61A Am.Jur.2d Pleading § 300 (2016) (“[A]
matter that merely negates an element of the plaintiff’s prima
facie case is not an affirmative defense.”).
allow the parties to explore the other side’s factual positions,
and Plaintiffs will have to produce evidence of the amount of
the legal costs, as well as their necessity and reasonableness.
ultimate burden of proof will remain with Plaintiffs.
For the foregoing reasons, Plaintiffs’ motion for leave to
amend will be denied.
The parties will have 60 days to conduct
follow-up discovery regarding defense costs.
A separate order
DEBORAH K. CHASANOW
United States District Judge
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