Westfield Insurance Company v. Miller Architects & Builders, Inc.

Filing 80

ORDER: IT IS HEREBY ORDERED that Miller's Motion for Attorney's Fees and Costs, Entry of Partial Final Judgment, and Stay 49 is GRANTED. LET JUDGMENT BE ENTERED ACCORDINGLY. (Written Opinion) Signed by The Hon. Paul A. Magnuson on 8/13/2018. (LLM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Westfield Insurance Company,

Civ. No. 17-400 (PAM/LIB)

Plaintiff,
v.

MEMORANDUM AND ORDER

Miller Architects & Builders, Inc.,
Defendant.

This matter is before the Court on Defendant’s Motion for Partial Entry of Judgment
and a Stay, and for attorney’s fees and costs. For the following reasons, the Motion is
granted.
BACKGROUND
In January 2018, the Court granted summary judgment to Defendant Miller
Architects and Builders, Inc. (“Miller”), finding that Plaintiff Westfield Insurance
Company breached its duty to defend Miller in an arbitration proceeding involving
allegedly faulty design and construction of an apartment building in Grand Forks, North
Dakota. (Docket No. 48.) Miller now requests entry of judgment on Westfield’s duty to
defend, a stay pending the outcome of the underlying arbitration, and an award of
attorney’s fees, costs, and statutory prejudgment interest.
A.

Rule 54(b) Partial Judgment
To determine whether to enter partial judgment under Rule 54(b) the Court

considers “the equities of the situation and judicial administrative interests, particularly the
interest in preventing piecemeal appeals.” McAdams v. McCord, 533 F.3d 924, 928 (8th

Cir. 2008) (quotation omitted).

The Court must consider factors such as “the

interrelationship of the claims so as to prevent piecemeal appeals,” Huggins v. FedEx
Ground Package Sys., Inc., 566 F.3d 771, 774 (8th Cir. 2009) (quotation omitted), and
whether “there is some danger of hardship or injustice which an immediate appeal would
alleviate.” Taco John’s of Huron, Inc. v. Bix Produce Co., 569 F.3d 401, 402 (8th Cir.
2009). The Eighth Circuit has found that the entry of judgment on a duty-to-defend
determination is appropriate. John Deere Ins. Co. v. Shamrock Indus., Inc., 929 F.2d 413,
418 (8th Cir. 1991).
The only claims remaining in this case involve Westfield’s duty to indemnify Miller
should Miller be held liable for a covered claim in the underlying arbitration. “[U]nder
Minnesota law, . . . the duty to defend and the duty to indemnify are two issues, not one.”
Id. Without the entry of judgment as to Westfield’s duty to defend, Miller has been unable
to recoup its attorney’s fees of more than $360,000 plus significant prejudgment interest.
The hardship to Miller if partial judgment is not entered is undeniable. And an appeal on
the duty to defend would not necessarily result in piecemeal appeals, because that issue
may be dispositive of all coverage issues in the case. In any event, both parties
acknowledge that judgment on the duty to defend will help move settlement discussions in
the underlying arbitration.
Westfield also argues that a judgment that Westfield is obligated to defend Miller is
not appropriate because Miller did not move for summary judgment on its declaratoryjudgment counterclaim.

But Westfield moved for summary judgment on its own

declaratory-judgment counterclaim which sought a declaration of non-coverage; the denial
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of Westfield’s motion means that the opposite declaration is appropriate. In any event,
Westfield’s argument elevates form over substance. The Court found that Westfield has a
duty to defend Miller. Entry of judgment on that issue is undoubtedly appropriate.
The equities here weigh strongly in favor of granting Miller partial judgment on its
duty-to-defend counterclaim, and the Court will therefore enter such judgment.
B.

Stay
Miller also seeks a stay of this case pending the outcome of the arbitration

proceeding. Westfield does not oppose a stay but argues that the Court should require
Miller to respond to discovery requests that Westfield has already served. According to
Miller, the discovery relates to Westfield’s duty to indemnify, which is the precise issue
that Miller wants stayed until after the arbitration.
Contrary to Westfield’s assertions, ongoing discovery is unnecessary.

Miller

acknowledges its duty to keep Westfield apprised of information regarding the arbitration.
If Miller is not providing Westfield with sufficient information about the arbitration,
Westfield can seek appropriate relief from Magistrate Judge Brisbois. The remaining
indemnification claim will therefore be stayed pending the arbitration.
C.

Attorney’s Fees
Westfield again agrees that Miller is entitled to its attorney’s fees and to

prejudgment interest on those fees. Westfield takes issue with the amounts requested and
the calculation of prejudgment interest, however.

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1.

Prejudgment interest

Westfield contends that prejudgment interest should be calculated as to each
attorney invoice separately. In other words, although Westfield agrees that prejudgment
interest is due on Miller’s attorney’s fees, it believes that the Court should calculate that
interest not on the entire amount of fees, but by individual invoice. According to Westfield,
interest cannot be due on amounts incurred after Miller’s tender of defense until Miller
became obligated to pay those amounts.
But Westfield cites no authority for the piecemeal approach it advocates. And
Westfield’s position is contrary to relevant authority and the text of the statute itself. See
Minn. Stat. § 60A.0811, subd. 2(a) (stating that prejudgment interest is “calculated from
the date the request for payment of those benefits was made”); Avon State Bank v.
BancInsure, Inc., 787 F.3d 952, 960 (8th Cir. 2015) (approving district court’s calculation
of prejudgment interest from the date the insured first requested coverage, not from date
insured actually paid the costs). Prejudgment interest is calculated from the date Miller
tendered its defense to Westfield, not the date of each individual attorney’s invoice and is
therefore due from March 2015 to the present on the fees Miller reasonably incurred
defending the underlying arbitration.
2.

Amount of fees

Westfield takes issue with the amount of fees Miller requests. Westfield notes that
the amount of Miller’s fees for the dispositive motions in this case is 60% more than what
Westfield spent on those motions. But there are logical reasons for this discrepancy, not
the least of which is the fact that Miller’s burden in defending against its insurer’s summary
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judgment motion was necessarily more fact- and record-intensive than Westfield’s
arguments in bringing that motion.
Westfield urges the Court to give Miller only 60% of the fees it requests but offers
very little in the way of specifics regarding which fees it believes are excessive. And even
Westfield’s specific examples are not particularly persuasive. Westfield notes that Miller
spent 48 hours on responses to discovery, while Westfield only spent 12. But Miller bore
the brunt of discovery here, and it is unsurprising that its attorneys spent more time on that
discovery.
To determine whether a requested award of attorney’s fees is reasonable, the Court
uses the lodestar method. Fish v. St. Cloud State Univ., 295 F.3d 849, 851 (8th Cir. 2002).
The lodestar is the number of hours reasonably expended times a reasonable hourly rate
for those hours. Id. Westfield does not take issue with the hourly rate Miller claims, and
the Court determines that the hours Miller’s attorneys spent on the arbitration and in
defending this matter were reasonable in light of the complexity of the matter and the work
involved. Thus, Miller is entitled to the fees it claims: $167,465.07 for defense of the
underlying arbitration from inception until January 2017, and $194,458.18 for defense of
this litigation. Prejudgment interest on the arbitration-defense fees is also due, in the
amount of $45.88 per day, from March 6, 2015, to the date of this Order.
CONCLUSION
Accordingly, IT IS HEREBY ORDERED that:
1.

Miller’s Motion Attorney’s Fees and Costs, Entry of Partial Final Judgment,
and Stay (Docket No. 49) is GRANTED;
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2.

Miller is entitled to collect from Westfield the amount of $361,923.25, plus
prejudgment interest of $57,671.16 as of the date of this Order, accruing at
an additional $45.88 per day until paid;

3.

Under Fed. R. Civ. P. 54(b), the Court finds that there is no just reason for
delay and Judgment is ENTERED as to Westfield’s duty to defend Miller in
the underlying arbitration; and

4.

The remaining issues in this case are STAYED pending the outcome of the
underlying arbitration. The parties shall file a joint status report with the
Court within six months of the date of this Order, and periodic status reports
every three months thereafter, until the arbitration proceedings are complete.

LET JUDGMENT BE ENTERED ACCORDINGLY.

Dated: August 13, 2018

s/ Paul A. Magnuson
Paul A. Magnuson
United States District Court Judge

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