Fidelity National Title Insurance Company v. Captiva Lake Investments, LLC
MEMORANDUM AND ORDER:IT IS HEREBY ORDERED that Captiva's amended motion for attorneys' fees [Doc. # 421 ] is granted in part and denied in part. IT IS FURTHER ORDERED that Captiva is awarded attorneys' fees in the amount of $2,138,487.80.. Signed by District Judge Carol E. Jackson on 3/7/16. (KKS)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
CAPTIVA LAKE INVESTMENTS, LLC,
FIDELITY NATIONAL TITLE INSURANCE
Case No. 4:10-CV-1890 (CEJ)
MEMORANDUM AND ORDER
This matter is before the Court on plaintiff’s amended motion for attorneys’
fees. Defendant has filed a response in opposition and the issues are fully briefed.
This dispute concerns the availability of coverage under a loan policy of title
insurance issued in conjunction with a development project. The insured, plaintiff
Captiva Lake Investments, LLC (Captiva), claimed that the insurer, defendant
Fidelity National Title Insurance Company (Fidelity), was required to provide
defense and indemnification with respect to various mechanics’ liens and for
unmarketability of title. Fidelity asserted that it had provided a defense, that
coverage was barred under policy exclusions, and that there was no coverage for
Captiva’s alleged unmarketability of title. Captiva asserted claims for declaratory
judgment, breach of contract-failure to defend, breach of contract-failure to
indemnify, and tortious interference; Fidelity asserted a claim for declaratory
judgment.1 At the close of Captiva’s case at trial, the Court granted Fidelity’s
motion for judgment as a matter of law with respect to Captiva’s tortious
interference claim. At the close of all evidence, Captiva elected to submit only its
claim for breach of the duty to indemnify to the jury. See Jury Inst. No. 5 [Doc.
#388]. On July 24, 2015, the jury found in favor of Captiva and awarded damages
in the amount of $6,289,992.00. In response to a special interrogatory, the jury
found that Fidelity delayed payment on Captiva’s claim without reasonable cause or
excuse and thus was liable for a statutory penalty, pursuant to Mo.Rev.Stat. §
375.420. [Doc. #384]. Pursuant to the jury verdict, judgment was entered in favor
of Captiva and against Fidelity in the amount of $6,919,141.20. [Doc. #391].
Captiva initially sought attorneys’ fees in the total amount of $2,233,698.00
for 6,569.7 hours of legal time, at a blended hourly rate of $340.00. The Court
found that Captiva was not entitled to fees for hours expended on its tortious
interference claim and directed Captiva to amend its application to remove those
fees. Captiva has now submitted an amended application in which it seeks
attorneys’ fees in the amount of $2,162,740.00 for 6,361 hours.
As a preliminary matter, the Court notes that this case was filed in October
2010 and extends to more than 425 docket entries. Each party asserted multiple
claims. The case implicated a number of issues, including the formation and
interpretation of the title loan policy, the financing of the Majestic Pointe
construction project, the amounts and validity of the mechanics’ liens, the proper
measure of damages, and the nature of the attorney-client relationship in the
Fidelity dismissed its claims without prejudice five days before trial. [Docs. #355,
tripartite relationship among insured, insurer, and defense counsel retained by the
insurer for the benefit of the insured. In addition to this litigation, the parties were
involved in mechanics’ lien litigation in Camden County and an administrative
complaint filed with the Missouri Department of Insurance.
regarding discovery disputes was extensiv, largely due to Fidelity’s conduct. There
were also three rounds of dispositive motions. Finally, the parties participated in
five hearings and appeared for nine days of trial.
In a diversity action, state law governs the availability of attorney’s fees
where no conflicting federal statute or court rule applies. Weitz Co. v. MH
Washington, 631 F.3d 510, 528 (8th Cir. 2011). In Missouri, attorney’s fees are not
recoverable from another party, except when allowed by contract or statute. Trim
Fit, LLC v. Dickey, 607 F.3d 528, 532 (8th Cir. 2010) (citing Essex Contracting, Inc.
v. Jefferson Cnty., 277 S.W.3d 647, 657 (Mo. 2009)).
Captiva seeks fees under Missouri’s vexatious refusal statute, which states:
In any action, suit or other proceeding instituted against any insurance
company, . . . upon any contract of insurance . . ., if the insurer has
failed or refused . . . to make payment under and in accordance with
the terms and provisions of the contract of insurance, and it shall
appear from the evidence that the refusal was vexatious and without
reasonable cause, the court or jury may, in addition to the amount due
under the provisions of the contract of insurance and interest thereon,
allow the plaintiff damages for vexatious refusal to pay and attorney’s
fees as provided in section 375.420.
Mo. Ann. Stat. § 375.296 (emphasis added). Thus, an award of fees is authorized in
Under Missouri law, factors the trial court may consider include: (1) the rates
customarily charged by the attorneys involved in the case and by other attorneys in
the community for similar services; (2) the number of hours reasonably expended
on the litigation; (3) the nature and character of the services rendered; (4) the
degree of professional ability required; (5) the nature and importance of the subject
matter; (6) the amount involved or the result obtained; and (7) the vigor of the
opposition. WingHaven Residential Owners Ass’n, Inc. v. Bridges, 457 S.W.3d 383,
386 (Mo. Ct. App. 2015) (citation omitted); see also Weitz Co., 631 F.3d at 528-29
(listing factors Missouri courts consider when determining reasonable attorney’s
The vexatious refusal statute does not require an award of attorneys’ fees.
Fidelity argues that the Court should exercise its discretion not to award fees
because Captiva received the benefit of Fidelity’s defense of the mechanics’ liens
and the satisfaction of those liens, in addition to damages for breach of the policy.
Thus, Fidelity argues, Captiva has already been made whole. The damages awarded
at trial were to place Captiva “in the position [it] would have been in had the
contract been performed.” Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62, 67 (Mo.
2000). However, damages for breach of the policy do not compensate the insured
for litigation expenses and, thus the insured “is not made whole in a practical sense
by an action in which [it] only recovers consequential damages flowing from the
breach.” Id. “The statute’s provisions of attorneys’ fees and the . . . penalty
obviously aim to make the contracting party whole in a practical sense and to
provide an incentive for insurance companies to pay legitimate claims without
litigation.” The Court finds that an award of attorneys’ fees is appropriate.
Captiva seeks an award of fees for 6,361 hours. Fidelity argues that this
amount should be reduced under a number of different theories.
Vague Entries and Block Billing
Fidelity argues that Captiva’s fee request should be reduced by a percentage
amount because its billing entries are vague and consist of block billing. “The term
‘block billing’ refers to the time keeping method by which each lawyer and legal
assistant enters the total daily time spent working on a case, rather than itemizing
the time expended on specific tasks.” Bishop v. Pennington Cty., No. CIV. 06-5066KES, 2009 WL 1364887, at *3-4 (D.S.D. May 14, 2009) (quoting McDannel v.
Apfel, 78 F. Supp. 2d 944, 946 n. 1 (S.D. Iowa 1999)). Although the Eighth Circuit
does not prohibit block billing, district courts are authorized to apply a percentage
reduction for inadequate documentation that hinders the court’s ability to conduct a
meaningful review. Id.; see also
Miller v. Woodharbor Molding & Millworks, Inc.,
174 F.3d 948, 949–50 (8th Cir. 1999) (remanding to district court to request more
detail or apply percentage reduction based on vague billing entries).
Fidelity identifies three specific billing records as examples of unacceptable
6/10/14 7.1 hours: Research legal requirements for successful
fee affidavit in support of motion for attorney’s fees; research re
history of representations made re document productions and
disclosure of information; research re Major Claims Reports
possibly missing as attachments to e-mail correspondence
10/13/14 5.3 hours: Prepare for and meet with client re trial
strategy; research concerns expressed by client; correspondence
to S. Briner re assertions of privilege; communicate with M. Toth
and J. Sewell of Midwest Litigation Support re demonstrative
aides for trial; review documents
3/17/15 6.3 hours; Prepare for trial; research re Department of
Insurance issues, work on trial exhibits; telephone conference
with C. Lindquist re damage issues; telephone conference with
client re same; review court’s pre-trial scheduling order;
conference re same; review research re vexatious refusal;
update proposed jury instructions; correspondence with J. Zanola
re report; correspondence with J. Uecker re testimony
Fidelity’s Objections at 13 [Doc. #429].
While these entries do not indicate how many minutes were spent on each
particular task, they are sufficiently specific to communicate the work that was
done and its connection to the case. Furthermore, there is no evidence that
attorneys were spending an excessive amount of time on their tasks or duplicating
the work done by others. “Defendant’s position that counsel should be required to
more specifically detail how his/her time was expended would place a tremendous
burden on any counsel and would result in inefficient utilization of counsel’s time.”
Monsanto Company v. David, No. 4:04CV425HEA, 2006 WL 2669076, at *1 (E.D.
Mo. Sept. 14, 2006). The Court finds that the billing report sufficiently details the
actions taken by the attorneys to allow for meaningful review of the hours
expended, so a percentage reduction for block billing is unwarranted here. Where
the Court determines that some reduction is necessary, it adopts the method
employed by Fidelity’s expert, Michael J. Brychel, by assigning an equal amount of
time to each task within the entry. Thus, each of five tasks in a four-hour entry is
assigned .8 hours. See Declaration of Michael J. Brychel ¶ 19 [Doc. #429-2].
Fees for Specific Claims
Fidelity argues that the vexatious refusal statute prohibits recovery of fees
for the hours Captiva expended on the parties’ cross-claims for declaratory
judgment. Fidelity notes that the Eighth Circuit has held that the “Missouri
Vexatious Delay Statute is inapplicable to declaratory judgment actions such as this
one brought by an insurance carrier.” Hawkeye-Security Ins. Co. v. Davis, 277 F.2d
765, 771 (8th Cir. 1960). In Hawkeye-Security, the defendant insureds requested
attorneys’ fees under the statute after they prevailed at trial and on appeal. The
Eighth Circuit denied the request, noting that the insureds did not plead a right to
fees or ask for attorneys’ fees in the trial court; furthermore, there was no basis for
finding that the insured had acted vexatiously. Id. at 771-72. Hawkeye-Security is
inapplicable to a case such as this, where the insured asserted claims for coverage
under the policy. Indeed, Captiva had no choice but to defend against Fidelity’s
declaratory judgment claims in order to bring the breach of contract claim on which
Fidelity also argues that Captiva is not entitled to fees for work on its failureto-defend claim. Under Missouri law, where a prevailing plaintiff’s claims “are based
on different legal theories and facts, and counsel’s work on one claim is unrelated
to work on another, then the court should treat the unrelated claims as if they had
been raised in separate lawsuits.” DeWalt v. Davidson Serv./Air, Inc., 398 S.W.3d
491, 507 (Mo. Ct. App. 2013) (citation omitted). However, “if the claims for relief
have a common core of facts and are based on related legal theories, so that much
of counsel’s time is devoted generally to the litigation as a whole and rendering it
difficult to divide the hours expended on a claim-by-claim basis, such a lawsuit
cannot be viewed as a series of distinct claims.” Id. Thus, where a case involves
“multiple counts with a common core of facts and related legal theories” that “all
arose from the same conduct,” the courts are not required to segregate attorney’s
fees for each claim. Williams v. Plaza Finance Corp., 78 S.W.3d 175, 186 (Mo. Ct.
App. 2002) (affirming award for all fees where plaintiff brought claims for federal
odometer fraud, state odometer fraud, and fraudulent misrepresentation, but
prevailed only on federal claim). Captiva’s two contract claims arose from its
allegations that Fidelity breached its duties under the parties’ contract of insurance.
Based on its familiarity with this case, the Court does not believe that the litigation
would have been conducted differently if Captiva had proceeded solely on its claim
for breach of the duty to indemnify.
As noted above, the Court previously stated that Captiva was not entitled to
recover attorneys’ fees on its tortious interference claim. [Doc. #407]. Captiva
amended its motion, eliminating 208.7 hours. Fidelity has identified an additional
205.21 hours expended on this claim. The Court has reviewed the billing records at
issue and concludes that an additional 71.33 hours can be attributed to Captiva’s
tortious interference claim. In particular, the Court will disallow fees for time spent
on claims for tort of bad faith, breach of fiduciary duty, and breach of an insurer’s
ethical duties. In addition, the Court has disallowed fees for briefing on Fidelity’s
dispositive motion on the tortious interference claim, and for preparing and
deposing expert witnesses on this claim. The Court rejects Fidelity’s assertion that
fees for work associated with Captiva’s administrative complaint and in obtaining its
file from SSB are related solely to the tortious interference claim.
Fidelity asserts that the Court should disallow fees for time Captiva spent on
the issue of adverse inference instructions because no such instruction was
requested. The background on this issue is as follows: On April 23, 2013, the Court
appointed William A. Whitledge as an expert to examine Fidelity’s computer
systems after Fidelity failed to comply with court orders directing it to produce
electronically-maintained records. On January 7, 2015, the Court found that
Fidelity’s failure to impose a litigation hold had resulted in the loss of discoverable
evidence and that Captiva had been prejudiced as a result, justifying the imposition
of sanctions. Memorandum and Order [Doc. #280]. The Court rejected as too harsh
Captiva’s request to strike Fidelity’s pleadings, but stated that it would issue an
adverse-inference instruction at trial. The Court also directed Fidelity to pay one
half of Captiva’s costs for the inspection and attorneys’ fees associated with
bringing its sanctions motion.2 Captiva ultimately decided not to request an adverse
Fidelity conducted a key-word search of Captiva’s billing record for items it
asserts are associated with the adverse inference instruction. The resulting exhibit
is 49 pages long and lists billing entries amounting to $242,149.40 that Fidelity
argues should be disallowed. Fidelity’s search is too broad and captures fees
Captiva expended in its efforts to compel Fidelity to produce materials as ordered
by the Court. Captiva is entitled to be compensated for the four discovery-related
motions it had to file in order to address Fidelity’s failure to properly produce
discoverable material and adequate privilege logs. By contrast with Fidelity’s
overbroad examination, the Court has identified 30.26 hours properly attributable
to the abandoned adverse-inference instruction. However, Captiva’s decision not to
pursue the instruction avoided unnecessarily extending the litigation and the Court
declines to reduce the fee award on this basis.
Degree of Success
Fidelity also argues that the Court should reduce Captiva’s fees by fifty
percent because it achieved only limited success. A prevailing party’s degree of
success is a crucial factor in determining the appropriate amount of a fee award.
See Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). When there is only limited
Captiva has excluded time expended on this sanctions motion from its present
request for fees.
success on claims based on a common core of facts or related legal theories, the
trial court “should focus on the significance of the overall relief obtained.” Trout v.
State, 269 S.W.3d 484, 488 (Mo. Ct. App. 2008) (quoting Hensley, 461 U.S. at
435). On the other hand,
Where a plaintiff has obtained excellent results, his attorney should
recover a fully compensatory fee. Normally this will encompass all
hours reasonably expended on the litigation, and indeed in some cases
of exceptional success an enhanced award may be justified. In these
circumstances the fee award should not be reduced simply because
the plaintiff failed to prevail on every contention raised in the lawsuit.
Litigants in good faith may raise alternative legal grounds for a desired
outcome, and the court’s rejection of or failure to reach certain
grounds is not a sufficient reason for reducing a fee. The result is what
Hensley, 461 U.S. at 435 (internal citation omitted).
Fidelity’s contention that Captiva’s success was less than excellent rests on
the fact that the jury did not award Captiva damages for lost opportunities, which
Captiva valued at $12 million. The jury was instructed on a single claim for breach
of contract and found in favor of Captiva. The jury was given a choice of awarding
damages for lost opportunities or for the lost MLake transaction. The jury selected
the latter and awarded $6,284,992. The jury also found that Fidelity’s conduct was
without reasonable cause or excuse, entitling Captiva to a statutory penalty in the
amount of $629,149.20, plus attorneys’ fees. The Court does not accept Fidelity’s
premise that Captiva achieved only limited success.
Fidelity asks the Court to discount fees when more than one attorney
attended a deposition or hearing. See Ex. D [Doc. #429-6]. Where more than one
attorney represents the prevailing party, the contribution of all attorneys must be
taken into consideration and the fees awarded should reflect the efforts of all, at
least to the extent that the time reported does not reflect duplication of effort or
work that would be performed by nonlawyers. A.J. by L.B. v. Kierst, 56 F.3d 849,
863-64 (8th Cir. 1995) (quotation and citation omitted). The Court has reviewed
the relevant billing entries and concludes that the attendance by more than one
attorney was warranted by the complexity of the litigation.
Fidelity also identifies 26 hours of “administrative tasks” that it argues should
be disallowed, including drafting an engagement letter, preparing indices of
exhibits, and addressing technical issues. Ex. E [Doc. #429-7]. It is appropriate to
apply a discount when parties request fees for hours expended by attorneys on
work that can properly be done by administrative staff. In this case, however, all
work was billed at the same hourly rate, regardless of who performed it.3 Fidelity’s
objection to fees for administrative tasks is overruled.
Captiva seeks a “blended” hourly rate of $340 for all work performed on this
matter by attorneys and paralegals. Although Fidelity previously accepted this
hourly rate, see Doc. 283, it now argues that it cannot evaluate whether this is a
reasonable rate without knowing the actual billing rates for the services rendered.
“[W]hen fixing hourly rates, courts may draw on their own experience and
knowledge of prevailing market rates.” Warnock v. Archer, 397 F.3d 1024, 1027
(8th Cir. 2005) (citation omitted).
Captiva has submitted a list of the hourly rates for all attorneys and
paralegals during the time period they worked on the case, showing rates ranging
The Court typically disallows fees for clerical tasks, such as filing documents in the
case record. Betton v. St. Louis County, 4:05CV1455 JCH, 2010 WL 2025333, at *7 (E.D.
Mo. May 19, 2010) (citation omitted). The tasks identified by Fidelity are not clerical.
between $170 for a paralegal and $560 for an attorney. Based on its “own
experience and knowledge of prevailing market rates,” the Court thinks it highly
likely that, had it chosen to do so, Captiva could have established that the
individual hourly rates it reports are reasonable.
Rather than bill at different rates for each staff member, however, Captiva
elected to rely on a blended rate. The Court finds that the blended hourly rate of
$340 is appropriate in this case. First, attorneys Steven Hall and Richard
Wunderlich account for two-thirds of the total hours expended in this case. An
hourly rate of $340 for their services is more than reasonable in light of the
expertise of counsel, the quality of their representation, and the complexity of the
litigation. Furthermore, the blended rate represents a significant discount for all of
the hours expended by Mr. Wunderlich, whose rate increased from $445 to $545,
and for a portion of the hours expended by Mr. Hall, whose hourly increased from
$305 to $390. Furthermore, if all hours were billed at the lowest hourly rates
reflected in Captiva’s list the total fees would amount to $1,987,260, or
approximately $175,000 less than what Captiva requests at the blended rate. It is
highly likely that the blended hourly rate resulted in a lower fee request than the
traditional method of billing at individual hourly rates would have.
Fidelity reasserts its argument that it is entitled to discovery on “Captiva’s
counsels’ actual billing rates for services, Captiva’s fee arrangement with counsel,
and whether Captiva was actually billed for and paid the attorney’s fees Captiva
now seeks to recover.” The Court believes that the Richard Wunderlich’s amended
declaration in support of Captiva’s request for fees adequately addresses the
information the Court requires for making its determination. Additional discovery
will only increase the already considerable costs of this protracted litigation.
After considering all the requisite factors, the Court finds that an award of
fees is appropriate, and that Captiva’s requested hourly rate of $340 and the hours
expended, minus 71.33, are reasonable. The Court will award fees for 6,289.67
hours for a total award of $2,138,487.80.
IT IS HEREBY ORDERED that Captiva’s amended motion for attorneys’ fees
[Doc. #421] is granted in part and denied in part.
IT IS FURTHER ORDERED that Captiva is awarded attorneys’ fees in the
amount of $2,138,487.80.
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 7th day of March, 2016.
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