Sampson v. Schenck et al
MEMORANDUM AND ORDER - Plaintiff Nicholas Sampson's motion for a partial summary judgment on the issue of bad faith (Filing No. 841 in Case No. 8:07cv155) is denied. Plaintiff Matthew Livers's motion for partial summary judgment on the is sue of bad faith (Filing No. 792 in Case No. 8:08cv107) is denied. Plaintiff Nicholas Sampson's motion for attorney fees and expenses (Filing No. 835 in Case No. 8:07cv155) is granted. Attorney fees in the amount of $15,298.50, and cost s in the amount of $739.52, are awarded to plaintiff Sampson from garnishee St. Paul in Case No. 8:07cv155. Plaintiff Matthew Livers's motion for attorney fees (Filing No. 787 in Case No. 8:08cv107) is granted. Attorney fees in the amount of $217,614.50 are awarded to plaintiff Livers and against garnishee St. Paul in Case No. 8:08cv107. Plaintiff Nicholas Sampson's motion for a money judgment and order of garnishment (Filing No. 838 in Case No. 8:07cv155) is granted in p art and denied in part as set forth in this order. Plaintiff Matthew Livers's motion for money judgment and order of garnishment (Filing No. 789 in Case No. 8:08cv107) is granted in part and denied in part as set forth in this order. Within 14 days of the date of this order, the plaintiffs shall submit to the court calculations of each plaintiff's proportionate share of the garnishee's $5,000,000.00 liability, to be prorated between the plaintiffs in proportion to their sha re of the total of the original judgments combined. An order of garnishment directing garnishee St. Paul Fire and Marine Company, also known as The Saint Paul Travelers Companies, Inc., to pay into the court the sum of five-million dollars ($5,0 00,000.00), prorated between the plaintiffs, and judgments for attorney fees and costs in favor of the plaintiffs and against garnishee St. Paul Fire and Marine Company, also known as The Saint Paul Travelers Companies, Inc., will thereafter be entered. Ordered by Senior Judge Joseph F. Bataillon. (Copy mailed to pro se party) (KLF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
DAVID W. KOFOED, in his official and
ST. PAUL FIRE AND MARINE INSURANCE
COMPANY, also known as THE SAINT
PAUL TRAVELERS COMPANIES, INC.,
DAVID W. KOFOED, in his official and
MEMORANDUM AND ORDER
ST. PAUL FIRE AND MARINE INSURANCE
COMPANY, also known as THE SAINT
PAUL TRAVELERS COMPANIES, INC.,
This matter is before the court on the plaintiffs’ motions for attorney fees and
expenses, Filing No. 835 in Sampson v. Schenk, No. 8:07cv155 (“Livers”) and Filing No.
787 in Livers v. Schenk, No. 8:08cv107 (“Sampson”);1 motions for money judgments
and orders of garnishment, Samspon, Filing No. 838 and Livers, Filing No. 789; and
motions for a partial summary judgment on the issue of bad faith, Sampson, Filing No.
841, and Livers, Filing No. 792. These are garnishment proceedings in aid of execution
under Fed. R. Civ. P. 69 and Neb. Rev. Stat. § 25-1010 et seq. in connection with
underlying actions for civil rights violations under 42 U.S.C. § 1983. This court has
jurisdiction under 28 U.S.C. § 1367.
The facts are set forth in a number of previous opinions and need not be
repeated herein. See Livers v. Schenck, 700 F.3d 340, 344-50 (8th Cir. 2012); State v.
Kofoed, 817 N.W.2d 225, 231-38 (Neb. 2012); Sampson, No. 8:07CV155, Filing No.
829, Memorandum and Order at 3-11 (D. Neb. March 30, 2016); Filing No. 782,
Memorandum and Order at 1-8 (D. Neb. Mar. 31, 2014); Filing No. 772, Memorandum
and Order at 1-14 (D. Neb. Sept. 13, 2013); Filing No. 458, Memorandum and Order at
1-6 (D. Neb. Mar. 28, 2011); Livers, No. 8:08CV107, Filing No. 781, Memorandum and
Order at 3-11 (D. Neb. March 30, 2016); Filing No. 726, Memorandum and Order at 1-8
(D. Neb. Mar. 31, 2014); Filing No. 658, Memorandum and Order at 1-14 (D. Neb. Sept.
13, 2013); Filing No. 340, Memorandum and Order at 1-6 (D. Neb. Mar. 28, 2011).
Future citations to the record in Sampson v. Schenk, No. 8:07CV155, will be prefaced only with
Sampson, and the references to Livers v. Schenk, No. 8:08CV107, will be prefaced with Livers. There
are substantively identical pleadings filed in both cases. Consequently, the court will generally cite only to
the Sampson case, although there may be a similar pleading in the other case.
As relevant to the present motion, the salient facts are that Sampson and Livers
each filed actions for civil rights violations against several defendants in connection with
their arrests for two murders. All of the defendants except David Kofoed settled with the
plaintiffs. This court entered default judgments against Kofoed for Sampson in the
amount of $2,258,716.092 and for Livers in the amount of $4,352,637.82.3 Sampson,
Filing No. 783; Livers, Filing No. 727.
In an effort to enforce the judgments against Kofoed, Sampson and Livers filed
motions to determine garnishee liability of St. Paul Fire and Marine Company a/k/a/ The
Saint Paul Travelers Companies, Inc. (“St. Paul” or “garnishee”) with respect to a policy
of insurance St. Paul issued to Kofoed’s employer, Douglas County, Nebraska. The
policy provided Law Enforcement Liability Protection, with a five-million dollar total limit
of liability. See Filing No. 829, Memorandum and Order at 12. This court determined
that the policy afforded coverage and found that the policy’s self-insured retention
(“SIR”) operated as a large deductible meaning that “St. Paul is not responsible for the
first $250,000.00 of the judgments [entered in the two cases].” Id. at 42.
In his motion for a judgment on garnishment, Sampson moves for an order
directing the garnishee to pay into court the total sum of $2,895,267.89. That amount
represents the original judgment ($2,258,716.09) plus prejudgment interest in the
amount of $542,091.86 and post judgment interest in the amount of $94,459.93. Livers
moves for an order directing St. Paul to pay into the court the total amount of
$5,579,298.22, representing the original judgment ($4,352,637.82) plus prejudgment
That amount reflects $965,000.00 in compensatory damages, $965,000.00 in punitive damages,
$129,041.09 in costs, and $199,675.00 in attorney fees. See Sampson, Filing No. 783, Judgment.
That amount reflects $1,650,000.00 in compensatory damages, $1,650,000.00 in punitive
damages, $52,981.32 in costs and $ 999,656.50 in attorney fees. See Livers, Filing No. 727, Judgment.
interest in the amount of $1,044,633.08, and postjudgment interest in the amount of
In addition, the plaintiffs move for a partial summary judgment seeking a
declaration that St. Paul acted in bad faith by breaching its duty to defend and to
indemnify Kofoed, and in refusing to settle for less than the policy limit. They argue
that, on a finding of bad faith, St. Paul is legally obligated to pay the judgments in full
and asks the court to order St. Paul to pay into the court an amount in excess of the
In response to the motions for a garnishment judgment, St. Paul first contends
that it does not owe prejudgment interest. It argues that the present proceeding is a
garnishment action to enforce a judgment, and the judgment did not include
It also argues that the plaintiffs cannot recover punitive
The plaintiffs base their claims to prejudgment interest on Neb. Rev. Stat. §§ 45-103.02(2) and
45-104 and their claim to postjudgment interest at the rate of 12% per annum on Neb. Rev. Stat. § 45103.02(2) and § 45-104.
The plaintiffs do not seek prejudgment interest against Kofoed as part of the underlying
judgments, they seek a ruling that St. Paul owes prejudgment interest from the time the court determined
the coverage issue, March 30, 2016. See Sampson, Filing No. 851, Reply Brief at 12.
In making that argument, St. Paul reasserts arguments raised and rejected by this court in
connection with the coverage issue. St. Paul argues:
It is St. Paul’s position that the acts of Kofoed on which the punitive award is based do
not constitute official activities or operations of Douglas County. Nor can that conduct be
considered work done within the scope of Kofoed’s employment or in the performance of
his duties for Douglas County. The award was rendered against Kofoed in his individual
capacity and falls outside the scope of Douglas County’s insurance coverage.
Sampson, Filing No. 847, Brief at 12. For the reasons stated in its earlier order, the court again rejects
that argument. See Sampson, Filing No. 829, Memorandum and Order at 24-28, 33-41. Further, a
state’s public policy does not bar recovery under a federal statute. State ex rel. Cherry v. Burns, 602
N.W.2d 477, 484 (Neb. 1999) (noting punitive damages are recoverable in a suit filed in Nebraska under
St. Paul resists the plaintiffs’ summary judgment motions, contending it did not
act in bad faith and is not liable for amounts in excess of the policy limits. It argues that
the plaintiffs’ bad faith is an action sounding in tort and is not based on the policy.
Further, St. Paul contends that plaintiffs lack standing to bring a bad faith claim absent a
specific assignment to that effect from Kofoed. St. Paul also argues that the plaintiffs'
motions are improper and untimely.
In their motions for attorney fees, the plaintiffs ask the court to award attorney
fees the amount of $15,298.50 (representing 66.10 hours of work at rates of $195.00 to
$250.00 dollars per hour) and expenses in the amount of $739.52 for services rendered
to Sampson in the garnishment proceedings and attorney fees of $217,614.50
(representing 909 hours of work at rates of $135.00 to $275.00 per hour) for services
rendered to Livers. St. Paul acknowledges that plaintiffs are the prevailing parties at
this point in the litigation and does not dispute the amount of attorney fees requested,
stating it “has elected not to contest the amount of attorney fees”. Filing No. 848,
Response at 1. St. Paul argues only that the award would be premature pending the
result of St. Paul’s eventual appeal of the court’s decision on coverage.
Punitive damages can be and have been recovered in Nebraska under § 1983. See, e.g., Campos v.
Barney G. Inc., No. 8:06CV699, 2007 WL 1341442, *2 (D. Neb. April 3, 2007); Hirsh v. Lecuona, No.
8:06CV13, 2008 WL 2795859,*7-*10 (D. Neb. July 18, 2008).
The cases cited by the plaintiffs in support of their proposition are inapposite. The cases hold
only that punitive damages are not recoverable against municipal entities under § 1983 and bringing suit
against a public official in his official capacity is the same as bringing suit against the municipal entity but
punitive damages against officials in their individual capacities are recoverable. See Fernandez v. Taos
Mun. Schs. Bd. of Educ., 403 F. Supp. 2d 1040, 1043 (D.N.M. 2005); Riggs v. City of Owensville, No.
4:10-CV-793 CAS, 2010 WL 2681384, at *2 (E.D. Mo. July 2, 2010). Kofoed was sued in his individual
capacity. In an action pursuant to 42 U.S.C. § 1983, punitive damages can be awarded against municipal
employees, but not against the governmental entity itself. City of Newport v. Fact Concerts, Inc., 453 U.S.
247, 271 (1981). Punitive damages may be assessed when a defendant's conduct is shown to be
motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally
protected rights of others. Smith v. Wade, 461 U.S. 30, 56 (1983).
alternatively asks that “if an order is entered, [the order] should state that it is contingent
upon Sampson remaining the prevailing party after completion of the appellate process
and is subject to reversal if St. Paul prevails.” Sampson, Filing No. 848, Response at 2.
The court is under an independent obligation to assure itself that it has subject
matter jurisdiction. Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). “Subject-matter
jurisdiction is a threshold requirement which must be assured in every federal case.”
Kronholm v. Fed. Deposit Ins. Corp., 915 F.2d 1171, 1174 (8th Cir. 1990).
The court has ancillary enforcement jurisdiction over claims that have “a factual
and logical dependence on ‘the primary lawsuit.’” Peacock v. Thomas, 516 U.S. 349,
355 (1996). The court has inherent power to enforce its judgments. Id. at 356. A
federal court may assert ancillary jurisdiction “to enable a court to function successfully,
that is, to manage its proceedings, vindicate its authority, and effectuate its decrees.”
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 380 (1994). The Supreme
Court has approved the use of ancillary jurisdiction “over a broad range of
supplementary proceedings . . . to assist in the protection and enforcement of federal
judgments—including attachment, mandamus, garnishment, and the prejudgment
avoidance of fraudulent conveyances.” See Peacock, 516 U.S. at 356.
“Such jurisdiction, however, may not extend ‘beyond attempts to execute, or to
guarantee eventual executability of, a federal judgment.’” Deretich v. City of St. Francis,
149 F.3d 1187, 1998 WL 327207, *1 (8th Cir. 1998) (per curiam) (quoting Peacock, 516
U.S. at 357). The reach of the federal courts' ancillary jurisdiction does not extend to
“the exercise of jurisdiction over proceedings that are ‘entirely new and original,’ or
where ‘the relief [sought is] of a different kind or on a different principle’ than that of the
prior decree.” Id. at 358 (quoting Krippendorf v. Hyde, 110 U.S. 276, 285 (1884) and
Dugas v. American Surety Co., 300 U.S. 414, 428, (1937) (internal citations and
quotation omitted)). Also, ancillary jurisdiction is not justified over a new lawsuit to
impose liability for a judgment on a third party. Peacock, 516 U.S. at 357-58.
In its earlier Order, this court summarized the law with respect to garnishment
The Federal Rules provide the "procedure on execution—and in
proceedings supplementary to and in aid of judgment or execution—must
accord with the procedure of the state where the court is located." Fed. R.
Civ. P. 69(a)(1). Under Nebraska law, garnishment is a legal, not
equitable, remedy unknown at common law and is a purely statutory
remedy. Gerdes v. Klindt, 570 N.W.2d 336, 341 (Neb. 1997). The
garnishee is not liable unless the defendant had a right of action against
him for the legal demand due or to become due. Id. In an action to
determine the liability of the garnishee, the plaintiff has the burden to
establish why the garnishee was liable to the defendant at the time notice
of garnishment was served. Id. The claim of the judgment creditor
garnishor can rise no higher than the claim of the garnishor’s judgment
debtor against the garnishee. Meyers v. Christensen, 776 N.W.2d 201,
205 (Neb. 2009). The test is whether, as of the time the summons in
garnishment was served, the facts would support a recovery by the
garnishor's judgment debtor against the garnishee. Id.
Sampson, Filing No. 829, Memorandum and Order at 18-19.
“The [Nebraska] garnishment statutes furnish a judgment creditor a means
through which to satisfy a judgment, not a means through which to modify the
underlying judgment.” ITT Hartford v. Rodriguez, 543 N.W.2d. 740, 742 (Neb. 1996).
Under Nebraska law, “[t]he garnishment proceeding must be supported by a ‘judgment
in esse,’ that is, a judgment ‘[i]n actual existence’ or, literally, in being.’” Cattle Nat'l
Bank & Trust Co. v. Watson, 880 N.W.2d 906, 923 (Neb. 2016). Thus, the judgment
must be in existence before a garnishment in aid of execution. Id.; see Neb. Rev. Stat.
§ 25–1056. On establishing that the garnishee holds property or credits of the judgment
debtor, the garnishee must then pay such amounts to the court in satisfaction of the
garnishor's judgment against the judgment debtor, subject to certain statutory
exceptions with regard to wages. ML Manager, LLC v. Jensen, 842 N.W.2d 566, 570
Bad Faith/Excess Judgment
It is established in Nebraska that “[t]he amount of liability fixed by the insurance
policy, upon which the premium is paid, determines the limit of the contractual liability
and duty of the insurer.” Olson v. Union Fire Ins. Co., 118 N.W.2d 318, 321 (Neb.
1962). The duty to exercise good faith arises out of the contractual relationship, but the
liability for bad faith nonetheless remains a tortious wrong. Lienemann v. State Farm
Mut. Auto Fire & Cas. Co., 540 F.2d 333, 342 (8th Cir. 1976) (noting a suit for an excess
judgment is not upon the policy itself, since there is no covenant in the policy which
promises coverage above the policy limits); see also Valley Boys, Inc. v. State Farm
Fire & Cas. Co., No. 8:14CV159, 2015 WL 505630 *1 n.1 (D. Neb. Feb. 6, 2015) (the
contract defines the duty for purposes of the tort, but the tort is a separate claim and is
not dependent on the contract).
Under Nebraska law, a plaintiff in a bad faith tort case must show the absence of
a reasonable basis for denying benefits of the insurance policy and the defendant’s
knowledge or reckless disregard of the lack of a reasonable basis for denying the claim.
Radecki v. Mutual of Omaha Ins. Co., 583 N.W.2d 320, 325 (Neb. 1998). If a lawful
basis for the insurer’s positon actually exists, the insurer, as a matter of law, cannot be
held liable for bad faith. LeRette v. Am. Med. Sec., Inc., 705 N.W.2d 41, 49 (Neb.
2005). “‘The liability of an insurer to pay in excess of the face of the policy accrues
when the insurer, having exclusive control of settlement, in bad faith refuses to
compromise a claim for an amount within the policy limit.’” Hadenfeldt v. State Farm
Mut. Auto Ins. Co., 239 N.W.2d 499, 502 (1976) (quoting Olson v. Union Fire Ins. Co.,
118 N.W.2d 318, 321 (Neb. 1962).
Prejudgment interest is a measure that “serves to compensate for the loss of use
of money due as damages from the time the claim accrues until judgment is entered,
thereby achieving full compensation for the injury those damages are intended to
redress.” West Virginia v. United States, 479 U.S. 305, 311 n.2 (1987). Section 1983
does not mention the award of prejudgment interest, and there is no general federal
statute governing the award of prejudgment interest but courts may allow prejudgment
interest even though the governing statute is silent. Rodgers v. United States, 332 U.S.
371, 373 (1947) (holding that when a federal statute is silent as to prejudgment interest,
the court should fashion a federal rule which grants or denies prejudgment interest
based on the congressional purpose of the particular statute). “In a suit to enforce a
federal right, the question of whether or not to award prejudgment interest is ordinarily
left to the discretion of the district court.” Gierlinger v. Gleason, 160 F.3d 858, 873 (2d
Under Nebraska law, prejudgment interest may be awarded only as provided in
Nebraska Revised Statutes § 45–103.02. Roskop Dairy, L.L.C. v. GEA Farm Techs.,
Inc., 871 N.W.2d 776, 802 (Neb. 2015). That statute provides: “Except as provided in
section 45-103.04, interest as provided in section 45-104 shall accrue on the unpaid
balance of liquidated claims from the date the cause of action arose until the entry of
judgment.”7 Neb. Rev. Stat. § 45–103.02(2). A claim is liquidated for purposes of
prejudgment interest when there is no reasonable controversy as to both the amount
due and the plaintiff's right to recover. Roskop Dairy, 871 N.W.2d at 802 (emphasis
added). Damages must be readily determinable or ascertainable by computation or a
recognized standard in order to constitute liquidated damages for which prejudgment
interest is recoverable. Nebraska Public Power Dist. v. Borg-Warner Corp., 621 F.2d
282 (8th Cir. 1980). Where a reasonable controversy exists as to a plaintiff's right to
recover or as to the amount of such recovery, the claim is generally considered to be
unliquidated and prejudgment interest is not allowed. Land Paving Co. v. D.A. Const.
Co., Inc., 338 N.W.2d 779, 780 (Neb. 1983).
In an action arising under federal law, the appropriate compensatory postjudgment interest rate is presumptively the 28 U.S.C. § 1961(a) rate. El-Tabech v.
Clarke, 616 F.3d 834, 841 (8th Cir. 2010). “Congress has declared the post-judgment
rate that adequately compensates federal judgment creditors”. Id. (“In enacting this
statute, Congress determined that adequate compensation for the delay in paying a
Nebraska Revised Statutes § 45-103.04 provides that interest shall not accrue prior to the date
of entry of judgment for “[a]ny action involving the state, a political subdivision of the state, or any
employee of the state or any of its political subdivisions for any negligent or wrongful act or omission
accruing within the scope of such employee’s office or employment.” See also Eikmeier v. City of
Omaha, 783 N.W.2d 795, 799 (Neb. 2010).
federal judgment is the interest a conservative investor would have earned, not the
interest paid by a judgment creditor who borrowed funds while awaiting payment.”).
The rate is “‘calculated from the date of the entry of the judgment, at a rate equal to the
weekly average 1–year constant maturity Treasury yield, as published by the Board of
Governors of the Federal Reserve System, for the calendar week preceding the date of
the judgment.’” Id. (quoting 28 U.S.C. § 1961(a)). Under extraordinary circumstances a
court might be justified in increasing the rate prescribed in § 1961(a) to make a civil
rights award adequately compensatory, but it is an abuse of discretion to depart from
the § 1961(a) rate where no such circumstances are shown. Id.
Under Nebraska law, attorney fees are costs awarded to prevailing parties;
attorney fees are not damages, either compensatory or punitive in nature. Brodersen v.
Traders Ins. Co., 246 Neb. 688, 523 N.W.2d 24 (1994). Nebraska Revised Statutes
Section 44–359 provides:
In all cases when the beneficiary or other person entitled thereto brings an
action upon any type of insurance policy . . . against any company,
person, or association doing business in this state, the court, upon
rendering judgment against such company, person, or association, shall
allow the plaintiff a reasonable sum as an attorney's fee in addition to the
amount of his or her recovery, to be taxed as part of the costs.
Wiegert-Stathes v. Am. Family Mut. Ins. Co., No. A-08-1041, 2009 WL 3381578, at *10
(Neb. Ct. App. Oct. 20, 2009).
“Such attorney fee as may be awarded under the
provisions of § 44-359 must be solely and only for services actually rendered in the
preparation and trial of the litigation on the policy in question.” Hemenway v. MFA Life
Ins. Co., 318 N.W.2d 70, 76 (Neb. 1982). When an attorney fee is authorized, the
amount of the fee is addressed to the discretion of the trial court. Barnett v. Peters, 574
N.W.2d 487, 490 (Neb. 1998). Factors for the court to consider in awarding fees under
Neb. Rev. Stat. § 44-359 are: the amount involved; the responsibility assumed; the
questions of law raised; the time and labor necessarily required; the result of the service
performed; and the professional diligence and skill of the attorneys. Ruby Co-op. Co. v.
Farmers Elevator Mut. Ins. Co., 250 N.W.2d 239, 243 (Neb. 1977). “When determining
reasonable hourly rates, district courts may rely on their own experience and knowledge
of prevailing market rates.” Hanig v. Lee, 415 F.3d 822, 825 (8th Cir. 2005); see also
Bowen v. Allied Prop. & Cas. Ins. Co., No. 4:11CV3163, 2013 WL 942443, at *6 & n.12
(D. Neb. Mar. 11, 2013) (listing cases approving rates ranging from $125.00 to $385.00
as reasonable in this market). Both Nebraska and federal law allow for the recovery of
“costs” by a prevailing plaintiff.
See Neb. Rev. Stat. § 25–1708; Fed. R. Civ. P.
54(d)(1); 28 U.S.C. § 1920.
A district court retains jurisdiction over collateral matters, such as attorneys' fees
and costs while an appeal is pending. Peter v. Jax, 187 F.3d 829, 833 n. 2 (8th Cir.
1999). In addition, a district court retains jurisdiction to the extent necessary to enforce
a judgment that has not been stayed. Id.
Bad Faith/Excess Judgment
The court first finds that the court lacks ancillary jurisdiction to determine St.
Paul’s liability for any alleged bad faith denial of a claim or refusal to settle within policy
limits. Consequently, the court is without authority to order St. Paul to pay an amount in
excess of the policy limits. Under Nebraska law, a claim for bad faith is a tort claim
separate and apart from the contract of insurance involved in this garnishment
The garnishment proceeding was instituted to enforce the judgments
obtained against Kofoed in the plaintiffs' § 1983 actions. The court has determined that
garnishee St. Paul is in possession of property of the judgment debtor in that the St.
Paul policy provides coverage for Kofoed’s acts. A finding of additional liability on the
part of St. Paul, outside what is provided in the policy, would amount to “the exercise of
jurisdiction over proceedings that are ‘entirely new and original,’ or where ‘the relief
[sought is] of a different kind or on a different principle’ than that of the prior decree.”
Peacock, 516 U.S. at 358 (quotations and citations omitted). Accordingly the court finds
the plaintiffs’ motion for partial summary judgment should be denied for lack of ancillary
jurisdiction, and that portion of the plaintiffs’ motion for a money judgment that seeks
recovery of an amount in excess of the policy limit should be denied as well.8
Motions for Money Judgment and Order of Garnishment
Having found the policy affords coverage, the most St. Paul can be ordered to
pay on the judgments against Kofoed is the policy limit—five million dollars.
judgments against Kofoed, collectively, amount to $6,611,353.91, exceeding the policy
limit. As they relate to St. Paul’s responsibility to pay, each judgment is subject to the
$250,000.00 self-insured retention (Sampson’s $2,258,716.09 judgment becomes
$2,008,716.09 and Livers’s $4,352,637.82 judgment becomes $4,102,637.82, for a
The court notes that if it were to address the merits of the issue, the court would find the plaintiffs
have not established as a matter of law that they are entitled to a partial summary judgment and
declaration that St. Paul acted in bad faith. In its earlier order, the court found there was no duty to
defend under the policy; it was replaced by a “right to investigate or defend.” See Sampson, Filing No.
829, Memorandum and Order at 14-15. With respect to any alleged breach of its duty to indemnify,
although this court found St. Paul’s position that it had a duty to provide coverage only if the self-insured
retention was exhausted was erroneous, the court cannot say that the plaintiffs have shown “an absence
of a reasonable basis for denying the benefits of the insurance policy and the insurer’s knowledge or
reckless disregard of a lack of a reasonable basis for denying the claim.” See Radecki, 583 N.W.2d at
325. Despite notice of the fact that Kofoed was unrepresented, however, St. Paul did not exercise its
right to investigate or defend. See Sampson, Filing No. 829, Memorandum and Order at 17-18. The
record shows St. Paul proceeded at its peril, relinquishing any control it might have had over the litigation,
risking entry of a default judgment, and exposing it to liability up to the policy limits.
combined total covered loss of $6,111,353.91). Sampson and Livers are each entitled
to recover a pro rata share of the policy-limit amount.
The court thus finds the
garnishee should be ordered to pay $5,000,000.00 into the court toward satisfaction of
the judgments against Kofoed, to be divided between Sampson and Livers in the
proportion that each plaintiff’s judgment (less the $250,000 SIR) bears to the total
Sampson and Livers neither sought nor were awarded prejudgment interest
against Kofoed in the underlying action.
The court has no authority to modify the
underlying judgment that does not include an award of prejudgment interest. Further,
the plaintiffs have not shown that they are entitled to prejudgment interest from the date
of the court’s coverage finding to the present. Arguably, because the amount of St.
Paul’s coverage under the policy is capped at $5 million dollars the amount of a
judgment up to that amount would be liquidated. However, the plaintiffs’ motions for
judgments in excess of the verdict, as well as St. Paul’s contention that punitive
damages could not be covered, indicate that the amount of the potential garnishment
order was still the subject of reasonable controversy. Accordingly, the claim was not
liquidated. In light of that determination, the court need not address whether an award
of prejudgment interest against a political subdivision is precluded under Nebraska law.
The court finds the plaintiffs' request for prejudgment interest should be denied.
Contrary to the plaintiffs’ assertions, postjudgment interest accrues on the
judgments under 28 U.S.C. § 1961, not under Nebraska law. The judgments at issue
are for civil rights violations under federal question jurisdiction. Postjudgment interest
has accrued, and will accrue on the judgments since the date of the judgments at the
legal rate under 28 U.S.C. § 1961.
There is no dispute that the plaintiffs prevailed in the garnishment proceedings.
As prevailing plaintiffs in a coverage suit under Nebraska law, they are entitled to
recover attorney fees in the garnishment proceeding. In contrast to the plaintiffs' bad
faith claims, a claim for attorney fees in an action against an insurer for an order in
garnishment is not a new and separate claim, rather, it is necessary to effectuate the
enforcement of the court’s judgment. The court properly has ancillary jurisdiction over
that claim. The plaintiffs have submitted detailed records of the time involved and St.
Paul does not challenge the amount of fees.
The court has carefully reviewed the time expended and hourly rates and finds
they are reasonable. The court is familiar with the litigation and the complexity of the
issues. The amount involved is substantial and a significant amount of time and labor
was required to achieve the result.
Further, the court is familiar with the skill and
expertise of counsel. Based on these factors and the court’s knowledge of reasonable
rates in this legal market, the court finds the plaintiffs should recover attorney fees in the
St. Paul does not challenge the amount.
The court sees no
reason to delay the award of fees until the resolution of any eventual appeal. Of course,
if the court’s decision is reversed, the award of fees will be reversed as well.
IT IS ORDERED:
Plaintiff Nicholas Sampson’s motion for a partial summary judgment
on the issue of bad faith (Filing No. 841 in Case No. 8:07cv155) is denied.
Plaintiff Matthew Livers’s motion for partial summary judgment on
the issue of bad faith (Filing No. 792 in Case No. 8:08cv107) is denied.
Plaintiff Nicholas Sampson’s motion for attorney fees and expenses
(Filing No. 835 in Case No. 8:07cv155) is granted.
Attorney fees in the amount of $15,298.50, and costs in the amount
of $739.52, are awarded to plaintiff Sampson from garnishee St. Paul in
Case No. 8:07cv155.
Plaintiff Matthew Livers’s motion for attorney fees (Filing No. 787 in
Case No. 8:08cv107) is granted.
Attorney fees in the amount of $217,614.50 are awarded to plaintiff
Livers and against garnishee St. Paul in Case No. 8:08cv107.
Plaintiff Nicholas Sampson’s motion for a money judgment and
order of garnishment (Filing No. 838 in Case No. 8:07cv155) is granted in
part and denied in part as set forth in this order.
Plaintiff Matthew Livers’s motion for money judgment and order of
garnishment (Filing No. 789 in Case No. 8:08cv107) is granted in part and
denied in part as set forth in this order.
Within 14 days of the date of this order, the plaintiffs shall submit to
the court calculations of each plaintiff’s proportionate share of the
garnishee’s $5,000,000.00 liability, to be prorated between the plaintiffs in
proportion to their share of the total of the original judgments combined.
An order of garnishment directing garnishee St. Paul Fire and
Marine Company, also known as The Saint Paul Travelers Companies,
Inc., to pay into the court the sum of five-million dollars ($5,000,000.00),
prorated between the plaintiffs, and judgments for attorney fees and costs
in favor of the plaintiffs and against garnishee St. Paul Fire and Marine
Company, also known as The Saint Paul Travelers Companies, Inc., will
thereafter be entered.
DATED this 30th day of November, 2016.
BY THE COURT:
/s Joseph F. Bataillon
JOSEPH F. BATAILLON
Senior United States District Judge
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