Allied World Surplus Lines Insurance Company v. Goettle, Inc.
Filing
91
ORDER granting 79 Goettles Motion to Enforce the Courts May 28, 2019 Order. Allied World must pay Goettle $226,051.51 in defense costs. Additionally, Allied Worlds Cross-Motion to Stay Enforcement (Doc. 85) pending the anticipated appeal is DENIED.. Signed by Judge Susan J. Dlott on 2/24/2020. (wam)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
Allied World Surplus Lines Insurance
Company,
Plaintiff/Counterclaim Defendant,
v.
Richard Goettle, Inc.,
Defendant/Counterclaim Plaintiff.
:
:
:
:
:
:
:
:
:
:
Case No. 1:17-cv-670
Judge Susan J. Dlott
Order Granting Motion to Enforce and
Deny Cross-Motion to Stay Enforcement.
Pending before the Court are Richard Goettle, Inc’s Motion to Enforce the Court’s May
28, 2019 Order (Doc. 79) and Allied World Surplus Lines Insurance Company’s Cross-Motion
to Stay Enforcement (Doc. 85). In the Motion to Enforce, Goettle asks the Court to order its
insurer, Allied World, to pay the defense costs Goettle has incurred in an underlying lawsuit
pursuant to Allied World’s obligations under a professional liability policy. Allied World
opposes paying the defense costs in part, and it cross-moves for a stay of the enforcement of any
order requiring it to pay defense costs pending an appeal to the Sixth Circuit Court of Appeals.
For the reasons that follow, the Court will GRANT the Motion to Enforce and DENY the CrossMotion to Stay Enforcement pending an appeal.
I.
BACKGROUND
The Court set forth a comprehensive statement of the facts and procedural history of this
Case in in the May 28, 2019 Order on Cross-Motions for Summary Judgment (“Summary
Judgment Order”) (Doc. 74). A shorter summary is set forth here.
Allied World provided insurance coverage to Goettle through a professional liability
policy. In August 2017, Goettle notified Allied World about a potential claim against it by Joy
Global arising from the Dolet Hills construction project in August 2017. On September 5, 2017,
1
Goettle sued Joy Global to recover payment for engineering and construction services it rendered
to Joy Global on the Dolet Hills project in Richard Goettle, Inc. v. Joy Global Conveyors, Inc.,
No. 1:17-cv-613 (“the Ohio Contract Action”). On September 6, 2017, Joy Global sued Goettle
for negligent design, negligent construction, and breach of contract in Joy Global Conveyors,
Inc. v. Richard Goettle, Inc., No. 5:17-cv-1121 (W.D. La.) (“the Louisiana Action”). (Doc. 1-2
at PageID 32–49.) One month later, Allied World formally declined to provide Goettle with
defense or indemnity coverage for the Dolet Hills incident. (Doc. 47–19 at PageID 2942–2954.)
Goettle, accordingly, began to incur costs in late 2017 to defend itself in the Louisiana Action.
Allied World filed this suit against Goettle seeking a declaration that it owes Goettle no
coverage for the Louisiana Action. (Doc. 1.) Goettle filed Counterclaims seeking defense and
indemnity coverage and breach of contract damages. (Doc. 7.) The Court held in the Summary
Judgment Order that the Policy Form of the 2017–2018 Policy at least potentially provided
coverage to Goettle for the Dolet Hills incident. (Doc. 74.) The Court further held that Allied
World, therefore, had a duty to defend Goettle, its insured, in the Louisiana Action. (Id.)
Goettle now seeks the Court to order Allied World to pay the costs it has incurred
defending the Louisiana Action through June 2019. Goettle asserted through the Affidavit of
Jeff Ginter, its chief financial officer, that it has incurred and paid $326,051.51 to defend the
Louisiana Action. (Doc. 79-8 at PageID 4982.) Those defense costs are summarized as follows:
WEINER, WEISS & MADISON
$31,071.24
ROGER HEALEY
$143,476.00
BENESCH ATTORNEYS AT LAW
$68,622.13
DAN BROWN AND ASSOCIATES
$58,164.14
BRAUN INTERTEC
$24,718.00
2
(Doc. 79-1 at PageID 4892; Doc. 82 at PageID 5080.) Acknowledging a $100,000 deductible,
Goettle demanded that Allied World reimburse the remaining $226,051.51 in defense costs.
Allied World agreed to pay some of the costs requested, but it objected that Goettle had
not established that other costs requested were incurred in defense of the Louisiana Action. It
suggested that the costs instead might have been incurred in either (1) this Coverage Action or
(2) the Ohio Contract Action that both also arose from the Dolet Hills construction project and
were pending at the same time.1 After an initial round of briefing on the defense costs issue, the
Court held a hearing on November 20, 2019 to seek clarification whether the costs arose from
work performed in the Louisiana Action, as opposed to in this Coverage Action or in the Ohio
Contract Action. (Doc. 83.) The Court concluded that Goettle needed to file supplemental
evidence, to which Allied World could respond. The supplemental briefing is complete.2
Allied World also has cross-moved for a stay of enforcement if the Court rules against it
so that it need not pay the defense costs during its appeal the matter to the Sixth Circuit Court of
Appeals. The parties also have fully briefed this issue.
II.
MOTION TO ENFORCE
A.
Standard of Law
“An insurance company must pay for the defense of actions brought against its insured as
long as the underlying complaint contains at least one potentially covered claim.” Medpace, Inc.
v. Darwin Select Ins. Co., 13 F. Supp. 3d 839, 844 (S.D. Ohio 2014) (citing Ohio Gov’t Risk
Mgmt. Plan v. Harrison, 115 Ohio St. 3d 241, 874 N.E.2d 1155, 1160 (2007)). When an insurer
1
The Honorable Judge Michael R. Barrett dismissed the Ohio Contract Action for lack of personal jurisdiction over
Joy Global in an Opinion and Order dated September 30, 2018. (No. 1:17-cv-613, Doc. 26-1.)
2
Allied World filed a request to strike or ignore a reply brief filed by Goettle in support of its supplemental
memorandum. (Docs. 86, 87.) Allied World’s request was not properly filed as a motion, so the Court does not
need to take any action in response to it. Nonetheless, the Court notes that it did not rely on any new information
provided in Goettle’s reply brief when adjudicating the pending motions.
3
has refused to defend its insured in an underlying litigation, and later is determined by a court to
have been wrong to refuse, the insurer cannot then “second-guess” the fees and expenses
incurred by insured in that underlying litigation. Abercrombie and Fitch, Co. v. Ace European
Group Ltd., Nos. 2:11-cv-1114, 2:12-cv-1214, 2014 WL 4915269, at *6–7 (S.D. Ohio Sept. 30,
2014), aff’d, 621 F. App’x 338 (6th Cir. 2015). The district court in Abercrombie cited at length
from and adopted the reasoning of the Seventh Circuit Court of Appeals in an earlier case:
[Defendant] complains about the amount of defense costs incurred by [Plaintiff].
. . . . We are unimpressed, as was the district court. When [Plaintiff] hired its
lawyers, and indeed at all times since, [Defendant] was vigorously denying that it
had any duty to defend-any duty, therefore, to reimburse [Plaintiff]. Because of
the resulting uncertainty about reimbursement, [Plaintiff] had an incentive to
minimize its legal expenses (for it might not be able to shift them); and where
there are market incentives to economize, there is no occasion for a painstaking
judicial review.
....
Furthermore, although [Defendant]’s policy entitled it to assume [Plaintiff]’s
defense, in which event [Defendant] would have selected, supervised, and paid
the lawyers for [Plaintiff] in the [underlying] litigation, it declined to do sogambling that it would be exonerated from a duty to defend-with the result that
[Plaintiff] selected the lawyers. Had [Defendant] mistrusted [Plaintiff’s] incentive
or ability to economize on its legal costs, it could, while reserving its defense that
it had no duty to defend, have assumed the defense and selected and supervised
and paid for the lawyers defending [Plaintiff] in the [underlying] litigation, and
could later have sought reimbursement if it proved that it had indeed had no duty
to defend [Plaintiff]. So presumably it had some confidence in [Plaintiff]’s
incentive and ability to minimize legal expenses.
Id. at *5 (quoting Taco Bell Corp. v. Cont’l Cas. Co., 388 F.3d 1069, 1075–76 (7th Cir. 2004))
(internal citations omitted). Accordingly, the district court in Abercrombie ordered the insurance
company to reimburse its insured $1.9 million for costs incurred and paid by the insured in the
underlying litigation. Id. at *7.
4
B.
Analysis
Goettle seeks the Court to order Allied World to reimburse $226,051.51 it incurred
defending itself against the claims asserted by Joy Global. The Court ordinarily would not
“second-guess how [Goettle] has chosen to defend [the Louisiana Action] and the amount it has
expended in doing so.” Abercrombie, 2014 WL 4915269, at *7. Abercrombie is distinguishable,
however, on two bases. First, the insured in Abercrombie provided detailed billing records to the
Court for its review. (Abercrombie & Fitch Co.’s Brief on Defense Costs, Doc. 80-4.) Goettle
provided only summary billing invoices for its attorney fees, not detailed billing records
specifying the work performed. Second, Abercrombie did not involve a situation where three
separate lawsuits between the interested parties were pending simultaneously. Because the
circumstances here were different than in Abercrombie, the Court sought clarification on whether
the fees sought were for work performed in the Louisiana Action. The Court’s analysis of each
category of fees sought follows.
1.
Wiener Weiss & Madison
The Wiener law firm is listed as lead counsel of record for Goettle in the Louisiana
Action, but Goettle describes it as local counsel. (Doc. 81 at PageID 5069.) Allied World has
agreed to pay attorney fees in the amount of $31,071.24 for the services provided by the Wiener
firm:
10/07/2017
11/07/2017
12/06/2017
01/11/2018
Roger CC Wiener, Weiss &
Madison
WEINER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
5
$3,000.00
$1,472.75
$1,998.85
$638.00
02/13/2018
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
WIENER, WEISS
& MADISON
04/06/2018
11/09/2018
11/30/2018
1/8/2019
02/12/2019
02/28/2019
03/31/2019
05/09/2019
06/06/2019
7/9/2019
$182.50
$145.00
$3,940.50
$928.00
$174.00
$5,238.75
$1,073.00
$3,691.64
$946.75
$6,191.50
$1,450
$31,071.24
(Doc. 79-1 at PageID 4892; Doc. 80 at PageID 4984, 4989.)
2.
Roger Healey, Esq.
Roger Healey was admitted to appear pro hac vice as Goettle’s attorney in the Louisiana
Action on October 18, 2017. Of note, he was employed as Goettle’s general counsel until July 1,
2018. (Doc. 79-3 at PageID 4960; Doc. 83 at PageID 5115.) He continues to serve as Goettle’s
lead counsel in the Louisiana Action. (Doc. 82-1 at PageID 5084.) Goettle seeks $143,476 for
fees paid to Healey as follows:
7/29/2018
ROGER HEALEY
$2,126.00
8/31/2018
ROGER HEALEY
$3,325.00
9/30/2018
ROGER HEALEY
$21,525.00
6
10/31/2018
ROGER HEALEY
$20,000.00
11/30/2018
ROGER HEALEY
$10,100.00
12/31/2018
ROGER HEALEY
$3,500.00
1/31/2019
ROGER HEALEY
$11,700.00
2/28/2019
ROGER HEALEY
$9,775.00
3/31/2019
ROGER HEALEY
$18,075.00
4/30/2019
ROGER HEALEY
$10,425.00
5/21/2019
ROGER HEALEY
$18,450.00
6/20/2019
ROGER HEALEY
$14,475.00
$143,476
(Doc. 79-1 at PageID 4892; Doc. 82 at PageID 5080.)
Allied World initially questioned the invoices submitted by Healey because significant
fees were incurred when proceedings in the Louisiana Action were stayed by court order and
when there were limited filings in the Louisiana Action. At the hearing, counsel for Goettle
explained that Healey helped prepare Goettle witnesses for their depositions and attended the
depositions taken in this case in an effort to help defend Goettle in the Louisiana Action. (Tr.,
Doc. 83 at PageID 5118.) Goettle later filed an Affidavit by Healey to support the hearing
argument. Healey averred that the fees and costs he invoiced to Goettle, and that Goettle now
seeks to recover as defense costs, were “reasonably incurred by me in my representation and the
defense of Goettle in the Louisiana Action.” (Doc. 82-1 at PageID 5085.)
In response, Allied World argued that Goettle should not be awarded defense costs for
the time Healey spent in preparation for and attendance at depositions in this case. Allied World
argued that the depositions from this case will not be admissible in the Louisiana Action because
7
proceedings in that case were stayed and because Joy Global was not provided with notice of the
depositions. However, Allied World’s argument misses the mark. This Court need not speculate
for what purpose the depositions taken here might be offered and admitted in the Louisiana
Action. Allied World has not cited any authority for the proposition that defense costs are
limited to only costs incurred in pursuit of admissible evidence. Allied World’s argument in the
end challenges the reasonableness of Healey’s fees, and that is impermissible under
Abercrombie. See 2014 WL 4915269, at *6–7. The Court will award Goettle defense costs for
the services provided by Healey in the amount of $143,476.
3.
Benesch Attorneys at Law
Goettle seeks $68,622.13 in defense costs for payments made to Benesch Attorneys at
Law as follows:
10/16/2017
11/16/2017
12/13/2017
1/22/2018
4/30/2018
5/14/2018
6/23/2018
10/18/2018
BENESCH
ATTORNEYS AT
LAW
BENESCH
ATTORNEYS AT
LAW
BENESCH
ATTORNEYS AT
LAW
BENESCH
ATTORNEYS AT
LAW
BENESCH
ATTORNEYS AT
LAW
BENESCH
ATTORNEYS AT
LAW
BENESCH
ATTORNEYS AT
LAW
BENESCH
ATTORNEYS AT
LAW
8
$3,884.50
$34,454.98
$22,785.15
$439.00
$1,122.00
$204.00
$185.50
$575.00
11/27/2018
BENESCH
ATTORNEYS AT
LAW
$4,972.00
$68,622.13
(Doc. 79-1 at PageID 4892; Doc. 82 at PageID 5080.)
Allied World initially questioned whether the fees incurred by the Benesch firm were for
the defense of Goettle in the Louisiana Action because the Benesch firm was listed as Goettle’s
counsel of record only in the Ohio Contract Action, not in the Louisiana Action. The Benesch
billing entries roughly track the time period the Ohio Contract Action was pending from
September 2017 to early October 2018. Id.
Following the hearing, Goettle submitted the Healey Affidavit and the Affidavit of
Richard Kalson, a partner at the Benesch, to support these purported defense costs. Healey and
Kalson explained that Benesch provided legal services in both the Louisiana Action and in the
Ohio Contract Action on matters related to which court forum ultimately would decide the merits
of Joy Global’s claim against Goettle for design defect— the claim for which Goettle seeks
defense coverage under the 2017–2018 Policy. (Healey Aff., Doc. 82-1 at PageID 5085–5088;
Kalson Aff., Doc. 82-4 at PageID 5108–5109.)3 Joy Global asserted the design defect claim
against Goettle in the Louisiana Action, but Goettle reasonably anticipated that Joy Global would
be required to file the design defect claim as a compulsory counterclaim in the Ohio Contract
Action if Judge Barrett elected to retain that case. Therefore, the Benesch firm’s efforts to
prevent Judge Barrett from transferring or dismissing the Ohio Contract Action was in
furtherance of Goettle’s defense strategy to have the design defect claim against it heard in Ohio,
not Louisiana. The work was inextricably intertwined with the defense of the Louisiana Action.
3
Both attorneys specifically averred that the Benesch firm did not provide any services or seek fees with respect to
Goettle’s Complaint against Joy Global in the Ohio Contract Action. (Healey Aff., Doc. 82-1 at PageID 5087–5088;
Kalson Aff., Doc. 82-4 at PageID 5109.)
9
The Court will award Goettle defense costs for the services provided by the Benesch firm in the
amount of $68,622.13.
4.
Dan Brown and Associates and Braun Intertec
Goettle seeks defense costs in the amount of $58,164.14 for services provided by Dan
Brown and Associations, P.C. (“DBA”) as follows:
09/06/17
DBA
$6,315.00
0/02/17
DBA
$14,285.00
10/31/17
DBA
$1,185.00
11/27/17
DBA
$4,170.00
01/08/18
DBA
$21,207.69
04/09/18
DBA
$7,257.67
05/07/18
DBA
$3,743.78
$58,164.14
(Doc. 79-1 at PageID 4892; Doc. 82 at PageID 5080.)4
Likewise, Goettle seeks $24,718 in defense costs for fees paid to Braun Intertec as
follows:
01/26/18
BRAUN INTERTEC
CORPORATION
$18,135.60
04/20/18
BRAUN INTERTEC
CORPORATION
$6,582.40
$24,718.00
(Doc. 79-1 at PageID 4892; Doc. 82 at PageID 5080.)
4
This total includes a deduction of $2,340 from the invoice dated September 6, 2017 for costs incurred before
Goettle gave notice of the claim to Allied World in August 2017. (Doc. 79-3 at PageID 4960.)
10
Allied World questioned whether DBA’s fees all arose from the defense of the Louisiana
Action because the invoices bill separately for “Litigation Services,” “Field Observation,” and
“Expert Consultant Services.” (Doc. 79-1 at PageID 4898–4901, 4904, 4906, 4909–4911, 4917–
4918, and 4921.) Allied World agreed to pay only $35,300.36 for DBA fees incurred as
“Litigation Services.” (Doc. 80 at PageID 4989.) As to Braun Intertec, Allied World asserted
that the Braun Intertec invoices did not demonstrate that the fees incurred were for the defense of
the Louisiana Action.
The Court indicated its preliminary approval of the costs submitted for DBA and Braun
Intertec at the November 20, 2019 hearing:
I’m satisfied that regardless of what they called it, it’s -- it was for the litigation.
Because they’ve pretty much -- they’ve already detailed their bills, and it all looks
like it’s for the litigation. I’m satisfied on Dan Brown.
***
The same on Intertec. That was the only work they were doing for Goettle. So I
think it’s sufficient.
(Tr., Doc. 83 at PageID 5141–5142.) However, the Court agreed with Allied World’s request
that Goettle provide its engagement letters for DBA and Braun Intertec after the hearing. (Id. at
PageID 5143.) As explained below, the supplemental documents provided do not add much new
information, but they do support the Court’s initial approval.
Healey, then the general counsel for Goettle, stated in his Affidavit that he retained DBA
“to provide consulting services for the Louisiana Action.” (Doc. 82-1 at PageID 5088.) DBA’s
engagement letter dated August 21, 2017 stated that it would “perform an independent review of
the anchored wall at the Joy Global facility in Mansfield, Louisiana.” (Doc. 82-2 at PageID
5092.) Allied World complained that Goettle engaged DBA before Joy Global sued Goettle in
the Louisiana Action on September 6, 2017. However, that ignores the fact that Goettle
11
reasonably could have anticipated Joy Global’s suit because Joy Global gave Goettle formal
notice on August 10, 2017 that it considered Goettle to be in breach of the contract. (Doc. 43-7
at PageID 1193–1194.) The Court will award Goettle defense costs for the services provided by
DBA in the amount of $58,164.14.
Similarly, Healey averred that he also hired Braun Intertec “to provide expert services for
the Louisiana Action.” (Doc. 82-1 at PageID 5089.) Braun Intertec was retained in late
November 2017, after Joy Global sued Goettle in the Louisiana Action. (Doc. 82-3 at PageID
5099.) Its scope of work was to provide “drilling, soil sampling, and laboratory soils testing
services” at the retaining wall. (Id. at PageID 5013.) Goettle’s attorney vouched at the hearing
that “one of the major issues in Louisiana is whether the owner’s soil contractors didn’t properly
compact the soils and put improper soil in.” (Tr., Doc. 83 at PageID 5140.) The Court accepts
the explanation by Goettle and will award it defense costs for the services provide by Braun
Intertec in the amount of $24,718.
C.
Conclusion
The Court determined in the Summary Judgment Order that Allied World had a duty to
defend Goettle against the claims made by Joy Global in the Louisiana Action. Though it was
reasonable under the procedural circumstances here for Allied World to question whether the
fees sought were incurred by Goettle in its defense against the claims made by Joy Global, the
Court has determined that the fees sought are recoverable. Accordingly, Court will grant
Goettle’s Motion to Enforce and compel Allied World to pay Goettle $226,051.51 in defense
costs.
12
III.
CROSS-MOTION TO STAY ENFORCEMENT PENDING APPEAL
Allied World moves the Court to stay enforcement of this Order to pay defense costs
pending an appeal. “[A]n order requiring an insurer to advance defense costs in an underlying
action, while the coverage action is unresolved, is an immediately appealable injunction.”
Abercrombie, 2014 WL 4915269, at *9. A district court has authority pursuant to Rule 62 of the
Federal Rules of Civil Procedure to stay an order granting an injunction pending the appeal. The
district court in Abercrombie granted the insurance company’s motion to stay enforcement of the
order to pay defense costs while the insurance company pursued an appeal. Id. at *9–11. As to
whether to grant a stay during an appeal, the Abercrombie court examined the following four
factors:
(1) the likelihood that the party seeking the stay will prevail on the merits of the
appeal; (2) the likelihood that the moving party will be irreparably harmed absent
a stay; (3) the prospect that others will be harmed if the court grants the stay; and
(4) the public interest in granting the stay.
Id. (quoting Mich. Coal. of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153
(6th Cir. 1991)). The Abercrombie court determined after a cursory review of those factors to
stay its order. Id.5 Goettle now argues that despite the Abercrombie precedent, a stay is not
warranted here under a more robust examination of the four factors. The Court, therefore, turns
to the analysis of the four factors first set forth in Michigan Coalition and later re-stated in
Abercrombie.
First, the Court asks if Allied World has demonstrated a likelihood of success on the
merits. Mich. Coal., 945 F.2d at 153. Because a motion for stay pending appeal is taken after a
5
On appeal, the Sixth Circuit affirmed the decisions of the district court holding that the insurer had a duty to
defend its insured and ordering it to pay past defense costs. ACE European Grp., Ltd. v. Abercrombie & Fitch Co.,
621 F. App’x 338, 339 (6th Cir. 2015). The Sixth Circuit did not address whether the decision to stay the defense
costs order was appropriate.
13
full consideration of the merits in the pending lawsuit, “a party seeking a stay must ordinarily
demonstrate to a reviewing court that there is a likelihood of reversal.” Id. “The probability of
success that must be demonstrated is inversely proportional to the amount of irreparable injury
[the movant] will suffer absent the stay.” Id. However, the Sixth Circuit instructed that the
movant must show “serious questions going to the merits” even if the risk of irreparable harm is
great. Id.
The district court in Abercrombie, examining this first factor, refused to express a lack of
confidence in the merits of the decision it had reached. 2014 WL 4915269, at *9. It
acknowledged that there were “legitimate questions to be answered,” without explaining what
those legitimate questions were. Instead, the Abercrombie court only stated that the case
presented “a very important legal issue with a great deal of money at stake” and involved
“experienced attorneys . . . asserting valid legal arguments.” Id. Like the Abercrombie court,
this Court does not believe that there is likelihood that its Summary Judgment Order will be
reversed. The Court does recognize that serious questions on the merits of the Summary
Judgment Order and this Order exist. The Summary Judgment Order presented difficult issues
of contract interpretation where the main policy and the endorsements contained possibly
conflicting provisions. This Order requires analyzing whether defense costs are payable in
unusual procedural circumstances where the insured was involved in multiple, overlapping
lawsuits, represented by different sets of counsel, arising from the same event. These issues
warrant appellate review.
Next, the Court examines whether Allied World faces irreparable harm. Mich. Coal., 945
F.2d at 153. Courts evaluate irreparable harm based on “its substantiality, the likelihood of its
occurrence, and the proof provided by the movant.” Id. at 155. The movant must have evidence
14
that the harm alleged is “certain and immediate,” not “speculative or theoretical.” Id. at 154.
Mere monetary damage is unlikely to constitute irreparable harm. Id.; see also Baker v. Adams
Cty./Ohio Valley Sch. Bd., 310 F.3d 927, 930 (6th Cir. 2002) (“Mere injuries, however
substantial, in terms of money, time and energy necessarily expended in the absence of a stay,
are not enough”) (citation omitted). Allied World argues that it will incur irreparable harm to the
extent that will expend time and resources to adjust Goettle’s defense in the Louisiana Action.
The district court in Abercrombie concluded that the “transaction costs of assuming that
[defense] duty” constituted irreparable harm. See 2014 WL 4915269, at *10. However, the
Court disagrees in this case. Allied World has not indicated that it intends to step in and take
over Goettle’s defense in the Louisiana Action. It already is a party to the Louisiana Action
itself. Allied World has not established it will suffer irreparable harm in the form of nonmonetary transaction costs if it must periodically review and pay Goettle’s defense costs.6
The Court also examines the prospect of harm to others. Mich. Coal., 945 F.2d at 153.
Goettle suffers if the Court stays this enforcement order. Goettle already has incurred, wrongly
in this Court’s estimation, costs to defend itself in the Louisiana Action. Staying this Order
pending appeal extends that harm into the future.
Finally, the Court examines the public interest. Mich. Coal., 945 F.2d at 153. The
Abercrombie concluded that the public interest was served by staying enforcement of the order to
pay defense costs to “ascertain[ ] liability first and require[e] parties to pay once determined
legally responsible.” 2014 WL 4915269, at *10. This analysis, however, is inconsistent with the
general recognition that “[e]nforcement of contractual duties is in the public interest.” Certified
6
Additionally, an insurer’s duty to defend is broad, broader than the duty to indemnify. Allied World contractually
agreed to provide a defense to Goettle in any suit in which there was a potentially covered claim made against
Goettle. At least one court in the Sixth Circuit has concluded that court orders enforcing a contractual duty to
defend do not cause irreparable harm to an insured. See Travelers Prop. Cas. Co. v. R.L. Polk & Co., No. 06-12895,
2008 WL 3843512, at *2–3 (E.D. Mich. Aug. 13, 2008).
15
Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 551 (6th Cir. 2007);
see also Travelers Prop. Cas. Co., 2008 WL 3843512, at *3 (“[T]he public has an interest in
seeing that parties to a contract are held to their obligations.”). Allied World contractually
assumed the duty to pay Goettle’s defense costs if the claim arguably was covered by the 2017–
2018 Policy. The public interest weighs in favor of enforcement of that duty, even pending
appeal.
The Court concludes that the Michigan Coalition factors do not weigh in favor of a stay
pending the anticipated appeal. Allied World has established only serious questions on the
merits, but not a likelihood of success nor irreparable harm if it is required to reimburse Goettle’s
defense costs before an appeal is resolved. Any risk of harm to Allied World is outweighed by
the risk of harm to Goettle by requiring it to continue to bear its own defense costs in the
Louisiana Action and by the public interest in favor of enforcing the duty to defend in insurance
contracts.
IV.
CONCLUSION
For the foregoing reasons, Goettle’s Motion to Enforce the Court’s May 28, 2019 Order
(Doc. 79) is GRANTED. Allied World must pay Goettle $226,051.51 in defense costs.
Additionally, Allied World’s Cross-Motion to Stay Enforcement (Doc. 85) pending the
anticipated appeal is DENIED.
IT IS SO ORDERED.
Dated this 24th day of February, 2020.
BY THE COURT:
S/Susan J. Dlott
Susan J. Dlott
United States District Judge
16
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?