Cincinnati Insurance Company v. Crossman Communities of North Carolina Inc et al

Filing 373

ORDER granting in part and denying in part 353 MOTION for Judgment NOV to Alter/Amend Judgment, to Amend/Make Additional Findings and for New Trial. The defendant's Motion for Judgment NOV and for New Trial is denied. The motion to amend or make additional findings and to amend judgment is granted in part, as to the amount of the time-on-risk indemnity obligation of defendant Harleysville. Judgment is entered in the amount of $3,565.00, which is Harleysville's time-on-risk indemnity obligation under the Policy. Signed by the Honorable R Bryan Harwell on 1/8/2014. (hcic, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Crossmann Communities of
North Carolina, Inc.;
Crossmann Communities, Inc.,;
Beazer Homes Investment Corp.;
Beazer Homes Corp., Inc.,

)
)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
Harleysville Mutual Insurance
)
Company,
)
)
Defendant.
)
______________________________)

Civil Action No. 4:09-1379-RBH

ORDER

A bench trial was held in this case on August 12 through 13, 2013. On September 27, 2013,
this Court issued its Findings of Fact and Conclusions of Law. Before the Court is Defendant’s Motion
for Judgment NOV, to Alter or Amend Judgment, to Amend/Make Additional Findings, and for New
Trial pursuant to Fed. R. Civ. P. 50(b)1, 52(b), 59, and 59(e), filed on October 25, 2013 (ECF # 353).
Plaintiffs filed a response in opposition to the motion on November 12, 2013. Defendant filed a Reply
on November 22, 2013. The Court denies the motion for Judgment NOV and for new trial, but makes
some additional findings, amends the judgment as to Harleysville’s time-on-risk indemnity obligation,
and further explains its rulings on several grounds.

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“The motions described in Federal Rule 50 are available only in cases tried to a jury that has
the power to return a binding verdict. Thus, it does not apply to cases tried without a jury or to those
tried to the court with an advisory jury.” 9B Arthur R. Miller, Federal Practice and Procedure,
Section 2523 (2008).
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Legal Standard
Fed. R. Civ. P. 52(b) provides that “[o]n a party’s motion filed no later than 28 days after the
entry of judgment, the court may amend its findings-or make additional findings-and may amend the
judgment accordingly. The motion may accompany a motion for new trial under Rule 59.”
Fed. R. Civ. P. 59(a)(1)(B) provides that the court may on motion grant a new trial on some
or all of the issues “for any reason for which a rehearing has heretofore been granted in a suit in equity
in federal court.” Rule 59(a)(2) allows the court after a nonjury trial to “open the judgment, if one has
been entered, take additional testimony, amend findings of fact and conclusions of law or make new
ones, and direct the entry of a new judgment.” Although Rule 59 addresses grounds for new trials,
some courts have found that the concept of a new trial under Rule 59 is sufficiently broad to include
a rehearing of any matter decided by the court without a jury. 11 Arthur R. Miller, Mary Kay Kane,
Richard L. Marcus & Adam N. Steinman, Federal Practice and Procedure § 2804 (3d ed. 2013).
Fed. R. Civ. P. 59(e) provides that a motion to alter or amend a judgment must be filed no later
than 28 days after the entry of the judgment.
Motions under Rule 59 are not to be made lightly: “[R]econsideration of a previous order is an
extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial
resources.” Nelson v. Sam’s Club, No. 4:10–3020–RBH, 2011 WL 2559548 at *1 (D.S.C. June 28,
2012) (quoting 12 James Wm. Moore et al., Moore's Federal Practice ¶ 59.30[4] (3d ed.)); see also
Pac. Ins. Co. v. Am. Nat’l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998) (“In general, reconsideration
of a judgment after its entry is an extraordinary remedy which should be used sparingly.”).
The Fourth Circuit has held that a Rule 59(e) motion should be granted for only three reasons:
(1) to follow an intervening change in controlling law; (2) on account of new evidence; or (3) “to

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correct a clear error of law or prevent manifest injustice.” Collison v. International Chemical Workers
Union, 34 F.3d 233, 235 (4th Cir. 1994) (emphasis added). Further, “a new trial will not be granted
on grounds not called to the court’s attention during the trial unless the error was so fundamental that
gross injustice would result.” United States v. Timms, No. 12-8157, 2013 WL 4034501 at * 1 (4th Cir.
August 9, 2013), citing United States v. Carolina E. Chem. Co., Inc., 639 F.Supp. 1420 (D.S.C.
1986)(citing Wright and Miller, Federal Practice and Procedure, § 2805). A motion under Rule 59
is not an opportunity to rehash issues already ruled upon because a litigant is displeased with the result.
See Tran v. Tran, 166 F. Supp. 2d 793, 798 (S.D.N.Y. 2001).
Discussion
The motion before the Court has eighteen grounds, most of which have already been addressed
in the Court’s previous summary judgment orders (ECF No. 248 and 249) or in the Findings of Fact
and Conclusions of Law (ECF No. 350). However, the Court will discuss in this Order the following
grounds presented in the defendant’s motion: Ground Nine (9) pertaining to the amount of
Harleysville’s indemnity obligation; Grounds Eleven (11) and Twelve (12) pertaining to the award of
attorney’s fees for the underlying action; and Ground Sixteen (16) regarding the Court’s allocation of
the portion of the settlements from other insurers that constituted reimbursement of defense costs.
In Ground Nine of the motion, Harleysville asserts that the Court incorrectly determined the
amount of covered damages per building when it calculated Harleysville’s time-on-risk liability.
Beazer does not respond to this argument other than to say that trial courts may alter the default “timeon-risk” default formula set forth in Crossmann Communities of North Carolina, Inc. v. Harleysville
Mutual Insurance Company, 395 S.C. 40, 717 S.E.2d 589, 602 (2011) where “a strict application
would be unduly burdensome or otherwise inappropriate under the circumstances of a particular case.”

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Harleysville asserts:
In calculating the amount of covered damages, this Court relied on the testimony from
Richard Moore and Sidney Mathis and concluded that the total cost to repair the
resulting damages at Buildings 1 through 13 (the buildings whose certificates of
occupancy were issued during the effective period of coverage of the Harleysville
Policies) was $525,294. The Court then used this amount as the covered damages
when determining Harleysville’s time-on-risk liability. In doing so, this Court failed
to appropriately determine what portion of the actual settlement paid by Beazer
($3,336,800) was attributable to settling claims for covered damage at Buildings 1
through 13.
(ECF No. 353-1, p. 20)
Harleysville further points out that both experts based their calculations on the total indemnity
exposure in the underlying lawsuit of over $20 million and that their work on the case was performed
before the settlement occurred. It further asserts that in order to determine what portion of the
settlement was paid to settle only covered damages in Buildings 1 through 13, it was necessary for this
Court to determine what percentage of the total damages at Buildings 1 through 13 consisted of covered
damages. Defendant suggests that one method of determining this amount would be to compare the
amount that the Court found to represent the cost to repair covered damages ($525,294) to the evidence
presented of the amount that would be required to repair all damages at Buildings 1 through 13.
Evidence indicated that it would cost some $3,000,0002 to repair all damages at these buildings. (See
Def. Exh. 41). The amount that this Court found it would cost to repair covered damages is 17.5% of
this total ($525,294 divided by $3 million). This percentage would then be applied to the amount paid
by Beazer to settle all claims.

2

The number reflected in Defendant’s Exhibit 41 for total damages at Buildings 1 through 13
was $3,328,292.73. Beazer has not made a detailed response to Harleysville’s motion as to this
argument. The Court notes that using $3,000,000 (as suggested by Harleysville) rather than
$3,328,292.73 in the calculation results in a higher indemnity amount, which benefits Beazer.
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The Court would therefore divide the total settlement paid by Beazer ($3,336,800) by the
number of buildings (77) to determine an amount paid to settle all damages per building. The Court
agrees with the defendant’s argument and amends its findings. The Court finds that Beazer paid
$43,335.10 to settle all claims (both covered and non-covered) per building. Applying the percentage
of covered damages (17.5%) to this amount, results in a finding that for each building, Beazer paid
$7,584 to settle claims of covered damages. The chart below summarizes the Court’s amended
findings.
Building

CO date
Completion
Total days Harleysville Covered damages Harleysville
Plus 30 days of damages date on risk
days on risk per building
Pro rata share*

7
6
2
4
5
3
1
10
9
11
8
12
13
TOTAL:

8/30/1997
9/6/1997
9/13/1997
10/4/1997
10/25/1997
11/6/1997
12/25/1997
6/4/1998
6/4/1998
6/11/1998
6/28/1998
7/17/1998
9/2/1998

1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013
1/17/2013

5619
5612
5605
5584
5563
5551
5502
5341
5341
5334
5317
5298
5251

364
357
350
329
308
296
247
86
86
79
62
43
0

$7,584
$7,584
$7,584
$7,584
$7,584
$7,584
$7,584
$7,584
$7,584
$7,584
$7,584
$7,584
$7,584

$491
$482
$474
$447
$420
$404
$340
$122
$122
$112
$ 88
$ 62
$ 0
$3,565

Based on the above, the Court amends its Findings of Fact and Conclusions of Law to find
that Harleysville’s liability for its time on the risk indemnity is $3,565.
The Court will next discuss the attorneys’ fee award for the underlying action (Grounds
Eleven and Twelve). Harleysville first asserts that the Court failed to utilize the correct standard
when determining the amount of reasonable, necessary and related defense costs in the underlying
lawsuit. Specifically, Harleysville contends that the Court erred in finding that application of the

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six factors in Hardaway Concrete Co. v. Hall Contracting Corp., 374 S.C. 216, 647 S.E. 2d 488
(S.C. App. 2007) would impose a heavier burden on Beazer than is warranted in this case. The
Court reiterates its finding that the attorney’s fees and costs sought by Beazer to enforce
Harleysville’s duty to defend are “breach of contract” damages and that this is a situation distinct
from cases in which a court awards attorney’s fees to a prevailing party in litigation before the
court.3 Regardless, however, the Court did consider and apply the factors used by South Carolina
and federal courts in its Findings of Fact and Conclusions of Law. To the extent that each of the
factors may not have been addressed in sufficient detail by this Court previously, the Court will
further elaborate on the factors in this Order and make additional findings.
South Carolina courts have employed a six factor test when making a determination as to
the reasonableness of attorneys’ fees in completed litigation. Those factors are as follows:
(1) the nature, extent, and difficulty of the legal services rendered; (2) time and labor devoted to the
case; (3) professional standing of counsel; (4) contingency of compensation; (5) fee customarily
charged in the locality for similar services; and (6) beneficial results obtained. Id., 647 S.E. 2d at
494-5.
With regard to the first factor (the nature, extent, and difficulty of the legal services
rendered) this Court has already found that, with regard to the underlying construction lawsuit
involving numerous buildings, “the True Blue Lawsuit was complex, and posed challenges (a) in
3

Defendant cites Noisette v. Ismail, 299 S.C. 243, 384 S.E.2d 310 (Ct. App. 1989), overruled
on other grounds, 304 S.C. 56, 403 S.E.2d 122 (S.C. 1991), in support of its argument that the six
Hardaway factors should be applied in a breach of contract action. In Noisette, no proof was offered
at trial of the time the attorney spent in defending the underlying action. The court vacated and
remanded the attorney’s fee award on the basis that the record did not reflect “the nature and extent of
the services rendered . . . , the complexity of the issues involved with the case, and the beneficial results
obtained.” 384 S.E. 2d at 317. In the case at bar, this Court considered each of the cited factors as well
as the other Hardaway factors not mentioned in Noisette.
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document discovery, (b) with a large number (approximately 50) of different parties to the case, and
(c)in the way of a large financial exposure to Beazer.” (ECF No. 350, p, 39)
The second factor (time and labor devoted to the case) was also previously addressed. The
Court found that “[e]xcluding certain fees incurred before the True Blue Lawsuit was filed and
certain minor billing irregularities, the Court finds that the total cost to defend the True Blue
Lawsuit is $2,572,522.05. [PX-226.] Beazer recovered $79,390.51 in defense costs through the
payment of defense costs by an insurer other than Harleysville while the True Blue Lawsuit was
active; therefore, Beazer’s net unreimbursed cost to defend the True Blue Lawsuit is
$2,493,131.54.” (ECF No. 350, p. 43, note 9) This total includes fees and costs. Elmore testified in
his deposition which was introduced into evidence at trial that the total amount of the fees charged
by his law firm was approximately $1,745,000. (Depo. p. 26). Elmore further described the labor
required. Plaintiffs submitted several volumes of evidence regarding time and labor (its fees and
costs), including their detailed billing records from June of 2009 through February of 2013. The
Court has reviewed the voluminous invoices presented and notes the extensive amount of time that
was spent by counsel for Beazer in defending the state court case. A review of the invoices
indicates that Elmore’s billed time as senior partner was 1875 hours; other partners billed 1138
hours; associates billed 1785 hours; paralegals billed 3912 hours; and law clerks billed 129 hours.
The amount charged by the firm for each category of timekeepers was $300 per hour for Elmore,
$250 per hour for other partners, $175 per hour for associates, and $125 per hour for paralegals and
law clerks.
Harleysville does not generally contest the amount of the costs incurred by Beazer.
However, it contends based on the deposition testimony of attorney Brown that a reasonable award

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for attorney time would be $500,000. At the rate of $155 per hour (the rate charged by Brown to
provide a partial defense of the underlying case), this would amount to 3225 hours that Defendant
submits would be reasonable. At the rate of $300 per hour (the rate charged by Elmore and
approved by Beazer), this number of hours would equal an award of $967,500, not including costs.
However, the billing records as noted above show many more hours of both lawyer and paralegal
time than 3225. Clearly, the evidence supports a very substantial attorney’s fee and cost award.
The third factor (professional standing of counsel) was also addressed. The Court stated:
“Beazer’s lead counsel, Mr. Elmore, is an experienced construction law litigator with a reputation
as a litigator in South Carolina construction law, and his selection by Beazer to be lead counsel was
reasonable.” (ECF No. 350, p. 43)
The fourth factor (contingency of compensation) was not applicable because Beazer paid its
attorneys by the hour.
With respect to the fifth factor (fee customarily charged in the locality for similar services),
the Court appropriately considered testimony that the corporate client, Beazer through both a third
party administrator and a claims manager, reviewed, approved, and paid the rates charged by the
Elmore Goldsmith firm (ECF No. 350, p. 39); evidence that the Bellamy Firm charged the same
rates as the Elmore Goldsmith Firm; and its own knowledge of reasonable fees in the jurisdiction.
(ECF No. 350, pp. 17-18.) (Counsel for Harleysville urged during opening statements at trial that it
is appropriate for the Court to rely on its own knowledge of appropriate fees.)
The Court has already discussed the beneficial results obtained. (ECF No. 350, p. 43)
In federal court, the amount of an attorney’s fee award is ordinarily governed by Local Rule
54.02. Under the “lodestar” formula, the Court multiplies the number of hours reasonably expended

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by counsel by a reasonable hourly rate. Robinson v. Equifax Information Services, LLC, 560 F.3d
235, 244 (4th Cir. 2009) In deciding what constitutes a reasonable number of hours and a reasonable
rate, the Court’s discretion is guided by the twelve factors set forth in Barber v. Kimbrell’s, Inc.,
577 F.2d 216 (4th Cir. 1978). Those twelve factors are “(1) the time and labor expended; (2) the
novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal
services rendered; (4) the attorney’s opportunity costs in pressing the instant litigation; (5) the
customary fee for like work; (6) the attorney’s expectations at the outset of the litigation; (7) the
time limitations imposed by the client or circumstances; (8) the amount in controversy and the
results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of
the case within the legal community in which the suit arose; (11) the nature and length of the
professional relationship between the attorney and client; and (12) attorneys’ fees awards in similar
cases.” The most important factor as recognized by the Supreme Court is “the degree of success
obtained.” Hensley v. Eckerhart, 461 U.S. 424, 436 (1983).
Here, the number of hours expended by Elmore’s firm was 1875 for Elmore as senior
partner, 1138 for other partners, 1785 for associates, 3912 for paralegals, and 129 for law clerks.
The amount charged by the firm for each category of timekeepers was ($300 per hour for Elmore,
$250 per hour for other partners, $175 per hour for associates, $125 per hour for paralegals and law
clerks). The Court will now discuss the Barber factors in order to determine whether the number of
hours and the rates were reasonable.
The first factor is the time and labor expended. This factor is the same as South Carolina
factor 2 discussed above. The second factor is the novelty and difficulty of the questions raised.
Elmore testified in his deposition which was introduced into evidence at trial that the underlying

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True Blue lawsuit was one of the most complex construction defect cases that he has litigated
“because of the number of different building types, the number of different contractors who worked
on the project, and, more particularly, the way that the Plaintiffs’ experts went about their
investigation and came up with their repair scope.” (Depo., p. 83). The third factor is the skill
required to properly perform the legal services rendered. This has been discussed in reference to
South Carolina factor 3. The fourth factor is the attorney’s opportunity costs in pressing the instant
litigation. No evidence was presented concerning other cases that Elmore declined to represent due
to the amount of time the True Blue litigation consumed. This factor would not appear to be
important to the analysis in this case. The fifth factor, the customary fee for like work, has already
been addressed. The sixth factor, the attorney’s expectations at the outset of the litigation, would
not appear to be relevant because the case was not taken on a contingency basis. The seventh
factor, the time limitations imposed by the client or circumstances, would militate in favor of
approving the number of hours requested. It is clear that the underlying lawsuit required Elmore’s
firm to prioritize the case over other matters. The eighth factor, the amount in controversy and the
results obtained, was discussed above regarding South Carolina factor 6. The ninth factor, the
experience, reputation and ability of the attorney was previously discussed in South Carolina factor
3. The tenth factor, the undesirability of the case within the legal community in which the suit
arose, does not apply. There is no indication that this case would have been considered undesirable.
The eleventh factor, the nature and length of the professional relationship between the attorney and
client, would support a finding that the fees requested were reasonable. This case began in 2009
and ended in 2013. The record also contains evidence that Elmore represented Beazer on several
other projects. The twelfth factor, attorneys’ fees awards in similar cases, is discussed below.

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The Court has already noted in its Findings of Fact and Conclusions of Law that
determination of the hourly rate is critical and that “the market rate should be determined by
evidence of what attorneys earn from paying clients for similar services in similar circumstances,
which of course may include evidence of what the . . . attorney actually charged his client.”
Robinson v. Equifax Information Services, LLC, 560 F.3d 235, 244 (4th Cir. 2009), citing Plyler v.
Evatt, 902 F.2d 273, 277 (4th Cir. 1990). (ECF No. 350, p. 38, note 8) The Court also noted
previously that every invoice submitted to Beazer was reviewed both by a third party administrator
and Beazer’s National Claims Manager before they were approved for payment. The Court also
addressed in its Findings of Fact and Conclusions of Law the specific objections by Harleysville to
the fees requested, e.g., the length of certain depositions taken by Elmore and the hourly rate
charged. The Court made a deduction from the total amount awarded to avoid duplication of effort
between Brown and Elmore.
After thoroughly reviewing the evidence presented and applying all of the factors, the Court
declines to amend the amount of the attorney’s fees and costs awarded. It specifically finds that the
hours and rates requested for attorney time are reasonable and necessary and that the costs incurred
were also reasonable. The Court notes that substantial attorney’s fee awards have been made in
other complex civil litigation cases. See Uhlig, LLC v. Shirley, 895 F.Supp.2d 707 (D.S.C.
2012)(awarding attorney’s fees in the amount of $1,816,494 in employment contract/business tort
litigation initiated in 2008 and tried before a jury some three and one-half years later); Signature
Flight Support Corp. v. Landow Avaiation Ltd. P’ship, No. 1:08cv955 (JCC/TRJ), 2010 WL
3064021, at * 13 (E.D. Va. July 30, 2010)( awarding fees to a prevailing plaintiff in claim for
breach of contract and permanent injunction in the amount of $1.3 million; the hourly rates in 2009

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of two principal attorneys who were located in Northern Virginia were $605 and $290.)
The final argument raised by Harleysville that the Court will address in this order is the
argument in Ground Sixteen that this Court failed to properly calculate the amount that Beazer
received from other insurers in reimbursement of defense costs. The Court found that an offset
against the attorney’s fees awarded to Beazer was appropriate for the amount that Beazer had
received from other carriers for defense costs and rejected Beazer’s argument that these payments
constitute collateral sources under South Carolina law. The settlement agreements with the other
carriers did not specify the amount that represented defense costs and the amount that represented
indemnity and the Court accordingly attempted to do justice. Welch v. Epstein, 342 S.C. 279, 536
S.E. 2d 408 (S.C. App. 2000). This Court found that a reasonable method of allocating the defense
and indemnity costs was to allocate 43% of the settlements with other carriers to defense costs.
(ECF No. 350, Finding of Fact 57, p. 23) This Court disagrees with the argument by Harleysville
that the time on risk formula should apply to the question of the proper allocation in these
settlements between defense and indemnity costs. See this Court’s Summary Judgment Order on
Fourth Party Claims, ECF No. 249. Therefore, the Court denies the defendant’s motion on this
ground.
The defendant’s Motion for Judgment NOV and for New Trial is DENIED. The motion to
amend or make additional findings and to amend judgment is GRANTED IN PART, as to the
amount of the time-on-risk indemnity obligation of Defendant Harleysville. Judgment is entered in
the amount of $3565, which is Harleysville’s time-on-risk indemnity obligation under the Policy.

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AND IT IS SO ORDERED.
s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge
Florence, S.C.
January 8, 2014

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