Opinion
Civil No. 2001-49.
January 29, 2008
Gregory H. Hodges, Esq., St. Thomas, U.S.V.I., For the Plaintiff.
Michael L. Sheesley, Esq., St. Thomas, U.S.V.I., For defendant Richard C. Cassin.
Joycelyn Hewlett, AUSA, St. Thomas, U.S.V.I., For the United States of America Small Business Administration,.
Carol G. Hurst, Esq., St. Thomas, U.S.V.I., For CIT Group/Sales Financing, Inc.
ORDER
Before the Court is the motion of AGF Marine Aviation Transport ("AGF") for reconsideration of this Court's December 10, 2007, order awarding attorneys' fees and costs to AGF.
I. FACTS
On March 7, 2001, AGF commenced the above-captioned action against Richard Cassin ("Cassin"). AGF sought a declaration from this Court that a marine insurance policy (the "Policy") covering a vessel owned by Cassin was void ab initio. Citi Group/Sales Financing, Inc. ("CIT"), was granted leave to intervene in this action in October, 2001, as a first priority lien holder on the vessel. The United States Small Business Administration ("SBA") was granted leave to intervene in May, 2002, as a second priority lien holder.
On January 23, 2007, this Court granted summary judgment in favor of AGF, and dismissed the matter. On February 6, 2007, AGF moved for attorneys' fees and costs. Thereafter, CIT timely appealed the Court's January 23, 2007, Order.
On December 10, 2007, during the pendency of CIT's appeal, the Court granted AGF's motion and directed Cassin to reimburse AGF for attorneys' fees and costs in the amount of $85,122.87. Now, AGF moves for reconsideration of this Court's December 10, 2007, order awarding attorneys' fees and costs to AGF.
II. DISCUSSION
Under Local Rule of Civil Procedure 7.3 ("Local Rule 7.3"), a party may file a motion for reconsideration "within ten (10) days after the entry of the order or decision." LRCi 7.3 (2008). A motion for reconsideration must be based on: (1) "intervening change in controlling law;" (2) "availability of new evidence," or; (3) "the need to correct clear error or to prevent manifest injustice." Id. The purpose of a motion for reconsideration "is to correct manifest errors of law or fact or to present newly discovered evidence." Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985). Such motions are not substitutes for appeals, and are not to be used as "a vehicle for registering disagreement with the court's initial decision, for rearguing matters already addressed by the court, or for raising arguments that could have been raised before but were not." Bostic v. AT T of the Virgin Islands, 312 F. Supp. 2d 731, 733, 45 V.I. 553 (D.V.I. 2004).
III. ANALYSIS
AGF argues that the Court should reconsider its December 10, 2007, Order to correct clear error with respect to the standard for awarding attorneys' fees and costs used by the Court to in that Order. According to AGF, the Court clearly erred by relying on title 5, section 541(a) of the Virgin Islands Code as the basis for awarding attorneys' fees and costs to AGF. Rather, AGF contends that the Court should have applied the standard for awarding attorneys' fees and costs in federal admiralty cases.
"As a general matter, attorneys' fees are not available in admiralty cases unless the court determines in its equitable discretion that one party has acted in bad faith." Sosebee v. Rath, 893 F.2d 54, 56 (3d Cir. 1990); see also F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129 (1974); Vaughan v. Atkinson, 369 U.S. 527, 530-1 (1962); New York Marine Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 130 (2d Cir. 2001). "Under the Virgin Islands statute, however, attorneys' fees may be awarded to prevailing parties by the district court in its discretion without finding that one party acted in bad faith." Sosebee, 893 F.2d at 56; see also V.I. CODE ANN. tit. 5, § 541 (1939) (providing that "there shall be allowed to the prevailing party in the judgment such sums as the court in its discretion may fix by way of indemnity for his attorney's fees in maintaining the action or defenses thereto"). Therefore, the "Virgin Islands attorneys' fees statute [may] not be applied in a case cognizable in admiralty, because of its inconsistency with admiralty law principles." Peter v. Hess Oil Virgin Islands Corp., 903 F.2d 935, 937 (3d Cir. 1990).
The Court has admiralty jurisdiction over this matter pursuant to 28 U.S.C. § 1333(1). See 28 U.S.C. 1333(1) (2005) (providing that federal courts may entertain "any civil case of admiralty or maritime jurisdiction."). Accordingly, AGF should not have been awarded attorneys' fees and costs pursuant to title 5, section 541(a) of the Virgin Islands Code. See, e.g., Ocean Barge Transp. v. Hess Oil Virgin Islands Corp., 598 F. Supp. 45, 47 (D.V.I. 1984) (holding that the Virgin Islands statute allowing attorneys' fees should not be applied in an admiralty action), aff'd without opinion, 760 F.2d 259 (3d Cir. 1985); see also 5 V.I.C.
AGF asserted that this Court had admiralty jurisdiction over this matter pursuant to 28 U.S.C. § 1333(1). Additionally, CIT concedes that federal admiralty law should apply to the award of attorneys' fees and costs in this matter.
Under federal admiralty law, the Court may award attorneys' fees in an admiralty case upon a showing that opposing counsel has commenced or conducted an action in bad faith, vexatiously, wantonly or for oppressive reasons. See F.D. Rich Co., 417 U.S. at 129; Sosebee, 893 F.2d at 56.
AGF contends that Cassin acted in bad faith by misstating the purchase price of the vessel. AGF points out that this Court found in its January 23, 2007, Order that Cassin's misrepresentation of the purchase price was a breach of uberrimae fidei, the duty of utmost good faith, which requires that an insured "fully and voluntarily disclose to the insurer all facts material to a calculation of the insurance risk." HIH Marine Services, Inc. v. Fraser, 211 F.3d 1359, 1362 (11th Cir. 2000). However, "a finding of a failure to act without the utmost good faith is not tantamount to acting in bad faith. . . ." Certain Underwriters at Lloyds v. Inlet Fisheries, Inc., 2006 U.S. Dist. LEXIS 37921, at *14 n. 31 (D. Alaska 2006). Moreover, because Cassin made such misrepresentation prior to the commencement of this action, it is irrelevant to the determination of whether Cassin acted in bad faith, vexatiously, or oppressively in litigating his defenses. See Skehan v. Bd. of Trustees of Bloomsburg State Coll., 538 F.2d 53, 57 (3d Cir. 1976) (explaining that it is "bad faith, vexatiousness or oppression" in litigating, and not conduct prior thereto, which comprises the basis for allowing award of attorney's fees in an admiralty case).
Additionally, AGF seeks attorneys fees from CIT and the SBA. AGF argues that CIT and the SBA acted in bad faith by incorporating into their claims Cassin's misrepresentation about the vessel's purchase price. AGF also asserts that it was bad faith for CIT and the SBA to assert that the Policy contained a standard mortgage clause. This Court has previously found that the Policy did not contain any standard mortgage clause. The Court has never, however, found that CIT or the SBA acted in bad faith. Furthermore, the fact that CIT and the SBA asserted claims that were later rejected by the Court does not equate to evidence that CIT and the SBA acted in bad faith. AGF has failed to offer any other facts to support its claim for fees against CIT and the SBA.
The January 23, 2007, Order stated that "Cassin shall reimburse AGF for attorneys' fees and costs in the amount of $85,122.87." (Order 4, January 23, 2007.) On reconsideration, AGF specifically seeks to recover attorneys' fees and costs from CIT and the SBA as well as Cassin, jointly and severally. In its response to the instant motion for reconsideration, CIT argues that it should not be required to reimburse AGF for attorneys' fees and costs because AGF did not "prevail" against CIT. However, "the imposition of [attorneys' fees and costs as] sanctions under the bad-faith exception depends not on which party wins the lawsuit, but on how the parties conduct themselves during the litigation." Chambers v. NASCO, Inc., 501 U.S. 32, 53, 111 S.Ct. 2123, 2137, 115 L.Ed.2d 27 (1991).
"A standard mortgage clause in an insurance policy constitutes an independent contract which shelters the mortgagee's interest from the acts or neglects of the insured." Blakeslee v. Royal Ins. Co. of Am., 1995 U.S. Dist. LEXIS 3572 at *8 (S.D.N.Y. Mar. 22, 1995) (applying New York law).
The Court is troubled by Cassin's misrepresentation regarding the purchase price of the vessel. The Court is also unimpressed by the inability of CIT and the SBA to discover that the Policy did not contain a standard mortgage clause before arguing that they were covered by such a clause. However, based on the evidence in the record and construing all inferences in favor of CIT and the SBA, the Court does not find that the claims of CIT and the SBA were maintained in bad faith, vexatiously, wantonly, or for oppressive reasons. See, e.g., East Coast Tender Service, Inc. v. Robert T. Winzinger, Inc., 759 F.2d 280, 284 (3d Cir. 1985) (affirming the denial of attorneys' fees and costs to the plaintiff in an admiralty action because the defendant had not acted "vexatiously or in bad faith," though all of his claims had been rejected outright by the trial court); Ocean Barge Transport Co. v. Hess Oil Virgin Islands Corp., 598 F. Supp. 45, 48 (D.V.I. 1984) (refusing to award attorneys' fees to the prevailing party in an admiralty case because the non-prevailing party had not acted in bad faith); cf. Deisler v. McCormack Aggregates, Co., 54 F.3d 1074, 1087 (3d Cir. 1995) (upholding the award of attorneys' fees against the defendant based upon the finding that such defendant's conduct was arbitrary and capricious). Because AGF is not entitled to recover attorneys' fees and costs from Cassin, CIT, or the SBA, under federal admiralty law, it is hereby
ORDERED that, to the extent AGF seeks reconsideration of the award of attorneys' fees and costs under the standard used in federal admiralty law, the motion for reconsideration is GRANTED; it is further
ORDERED that, insofar as AGF seeks attorneys' fees from Cassin, CIT, and the SBA, the motion for reconsideration is DENIED; and it is further
ORDERED that this Court's December 10, 2007, Order awarding attorneys' fees and costs to AGF is VACATED.