Opinion
Civil Action No. 97-D-1637-E, Civil Action No. 97-D-1638-E
July 30, 2002
ORDER
Before the court is Defendants' Joint Motion For Attorney's Fees, which was filed August 10, 1998. (Doc. No. 22.) Plaintiffs filed a Response to said Motion on August 25 (Doc. No. 23), to which Defendants filed a Reply on August 31. (Doc. No. 24.) After careful consideration of the arguments of the Parties, the applicable law and the record as a whole, the court finds that Defendants' Motion is due to be granted to the extent that Defendants are entitled to attorney's fees in the amount of $5,000 to be paid by Plaintiffs' counsel.
As laws governing the award of attorney's fees are considered substantive in nature, the Erie doctrine requires a court sitting in diversity to make such determinations in reference to the applicable state law. See, e.g., McMahan v. Toto, 256 F.3d 1120, 1132 (11th Cir. 2001). Accordingly, the court addresses Defendants' Motion in light of the Alabama Litigation Accountability Act. Ala. Code § 12-19-270, et seq. (1995). Under this statute, the court "shall award . . . reasonable attorney's and costs against any attorney or party, or both, who has brought a civil action . . . that the court determines to be without substantial justification." Id. at § 12-19-272(a). While such an award appears to be mandatory, the court is given discretion in allocating fees between the attorneys and/or the parties. Id. at § 12-19-272(b). Moreover, the court is granted a measure of discretion in the "portion" of fees it assesses. Id. The Alabama Code provides a nonexhaustive list of twelve factors the court may consider in exercising its discretion. Id. at § 12-19-273.
The present action is a consolidated case that Plaintiffs dismissed immediately after Defendants filed a motion seeking summary judgment. (Doc. Nos. 14, 16.) Judgment was sought as to Plaintiff Fields pursuant to Foremost Insurance Co. v. Parham, 693 So.2d 409 (Ala. 1997). (Doc. No. 14 at 12-17.) Foremost involves a fact-intensive endeavor examining the reasonableness of an insured's examination of his insurance policy.See Foremost, 693 So.2d at 421. The fact that Fields had not read the policy in question does not, without more, give rise to a finding that his claim was frivolous. (Fields Dep. at 60.) Accordingly, the court finds there is insufficient evidence to conclude that Fields' claim was brought "without substantial justification." See Sam v. Beaird, 685 So.2d 742, 745 (Ala.Civ.App. 1996) (no attorney's fees awarded absent evidence that plaintiff pursued claims "in bad faith or with malicious intent").
Defendants complain that Plaintiffs' counsel did not even interview Fields, and that a brief investigation would have caused a prudent attorney to conclude that the case is meritless. (Mot. ¶ 6.) As will be discussed infra, the court cannot and will not condone the filing of a Complaint in the absence of a reasonable investigation. However, under the Foremost analysis an insured's reliance is unreasonable as a matter of law only "where the undisputed evidence indicates that the party or parties claiming fraud in a particular transaction were fully capable of reading and understanding their documents, but nonetheless made a deliberate decision to ignore written contract terms." Foremost, 693 So.2d at 421. The court is not altogether persuaded that the facts would have revealed as much even upon proper investigation by Plaintiffs' counsel.
Defendants have a stronger case as to Plaintiff Lynch, however, inasmuch as he acknowledged in his deposition that the core of the allegations in his Complaint were simply not true. (Lynch Depo. at 80-82, 86.) Accordingly, the court finds that Plaintiff Lynch's claims are "groundless in fact or in law," and, thus, they were brought "without substantial justification." Ala. Code § 12-19-271(1) (1995). Plaintiffs' counsel points out that Defendants unfairly manipulate the frankness of an elderly, uneducated man's deposition testimony. (Resp. at 2-3.) Whatever truth there may be in this contention, counsel acknowledges never having directly contacted Plaintiffs prior to filing the present action. (Ragsdale Aff. ¶¶ 3-4.) In other words, there is no denial that the allegations in Lynch's Complaint were both unverified and meritless.
Accordingly, the question becomes one of the appropriate award of fees and the party or parties against whom to assess such fees. In all, Defendants seek approximately $25,000 in fees and costs. (Mot. ¶ 7.) No more than half of these fees can be attributed to frivolous claims, however, since the court has determined there is insufficient evidence to show that Fields' claim was "without substantial justification." Moreover, cases are consolidated for purposes of efficiency; much of the litigation activities would have been required even in the absence of Lynch's suit, and the addition of a party does not significantly affect the costs of such activities. Indeed, counsel for Defendant Primerica has indicated that roughly one-third of the costs can be attributed solely to Fields. Because the court's discretion is to be guided by what "it determines most just," the court finds that justice does not permit the award of more than one-third of the total amount of fees and costs sought. Ala. Code § 12-19-272(b).
Defendants place great emphasis on the fact that the removal of the present matter from state court should have led to the cessation of all litigation activity with respect to the fraudulently joined Defendant Edmond H. Randle. (Mot. ¶ 5.) This may be true, but said Defendant never petitioned the court for a formal recognition of his dismissal. Nor is there any indication that he resisted further litigation, even though it was within his rights to do as much. Litigation accountability is a two-way street. The court will not reward a party for needlessly running up fees and costs when it has a reasonable basis for refusing to do so. In other words, extraneous litigation as to Defendant Randle is attributable to both sides, and the court will not shift the burden to Plaintiffs on that ground.
The court next must determine what portion of approximately $8,000 should be assessed, and the amount that should be distributed between Fields and his attorney. Lynch acknowledges that the allegations in his Complaint were not true, so the argument could be made that he should be held responsible for the fees. Were there a more direct link between any of his conduct and the Complaint itself, the court would be inclined to agree. See, e.g., Brashear v. Spinks, 658 So.2d 466, 467 (Ala.Civ.App. 1994). However, an officer of the court bears a responsibility to ensure the verity of the information offered before the court. The Complaint alleged detailed and specific facts that Plaintiffs' counsel represented as true without examining the purported source of the information. Given Lynch's frank admission in his deposition, it would not be a stretch to assume that Plaintiffs' counsel would have uncovered the same information upon the most cursory of investigation. Plaintiffs' counsel was remiss in his obligation to serve as the conduit of information brought before the halls of justice, and it would be unfair to shift the costs incurred as a result of such negligence. See Ala. Code § 12-19-273(1) (court's discretion guided by "extent to which any effort was made to determine the validity of any action, claim or defense before it was asserted"). Accordingly, any fees will be taxed against Plaintiffs' counsel only.
As noted, Plaintiffs' counsel was negligent, perhaps even wanton in relying upon information solely from a third party. Undoubtedly attorney accountability espouses a normative aim of responsible advocacy. Nonetheless, the court finds a significant distinction between irresponsible lawyering and outright fraud on the court, and an award of fees should reflect this distinction. See id. at § 12-19-273(5) (court's discretion guided by whether "action was prosecuted . . . in bad faith or for improper purpose"). In other words, while bad faith should require a complete shift of fees, mere negligence need not. On the other hand, Plaintiffs' counsel should be given some incentive to act more responsibly in the future. Indeed, hollow enforcement of the present statute would serve little deterrent impact upon lawyers who might otherwise negligently subject defendants to undue harassment. There being no indication that Plaintiffs' counsel acted in bad faith, the court finds that $5,000 is an appropriate award. Counsel for Defendant Primerica is entitled to $1,500 of said award, with the remaining $3,500 going to counsel for Defendant Randle.
In accordance with the foregoing, it is CONSIDERED and ORDERED that Defendants' Joint Motion For Attorney's Fees be and the same is hereby GRANTED to the extent that counsel for Defendants are entitled to recover from counsel for Plaintiffs the sum of five-thousand dollars ($5,000) for which let execution issue.