Opinion
Civil Action No. 3:99-CV-0351-D
May 22, 2001
MEMORANDUM OPINION AND ORDER
Defendant-counterplaintiff John L. Hickman ("Hickman") seeks an award of attorney's fees from plaintiff-counterdefendant Utica Mutual Insurance Company ("Utica") pursuant to Fed.R.Civ.P. 54(d). For the reasons that follow, the court denies the motion without prejudice.
I
In Utica Mutual Insurance Co. v. Hickman, 2000 WL 159360 (N.D. Tex. Oct. 24, 2000) (" Utica I "), appeal docketed, No. 01-10391 (5th Cir. Mar. 28, 2001), the court, in pertinent part, granted partial summary judgment in favor of Hickman against Utica, awarding him attorney's fees, expenses, and costs arising from Utica's wrongful refusal to defend him under a Maryland insurance policy against CIGNA Insurance Company and Reliance Insurance Company ("Reliance"). Following a bench trial on the amount of the award, the court entered judgment in the amount of $51,423.91. See Utica Mut. Ins. Co. v. Hickman, 2001 WL 210258, at *1 (N.D. Tex. Feb. 28) (" Utica II"), appeal docketed, No. 01-10391 (5th Cir. Mar. 28, 2001). In Utica II the court noted that its award covered only the damages incurred by Hickman as a result of the breach of contract, "not as an ancillary claim for attorney's fees in bringing the instant lawsuit, which will be adjudicated in accordance with the procedure established in Fed.R.Civ.P. 54(d)(2)." Id. at * 1 n. 1. Hickman now moves under Rule 54(d)(2) for an award of attorney's fees.
II
State law applies in determining whether attorney's fees should be awarded in state-law cases. See Specialty Healthcare Mgmt., Inc. v. St. Mary's Parish Hosp., 220 F.3d 650, 658 (5th Cir. 2000). In the present action, the court has already determined that the substantive law of Maryland controls the interpretation of the policy at issue. Utica I, 2000 WL 159360 at *3. Accordingly, the court will apply Maryland law to determine the fee award under Rule 54. Under Maryland law, "an insured may recover attorneys' fees incurred due to the insurer's wrongful denial of a duty to defend." Litz v. State Farm Fire Cos. Co., 695 A.2d 566, 573 (Md. 1997). This rule applies to declaratory actions, like the instant case, by an insurer to determine coverage. Id.
In determining the reasonableness of the award, Maryland courts consider the following factors: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and the ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent. Reisterstown Plaza Assoc. v. General Nutrition Ctr., Inc., 597 A.2d 1049, 1056-57 (Md.Ct.Spec.App. 1991). Although Hickman argues that his requested fee award is reasonable under the lodestar method used by the Fifth Circuit, Maryland courts use a substantially similar method of determining the reasonableness of a fees award. Compare Shipes v. Trinity Indus., 987 F.2d 311, 319-322 (5th Cir. 1993) (describing method by which lodestar is increased or discounted after analysis of several factors) with Reisterstown, 597 A.2d at 1056-57 (describing factors used to determine reasonableness of award). Moreover, Utica does not challenge the reasonableness of the award. Therefore, except as the court explains below, the court accepts the reasonableness of Hickman's requested fee award.
Utica argues that Hickman is not entitled to the full amount of the fees he seeks because he did not prevail completely and has failed to segregate the fees devoted to the successful and unsuccessful aspects of the litigation. It notes that the court held that Utica did not breach the terms of the Texas contract and also concluded that Utica did not have a duty to indemnify Hickman in the suit that Reliance filed against him. See Utica I, 2000 WL 159360 at *7. Hickman responds that he had no duty to segregate because the claims are so interrelated that their prosecution required identical analysis and research. He also maintains that "virtually no time was expended regarding the Texas policy[,]" Hickman Rep. Br. 4, because he realized early in the litigation that Utica did not breach the Texas contract. Indeed, in Hickman's summary judgment motion, he conceded that there was no claim under the Texas contract.
In arguing that there is no duty to segregate fees because the claims are interrelated, Hickman relies on two Maryland cases. Both opinions, however, involved claims that were interdependent, and not merely related, like the claims at issue in this case. In Reisterstown the court held that segregation was unnecessary between a claim for unpaid rent and counterclaims for contractual damages, tort, and common law remedies. Reisterstown, 597 A.2d at 1056. Similarly, in Watson v. Watson, 534 A.2d 1365 (Md.Ct.Spec.App. 1988), the claims involved an action for wrongful attachment and for an injunction from further wrongful action. See id. at 1367. In the instant case, although the claims under the Maryland and Texas contracts were factually related, they were not interdependent. The court's analysis of one claim did not of itself determine the result of the other claim. Hickman therefore has a duty to segregate the fees for which he seeks recovery.
The court is unclear as to whether Hickman is arguing that segregation is impossible between Utica's original claims and Hickman's counterclaims or between work done on the Maryland contract and on the Texas contract. To the extent that Hickman is referring to the impossibility of segregating between the claims and counterclaims, the court agrees. The court therefore addresses only the possibility of segregating fees related to the Texas and Maryland contracts.
Hickman has not satisfied this duty. He submits the affidavit of Ronald D. Gray, Esquire ("Gray"), who states that "virtually no time was expended with regard to the Texas policy because it became clear early in discovery that no claim under such policy would prevail." Hickman App. 8. Gray avers that the time expended on the case related either to the Maryland policy only or to issues related to insurance policies in general. As a result, he states that "no segregation of time relating solely to the Maryland policy and solely to the Texas policy is possible." Id. at 9. The court disagrees.
Gray's statement that "virtually no time" was spent on the Texas contract issue implicitly concedes that some time was spent on it. Moreover, the facts and analysis that alerted Hickman that there was no valid claim under the Texas contract are not the result of research into insurance policies in general. Were this court now to reduce Hickman's fee award to account for the part that "was expended with regard to the Texas policy," it would be forced to do so by an arbitrary sum. This would be error. See Maxima Corp. v. 6933 Arlington Dev. Ltd. P'ship, 641 A.2d 977, 984 (Md.Ct.Spec.App. 1994) (holding that arbitrary fee award is abuse of discretion).
Accordingly, because Hickman has not yet satisfied his duty to segregate, the court denies the motion without prejudice to Hickman's seeking a reduced sum that reflects such segregation, or evidence that would permit the court to reduce the fee requested to exclude, on a non-arbitrary basis, work performed solely in relation to the Texas contract. Any supplemental fee request must be filed within 20 days of the date this memorandum opinion and order is filed.
SO ORDERED.