Reg'l Air Inc. v. Canal Ins. Co., s. 09–6090

Citation639 F.3d 1229
Decision Date15 February 2011
Docket NumberNos. 09–6090,09–6101.,s. 09–6090
PartiesREGIONAL AIR, INC., Plaintiff–Appellant/Cross–Appellee,v.CANAL INSURANCE COMPANY, Defendant–Appellee/Cross–Appellant.
CourtU.S. Court of Appeals — Tenth Circuit

639 F.3d 1229

REGIONAL AIR, INC., Plaintiff–Appellant/Cross–Appellee,
v.
CANAL INSURANCE COMPANY, Defendant–Appellee/Cross–Appellant.

Nos. 09–6090

09–6101.

United States Court of Appeals, Tenth Circuit.

Feb. 15, 2011.


[639 F.3d 1230]

Edward W. Dzialo, Jr., Godlove, Mayhall, Dzialo, Dutcher & Erwin, Lawton, OK, for Plaintiff–Appellant/Cross–Appellee.Harris A. Phillips (Linda G. Alexander, with him on the briefs), Niemeyer, Alexander, Austin & Phillips, P.C., Oklahoma City, OK, for Defendant–Appellee/Cross–Appellant.Before KELLY and GORSUCH, Circuit Judges, and MELGREN *, District Judge.

[639 F.3d 1231]

ORDER

Appellant/Cross-Appellee's petition for panel rehearing is granted for the limited purposes of adding footnotes 2 and 3 to the opinion. The petition for rehearing is denied in all other aspects. The revised decision, filed nunc pro tunc to the original filing date, is attached to this order.

GORSUCH, Circuit Judge.

Sometimes litigation takes so many twists and turns that, by the end of it all, it's hard to tell who won and who lost. Ours is such a case. After much motions practice and a trial, Canal paid Regional Air just less than $60,000 for an insurance loss. After trial, both sides declared victory. And this led to a whole new fight over who won and who lost the last fight. Claiming to be the “prevailing party,” each side argued that Oklahoma law entitled it to recover attorneys' fees, costs and, in Regional Air's case, interest from its opponent. Eventually, the district court declared Regional Air the prevailing party but granted the company only a fraction of the fees, costs, and interest it sought. This result satisfied no one and both sides appealed. To resolve these competing appeals, and hopefully bring this collateral dispute at least a step closer to conclusion, we must address several questions of law, including: When should relief granted before trial be included within the district court's judgment? Does a trial court have discretion to deny attorneys' fees under Oklahoma's law? When does a prevailing party's entitlement to pre-verdict interest accrue? As we will explain, our resolution of these questions agrees in many but not all respects with the district court's.

I

To make sense of the parties' current collateral litigation over attorneys' fees, costs, and interest, some appreciation of their underlying insurance dispute is required.

Beginning then at the beginning, Canal sold Regional Air an insurance policy to cover several of Regional Air's tractor trailers. For our purposes, the policy contained three important features. First, “[i]n the event of [a] loss,” it required Regional Air to “protect the covered automobile”; and to ensure this would be done, Canal's policy indicated that “reasonable expenses incurred in affording such protection shall be deemed incurred at [Canal's] request.” App. Vol. 2 at 200. Second, the policy required Regional Air to give notice of any loss “as soon as practicable” to Canal or its agents. Id. Third, in the event of a dispute about the value of a loss, the policy gave both parties the option to insist on an appraisal process before a neutral umpire. Id. at 201.

In June 2001, a loss occurred when a traffic accident damaged one of Regional Air's tractor trailers. In compliance with the policy, Regional Air had the vehicle towed to a safe location for storage. Regional Air then notified Canal of the wreck and Canal, after confirming coverage, forwarded the matter to its adjuster to handle the claim. On August 2, 2001, the adjuster sent Regional Air a letter offering $28,094.14 for the damage to the tractor trailer, plus $7,400 for towing and storage costs incurred through August 5. Id. at 202. The adjuster offered to send a check for these amounts right away, if only Regional Air would sign and return an enclosed settlement agreement.

It didn't go that way. Writing to the adjuster on August 7, 2001, Regional Air's president warned that the offer “does not even come close to replacing this equipment,” and observed that, during the time it took the adjuster to complete its assessment of the damage, “the clock was ticking and the storage fees have already exceeded $6,000.” Id. at 206. The adjuster and Regional Air went back and forth with

[639 F.3d 1232]

more offers and more rejections, but never reached agreement. Finally, and after an initial skirmish in state court, the appraisal process specified in the parties' contract was invoked and an umpire was called in to decide the dispute. In the end, the umpire awarded Regional Air $44,294.14 in total compensation—representing Canal's original settlement offer of $28,094.14 for repairs and $7,400 for towing and storage costs, plus an additional $10,000 for repairs not included in Canal's offer (less a $1,000 deductible). Id. at 207.

Still dissatisfied, Regional Air brought this diversity suit in federal district court seeking damages equal to the insurance policy's coverage limit, more than twice the amount of the umpire's award. Canal responded by asking the district court to confirm the propriety of the appraisal award, arguing that it shouldn't have to (re)litigate what had already been settled by the umpire consistent with the parties' contract. With this the district court agreed, ruling that the contract allowed Regional Air to avoid the appraisal award (and so obtain a greater amount for the damage done to its tractor trailer) only if it could prove at trial that the umpire's award was a product of fraud, mistake, or misconduct. At this point, Canal attempted to settle the case with a new offer of $49,494.14—the umpire's appraisal award plus $5,000—but Regional Air refused the deal. Aple. Supp.App. at 63.

So the case proceeded to a jury trial. At trial, the district court found Regional Air's evidence of fraud, mistake, or misconduct lacking and directed a verdict for Canal on the question whether the appraisal award could be undone. Still, there remained one question for the jury to resolve concerning storage costs. Though the appraisal award included $7,400 for towing and storage costs Regional Air incurred during a relatively short period after the accident, the company claimed it could prove additional storage costs incurred from December 2001 through the date of trial. The district court allowed Regional Air to present this evidence and in due course the jury returned a $12,000 verdict in favor of Regional Air for its additional storage costs. After trial, the district court entered this judgment:

Based on the evidence presented at trial, there is no legally sufficient evidentiary basis on which a jury could find for Plaintiff on its request to set aside the umpire award. Accordingly, judgment is hereby entered in favor of Defendant and against Plaintiff on that claim.... As for Plaintiff's breach of contract claim for storage charges, the Court enters judgment on the jury's verdict in favor of Plaintiff in the amount of $12,000.00. App. Vol. 1 at 63.

That brings us finally to the parties' current collateral dispute. After the district court entered judgment ending the litigation on the merits, both sides declared victory. As the “prevailing party,” both Regional Air and Canal claimed themselves entitled to recover from the other side their attorneys' fees, costs and, in Regional Air's case, interest. The focus of this new fight was subsection (B) of Okla. Stat. tit. 36, § 3629, which provides that

[i]t shall be the duty of the insurer, receiving a proof of loss, to submit a written offer of settlement or rejection of the claim to the insured within ninety (90) days of receipt of that proof of loss. Upon a judgment rendered to either party, costs and attorney fees shall be allowable to the prevailing party. For purposes of this section, the prevailing party is the insurer in those cases where judgment does not exceed written offer of settlement. In all other judgments the insured shall be the prevailing party.

[639 F.3d 1233]

If the insured is the prevailing party, the court in rendering judgment shall add interest on the verdict at the rate of fifteen percent (15%) per year from the date the loss was payable pursuant to the provisions of the contract to the date of the verdict. This provision shall not apply to uninsured motorist coverage.

For its part, and no doubt with an eye on § 3629's use of the word “judgment,” Regional Air also filed a motion to amend the judgment, asking the district court to make clear(er) Regional Air's entitlement to recover not just the $12,000 in storage fees awarded by the jury but also the $44,494.14 Canal owed by virtue of the confirmed appraisal award.

The district court resolved the parties' competing motions in three orders entered on April 1 and 17, 2009. As an initial matter, the district court denied Regional Air's motion to amend the judgment. The court then proceeded to hold Regional Air was, nonetheless, the prevailing party. But this status turned out to be of little benefit to Regional Air: the district court declined to award it any attorneys' fees or costs. On the question of interest, the district court held that Regional Air could recover pre-verdict interest on the jury's $12,000 award for storage costs—but that it was entitled to no such interest on the appraisal award confirmed before trial. Finally, the court held that Regional Air's interest on its storage costs began to accrue from the “date of loss,” namely June 2001.

II

Between Regional Air's appeal and Canal's cross-appeal, the parties have asked to overturn most every aspect of the district court's post-judgment orders. For example, Regional Air argues that, while the district court correctly determined that it was the prevailing party, the court erred by denying attorneys' fees and costs and by awarding too little interest. In Regional Air's estimation, the district court also abused its discretion when it refused to amend the judgment to include the amount of Regional Air's...

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