Interstate Fire & Cas. Co. v. Wash. Hosp. Ctr. Corp., Civil Action No. 10–1193(ABJ).

• Decision Date: 18 January 2013
• Docket Number: Civil Action No. 10–1193(ABJ).
• Parties: INTERSTATE FIRE AND CASUALTY COMPANY, Plaintiff, v. WASHINGTON HOSPITAL CENTER CORPORATION, d/b/a Washington Hospital Center, Greenspring Financial Insurance Limited, and MedStar Health Inc., Defendants.
• Court: U.S. District Court — District of Columbia

917 F.Supp.2d 87

INTERSTATE FIRE AND CASUALTY COMPANY, Plaintiff,

v.WASHINGTON HOSPITAL CENTER CORPORATION, d/b/a Washington Hospital Center, Greenspring Financial Insurance Limited, and MedStar Health Inc., Defendants.

Civil Action No. 10–1193(ABJ).

United States District Court,

District of Columbia.

Jan. 18, 2013.

David Drake Hudgins, Hudgins Law Firm, P.C., Alexandria, VA, Bethany Culp, Paulette S. Sarp, Minneapolis, MN, for Plaintiff.

George Samuel Mahaffey, Jr., Joseph B. Wolf, Linda S. Woolf, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

AMY BERMAN JACKSON, District Judge.

Plaintiff, Interstate Fire and Casualty Co. (“Interstate”), brought this action against Washington Hospital Center Corp. (“WHC”), Medstar Health, Inc., and Greenspring Financial Insurance Ltd. (“GFIL”). Interstate seeks reallocation of a $3,055,000 payment that it made to patientRadianne Banks as part of the settlement agreement between Banks, Progressive Nursing Staffers of Virginia, Inc. (“Progressive”) (insured by Interstate), Nurse Chichio Hand, and WHC (insured by GFIL), as well as legal fees, costs, and monies paid by Interstate in defense and settlement of the underlying litigation. The action is now before the Court on GFIL's objections to Magistrate Judge Alan Kay's Memorandum Order on the issue of damages. Mem. Order [Dkt. # 59] (“MJ Mem. Order”). GFIL has objected to the Magistrate Judge's Memorandum Order and asks the Court to set aside the Magistrate Judge's determination of damages on the basis that the Magistrate Judge lacked the authority to make a determination of the damages to be awarded to Interstate, and that he erred in determining that Interstate was entitled to reimbursement of the entire $3,055,000 paid to Banks, and $148,062 in attorneys' fees. The Court will construe the Magistrate Judge's Memorandum Order as a Report and Recommendation. Because the parties to the underlying action agreed to preserve Interstate's right to seek reallocation of the entire $3,055,000, and Interstate is entitled to prejudgment interest on that amount at the rate set forth in D.C.Code Section 28–3302(a), the Court will adopt the Magistrate Judge's findings and recommendations in full.

JURISDICTION OF THE MAGISTRATE JUDGE

GFIL first objects to the Magistrate Judge's Memorandum Order on the basis that the Magistrate Judge lacks authority to make a determination of the damages to be awarded to Interstate. The Court declines to wade into the legal question of the bounds of authority delegated to magistrate judges under the local rules of this Court, the Federal Rules of Civil Procedure, and the Federal Magistrates Act of 1968, 28 U.S.C. § 631 et seq. (2012). Rather, the Court will treat the Magistrate Judge's Memorandum Order as a Report and Recommendation and, accordingly, review the portions to which GFIL has objected under a de novo standard. See Callier v. Gray, 167 F.3d 977, 982–83 (6th Cir.1999) (holding that a magistrate judge was authorized to provide a report and recommendation on a question of damages “subject to the district judge's ongoing supervision and final decision” under 28 U.S.C. § 636(b)(3), which gives magistrate judges “such additional duties as are not inconsistent with the Constitution and the laws of the United States”); cf. Conetta v. Nat'l Hair Care Ctrs., Inc., 236 F.3d 67, 73 (1st Cir.2001) (acknowledging that a magistrate judge could “hear the evidence and prepare a recommended decision as to the amount of damages [plaintiff was entitled]”). This will not prejudice GFIL, which has had the opportunity to lodge its objections to any portions of the Magistrate Judge's order and to brief the relevant issues fully.

FACTUAL BACKGROUND

Since neither party objects to the findings set forth in the background section of the Magistrate Judge's Memorandum Order, the Court will adopt those findings. In addition, the facts of this case are laid out in detail in the Court's previous Memorandum Opinion addressing liability. Memorandum Opinion, 853 F.Supp.2d 49 (D.D.C.2012) [Dkt. # 47] (“Mem. Op.”). In summary, the relevant facts are as follows:

In the litigation underlying this action, a patient named Radianne Banks sued WHC and two physicians for medical malpractice. Id. at 51; Defs.' Statement of Undisputed Material Facts [Dkt. # 33–2] (“Defs.' SMF”) ¶ 46; accord Pl.'s Opp. to Defs.' SMF [Dkt. # 34] ¶ 46. WHC filed a third-party complaint against Nurse Hand, the nurse responsible for Banks's post-op care, and Progressive, the organization that supplied her to WHC. Mem. Op., 853 F.Supp.2d at 51. The third-party complaint alleged contribution, and both common-law and contractual indemnification. See Third–Party Complaint, Banks v. WHC, No. 2007 CA 002022 M (D.C. June 25, 2008), Ex. 10 to Pl.'s Mot. for Partial Summ. J. [Dkt. # 32–14], ¶¶ 10–22. The contractual indemnification claim relied on a Temporary Staffing Agreement between Progressive and WHC, which provided that Progressive was required “to indemnify WHC for claims arising from the negligence of Progressive or its registered nurse employees who were provided to WHC.” Id.;Mem. Op., 853 F.Supp.2d at 52–53. Progressive and Nurse Hand filed a fourth-party complaint against WHC, in relevant part, for contribution and/or indemnification. See Settlement Agreement, Ex. 12 to Pl.'s Mot. for Summ. J. [Dkt. # 32–25], at 1.

Eventually, Banks, WHC, Hand, Progressive, and Interstate entered into a settlement agreement, which settled all of the underlying claims. Id. Interstate agreed to pay Banks a sum of $3,055,000, and WHC agreed to pay Banks a sum of $1,050,000. Id. ¶ 4. As part of the agreement, WHC released Progressive “from any and all claims” that “WHC may now have or may hereafter have against ... Progressive by reason of any matter, cause or thing arising out of, or in any manner connected with, the Litigation ... including but not limited to the Temporary Staffing Agreement.” Id. ¶ 2. Hand and Progressive similarly released WHC “from any and all claims” that “Hand and Progressive may now have or may hereafter have against WHC by reason of any matter, cause or thing arising out of, or in any manner connected with, the Litigation or the facts giving rise to the Litigation.” Id. ¶ 3. The agreement also contained a provision that stated:

Nothing contained in this Agreement should be construed as a waiver of [Interstate]'s rights under its policies to seek reallocation of the settlement. WHC agrees and understands that [Interstate] does not waive and expressly reserves the right to rely on the ‘other insurance’ clauses incorporated into its policies to seek reallocation of the settlement as may be warranted.

Id. Finally, the agreement stated that “[t]his Settlement Agreement contains the entire agreement among the parties hereto with regard to the matters set forth in it....” Id. ¶ 15.

Interstate filed this action on July 15, 2010. Compl. [Dkt. # 1]. The Complaint contains claims for breach of contract, contribution, subrogation, and declaratory judgment. Id. Both sides moved for summary judgment; Interstate moved only for partial summary judgment against GFIL on the contribution and declaratory judgment claims.

In its Order and accompanying Memorandum Opinion of March 28, 2012, [Dkts. # 46, 47],¹ this Court granted Interstate's motion for partial summary judgment against GFIL, denied GFIL's cross-motion for summary judgment, and granted summary judgment for defendants WHC and MedStar Health, Inc. The Court found that GFIL's insurance contract with WHC covered the actions of Nurse Hand. Moreover, since GFIL's contract provided primary insurance and Progressive's contract provided secondary insurance, Interstate was entitled to reimbursement from GFIL for the amount it paid to settle the underlying litigation.

In its Order, the Court directed the parties to file a joint status report stating their respective positions on the sole remaining issue: the amount of damages to which Interstate was entitled in light of the Court's ruling on the merits. See Order (March 28, 2012) [Dkt. # 46]. The parties filed their status report on April 26, 2012, [Dkt. # 50], and the Court referred the action to a Magistrate Judge for his or her determination of the amount of damages to be awarded, [Dkt. # 52]. The Court expressly referred the matter under Local Rule of Civil Procedure 72.2(a). Id. Magistrate Judge Alan Kay was randomly assigned the same day. [Dkt. # 53].

After an unsuccessful attempt to mediate the case, the Magistrate Judge permitted GFIL to file a supplement to its statement on damages and permitted Interstate to respond. Minute Order (July 9, 2012). The Magistrate Judge also ordered Interstate to provide the Court with a breakdown of the costs and expenses claimed, a reconciliation with the Bill of Costs, and a summary of the attorneys' fees claim, Minute Order (Aug. 7, 2012), which Interstate filed on August 17, 2012, [Dkt. # 58]. On September 4, 2012, the Magistrate Judge issued a Memorandum Order, finding that Interstate was entitled to reimbursement of the $3,055,000.00 paid to Banks in settlement of the underlying lawsuit; attorneys' fees in the amount of $148,062.00; and costs incurred in defending the underlying lawsuit against Nurse Hand in the amount of $5,186.76; as well as prejudgment interest at the rate set forth in D.C.Code § 28–3302(a); and post judgment interest at the rate set forth in 28 U.S.C. § 1961(a). MJ Mem. Order at 12–13.

STANDARD OF REVIEW

When a party objects to a magistrate judge's recommendation, the court “must determine de novo any part of the magistrate judge's disposition that has been properly objected to.” Fed.R.Civ.P. 72(b)(3); see also Smith v. District of Columbia, 846 F.Supp.2d 197, 199 (D.D.C.2012); D.D. ex rel. Davis v. District of Columbia, 470 F.Supp.2d 1, 1 (D.D.C.2007). The Court may “accept, reject, or modify” the magistrate judge's recommendation, “receive further evidence,” or “return the matter to the...