Littlefield v. McGuffey
| Decision Date | 05 November 1992 |
| Docket Number | 92-1792,Nos. 92-1494,s. 92-1494 |
| Citation | 979 F.2d 101 |
| Parties | Susanne LITTLEFIELD, Plaintiff-Appellee, v. Malcolm McGUFFEY, also known as Wally Mack and Santa Maria Realty, Defendants, and State Farm General Insurance Company, Garnishee-Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Aram A. Hartunian (argued), Steven P. Schneck, Hartunian & Associates, Chicago, Ill., for plaintiff-appellee.
Richard H. Hoffman, Querrey & Harrow, Karen A. Covy, Cook County State's Atty.'s Office, James L. Elsesser, John T. Harris, Elsesser & Associate, Chicago, Ill., for defendants.
Michael C. Borders (argued), Rebecca O. Carlins, Rooks, Pitts & Poust, Chicago, Ill., for defendant-appellant.
Before BAUER, Chief Judge, CUMMINGS, and POSNER, Circuit Judges.
Last year Malcolm McGuffey appealed a jury finding that he had violated Susanne Littlefield's rights under both the Equal Opportunity in Housing provision of the Civil Rights Act of 1866 and the Fair Housing Act as amended by the Fair Housing Amendments Act of 1988. 42 U.S.C.A. §§ 1982, 3604, 3613, and 3617. Additionally, he challenged the jury's determination that he was liable under Illinois common law for intentional infliction of emotional distress. McGuffey also appealed Judge Williams' denial of his motions for judgment notwithstanding the verdict, or, alternatively, for a new trial. We upheld the verdict as well as the district court judge's award of attorney's fees and denial of a fee multiplier. State Farm General Insurance Company ("State Farm"), McGuffey's insurer, now appeals the district court's subsequent determinations that the company is liable for Littlefield's attorney's fees and related expenses.
The events giving rise to this protracted litigation, well documented in Littlefield v. Mack, 750 F.Supp. 1395 (N.D.Ill.1990), and Littlefield v. McGuffey, 954 F.2d 1337 (7th Cir.1992), do not bear repeating in any detail. Suffice it to say, McGuffey reneged on a housing rental contract with Littlefield after learning that she had an African-American boyfriend, and that the two had a daughter. From ugly, the story then turned bizarre. A veritable chameleon, McGuffey adopted multiple personas and pseudonyms to harass and threaten Littlefield, as well as her boyfriend, daughter, and sister. The jury found in favor of Littlefield, awarding her $50,000 in compensatory damages and $100,000 in punitive damages.
This appeal focuses exclusively on the scope of a building owner's insurance policy issued to McGuffey by State Farm. In its section entitled "Additional Coverage", the policy provides:
We cover the following in addition to the limits of liability:
1. Claim expenses. We pay:
a. expenses incurred by us and costs taxed against any insured in any suit we defend.
Appellant's Brief, filed Oct. 6, 1992, at 7.
An intentional acts exclusion clause in the policy created the possibility that damages predicated on a finding of liability could exceed State Farm's contractual obligation to pay. Recognizing what it thought to be a possible conflict of interest, State Farm referred the defense to the law firm of Querrey & Harrow, explaining to McGuffey in some detail that the firm would be representing only him, that State Farm would remain uninvolved in the defense, and that McGuffey could choose other counsel at State Farm's expense if he so desired. He did not, and the Querrey & Harrow firm represented McGuffey at trial as well as on direct appeal here.
After we upheld the district court's judgment, see Littlefield, 954 F.2d at 1337, the district court granted Littlefield attorney's fees and expenses pursuant to 42 U.S.C. § 1988(b) (1991). Littlefield soon thereafter served State Farm with a garnishment summons seeking payment. The district court granted Littlefield's motion for summary judgment and denied State Farm's cross-motion, 789 F.Supp. 909 (1992). Later it granted her motion to supplement garnishment, 789 F.Supp. 914 (1992). The total attorney's fees and expenses in question amount to $217,882.38. State Farm appeals, challenging the district court's determination that the insurance policy covers attorney's fees under § 1988(b).
We review the entry of summary judgment de novo. Hayes v. Otis Elevator Co., 946 F.2d 1272, 1277 (7th Cir.1991). In so doing the court must "view the record and all inferences drawn from it in the light most favorable to the party opposing the motion." Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir.1990). We will affirm summary judgment when the record presents "no genuine issue of material fact [such] that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56.
The building owner policy at the center of this dispute provides that State Farm will cover, in addition to the limits of its liability, "expenses incurred by us and costs taxed against any insured in any suit we defend." Appellant's Brief, filed May 27, 1992, at 7. This appeal, therefore, turns on the meaning of two words--"costs" and "defend". If State Farm did in fact defend McGuffey during the proceedings, then it is contractually obligated to pay for any costs assessed against him, including attorney's fees if they are indeed costs. Predictably, the parties devote much of their attention to definitional debate. Our discussion focuses on whether costs include attorney's fees, and whether State Farm defended McGuffey.
State Farm contends that the term "costs" in the policy does not cover attorney's fees. The company argues that neither the common nor historical understanding of the term "costs" contemplates attorney's fees. But "costs" has no uniform meaning, and we are reluctant to create federal common law defining the term. Costs can include attorney's fees and expenses either if a statute provides for it or if the parties so agree in a valid contract. 1 Hall v. Cole, 412 U.S. 1, 4, 93 S.Ct. 1943, 1946, 36 L.Ed.2d 702 (1973). Section 1988 is one such statute, and we read State Farm's policy with McGuffey in conjunction with § 1988 to provide for attorney's fees.
Section 1988 expressly provides that an individual prevailing on a civil rights claim may receive "a reasonable attorney's fee as part of the costs." 42 U.S.C. § 1988(b). The United States Supreme Court as well as this court have upheld § 1988's stipulation that attorney's fees are part of costs. See, e.g., Hutto v. Finney, 437 U.S. 678, 697, 98 S.Ct. 2565, 2577, 57 L.Ed.2d 522 (1978); Argento v. Village of Melrose Park, 838 F.2d 1483, 1499 (7th Cir.1988). Moreover, several courts considering civil rights cases also have defined attorney's fees as costs. E.g., Marek v. Chesny, 473 U.S. 1, 5-9, 105 S.Ct. 3012, 3014-3017, 87 L.Ed.2d 1 (1985) (); Hopper v. Euclid Manor Nursing Home, Inc., 867 F.2d 291, 293 (6th Cir.1989) (); Vaughn v. Westinghouse Elec. Corp., 526 F.Supp. 1165, 1168 (E.D.Ark.1981) ().
State Farm faces a tough hurdle distinguishing the facts of Argento, a case that involved an insurance contract containing language nearly identical to the policy in this case. 2 Observing that § 1988 expressly equates attorney's fees and costs, we held that the insurance contract in Argento obligated the insurer to pay attorney's fees charged against its insured. Id. at 1499.
Undaunted by the remarkable factual similarities of this case to Argento, State Farm nevertheless urges the court to abandon precedent and hold that the use of the word "costs" in McGuffey's policy does not embrace attorney's fees. In support of its position, State Farm implies that the Argento holding is somehow inadequate because it addresses neither the statutory definition of "costs" contained in 28 U.S.C. § 1920, nor the historical distinction between attorney's fees and costs, nor the insurance industry's understanding of the term "costs". Appellant's Reply Brief, filed July 13, 1992, at 3. In deciding Argento, the court of course need not have delved into these matters. Section 1988(b), after all, expressly designates that fees can be part of costs. Id. at 1499.
State Farm's additional arguments merit cursory discussion. With copious citation to Illinois case law governing contractual interpretation, State Farm rehashes some of the same arguments repudiated in Argento. The company contends, for instance, that the district court disregarded principles of contract interpretation by giving a "forced and unnatural" meaning to the policy, primarily by failing to read the disputed provision in the context of the insurance policy as a whole. Appellant's Brief, at 8-16. But no magical meaning emerges from the contested clause when one reads it in conjunction with the rest of the policy. Moreover, Argento held that the insurance policy required the company to pay attorney's fees as part of costs regardless of the fact that the contract did not explicitly provide for payment of attorney's fees. Id. at 1499. That being so, State Farm furnishes no principled reasoning why mention of costs in McGuffey's policy deserves different treatment than the costs provision in Argento, a case decided well before State Farm issued McGuffey's policy.
State Farm undoubtedly has a brigade of attorneys on its payroll to keep the company apprised of legal developments that bear on company practices, policies, and balance sheets. If an insurer does not wish to underwrite attorney's fees charged against its insureds, it need only add words of exclusion to its contracts. Here, the four words "exclusive of attorney's fees", inserted into the policy after the word "costs", would have accomplished State...
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