Feld v. Fireman's Fund Ins. Co.

• Citation: 206 F.Supp.3d 378
• Decision Date: 12 September 2016
• Docket Number: Civil Action No. 12-1789 (JDB)
• Parties: Kenneth FELD, Plaintiff, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Columbia

206 F.Supp.3d 378

Kenneth FELD, Plaintiff,

v.FIREMAN'S FUND INSURANCE COMPANY, Defendant.

Civil Action No. 12-1789 (JDB)

United States District Court, District of Columbia.

Signed September 12, 2016

John M. Simpson, Kara L. Petteway, Kimberly Hope Caine, Matthew H. Kirtland, Norton Rose Fulbright US LLP, Washington, DC, for Plaintiff.

Thomas Sykes Schaufelberger, Saul Ewing LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

JOHN D. BATES, United States District Judge

Defendant Fireman's Fund Insurance Company ("FFIC") refused to fully reimburse plaintiff Kenneth Feld for more than $4.5 million in legal fees and costs that Feld claims to have incurred in a separate, protracted legal battle. Before the Court now are the parties' cross-motions for summary judgment. While the bulk of the dispute will be resolved by granting FFIC summary judgment in part, a remaining quarrel over almost $200,000 in legal expenses means that this show must, unfortunately, go on.

BACKGROUND

The facts of this case were summarized at length in the Court's previous opinion and hence only a limited recitation of the details is needed here—drawn largely from that prior opinion. See July 3, 2013 Mem. Op. [ECF No. 19] at 1–6. The origin of this dispute lies in another case from this district: Feld v. Feld , Civil Action No. 08–cv–1557–ESH. That was a highly contentious personal injury suit brought by Karen Feld (a non-party to the proceedings in this Court) against her older brother Kenneth Feld. At the time of the events alleged in Karen's complaint, Feld had personal liability insurance coverage under a "Prestige Home Premier" policy (the "Policy") issued by FFIC. The Policy provided that FFIC would defend Feld against covered claims or suits against him. Under the Policy, FFIC had a duty to "[p]rovide a defense at [its] expense by counsel of [its] choice." Policy, Ex. 1 to Def.'s Mot. for Summ. J. [ECF No. 68-1] at 55.

On June 12, 2009, Feld notified FFIC of the personal injury litigation ("the Underlying Action") and of his claim for coverage under the Policy. See Pl.'s Stmt. of Undisputed Facts [ECF No. 73] ¶ 35. FFIC agreed to defend Feld in the Underlying Action "subject to a full and complete reservation of rights." Coverage Letter, Ex. 4 to Kirtland Decl. [ECF No. 72-4] at 1. Specifically, FFIC stated that the claims in the Underlying Action alleged intentional conduct and hence were "not covered by the Policy." Id. FFIC nevertheless agreed to provide a defense because Feld had denied the allegations and said that he acted in self-defense. Id. FFIC told Feld:

Subject to [FFIC's] reservation of rights, you may elect to choose your own counsel to defend you in this matter; otherwise we can appoint counsel for you. FFIC agrees to pay, at an agreed hourly rate, the reasonable and necessary legal fees and Court costs incurred by counsel to defend you subsequent to the date this matter was tendered to FFIC under a full reservation of rights, and in accordance with the terms and conditions of the subject Policy and those contained herein. Payment by FFIC for any legal expenses incurred on your behalf will not act as a waiver of any rights FFIC may have to adjust, allocate or assert that there is no coverage for any payment made.

Id. Feld retained counsel from the law firm of Fulbright & Jaworski L.L.P. to represent him in the Underlying Action. That litigation—culminating in a lengthy and highly publicized trial, followed by an appeal to the D.C. Circuit—not only generated much ill will within the Feld family, it also generated a legal bill for Kenneth Feld in excess of $4.5 million. FFIC reimbursed Feld for a little more than $2 million of those fees. Feld then filed this action to recover the difference, arguing that FFIC breached its insurance contract by refusing to cover the rest of his legal fees from the Underlying Action.

FFIC responded with a summary judgment motion claiming that it paid what it owed pursuant to the parties' agreement regarding the hourly rates to be charged by Feld's counsel. Feld says there was never any such agreement and FFIC owes him the "reasonable" legal fees promised in the Policy. So the $2-million-dollar question is: Was there an agreement as to rates?

DISCUSSION

I. Legal Standard for Summary Judgment

To obtain summary judgment, the moving party must show that there is no genuine dispute as to any material fact as to the claim at issue. The movant need not entirely foreclose the possibility that there could exist an issue of material fact, he need only show that the non-movant has failed, or by necessity will fail, to appropriately raise the issue. SeeCelotex Corp. v. Catrett , 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In making this determination, a court must view the facts in the light most favorable to the non-movant and draw all justifiable inferences in his favor. Id. at 255, 106 S.Ct. 2505.

II. Breach of Contract

A. Late Notice

FFIC's opening act is to argue that it owes Feld nothing because he failed to timely notify FFIC of his claim as required by the Policy. Policy, Ex. 1 to Def.'s Mot. for Summ. J. at 99. FFIC's "late notice" defense runs smack into a choice of law issue. Under Maryland law, an insurer generally must provide coverage even in the event of late notice unless it can prove by a preponderance of the evidence that the untimely notice caused actual prejudice. Minn. Lawyers Mut. Ins. Co. v. Baylor & Jackson, PLLC , 531 Fed.Appx. 312, 319–20 (4th Cir.2013). In the District of Columbia, however, "an insurer is not required to demonstrate actual prejudice before denying coverage on the basis of an insured's failure to comply with a contractual notice provision." Nat'l R.R. Passenger Corp. v. Lexington Ins. Co. , 445 F.Supp.2d 37, 43 (D.D.C.2006), aff'd, 249 Fed.Appx. 832 (D.C.Cir.2007) (per curiam). "The starting point for assessing which state's law should apply is the law of the forum state." Aref v. Lynch , No. 15–5154, 833 F.3d 242, 261, 2016 WL 4409356, at *13 (D.C.Cir. Aug. 19, 2016). Hence, the Court will look to D.C. choice-of-law principles.

D.C. employs the "governmental interest" test to determine which state's law to apply. Id. at 261–62, 2016 WL 4409356, at *14. The test involves a two-step inquiry: identify the governmental policy underlying the applicable law and then determine which state's policy would be most advanced by having its law applied to the facts of the case. Id. For insurance contracts, there is a presumption that the governing law is the "local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship." Restatement (Second) of Conflict of Laws § 193 (1971) ; 21st Century N. Am. Ins. Co. v. Nationwide Gen. Ins. Co. , No. 1:14–CV–00557 (AK), 2015 WL 1570154, at *2 (D.D.C. Apr. 9, 2015) ; see Indep. Petrochem. Corp. v. Aetna Cas. & Sur. Co. , 944 F.2d 940, 948 (D.C.Cir.1991) (applying § 193 to an insurance policy); Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Binker , 665 F.Supp. 35, 40 (D.D.C.1987). D.C. courts look at six factors to determine whether another state has "a more significant relationship": (1) the place of contracting; (2) the place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; (5) the residence and place of business of the parties; and (6) the principal location of the insured risk. Adolph Coors Co. v. Truck Ins. Exchange , 960 A.2d 617, 620 (D.C.2008).

Here, the parties surely understood Maryland to be the principal location of the insured risk given that the homeowner's policy at issue provided coverage for Feld's Maryland domicile. See Policy, Ex. 1 to Def.'s Mot. for Summ. J. at 16; see also Gray v. Grain Dealers Mut. Ins. Co. , 871 F.2d 1128, 1130 (D.C.Cir.1989) (finding that the state of the policyholder's residence was the intended principal location of the insured car); 21st Century N. Am. Ins. Co. , 2015 WL 1570154, at *3 (same). FFIC wants to parse the Policy into property coverage and personal liability, with D.C. then being the location of the risk for the personal liability portion of the contract. Def.'s Mot. for Summ. J. [ECF No. 68] at 20. FFIC, though, has cited no authority for this type of slicing and dicing of a homeowner's policy. And even if the Court took that narrow view of the insured risk, the location of the risk would then not be entitled to any special weight because it would not be in a single state. Restatement (Second) of Conflict of Laws § 193 cmt. b (1971).

Turning to the other Restatement factors, in its motion for summary judgment FFIC took the position that the factors did not favor any one jurisdiction. Def.'s Mot. for Summ. J. at 20. By the time FFIC filed its opposition brief, however, it had decided that in fact the most significant Restatement factors—primarily the place of performance of the contract—pointed to the District of Columbia. Def.'s Opp'n [ECF No. 83] at 25. But the fact that D.C. was the location of the underlying incident and lawsuit is entitled to little weight here. It is generally understood that the location of an underlying injury does not play a significant role in a contractual suit. See Holmes v. Brethren Mut. Ins. Co. , 868 A.2d 155, 157 n. 2 (D.C.2005) ; Vaughan v. Nationwide Mut. Ins. Co. , 702 A.2d 198, 202 (D.C.1997) ("The location of fortuitous events ... generally is not considered a persuasive factor in choice of law analysis in situations of economic loss ...."). Nor is the place of performance considered significant when at the time of...