Standard Fire Ins. Co. v. Knowles

• Decision Date: 15 September 2015
• Docket Number: Case No.: 2:14–CV–2102–VEH
• Citation: 129 F.Supp.3d 1271
• Parties: The Standard Fire Insurance Company, Plaintiff, v. Jeffrey A. Knowles, et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

129 F.Supp.3d 1271

The Standard Fire Insurance Company, Plaintiff,

v.Jeffrey A. Knowles, et al., Defendants.

Case No.: 2:14–CV–2102–VEH

United States District Court, N.D. Alabama, Southern Division.

Signed September 15, 2015

Joel S. Isenberg, Candace L. Hudson, Seth T. Hunter, Ely & Isenberg LLC, Birmingham, AL, for Plaintiff.

William M. Acker, III, Benjamin S. Goldman, Mark T. Waggoner, Hand Arendall LLC, Richard E. O'Neal, U.S. Attorney's Office, Birmingham, AL, R. Austin Huffaker, Jr., Rushton Stakely Johnston & Garrett PA, Montgomery, AL, for Defendants.

MEMORANDUM OPINION

VIRGINIA EMERSON HOPKINS, United States District Judge

This case presents the question of whether attorney's fees claimed pursuant to the Alabama attorney lien statute, or as part of the so-called "common fund" doctrine, trump the claim of a mortgagee, where the funds against which the claim is made are insurance proceeds on mortgaged property, at least part of which were paid because of litigation initiated by the attorneys and their client. Under the circumstances of this case, the court holds that they do not.

I. INTRODUCTION AND PROCEDURAL HISTORY

This statutory interpleader action was originally filed on October 30, 2014, by the Standard Fire Insurance Company ("Standard Fire"). (Doc. 1). Concurrent with filing the complaint, Standard Fire, as a disinterested stakeholder, deposited $87,500 into the court's registry. (Doc. 7). On January 13, 2015, Standard Fire was dismissed from this action. (Doc. 36). The only parties remaining in this case are the defendants-Green Tree Servicing, LLC. ("Green Tree"), Jeffrey A. Knowles, William M. Acker, III, Robert J. Hayes, and the United States of America—all of whom claim some stake in the funds.¹

The case comes before the court on the cross motions for summary judgment filed by Green Tree Servicing, LLC. ("Green Tree") (doc. 45); and Jeffrey A. Knowles, William M. Acker, III, and Robert J. Hayes (doc. 47). Each movant (or, in the case of Knowles, Acker, and Hayes, "movants") has responded to the other's motion for summary judgment. The United States has neither filed a motion for summary judgment, nor responded to either of the pending motions. For the reasons stated herein, Green Tree's motion will be GRANTED, as to all claims and parties, including the United States, and the motion of Knowles, Acker, and Hayes will be DENIED.

II. STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment is proper if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; see alsoCelotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ("[S]ummary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.") (internal quotation marks and citation omitted). The party requesting summary judgment always bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings or filings that it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once the moving party has met its burden, Rule 56(e) requires the non-moving party to go beyond the pleadings in answering the movant. Id. at 324, 106 S.Ct. 2548. By its own affidavits—or by the depositions, answers to interrogatories, and admissions on file—it must designate specific facts showing that there is a genuine issue for trial. Id.

The underlying substantive law identifies which facts are material and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All reasonable doubts about the facts and all justifiable inferences are resolved in favor of the non-movant. Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir.2000). Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. If the evidence presented by the non-movant to rebut the moving party's evidence is merely colorable, or is not significantly probative, summary judgment may still be granted. Id. at 249, 106 S.Ct. 2505.

How the movant may satisfy its initial evidentiary burden depends on whether that party bears the burden of proof on the given legal issues at trial. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.1993). If the movant bears the burden of proof on the given issue or issues at trial, then it can only meet its burden on summary judgment by presenting affirmative evidence showing the absence of a genuine issue of material fact—that is, facts that would entitle it to a directed verdict if not controverted at trial. Id. (citation omitted). Once the moving party makes such an affirmative showing, the burden shifts to the non-moving party to produce "significant, probative evidence demonstrating the existence of a triable issue of fact." Id. (citation omitted) (emphasis added).

For issues on which the movant does not bear the burden of proof at trial, it can satisfy its initial burden on summary judgment in either of two ways. Id. at 1115–16. First, the movant may simply show that there is an absence of evidence to support the non-movant's case on the particular issue at hand. Id. at 1116. In such an instance, the non-movant must rebut by either (1) showing that the record in fact contains supporting evidence sufficient to withstand a directed verdict motion, or (2) proffering evidence sufficient to withstand a directed verdict motion at trial based on the alleged evidentiary deficiency. Id. at 1116–17. When responding, the non-movant may no longer rest on mere allegations; instead, it must set forth evidence of specific facts. Lewis v. Casey, 518 U.S. 343, 358, 116 S.Ct. 2174, 135 L.Ed.2d 606 (1996). The second method a movant in this position may use to discharge its burden is to provide affirmative evidence demonstrating that the non-moving party will be unable to prove its case at trial. Fitzpatrick, 2 F.3d at 1116. When this occurs, the non-movant must rebut by offering evidence sufficient to withstand a directed verdict at trial on the material fact sought to be negated. Id.

"The standard of review for cross-motions for summary judgment does not differ from the standard applied when only one party files a motion, but simply requires a determination of whether either of the parties deserves judgment as a matter of law on the facts that are not disputed." S. Pilot Ins. Co. v. CECS, Inc., 52 F.Supp.3d 1240, 1242 (N.D.Ga.2014) (citing Am. Bankers Ins. Group v. United States, 408 F.3d 1328, 1331 (11th Cir.2005) ). "The Court must consider each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration." Id."The Eleventh Circuit has explained that ‘[c]ross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed.’ " Id. (quotingUnited States v. Oakley, 744 F.2d 1553, 1555 (11th Cir.1984) ). "Cross–motions may, however, be probative of the absence of a factual dispute where they reflect general agreement by the parties as to the controlling legal theories and material facts. Id. (quoting Oakley, 744 F.2d at 1555–56 ).

III. FACTS

The following facts have been offered by Green Tree in its motion for summary judgment and, because they have not been disputed by the parties opposing that motion, are deemed to be admitted for summary judgment purposes:²

1. On May 22, 2007, claimant Jeffrey A. Knowles ("Knowles") and his wife mortgaged (the "Mortgage") certain real property located in Birmingham, Alabama (City of Vestavia Hills). The Mortgage secured a note (the "Note") between ... Knowles and GMAC Mortgage in the amount of $153,500.00.Together, the Mortgage and Note are referred to as the "Loan."

2. As part of the Loan, Knowles agreed that he would maintain homeowner's insurance on the real property and have the mortgagee named in a "standard mortgage clause."

3. From October 27, 2010 to October 27, 2011, Knowles insured the property through a policy of insurance with Standard Fire Insurance Company ("Standard Fire") (the "Policy"). The Policy includes several coverages including coverage for the home or dwelling (Coverage A) and for other structures (Coverage B). The Policy also lists "GMAC Mortgage LLC ISAOA" as the first mortgagee on the property in accordance with the Mortgage terms. The term "ISAOA", in the insurance industry, stands for "Its Successors And/Or Assigns."

4. The Policy contained a Mortgage Clause which governs the payment of insured losses under Coverages A & B when a mortgagee is named in the Policy:

"If a mortgagee is named in this policy, any loss payable under Coverage A or B shall be paid to the mortgagee and you, as interests appear."

(Doc. 1–1 at 36 (Section I–Conditions, ¶ 12)). The Policy further stated that a denial of the claim with respect to the insured will not affect the mortgagee's claim if certain conditions are met by the mortgagee:

"If we deny your claim, that denial shall not apply to a valid claim by the mortgagee.....

(Id. )

5. On April 27, 2011, during the Policy Period, the dwelling and other structures at the subject property were damaged in the tornadoes that struck Alabama.

6. Knowles made a claim for the subject loss against the Standard Fire insurance policy.

7. As to the structure damage, Standard Fire adjusted the loss and issued a check on May 16, 2011 for $22,679.05. Knowles chose not to deposit the

...