Wesco Ins. Co. v. Roderick Linton Belfance, LLP, 21-3479

CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
Writing for the CourtMURPHY, CIRCUIT JUDGE
PartiesWesco Insurance Company, Plaintiff-Appellee, v. Roderick Linton Belfance, LLP, et al., Defendants, Jason D. Wallace; Daniel R. Bache, Defendants-Appellants.
Decision Date01 July 2022
Docket Number21-3479


Wesco Insurance Company, Plaintiff-Appellee,

Roderick Linton Belfance, LLP, et al., Defendants,

Jason D. Wallace; Daniel R. Bache, Defendants-Appellants.

No. 21-3479

United States Court of Appeals, Sixth Circuit

July 1, 2022

Argued: January 13, 2022

Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 1:17-cv-01813-Benita Y. Pearson, District Judge.


Peter Pattakos, THE PATTAKOS LAW FIRM LLC, Fairlawn, Ohio, for Appellants.

Samuel R. Stalker, COZEN O'CONNOR, Chicago, Illinois, for Appellee.


Peter Pattakos, Rachel Hazelet, THE PATTAKOS LAW FIRM LLC, Fairlawn, Ohio, for Appellants.

Samuel R. Stalker, COZEN O'CONNOR, Chicago, Illinois, for Appellee.

Before: COLE, LARSEN, and MURPHY, Circuit Judges.



If a court compels a lawyer to pay a defendant's attorney's fees because the lawyer filed a frivolous complaint or litigated a case for an improper purpose,


would the average attorney describe this fees award as a "sanction"? This case raises that interpretive question. And we have a large body of legal sources to help answer it: the thousands of judicial decisions available on Westlaw or Lexis. They reveal that the legal community routinely describes an attorney's fees award as a "sanction" when a court grants it because of abusive litigation tactics.

This fact dooms the request for insurance coverage by the two lawyers who filed this appeal. These lawyers had brought claims against schools under the Individuals with Disabilities Education Act (IDEA). After the claims failed, the schools sought their attorney's fees from the lawyers under the IDEA's fee-shifting provision. The lawyers asked their insurer, Wesco Insurance Company, to pay the fees. Wesco refused on the ground that the requested attorney's fees fell within the insurance policy's exclusion for "sanctions." Because the IDEA makes attorney misconduct a prerequisite to a fees award against a party's lawyer, we agree that this policy exclusion applied. We thus affirm the summary-judgment ruling for Wesco.


The IDEA provides federal funds to the states to ensure that students with disabilities receive an appropriate education tailored to their needs. 20 U.S.C. §§ 1400(d)(1)(A), 1411(a)(1). When parents believe that a school has failed to live up to the Act's expectations, it offers them an administrative process to raise their concerns and, if that process fails, a cause of action to obtain judicial relief. Id. § 1415; Perez v. Sturgis Pub. Schs., 3 F.4th 236, 239 (6th Cir. 2021). To encourage lawyers to take these cases, the Act gives district courts discretion to award attorney's fees to prevailing parents. 20 U.S.C. § 1415(i)(3)(B)(i)(I). Sometimes, though, lawyers representing parents pursue baseless claims. If a court finds a complaint to be, say, "frivolous" or "presented for any improper purpose," the Act allows the court to compel the lawyers who filed it to pay a school's attorney's fees. Id. § 1415(i)(3)(B)(i)(II)-(III).

This case stems from four IDEA claims pursued by three attorneys with Roderick Linton Belfance, LLP: Jason Wallace, Daniel Bache, and Kristopher Immel. (Immel litigated only one of the claims.) These attorneys alleged that four School Districts in northern Ohio-Akron, Solon, Nordonia Hills, and Cleveland Heights-failed to provide their student clients with an


appropriate education. After significant administrative litigation, a hearing officer found for the School District in each proceeding. Wallace and Bache pursued the claim against the Akron School District in court. See Barney v. Akron Bd. of Educ., 763 Fed.Appx. 528, 532 (6th Cir. 2019). A district court ruled for Akron, and we affirmed. See id. at 532-34.

Frustrated with having to defend against what they viewed to be frivolous litigation, the School Districts sued Wallace, Bache, Immel, and the Roderick firm under the IDEA's feeshifting provisions. The School Districts alleged that, during the administrative process, the Roderick attorneys presented sloppy pleadings, asserted factually inaccurate or legally irrelevant allegations, and needlessly prolonged the proceedings. To list two examples, the Akron School District noted that Wallace and Bache filed an administrative complaint that misstated the most basic of facts, including the student's address, school, and mother's name-errors that "profoundly disturbed" the hearing officer. Akron Compl., R.51-2, PageID 1137. Likewise, the Nordonia Hills City School District noted that Wallace and Bache claimed that their parent client had requested an IDEA evaluation of her child when he was in the eighth grade-a false allegation that forced the district to waste resources interviewing the child's eighth-grade teachers.

Wesco had issued a professional-liability policy to Roderick and its attorneys covering the time period of the IDEA proceedings. (Technically, Wesco had issued two polices to the firm over this period. But neither party suggests that these policies had any material differences, so we will cite only one for simplicity.) The Roderick firm and its three attorneys (Wallace, Bache, and Immel) asked Wesco to provide a defense against the School Districts' suits and to indemnify them for any liability. Wesco responded that it had no duty to defend or indemnify Roderick in connection with these claims. Under the policy, Wesco agreed to defend Roderick against certain "claim[s]" for "damages" arising from their legal services and to indemnify them for any awarded "damages." Ins. Pol'y, R.1-7, PageID 151. Yet the policy defined "damages" to exclude an award of "sanctions" under "federal" law. Id., PageID 153. Wesco asserted that this exclusion captured the School Districts' requests for attorney's fees under the IDEA.

Recognizing that Roderick and its attorneys would disagree, Wesco preemptively sued them and the School Districts seeking a declaratory judgment that its policy did not apply. The


district court granted summary judgment to Wesco, agreeing that an attorney's fees award for the School Districts under the IDEA qualified as a "sanction" within the coverage exclusion. See Wesco Ins. Co. v. Roderick Linton Belfance LLP, 2018 WL 4510093, at *1, *5-6 (N.D. Ohio Sept. 19, 2018). Wallace and Bache-but not Immel, the Roderick firm, or the School Districts-appealed. We review the district court's decision de novo. See Goodyear Tire &Rubber Co. v. Nat'l Union Fire Ins. Co. of Pitt., 694 F.3d 781, 782 (6th Cir. 2012).

Apart from this case, another insurer filed a similar suit against Wallace and Bache. During the course of the IDEA proceedings against the School Districts, these attorneys left Roderick to start their own firm. Wesco did not insure this new firm. So Wallace and Bache sought coverage from their new insurer for their conduct during the IDEA proceedings after they departed Roderick. This other insurer also denied coverage. A state appellate court recently upheld its decision. See Ohio Bar Liab. Ins. Co. v. Wallace, 183 N.E.3d 638, 648 (Ohio Ct. App. 2022).


Before reaching the merits, we must ensure ourselves of our appellate jurisdiction even though neither party noticed a potential jurisdictional problem. See Bd. of Trs. of Plumbers, Pipe Fitters &Mech. Equip. Serv., Loc. Union No. 392 v. Humbert, 884 F.3d 624, 625 (6th Cir. 2018). Except in a few inapplicable situations, Congress has given circuit courts jurisdiction only over "final decisions" of district courts. 28 U.S.C. § 1291; cf. id. § 1292(a)-(b); Fed.R.Civ.P. 54(b); Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949).

Is there a "final decision" here? A flurry of counterclaims and crossclaims complicates the picture. Back in September 2018, the district court granted summary judgment to Wesco on the basic coverage question at issue on appeal. But the court did not grant an ostensibly final judgment until nearly three years later. In the meantime, the parties litigated these other claims. After Wesco sued, the Roderick firm and Immel brought counterclaims against the insurer for breach of contract. Wallace and Bache filed separate counterclaims against Wesco for breach of contract, bad-faith denial of coverage, and intentional infliction of emotional distress. Wallace and Bache also brought a crossclaim against the Roderick firm (which they had since left) for


breach of contract. Roderick responded with crossclaims against Wallace and Bache for indemnification or contribution.

The district court gradually dismissed all of these remaining claims. Its summaryjudgment ruling in favor of Wesco on the insurer's claims appeared to resolve the counterclaims against it. Wesco, 2018 WL 4510093, at *6. So the parties filed a joint motion asking the court to clarify that its order effectively granted judgment on these claims. The court agreed, dismissing them with prejudice. See Wesco Ins. Co. v. Roderick Linton Belfance LLP, 2018 WL 10809985, at *1 (N.D. Ohio Oct. 16, 2018). That dismissal left Wallace and Bache's and the Roderick firm's crossclaims against each other. These parties asked the court to dismiss the crossclaims without prejudice so that they could immediately appeal the court's summaryjudgment ruling in Wesco's favor. The court denied this request. It reasoned that these parties could not "manufacture a 'final judgment' but reserve the right to pursue their claims against each other in later litigation." Id.

With the crossclaims still pending, Wallace filed for bankruptcy. The court stayed the proceedings for his bankruptcy case. Wallace's discharge from bankruptcy extinguished the crossclaims between him and the Roderick firm with prejudice. That resolution left only Bache's and Roderick's crossclaims against each other. These defendants jointly moved to dismiss these crossclaims. This time, the district court found it "proper...

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