United States District Court, D. Arizona
Lexington Insurance Company, a Delaware corporation, Plaintiff/ Counterdefendant,
Scott Homes Multifamily Inc., an Arizona corporation; and Silverbell 290 Limited Partnership, an Arizona limited partnership, Defendants/Counterclaimants.
A. Teilborg Senior United States District Judge.
before the Court is Defendant/Counterclaimant Silverbell 290
Limited Partnership's (“Silverbell”) and
Defendant Scott Homes Multifamily, Inc.'s (“Scott
Homes”) (collectively, “Defendants”) Motion
for Attorneys' Fees, (Doc. 494).
Plaintiff/Counterdefendant Lexington Insurance Company
(“Lexington”) has filed a brief in opposition to
Defendants' Motion for Attorneys' Fees, (Doc. 503).
The Court now rules on the motion.
familiarity with the factual and procedural history of this
action, the Court will recount only those aspects of this
litigation that are relevant to the pending issue of
attorneys' fees and costs.
October 8, 2012, Lexington filed a Complaint for Declaratory
Judgment seeking “[a] judicial declaration that there
is no coverage under the Lexington Excess Policy for the
Stipulated Judgment” entered into by Scott Homes and
Silverbell in the underlying construction defect lawsuit.
(Doc. 1 at 34). Lexington also sought “[a] judicial
declaration that [it] owes no current or past duty to defend,
indemnify, or reimburse Scott Homes in any amount for any
claims in connection with the underlying lawsuit or
Settlement Agreement.” (Id.). Silverbell filed
an Answer on October 31, 2012 and asserted counterclaims for
breach of contract, bad faith, and punitive damages. (Doc.
10). In its Counterclaim, Silverbell sought $6, 000, 000.00
in damages for its breach of contract claim arising from the
Stipulated Judgment in the underlying construction defect
lawsuit, damages for bad faith, and punitive damages in the
amount of $5, 000, 000.00 or more. (Id. at 45-46).
Although Scott Homes filed an Answer on December 17, 2012,
Scott Homes did not assert any counterclaims as it had
previously “assigned the relevant interest in the
Lexington insurance policy to Silverbell.” (Doc. 25 at
5). As a result, Scott Homes contended it was “not a
proper party to this lawsuit.” (Id.). On June
12, 2013, Lexington filed an Answer to Silverbell's
Counterclaim in which Lexington denied liability. (Doc. 52).
On April 25, 2014, Lexington filed a First Amended Complaint
(“FAC”); (Doc. 270).
16, 2014, Lexington and Defendants filed cross-motions for
summary judgment. (Docs. 273, 281). In ruling on these
motions, the Court found for Defendants on certain coverage
issues, but determined that Silverbell was not entitled to
punitive damages. (Doc. 323 at 49-50). Additionally, the
Court held that fact issues remained as to Silverbell's
bad faith counterclaim, as well as several coverage issues,
requiring resolution by trial. (Id.). On August 20,
2015, the parties stipulated to the dismissal of
Silverbell's bad faith counterclaim and agreed that
neither party would “be entitled to attorneys' fees
or costs in connection” with this bad faith claim.
(Doc. 404 at 2).
time of trial, Counts II-XI of Lexington's FAC remained,
as well as Count I of Silverbell's Counterclaim regarding
coverage. (Doc. 486 at 1). All of the other claims in
Lexington's FAC and Silverbell's counterclaims for
bad faith and punitive damages were dismissed prior to trial.
(Id.). At trial, the jury found that Silverbell
“proved by a preponderance of the evidence that Scott
Homes Multifamily Inc. was liable for covered property damage
exceeding $1 million.” (Doc. 463 at 2). Based on this
verdict, the Court entered judgment in favor of Defendants on
“all remaining Counts in the Complaint and
Counterclaim” and awarded Silverbell $3, 410, 000.01,
subject to prejudgment and post-judgment interest. (Doc. 486
now seek an award of attorneys' fees and taxable costs
against Lexington totaling $1, 558, 099.04, calculated under
Defendants' contingent fee agreement. (Doc. 494 at 6).
Alternatively, Defendants seek an award in the amount of $1,
015, 650.00 “based upon services performed and
reasonable hourly rates for those services.”
(Id.). Defendants' request for attorneys'
fees is based upon Arizona Revised Statute Sections
12-341.01(A) and (B), (Doc. 494 at 9), which provide, in
A. In any contested action arising out of a contract, express
or implied, the court may award the successful party
reasonable attorney fees. . . . This section shall not be
construed as altering, prohibiting or restricting present or
future contracts or statutes that may provide for attorney
B. The award of reasonable attorney fees pursuant to this
section should be made to mitigate the burden of the expense
of litigation to establish a just claim or a just defense. It
need not equal or relate to the attorney fees actually paid
or contracted, but the award may not exceed the amount paid
or agreed to be paid.
A.R.S. § 12-341.01(A-B).
contends that Defendants are not entitled to reasonable
attorneys' fees on the grounds that Defendants are not
the successful or prevailing party. (Doc. 503 at 2). In the
event the Court decides to award attorneys' fees to
Defendants, Lexington alternatively asks that the Court award
“a reasonable amount of attorneys' fees actually
expended only on the successful aspects of the case”
rather than calculate an award under Defendants'
contingent fee agreement. (Id.). Additionally, if
the Court is inclined to make an award to Defendants,
Lexington requests that the Court “make a further
equitable deduction of fifty percent (50%) to account for
activities related to the meritless counterclaims and the
defense of Scott Homes that were lumped into other
activities.” (Id.). Accordingly, Lexington
argues that “any award of reasonable attorneys'
fees to Defendants for their work on successful claims should
be no more than $428, 467.53.” (Id.).
federal cases where the controlling substantive law is state
law, such as in diversity cases or as to claims where the
court is exercising supplemental jurisdiction, attorneys'
fees can be awarded under state law.” Poehler v.
Fenwick, No. 2: CV-15-1161-PHX-JWS, 2016 WL 1428095, at
*2 (D. Ariz. Apr. 12, 2016) (citation omitted). Under Arizona
state law, “In any contested action arising out of a
contract, express or implied, the court may award the
successful party reasonable attorney fees.” A.R.S.
§ 12-341.01(A). Therefore, to award attorneys' fees
under this statute, the Court must find that this action
arises out of a contract, that Defendants are the
“successful” or prevailing party, that an award
of attorneys' fees is appropriate, and that the requested
fees are reasonable.
Whether the Claim Arises Out of a Contract
determining whether a claim arises out of a contract, the
court considers the “nature of the action and the
surrounding circumstances.” Marcus v. Fox, 723
P.2d 682, 684 (Ariz. 1986). An action arises out of a
contract under A.R.S. § 12-341.01(A) if the action could
not exist “but for” the contract, meaning that
the presence of a contract is a legal element of the action.
See Sparks v. Republic Nat'l Life Ins. Co., 647
P.2d 1127, 1141 (Ariz. 1982); see also Barmat v. John
& Jane Doe Partners A-D, 747 P.2d 1218, 1222 (Ariz.
1987) (“Where . . . the duty breached is not imposed by
law, but is a duty created by the contractual relationship,
and would not exist ‘but for' the contract, then
breach of either express covenants or those necessarily
implied from them sounds in contract.”). Consequently,
A.R.S. § 12-341.01 does not apply if the “contract
is only a factual predicate to the action but not the
essential basis of it.” Kennedy v. Linda Brock
Auto. Plaza, Inc., 856 P.2d 1201, 1203 (Ariz.Ct.App.
1993). Nor does “[t]he mere reference to a contract in
a complaint . . . make the action one ‘arising out of
contract.'” Dooley v. O'Brien, 244
P.3d 586, 591 (Ariz.Ct.App. 2010).
Arizona law, “[t]he trial court has substantial
discretion to determine who is a ‘successful
party'” when determining an award of attorneys'
fees under A.R.S. § 12-341.01. Fulton Homes Corp. v.
BBP Concrete, 155 P.3d 1090, 1096 (Ariz.Ct.App. 2007)
(citing Pioneer Roofing Co. v. Mardian Constr. Co.,
733 P.2d 652, 664 (Ariz.Ct.App. 1986)). “The decision
as to who is the successful party for purposes of awarding
attorneys' fees is within the sole discretion of the
trial court, and will not be disturbed on appeal if any
reasonable basis exists for it.” Maleki v. Desert
Palms Prof'l Props., L.L.C., 214 P.3d 415, 422
(Ariz.Ct.App. 2009) (quoting Sanborn v. Brooker &
Wake Prop. Mgmt., Inc., 874 P.2d 982, 987 (Ariz.Ct.App.
“‘[a]n adjudication on the merits is not a
prerequisite to recovering attorneys' fees under [A.R.S.
§ 12-341.01].'” Med. Protective Co. v.
Pang, 740 F.3d 1279, 1283 (9th Cir. 2013) (quoting
Fulton Homes Corp., 155 P.3d at 1096). Accordingly,
“successful parties” are “not limited to
those who have a favorable final judgment at the conclusion
of the” action. Wagenseller v. Scottsdale Mem'l
Hosp., 710 P.2d 1025, 1048 (Ariz. 1985). “Rather,
a party may be successful without recovering ‘the full
measure of the relief it requests.'” Med.
Protective Co., 740 F.3d at 1283 (quoting
Sanborn, 874 P.2d at 987). In like manner,
“[n]either does the fact that the amount of the claim
is set off or reduced by counterclaim mean that the plaintiff
was not the successful party.” Ocean W.
Contractors, Inc. v. Halec Const. Co., 600 P.2d 1102,
1105 (Ariz. 1979) (citations omitted). For example, a
“party who is awarded a money judgment in a lawsuit is
not always the successful or prevailing party, ”
although an “award of money is . . . an important item
to consider when deciding who, in fact, did prevail.”
Id. Furthermore, a party “need not
‘prevail on the merits of the underlying claims' in
order to be deemed a successful party under Section
12-341.01.” Med. Protective Co., 740 F.3d at
1283 (quoting Mark Lighting Fixture Co. v. Gen. Elec.
Supply Co., 745 P.2d 123, 128 (Ariz.Ct.App. 1986)).
determine whether a party is successful under Section
12-341.01, a court should consider ‘the totality of the
circumstances and the relative success of the
litigants.'” Id. (quoting McAlister v.
Citibank, 829 P.2d 1253, 1262 (Ariz.Ct.App. 1992)).
Where a case involves “various competing claims,
counterclaims and setoffs all tried together, the successful
party is the net winner.” Ayala v. Olaiz, 776
P.2d 807, 809 (Ariz.Ct.App. 1989). In determining who was the
prevailing party in such “a case involving multiple
claims and varied success, the trial court may apply a
‘percentage of success' or a ‘totality of the
litigation' test.” Berry v. 352 E.
Va., L.L.C., 261 P.3d 784, 788-89 (Ariz.Ct.App. 2011)
(quoting Schwartz v. Farmers Ins. Co. of Ariz., 800
P.2d 20, 25 (Ariz.Ct.App. 1990)). Other Arizona courts have
also applied a “net judgment” test to determine
the prevailing party in situations where both parties are
awarded judgments. Vortex Corp. v. Denkewicz, 334
P.3d 734, 745 (Ariz.Ct.App. 2014); see also Am. Power
Prods., Inc. v. CSK Auto, Inc., No. 1: CA-CV-12-0855,
2016 WL 2930686, at *2 n.2 (Ariz.Ct.App. May 19, 2016)
(indicating that the bright-line net judgment test may best
be applied in “moderately simple” cases with
claims and counterclaims “for merely monetary
damages” that are “not so complex”).
Discretion to Award Attorneys' Fees
court finds that a party is the “successful
party” as envisioned in A.R.S. § 12-341.01, the
court may then exercise its discretion on whether to award
reasonable attorneys' fees. Associated Indem. Corp.
v. Warner, 694 P.2d 1181, 1184 (Ariz. 1985).
Nevertheless, “there is no presumption that a
successful party should be awarded attorney fees under §
12-341.01.” Motzer v. Escalante, 265 P.3d
1094, 1095 (Ariz.Ct.App. 2011); see also Manicom v.
CitiMortgage, Inc., 336 P.3d 1274, 1283 (Ariz.Ct.App.
2014) (holding that an award of attorneys' fees under
A.R.S. § 12-341.01(A) “is permissive” and
determining whether to exercise its discretion to award
attorneys' fees under § 12-341.01(A), the Arizona
Supreme Court concluded in Associated Indemnity that
a court may consider, among other factors, the following:
(1) the merits of the unsuccessful parties' claim or
defense; (2) whether litigation could have been avoided or
settled; (3) whether assessing fees against the unsuccessful
party would cause extreme hardship; (4) whether the
successful party prevailed with respect to all relief sought;
(5) the novelty of the issues; and (6) whether the award will
overly deter others from bringing meritorious suits.
Velarde v. PACE Membership Warehouse, Inc., 105 F.3d
1313, 1319 (9th Cir. 1997) (citing Associated Indem.
Corp., 694 P.2d at 1184).
these Associated Indemnity factors, “[n]o
single factor can be determinative and the court is to weigh
all of the factors in exercising its discretion.”
Am. Const. Corp. v. Phila. Indem. Ins. Co., 667
F.Supp.2d 1100, 1107 (D. Ariz. 2009) (citing Wilcox v.
Waldman, 744 P.2d 444, 450 (Ariz.Ct.App. 1987)).
However, “[t]he weight given to any one factor is
within the court's discretion.” Moedt v. Gen.
Motors Corp., 60 P.3d 240, 245 (Ariz.Ct.App. 2002).
Finally, because “[a]n award of attorney's fees
under A.R.S. § 12-341.01 is discretionary with the trial
court, . . . if there is any reasonable basis for the
exercise of such discretion, its judgment will not be
disturbed.” Schwartz, 800 P.2d at 25 (citing
Associated Indem. Corp., 694 P.2d at 1184-85).
“Reasonable” Attorneys' Fees
after concluding that awarding attorneys' fees is
appropriate under the factors laid out in Associated
Indemnity, the court must then decide whether the
requested fees are reasonable. Manone v. Farm Bureau
Prop. & Cas. Co., No. 3:CV-15-8003-PCT-JAT, 2016 WL
1059539, at *3 (D. Ariz. Mar. 17, 2016). To determine whether
the requested attorneys' fees are reasonable, “the
Court looks to whether the hourly rate is reasonable and
whether the hours expended on the case are reasonable.”
Maguire v. Coltrell, No. 2:CV-14-1255-PHX-DGC, 2015
WL 3999188, at *3 (D. Ariz. July 1, 2015) (citing
Schweiger v. China Doll Rest., Inc., 673 P.2d 927,
931-32 (Ariz.Ct.App. 1983)).
is generally analyzed under the “lodestar method,
” which has been adopted as “the centerpiece of
attorney's fee awards.” Leavey v.
UNUM/Provident Corp., No. 2: CV-02-2281-PHX-SMM, 2006 WL
1515999, at *23 (D. Ariz. May 26, 2006) (quoting
Blanchard v. Bergeron, 489 U.S. 87, 94 (1989)).
“The lodestar method of calculating reasonable
attorneys' fees is a two-step process whereby a court
multiplies ‘the number of hours reasonably expended by
a reasonable hourly rate' and then determines if any of
the identified lodestar factors favor enhancing or reducing
the arrived at product.” Manone, 2016 WL
1059539, at *3 (quoting Fischer v. SJB-P.D. Inc.,
214 F.3d 1115, 1119 (9th Cir. 2000)).
may also consider the thirteen factors listed in Local Rule
of Civil Procedure for the District of Arizona (“Local
Rule”) 54.2(c)(3) when determining the reasonableness
of an attorneys' fee request. See W. All. Bank v.
Jefferson, No. 2: CV-14-0761-PHX-JWS, 2016 WL 1392077,
at *1 (D. Ariz. Apr. 8, 2016). These thirteen factors
(A) The time and labor required by counsel; (B) The novelty
and difficulty of the questions presented; (C) The skill
requisite to perform the legal service properly; (D) The
preclusion of other employment by counsel because of the
acceptance of the action; (E) The customary fee charged in
matters of the type involved; (F) Whether the fee contracted
between the attorney and the client is fixed or contingent;
(G) Any time limitations imposed by the client or the
circumstances; (H) The amount of money, or the value of the
rights, involved, and the results obtained; (I) The
experience, ability and reputation of counsel; (J) The
‘undesirability' of the case; (K) The nature and
length of the professional relationship between the attorney
and the client; (L) Awards in similar actions; and (M) Any
other matters deemed appropriate under the circumstances.
“[o]nce a party establishes its entitlement to fees and
meets the minimum requirements in its application and
affidavit for fees, the burden shifts to the party opposing
the fee award to demonstrate the impropriety or
unreasonableness of the requested fees.” Nolan v.
Starlight Pines Homeowners Ass'n, 167 P.3d 1277,
1285-86 (Ariz.Ct.App. 2007). However, “[i]f that party
fails to make such a showing of unreasonableness, the
prevailing party is entitled to full payment of the
fees.” Geller v. Lesk, 285 P.3d 972, 976
(Ariz.Ct.App. 2012) (citing McDowell Mountain Ranch Cmty.
Ass'n, Inc. v. Simons, 165 P.3d 667, 672
(Ariz.Ct.App. 2007)). On the other hand, should “the
party opposing the award show that the otherwise prima
facie reasonable fee request is excessive, the court has
discretion to reduce the fees to a reasonable level.”
Court “has broad discretion in fixing the amount of
attorneys' fees.” Pettay v. Ins. Mktg. Servs.,
Inc. (W.), 752 P.2d 18, 21 (Ariz.Ct.App. 1987) (citing
Associated Indem. Corp., 694 P.2d at 1184). However,
“[t]his discretion is limited only to the extent that
‘such award may not exceed the amount paid or agreed to
be paid.'” Id. (citing A.R.S. §
12-341.01(B); Lacer v. Navajo Cty., 687 P.2d 400,
404 (Ariz.Ct.App. 1984)).
Entitlement to Fees
are entitled to an award of reasonable attorneys' fees
pursuant to A.R.S. § 12-341.01(A) as this suit involved
a contested action arising out of a contract, Defendants were
the successful party in this litigation, and the Court will
exercise its discretion in awarding attorneys' fees.
Claim Arises Out of a Contract
their request for attorneys' fees under A.R.S. §
12-341.01, Defendants allege that “[t]his action, and
all claims alleged herein, arose out of an express
contract-the 2002 Lexington Excess Policy.” (Doc. 494
at 9). The Court agrees. Defendants' Motion for
Attorneys' Fees continues: “The 2002 Lexington
Excess Policy contained both defense and coverage obligations
imposed on Lexington and owed to its insured, Scott Homes.
Scott Homes' rights under the 2002 Lexington Excess
Policy were assigned to Silverbell.” (Id.).
Further, Defendants state that Lexington's coverage
obligations under this contract “were triggered”
when the jury “determined Scott Homes was liable for
more than $1 million in ‘property damage' covered
under the 2002 Lexington Excess Policy.” (Id.
Lexington contends that “Defendants do not argue that
they are entitled to recover their attorneys' fees
pursuant to contract, ” but instead “rely solely
on A.R.S. § 12-341.01, ” (Doc. 503 at 4-5), this
does not dissuade the Court from agreeing with
Defendants' contention that this action arose out of an
express contract. In support of its argument Lexington cites
Sanders v. Boyer, which states, “[u]nder
Arizona law the longstanding general rule has been that
attorney's fees are not allowed except where expressly
provided for by either statute or contract.” 613 P.2d
1291, 1297 (Ariz.Ct.App. 1980). However, it is clear to the
Court that A.R.S. § 12-341.01-a statute
expressly providing that a court may award attorney fees
“[i]n any contested action arising out of a
contract, ” A.R.S. § 12-341.01(A)
(emphasis added)-meets the mandate of Sanders v.
“[w]hen the contract in question is central to the
issues of the case, it will suffice as a basis for a fee
award.” In re Larry's Apartment, L.L.C.,
249 F.3d 832, 836-37 (9th Cir. 2001). Here, the Lexington
Excess Policy was clearly central to the issues of this case.
As Defendants pointed out in their Motion for Attorneys'
Fees, (Doc. 494 at 9), the Court even previously determined
that Lexington had a duty to defend Scott Homes under the
Lexington Excess Policy and Lexington's refusal to do so
“was a material breach of the Lexington Excess
Policy.” (Doc. 323 at 37). As a result, the Court finds
that this action and all claims alleged herein arose out of
the 2002 Lexington Excess Policy, an express contract.
Defendants are the “Successful” Party
their Motion for Attorneys' Fees, Defendants assert that
“Silverbell and Scott Homes are the prevailing parties
in this litigation.” (Doc. 494 at 6). In support of
this argument, Defendants state, “[a] judgment was
entered in favor of Silverbell and Scott Homes, and against
Lexington Insurance Company  on October 30, 2015.”
(Id.). With damages and pre-judgment interest
included, “the total amount of the judgment is $4, 331,
507.67.” (Id.). Defendants maintain that
“Silverbell prevailed on both contractual issues
relating to Lexington's defense and coverage
obligations” and “on all of the Counts for
Declaratory Relief alleged by Lexington regarding the 2002
Lexington Excess Policy.” (Id. at 10).
however, states that “Defendants presume, without any
analysis, that they are the ‘successful parties'
simply because they received a judgment following
trial.” (Doc. 503 at 5). Rather, Lexington insists that
Defendants do “not meet [the] threshold requirement for
an attorneys' fees award” because “under
either a ‘percentage of success' or a
‘totality of the litigation' test, neither party is
the successful party in this case.” (Id. at
does concede that “Silverbell received a judgment on
certain contractual claims at trial.” (Id. at
6). However, Lexington states that it “prevailed on a
contractual claim regarding offsets in the parties'
post-trial motions” where it “received $2, 589,
999.99 in offsets, which allowed Silverbell to only recover
approximately fifty-seven percent (57%) of its requested
contractual damages of $6 million.”
(Id.). Further, Lexington asserts that
“Defendants were unsuccessful on two of the primary
issues in this case: Silverbell's extracontractual claims
for bad faith and punitive damages.” (Id. at
2). Specifically, Lexington claims that it “prevailed
on the merits on Silverbell's $15 million punitive
damages counterclaim, and obtained a dismissal of the bad
faith counterclaim upon the parties'
stipulation[.]” (Id. at 6).
Lexington's contentions that neither party prevailed in
this action, the Court has “substantial
discretion” to ascertain which party, if any, was
successful. Fulton Homes Corp., 155 P.3d at 1096
(citing Pioneer Roofing Co., 733 P.2d at 664). As
each party in this case prevailed on some claims, the Court
concludes that a “totality of the litigation”
test will most fairly determine the relative success of the
parties. See generally Schwartz, 800 P.2d at
25. Under a
“totality of the litigation” test, “the
Court reviews the multiple claims and whether the parties
succeeded on these claims to determine which party is the
successful party.” Med. Protective Co. v.
Pang, 25 F.Supp.3d 1232, 1239 (D. Ariz. 2014) (citing
Berry, 261 P.3d at 788-89). “Only when a
defendant's setoffs or counterclaims exceed the amount
recovered by the plaintiff is the court barred from finding
that the plaintiff was the prevailing party.” Am.
Power Prods., Inc., 2016 WL 2930686, at *2 n.3; see
Sanborn, 874 P.2d at 987.
reviewing each of the multiple claims in this case under the
“totality of the litigation” test, the Court
finds that Defendants were the successful party. Upon the
parties' cross-motions for summary judgment, the Court
held that Silverbell was entitled to judgment on Counts I,
XII, XIII, XIV, XV, and XVI of Lexington's FAC. (Doc. 323
Accordingly, these claims were dismissed. (Id.). As
to Silverbell's Counterclaim, the Court held that Count I
(duty to defend and coverage) and Count II (bad faith)
remained issues for trial. (Id. at 50). Despite
these victories for Defendants, however, the Court determined
on summary judgment that “Silverbell is not entitled to
punitive damages.” (Id.). Lexington was not
awarded summary judgment on any other claims, but the Court
did hold that Counts II-XI of Lexington's FAC were
“coverage issues to be litigated at trial.”
(Id. at 49).
months later, upon stipulation of the parties, (Doc. 404),
the Court dismissed with prejudice Count II of
Silverbell's Counterclaim for insurance bad faith, (Doc.
406). While Defendants claim that “[t]his was a
tactical trial decision by Silverbell and not an
acknowledgement of reasonableness by Lexington in its claims
handling, ” (Doc. 494 at 14), Lexington contends this
dismissal occurred “shortly after [it] prevailed on a
critical motion in limine that severely undercut
Silverbell's bad faith counterclaim, ” (Doc. 503 at
6). Lexington even states that its success on the motion in
limine “led to Silverbell conceding that its bad faith
counterclaim had no merit and dismissing this claim on the
eve of trial.” (Id. at 9). However, after
reviewing the record, the Court finds there is no support for
this statement; the Court does not believe Defendant ever
expressly conceded that “its bad faith counterclaim had
no merit.” (Id.). Even though Lexington
includes an email between the parties' counsel in which
counsel for Defendants states that “Defendants may be
willing to agree to dismiss its bad faith claim for a waiver
of fees and costs as to that claim only, and with a
stipulation that certain witnesses and evidence would no
longer be relevant on the breach of contract/coverage claim
only[, ]” (Doc. 504-1 at 15), this is not evidence of
Defendants conceding that their bad faith claim “has no
merit.” Further, Lexington's assertion that it
“obtained a dismissal of the bad faith counterclaim,
” (Doc. 503 at 6), seems to imply that Lexington did so
single-handedly when, in fact, Defendants stipulated to the
dismissal. Notwithstanding, regardless of any procedural
reasons Defendants may have had for their stipulation, the
dismissal of the bad faith counterclaim weighs slightly in
Defendants prevailed on each Count of Lexington's FAC
remaining at the time of trial (Counts II-XI), and on Count I
of Silverbell's Counterclaim. (Doc. 486 at 1).
Consequently, the Court entered judgment on each of these
Counts in favor of Defendants and ordered that Silverbell
recover damages in the amount of $3, 410, 000.01, subject to
pre-judgment and post-judgment interest, from Lexington.
(Id. at 1-2). Although Lexington states that
“Silverbell ultimately prevailed at trial on a single
coverage issue” after “the jury was asked just
one question, which it answered in favor of Silverbell,
” (Doc. 503 at 4), Defendants actually succeeded in
“proving that Lexington owed both a defense and
coverage/indemnity obligation to Scott Homes, ” (Doc.
494 at 14). Further, Defendants “prevailed on all of
the Counts for Declaratory Relief alleged by Lexington
regarding the 2002 Lexington Excess Policy.”
(Id. at 10). That Defendants obtained relief in the
form of monetary damages totaling $4, 331, 507.61 (with
pre-judgment interest included) after litigating all of the
claims and counterclaims, while Lexington was awarded
nothing, “is an important item to consider when
deciding who is the prevailing party[.]”
Sanborn, 874 P.2d at 987 (citing Ocean W.
Contractors, Inc., 600 P.2d at 1105).
further contends that its “successful claims and
defenses dramatically reduced [the value of] Silverbell's
counterclaims from $21 million to $4, 331, 507.67, a
reduction of almost eighty percent (80%).” (Doc. 503 at
7). In support of this assertion, Lexington points to its
victory on Defendants' punitive damages counterclaim on
summary judgment, as well as the stipulated dismissal of
Defendants' bad faith counterclaim. (Id.).
Lexington also alleges that it “prevailed on a
contractual claim regarding offsets in the parties'
post-trial motions, ” in which ...