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Admiral Insurance Co. v. Community Insurance Group SPC Ltd.

United States District Court, D. Arizona

February 23, 2017

Admiral Insurance Company, Plaintiff,
Community Insurance Group SPC Limited, Defendant.



         Defendant Community Insurance Group SPC Limited (CIG) has filed a motion for attorneys' fees and non-taxable expenses pursuant to Local Rule 54.2 and A.R.S. §§ 12-341 and 12-341.01. Doc. 199. The motion is fully briefed, and neither party has requested oral argument. The Court will grant the motion in part.

         I. Background.

         This case involved a dispute over insurance coverage for a physician, Dr. Anthony Schwartz, who was sued for medical negligence. Dr. Schwartz had a professional liability policy through Plaintiff Admiral Insurance Company (“Admiral”). Dr. Schwartz was employed by the Bullhead City Clinic (the “Clinic”), and the Clinic had its own liability policy through Defendant Community Insurance Group SPC Limited (“CIG”). Admiral filed this action against CIG on August 14, 2014, seeking equitable contribution for payments it made on behalf of Dr. Schwartz. Doc. 1.

         CIG filed motions to dismiss (Doc. 12), to file a sur-reply (Doc. 32), and to strike (Doc. 36), which were denied (Doc. 37). CIG then filed a motion for reconsideration (Doc. 42), which was also denied (Doc. 51). Following discovery, the parties briefed extensive cross-motions for summary judgment. Docs. 121, 122, 128, 129, 130, 148, 149, 150, 153, 154, 155. On August 26, 2016, the Court held a conference with the parties and directed that the motions be briefed in a more focused manner. Doc. 160. All pending motions were denied, and the parties filed simultaneous cross-motions for summary judgment and simultaneous responses. Docs. 189, 190, 191, 192, 193, 194, 195, 196. On November 22, 2016, the Court entered judgment in favor of CIG and against Admiral. The Court concluded that the Clinic policy provided excess coverage and did not trigger the Admiral Policy's “other insurance” clause. Doc. 197.

         On December 6, 2016, CIG filed this motion for attorneys' fees, seeking $256, 376.41. Doc. 199. The request includes “attorneys' fees through the summary judgment ruling, for its computerized research expenses, and for fifteen hours of attorney time for preparing this fee application.” Id. at 11. CIG also seeks non-taxable expenses of $39, 407.36, in addition to taxable costs listed in the Bill of Costs filed separately. Id.

         II. Legal Standard.

         Under Arizona law, “[i]n 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). The trial court has discretion regarding such an award. See Wilcox v. Waldman, 744 P.2d 444, 450 (Ariz.Ct.App. 1987). Courts consider: (1) the merits of the unsuccessful party's claim, (2) whether the successful party's efforts were completely superfluous in achieving the ultimate result, (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) whether the legal question presented was novel or had been previously adjudicated, and (6) whether a fee award would discourage other parties with tenable claims from litigating. Am. Const. Corp. v. Philadelphia Indem. Ins. Co., 667 F.Supp.2d 1100, 1106-07 (D. Ariz. 2009) (citing Assoc. Indem. Corp. v. Warner, 694 P.2d 1181, 1184 (Ariz. 1985)). No single factor is determinative. See Velarde v. PACE Membership Warehouse, Inc., 105 F.3d 1313, 1319-20 (9th Cir. 1997).[1]

         III. Analysis.

         This case arose out of contract. See Docs. 199, 201; see also Cal. Cas. Ins. Co. v. Am. Family Mut. Ins. Co., 94 P.3d 616, 622 (Ariz.Ct.App. 2004) (affirming award of attorneys' fees pursuant to A.R.S. § 12-3451.01 for equitable contribution). Accordingly, the Court will determine whether fees should be awarded by turning to the factors in Associated Indemnity, 694 P.2d at 1184.

         A. Merits of the Claims.

         The Admiral Policy undisputedly provided primary coverage for Dr. Schwartz, and the Clinic paid approximately $250, 000 in premiums to Admiral for that coverage. Furthermore, Admiral was provided with an insurance certificate prior to litigation demonstrating that the CIG policy provided excess coverage to Dr. Schwartz. Admiral argues that its claims were not without merit because it survived both a motion to dismiss and a motion for reconsideration. Doc. 201 at 7. But the fact that Admiral was able to state a claim does not mean that the claim had merit. When facts from both sides were considered, Admiral lost at summary judgment. This factor favors CIG's request for attorneys' fees.

         B. Litigation could have been avoided.

         Admiral brought this action. The parties engaged in attempts at private mediation and settlement, but all attempts failed. Admiral argues that CIG prolonged the litigation by failing to turn over the CIG Policy, a point which has some merit. But no settlement was reached even after the CIG Policy was disclosed. The Court concludes that CIG's actions were not superfluous in achieving the ultimate result; they were necessary ...

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