A recent New Jersey Law Journal story, “Court Upholds $1.7M Fee Awards in Title Insurance Dispute,” reports that a New Jersey appeals court has upheld a $1.7 million attorney fee award against a title insurance company, finding that the work billed in the underlying title dispute fell within the insurance policies’ defense coverage provisions. The appeals court also ruled that the plaintiffs may be entitled to attorney fees and expenses related to the title insurance dispute, as well as prejudgment interest.
In an unpublished decision in 212 Marin Boulevard v. Chicago Title Insurance, a three-judge Appellate Division panel upheld a Hudson Country trial judge’s ruling that defendant Chicago Title Insurance Co. had a duty to defend the plaintiffs; title and was obligated to the plaintiffs about $1.7 million in attorney fees incurred in the underlying title actions.
The plaintiffs sued Chicago Title in 2009, seeking a declaration that the insurer had a duty to defend their title in the rail use cases and, in 2011, a trial judge agreed, according to the opinion. In 2012, the plaintiffs filed a fee application for approximately $1.7 million, which the trial judge approved.
The trial judge did, however, deny the plaintiffs’ request for attorney fees and costs incurred in the coverage dispute, as well as prejudgment interest. Chicago Title and the plaintiffs both appealed.
The Appellate Division panel, composed of Judges Clarkson Fisher Jr., Allison Accurso and Thomas Manahan, first determined that Chicago Title had a duty to defend and indemnify the plaintiffs in the rail use cases, finding that the cases fell within the scope of the policies and that none of the policies’ exclusions applied.
Turning to the fee award, the appeals court rejected all of Chicago Title’s arguments, including that certain counsel fees, such as those for attending public meetings, lobbying efforts and tax issues, were unrelated to the defense of the plaintiffs’ title in the rail use cases.
“There is nothing about the policy language to suggest that the promise to pay costs incurred in the defense of title would be strictly limited to the particular confines of the underlying lawsuits and would not extend to other efforts to vindicate the title conveyed,” the court said.
The appeals panel also disagreed with Chicago Title’s argument that it should not have to cover legal fees incurred in the plaintiffs’ pursuit of claims that ultimately failed.
“An insured abandoned by an insurer, which had promised to defend its insured’s title, should not necessarily be deprived of fees and expenses incurred in pursuing a theory that proved unsuccessful,” the court said. “The matter rested within the judge’s discretion to determine the reasonableness of the insured’s failed theory.”
The appeals court also sided with the plaintiffs with regard to attorney fees and costs incurred in the title insurance dispute. The panel said the trial judge improperly denied the plaintiffs’ request on the basis that the title insurance suit was “‘akin to direct actions brought by an insured against the carrier to enforce coverage,’” making Rule 4:42-9(a)(6) inapplicable.
Counsel for the plaintiffs, Lynda A. Bennett of Lowenstein Sandler in Roseland, said the appeals court’s ruling made clear that title insurers who shirk their duty to defend risk having to pay not only the insured’s defense costs, but also the costs associated with litigating the coverage dispute.
A recent Reuters story, “Delaware Bans ‘Loser-Pays’ Rules in Corporate Class Actions,” reports that Delaware's governor has signed into law a ban on companies adopting rules that could force investors who bring and lose certain lawsuits to pay the company's defense fees.
However, Delaware lawyers feared fee-shifting would effectively wipe out shareholder litigation and the ability to police corporate boards. The bill, signed by Governor Jack Markell, applies to lawsuits brought under the state's corporate law, which governs most U.S. publicly traded companies and their relations with investors.
Companies with fee-shifting bylaws would have had grounds to seek to recoup legal defense costs. Traditionally each party in U.S. litigation pays its own way regardless of the outcome. Debate over the tactic began in May 2014 when the Delaware Supreme Court ruled in a case involving ATP Tour Inc that fee-shifting provisions were not invalid and might be a permissible way to discourage litigation.
To placate big business, the new law allows companies to adopt rules that require investors to sue in Delaware, a tactic known as forum selection. Supporters argue that corralling lawsuits in Delaware allows the state's judges to weed out weak cases without fear that investors would file in a court in another state, usually where the company has its operations.
Class actions challenging merger deals have become a sore point for business groups. Small investors often file multiple cases over every deal, and while only rare cases result in money for investors, they often generate hundreds of thousands of dollars for the shareholder attorneys.
While the new law was the target of an unusually intense lobbying campaign and a rare close vote in the state's Senate, experts said it may not change much. For one, only about three dozen mostly small companies adopted fee-shifting tactics since the ATP ruling.
Shareholder lawyers said concentrating the class actions in Delaware might improve procedures for handling the cases, but not much else. "I don't know that it achieves getting rid of weak cases," said Juan Monteverde of Faruqi & Faruqi, who specializes in class actions.
Legal bill auditors are companies who provide quantitative analysis of legal billing entries. Legal bill auditors help to categorize and summarize billing entries. Legal bill auditors are hired by clients such as insurance carriers, law firms, corporations, government agencies and municipalities to analyze legal billing entries in underlying litigation and transactional matters.
Legal bill auditing is part art and part science. No two legal bill auditing programs are the same. As a professional body, our mission is to ensure quality and reliability across the legal fee analysis profession. NALFA’s rating system will help fulfill part of this mission. Our rating program will provide clarity to legal bill auditing. Our rating system will also assist clients who use legal bill auditing.
Legal billing auditing programs will be rated by process, methodology, technology, personnel, customer service and leadership. NALFA has identified the following professionally active, U.S.-based legal bill auditing programs (members and non-members) to be rated:
Legal Fee Solutions, LLC (Member)
KPC Legal Audit Services (Member)
Bottomline Technologies (Member)
Alan Gray, Inc. (Member)
Legal Fee Advisors (Non-Member)
Sterling Analytics (Non-Member)
Elevate Services, Inc. (Non-Member)
"We are not interested in legal bill auditing programs being uniform, just competent. We look forward to working with members and non-members in rating the nation's top legal bill auditing programs," said Terry Jesse, Executive Director of NALFA.
Attorney fee experts are judicially qualified expert witnesses who provide expert declarations on the reasonableness of attorney fees and expenses in underlying cases. Attorney fee experts are retained when attorney fees and expenses are at issue by both fee-seeking and fee-challenging clients.
NALFA qualifies attorney fee experts from across the U.S. The following NALFA profile quotes are based on Bio/CV, case summaries and case materials submitted to and verified by NALFA. Members are listed in alpha order.
Pat Gallagher: “Outstanding Skills in Assessing Reasonable Attorney Fees”
Gallagher Law Firm
Gary Greenfield: “Widely Respected on Attorney Fee and Legal Billing Issues”
Litigation Cost Management
Robert Kaufman: "Highly Experienced on Cumis Counsel Billings"
Woodruff Spradlin & Smart
Costa Mesa, CA
Bruce Meckler: "The Nation's Most Experienced Attorney Fee Expert"
John O'Connor: "Highly Qualified on Large, Complex Attorney Fee Disputes"
O'Connor & Associates
San Francisco, CA
For more on NALFA fee experts, visit http://www.thenalfa.org/Network-Directory/
NALFA would like to welcome Jeffrey L. Cohen to our membership. Mr. Cohen is a fully qualified bankruptcy fee examiner. Jeffrey L. Cohen is a Partner at Cooley LLP in New York.
Mr. Cohen served as counsel to the Official Fee Review Committee in the Adelphia Communications bankruptcy cases, wherein the Fee Committee reviewed over $600 million in fees and expenses. Mr. Cohen currently serves as the fee examiner in the Endeavour Corp. bankruptcy cases in the U.S. Bankruptcy Court for the District of Delaware. Mr. Cohen also regularly represents debtors and creditors’ committees around the country including among others, Crabtree & Evelyn, Brookstone, Skymall, Filene’s Basement, Atari, Blockbuster Video and Pizzeria Uno.
For more information on Jeffrey L. Cohen, visit http://www.cooley.com/jcohen and http://www.thenalfa.org/Network-Directory/cohen/
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