A recent Law.com story by Aleeza Furman, “Defendants’ Late Motion Costs Them An Over $130K Attorney Fees Award”, reports that a late motion in a long-running contract dispute lost defendants $130,620 in attorney fees.  The Pennsylvania Superior Court threw out an order granting the fees because the defendants had filed their motion more than 30 days after the trial court entered its final order in the matter.

The three-judge panel rejected the argument that the plaintiff’s pursuit of an appeal extended the window in which the defense could seek attorney fees.  “The lesson is to file for fees early and often,” solo practitioner Joseph Caprara said.  Caprara represented the defendants, Skippack Building Corp. and its shareholders, BS Trust, EB Trust, JE Trust and SJ Trust.

Plaintiff Blue Haven Pools, represented by Hamburg, Rubin, Mullin, Maxwell & Lupin’s Mark Himsworth, argued that the trial court had lacked jurisdiction to grant the attorney fees because the defendants’ motion was untimely filed.  Blue Haven contended that the defendants filed their motion approximately three months after the court entered its judgment in a garnishment action between the two parties.

The defendants, however, argued the time limit to seek fees had not yet expired because an appeal had been in the works.  While the trial court entered its judgment in the garnishment action Jan. 23, 2017, the Superior Court ruled on the matter April 3, 2017, and Skippack Building filed its motion April 20, 2017, according to the opinion.  “When we sought counsel fees our argument was, ‘it wasn’t over,’” Caprara said.  “Theoretically, it’s possible for Blue Haven to file another appeal.”

But the Superior Court ruled otherwise.  “Skippack had 30 days from the date of the final order to file a motion for counsel fees, and an appeal does not extend the time period for the motion to be filed,” Judge Megan Sullivan wrote.  The court held that it was constrained to reverse the trial court’s order granting attorney fees.

A recent Law 360 story by Emilie Ruscoe, “Conn. Defendants Slams $3M Atty Fee Bid as Late, ‘Excessive’”, reports that two defendants on the hook for $6.75 million in damages for duping a Delaware company into an investment scheme have pushed back against the more than $3 million in fees and expenses requested by the investor's counsel, telling a Connecticut state judge that certain fee-related filings were untimely and that other requests were made for work that didn't have to do with the state court claims.  In an objection, Dean S. Barr and Joseph E. Meehan told Judge Sheila A. Ozalis that the plaintiff's counsel shouldn't get the nearly $3.1 million in legal fees and more than $210,000 in costs it sought last month.

The fee request came after Judge Ozalis determined after a nine-day bench trial that Barr and Meehan were jointly and severally liable for costing FIH LLC of Delaware millions of dollars by fraudulently enticing investments in Foundation Capital Partners LLC.  She ruled that the two men owed $6.75 million in damages over the negligent misrepresentation and intentional fraudulent misrepresentation counts and claims arising from Connecticut's Uniform Securities Act and Unfair Trade Practices Act.

In objecting to the subsequent fee motion, Barr and Meehan said that FIH sought fees and costs for five law firms involved in its representation, but submitted affidavits describing the basis of the requests for only three of those firms, Wiggin and Dana LLP, Phillips Nizer LLP and Epstein Becker & Green PC, by the Sept. 29 deadline.  The other two firms, Cozen O'Connor and Sadis & Goldberg LLP, "are in the process of preparing affidavits to support this attorneys' fees motion," FIH said in its filing, according to the objection.  The supplemental affidavits were filed Oct. 4, the objection said.

Barr and Meehan said any fee request for Cozen O'Connor and Sadis & Goldberg LLP should be rejected because the deadline for submitting those affidavits had been "clear and unambiguous" and that no extension was either requested or granted.  "FIH had more than enough notice, time and incentive to provide documentation for these fees," Barr and Meehan said.  The defendants also asserted that the requested fees were "unreasonable and excessive" because they "inappropriately encompass" FIH's separate litigation of its securities claims in federal district court and its appeal to the Second Circuit.

Over $1 million of the fees sought arose only from the federal litigation, the defendants said, and those fees "were clearly not incurred in connection" with the litigation alleging violations of Connecticut's Uniform Securities Act.  The defendants cited the example of the fees requested for FIH's appeal of a summary judgment order in favor of the defendants, noting that the appeal explicitly did not include FIH's state law claims.

And even before its appeal, "by its own admission, the time and costs spent litigating the federal trial were unrelated to FIH's [Connecticut's Uniform Securities Act] claim brought under Connecticut state law," the defendants said.  Barr and Meehan also highlighted that FIH hadn't prevailed in the federal trial, telling the court that "its lack of success on those claims must be taken into account" in calculating fees and costs.

The defendants also argued that nothing in the fee motion or supporting filings showed that the time counsel spent on various proceedings was reasonable.  "None of the affidavits filed offer any detailed descriptions attributing time to work performed," they said.  In its fee motion, FIH said that it "should be allowed to recover the fees and costs it was forced to expend in its nearly decade-long efforts to recover the $6.75 million that it invested in Foundation Capital Partners based on Dean S. Barr and Joseph E. Meehan's lies and material omissions."  FIH referred the court to a lengthy litigation history in support of its fee requests, noting various claims against the company it brought in state court and a federal district court action that twice was appealed to the Second Circuit.

A recent Law 360 story by Hayley Fowler, “Abortion Protesters Keep Atty Fees in 4th Circ. Picketing Row” reports that the First Circuit deepened a circuit divide on how long attorneys have to seek fees in district court after winning a Social Security Administration benefits dispute, adopting a "reasonable time" standard also used in the Tenth Circuit rather than a more rigid limit used in four other circuits.  The court affirmed a finding that the attorney in question waited too long under either approach to seek fees for successfully representing a client in a benefits dispute with the agency.

But in a matter of first impression for the circuit, the court said fee petitions brought under 42 USC § 406(b), for representation in court on disability benefits challenges must be brought within a reasonable time.  That puts the First and Tenth Circuits on one side of a divide opposite the Second, Third, Fifth and Eleventh circuits, which say such fee petitions must be brought within 14 days of judgment.

The problem with that 14-day time limit is that after a district court decides a benefits dispute, often the case is remanded to the agency for a benefits determination, making it impossible to know how much the client will recover and thus impossible to calculate a contingency fee, the court noted in an opinion written by Judge O. Rogeriee Thompson.  "In scanning the out-of-circuit precedent, we have observed that in practice, accomplishing justice in most § 406(b) cases seems to inevitably require some exercise of the district court's discretion and powers in equity," the court said.

Some of the circuits that follow the 14-day rule toll that deadline until the SSA makes a final benefits determination.  Others recognize the district court's power to grant discretionary relief from that strict deadline.  The First Circuit said it makes more sense to use the "reasonableness" standard applied to fee motions made under Federal Rule of Civil Procedure 60(b) – the rule for relief from a final judgment – rather than the 14-day time limit that comes from Federal Rule of Civil Procedure 54(d)(2), the rule for judgments that include attorney fees.

Attorney fees in disability benefits cases are not comparable to "loser pays" types of attorney fee awards typically addressed in motions for judgment under Rule 54(d)(2), the court said. Instead, the disability benefits statute allows for attorney fees of up to 25% of the awarded benefits, in what the First Circuit said "implies that the fees are awarded as a part of a district court's judgment for the claimant, rather than as a separate judgment allowing the party to recuperate costs underlying the action."  "Here it is clear to all parties that, in the event of success before the agency on remand, a subsequent amendment to the district court's judgment to award attorneys' fees is highly likely," the court said.

The dispute arose from Green & Greenberg's successful representation of a client in court and before the SSA who eventually was recognized to have a disability and awarded benefits.  The firm represented client Jose Pais on a contingency basis for 25% of his award.  After he won, the SSA set aside just over $29,000 for potential legal fees.  When the firm sought to collect its fees through the SSA, it claimed only about $7,000 for its work at the administrative level. During oral argument, the firm's David Spunzo told the court a paralegal mistakenly claimed 25% of the money available for fees, rather than 25% of the total award.

The SSA then several times notified the firm that it was continuing to retain about $22,000 from Pais's total award as the contingency fee.  By the time the firm sought the remaining amount of the available attorney fees for its work in court, 26 months after the SSA notified Pais of the benefits award, the district court determined it was too late.  The SSA did not take a position in the litigation on which approach to the timing of fee motions is correct, in-house counsel Timothy Bolen told the court during oral argument.  Bolen said the agency's role is to act as quasi-trustee for the claimant and reserve 25% of the award for potential payment of attorney fees, while the question of how much in fees to award is left to the district court.

A recent Law 360 story by Josh Liberatore, “11th Circ. Tosses Insurer’s Bid For Atty Fees After Reversal” reports that an insurer can't seek attorney fees on a $1.6 million judgment it previously won against a Liberty Mutual unit, the Eleventh Circuit confirmed, which comes after the court recently vacated the insurer's win on claims that the Liberty unit breached its contract while defending a fatal accident suit.  In an unpublished opinion, the appellate panel denied Endurance American Specialty Insurance Co.'s bid for attorney fees as moot. 

In May, the Eleventh Circuit reversed Endurance's $1.6 million win, finding that it couldn't show how Safeco Insurance Co. breached an indemnity agreement it had with Comegys Insurance Agency Inc., which was insured by Endurance.  "Safeco did win its appeal," the panel noted, "so, Endurance may not seek attorneys' fees."  Endurance had asked the Eleventh Circuit to overturn a lower court judge's ruling that its claims for attorney fees stemming from the judgment against Safeco were time-barred because Endurance failed to seek the fees within 14 days of the judgment.

The coverage dispute stems from an accident between driver Robert Smith and a motorcyclist, who died.  Safeco insured Smith, who bought his policies through Comegys.  Smith faced a wrongful death suit for which Safeco assigned an attorney who defended the case, and eventually a $7.3 million consent judgment was entered against Smith, according to court documents.  The consent judgment included Safeco paying the motorcyclist's estate the limits of Smith's auto policy, $1.25 million, and assigning the estate Safeco's claim against Comegys for negligent procurement, based on the theory that Comegys failed to find Smith a more robust policy after he had inquired about raising his policy limits.

Endurance insures Comegys under an errors and omissions policy, according to its suit.  The motorcyclist's estate pursued Endurance and Comegys "for the limit of Comegys's policy with Endurance," according to court documents.  The companies eventually paid just over $1.5 million to end the claims, court records show.

Endurance then sought to recoup the money from Safeco, arguing Safeco had breached its contract with Comegys by refusing to indemnify it for the alleged negligence.  Endurance's argument hinged on Safeco assigning an attorney to defend Smith, who allegedly mentioned to the motorcyclist's estate the possibility of a negligent procurement claim against Comegys and recommended an insurance lawyer to the estate.  In July 2019, a jury found in Endurance's favor, and the lower court entered a $1.6 million judgment against Safeco.

While Safeco appealed that decision to the Eleventh Circuit, Endurance launched an appeal of its own, arguing it should be awarded attorney fees for the judgment.  However, the Eleventh Circuit reversed the judgment last month, finding that Endurance couldn't show how Safeco had breached its contract with Comegys.  Safeco had acted entirely within the terms of that agreement by providing an insurance policy to Comegys's customers, tendering the policy on time after the accident and providing an attorney to Smith to defend the suit, the Eleventh Circuit panel presiding over that case found.  Safeco can't be held liable for what Smith's attorney decided to do after that, the panel said.