A recent Law 360 story by Ben Zigterman, “6th Circ. Won’t Rehear Attorney Fee Coverage Decision” reports that the Sixth Circuit declined to rehear an appeal decided earlier this month against two attorneys seeking coverage of attorney fee awards that Wesco Insurance Co. said were excluded "sanctions." After the July 1 decision, Ohio attorneys Jason Wallace and Daniel Bache asked to have the full circuit rehear the appeal, arguing that a three-judge panel improperly interpreted the policy from an average attorney's perspective, rather than whether it was subject to multiple interpretations.
"The original panel has reviewed the petition for rehearing and concludes that the issues raised in the petition were fully considered upon the original submission and decision of the case," the order said. "The petition then was circulated to the full court. No judge has requested a vote on the suggestion for rehearing en banc." In its decision, the panel found that the attorney fee award qualified as sanctions because the Individuals with Disabilities Education Act the claims were brought under make attorney misconduct a prerequisite for an attorney fee award.
Because Wesco's policy included an exclusion for sanctions under federal law, the panel said the insurer didn't owe coverage. The case stems from suits filed by four northern Ohio school districts seeking to recover what they spent on attorney fees fighting litigation filed on behalf of parents and children under IDEA, according to court documents.
"This misconduct element makes clear that any awarded fees would constitute a 'sanction' under the ordinary meaning of that term (and so under Wesco's policy)," the panel wrote. In their petition for a rehearing, Wallace and Bache argued that the panel should have interpreted the policy's terms liberally in its favor, not under their ordinary meaning or as an average attorney would define them.