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Category: Fees & Timeliness

Eleventh Circuit Tosses Insurer’s Request for Attorney Fees

June 2, 2022

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  In an unpublished opinion, the appellate panel denied Endurance American Specialty Insurance Co.'s bid for attorney fees as moot.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.

Federal Circuit Says Party Time-Barred From Challenging Fee Award

April 20, 2022

A recent Law 360 story by Jasmin Jackson, “Fed. Circuit Says Appeal of Domino’s $2.7M Fee Win Too Late” reports that the Federal Circuit has held a patentee waited too long to challenge an order forcing it to pay Domino's $2.7 million worth of attorney fees in a patent suit over online menus, yet it won't decide whether to ax the appeal until a lower court rules on a filing extension request.  The three-judge panel said they would postpone ruling on a motion to dismiss filed by Domino's Pizza LLC in an appeal launched by patent-holding company Ameranth Inc. over the seven-figure fee award, which was issued after the pizza chain beat claims that its online menu infringed a patent held by Ameranth.

The panel said they would wait for a California federal judge to decide whether the missed 30-day filing deadline for the appeal could be extended.  "Granting an extension of time to appeal could result in the notice of appeal being deemed timely, and because the district court did not act on that request, the court deems it proper here to remand for the district court to now act on that request," the panel said.

Ameranth filed its suit against Domino's in March 2012 and claimed the chain's online ordering system infringed a patent that covered menu generation, which was issued by the U.S. Patent and Trademark Office that same month.  But U.S. District Judge Dana M. Sabraw invalidated the patent in September 2018 and found the ordering technology was unpatentable under the U.S. Supreme Court's 2014 ruling in Alice v. CLS Bank — a decision that prevented abstract computer-based ideas from being patented without an added inventive element.  According to the ruling, Ameranth's patent was based on an abstract idea of configuring and transmitting menu information.

The pizza chain then requested nearly $3 million in attorney fees in February 2020.  A year later, Judge Sabraw agreed that Domino's was entitled to the award due to Ameranth's "especially weak" suit and said further briefing was needed to determine the exact amount.  Ameranth asked that the ruling be reconsidered the following month and asserted it was wrongfully being labeled as a "patent troll."  But the pizza chain was ultimately awarded $2.7 million in June 2021.

Judge Sabraw amended the judgment the following November but maintained the fee amount, prompting the patent-holding company to initiate an appeal at the Federal Circuit the same month.  But the panel said in their order that Ameranth had to initiate the appeal within about a month of the lower court's initial June order, ruling the filing clock didn't restart after the amended judgment.  "The June 21, 2021, order here fully adjudicated the fee matter and evidenced a clear intent to be the court's final act on that matter," the panel held.