Hamilton v. Northfield Insurance Company ( 2020 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS June 8, 2020
Christopher M. Wolpert
TENTH CIRCUIT Clerk of Court
BILLY HAMILTON,
Plaintiff-Appellant/
Cross-Appellee,
v.
No. 17-7049
NORTHFIELD INSURANCE (D.C. No. 6:16-CV-00519-RAW)
COMPANY, (E.D. Okla.)
Defendant-Appellee/
Cross-Appellant.
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OKLAHOMA ASSOCIATION FOR
JUSTICE,
Amicus Curiae.
ORDER AND JUDGMENT *
Before TYMKOVICH, Chief Judge, and CARSON, Circuit Judge. **
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
**
The Honorable Monroe G. McKay participated earlier as a panel
member, but he passed away before the issuance of this order and judgment and
has not participated in this decision. “The practice of this court permits the
remaining two panel judges if in agreement to act as a quorum in resolving the
appeal.” United States v. Wiles, 106 F.3d 1516, 1516 n.* (10th Cir. 1997); see 28
(continued...)
We abated this appeal and certified two questions to the Oklahoma
Supreme Court regarding Oklahoma law on the award of attorney fees in
insurance matters. The Oklahoma Supreme Court has answered our questions,
and we now grant the petition for rehearing submitted by Mr. Hamilton and
remand to the district court for further proceedings.
This diversity case arises out of an insurance policy Billy Hamilton
purchased from Northfield Insurance Company in March 2015. In December
2015, Hamilton filed a claim with Northfield seeking coverage for his building’s
leaking roof, but Northfield twice denied the claim. In November 2016, Hamilton
sued in Oklahoma state court and the case was removed to the United States
District Court for the Eastern District of Oklahoma.
In June 2017, counsel for Hamilton emailed Northfield’s attorneys
requesting “a serious settlement offer” the following week, noting that he had
“almost $12k in hard costs invested in this case thus far” and was conveying that
information “because that figure impacts how much of any settlement Mr.
Hamilton would receive.” (App. Vol. IV at 938.). Counsel for Northfield
responded that Northfield was willing to offer $45,000 to settle the case, which
**
(...continued)
U.S.C. § 46(d) (“A majority of the number of judges authorized to constitute a
court or panel thereof . . . shall constitute a quorum.”).
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they believed “[wa]s a fair offer as it [wa]s more than three times the actual
damages in th[e] case” and further stated that, “[b]ased upon your out of pocket
litigation expenses, this settlement amount will allow you to recover these
expenses along with some fees and should reimburse Mr. Hamilton for the entire
amount of his repair costs.” (Id. at 939.) Hamilton rejected Northfield’s
settlement offer, and the case proceeded to trial, resulting in a $10,652 jury
verdict, the maximum amount of damages the judge instructed the jury it could
award.
Hamilton subsequently filed motions for attorney fees and statutory interest
pursuant to Okla. Stat. tit. 36, § 3629. Northfield responded that Hamilton was
not the “prevailing party” within the meaning of § 3629(B) because Northfield’s
$45,000 settlement offer exceeded the $10,652 damages award. Hamilton argued
that because Northfield’s settlement offer had accounted for damages plus costs
and fees, the costs and fees incurred by Hamilton up to the time of the settlement
offer should be added to the $10,652 damages award in determining the
“prevailing party” under § 3629(B). The district court agreed with Northfield and
denied Hamilton’s motion.
On appeal before this court, Hamilton argued that the district court erred in
(1) granting summary judgment to Northfield on Hamilton’s claim for breach of
the implied duty of good faith and fair dealing and his accompanying request for
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punitive damages, (2) denying Hamilton’s motion for attorney fees and interest on
the grounds that he was not the “prevailing party” within the meaning of
§ 3629(B), and (3) prohibiting certain cross-examination of Northfield’s expert
witnesses. Northfield, in turn, cross-appealed the district court’s denial of its
motion for judgment as a matter of law as to Mr. Hamilton’s breach of contract
claim and challenged the district court’s rulings on Hamilton’s expert witness
report and testimony. On December 18, 2020, we affirmed on all grounds.
Hamilton v. Northfield Ins. Co., 910 F.3d 1320 (10th Cir. 2018).
Hamilton then filed a Petition for Rehearing En Banc on January 2, 2019.
After careful consideration of the Petition and additional briefing by amicus
curiae, we sua sponte granted panel rehearing, vacating our December 18, 2018
decision as to the issues raised in Hamilton’s appeal (17-7049) but leaving that
decision in effect as to the issues raised and resolved in Northfield’s cross-appeal
(17-7055). Hamilton v. Northfield Ins. Co., 913 F.3d 998 (10th Cir. 2019), order
clarified, 913 F.3d 999 (10th Cir. 2019). With case 17-7049 reopened and abated,
we certified the following questions of law to the Oklahoma Supreme Court:
1. In determining which is the prevailing party under Okla. Stat. tit. 36,
§ 3629(B), should a court consider settlement offers made by the
insurer outside the sixty- (formerly, ninety-) day window for making
such offers pursuant to the statute?
2. In determining which is the prevailing party under Okla. Stat. tit. 36,
§ 3629(B), should a court add to the verdict costs and attorney fees
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incurred up until the offer of settlement for comparison with a
settlement offer that contemplated costs and fees?
The Oklahoma Supreme Court returned their answers on May 5, 2020.
Hamilton v. Northfield Ins. Co., 2020 OK 28.
As to the first question, the court answered “no” and further held “a court
may consider only those timely offers of settlement of the underlying insurance
claim—and not offers to resolve an ensuing lawsuit that results from the insurer’s
denial of the same—when determining the prevailing party for the purposes of
awarding attorney fees and costs under section 3629(B).” Id. at ¶ 1. The court
noted that its answer to the first question necessarily resolved the panel’s second
question in the negative: because § 3629(B) only applies to settlement offers
made by the insurer prior to litigation and thus before any such fees have been
incurred, the court held that it is improper to stack attorney fees on top of the
“prevailing party” calculation. Id. at ¶ 1. The court explained the purpose of
§ 3629(B) is to “avoid litigation by creating fee-shifting disincentives if the
insured’s claim is not speedily resolved.” Id. at ¶ 1. It follows, the court
reasoned, that it would thwart the purpose of the statute if a settlement offer made
after a suit is filed could “immunize a company from the consequences of an
unjustified refusal to pay which made the suit necessary in the first place.” Id. at
¶ 5–6 (citation omitted).
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Because Northfield’s $45,000 offer was made outside of the prescribed
sixty-day window, and because it was a litigation-settlement offer rather than a
claim-settlement offer, the Oklahoma Supreme Court held it was not a statutory
settlement offer within the meaning of § 3629(B). Id. at ¶ 6–7. The court thus
concluded that Hamilton is the “prevailing party” entitled to an award of attorney
fees under § 3629(B) because he received a judgment in his favor. Id. at ¶ 7.
On May 12, 2020, this panel lifted the abatement and ordered supplemental
briefing addressing the impact on this appeal of the Oklahoma Supreme Court’s
answers to our certified questions. The parties agree that, in light of the
Oklahoma Supreme Court’s decision, Hamilton is the “prevailing party” within
the meaning of § 3629. Hamilton is thereby entitled to reasonable attorney fees
and statutory interest at an annual rate of fifteen percent. § 3629.
Accordingly, we remand to the United States District Court for the Eastern
District of Oklahoma for a determination of the amount of attorney fees, trial and
appellate, that were reasonably and necessarily incurred by Hamilton. The district
court may, in its discretion, conduct any and all proceedings it deems necessary
and appropriate on the issue of attorney fees.
As to all other issues raised by Hamilton on appeal and not addressed
herein, we affirm and reinstate the relevant portions of the panel’s prior opinion
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reported at 910 F.3d 1320 (10th Cir. 2018).
Entered for the Court
Timothy M. Tymkovich
Chief Judge
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