Burden not met: Fee recovery doomed by lack of evidence

A prevailing party’s ability to recover attorneys’ fees was doomed by its failure to contemporaneously attach supporting documents — or even identify the amount of fees it wanted — with its motion, the Eastern District of Virginia has held.

The plaintiff requested fees under Va. Code § 38.2-209, as well as 28 U.S.C. § 1927 and the court’s inherent power to assess sanctions for bad faith conduct.

But U.S. District Judge Roderick C. Young said Federal Rule of Evidence 6(c)(2) mandated simultaneous filing of supporting documents with its motion.

“So, even assuming arguendo that Plaintiff is entitled to attorney’s fees under Virginia Code § 38.2-209, the Court cannot conclude that Plaintiff met its burden to show that any requested fees would be ‘reasonable’ and thus recoverable,” the judge said.

Young refused to award attorneys’ fees in Landfall Trust LLC v. Fidelity National Title Insurance Company (VLW 024-3-255).

Motion for fees

Landfall Trust sued Fidelity National Title Insurance for breach of contract for failing to cure or compensate for unmarketable title. In addition to damages, Landfall sought attorneys’ fees, costs and expenses.

Virginia Lawyers Weekly reported on this case in “Description dooms sale, but negligence claim dismissed,” as well as “Policy exception limits title insurer’s liability,” and “Unmarketable title case headed to jury.”

A jury found Fidelity liable for $185,000 in damages. Landfall moved for bad faith attorneys’ fees pursuant to Va. Code § 38.2-209, 28 U.S.C. § 1927 and the court’s inherent authority. Fidelity opposed. Landfall’s reply and bad faith brief included supporting documents.

§ 38.2-209

Looking to Selective Ins. Co. of the Se. v. Williamsburg Christian Acad. and Tiger Fibers, LLC v. Aspen Specialty Ins. Co., Young said § 38.2-209 merely functions as a “fee-shifting statute, providing ‘only … a source of recovery of costs and attorney’s fees’” after a judgment has been  entered against an insurer.

“The statute is ‘both punitive and remedial in nature,’” the judge noted. “It is designed to punish an insurer guilty of bad faith in denying coverage or withholding payment and to reimburse an insured who has been compelled by the insurer’s bad-faith conduct to incur the expense of litigation.’”

Along with the reasonableness standard courts use evaluate an insurer’s conduct for bad faith, Young pointed out that a prevailing party has the burden of proving that the requested fees are reasonable and necessary under the familiar Chawla v. BurgerBusters, Inc. standard.

“For that reason, claims for attorney fees pursuant to Virginia statutes necessarily fail where the fee applicant fails to properly provide evidence of the requested fees and their reasonableness,” he wrote.

Unsupported motion

Fidelity argued that Landfall’s unsupported fees motion should be denied and insisted that the court “should not … allow [Plaintiff] to try to cure this fatal defect with belated submissions on reply.”

Young agreed, saying that Landfall failed to comply with Federal Rule of Civil Procedure 6(c)(2)‘s requirement that supporting documents be filed simultaneously with motions.

“Thus, even if Plaintiff could show Defendant had denied Plaintiff’s insurance claim in ‘bad faith’ within the meaning of § 38.2-209, the Court would have no choice but to deny Plaintiff’s motion,” the judge wrote.

And in McGinnis v. Se. Anesthesia Assoc., the Western District of North Carolina said Rule 6(c)(2)’s simultaneous filing requirement affords the opposing party an opportunity to address the motion fully and squarely on its merits.

“Put simply, under the rule, ‘a party may not file a motion unsupported by any evidence only to spring the evidence on the opposing party at a later date,’” Young explained.

Here, Landfall had no timely filed proof to support its motion.

“So, even assuming arguendo that Plaintiff is entitled to attorney’s fees under Virginia Code § 38.2-209, the Court cannot conclude that Plaintiff met its burden to show that any requested fees would be ‘reasonable’ and thus recoverable” the judge wrote.

Even if Landfall’s motion weren’t doomed by that noncompliance, its lack of supporting documents filed with its bad faith brief also failed to comply with the court’s briefing order.

Young rejected Landfall’s claim that it didn’t interpret the court’s order as requiring the submission of bills, but rather only legal memoranda. Under Virginia law, a party seeking fees must submit documentary evidence to support such a claim.

“So, the Court’s ‘Bad Faith’ Briefing Order required Plaintiff to file evidence — e.g., timesheets and bills — within fourteen days as well. Plaintiff did not do so,” the judge wrote. “If Plaintiff had any doubts about what this Court’s ‘Bad Faith’ Claim Briefing Order required, it should have sought clarification from the Court.”

Inherent power

Landfall also asked the court to award fees under 28 U.S.C. § 1927 and its inherent power to assess sanctions for bad faith, wanton, vexatious and oppressive conduct.

Section 1927 is “‘concerned with remedying abuse of court process,’ solely ‘focus[ing] on the conduct of the litigation and not on its merits,’” whereas the court may invoke its inherent authority even if procedural rules also sanction the conduct.

But Young found that Landfall’s evidence fell “far short” of satisfying its burden to show the reasonableness of the fee requested for its attorney’s work related to Fidelity’s purportedly vexatious litigation practices.

“Rather, in addition to the attorney’s own affidavits, the fee applicant should submit things such as ‘affidavits from disinterested counsel, evidence of awards in similar cases, or other specific evidence that allows the court to determine “actual rates which counsel can command in the market,”’ he said, adding that it’s an abuse of discretion for a court to award requested hourly rates without satisfactory specific proof of prevailing market rates.

Here, Landfall provided its attorney’s declaration of his billing rate and his sworn belief that his rate was reasonable for complex commercial litigation in the Richmond area, a reference in its attorney’s declaration to the “Laffey Matrix” and citations to similar fee awards.

Young said none of that constituted the requisite satisfactory specific evidence of the prevailing market rates.

“To begin with, the Fourth Circuit and this Court have repeatedly held that the Laffey Matrix is not reliable, specific evidence of the market rate in the Eastern District of Virginia,” he noted.

Landfall’s purportedly similar cases were equally unpersuasive. None came from within the Eastern District and Landfall conceded that the cases didn’t develop a common theme that would help the court determine the insured’s entitlement to recover fees.

Finally, Young said it was well-settled that an attorney’s own sworn statements are insufficient to meet the movant’s burden of proof to establish the prevailing market rate.

“For these reasons, even if Plaintiff had demonstrated that Defendant’s litigation conduct triggers 28 U.S.C. § 1927 and/or this Court’s inherent powers and would permit the Court to award fees, the Court could not find that Plaintiff met its burden of proof to demonstrate that the hourly rate, and thus the requested fee itself, is reasonable,” the judge concluded.