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Hamilton v. Nationwide Mutual Fire Insurance Co.

Superior Court of Delaware, Kent

November 16, 2018

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, a foreign corporation, Defendant.

          Submitted: September 28, 2018

         Plaintiffs Motion for Allowance of Attorney's Fees and Costs Granted.

          William D. Fletcher, Jr., Esquire of Schmittinger and Rodriguez, P.A., Dover, Delaware, attorney for the Plaintiff.

          Louis J. Rizzo Jr., Esquire of Reger, Rizzo, and Darnall LLP, Wilmington, Delaware, attorney for the Defendant.


          William L. Witham. Jr. Resident Judge.

          Upon consideration of the Motion for the Allowance of Attorneys' Fees and Costs filed by the Plaintiff, Paul Hamilton, pursuant to 18 Del. C. § 4102 and Del. Super. R. 54(d) (Rule 54(d)), the opposition of the Defendant, Nationwide Mutual Fire Insurance Co., and the record of the case, it appears that:

         1. On January 23, 2015, the Defendant issued a Homeowner's Insurance policy[1] to the Plaintiff for coverage of his dwelling. The insurance policy's maximum payout was $252, 600 under Section I, Coverage A of the policy.

         2. On or about March 17, 2015, a fire damaged the Plaintiffs dwelling. The Defendant conducted a examination of the damage and estimated the total damages amounted $ 127, 437.03 [2] Initially, the Plaintiff did not further object to or question the repair figures computed by the Defendant.

         3. The Defendant issued a check to the Plaintiff for $127, 437.03, less deductibles and reserves. However, the Plaintiff then rejected the Defendant's estimate, and demanded the policy's maximum payout, prompting the present action[3]before the Court.

         4. After a lengthy procedural history, including a Pre-Trial stipulation that included the Plaintiff s request for costs and attorneys' fees, [4] the Defendant extended a $30, 000 offer of judgment to the Plaintiff[5] pursuant to Delaware Superior Court Rule 68 (Rule 68). However, the Rule 68 offer was silent regarding any reference to attorneys' fees and other costs being included as part of the $30, 000. Nevertheless, the Plaintiff immediately accepted and filed with the Court on the same day.

         5. Two weeks later, on June 14, 2018, the Plaintiff filed the present motion for allowance of attorneys' fees and costs pursuant to section 4102 and Rule 54(d). In response to the Defendant's reply, the Plaintiff later supplemented their motion with a certification concerning their attorneys' fees totaling $41, 725.00.[6] The requested amount for costs amounted to $1, 389.75.

         6. "In an action at law, attorneys' fees will not be awarded unless clearly provided for by statute or contract."[7] Here, the applicable Delaware statute authorizing attorney's fees as costs in insurance cases is a fee shifting statute, 18 Del. C. £ 4102. Section 4102 provides:

[t]he Court upon rendering judgment against any insurer upon a policy of property insurance as 'property' insurance is defined in [18 Del. C] § 904[8] [ ], shall allow the plaintiff a reasonable sum as attorney's fees to be taxed as part of the costs."[9]

         7. Pursuant to Rule 54(d), the recovery of costs by the prevailing party shall be allowed upon application to the Court within ten days of the final judgment's entry. Here, the Plaintiffs application was timely and thus the Court has discretion to award those costs that often include filing and other service fees.[10]

         8.Rule 68 authorizes a defendant to make an offer of judgment and is modeled after the Federal Rules of Civil Procedure Rule 68.[11] Rule 68 encourages settlements between opposing parties to avoid litigation by prompting parties to balance the risks and costs of litigation against the likelihood of success at trial.[12] The rule provides:

[a]t any time more than [ten] days before the trial begins a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued. If within [ten] days after the service of the offer the adverse party serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service thereof and thereupon the Clerk shall enter judgment.[13]

         9. The crux of the Plaintiffs argument is straight forward. The Defendant did not specifically include attorneys' fees and costs in its Rule 68 offer, therefore the Plaintiff is entitled to both pursuant to section 4102 and Rule 54(d).

         10. As a preliminary matter however, the Court must address the Defendant's counter-argument that attorneys' fees and costs were always a part of the parties' negotiations throughout the process and were included in the Rule 68 offer of judgment. In the alternative, the Defendant urges the Court to void the Rule 68 agreement due to the lack of a "meeting of the minds." In support, the Defendant cites Ceccola v. State Farm Mut. Auto. Ins. Co., [14] a case where the Delaware Supreme Court reversed the lower court and voided a Rule 68 offer of judgment.[15]

         11. However, the Defendant's reliance on Ceccola appears to be misplaced. In fact, our Supreme Court's reversal was based on facets of that case not found in the present case. First, while both cases involve a Rule 68 offer and acceptance, in Ceccola, the plaintiff realized a mistake in the agreement and revoked acceptance, both verbally and via email.[16] In our case, there was no revocation of acceptance by the Plaintiff. Second, the defendant in Ceccola manipulated the Court by deceiving the Prothonotary and filing the earlier acceptance; turning a previously extinguished contract into a final judgment.[17] In this case, no such "manipulation of court processes" occurred that would suggest voiding the Rule 68 agreement.[18] In short, Ceccola is less a "meeting of the minds" case and more a case about an attorney's unethical and possibly fraudulent behavior.

         12. It is clear to the Court, based on the record, including the Pre-Trial Stipulation, that both parties were aware that the Plaintiff sought costs and attorneys' fees pursuant to 18 Del. C. § 4102.[19] Thus, both parties were on notice of the Plaintiffs intentions and the record is silent to anything to the contrary that would suggest a lack of "meeting of the minds."

         13. Even if the Court was convinced by the Defendant's argument and found that there had been no "meeting of the minds" regarding the Defendant's Rule 68 offer of judgment, the Court is (1) persuaded by legal precedent that holds ambiguities in Rule 68 offers are construed against the offeror[20] and (2) bound by legal precedent that holds the offeror responsible for specifying Rule 68 offer of judgments to include costs and attorneys' fees.[21]

         14. In Marek, [22] the Supreme Court of the United States (SCOTUS) held that costs under Fed. R. 68 included fees where the underlying fee shifting statute defined costs as inclusive of attorneys fees, and are recoverable.[23] SCOTUS further acknowledged:

[i]f an offer recites that costs are included or specifies an amount for costs, and the plaintiff accepts the offer, the judgment will necessarily include costs. If, on the other hand, the offer does not state that costs are included and an amount for costs is not specified, the court will be obliged by the terms of the Rule to include in its judgment an additional amount which in its discretion it determines to be sufficient to cover the costs.[24]

         15. In support of his position, the Plaintiff cites several post Marek federal cases that applied Marek and contends that Delaware courts apply Rule 68 as its federal counterpart is applied by virtue of Rule 68 being modeled after the former.[25] In one of those cases, Lima[26] the Court stated:

[T]he [o]ffer was valid and was silent as to fees and costs. That fact begins and ends our analysis[27] In interpreting a Rule 68 offer of judgment, courts must not consider extrinsic evidence or the intentions of the parties.[28]

         16. Delaware courts have applied Rule 68 in both the pre and post Marek legal landscapes. In Ferrari v. New Castle Mut. Ins. Co., [29] a pve-Marek case, the plaintiff brought a claim under section 4102 after accepting a Rule 68 offer of judgment.[30] However, the Rule 68 offer failed to mention attorney's fees.[31] In denying Ferrari's motion for attorneys' fees, Judge Balick held that "costs then accrued" referred to costs routinely allowed to a prevailing party and entered by the Prothonotary, but not attorney's fees when they are not mentioned in the Rule 68 offer or acceptance[32]

         17. In post Marek cases however, Delaware courts appear to have shifted its application of Rule 68 to align with its sister federal district courts. For example in Adams, a case similar to both Ferrari and our present case, Nationwide (ironically the defendant in that case) refused to pay the plaintiff under the terms of an insurance policy involving the plaintiffs damaged vehicle.[33] During the negotiations between the parties, Nationwide made a Rule 68 offer of judgment under the following terms:

         The defendant, Nationwide Insurance Company, pursuant to Court of Common

Pleas Civil Rule 68, hereby offers to allow judgment to be taken against it in the amount of $3, 700.00, together with [c]ourt costs accrued' to the time of the making of this offer. If this offer is not accepted within ten [ ] days and the ultimate result is not more favorable than this offer, all [c]ourt costs, including expert witness fees, incurred subsequent to the making of this offer shall be taxed to the plaintiffs."

         Again, the Rule 68 offer was silent regarding the inclusion of attorneys' fees.[34] As in our case, the plaintiffs promptly filed acceptance and judgment was entered. Four days later, the plaintiffs filed for attorneys' fees pursuant to section 4102.[35] Judge Trader, in Adams, found for the plaintiff and held:

Since [section] 4102 includes attorney's fees as a "part of costs," a Rule 68 offer of judgment providing for "costs then accrued" must be read to include "costs and attorney's fees then accrued."[36]

         18. In this case, the Defendant's Rule 68 offer of judgment stated the following:

Pursuant to Superior Court Civil Rule 68, Defendant Nationwide...offers to allow judgment to be entered against it in the above-captioned matter in the amount of [ ] $30, 000.00. This offer of judgment is made solely for the purposes specified in Rule 68 and is not to be construed as an admission that the Defendant is liable in this action or that the Plaintiff has suffered damage.[37]

         As in Adams and Lima, nowhere in the present Rule 68 offer is any mention of attorneys' fees or costs. Following precedent established in Marek and its progeny, the plaintiff is entitled to those fees and costs.

         19. Delaware's legislative will is clear and is supported by Marek and its progeny. Rule 68 offers of judgment must state the inclusion of attorneys' fees and costs in the offer amount, if those are to be included. Since Delaware courts apply Rule 68 in the same fashion as its federal counterpart, the fact that the Defendant did not specifically state attorneys' fees and other costs were included, ends our analysis[38] regarding whether the Plaintiff is entitled to attorneys' fees and costs.

         20. The Court now turns its analysis towards establishing what portion of the requested attorneys' fees and costs are "reasonable."[39]

         21. The Court will first address the Plaintiff s request for costs pursuant to Rule 54(d). In this case, the costs will be awarded to the Plaintiff. The Plaintiff submitted documentation supporting their costs and, upon examination, none of those appear to be unreasonable. Also of note, the Plaintiff has not requested costs that accrued after the acceptance of the Rule 68 offer on June 1, 2018. This suggests to the Court that the Plaintiff is not attempting to recover unauthorized costs. Most importantly, the Defendant has not directly objected to the Plaintiffs motion for costs.[40] As a result, the Court exercises its discretional authority and awards the Plaintiff costs of $1, 389.75.

         22. Turning to the question of reasonable attorneys' fees, the Court also has discretion in awarding reasonable fees under section 4102[41] that are within the scope of the statute.[42] Here, based on application of the Cox[43] factors, ...

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