In Jurinko v. Medical Protective Company, the U. S. District Court for the Eastern District of Pennsylvania was faced with yet another issue in this case which has yielded significant address of bad faith issues, both in the trial court an on appeal.  See below.

This Opinion, issued after a partial reversal by the Third Circuit on punitive damages, addressed attorneys’ fees.  The plaintiffs sought over $100,000 in fees incurred on post-trial motions, on appeal and in preparing the instant motion for supplemental attorney’s fees.  The  Court went over the issue of whether it even had jurisdiction to hear the motion, where the case had not be clearly remanded by the Third Circuit.  It did not answer this questions, denying the motion on other jurisdictional/procedural grounds. 

First, as to fees for post-trial motions, under F.R.C.P. 54(d)(2), the plaintiffs did not meet the mandatory 14 day requirement from the entry of judgment to seek attorneys’ fees for work done to date, and so any post-trial, pre-appeal, fee claim was waived.

Second, under the Third Circuit’s Local Appellate Rules, attorney fee requests for work done on the appeal had to be made in the Third Circuit, not in the District Court.

Third, in light of the prior two rulings, it would be improper to award attorney’s fees for those two requests.

Finally, the Court rejected the Defendant’s motion to reduce the previously awarded attorney’s fees in an amount commensurate to the Third Circuit’s reduction of the punitive damage award (from 4:1 to 1:1).  The Court rejected this effort because its earlier, affirmed, basis for the attorney’s fee award – the lodestar method under Pennsylvania Rule of Civil Procedure 1716— was not based on the amount of punitive damages.

Date of Decision: July 30, 2009

Jurinko v. Medical Protective Co.,  NO. 03-CV-4053, UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA, 2009 U.S. Dist. LEXIS 66324 (E.D.Pa. July 30, 2009) (Rufe, J.) 

 

The prior Jurinko opinions in the Third Circuit and District Court are summarized on this blog:  THIRD CIRCUIT APPLIES LODESTAR METHOD TO CALCULATING STATUORY ATTORNEYS FEES; UPHOLDS INTEREST FINDING, THIRD CIRCUIT REDUCES PUNITIVE DAMAGES AWARD TO 1:1 RATIO, THIRD CIRCUIT UPHOLDS BAD FAITH FAILURE TO SETTLE CLAIMS BASED ON ADJUSTER'S OWN ADMISSION OF UNREASONABLE CONDUCT IN NEGOTIATIONS, CONTINGENT FEE AGREEMENT CANNOT BE USED TO FIX AN ATTORNEY FEE AWARD UNDER THE BAD FAITH STATUTE, RATHER THE LODESTAR AMOUNT SHOULD BE USED, EXPERT TESTIMONY ON LEGAL MAL PERMITTED WHERE CARRIER KNOWINGLY APPOINTED SINGLE COUNSEL TO REPRESENT TWO INSUREDS DESPITE CONFLICT OF INTEREST, MARCH 2006 BAD FAITH CASES PUNITIVE DAMAGE AWARD OF $6.25 MILLION WITHSTANDS DUE PROCESS ANALYSIS WHERE RATIO WITH COMPENSATORY DAMAGES IS LESS THAN 4 TO 1, EVIDENCE SUFFICIENT TO SUPPORT JURY’S BAD FAITH VERDICT BECAUSE OF FAILURE TO SETTLE AND APPOINTMENT OF SINGLE COUNSEL WITH CONFLICT OF INTEREST.   

 

In a non-precedential Third Circuit Opinion, Jurinko v. The Medical Protective Company, the case involved the assignment of a bad faith claims to the patients of the insured doctor.  The case had gone to trial, and the insureds had obtained an excess verdict against the doctor for medical malpractice, and he assigned his claims against the carrier in lieu of making the excess payment.  On the assigned claims against the insurer, the patients received a jury verdict of $1,658, 345 and punitive damages of $6,250,000.  The trial court upheld the jury award, and then molded the verdict concerning attorney’s fees, costs and interest.

The case’s factual history reveals a story of settlement recommendations by judges, and the doctor’s own defense counsel (appointed by the carrier), that far exceeded anything the carrier was willing to pay toward settlement; and in fact, throughout the course of settlement discussions and recommendations, the carrier’s offer to contribute toward a settlement never rose above $50,000 (on a $200,000 policy), and where the insured’s potential exposure was evaluated by the judges and/or defense counsel at numbers between $750,000 and $2,000,000.  The doctor himself had wanted to settle.

Astonishingly, the carrier’s own adjuster testified that he acted unreasonably and irresponsibly in settlement negotiations” and that he denied the doctor an effective defense by appointing the same lawyer to represent that doctor, and a co-defendant doctor (against whom plaintiffs asserted crossclaims should have been asserted, but could not be because of a conflict).  Counsel denied that the purported conflict had any real effect, as there eventually was separate counsel and he could argue reliance on the other doctor at trial.

The bad faith aspect of the claim is discussed elsewhere on this site

The trial court found that there was at least a partial agreement as to any interest award on the jury verdict, which amounted to less than the prime plus 3% permitted under the Bad Faith Statute; but also apportioned part of the interest at that higher rate to make the insured doctor whole.  The Third Circuit upheld this finding.

The statute also permits the recovery of attorneys’ fees.  The Jurinkos sought $2,372,503.50 in attorneys' fees -- thirty  percent of the verdict, i.e., they wanted application of a contingent fee measure of fees, instead of application of the lodestar method of calculating fees.  The Court rejected that effort.  It looked to Pennsylvania Rule of Civil Procedure 1716 which provides that a court awarding attorneys’ fees must consider (1)  the time and effort the attorneys reasonably expended; (2) the quality of the services rendered; (3) the results achieved and benefits conferred on the class or the public; (4) the magnitude, complexity and uniqueness of the litigation and (5) whether the receipt of a fee was contingent on success.  The Court found the lodestar method more appropriate than a percentage of recovery method, as the statute is a fee shifting statute.  This is consistent with the Pennsylvania intermediate appellate court approach as well.

Date of Decision:  December 24, 2008

Jurinko v. The Medical Protective Company, Nos. 06-3519 & 06-3666, 2008 U.S. App. LEXIS 26263 (3d Cir. December 24, 2008) (Scirica, J.)

 

In Gallatin Fuels, Inc. v. Westchester Fire Ins. Co., the district court heard a motion under Rule 60(b) to reconsider its earlier award of attorneys’ fees, costs and prejudgment interest, in light of the Third Circuit’s decision in Gallatin Fuels, Inc. v. Westchester Fire Ins. Co., 2007 U.S. App. LEXIS 19069 (3d Cir. Aug. 9, 2007) (Fisher, J) http://www.ca3.uscourts.gov/opinarch/063133np.pdf (see September 2007 Bad Faith Cases on this blog), that had reversed in part and affirmed in part.  Specifically, the Third Circuit had found there was no breach of contract, but did find bad faith.  The district court upheld its award of attorneys’ fees under the bad faith statute, but reversed its award of prejudgment interest, which had been based on its now reversed decision on compensatory damages for breach of contract.  The court additionally awarded attorney’s fees (though not costs) in connection with the carrier’s appeal of the bad faith and punitive damages awards only.  Plaintiff could not recover fees associated with its own appeal, the reversed contract claim or those incurred in the instant motion.

Date of Decision:  October 31, 2007

Gallatin Fuels, Inc. v. Westchester Fire Ins. Co., United States District Court for the Western District of Pennsylvania, No. 02-2116, 2007 U.S. Dist. LEXIS 80538 (W. D. Pa. October 31, 2007) (Ambrose, C. J.)

L.A.