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The Hanover Insurance Company v. Anova Food, LLC

United States District Court, D. Hawaii

September 29, 2017

THE HANOVER INSURANCE COMPANY and MASSACHUSETTS BAY INSURANCE COMPANY, Plaintiffs,
v.
ANOVA FOOD, LLC and ANOVA FOOD, INC., Defendants.

          FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART ANOVA FOOD, LLC'S MOTION FOR AWARD OF ATTORNEYS' FEES AND COSTS [1]

          RICHARD L. PUGLISI, UNITED STATES MAGISTRATE JUDGE.

         Before the Court is Anova Food, LLC's (“Anova LLC”) Motion for Award of Attorneys' Fees and Costs, filed on June 23, 2017 (“Motion”). See ECF No. 224. Anova LLC requests an award of $539, 077.78 for attorneys' fees and costs as the prevailing party pursuant to Florida Statutes Section 627.428. ECF No. 225. The Hanover Insurance Company and Massachusetts Bay Insurance Company (“Hanover Companies”) filed their Opposition on August 25, 2017. ECF No. 243. Anova LLC filed its Reply on September 22, 2017. ECF No. 246. After careful consideration of the submissions of the parties and the relevant legal authority, the Court FINDS AND RECOMMENDS that Anova LLC's Motion be GRANTED IN PART AND DENIED IN PART.

         BACKGROUND

         The Hanover Companies filed this declaratory judgment action asking the court to determine their duty to defend and duty to indemnify Anova LLC in connection with Kowalski v. Anova Food, LLC, Civil No. 11-00795 HG-RLP (“Underlying Lawsuit”) pursuant to various insurance policies. In the Underlying Lawsuit, the Hanover Companies tendered a defense and provided counsel for Anova LLC. The Underlying Lawsuit was settled in March 2015.

         In this action, the court granted summary judgment in favor of Anova LLC on the Hanover Companies' duty to defend Anova LLC in the Underlying Lawsuit. See ECF No. 113. However, the court found that Anova LLC was not entitled to fees incurred before it requested a defense from the Hanover Companies. Id. The Court held that Anova LLC was entitled to certain attorneys' fees incurred after it requested a defense. Id.; ECF No. 151 at 48-55. After a second round of motions for summary judgment, the court determined that Anova LLC was entitled to indemnification on some of the claims asserted in the Underlying Lawsuit, but held that neither party was entitled to recover the money that they contributed to the settlement of the Underlying Lawsuit. See ECF No. 151. The court also denied Anova LLC's claim for bad faith. ECF No. 188.

         ANALYSIS

         I. Entitlement to Attorneys' Fees and Costs

         Under Florida Statute Section 627.428, if an insured obtains judgment against its insurer, the insured is entitled to “a reasonable sum as fees or compensation for the insured's [] attorney prosecuting the suit in which the recovery is had.” Fla. Stat. § 627.428(1).

         A. Entitlement to Fees Incurred in Connection with the Underlying Lawsuit

         In addition to the fees that it incurred in this action, Anova LLC also seeks to recover a portion of the attorneys' fees that it incurred in defending the Underlying Lawsuit. ECF No. 225. Specifically, Anova LLC asks the Court to award it 50% of the fees that it incurred for work performed by Lane Powell, P.C. from September 2012 through March 2015 in connection with the Underlying Lawsuit, which equals $69, 852.92. Id. at 19, 29. Under Florida law, an insured may recover fees for pre-suit work if the work “was necessitated by the insurer's unreasonable conduct.” U.S. Fid. & Guar. Co. v. Rosado, 606 So.2d 628, 629 (Fla. Dist. Ct. App. 1992). Here, the court expressly denied Anova LLC's bad faith claim against the Hanover Companies. ECF No. 188. Accordingly, the Court finds that Anova LLC is not entitled to recover attorneys' fees for the work performed by Lane Powell, P.C. in connection with the Underlying Lawsuit.

         B. Entitlement to Attorneys' Fee Incurred After the Hanover Companies Made a Settlement Offer

         Under Florida law, an insured is entitled to its attorney's fees under Section 627.428 only if it obtains a judgment greater than any settlement offer made by the insurer. Danis Indus. Corp. v. Ground Improvement Techniques, Inc., 645 So.2d 420, 421 (Fla. 1994). For purposes of determining whether the settlement offer exceeds the insured's recovery, the Court must consider the insured's damages plus any attorneys' fees, taxable costs, and prejudgment interest incurred before the insurer's offer. See State Farm Mutual Auto. Ins. Co. v. Nichols, 932 So.2d 1067, 1074 (Fla. 2006). If the insured does not recover more than the insurer's offer, the insured is only entitled to “pre-offer fees under section 627.428.” Nichols, 932 So.2d at 1075.

         Here, the Hanover Companies offered $355, 900 to settle this case on July 6, 2016. See ECF No. 243 at 8. Accordingly, the Court must consider whether Anova LLC's recovery exceeded the $355, 900 settlement offer. Anova was awarded $250, 971, which is $104, 929 less than the Hanover Companies' settlement offer. See ECF No. 219. However, the Court must also consider the attorneys' fees, taxable costs, and prejudgment interest incurred by Anova LLC before the offer. See Nichols, 932 So.2d at 1074. Anova LLC submits that it had incurred more than $370, 000 in fees, $4, 288 in costs, and $30, 367 in prejudgment interest at the time of the settlement offer. See ECF No. 225 at 19; ECF No. 246 at 6. As discussed below, the Court ultimately finds that Anova LLC is not entitled to recover the full amount of attorneys' fees requested for this time period. However, even with the appropriate reductions, Anova LLC's damages plus the reasonable attorneys' fees, costs, and prejudgment interest incurred as of the date of the Hanover Companies' settlement offer exceeds the amount of the settlement offer. Accordingly, Anova LLC is entitled to recover its reasonable fees for the entirety of this case.

         II. Calculation of ...


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