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Travelers Indemnity Co. v. Arena Group 2000

March 13, 2008

TRAVELERS INDEMNITY COMPANY, ET AL., SUCCESSOR IN INTEREST BY MERGER TO GULF INSURANCE COMPANY, AND GULF UNDERWRITERS INSURANCE COMPANY, PLAINTIFFS,
v.
ARENA GROUP 2000, L.P., D/B/A SAN DIEGO SPORTS ARENA CO., D/B/A SAN DIEGO ENTERTAINMENT, INC., ELIZABETH NOLAN D/B/A URC MANAGEMENT AND THE CITY OF SAN DIEGO DEFENDANTS.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER DENYING DEFENDANT CITY OF SAN DIEGO'S MOTION FOR ATTORNEYS' FEES (Doc. No. 261)

Presently before the Court is a motion for attorneys' fees filed by the City of San Diego ("defendant" or "City"), pursuant to Federal Rule of Civil Procedure 54(d)(1)-(2) and Local Rule 54.1. (Doc. No. 261.) For the following reasons, the Court DENIES the motion for attorneys' fees.

BACKGROUND

On February 22, 2003, Daniel Doll and Shelby Olerich-Snow suffered severe personal injuries when a two-ton marquee sign fell on them as they left the Black Angus restaurant near the San Diego Sports Arena. They filed two personal-injury actions in state court against Arena Group 2000, L.P. ("Arena"); the City; and Elizabeth Nolan d/b/a URC Management ("property manager"). Arena tendered the claim to various insurers, including Gulf Underwriters Insurance Company and The Travelers Indemnity Company (successor in interest by merger to Gulf Insurance Company and Gulf Underwriters Insurance Company) (collectively, "Gulf"). The City is an additional insured under Arena's primary and excess policies with Gulf. (Doc. No. 208, at 2.)

On April 12, 2005, Gulf sent a reservation of rights letter to the attorney retained to represent Arena, the City, and the property manager. The letter stated that Gulf had undertaken a preliminary review of the complaints to identify possible coverage issues. (Cleesattle Decl., Ex. 1, at 4.) Gulf cautioned that the letter was subject to revision. (Id. at 6.) Gulf agreed to provide a defense under the primary policy, but reserved the right to retain separate defense counsel, litigate coverage issues, and seek and obtain reimbursement from defendants for any money paid in defense or indemnity. (Id.)

In June 2005, Doll and Snow filed second amended complaints in state court. On July 8, 2005, Gulf sent another reservation of rights letter identifying possible coverage issues. (Cleesattle Decl., Ex. 1 at 1.) The letter incorporated coverage issues raised in the April 12, 2005 letter, and reiterated Gulf's agreement to provide a defense under the primary policy, subject to a reservation of rights. (Id. at 4.)

On July 18, 2005, Gulf filed the present lawsuit against Arena, the City, and others, asserting eight causes of action. The first seven sought a declaration that Gulf was not obligated under the policies to defend or indemnify Arena or the City. The eighth sought a judicial determination that Gulf was entitled to reimbursement for all sums paid by Gulf to settle the underlying state actions. Gulf sought $7,218,000 in damages.

The City filed a motion for summary judgment on June 4, 2007. (Doc. No. 200.) Judge Whelan found that the California Tort Claims Act, Government Code § 911.2, applied to the lawsuit. Since Gulf failed to comply with the pre-filing requirement of the Act, the Court granted the City's motion for summary judgment on June 19, 2007. (Doc. No. 209.) Final judgment was entered on July 20, 2007. (Doc. No. 251.)

On September 18, 2007, the City filed a motion for attorneys' fees and bill of costs in the amount of $292,009.03.*fn1 (Doc. No. 261.) Gulf filed its opposition on October 15, 2007. (Doc. No. 269.) On October 22, 2007, the City filed its reply. (Doc. No. 271.) On October 24, 2007, Gulf requested leave to file a surreply, claiming the City had cited particular statutory and contract provisions for the first time in its reply, and attached the surreply.*fn2 (Doc. No. 272).

A hearing for taxation of costs was held before the Clerk of the Court on October 4, 2007. (Doc. No. 267.) The Clerk taxed costs in the amount of $4,463.03. (Id.) Attorneys' fees in the amount of $287,546 were denied. (Id.)

LEGAL STANDARD

Under Federal Rule of Civil Procedure 54(d)(1), except when there is an express provision in a federal statute or the Federal Rules of Civil Procedure, costs (other than attorneys' fees) shall be allowed to the prevailing party unless the court directs otherwise. Routinely allowed costs are listed at 28 U.S.C. § 1920. Except in cases of voluntary dismissal, the defendant is the prevailing party when a case terminates without judgment for plaintiff. Civ. L.R. 54.1(f). Federal Rule 54(d)(2) governs the procedure for claiming attorneys' fees. Attorneys' fees are not taxable as costs unless a statute or enforceable contract provides for them. Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 257 (1975). In a diversity case, a federal court should follow state law in denying or awarding attorneys' fees, unless state law runs counter to a federal statute or rule of court. Id. at 260.

ANALYSIS

A. Absent a Federal Statute or Rule, a Court Exercising Diversity Jurisdiction Follows State Law in ...


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