United States District Court, District of Columbia
D. BATES UNITED STATES DISTRICT JUDGE
Fireman's Fund Insurance Company ("FFIC")
refused to fully reimburse plaintiff Kenneth Feld for more
than $4.5 million in legal fees and costs that Feld claims to
have incurred in a separate, protracted legal battle. Before
the Court now are the parties' cross-motions for summary
judgment. While the bulk of the dispute will be resolved by
granting FFIC summary judgment in part, a remaining quarrel
over almost $200, 000 in legal expenses means that this show
must, unfortunately, go on.
facts of this case were summarized at length in the
Court's previous opinion and hence only a limited
recitation of the details is needed here-drawn largely from
that prior opinion. See July 3, 2013 Mem. Op. [ECF
No. 19] at 1-6. The origin of this dispute lies in another
case from this district: Feld v. Feld, Civil Action
No. 08-cv-1557-ESH. That was a highly contentious personal
injury suit brought by Karen Feld (a non-party to the
proceedings in this Court) against her older brother Kenneth
Feld. At the time of the events alleged in Karen's
complaint, Feld had personal liability insurance coverage
under a "Prestige Home Premier" policy (the
"Policy") issued by FFIC. The Policy provided that
FFIC would defend Feld against covered claims or suits
against him. Under the Policy, FFIC had a duty to
"[p]rovide a defense at [its] expense by counsel of
[its] choice." Policy, Ex. 1 to Def's Mot. for Summ.
J. [ECF No. 68-1] at 55.
12, 2009, Feld notified FFIC of the personal injury
litigation ("the Underlying Action") and of his
claim for coverage under the Policy. See Pl's Stmt, of
Undisputed Facts [ECF No. 73] ¶ 35. FFIC agreed to
defend Feld in the Underlying Action "subject to a full
and complete reservation of rights." Coverage Letter,
Ex. 4 to Kirtland Decl. [ECF No. 72-4] at 1. Specifically,
FFIC stated that the claims in the Underlying Action alleged
intentional conduct and hence were "not covered by the
Policy." Id. FFIC nevertheless agreed to
provide a defense because Feld had denied the allegations and
said that he acted in self-defense. Id. FFIC told
Subject to [FFIC's] reservation of rights, you may elect
to choose your own counsel to defend you in this matter;
otherwise we can appoint counsel for you. FFIC agrees to pay,
at an agreed hourly rate, the reasonable and necessary legal
fees and Court costs incurred by counsel to defend you
subsequent to the date this matter was tendered to FFIC under
a full reservation of rights, and in accordance with the
terms and conditions of the subject Policy and those
contained herein. Payment by FFIC for any legal expenses
incurred on your behalf will not act as a waiver of any
rights FFIC may have to adjust, allocate or assert that there
is no coverage for any payment made.
Id. Feld retained counsel from the law firm of
Fulbright & Jaworski L.L.P. to represent him in the
Underlying Action. That litigation-culminating in a lengthy
and highly publicized trial, followed by an appeal to the
D.C. Circuit-not only generated much ill will within the Feld
family, it also generated a legal bill for Kenneth Feld in
excess of $4.5 million. FFIC reimbursed Feld for a little
more than $2 million of those fees. Feld then filed this
action to recover the difference, arguing that FFIC breached
its insurance contract by refusing to cover the rest of his
legal fees from the Underlying Action.
responded with a summary judgment motion claiming that it
paid what it owed pursuant to the parties' agreement
regarding the hourly rates to be charged by Feld's
counsel. Feld says there was never any such agreement and
FFIC owes him the "reasonable" legal fees promised
in the Policy. So the $2-million-dollar question is: Was
there an agreement as to rates?
Legal Standard for Summary Judgment
obtain summary judgment, the moving party must show that
there is no genuine dispute as to any material fact as to the
claim at issue. The movant need not entirely foreclose the
possibility that there could exist an issue of material fact,
he need only show that the non-movant has failed, or by
necessity will fail, to appropriately raise the issue.
See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24
(1986). "[A]t the summary judgment stage the judge's
function is not himself to weigh the evidence and determine
the truth of the matter but to determine whether there is a
genuine issue for trial." Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986). In making this
determination, a court must view the facts in the light most
favorable to the non-movant and draw all justifiable
inferences in his favor. Id. at 255.
Breach of Contract
opening act is to argue that it owes Feld nothing because he
failed to timely notify FFIC of his claim as required by the
Policy. Policy, Ex. 1 to Def's Mot. for Summ. J. at 99.
FFIC's "late notice" defense runs smack into a
choice of law issue. Under Maryland law, an insurer generally
must provide coverage even in the event of late notice unless
it can prove by a preponderance of the evidence that the
untimely notice caused actual prejudice. Minn. Lawyers
Mut. Ins. Co. v. Baylor & Jackson, PLLC, 531
F.App'x 312, 319-20 (4th Cir. 2013). In the District of
Columbia, however, "an insurer is not required to
demonstrate actual prejudice before denying coverage on the
basis of an insured's failure to comply with a
contractual notice provision." Nat'l R.R.
Passenger Corp. v. Lexington Ins. Co., 445 F.Supp.2d 37,
43 (D.D.C. 2006), aff'd, 249 F.App'x 832
(D.C. Cir. 2007) (per curiam). "The starting point for
assessing which state's law should apply is the law of
the forum state." Aref v. Lynch, No. 15-5154,
2016 WL 4409356, at*13 (D.C. Cir. Aug. 19, 2016). Hence, the
Court will look to D.C. choice-of-law principles.
employs the "governmental interest" test to
determine which state's law to apply. Id. at
*14. The test involves a two-step inquiry: identify the
governmental policy underlying the applicable law and then
determine which state's policy would be most advanced by
having its law applied to the facts of the case. Id.
For insurance contracts, there is a presumption that the
governing law is the "local law of the state which the
parties understood was to be the principal location of the
insured risk during the term of the policy, unless with
respect to the particular issue, some other state has a more
significant relationship." Restatement (Second) of
Conflict of Laws § 193 (1971); 21st Century N. Am.
Ins. Co. v. Nationwide Gen. Ins. Co., No. 1:14-CV-00557
(AK), 2015 WL 1570154, at *2 (D.D.C. Apr. 9, 2015); see
Indep. Petrochem. Corp. v. Aetna Cas. & Sur.
Co., 944 F.2d 940, 948 (D.C. Cir. 1991) (applying §
193 to an insurance policy); Nat'l Union Fire Ins.
Co. of Pittsburgh, Pa. v. Binker, 665 F.Supp. 35, 40
(D.D.C. 1987). D.C. courts look at six factors to determine
whether another state has "a more significant
relationship": (1) the place of contracting; (2) the
place of negotiation of the contract; (3) the place of
performance; (4) the location of the subject matter of the
contract; (5) the residence and place of business of the
parties; and (6) the principal location of the insured risk.
Adolph Coors Co. v. Truck Ins. Exchange, 960 A.2d
617, 620 (D.C. 2008).
the parties surely understood Maryland to be the principal
location of the insured risk given that the homeowner's
policy at issue provided coverage for Feld's Maryland
domicile. See Policy, Ex. 1 to Def's Mot. for
Summ. J. at 16; see also Gray v. Grain Dealers Mut. Ins.
Co., 871 F.2d 1128, 1130 (D.C. Cir. 1989) (finding that
the state of the policyholder's residence was the
intended principal location of the insured car); 21st
Century N. Am. Ins. Co., 2015 WL 1570154, at *3 (same).
FFIC wants to parse the Policy into property coverage and
personal liability, with D.C. then being the location of the
risk for the personal liability portion of the contract.
Def.'s Mot. for Summ. J. [ECF No. 68] at 20. FFIC,
though, has cited no authority for this type of slicing and
dicing of a homeowner's policy. And even if the Court
took that narrow view of the insured risk, the location of
the risk would then not be entitled to any special weight
because it would not be in a single state. Restatement
(Second) of Conflict of Laws § 193 cmt. b (1971).
to the other Restatement factors, in its motion for summary
judgment FFIC took the position that the factors did not
favor any one jurisdiction. Def.'s Mot. for Summ. J. at
20. By the time FFIC filed its opposition brief, however, it
had decided that in fact the most significant Restatement
factors-primarily the place of performance of the
contract-pointed to the District of Columbia. Def.'s
Opp'n [ECF No. 83] at 25. But the fact that D.C. was the
location of the underlying incident and lawsuit is entitled
to little weight here. It is generally understood that the
location of an underlying injury does not play a significant
role in a contractual suit. See Holmes v. Brethren Mut.
Ins. Co., 868 A.2d 155, 157 n.2 (D.C. 2005); Vaughan
v. Nationwide Mut. Ins. Co., 702 A.2d 198, 202 (D.C.
1997) ("The location of fortuitous events . . .
generally is not considered a persuasive factor in choice of
law analysis in situations of economic loss .. .."). Nor
is the place of performance considered significant when at
the time of contracting it is either uncertain or unknown.
Restatement (Second) of Conflict of Laws § 188 cmt.
e(1971). Here, no one could have known where performance
would occur because the personal liability portion of the
Policy covered suits brought "anywhere in the
world." Policy, Ex. 1 to Def's Mot. for Summ. J. at
55. And again, the Court is not persuaded that the subject
matter of this homeowner's policy should be considered
the D.C.-based litigation rather than the home protected by
the policy. See Chi. Ins. Co. v. Paulson & Nace,
PLLC, 37 F.Supp.3d 281, 291 (D.D.C. 2014) (holding that
subject matter of professional liability insurance policy was
the attorneys' professional activities, not the
underlying lawsuit), aff'd, 783 F.3d 897, 902-03
(D.C. Cir. 2015). D.C. was not the place of contracting, the
place of negotiation, or the residence of the parties.
though, was one of the places of negotiation, Def's Mot.
for Summ. J. at 20- a significant contact (although less so
in a case like this one where there is no single place of
negotiation), Restatement (Second) of Conflict of Laws §
188 cmt. e (1971). Moreover, the Policy indicates that
Maryland law applies. Specifically, the Policy includes an
amendment titled "Prestige Home Premier Amendatory
Endorsement-Maryland." Policy, Ex. 1 to Def's Mot.
for Summ. J. at 32. Policy language is of course indicative
of the parties' intentions, see Vaughan, 702
A.2d at 201, and courts regularly look to these types of
amendatory endorsements as probative of what law the parties
expected would govern the contract, see Adolph Coors
Co., 960 A.2d at 621; Render v. Auto-Owners-Ins.
Co., 793 N.W.2d88, 94-95 (Wis. Ct. App. 2010); see
also Gray, 871 F.2d at 1130 (noting policy provisions
that specifically referred to North Carolina law). The
amendatory endorsement in Feld's policy is just one of
the Policy's several references to Maryland. See
Policy, Ex. 1 to Def's Mot. for Summ. J. at 21-26
(Maryland specific form numbers in the lower left-hand
protection of the justified expectations of the parties is of
considerable importance in contracts, " Restatement
(Second) of Conflict of Laws § 188 cmt. b (1971), which
is why special weight is given to the location of the insured
risk in insurance contract cases. "[I]t can often be
assumed that the parties, to the extent that they thought
about the matter at all, would expect that the local law of
the state where the risk is to be principally located would
be applied to determine many of the issues arising under the
contract." Restatement (Second) of Conflict of Laws
§ 193 cmt. c (1971); accord Vaughan, 702 A.2d
at 201. The home at the center of this homeowner's policy
was in Maryland. And the Policy is full of indications that
the parties, sensibly, expected Maryland law to govern the
contract. D.C., on the other hand, was just incidentally the
site of the incident. Upon contracting, the parties had no
reason to expect DC. law to govern a future dispute. For all
these reasons, the Court ...