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4th Circuit sets deadline for attorneys’ fee motions

Attorneys seeking fee awards in dismissed cases in the U.S. District Court for Maryland should pay close attention to whether the court included a separate document setting out the dismissal order as a “judgment,” a federal appeals court indicated this week.

If the document accompanies the dismissal order, lawyers have 14 days from the order’s entry in which to file their motion for fees, the 4th U.S. Circuit Court of Appeals ruled. But if the document is absent, attorneys have 164 days from the date of entry to file their motion, the 4th Circuit held, citing the Federal Rules of Civil Procedure.

The appeals court issued its published 3-0 decision in reviving a motion for fees that attorneys brought against an insurance company they allege pursued legal arguments in bad faith against their client, a victim of lead paint exposure caused by one of the underwriter’s policyholders.

U.S. District Judge Paul W. Grimm had rejected the attorneys’ motion for fees, saying it was filed too long after he had granted CX Reinsurance Company Ltd.’s voluntary dismissal of its claim. Specifically, Devon Johnson’s lawyers’ motion came 18 days after the grant, four days beyond the 14-day deadline, Grimm said.

However, the 4th Circuit said the 14-day time limit applies to the grant of dismissal only when it is accompanied by the “separate” document setting out the judge’s order as a final “judgment,” as specified in Rule 58(a).

The absence of the accompanying document from Grimm’s grant meant the judgment was not final until 150 days after it was issued, the 4th Circuit stated in sending the case back to district court to determine whether and, if so, in what amount attorneys’ fees are warranted.

“The essential purpose of Rule 58’s requirement of a separate document is to define with precision when a judgment has been entered, since numerous deadlines under the rules – including the 14-day deadline for filing attorneys’ fees motions – run from that act,” Judge Paul V. Niemeyer wrote for the 4th Circuit.

“At bottom, we conclude that because the district court’s dismissal order was not set out in a separate document as required by Rule 58(a), Johnson’s 14-day period for filing a motion for attorneys’ fees did not start to run until 150 days from the dismissal order’s entry,” Niemeyer added. “Johnson’s motion was accordingly timely filed.”

Judges G. Steven Agee and Stephanie D. Thacker joined Niemeyer’s opinion.

Johnson’s appellate attorney, Samuel D. Cowin, hailed the 4th Circuit’s decision regarding the deadline for filing a motion for attorneys’ fees, calling it an issue important not only to clients but to their lawyers.

“There is now clear guidance for practitioners in Maryland moving forward,” said Cowin, of Gallagher Evelius & Jones LLP in Baltimore.

CX’s appellate attorney, Ellen D. Jenkins, did not immediately return a telephone message Friday seeking comment on the 4th Circuit’s decision. Jenkins is with Rubbery Stalmack & Garvey LLC in Chicago.

The case arose when CX sued policyholder Benjamin L. Kirson five years ago seeking rescission of its general liability coverage for his residential properties in Baltimore because of his allegedly false representation that they were never in violation of lead paint regulations.

While that case was pending, Johnson obtained a state court judgment against Kirson for injuries caused by lead paint exposure at one of his properties. Johnson then intervened as a defendant with Kirson in the CX case to ensure the insurer would cover Johnson’s award for lead paint exposure.

CX reached a settlement agreement with Kirson but continued to seek rescission of its liability policy, with Johnson as a defendant, before eventually moving to dismiss its claim voluntarily, which Grimm granted on June 15, 2018, the 4th Circuit stated.

Saying CX pursued its arguments in bad faith, Johnson’s attorneys moved for attorneys’ fees 18 days later — on July 3, 2018 — prompting Grimm’s erroneous denial of the motion as untimely, the appellate court added.

The 4th Circuit rendered its decision in CX Reinsurance Company Ltd. v. Devon S. Johnson, No. 19-1516.

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