Fifth Circuit Court Cases - Case Law and Opinions from the 5th Circuit Federal Court - Court of Appeals

	ROMINGER LEGAL
		Fifth Circuit Court of Appeals Opinions - 5th Circuit
					Need Legal Help?
					Need Legal Help?
LEGAL RESEARCH CENTER
LEGAL RESEARCH CENTER			LEGAL HEADLINES - CASE LAW - LEGAL FORMS	NOT FINDING WHAT YOU NEED? -CLICK HERE

This opinion or court case is from the Fifth Circuit Court or Appeals. Search our site for more cases - CLICK HERE

LEGAL RESEARCH

COURT REPORTERS

PRIVATE INVESTIGATORS

PROCESS SERVERS

DOCUMENT RETRIEVERS

EXPERT WITNESSES

Find a Private Investigator

Find an Expert Witness

Find a Process Server

Case Law - save on Lexis / WestLaw.

Legal News - Legal Headlines

United States Court of Appeals
Fifth Circuit
F I L E D
June 18, 2003
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
_______________
No. 02-30442
_______________
TRINITY UNIVERSAL INSURANCE CO.,
Plaintiff - Counter Defendant - Appellee,
VERSUS
STEVENS FORESTRY SERVICE, INC.,
Defendant - Counter Claimant - Appellant.
_________________________
Appeal from the United States District Court
for the Western District of Louisiana
_________________________
Before JOLLY, HIGGINBOTHAM, and MAGILL,* Circuit Judges.
MAGILL, Circuit Judge:
Defendant-Appellant Stevens Forestry Service, Inc. ("Stevens")
appeals the district court's1 grant of summary judgment in favor of
Plaintiff-Appellee Trinity Universal Insurance Company ("Trinity").
Stevens sought reimbursement for attorneys' fees and costs incurred
when it hired defense counsel to assist in a liability suit against
Stevens. Trinity filed a motion for summary judgment, arguing that
*Circuit Judge of the United States Court of Appeals for the
Eighth Circuit, sitting by designation.
1The Honorable Roy S. Payne, United States Magistrate Judge
for the Western District of Louisiana.

it had fulfilled its duty as insurer by providing Stevens with
defense counsel. The district court granted summary judgment for
Trinity, holding that because Trinity provided Stevens with
adequate defense counsel, Trinity was not required to reimburse
Stevens for the expenses of its independent counsel. Stevens
appeals.
Our jurisdiction is proper pursuant to 28 U.S.C. § 1291
(2000). For the following reasons, we affirm.
I.
Stevens is an Arkansas forestry consulting firm with a
registered agent in Homer, Louisiana. In March 1999, Abe Mitchell,
a long-time client of Stevens, expressed concern, through a letter
from his counsel, with Stevens' management of his timber. Upon
receipt of this letter, Stevens retained an attorney, Michael
Percy, to assist Stevens in responding and preparing for a meeting
with Mitchell. In September 1999, Mitchell demanded $1,120,634.70
in damages from Stevens. At this time, Stevens tendered the claim
to Trinity, its liability insurer.
Trinity responded by letter dated October 20, 1999, agreeing
to provide Stevens with counsel and begin investigation of the
matter. However, Trinity expressly reserved the right to "later
deny coverage and to deny a defense pursuant to the policy's
provisions." In addition, Trinity provided, "[w]e have noted that
you are represented by counsel in this matter. Because of the
2

policy provisions [that may limit coverage], we encourage you to
continue to employ counsel with regard to this claim."
Two days after Trinity wrote this letter, Mitchell filed suit
against Stevens in a Louisiana state court, claiming mismanagement
of timberland ("Underlying Action").2 Within three weeks, on
January 10, 2000, Trinity again wrote Stevens, informing Stevens
that it had received a copy of the Underlying Action. This letter
provided:
Trinity will continue to investigate Mr. Mitchell's
claims and will continue to provide Stevens with an
attorney, at Trinity's expense. However, Trinity's
continued investigation and defense is subject to the
reservation of Trinity's right to deny coverage for Mr.
Mitchell's claim and to withdraw from Stevens' defense in
the event that it is determined that none of Trinity's
policies provide coverage for Stevens Forestry Service
with respect to Mr. Mitchell's claim/suit against it.
Because it is likely that there is no coverage for
Stevens Forestry Service with respect to Mr. Mitchell's
suit, you may wish to continue to retain an attorney at
Stevens' expense to protect the company's interest in
this litigation.
. . . .
Because the policy provisions referred to herein and
other applicable provisions may limit or exclude coverage
for Mr. Mitchell's claims, we encourage you to continue
to employ counsel at Stevens' expense with regard to this
claim. Mr. Caldwell Roberts, who has been appointed by
Trinity to defend Stevens, will cooperate with your
personal defense attorney and will continue to defend
Stevens, but subject to the reservations of right
discussed herein and in [the October letter from
Trinity].
(emphasis added)
Pursuant to this letter, Trinity appointed Caldwell Roberts as
2The Underlying Action was later removed to federal court.
3

Stevens' defense counsel in the Underlying Action. Roberts
represented Stevens throughout the course of the Underlying Action
and, along with independent counsel Percy, participated in all
aspects of the litigation.
On January 28, 2000, Trinity filed this action seeking a
declaration that it had no obligation to defend or indemnify
Stevens in the Underlying Action. Stevens filed a counterclaim,
seeking a contrary declaration. Subsequently, the Underlying
Action went to trial, and a jury verdict for Stevens resulted,
thereby mooting the indemnity issue.
Stevens then filed a motion for summary judgment seeking
recovery of Percy's attorneys' fees and expenses, which totaled
approximately $105,000. Trinity responded with its own motion for
summary judgment, arguing that (1) it had no duty to defend Stevens
under the policy, and (2) it had discharged any duty to defend by
providing Roberts as defense counsel in the Underlying Action. The
district court, assuming that Trinity had a duty to defend Stevens
in the Underlying Action, granted Trinity's motion, holding that
"even when the insurer reserves the right to deny coverage, it is
not obligated to pay for an attorney that the insured unilaterally
decides to hire as an extra defense counsel." Stevens appeals.
II.
We review a district court's grant of summary judgment de
novo. FDIC v. Abraham, 137 F.3d 264, 267 (5th Cir. 1998) (citation
omitted). Summary judgment is appropriate only where, in viewing
4

the facts in the light most favorable to the non-movant, there is
no genuine issue of material fact. Fed. R. Civ. P. 56(c) (2003).
The issue presented in this appeal is whether Trinity, as
insurer, must reimburse Stevens, as insured, for attorneys' fees
and costs Stevens incurred by hiring independent counsel to
represent it in the Underlying Action, where Trinity provided
Stevens with counsel, but reserved the right to deny coverage and
withdraw from Stevens' defense. As the district court's
jurisdiction was based on diversity, see 28 U.S.C. § 1332, it
properly determined that Louisiana state law is applicable to this
issue. See Erie R.R. v. Tompkins, 304 U.S. 64 (1938).
Neither the Louisiana legislature nor the Louisiana Supreme
Court has spoken on this issue. However, in an analogous case
applying Louisiana law, this circuit held that an insured may
recover fees for an attorney hired by the insured, as opposed to
the insurer, if the attorney provided by the insurer was
objectively inadequate. Nat'l Union Fire Ins. Co. v. Circle, Inc.,
915 F.2d 986, 991 (5th Cir. 1990). Specifically, the insured may
recover under a breach of duty theory if the attorney provided by
the insurer fails to "vigorously and adequately" defend the
insured. Id. (citation omitted).
Stevens does not contend that Roberts failed to "vigorously"
or "adequately" defend it in the Underlying Action. Instead,
Stevens argues that the complicated nature of the facts and
circumstances involved in the Underlying Action necessitated the
5

use of Percy as additional counsel, and therefore Trinity should
reimburse Stevens for Percy's fees. We disagree.
The district court correctly pointed out that what matters in
this case is that Trinity provided Stevens with competent defense
counsel in the Underlying Action, not whether Percy's contribution
as independent counsel to Stevens was beneficial or whether the
litigation was especially complex. Further, there is no evidence
that Trinity agreed to compensate Stevens for additional counsel.
In fact, the January 10, 2000, letter from Trinity provided that
any additional counsel would be at Stevens' expense: "you may wish
to continue to retain an attorney at Stevens' expense to protect
the company's interest in this litigation" and "we encourage you to
continue to employ counsel at Stevens' expense with regard to this
claim." The fact that Trinity reserved the right to later deny
coverage does not negate the fact that it fulfilled its duty of
providing Stevens with adequate counsel.
Therefore, in accordance with National Union,3 we find that
3Stevens points out that two Louisiana intermediate appellate
court decisions, issued after National Union, have found that, at
least in certain circumstances, an insurer who contests coverage is
liable for the attorneys' fees if the insured hires separate
counsel. See Smith v. Reliance Ins. Co., 807 So. 2d 1010, 1022
(La. Ct. App. 2002); Belanger v. Gabriel Chems., Inc., 787 So. 2d
559, 565-67 (La. Ct. App. 2001). This, argues Stevens, necessi-
tates the invalidation of National Union. We disagree.
These cases are distinguishable from National Union and not on
point in this case. Both involved an insured who wished to reject
the insurer's proffered counsel and instead employ independent
counsel. See Smith, 807 So. 2d at 1022; Belanger, 787 So. 2d at
(continued...)
6

Trinity is not required to reimburse Stevens for the fees or costs
associated with Stevens' hiring of additional counsel where
Trinity, as Stevens' insurer, provided Stevens with competent
defense counsel in the Underlying Action. Accordingly, we affirm
the district court's grant of summary judgment in favor of Trinity.
III.
For the aforementioned reasons, we affirm.
3(...continued)
565-67. Here, as in National Union, the insured accepted insurer's
counsel, but also wished to receive reimbursement for independent
counsel.
7