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Laschkewitsch v. Legal & General America, Inc.

United States District Court, E.D. North Carolina, Western Division

November 1, 2017

JOHN LASCHKEWTTSCH, Plaintiff,
v.
LEGAL & GENERAL AMERICA, INC., d/b/a BANNER LIFE INSURANCE COMPANY, Defendant.

          ORDER

          JAMES C. DEVER III CHIEF UNITED STATES DISTRICT JUDGE

         On March 23, 2017, this court granted summary judgment to Banner Life Insurance Company ("Banner" or "defendant") on plaintiff John Laschkewitsch's ("Laschkewitsch" or "plaintiff') claims and Banner's counterclaims. See [D.E. 100]. Banner now moves for attorneys' fees [D.E. 103], and Laschkewitsch moves to alter or amend the judgment under Rule 59(e) of the Federal Rules of Civil Procedure [D.E. 105]. As explained below, the court grants Banner's motion for attorneys' fees and denies Laschkewitsch's motion to alter or amend the judgment.

         I.

         In its order granting Banner summary judgment, the court directed Banner to brief its entitlement to attorneys' fees and costs. See [D.E. 100] 18. On April 6, 2017, Banner filed a motion for attorneys' fees [D.E. 103] and a declaration in support [D.E. 104]. On May 8, 2017, Laschkewitsch responded in opposition [D.E. 107]. On May 17, 2017, Banner replied [D.E. 111].

         Banner claims that both the Agent/Broker Agreement and N.C. Gen. Stat. § 75-16.1 allow Banner to recover $144, 031.65 in attorneys' fees in this action. Banner's entitlement to attorneys' fees turns on two inquiries: (1) whether the cited source authorizes an award of attorneys' fees, and if so, (2) whether the requested fees are reasonable.

         A.

         Laschkewitsch breached bis Agent/Broker Agreement ("Producer Agreement”) with Banner by submitting a policy application containing material misrepresentations. See [D.E. 100] 15-16. Maryland law governs the Producer Agreement. See Id. at 15; [D.E. 103-1] 6. Under Maryland law, a prevailing party can recover attorneys' fees if "the parties to a contract have an agreement to that effect." Nova Research. Inc. v. Penske Truck Leasing Co., 405 Md. 435, 445, 952 A.2d 275, 281 (2008) (quotation omitted). Banner cites the Producer Agreement's indemnity clause as providing a right to attorneys' fees:

The Agent/Broker shall indemnify the Company and the above named Brokerage General Agent and hold each of them harmless from any and all expenses, costs, attorneys' fees, causes of action, losses, and damages resulting or arising from unauthorized acts done by the Agent/Broker or his/her/its employees.

         [D.E. 103-1 ] 3. The Court of Appeals in Maryland recently held that a materially indistinguishable indemnity clause contemplated an award of attorneys' fees in a first-party action brought for a breach of the agreement that contained the clause. See Bainhridge St. Elmo Bethesda Apartments. LLC v. White Flint Express Realty Grp. Ltd. P'ship. LLLP, 454 Md. 475, 478-94, 164 A.3d 978, 980-89 (2017). Banner's attorneys' fees "result[] or aris[e] from unauthorized acts done by" Laschkewitsch. Thus, the indemnity clause authorizes attorneys' fees.

         Under Maryland law, Banner can recover not only fees incurred in prosecuting its breach- of-contract claim, but also fees incurred in litigating claims sharing "a common core of facts" with the breach claim. See, e.g., Ochse v. Henry, 216 Md.App. 439, 459-68, 88 A.3d 773, 785-90 (2014); Weichert Co. of Md. Inc. v. Faust, 191 Md.App. 1, 14-21, 989 A.2d 1227, 1234-38(2010), aff'd. 419 Md. 306, 19 A.3d 393 (2011). This case revolved around Laschkewitsch's knowledge of his brother's ALS and coverage under other life-insurance policies when Laschkewitsch sent his brother's application to Banner. Laschkewitsch's fraudulent conduct permeated all claims, counterclaims, and defenses in this case, and Banner succeeded in every respect. Moreover, the inextricable nature of all claims, counterclaims, and defenses makes apportioning fees among the breach-of-contract claim and other claims impractical. Thus, Banner can recover the attorneys' fees it incurred in this litigation.

         Alternatively, N.C. Gen. Stat. § 75-16.1 allows Banner to recover its attorneys' fees. Under North Carolina law, "a successful litigant may not recover attorneys' fees, whether as costs or as an item of damages, unless such a recovery is expressly authorized by statute." Silicon Knights. Inc. v. Epic Games. Inc., 917 F.Supp.2d 503, 516 (E.D. N.C. 2012) (quotation omitted), affd. 551 Fed.Appx. 646 (4th Cir. 2014) (per curiam) (unpublished); see Stillwell Enters. Inc. v. Interstate Equip. Co., 300 N.C. 286, 289, 266 S.E.2d 812, 814 (1980). In relevant part, section 75-16.1 allows a court to award "a reasonable attorney fee" to the attorney representing "the prevailing party" upon concluding that "[t]he party instituting the action knew, or should have known, the action was frivolous and malicious." N.C. Gen. Stat. § 75-16.1(2). Banner defeated Laschkewitsch's section 75-1.1 claim on summary judgment and qualifies as a prevailing party under section 75-16.1(2). See Fed. Point Yacht Club Ass'n. Inc. v. Moore, 781 S.E.2d 351, at *8 ( N.C. Ct. App. 2015) (unpublished table decision); Birmingham v. H & H Home Consultants & Designs. Inc., 189 N.C.App. 435, 443, 658 S.E.2d 513, 519 (2008).

         "A claim is frivolous if a proponent can present no rational argument based upon the evidence or law in support of it." Blyth v. McCrary, 184 N.C.App. 654, 663 n.5, 646 S.E.2d 813, 819 n.5 (2007) (alteration, citations, and quotations omitted); see Rhyne v. K-Mart Corp., 149 N.C.App. 672, 689, 562 S.E.2d 82, 94 (2002); see also Greensboro Scuba Sch., LLC v. Robertson, 776 S.E.2d 363, at *8-9 ( N.C. Ct. App. 2015) (unpublished table decision); Castle McCulloch, Inc. v. Freedman, 169 N.C.App. 497, 504, 610 S.E.2d 416, 422, aff'd 360 N.C. 57, 620 S.E.2d674 (2005). "A claim is malicious if it is wrongful and done intentionally without just cause or excuse or as a result of ill will." Blyth, 184 N.C.App. at 663 n.5, 646 S.E.2d at 819 n.5 (citations and quotations omitted); see Rhyne, 149 N.C.App. at 689, 562 S.E.2d at 94. Maliciousness can develop during the course of litigation if a party persists after discovering that his claim is meritless. See Furniture Distribs., Inc. v. Software Support-PMW. Inc., No. 3:12-CV-90-GCM, 2014 WL 421913, at *2 (W.D. N.C. Feb. 4, 2014) (unpublished); Fed. Point Yacht Club Ass'n. Inc., 781 S.E.2d 351, at *10. If a plaintiff s claims are reasonably "subject to dispute and analysis, " the claims are not frivolous or malicious. See KT.M Commc'ns. Inc. v. Tuschen, No. 5:14-CV-250-FL, 2015 WL 1268283, at *4 (E.D. N.C. Mar. 19, 2015) (unpublished).

         Just as other courts have held when faced with Laschkewitsch's fraud, the court concludes that the allegations underlying Laschkewitsch's section 75-1.1 claim were both frivolous and malicious. See Laschkewitsch v. Lincoln Life & Annuity Distribs., Inc., 47 F.Supp.3d 327.337-3 8 (E.D. N.C. 2014); Order, Rehastar Life Ins. Co., 5:13-CV-210-BO, [D.E. 169] (E.D. N.C. Nov. 12, 2014). After losing on nearly identical claims in two previous cases, Laschkewitsch knew or should have known that he could "present no rational argument based upon the evidence or law in support" of his section 75-1.1 claims. Indeed, in each of those cases, the court concluded that Laschkewitsch's claims were frivolous yet he pressed forward in this case. As for maliciousness, Laschkewitsch's claims are wrongful and done intentionally without just cause or excuse. He defrauded Banner, and then sued Banner in order to obtain the fruits of his fraud. He then persisted in forcing Banner to defend against a claim he knew was frivolous, stonewalled discovery, and filed a myriad of meritless motions. Laschkewitsch's conduct falls squarely within section 75-16.1(2), and Banner can recover its attorneys' fees.

         Fees awarded under section 75-16.1 typically are limited to fees related to either prosecuting or defending against section 75-1.1 claims. See Parlier v. Casteen, No. 514CV00085RLVDCK, 2016 WL 3032692, at *9 (W.D. N.C. May 26, 2016) (unpublished); McKinnon v. CV Indus., Inc., 228 N.C.App. 190, 198 n.2, 745 S.E.2d 343, 349 n.2 (2013). "However, where all of [a] plaintiffs claims arise from the same nucleus of operative facts and each claim was inextricably interwoven with the other claims, apportionment of fees is unnecessary." Whiteside Estates. Inc., v. Highlands Cove. L.L.C.,146 N.C.App. 449, 467, 553 S.E.2d431, 443 (2001); see Philips v. Pitt Cty. Mem'l Hosp. Inc.,242 N.C.App. 456, 458-59, 775 S.E.2d 882, 884-85 (2015). As noted, all claims in this case were based ...


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