Westfield Insurance Company v. Miller Architects & Builders, Inc.

Background

In January 2018, the court granted summary judgment to Miller Architects & Builders, Inc. (“Miller”), holding that Westfield Insurance Company had breached its duty to defend Miller in an arbitration involving allegedly faulty design and construction of an apartment building in Grand Forks, North Dakota. The remaining claims concerned Westfield’s duty to indemnify Miller if Miller were held liable for a covered claim in the arbitration.

Miller moved for entry of partial final judgment on the duty to defend, a stay of the remaining case until the arbitration ended, and attorney’s fees, costs, and statutory prejudgment interest. Westfield agreed that Miller was entitled to fees and interest but disputed the interest calculation and the amount of fees. Westfield did not oppose a stay but argued that Miller should still respond to discovery requests.

Partial judgment

The court granted Miller’s request under Federal Rule of Civil Procedure 54(b). That rule permits final judgment on fewer than all claims when there is no just reason for delay. The court found that Miller would face significant hardship without judgment because it had been unable to recover more than $360,000 in defense fees and related interest. It also found that an appeal concerning the duty to defend would not necessarily cause improper piecemeal appeals and could help settlement discussions in the arbitration.

The court rejected Westfield’s argument that Miller could not obtain judgment because Miller had not moved for summary judgment on its own declaratory-judgment counterclaim. Westfield had sought a declaration that there was no coverage, and the denial of that request supported the opposite declaration. The court therefore entered judgment that Westfield had a duty to defend Miller in the underlying arbitration.

Stay

The court stayed the remaining indemnification claim pending the outcome of the arbitration. It found ongoing discovery unnecessary during the stay. Miller remained obligated to keep Westfield informed about the arbitration, and Westfield could seek appropriate relief from Magistrate Judge Brisbois if Miller did not provide sufficient information.

Fees and prejudgment interest

The court applied the lodestar method, which calculates a reasonable fee by multiplying the reasonable hours worked by a reasonable hourly rate. Westfield did not challenge Miller’s hourly rates, and the court found the hours reasonable given the complexity and work involved.

The court awarded $167,465.07 for defending the underlying arbitration through January 2017 and $194,458.18 for defending this lawsuit, totaling $361,923.25. It ruled that prejudgment interest was calculated from the date Miller tendered its defense to Westfield—not separately from the date of each attorney invoice. Interest on the arbitration-defense fees was due from March 6, 2015, at $45.88 per day.

Disposition

The court ordered that Miller’s motion for attorney’s fees and costs, entry of partial final judgment, and a stay was granted. Miller was entitled to collect $361,923.25 from Westfield, plus $57,671.16 in prejudgment interest as of the order date, with an additional $45.88 accruing each day until paid. Judgment was entered on Westfield’s duty to defend Miller, and the remaining issues were stayed pending arbitration. The parties were required to file a joint status report within six months and periodic reports every three months thereafter until the arbitration was complete.