Scottsdale Insurance Company v. McGrath
- Lewis Liman
- 1:19-cv-07477
- U.S. District Court · Southern District of New York
- 5
In Scottsdale Insurance Company v. McGrath, Judge Liman approved a conditional judgment awarding McGrath $1 million, plus $215,000 in attorneys’ fees.
Scottsdale Insurance Company and Patrick M. McGrath were primarily affected. Scottsdale became subject to the stipulated $1 million damages award and $215,000 attorneys’ fee award, while McGrath received those awards subject to the judgment’s conditions and the parties’ reserved appellate rights. The judgment also applied to the other parties to the stipulated judgment.
What happened
Scottsdale Insurance Company v. McGrath concerned Scottsdale’s duty to defend McGrath under an insurance policy issued to Watershed Ventures LLC. The parties agreed to avoid a trial on damages while preserving their rights to appeal two earlier court orders.
The judgment set McGrath’s damages on his claim for breach of the duty to defend at $1 million, including prejudgment interest. It also awarded him $215,000 in attorneys’ fees and awarded no other costs.
Judge Liman approved the stipulated conditional final judgment on September 22, 2021. The judgment would become void if either earlier order were reversed, partly reversed, or sent back for further proceedings, and the court retained jurisdiction to interpret or enforce it.
The detailed version
- Scottsdale Insurance Company v. McGrath · No. 1:19-cv-07477
- Lewis Liman
- Sept. 22, 2021
Background
Scottsdale Insurance Company sought a declaration that Patrick M. McGrath was not an insured under Business and Management Indemnity Policy No. EKS 3172343, issued to Watershed Ventures LLC. McGrath filed an answer and counterclaims against Scottsdale. The opinion also identifies AH DB Kitchen Investors LLC and Castlegrace Equity Investors, LLC as defendants, and Craveable Hospitality Group, formerly Watershed Ventures, LLC, as a third-party defendant.
The judgment describes two earlier summary-judgment orders. In the first, the court denied Scottsdale’s motion for summary judgment and held that Rocky Aspen LLC was a subsidiary of Watershed when the identified “Watershed Option Triggering Events” occurred, and that McGrath was an insured under the policy until his removal as Rocky Aspen’s co-manager. In the second, the court granted Scottsdale’s motion for partial summary judgment and dismissed McGrath’s Counterclaim Count II for bad-faith breach of contract and requests for consequential and punitive damages.
Stipulated Conditional Final Judgment
To avoid the expense of a damages trial and permit an appeal of the two summary-judgment orders, Scottsdale and McGrath stipulated to the damages and attorneys’ fees. The court approved and entered the stipulated conditional final judgment.
Under Paragraph 4, McGrath was awarded $1,000,000 against Scottsdale on Counterclaim Count III, for breach of the duty to defend, together with prejudgment interest. Under Paragraph 5, McGrath was awarded $215,000 in attorneys’ fees. The judgment states that no costs other than attorneys’ fees would be awarded.
Appeal Reservation and Effect
Scottsdale reserved its right to appeal the portions of the first order concerning Rocky Aspen’s subsidiary status and McGrath’s insured status. McGrath reserved his right to appeal the second order’s dismissal of his bad-faith counterclaim and requests for consequential and punitive damages. If either earlier order were reversed, reversed in part, or vacated and remanded, in whole or in part, the stipulated conditional final judgment would be void.
The judgment states that its terms would bind the parties absent such appellate action. The court retained continuing jurisdiction to interpret or enforce the judgment, subject to the parties’ reserved appellate rights. Judge Lewis J. Liman approved and ordered the judgment on September 22, 2021.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.