IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

KAREN WELDIN STEWART, CIR-MI, )

INSURANCE COMMISSIONER OF THE )

STATE OF DELAWARE, )

)

Plaintiff, )

)

v. ) CIVIL ACTION NO. 12-0532-KD-B

)

CONTINENTAL CASUALTY )

COMPANY, )

)

Defendant and )

Third-Party Plaintiff, )

)

v. )

)

COLTIN ELECTRIC, INC., )

)

Third-Party Defendant. )

ORDER

This action is before the Court on the defendant Continental Casualty Company’s motion for 

award of attorney’s fees and supporting memorandum (doc. 194) and application for award of 

attorney’s fees and litigation expenses (doc. 204). Upon consideration, and for the reasons set forth 

herein, the motion and application are DENIED.

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This Court’s jurisdiction is based on diversity and Alabama is the forum state; therefore, the 

court applies the law of the State of Alabama to determine whether a party is entitled to fees and to 

resolve disputes as to the reasonableness of fees. Kearney v. Auto-Owners Ins. Co., 713 F. Supp. 2d 

1369, 1373 (M.D. Fla. 2010) (citing Coastal Roofing Co., Inc. v. David Boland, Inc., 309 F.3d 758, 

760 (11th Cir. 2002) (“Since Boland's claim for attorneys' fees sounds in state law and reaches us by 

way of federal diversity jurisdiction, we apply the substantive law of Florida, the forum state.” 

 1

 The plaintiff Karen Weldin Stewart’s motion to strike (doc. 192) is MOOT. 

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(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938))). “It is clear that statutes allowing for 

recovery of attorney’s fees are substantive for Erie purposes.” McMahan v. Toto, 256 F.3d 1120, 

1132 (11th Cir. 2001) (citation omitted). “As the Supreme Court has stated: 

[I]n an ordinary diversity case where the state law does not run counter to a valid 

federal statute or rule of court, and usually it will not, state law denying the right 

to attorney's fees or giving a right thereto, which reflects a substantial policy of 

the state, should be followed.”

McMahan, 256 F. 3d at 1133 (quoting Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 

240, 259 n. 31, 95 S. Ct. 1612, 1622 n. 31, 44 L.Ed.2d 141 (1975) (citation and quotation omitted)).

“Alabama follows the American rule, whereby attorney fees may be recovered if they are 

provided for by statute or by contract” or “special equity”. Jones v. Regions Bank, 25 So.3d 427, 

441 (Ala. 2009) (citations omitted); Hartford Acc. & Indem. Co. v. Cochran Plastering Co., Inc., 

935 So.2d 462, 472 (Ala. Civ. App. 2006) (citations omitted) (same). 

Relevant to this motion, Ala. Code § 39–1–1(d) sets forth specific instructions for making an 

offer of judgment and provides as follows: 

(d) In the event a civil action is instituted on the payment bond, at any time more 

than 15 days before the trial begins, any party may serve upon the adverse party 

an offer to accept judgment in favor of the offeror or to allow judgment to be 

entered in favor of the offeree for the money or as otherwise specified in the offer. 

If within 10 days after the service of the offer, the adverse party serves written 

notice that the offer is accepted, either party may then file the offer and notice of 

acceptance together with proof of service and the clerk of the court shall enter 

judgment. An offer not accepted shall be deemed withdrawn and evidence of the 

offer shall not be admissible. If the judgment finally obtained by the offeree is 

less favorable than the offer, the offeree shall pay the reasonable attorney's fees 

and costs incurred by the offeror after the making of the offer. . . . 

Ala. Code 39-1-1(d). 

B. Analysis

Continental argues that it is statutorily entitled to attorneys’ fees, costs, and litigation 

expenses totaling $414,445.46, incurred after Continental served an Offer of Judgment upon 

plaintiff on September 26, 2013. (See Continental’s notice of filing offer of judgment previously 

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served under Alabama Code § 39-1-1, and notice of intent to file application for attorney’s fees and 

costs (doc. 191-1)). Continental argues that because the net judgment to the Commissioner, 

$145,000.00, is less than Continental’s offer of $150,000.00, the “judgment finally obtained” is 

“less favorable than the offer” and therefore, it is entitled by statute to attorney’s fees and costs. 

Continental may be entitled to attorney’s fees, costs and expenses only if the judgment 

finally obtained is less favorable than the offer. In that regard, Ala. Code § 39-1-1(b) states that 

“[i]n the event the surety or contractor fails to pay the claim in full within 45 days from the mailing 

of the notice, then the person or persons may recover from the contractor and surety, in addition to 

the amount of the claim, a reasonable attorney's fee based on the result, together with interest on the 

claim from the date of the notice.” The Court has awarded interest on the claim from the date of the 

notice and a reasonable attorney’s fee to the plaintiff (docs. 208, 219). The judgment has been 

amended to include these awards. Thus, the judgment finally obtained exceeds the offer. 

Accordingly, Continental’s motion and application are denied. 

DONE and ORDERED this the 20th day of January 2015.

 

/s/ Kristi K. DuBose

KRISTI K. DuBOSE

UNITED STATES DISTRICT JUDGE

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