PUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 22
- 1373

MOSES ENTERPRISES, LLC , Plaintiff

- Appell ee ,

v. LEXINGTON INSURANCE COMPANY; AIG CLAIMS , INC., Defendant s - Appell ant s
. Appeal from the United States District Court for the Southern District of West Virginia , at Huntington

. Robert C

. Chambers , District Judge. ( 3 : 19

- c v - 0 0 477 )
Argued : March 7 , 202 3 Decided: April 28, 2023

Before THACKER and HEYTENS , Circuit Judges , and Joseph DAWSON, III, United States District Judge for the District of South Carolina, sitting by designation.

Vacated and remanded by published opinion

. Judge Heytens wrote the opinion, in which Judge Thacker and Judge Dawson joined

.

ARGUE D: Robert Lawrence Massie, NELSON MULLINS RILEY & SCARBOROUGH, LLP, Huntington, West Virginia, for Appellants. William Lowell Mundy, MUNDY & ASSOCIATES, Huntington, West Virginia, for Appellee. ON BRIEF: Marc E. Williams, Huntington, West Virginia, James T. Fetter, NELSON MULLINS RILEY & SCARBOROUGH, LLP, Charlotte, North Carolina, for Appellants

. USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 1 of 102 TOBY HEYTENS, Circuit Judge : This case is about whether an award of attorneys’ fees was proper under West Virginia law. Because the district court’s analysis omitted a required step, we vacate the fee award and remand for further proceedings

. I. Plaintiff Moses Enterprises, LLC, sell s cars. Moses had an insurance policy issued by defendant Lexington Insurance Company , with defendant AIG Claims, Inc. serv ing as the claims administrator. While the insurance policy was in place, Moses sold a car to someone using a fake identi t y . As the reader might guess, the fraud ster never paid. Luckily, the policy covered “Trick, Device, and False Pretense.” JA 24. But AIG denied coverage

. E ven though Moses filed a claim the same day it learned the purchase was a sham , AIG concluded Moses did
not provide notice of the claim within the policy’s required period

. Moses sued Lexington and AIG in federal district court . The complaint made four claims under West Virginia law , including

— as relevant here

— one for breach of the insurance contract and one for violating the State’s unfair trade practices statute. Among other relief, Moses requested “[d]amages for attorney fees.” JA 34. 1

1 Our review revealed “a jurisdictional tangle that could have been avoided by more careful pleading.” Thompson v. Ciox Health, LLC , 52 F.4th 171, 173 n.1 (4th Cir. 2022). Moses is a limited liability company , but the complaint contain s no mention of its members’ citizenships. See Central W. Va. Energy Co. v. Mountain State Carbon, LLC , 636 F.3d 101, 103 (4th Cir. 2011) (“For purposes of diversity jurisdiction , the citizenship of a limited liability company .

. . is determined by the cit izenship of all of its members.”). Fortunately for Moses , 28 U.S.C. § 1653 allows “[d]efective allegations of jurisdiction ” to (Continued) USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 2 of 103 Moses moved for partial summary judgment, asking the district court to hold as a matter of law that Lexington was “obligated to pay Moses for the loss it sustained as a result of the purchase of a 2017 Toyota by a purchaser who used a stolen identity .” D. Ct

. ECF 25, at 1. While th at motion was pending, defense counsel wrote Moses a short letter. It read, in part : Because my clients remain committed to resolving all claims fairly and reasonably, we are issuing a check to Moses Enterprises, LLC for the purchase price of the vehicle .

. . plus the

. . . statutory interest rate .

. . accruing from the date of the loss.
JA 213. The check

— which was mailed separately

— listed its “reason for payment” as
“case 3:19

- cv - 00477,” th is suit’s number on the district court ’s docket. JA 215. Moses
ret urned the check without cashing it . In a letter, Moses’s counsel explained: “As I informed you prior to you sending this check, I did not agree to accept this check and that I would return it.” JA 216. The district court granted partial summary judgment for Moses on the breach of contract claim but resolved only liability

— not damages. Nearly a year later, t he court denied the defendants ’ motion for summary judgment, which argued Moses’s compensatory damages were zero because Moses rejected the ch eck the defendants had
sent. In the district court’s view, “[i]t borders on absurd to argue that mailing opposing counsel an unwanted check is sufficient to settle or moot a claim , ” particularly where

“ be amended” on appeal, and Moses has provided information showing its members are all West Virginia citizens. Because neither de fendant is a citizen of West Virginia and the amount in controversy exceeds $75,000, the district court had subject matter jurisdiction under 28 U.S.C. § 1332(a). USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 3 of 104 “Defense Counsel was told before the check was sent that [Moses] would not settle for the amount proposed by the Defendants.” JA 95. The court further concluded “a material question of fact remain[ed] as to what damages [Moses] [was] entitled to as a result of Defendants’ breach of contra ct.” JA 94.
“L itigation continued.” JA 261. By the eve of trial, the dispute had narrowed to two claims

— the claim for violating West Virginia’s unfair trade practices statute and damages on the breach of contract claim

. The day before trial, the parties se ttled both claims, but continued to disagree about the amount of attorneys ’ fees to which Moses was entitled. Six months later, the district court awarded Moses “$293,135.45 in attorney’s fees and costs,” representing “the entire amount of attorney’s fees incurred until the final resolution of the case. ” JA 265 , 267

. We review an award of attorneys’ fees for abuse of discretion . S ee Colorado Bankers Life Ins. Co. v. Academy Fin. Assets, LLC , 60 F.4th 148, 153 (4th Cir. 2023) . In so doing, we review any underlying factual findings for clear error, see Andrews v. America’s Living Ctrs., LLC , 827 F.3d 306, 312 (4th Cir. 2016) , while reviewing any “legal determinations”

— including “the proper interpretation o f ” state law

— de novo. Colorado Bankers , 60 F.4th at 153. W e look to decisions of “the State’s highest court” for “the final word about what

. . . state law means.” Id.
II. As a general matter, West Virginia follows the “American rule that both sides of a civil controversy must pay their own attorneys’ fees

— win, lose, or draw.” Hayseeds, Inc.
v. State Farm Fire & Cas. , 352 S.E.2d 73, 78 (W. Va. 1986). But West Virginia’s highest USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 4 of 105 court has abrogated that rule for “prevailing claimants in property damage insurance
cases.” Id. at 7 9. “[W]henever a policyholder must sue his own insurance company over any property damage claim, and the policyholder substantially prevails in the action,” West Virginia law makes the insurance company “liable for the payment of the policyholder’s

reasona ble attorneys’ fees.” Id. at 80. The parties agree the policy at issue was one for property damage and that Moses substantially prevailed. See Jordan v. National Grange Mut. Ins. Co. , 393 SE.2d 647, 650 (W. Va. 1990) ( holding a policyholder may “substantially prevail [ ] in the litigation as a result of a settlement or as the result of a jury verdict”). There is thus no dispute Moses “may recover some amount of attorney’s fees.” JA 262. The question is: How much and for w hat?
A. We reject the defendants ’ argument that Moses is not entitled to any fees for work done after Moses returned the defendants’ check or after the district court grant ed partial summary judgment on the contract claim. True, West Virginia law allows fe e - shifting only
f

or work “necessary to obtain payment of the insurance proceeds.” Jordan , 393 S.E.2d at 65 2 . But the district c ourt made no reversible error in rejecting the view that any work done after those dates inherently flunks th e “necessary to obtain payment” test. The defendants’ first proffered date rises or falls on a c ontention that the rejected check was payment for “the amount due under the insurance policy.” Defs.’ Br. 4

– 5. But the district court made a factual finding that the check “was a settlement offer” for the entire litigation, JA 265 , and that finding is not clearly erroneous. The defendants’ letter USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 5 of 106 announced its purpose as “resolving all claims ”

— not just the breach of contract claim

— “fairly and reasonably,” JA 213 (e mphasis added), and the check’s “reason for payment” line referenced the docket number for the case as a whole , JA 215. Moses had no duty to settle its entire case for an amount its adversaries insisted represented full compensation for one of Moses’s disc rete claims. Nor was Moses required to open itself up to an argument it had done so by cashing the defendants’ “unsolicited” check. JA 264.
T he district court’s later grant of partial summary judgment also did not obviate the need for further work to “obta in payment of the insurance proceeds.” Jordan , 393 S.E.2d
at 65 2 . For one thing, Moses had no way of knowing whether the defendants would appeal the district court’s ruling. But even leaving that aside, the district court’s grant of partial summary judgmen t did not fully resolve the breach of contract claim because it left open the amount of damages. Indeed, by stating “a material question of fact remain s as to what damages the Plaintiff is entitled to as a result of Defendants’ breach of contract,” JA 94, the district court invited further attorney time to resolv e “what is actually payable under the insurance policy , ” JA 230. 2

2 It would not matter if we agreed with the defendants that “liability and damages for the co ntract claim were either entirely settled by, or easily mathematically determinable after, the district court’s [partial] summary judgment order.” Defs.’ Br. 17. The defendants offer no reason to believe Moses would still have been paid had its lawyers sim ply patted themselves on the back and stopped working . A nd any disputes about how much additional work was “necessary to obtain payment of the insurance proceeds” go to the amount of compensation for any post

- summary judgment work , not whether such work is compensable at all. Jordan , 393 S.E.2d at 650

– 52 (emphasis added). USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 6 of 107 B. At the same time, we reject Moses’ s contention that the district court committed no legal errors in concluding Moses was entitled to “the entire amount of attorney’s fees incurred until the final resolution of the case.” JA 265, 267. We need not

— and do not

— resolve whether an y particular figure could surviv e abuse of discretion review. Instead, we conclude the district court’s analysis missed a step and thus vacate and remand for further proceed ings. The parties litigated and settled two claims, but only one of them entitle s Moses to fee shifting under West Virginia law . In Count One of its complaint, Moses accused the defendants of breaching a first

- party insurance contract. Th at claim is eligible for fee shifting. See Hayseeds , 352 S.E.2d at 80. In Count Two, Moses charged the defendants with violating the West Virginia Unfair Trade Practices Act “in their handling of [Moses’s] claim.” JA 30. That “type of action ”

— which West Virginia courts call a Jenkins claim

— requires showing an insurance company’s “general business practice” of “bad faith settlement.” McCormick v. Allstate Ins. Co. , 475 S.E.2d 507, 514

– 15, 519 (W. Va. 1996)

. And West Virginia’s highest court (the Supreme Court of Appeals) has held fee shifting is unavailable for a Jenkins claim . S ee Lemasters v. National Mut. Ins. Co. , 751 S.E.2d 735 , 742

– 43 (W. Va. 2013) (per curiam).
Lemasters is closely on point and largely resolves this case. In Lemasters , the plaintiffs sought attorneys’ fees for both a b reach of contract claim and a Jenkins claim.
See Lemasters , 751 S.E.2d at 738

– 39. The trial court denied fee shifting for work “incurred in the prosecution o f ” the Jenkins claim ( id. at 738) , and the plaintiffs appealed, relying on USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 7 of 108 dicta in an earlier decision stating that “ Jenkins does allow, under certain conditions, a party to seek reasonable attorney fees.” Lemasters , 751 S.E.2d at 742 (quoting McCormick , 475 S.E.2d at 519). West Virginia’s highest court affirmed the trial court’s “conclusio n that it was without authority to award the [plaintiffs] attorney fees, costs and expenses in curred
in vindicating their Jenkins /

[Unfair Trade Practices Act] claims.” Id. I t also contrasted work on a Jenkins claim with work “necessary to obtain payment of the insurance proceeds” in “a contract

- based action,” for which fee shifting is available. Id. at 742

– 43. The district court viewed Lemasters as distinguishable because “[h]ere, unlike in
Lemasters , . . . the underlying [contract] action .

. . and the ba d faith action were pursued as one singular claim, which was not resolved or paid until the [final] settlement.” JA 264. We respectfully disagree. For one thing, West Virginia’s highest court has made clear Moses’s breach of contract claim (for which fee s hifting is available) and its Jenkins claim (for which fee shifting is unavailable ) are not “one singular claim

. ” To the contrary, it has said such claims are “wholly distinct , ” McCormick , 475 S.E.2d at 519 , and repeatedly “distinguished .

. . the filing of an action on the insurance contract to collect benefits arising from the insurance contract, from [an] action arising from violations of the” unfair trade practices statute, Lemasters , 751 S.E.2d at 741.
Yes , L emasters involved a different procedural posture . But nothing in the Supreme Court of Appeals’ analysis suggests those distinctions make a difference. As a federal court sitting in diversity, our role is to predict what West Virginia’s highest court would do , not to hunt for possible bases for distinguishing this case from its past decisions. And here
Lemasters reiterated the rule from Hayseeds by stating that fee shifting is allowed only for USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 8 of 109 an insured “vindicating its claim” “to collect benefits under [it s] insurance contract,” not for “a bad faith action.” 751 S.E.2d at 740, 743

. The district court also cited “the public policy underpinning Hayseeds ” as supporting an award of attorneys’ fees for all of Moses ’ s claims. JA 265. But neither Moses nor the district court has identified how pursuing a “wholly distinct” cause of action for an insurance company’s unfair trade practice of “bad faith settlement,” McCormick , 475 S.E.2d at 514, 519, could be “necessary” t o secure “payment of the insu rance proceeds,” Jordan , 393 S.E.2d at 652. Just because two things happen at the same time

— here, pursuit of the contract claim and the Jenkins claim

— does not mean one is “necessary” to the other. Id. Because the district court committed legal error in aw arding Moses the full amount of its requested fees without determin ing whether any of the work was properly attributed only to the Jenkins claim, we vacate the fee award and remand for further proceedings. On remand, the district court must

— aided by approp riate submissions by the parties

— at least attempt to determine which portions of the requested fees were “necessary to obtain payment of the insurance proceeds” and then award fees based on that work only.
Lemasters , 751 S.E.2d at 743.
T he regime of awarding attorneys’ fee s for federal civil rights litigation provides a helpful analog for the district court’s task

. Although a “prevailing party” in that context may receive “a reasonable attorney’s fee,” 42 U.S.C. § 1988(b), a litigant is not entitled to fees for all claims if successful “on only some .

. . claims,” Hensley v. Eckerhart , 461 U.S. 424, 434 (1983). Because “no fee may be awarded for services on the unsuccessful USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 9 of 1010 claim [s] ” ( i d. at 435 ) , a court awarding fees under Section 1988 must attempt to separate the compensable work on the successful claims from non

- compensable work on the unsuccessful ones

. S ee id . at 435

– 37. None of this is to prejudge the proper fee award in this case. Maybe the work
Moses ’ s attorneys did for the Jenkins claim was so intertwined with the ir work on the breach of contract claim that some ( or all ) of the time cannot be disentangled

. Cf. Hensley , 461 U.S. at 435 ; see also Pls.’ Br. 6 (so arguing)

. Or maybe

— as Moses’ s counsel asserted at oral argument

— n one of the requested fees were for work done on the Jenkins claim.
See Oral Arg. 34:40

– 35:23. But the district court made no findings about these issues. And because “we are a court of review, not of first view,” Cutter v. Wilkinson , 544 U.S. 709, 718 n.7 (2005), we leave to the district court the initial task of assessing which of the requested fees were compensation for “services .

. . necessary to obtain payment of the insurance proceeds,” Lemasters , 751 S.E.2d at 743.

* * * The j udgment of the district court is vacated , and th e case is remanded for further proceedings consistent with this opinion.
SO ORDERED USCA4 Appeal: 22-1373 Doc: 37 Filed: 04/28/2023 Pg: 10 of 10