Opinion ID: 164354
Heading Depth: 2
Heading Rank: 2

Heading: MCCC's Own Attorney Fees Incurred in Declaratory Judgment Actions

Text: 55 We next address whether the Agreement requires ERC to indemnify MCCC for MCCC's own attorney fees and expenses associated with the declaratory judgment actions. The answer turns on whether these attorney fees and expenses constitute claim expenses within the meaning of the Agreement. The district court held that MCCC's attorney fees and expenses were such claim expenses and therefore were subject to proportionate reimbursement as provided in the Agreement. 56 The Agreement defines claim expenses to mean all payment under the supplementary payments provisions of [MCCC's] policy, including court costs, interest upon judgments, and allocated investigation, adjustment and legal expenses. This definition incorporates by reference the supplementary payments provisions of MCCC's policies with its insureds. 57 The Statement of Uncontroverted Facts in ERC's memorandum in support of its motion for summary judgment contained what it asserted to be the language of the supplementary payments provisions. MCCC's response stated that the assertion was uncontroverted. App. 1673 ¶ 7. The pertinent part of that language is as follows: SUPPLEMENTARY PAYMENTS COVERAGES A AND B 58 We will pay, with respect to any claim we investigate or settle or suit against an insured we defend: A. All expenses we incur 59 .... 60 These payments will not reduce the limits of insurance. The district court held: 61 A plain reading of the supplementary payments provision indicates that it covers MCCC's declaratory judgment fees and expenses. The provision provides that MCCC will pay all expenses which it incurs with respect to any claim that it investigates. Certainly, MCCC investigated the claims for which it litigated coverage. Moreover, the fees and expenses which MCCC incurred in the declaratory judgment proceedings are expenses which it incurred with respect to such claims. Accordingly, the declaratory judgment fees and expenses fall within the plain and ordinary meaning of the supplementary payments provision. 62 App. 2454 (emphasis added). 63 We agree with the district court that claim expenses, which include all payments under the supplementary payments provisions of [MCCC's] policy, thus covers MCCC's declaratory judgment attorney fees and expenses. MCCC investigated the claims that formed the basis of the declaratory judgment actions. MCCC incurred attorney fees and expenses with respect to those claims. Hence, the declaratory judgment attorney fees and expenses fall within the unambiguous language of the supplementary payments provisions. ERC must reimburse MCCC for those claim expenses at the contractually provided proportionate rate. 64 ERC contends that this construction of the language makes the words settle or `suit' against an insured we defend superfluous, because any case that is settled or involves a suit must also be investigated. Citing Bituminous Casualty Corporation v. Cowen Construction, Inc., 55 P.3d 1030, 1034 (Okla.2002), ERC relies on the general proposition that courts should avoid construing a document in such a way as to render some of the language surplusage. ERC suggests: 65 A more reasonable construction of the supplementary payments provision ... is that MCCC will pay all expenses that it incurs with respect to any suit against an insured that it defends. It also will pay all pre-suit expenses that it incurs with respect to any claim that it investigates or settles. This construction makes sense. A provision that MCCC will pay its own expenses in any suit where MCCC defends its insured leaves MCCC's insureds liable for all expenses incurred when MCCC settles a claim before suit is filed. The addition of the investigate or settle language would provide coverage for those pre-suit expenses. 66 Aplt. Br. at 42. 67 But ERC's construction does not avoid the surplusage problem. First, the words or settle serve no purpose, since it is impossible to believe that MCCC would settle a claim without having investigated it. Moreover, although ERC's argument explains why the words any claim we investigate would need to be added to the words `suit' against an insured we defend, it does not explain why, once the words any claim we investigate are in the MCCC policy, there is any need to retain the words or `suit' against an insured we defend. At times, no reasonable interpretation of contract language can avoid rendering some of the language surplusage. ERC's construction of the policy language here has no advantage over the natural reading insofar as avoiding surplusage is concerned. 68 ERC's principal argument on appeal, however, avoids the difficulty of construing the above-quoted language. It points out that the quoted language is not the actual language of the supplementary payments provisions in the MCCC policies at issue. Rather than saying, We will pay, with respect to any claim we investigate or settle or `suit' against an insured we defend, the provisions say, We will pay, with respect to any claim or `suit' we defend. 69 The problem with this argument is that it was never presented to the district court. It is well settled that [i]f a party fails to raise an issue in the trial court, it is deemed waived on appeal unless plain error is demonstrated. Hynes v. Energy West, Inc., 211 F.3d 1193, 1201-02 (10th Cir.2000). 70 The role of plain error in civil litigation is very limited. There is no plain error provision in the rules governing civil matters except with respect to erroneous instructions, see Fed.R.Civ.P. 51(d)(2) (2003 amendment), and rulings on evidence, Fed. R.Evid. 103(d). Yet we have recognized the possibility of plain error in other circumstances. See Quigley v. Rosenthal, 327 F.3d 1044, 1063 (10th Cir.2003); 9A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2472 (2d ed. 1995) ([A]lthough the Civil Rules... do not contain a formal provision allowing the appellate courts to notice plain error, the appellate courts have held in a few cases that despite the absence of an objection they may consider an error so fundamental that it may have resulted in a miscarriage of justice.) 71 In reviewing for plain error, we have used the standard applied in criminal proceedings. Federal Rule of Criminal Procedure 52(b) states: A plain error that affects substantial rights may be considered even though it was not brought to the court's attention. Fed.R.Crim.P. 52(b) (2002). As pointed out by the Supreme Court, Rule 52(b) is permissive, not mandatory. If the forfeited error is `plain' and `affect[s] substantial rights,' the court of appeals has authority to order correction, but is not required to do so. United States v. Olano, 507 U.S. 725, 735, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993). [T]he discretion conferred by Rule 52(b) should be employed in those circumstances in which a miscarriage of justice would otherwise result. Id. at 736, 113 S.Ct. 1770 (internal quotation marks omitted). The doctrine is limited to correct[ing] a plain forfeited error affecting substantial rights if the error seriously affects the fairness, integrity or public reputation of judicial proceedings. Id. (internal quotation marks and bracket omitted). Accord Quigley, 327 F.3d at 1063. Establishing entitlement to plain-error relief is an extraordinary, nearly insurmountable burden. Quigley, 327 F.3d at 1063. 72 In our view, several factors combine to make this an inappropriate occasion to grant relief under the plain-error doctrine. First, the error was not an action or omission by the district court; it was an error by the parties. In their summary-judgment pleadings, ERC misquoted the policy language and MCCC responded that the quote was accurate. To be sure, ERC provided the district court with copies of the policies, which contained the correct language. ERC, however, miscited the record; it referred to page 6 of the contracts, but the pertinent language is not on any page numbered 6 in any of the contracts. Of course, the district court could have searched the record to verify the accuracy of language to which the parties stipulated. But courts could never complete their work if they have the burden of engaging in such time-consuming activity—activity that would be totally fruitless if attorneys performed their duties adequately. 73 Second, ERC had ample opportunity to bring the error to the district court's attention. The district court, relying on the language provided by ERC, granted summary judgment with respect to recovery of MCCC's own declaratory-judgment attorney fees on May 23, 2002. Trial on the issues not resolved by summary judgment was on June 18, 2002, almost a month later. ERC could also have alerted the district court to the matter by a post-trial, or even post-judgment, motion. 74 Third, the alleged error here does not concern any matter of significant public policy. We are dealing with a private contract dispute in a business relationship. And fourth, we are not certain whether the result we reach would be different under the language now presented to us by ERC. The proper construction of ERC's new language is not obvious. 75 In short, the judicial proceeding below was fair, and the error (by the parties) should not raise serious doubts about the integrity of that proceeding or bring disrepute upon the district court. We therefore affirm the district court on this issue. 76