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Insurer not obligated to pay attorneys fees


A federal appeals court ruled an insurer does not have to pay attorneys fees in a case in which the amount being sought by a plaintiff fell below the necessary level required for the court’s jurisdiction.

In August 2013, Imperial, Pennsylvania-based Maronda Homes Inc. of Florida sold a house to Joseph and Chamroeum Manalansan, according to Friday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta, in Southern-Owners Insurance Co. v. Maronda Homes, Inc. of Florida, JROD Plastering LLC, Joseph Manalansan, et al.

A few weeks later, the Manalansans sent Maronda notice of construction defects related to the house’s stucco installation.  Maranda had hired Saint Johns, Florida-based JROD, which had a commercial general liability insurance policy with Southern-Owners and listed Maronda as an additional insured, to perform the stucco installation. Maronda asked that Southern-Owners defend or indemnify it under JROD’s policy.

Southern-Owners sued Maronda and JROD in U.S. District Court in Jacksonville, Florida, seeking a ruling that its policy did not cover the stucco damage. The district court dismissed Southern-Owners complaint for “lack of subject-matter jurisdiction” because the amount being sought was less than the required minimum of $75,000.

Maronda and JROD then filed motions for attorneys fees under state law. Southern-Owners responded that the court did not have jurisdiction because it had already dismissed the underlying action. The district court agreed with the insurer and dismissed the plaintiffs’ motions.

A three-judge appeals court panel affirmed the decision, saying that in a 2008 unpublished opinion, the 11th Circuit had ruled that an attorneys fees award was within the court’s jurisdiction even after it ruled it did not have subject matter jurisdiction. But in a published opinion issued 24 years earlier, it held attorneys fees awards are “integral” to a case’s merits.

Attorneys in the case did not respond to requests for comment.