Lagstein v. Certain Underwriters at Lloyd's of London
725 F.3d 1050
9th Cir.2013Background
- Dr. Lagstein purchased a disability policy from Lloyd’s in 1999; policy obligated $15,000 monthly for up to 60 months if disabled.
- He became permanently disabled in 2001 due to heart issues and other problems, and physicians opined permanent disability.
- After initial claim, Lloyd’s delayed decision, and arbitration was compelled under the policy.
- Arbitration (2006) awarded contract damages of $900,000, $1.5 million for emotional distress, and later $4 million punitive damages; attorneys’ fees of $350,000 and half the arbitrators’ fees were awarded.
- Lloyd’s moved to vacate the award; district court vacated but this court later reversed, remanding to confirm the full awards.
- Following multiple rounds, escrow funds were posted and later released; disputes arose over interest, attorneys’ fees, and potential overpayment from escrow.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether post-award, pre-judgment interest on non-contract damages is proper | Lagstein argues for post-award, pre-judgment interest on non-contract damages | Lloyd’s contends no post-award interest on non-contract damages | Reversed; District Court must award post-award, pre-judgment interest on non-contract damages. |
| Whether attorneys’ fees should be awarded under state law | Lagstein seeks fees under Nevada statute | Lloyd’s argues federal rules apply to fees | Remanded to award fees pursuant to Nev. Rev. Stat. § 689A.410(5). |
| Whether escrow overpayment occurred | Lagstein released escrow funds based on contract-damages interest; no overpayment | Lloyd’s argues there was an overpayment | Affirms no overpayment; escrow release proper under award terms. |
Key Cases Cited
- Mausbach v. Lemke, 866 P.2d 1146 (Nev. 1994) (post-award interest permissible; pre-award not allowed)
- Northrop Corp. v. Triad Int’l Mktg. S.A., 842 F.2d 1154 (9th Cir. 1988) (authority to award interest where arbitration is silent)
- Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 299 F.3d 769 (9th Cir. 2002) (applies same reasoning to attorney’s fees)
- United States v. Park Place Assocs., Ltd., 563 F.3d 907 (9th Cir. 2009) (requires independent basis for federal jurisdiction in FAA cases)
- Ramada Inns, Inc. v. Sharp, 711 P.2d 1 (Nev. 1985) (damages ascertainability supports post-award, pre-judgment interest)
- Powers v. United Servs. Auto. Ass’n, 962 P.2d 596 (Nev. 1998) (limits on delaying payment of awarded damages; interest rules)
- Caffey v. Unum Life Ins. Co., 302 F.3d 576 (6th Cir. 2002) (pre-judgment interest; timing of entitlement clarified)
- Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827 (1990) (standard for when post-award interest accrues)
- Perrin v. LaFarge Conseils Et Etudes, S.A., 791 F.2d 1334 (9th Cir. 1986) (law-of-the-case framework for statutory interpretation of fees)