Scottsdale Insurance v. Tolliver
2011 U.S. App. LEXIS 3542
| 10th Cir. | 2011Background
- Tollivers obtained a homeowners policy from Scottsdale; house burned and Scottsdale sought to avoid payment and rescind due to misrepresentation of loss history.
- Tollivers counterclaimed for bad faith and breach of contract; Scottsdale prevailed on bad faith summary judgment.
- Scottsdale offered judgment under Rule 68 and Oklahoma § 1101.1; Tollivers rejected the offer.
- Trial yielded a verdict for Scottsdale; Tollivers challenged attorneys' fees awarded under § 1101.1(B)(3).
- District court awarded fees; on appeal the court affirmed for reasons differing from the district court’s rationale; Erie framework applied.
- This diversity case requires balancing Oklahoma substantive law with federal procedural rules under Erie.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1101.1(B)(3) is substantive under Erie | Tollivers argue § 1101.1(B)(3) is procedural and not enforceable in federal court. | Scottsdale contends § 1101.1(B)(3) is substantive and governs fees in diversity cases. | § 1101.1(B)(3) is substantive; Oklahoma law governs the fee award. |
| Do Rule 68 and § 1101.1(B)(1)–(3) directly collide, requiring federal rule application | District court found direct collision, so Rule 68 controls. | § 1101.1(B)(3) can operate alongside Rule 68 without conflict. | No direct collision; Rule 68 governs costs/fees only when applicable, but § 1101.1(B)(3) provides a separate fee entitlement. |
| Whether Rule 68 can govern Scottsdale's fee recovery when judgment favored Scottsdale | Rule 68 does not provide for attorneys' fees when prevailing party is Scottsdale. | Rule 68 is inapplicable post-judgment when the defendant prevails? | Rule 68 is inapplicable to Scottsdale's fee claim; § 1101.1(B)(3) applies. |
| What governing law applies to attorney fees in this diversity case | Erie requires applying Oklahoma substantive law entirely via state statute. | Erie allows federal procedural rules to apply; the substantive issue remains unclear. | Oklahoma substantive law, specifically § 1101.1(B)(3), governs the fee award. |
| Whether using Rule 68 procedures at the time of offer affected subsequent fee rights | Scottsdale properly used Rule 68 procedure when offering judgment. | Applying Rule 68 after judgment is inappropriate since the outcome favored Scottsdale. | Scottsdale could rely on Rule 68 at the offer stage; post-judgment, § 1101.1(B)(3) governs. |
Key Cases Cited
- Trierweiler v. Croxton & Trench Holding Corp., 90 F.3d 1523 (10th Cir.1996) (conflict analysis for Erie collision tests)
- Walker v. Armco Steel Corp., 446 U.S. 740 (1980) (direct collision and supremacy of federal rules when applicable)
- Hanna v. Plumer, 380 U.S. 460 (1965) (guidance on Erie conflict and substantiality of federal rules)
- Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) (twin aims: discourage forum shopping and avoid inequitable administration)
- Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (substantive vs. procedural distinctions in fee-shifting and remedy)
- Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 130 S. Ct. 1431 (2010) (procedural rules regulate enforcement of substantive rights)
- Mooring Capital Fund, LLC v. Knight, 388 F. App'x 814 (10th Cir. 2010) (attorney fees in diversity are substantive under state law)