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Sampson v. Kofoed

United States District Court, D. Nebraska

November 30, 2016

NICHOLAS SAMPSON, Plaintiff,
v.
DAVID W. KOFOED, in his official and individual capacities Defendant,
v.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, also known as THE SAINT PAUL TRAVELERS COMPANIES, INC., Garnishee. MATTHEW LIVERS, Plaintiff,
v.
DAVID W. KOFOED, in his official and individual capacities Defendant,
v.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, also known as THE SAINT PAUL TRAVELERS COMPANIES, INC., Garnishee.

          MEMORANDUM AND ORDER

          JOSEPH F. BATAILLON Senior United States District Judge.

         This matter is before the court on the plaintiffs' motions for attorney fees and expenses, Filing No. 835 in Sampson v. Schenk, No. 8:07cv155 (“Livers”) and Filing No. 787 in Livers v. Schenk, No. 8:08cv107 (“Sampson”);[1] motions for money judgments and orders of garnishment, Samspon, Filing No. 838 and Livers, Filing No. 789; and motions for a partial summary judgment on the issue of bad faith, Sampson, Filing No. 841, and Livers, Filing No. 792. These are garnishment proceedings in aid of execution under Fed.R.Civ.P. 69 and Neb. Rev. Stat. § 25-1010 et seq. in connection with underlying actions for civil rights violations under 42 U.S.C. § 1983. This court has jurisdiction under 28 U.S.C. § 1367.

         I. BACKGROUND

         The facts are set forth in a number of previous opinions and need not be repeated herein. See Livers v. Schenck, 700 F.3d 340, 344-50 (8th Cir. 2012); State v. Kofoed, 817 N.W.2d 225, 231-38 (Neb. 2012); Sampson, No. 8:07CV155, Filing No. 829, Memorandum and Order at 3-11 (D. Neb. March 30, 2016); Filing No. 782, Memorandum and Order at 1-8 (D. Neb. Mar. 31, 2014); Filing No. 772, Memorandum and Order at 1-14 (D. Neb. Sept. 13, 2013); Filing No. 458, Memorandum and Order at 1-6 (D. Neb. Mar. 28, 2011); Livers, No. 8:08CV107, Filing No. 781, Memorandum and Order at 3-11 (D. Neb. March 30, 2016); Filing No. 726, Memorandum and Order at 1-8 (D. Neb. Mar. 31, 2014); Filing No. 658, Memorandum and Order at 1-14 (D. Neb. Sept. 13, 2013); Filing No. 340, Memorandum and Order at 1-6 (D. Neb. Mar. 28, 2011).

         As relevant to the present motion, the salient facts are that Sampson and Livers each filed actions for civil rights violations against several defendants in connection with their arrests for two murders. All of the defendants except David Kofoed settled with the plaintiffs. This court entered default judgments against Kofoed for Sampson in the amount of $2, 258, 716.09[2] and for Livers in the amount of $4, 352, 637.82.[3] Sampson, Filing No. 783; Livers, Filing No. 727.

         In an effort to enforce the judgments against Kofoed, Sampson and Livers filed motions to determine garnishee liability of St. Paul Fire and Marine Company a/k/a/ The Saint Paul Travelers Companies, Inc. (“St. Paul” or “garnishee”) with respect to a policy of insurance St. Paul issued to Kofoed's employer, Douglas County, Nebraska. The policy provided Law Enforcement Liability Protection, with a five-million dollar total limit of liability. See Filing No. 829, Memorandum and Order at 12. This court determined that the policy afforded coverage and found that the policy's self-insured retention (“SIR”) operated as a large deductible meaning that “St. Paul is not responsible for the first $250, 000.00 of the judgments [entered in the two cases].” Id. at 42.

         In his motion for a judgment on garnishment, Sampson moves for an order directing the garnishee to pay into court the total sum of $2, 895, 267.89. That amount represents the original judgment ($2, 258, 716.09) plus prejudgment interest in the amount of $542, 091.86 and post judgment interest in the amount of $94, 459.93. Livers moves for an order directing St. Paul to pay into the court the total amount of $5, 579, 298.22, representing the original judgment ($4, 352, 637.82) plus prejudgment interest in the amount of $1, 044, 633.08, and postjudgment interest in the amount of $182, 027.31.[4]

         In addition, the plaintiffs move for a partial summary judgment seeking a declaration that St. Paul acted in bad faith by breaching its duty to defend and to indemnify Kofoed, and in refusing to settle for less than the policy limit. They argue that, on a finding of bad faith, St. Paul is legally obligated to pay the judgments in full and asks the court to order St. Paul to pay into the court an amount in excess of the policy limits.

         In response to the motions for a garnishment judgment, St. Paul first contends that it does not owe prejudgment interest. It argues that the present proceeding is a garnishment action to enforce a judgment, and the judgment did not include prejudgment interest.[5] It also argues that the plaintiffs cannot recover punitive damages.[6]

         St. Paul resists the plaintiffs' summary judgment motions, contending it did not act in bad faith and is not liable for amounts in excess of the policy limits. It argues that the plaintiffs' bad faith is an action sounding in tort and is not based on the policy. Further, St. Paul contends that plaintiffs lack standing to bring a bad faith claim absent a specific assignment to that effect from Kofoed. St. Paul also argues that the plaintiffs' motions are improper and untimely.

         In their motions for attorney fees, the plaintiffs ask the court to award attorney fees the amount of $15, 298.50 (representing 66.10 hours of work at rates of $195.00 to $250.00 dollars per hour) and expenses in the amount of $739.52 for services rendered to Sampson in the garnishment proceedings and attorney fees of $217, 614.50 (representing 909 hours of work at rates of $135.00 to $275.00 per hour) for services rendered to Livers. St. Paul acknowledges that plaintiffs are the prevailing parties at this point in the litigation and does not dispute the amount of attorney fees requested, stating it “has elected not to contest the amount of attorney[] fees”. Filing No. 848, Response at 1. St. Paul argues only that the award would be premature pending the result of St. Paul's eventual appeal of the court's decision on coverage. St. Paul alternatively asks that “if an order is entered, [the order] should state that it is contingent upon Sampson remaining the prevailing party after completion of the appellate process and is subject to reversal if St. Paul prevails.” Sampson, Filing No. 848, Response at 2.

         II. LAW

         A. Ancillary Jurisdiction

         The court is under an independent obligation to assure itself that it has subject matter jurisdiction. Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). “Subject-matter jurisdiction is a threshold requirement which must be assured in every federal case.” Kronholm v. Fed. Deposit Ins. Corp., 915 F.2d 1171, 1174 (8th Cir. 1990).

         The court has ancillary enforcement jurisdiction over claims that have “a factual and logical dependence on ‘the primary lawsuit.'” Peacock v. Thomas, 516 U.S. 349, 355 (1996). The court has inherent power to enforce its judgments. Id. at 356. A federal court may assert ancillary jurisdiction “to enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 380 (1994). The Supreme Court has approved the use of ancillary jurisdiction “over a broad range of supplementary proceedings . . . to assist in the protection and enforcement of federal judgments-including attachment, mandamus, garnishment, and the prejudgment avoidance of fraudulent conveyances.” See Peacock, 516 U.S. at 356.

         “Such jurisdiction, however, may not extend ‘beyond attempts to execute, or to guarantee eventual executability of, a federal judgment.'” Deretich v. City of St. Francis, 149 F.3d 1187, 1998 WL 327207, *1 (8th Cir. 1998) (per curiam) (quoting Peacock, 516 U.S. at 357). The reach of the federal courts' ancillary jurisdiction does not extend to “the exercise of jurisdiction over proceedings that are ‘entirely new and original, ' or where ‘the relief [sought is] of a different kind or on a different principle' than that of the prior decree.” Id. at 358 (quoting Krippendorf v. Hyde, 110 U.S. 276, 285 (1884) and Dugas v. American Surety Co., 300 U.S. 414, 428, (1937) (internal citations and quotation omitted)). Also, ancillary jurisdiction is not justified over a new lawsuit to impose liability for a judgment on a third party. Peacock, 516 U.S. at 357-58.

         B. Garnishment

         In its earlier Order, this court summarized the law with respect to garnishment proceedings:

The Federal Rules provide the "procedure on execution-and in proceedings supplementary to and in aid of judgment or execution-must accord with the procedure of the state where the court is located." Fed.R.Civ.P. 69(a)(1). Under Nebraska law, garnishment is a legal, not equitable, remedy unknown at common law and is a purely statutory remedy. Gerdes v. Klindt, 570 N.W.2d 336, 341 (Neb. 1997). The garnishee is not liable unless the defendant had a right of action against him for the legal demand due or to become due. Id. In an action to determine the liability of the garnishee, the plaintiff has the burden to establish why the garnishee was liable to the defendant at the time notice of garnishment was served. Id. The claim of the judgment creditor garnishor can rise no higher than the claim of the garnishor's judgment debtor against the garnishee. Meyers v. Christensen, 776 N.W.2d 201, 205 (Neb. 2009). The test is whether, as of the time the summons in garnishment was served, the facts would support a recovery by the garnishor's judgment debtor against the garnishee. Id.

Sampson, Filing No. 829, Memorandum and Order at 18-19.

         “The [Nebraska] garnishment statutes furnish a judgment creditor a means through which to satisfy a judgment, not a means through which to modify the underlying judgment.” ITT Hartford v. Rodriguez, 543 N.W.2d. 740, 742 (Neb. 1996). Under Nebraska law, “[t]he garnishment proceeding must be supported by a ‘judgment in esse, ' that is, a judgment ‘[i]n actual existence' or, literally, in being.'” Cattle Nat'lBank & Trust Co. v. Watson, 880 N.W.2d 906, 923 (Neb. 2016). Thus, the judgment must be in existence before a garnishment in aid of execution. Id.; see Neb. Rev. Stat. ยง 25-1056. On establishing that the garnishee holds property or credits of the judgment debtor, the garnishee must then pay such amounts to the ...


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