A federal appeals court ruled that an insurer does not have to pay attorneys’ fees in a case where the amount sought by a plaintiff fell below the level required for the court’s jurisdiction.
In August 2013, Imperial, Pennsylvania-based Maronda Homes Inc. in 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 Manalans sent Maronda notice of construction defects related to the house’s stucco installation. Maranda had hired Saint Johns, Fla.-based JROD, which had commercial general liability insurance 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 policy.
Southern-Owners sued Maronda and JROD in US District Court in Jacksonville, Florida, seeking a ruling that their policy did not cover the stucco damage. The district court dismissed Southern-Owner̵7;s complaint for “lack of subject matter jurisdiction” because the amount sought was less than the required minimum of $75,000.
Maronda and JROD then filed motions for attorney fees under state law. Southern-Owners responded that the court lacked jurisdiction because it had already dismissed the underlying action. The district court agreed with the insurer and dismissed the plaintiffs’ claims.
A three-judge court panel affirmed the decision, saying that in an unpublished 2008 opinion, the 11th Circuit had ruled that an attorney’s fee award was within the court’s jurisdiction even after it found it lacked subject matter jurisdiction. But in a published opinion issued 24 years earlier, it held that attorneys’ fees are “integral” into the merits of a case.
Attorneys in the case did not respond to requests for comment.