Rehearing and Rehearing En Banc Denied June 16, 1977.
JAMESON, District Judge:
Appellant, Kenneth J. MacGill has appealed from an order awarding him an attorney fee of $1.00, following a judgment in his favor on a counterclaim in a declaratory judgment action instituted by appellee, Equitable Life Assurance Society of the United States. Appellant contends that the amount of the award is unreasonable and constituted an abuse of the district court's discretion. Equitable, although not taking
MacGill, a former airline pilot, was insured under a group policy issued by Equitable to the Airline Pilots Association. He submitted a claim for disability. Equitable refused to pay benefits under supplemental plans of the policy, contending that MacGill had materially misrepresented his physical condition on his application.
A jury returned a verdict in favor of MacGill, and final judgment was entered for the unpaid benefits, interest, costs, and "attorney fees to be hereafter assessed". Motions filed by Equitable for a judgment notwithstanding the verdict and for a new trial were denied.
Prior to the assessment of any attorney fees, Equitable appealed from the judgment, contending (1) that there was insufficient evidence to support the jury's verdict, and (2) that the trial court erred in awarding MacGill attorney fees. This court entered a judgment affirming the district court and, in an unreported decision dated November 7, 1974, noted at 503 F.2d 1401, held that there was sufficient evidence to support the jury's finding that MacGill had not "materially misrepresented his physical condition on his insurance application form". With respect to the issue of attorney fees the court said:
Following affirmance of the judgment on appeal, MacGill filed a motion in the district court for an evidentiary hearing to determine the amount of attorney fees. No formal hearing was held on appellant's request, but both sides submitted affidavits. Equitable also filed objections to the award of attorney fees. In an order requesting a memorandum from MacGill, the district court said in part:
In its memorandum in support of its objection to the award of any attorney fee, Equitable contended that the statute providing for attorney fees, Fla.Stat.Ann. § 627.428 (1972),
In an order entered June 19, 1975, the district court noted that Florida district courts of appeal were then split as to whether attorney fees might be awarded where the policy was issued and delivered outside of Florida, but predicted that the Supreme Court of Florida would ultimately hold that they were not allowable. With respect to MacGill's contention that Equitable had waived its right to object to the award of attorney fees, the court recognized that "the grounds upon which relief from a judgment can be granted are very limited. Rule 60(b), F.R.Civ.P." The court continued:
Subsequent to the order of the district court and the filing of briefs on this appeal, the Supreme Court of Florida, in Pan-American Life Insurance Co. v. Diaz, 322 So.2d 549 (Fla.1975), held that attorney fees are not allowable in a suit on an insurance policy issued and delivered outside of Florida.
Contentions on Appeal
MacGill contends that the question of his entitlement to an award of attorney fees has been settled, both by Equitable's pretrial stipulation and by its failure to timely raise the issue prior to the first appeal. It is argued accordingly that the only issue remaining is the determination of the amount of a reasonable fee.
Relying on Diaz, Equitable contends that regardless of the procedural history of the case, this court "has no authority to award fees and thereby exercise jurisdiction which the Florida Legislature in its wisdom did not confer". Alternatively, Equitable contends that this court must decide the rights and liabilities of the parties on the law of the State of New York, which does not provide for an award of attorney fees.
It is of course clear from the decision of the Supreme Court of Florida in Diaz that MacGill was not entitled to an award of attorney fees pursuant to Fla.Stat. § 627.428. The sole question on this appeal is whether Equitable, by reason of (1) the
Stipulations in Pretrial Order
MacGill relies upon the following provisions in the pretrial order:
Equitable, however, calls attention to another provision of the stipulation, which reads:
Recognizing that this provision of the stipulation is not entirely consistent with the other provisions, MacGill contended in the district court that a reading of the stipulation "as a whole reveals that the inclusion of the words `and 627.428' (the attorney's fees statute) was at most inadvertent and was not consistent with the language of the stipulation as a whole".
MacGill also contends that Equitable stipulated to its liability for attorney fees during the course of trial when the following colloquy took place:
Reference to Attorney Fees in Pleadings and other Filings
As noted supra, the paragraph in MacGill's counterclaim alleging liability for attorney fees was denied in Equitable's reply. The only references to fees during subsequent proceedings and prior to the jury verdict were the stipulations and colloquy hereinabove quoted. The allowance of attorney fees was not mentioned in any of the pretrial briefs, which were concerned with the questions of whether Florida or New York law governed in the interpretation of the policy and the liability of Equitable under the laws of both states. On October 30, 1973, the district court entered a brief supplemental pretrial order holding that New York law was applicable. This order made no reference to attorney fees.
The jury returned its verdict in favor of MacGill on December 6, 1973. On December 19 MacGill submitted a form of judgment with a brief "memorandum and motion for entry of judgment". The memorandum and motion includes the following:
The judgment submitted by MacGill was signed and entered on December 26, 1973.
On January 7, 1974, Equitable filed its motion for judgment notwithstanding the verdict and, alternatively, for a new trial. This motion did not raise the issue of attorney fees, nor was it mentioned in any of the briefs filed or the order denying the motion.
Effect of Stipulation
It is by no means clear, as MacGill argues, that under the stipulation of the parties and the court's comments during trial, the issue of entitlement to attorney fees had been resolved. While the stipulation provided that if MacGill should prevail he would be entitled to attorney fees "under Florida Statute § 627.428", another provision set forth as an issue of law "for determination by the court" whether this statute was applicable.
MacGill's explanation of this provision in his final supplemental brief reads: "Paragraph 9A of the Joint Pre-Trial Stipulation filed in the trial court purports to question only whether the attorney fees statute applies to a Florida case on a New York group policy. When the balance of the Stipulation is considered, however, it is obvious that the argument was a technical one at best, and that Equitable" had bound itself to the proposition that if it did not prevail, "MacGill would be entitled to a reasonable attorney fees based on his counterclaim". While, as MacGill argues, the argument may have been a technical one, the question has now been determined adversely to MacGill's position by the Florida Supreme Court.
Nor does the court's suggestion (and Equitable's acquiescence) "that the issue of attorney's fees . . . remain open and [be] resolved by the Court on motion subsequently" necessarily support MacGill's position. Rather it may be interpreted to imply that the issue of whether attorney fees should be awarded, and not simply the amount of the fees, would be determined later.
In any case, it is well settled that a court is not bound to accept as controlling stipulations as to questions of law. Swift & Co. v. Hocking Valley R. Co., 243 U.S. 281, 289, 37 S.Ct. 287, 61 L.Ed. 722 (1917); United States v. Waterman Steamship Corp., 397 F.2d 577, 579 (5 Cir. 1968). Since entitlement to attorneys fees is a question of law, see Kessler v. Pennsylvania Nat. Mut. Cas. Ins. Co., 531 F.2d 248, 255 n. 30 (5 Cir. 1976), the parties' stipulation was not binding on the district court, if contrary to Florida law.
It is now clear that the stipulation was based upon a mistake of the applicable Florida law. This court held in a tax case, Logan Lumber Co. v. Commissioner of Internal Revenue, 365 F.2d 846 (5 Cir. 1966)
Insofar as the stipulation is concerned, we are persuaded that in light of the decision in Diaz, Equitable should be relieved of any stipulation of liability for attorney fees. To ignore Diaz would sanction a stipulation in contravention of law and thereby impose a "manifest injustice" on Equitable. This holding would not result in "substantial and real harm" to MacGill. He simply claimed under the stipulation an award of fees to which it is now clear he was not entitled.
Effect of Equitable's Failure to Raise Issue of Attorney Fees Prior to First Appeal
The effect of Equitable's failure to object to the form of judgment in the district court prior to the first appeal raises a more difficult question and one that is not easily resolved on the basis of prior decisions. Florida Statute § 627.428 provides that when attorney fees are awarded, they "shall be included in the judgment". Whether or not the issue of entitlement to attorney fees was determined in the judgment on which the first appeal was taken, the issue of the amount of the fees had not been resolved. Obviously further proceedings were required.
The district court treated Equitable's objection to the award of any attorney fee as a motion for relief from the judgment pursuant to Rule 60(b) and recognized that the grounds upon which relief "can be granted are very limited", citing Gulf Coast Building and Supply Co. v. International Brotherhood of Electrical Workers, 460 F.2d 105 (5 Cir. 1972). In that case a judgment including prejudgment interest was appealed and affirmed, but the issue of entitlement to interest was not raised either in the district court or on appeal. Following remand the district court entered an order reforming the judgment to allow interest only from the date of judgment. In reversing, this court held that under these circumstances the affirmance of the district court judgment was conclusive on the issue of prejudgment interest. It was held that the ground for relief set forth in Clause (b)(1)—"mistake, inadvertence, surprise and excusable neglect"—was not available because the motion had not been filed within one year from the entry of judgment, and that this clause could not be circumvented by relying on other clauses of Rule 60(b).
It is clear from Gulf Coast that if the amount of the attorney fee had been determined and included in the judgment in this case, the district court would have been precluded from modifying the judgment after remand. Here, however, the amount of the fee had not been determined or assessed. Noting this fact and anticipating that the Florida Supreme Court would hold that no attorney fees can be awarded when the policy of insurance is issued and delivered outside of Florida, the district court concluded that there was "no basis for the award of attorney's fees" and resolved the matter by awarding a nominal fee of $1.00.
Diaz having been decided during the pendency of this appeal, there is no longer any doubt that MacGill was not entitled to an award of attorney fees.
A party may be relieved from a final judgment under Rule 60(b)(5) "[if] it is no longer equitable that the judgment should have prospective application", and under Rule 60(b)(6) for "any other reason justifying relief from the operation of the judgment". In some cases the courts have relied upon both clauses in reforming a judgment. As stated in 7 Moore's Federal Practice ¶ 60.27, at 374, "the exact choice of a particular clause is difficult to make and need not be made where the motion is timely and the reason justifies relief".
While clause (b)(5) has been applied most frequently in final judgments involving injunctions, "in any other situation when the judgment has prospective application relief may be given from its prospective features when subsequent events make it no longer equitable that the judgment have prospective application". Moore ¶ 60.26, at 337. See also Bros Inc. v. W. E. Grace, Mfg. Co., 320 F.2d 594 (5 Cir. 1963), and cases cited in Annotation, 14 A.L.R. Fed. 309, 328-329, "which have a prospective application which becomes unequitable because of changed circumstances". While none of the cases cited in the Annotation or in Moore are precisely in point, we think the judgment here does have a prospective application with respect to the attorney fees to be determined and assessed later.
With respect to clause (b)(6), Moore states: "Like Rule 60(b) generally, clause (6) should be liberally applied to situations not covered by the preceding five clauses so that, giving due regard to the sound interest underlying the finality of judgments, the district court, nevertheless, has power to grant relief from a judgment whenever, under all the surrounding circumstances, such action is appropriate in the furtherance of justice." ¶ 60.27, at 342-343. This court has recognized that "Rule 60(b) is to be given a liberal construction" and a proceeding under the rule "calls for a delicate adjustment between the desirability of finality and the prevention of injustice". In re Casco Chemical Co., 335 F.2d 645, 651 (5 Cir. 1964) and Meadows v. Cohen, 409 F.2d 750, 754 (5 Cir. 1969).
Whether relief is granted under clause (b)(5) or (b)(6), we conclude that under all of the circumstances, and particularly in view of the fact that the amount of fees has not been determined, the motion to deny any award of attorney fees is "timely and the reason justifies relief".
Remanded to the district court with instructions to delete from the judgment the provision for "attorney fees to be hereafter assessed".
MacGill contended before the district court, in his memorandum subsequent to affirmance of the judgment, as he does here, that while New York law "applied to the substantive matters in dispute", the "court applied what the parties determined was the Florida law to the procedural matters of dispute, i. e., the award of attorney's fees".