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Ash Grove Cement Co. v. Liberty Mutual Insurance Co.

United States District Court, D. Oregon

March 3, 2014

ASH GROVE CEMENT COMPANY, a Delaware corporation, Plaintiff,
v.
LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts company, and UNITED STATES FIDELITY & GUARANTY COMPANY, a Maryland insurance company, Defendants.

Michael E. Farnell, Seth H. Row, Parsons Farnell & Grein, LLP, Portland, OR.

Michael R. Wrenn, Andrew N. Sachs, Wrenn Bender McKown & Ring, LLLP, Seattle, WA, Attorneys for Plaintiff.

Thomas M. Christ, Paul A.C. Berg, Cosgrave Vergeer Kester, LLP, Portland, OR.

Kevin G. McCurdy, McCurdy Fuller Ruettgers, Menlo Park, CA, Attorneys for Defendant Liberty Mutual Insurance Company

Andrew S. Moses, Thomas A. Gordon, Gordon & Polscer, LLC, Portland, OR, Attorneys for Defendant United States Fidelity & Guaranty Company.

OPINION & ORDER

MARCO A. HERNANDEZ, District Judge.

This case involves an insurance coverage dispute related to the Portland Harbor Superfund Site. Plaintiff Ash Grove claimed damages of $2, 271, 838.58 for defense costs. After a three-day bench trial, Plaintiff was awarded a sum of $1, 887, 907.82 in damages. Plaintiff now moves for attorney fees [377] in the amount of $1, 924, 107.06 and costs [374] in the amount of $16, 741.56. For the reasons explained below, I grant the motion for attorney fees in part and deny the motion in part. Plaintiff is awarded $1, 029, 511.76 in attorney fees. I also award costs of $11, 198.96. Plaintiff additionally moved to amend the judgment [381] to reduce the damages awarded to $1, 887, 249.49 and to include an award for prejudgment interest of $550, 037.41. As explained below, I grant the motion to amend. The judgment is reduced to $1, 887, 249.49 and I award $550, 037.41 in prejudgment interest.

DISCUSSION

I. Motion for Attorney Fees

A. Entitlement to Fees

State law governs attorney fees in diversity cases. Riordan v. State Farm Mut. Auto. Ins. Co. , 589 F.3d 999, 1004 (9th Cir. 2009) ("In a diversity case, the law of the state in which the district court sits determines whether a party is entitled to attorney fees, and the procedure for requesting an award of attorney fees is governed by federal law") (internal quotation marks omitted). Generally, "a court awards attorney fees to a litigant only if a statute or contract authorizes such an award." Swett v. Bradbury , 67 P.3d 391, 392 (Or. 2003).

Plaintiff seeks attorney fees pursuant to Oregon Revised Statute (ORS) § 742.061, which provides, in relevant part:

[I]f settlement is not made within six months from the date proof of loss is filed with an insurer and an action is brought in any court of this state upon any policy of insurance of any kind or nature, and the plaintiff's recovery exceeds the amount of any tender made by the defendant in such action, a reasonable amount to be fixed by the court as attorney fees shall be taxed as part of the cost of the action and any appeal thereon.

ORS § 742.061(1). The purpose of the statute is to encourage settlement of insurance claims without litigation. Hennessy v. Mut. of Enumclaw Ins. Co. , 211 P.3d 325, 327 (Or. Ct. App. 2009).

The plain language of the statute sets forth four conditions for entitlement to attorney fees: (1) Plaintiff must have filed a proof of loss with its insurer; (2) settlement must not have occurred within six months of filing of that proof of loss; (3) Plaintiff must have brought a court action upon the policy; and (4) Plaintiff must have ultimately recovered more than the amount of any tender made by Defendant in the action. If the conditions in the statute are met, "the decision whether to grant attorney fees is not a discretionary one. Instead, when the statutory conditions are met, the court shall' award attorney fees." Petersen v. Farmers Ins. Co. of Or. , 986 P.2d 659, 661 (Or. Ct. App. 1999).

I find the conditions in ORS § 742.061 are met. Plaintiff tendered defense of the 104(e) request to Defendants on January 29, 2008. Findings of Fact and Conclusions of Law [367], 16. Defendants did not make an offer of settlement within six months of January 29, 2008. Row Decl. Supp. Att'y Fees [380] ¶ 6. Plaintiff subsequently filed suit on January 27, 2009. Notice of Removal [1] Ex. 1 at 1. As Defendants made no tender, it necessarily follows that the Plaintiff's recovery exceeds the amount of the tender made by Defendants. Row Decl. Supp. Att'y Fees ¶ 4. Accordingly, attorney fees must be awarded in this case pursuant to ORS § 742.061.

B. Amount of Fees

Plaintiff seeks $1, 924, 107.06 in attorney fees. In their responses, Defendants object to the fee request for several reasons. In its reply, Plaintiff agreed to retract the following fees: 92 hours that Leslie Nellermoe spent to prepare as a witness; 39 hours spent on an amicus brief in Morgan v. Amex Assurance; 83.9 hours[1] spent to pursue settlement with Hartford, a dismissed Defendant; and 0.5 hours billed by Plaintiff's expert J.W. Ring. Pl.'s Reply 27-28. I will reduce Plaintiff's requested fees by these amounts.

1. Standards

Subsection (1) of ORS § 20.075 lists the factors the Court must consider "in determining whether to award attorney fees in any case in which an award of attorney fees is authorized by statute and in which the court has discretion to decide whether to award attorney fees." Here, the request for attorney fees is based on ORS § 742.061. As I have found the conditions of the statute are met, the award pursuant to the statute is not discretionary. See Petersen , 986 P.2d at 661. Therefore, ORS § 20.075(1) does not apply to the analysis of whether to award attorney fees. See id. It does, however, apply to my determination of the amount of an award of attorney fees. See ORS § 20.075(2); see also McCormick & Schmick's Seafood Rest., Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, No. 08-1011-AA, 2011 U.S. Dist. LEXIS 113881, at *8-9 (D. Or. Sept. 30, 2011).

The factors identified in subsection (1) of ORS § 20.075 are:

(a) The conduct of the parties in the transactions or occurrences that gave rise to the litigation, including any conduct of a party that was reckless, willful, malicious, in bad faith or illegal.
(b) The objective reasonableness of the claims and defenses asserted by the parties.
(c) The extent to which an award of an attorney fee in the case would deter others from asserting good faith claims or defenses in similar cases.
(d) The extent to which an award of an attorney fee in the case would deter others from asserting meritless claims and defenses.
(e) The objective reasonableness of the parties and the diligence of the parties and their attorneys during the proceedings.
(f) The objective reasonableness of the parties and the diligence of the parties in pursuing settlement of the dispute.
(g) The amount that the court has awarded as a prevailing party fee under ORS 20.190.
(h) Such other factors as the court may consider appropriate under the circumstances of the case.

ORS § 20.075(1). Subsection (2) of ORS § 20.075 requires the Court to consider the following additional factors:

(a) The time and labor required in the proceeding, the novelty and difficulty of the questions involved in the proceeding and the skill needed to properly perform the legal services.
(b) The likelihood, if apparent to the client, that the acceptance of the particular employment by the attorney would preclude the attorney from taking other cases.
(c) The fee customarily charged in the locality for similar legal services.
(d) The amount involved in the controversy and the results obtained.
(e) The time limitations imposed by the client or the circumstances of the case.
(f) The nature and length of the attorney's professional relationship with the client.
(g) The experience, reputation and ability of the attorney performing the services.
(h) Whether the fee of the attorney is fixed or contingent.

Id. at § 20.075(2). When analyzing the factors under ORS § 20.075, the Court should "includ[e] in its order a brief description or citation to the factor or factors on which it relies." McCarthy v. Or. Freeze Dry, Inc. , 957 P.2d 1200, 1208 (Or. 1998). But the Court "ordinarily has no obligation to make findings on statutory criteria that play no role in the Court's decision." Frakes v. Nay , 295 P.3d 94, 106 (Or. Ct. App. 2012).

2. ORS § 20.075 Subsection (1) Factors

Plaintiff generally concedes that the parties' claims and defenses were reasonable (factor (b)) and that the parties were diligent in this matter (factor (e)).[2] The exceptions were that some of USF&G's affirmative defenses were not reasonable, that USF&G unreasonably withheld discovery about defense costs, and that neither Liberty Mutual nor USF&G offered to stipulate to damages or limit issues for trial. Pl.'s Mem. Att'y Fees 5-6. Defendants on the other hand, argue that Plaintiff was unreasonable in pursuing several unsuccessful motions to compel. Liberty Mutual Resp. 5; USF&G Resp. 5.

It appears that none of Plaintiff's motions to compel were ruled upon. Judge King scheduled oral argument on two of Plaintiff's motions to compel [129, 136] for March 23, 2011. March 23, 2011 Order [171]. The minutes of the conference do not indicate any rulings for the motions to compel. March 29, 2011 Minutes [174]. However, Plaintiff's counsel asserts that no rulings were made, as Judge King encouraged the parties to resolve the discovery disputes. Row Decl. Supp. Att'y Fees ¶ 3. Plaintiff filed a third motion to compel [221], which Judge King denied but gave leave to re-file. May 5, 2012 Minutes [245]. Plaintiff renewed the motion to compel [258], and this court reserved ruling on the motion at the pretrial conference. March 18, 2013 Minutes [342]. I am not convinced that Plaintiff's motions to compel warrant a reduction in attorney fees. Even though there were no rulings from the motions, there is no indication that the motions requested documents beyond the realm of what could be discoverable.

Liberty Mutual additionally argues that it should not be required to pay attorney fees that Plaintiff spent to pursue other insurers.[3] Liberty Mutual Resp. 6. Factor (c) considers whether an award of attorney fees would deter others from asserting good faith claims or defenses in similar cases. Liberty Mutual asserts that it cannot control how other insurers, namely Hartford and USF&G, respond to claims for coverage. Plaintiff has already withdrawn its request for fees related to Hartford. As for fees associated with USF&G, I have already found that the motions to compel directed at USF&G do not affect the reasonableness of Plaintiff's fee request.

In sum, I do not find that any of the factors in subsection (1) of ORS § 20.075 support an adjustment of Plaintiff's attorney fee request.

3. ORS § 20.075 Subsection (2) Factors

Plaintiff concedes that not all the factors in subsection (2) of ORS § 20.075 are applicable to determine the reasonableness of Plaintiff's fee request.[4] I will consider only the following factors for which Plaintiff has presented evidence:

(a) the time and labor required in the matter, the novelty and difficulty of the questions involved, and the skill needed to properly perform the legal services;
(c) the fee customarily charged in the locality for similar legal services;
(d) the amount involved in the controversy and the ...

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