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Muller v. Country Mutual Insurance Co.

United States District Court, D. Oregon, Portland Division

December 8, 2017

STEPHEN MULLER and RENA MULLER, Plaintiffs,
v.
COUNTRY MUTUAL INSURANCE CO. Defendant.

          OPINION AND ORDER

          MICHAEL W. MOSMAN Chief United States District Judge

         This matter comes before me on Plaintiffs Rena and Stephen Muller's ("the Mullers") Motion for Attorney Fees [266]. For the reasons stated below, I GRANT in part and DENY in part the Motion.

         BACKGROUND

         This case arises out of a fire in 2012, in which the Mullers' house, business (machine shop), and 1967 Mustang were all damaged. After investigation, Country Mutual denied the Mullers' claim, concluding that the Mullers had intentionally stalled the fire. The Mullers brought suit in August 2014 and sought recovery for breach of express contract, [1].

         Their claims culminated in an eight-day jury Mai in June 2017. The jury found for the Mullers on their breach of contract claim and awarded damages of $1, 082, 500. [246]. These damages include $186, 000 in damages related to structures, $570, 000 in damages related to business property, $256, 500 in damages related to personal property, $25, 000 in damages related to business income, and $45, 000 in damages related to automobiles, [246].

         The Mullers seek: (1) an award of prejudgment interest in the amount of $428, 290.63, plus the daily rate through entry of judgment; (2) $1, 175, 568.49 in attorney fees, supplemental fees of $33, 146.25 incurred to respond to the Motion for a New Trial and for the reply, $8, 000 in expert fees, plus a 2.0 multiplier; and (3) $31, 076.29 in costs.

         DISCUSSION

         I. Prejudgment Interest

         The Mullers seeks an award of prejudgment interest in the amount of $428, 290.63. Motion [266] at 2. Country Mutual does not dispute that the Mullers are entitled to prejudgment interest but disagrees with the Mullers about the date prejudgment interest began to accrue. Response [284] at 2-3.

         Oregon Revised Statute Section 82.010, which governs prejudgment interest in this case, allows for prejudgment interest at a rate of "nine percent per annum [that] is payable on [a]ll moneys after they become due." O.R.S. § 82.010(1). "Prejudgment interest is proper when the exact amount owing is ascertained or easily ascertainable by simple computation or by reference to generally recognized standards and where the time from which interest must run can be ascertained." Gerber v. O'Donnett, 724 P.2d 916, 918 (Or. Ct. App. 1986). "Oregon courts [have] adopted an approach where prejudgment interest is appropriate notwithstanding that a defendant disputed liability and the jury did not award plaintiff all the damages it sought or where 'damages are not ascertainable until issues of fact have been decided by the jury.'" Precision Seed Cleaners v. Country Mut. Ins. Co., 976 F.Supp.2d 1228');">976 F.Supp.2d 1228, 1258 (D. Or. 2013) (quoting Strader v. Grange Mut. Ins. Co., 39 P.3d 903, 909 (Or. Ct. App. 2002)).

         This Court determined in Precision Seed Cleaners that losses from a fire became ascertainable on the date the Mullers submitted proof of loss to the defendant insurance company. Id. at 1264. Pursuant to O.R.S. § 742.238, which requires fire insurers to pay for covered losses within sixty days after proof of loss, the Court concluded the "due date" for the money was sixty days after the proof of loss was submitted. Precision Seed Cleaners, 916 F.Supp.2d at 1264; O.R.S. § 742.238 ("A fire insurance policy shall contain a provision as follows: 'The amount of loss for which this company may be liable shall be payable 60 days after proof of loss, as herein provided, is received by this company and ascertainment of the loss is made either by agreement between the insured and this company expressed in writing or by the filing with tfiis company of an award as herein provided.'")- Based on Precision Seed Cleaners, the Mullers argue that prejudgment interest began to accrue sixty days after the Mullers reported the amounts of loss to Country Mutual, Motion [266] at 3-4, and I agree.

         Country Mutual's arguments to the contrary are unpersuasive. Country Mutual argues that prejudgment interest did not begin to accrue until the date of the verdict: because the Court excluded the Mullers' proof of loss from trial, "there was no clarity as to the amount of damages" until trial. Response [284] at 2-3. But this argument does not comport with Strader and other Oregon decisions which hold that "although there are questions of fact about the amounts owed, that does not mean that defendant did not owe sums certain at dates certain." Strader, 39 P.3d at 909 (quoting Hazelwood Water Dist. v. First Union Mgmt., 715 P.2d 498 (Or. Ct. App. 1986)). Country Mutual also argues the damages were not ascertainable until the verdict because the Court excluded the proof of loss from trial. But the Court excluded the proof of loss based on hearsay and failure to disclose [223, 250], not because the amounts were unascertainable, and other proof of damages was introduced at trial. In the alternative, Country Mutual argues that the accrual date was six months after proof of loss was submitted on June 27, 2013, based on an Oregon statute on attorney fees in insurance cases. Response [284] at 2-3.However, Country Mutual does not provide any cases in support of its proposition that the statute on attorney fees also governs prejudgment interest, and I agree with the Mullers that the Court should follow Precision Seed Cleaners and calculate the prejudgment interest from an accrual date of sixty days after the proof of loss.

         But I disagree with several of the Mullers' calculations of accrual dates and prejudgment interest. The Mullers calculate that prejudgment interest began to accrue on the following dates:January 20, 2013 (structure, business property, and business income losses); February 2, 2013(automobile losses); and August 27, 2013 (personal property losses). Motion [266] at 3-4. With the exception of the personal property losses, none of the other accrual dates proposed by the Mullers are based on the date the sworn proof of loss was submitted. O.R.S. § 742.238 states that

[A] fire insurance policy shall contain a provision as follows: 'The amount of loss for which this company may be liable shall be payable 60 days after proof ofloss, as herein provided, is received by this company and ascertainment of the loss is made either by agreement between the insured and this company expressed in writing or by the filing with this company of an award as herein provided.

         O.R.S. § 742.238 (emphasis added).[2] The policies in this case required a sworn proof of loss, which was submitted on June 27, 2013. [93, 150-3].

         I therefore calculate prejudgment interest for the entire amount from sixty days after June 27, 2013 and grant prejudgment interest in the amount of $386, 563.40.

         II. Attorney Fees

         A. Entitlement to attorney fees

         Oregon law governs whether attorney fees are available in this case. Northern v. Rule, 637 F.3d 937, 938 (9th Cir. 2011) ("State laws awarding attorneys' fees are generally considered to be substantive laws under the Erie doctrine ... ."). The parties do not dispute that the Mullers are entitled to attorney fees under O.R.S. § 742.061. Under O.R.S. § 742.061, the Court "shall" award attorney fees if: (1) the Mullers submitted proof of loss; (2) Country Mutual did not settle within six months of the proof of loss; (3) the Mullers filed a lawsuit; and (4) the Mullers' recovery "exceeds the amount of any tender made by the defendant in such action." O.R.S. § 742.061(1). Here, the Mullers meet each of these criteria: they submitted proof of loss on June 27, 2013; Country Mutual did not settle within six months; the Mullers filed a lawsuit; and Country Mutual never offered more than $600, 000 to settle, but the Mullers recovered over $1 million at trial.

         B. Amount of fees

         Oregon courts generally award attorney fees based on the lodestar method, under which courts multiply the reasonable number of hours spent on the case by a reasonable hourly rate. See O.R.S. § 20.107(2); Strawn v. Farmers Ins. Co. of Or., 297 P.3d 439, 447-48 (Or. 2013)(“Strawn i"). The lodestar may be adjusted based on the factors specified in O.R.S. § 20.075. Alexander Mfg., Inc. Employee Stock Ownership & Tr. v. El. Union Ins. Co., 688 F.Supp.2d 1170, 1181 (D. Or. 2010). O.R.S. § 20.075 requires courts to undertake a two-part inquiry when assessing the amount of attorney fees to be awarded in a case such as this one where attorney fees are required by statute. O.R.S. § 20.075. First, the Court must consider:

(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 O.R.S. 20.190.
(h) Such other factors as the court may consider appropriate under the circumstances of the case.

O.R.S. § 20.075(1). Second, the Court must consider:

(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 ...

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