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Chatelain v. Country Mutual Insurance Co.

United States District Court, D. Oregon, Portland Division

December 29, 2017

ROBERT CHATELAIN and JANET CHATELAIN, Plaintiffs,
v.
COUNTRY MUTUAL INSURANCE CO. Defendant.

          OPINION AND ORDER

          MICHAEL W. MOSMAN, CHIEF UNITED STATES T3ISTRICT JUDGE.

         This matter comes before me on Plaintiffs Robert and Janet Chatelain's Motion for Attorney Fees [166], For the reasons stated below, I GRANT in part and DENY in part the Motion.

         BACKGROUND

         Plaintiffs Robert and Janet Chatelain own a dairy farm in Tillamook County. In 2009, they decided to retire and began leasing the farm to the Brauns. At the time of the lease, the dairy farm had 230 milking cows, 166 heifers, two bulls, and all equipment necessary to operate a dairy. In November 2013, the Brauns violated their lease agreement, and in December 2013, the Chatelains moved back to the dairy farm. On December 20, 2013, their first time milking the cows since moving back to the farm, the Chatelains noticed that 113 milking cows and 100 heifers were missing from the livestock. They also noticed that several pieces of equipment were, missing and that substantial damage had been caused to the farm. The Chatelains notified the sheriff, sued the Brauns, and submitted an insurance claim to Country Mutual. Country Mutual denied the claim, and the Chatelains brought suit for breach of contract and breach of the implied duty of good faith and fair dealing.

         After a four-day jury trial, the jury found for the Chatelains on both counts and awarded them $793, 375.00 in damages from stolen personal property, stolen livestock, loss of milk production, damages to structures, and vandalism. [152].

         The Chatelains seek: (1) an award of prejudgment interest in the amount of $178, 448.74, through entry of judgment; (2) $816, 096.00 m attorney fees and a 2.0 multiplier; (3) $29, 021.00 in attorney fees and $5, 872.50 in expert fees incurred to prepare the attorney fees motion; and (4) $15, 460.96 in costs, including $1, 008.90 in costs incurred after the filing of the attorney fees motion.

         DISCUSSION

         I. Prejudgment Interest

         The Chatelains seeks an award of prejudgment interest in the amount of $178, 448.74. Motion [166] at 3. Country Mutual does not dispute that the Chatelains are entitled to prejudgment interest but disagrees with the Chatelains about the date prejudgment interest began to accrue. Response [183] at 2-3.

         Oregon Revised Statute Section 82.010, which governs prejudgment interest in this case, allows for prejudgment interest at a rate of "mine percent per annum [that] is payable on [a] 11 moneys after they become due." O.R.S. § 82.010(1); see Laro Lumber Co. v. Patrick, 630 P.2d 400, 404 (Or. Ct. App. 1981) (concluding plaintiff was entitled to prejudgment interest from the date money was due under a contract). "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'Donnell, 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)).

         The Chatelains argue that prejudgment interest began to accrue on the date they submitted a proof of loss to Country Mutual, or September 29, 2014. Motion [166] at 4. There is some support in case law for the Chatelains' position that interest should be calculated from the date that damages became ascertainable here, when they submitted the proof of loss. At least one other court applying similar law concluded prejudgment interest begins accruing when proof of loss is submitted. See Underwriters Subscribing to Lloyd's Ins. Cert. No. 80520 v. Magi, Inc., 790 F.Supp. 1043, 1057 (E.D. Wash. 1991) (applying similar Washington law and concluding prevailing party was entitled "to prejudgment interest from the date the proof of loss was submitted"); see also Mayer v. Bassett, 501 P.2d 782, 789 (Or. 1972) ("[T]he plaintiff is entitled to recover interest from the date of demand."). But these cases do not address whether the relevant contracts included "due" dates, which might more specifically address when money "become[s] due."

         Country Mutual argues that the due date was six months after the Chatelains submitted their proof of loss, based on an Oregon statute on attorney fees in insurance cases. Response [183] at 3. However, Country Mutual does not provide any cases in support of its proposition that the statute on attorney fees also governs prejudgment interest. In the alternative, Country Mutual argues that prejudgment interest did not begin to accrue until the date of the verdict, because "there was no clarity as to the amount of damages" until trial. Response [183] at 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)).

         I do not find either party's position persuasive. I conclude that payment in this case was due sixty days after the Chatelains submitted their proof of loss, or on November 28, 2014. The language of O.R.S. § 82.010 states that prejudgment interest runs from the date any "moneys .. . become due." O.R.S. § 82.010(1). The Policy in this case states that:

         Payment will be made 60 days after "we" receive "your" properly executed proof of loss and "you" have complied with all the policy conditions, and:

1. "We" reach an agreement with "you";
2. There is an entry of a final judgment; or
3. There is a filing of an appraisal award with "us."

         Policy [25-1] at 47. The language of this provision could mean either that payment was due 60 days after the proof of loss was submitted or that payment was not due in this case until 60 days after an agreement, the entry of final judgment or the filing of an appraisal award. Because this language is ambiguous, I construe it in favor of the Chatelains and hold they are entitled to recover prejudgment interest beginning 60 days after they submitted the proof of loss. See Gowans v. Nw. Pac. Indem. Co., 489 P.2d 947, 948 (Or. 1971) ("[I]f the terms of an insurance policy are ambiguous, any reasonable doubt as to the meaning of such terms will be resolved against the insurance company and in favor of the insured.").

         I therefore calculate prejudgment interest from November 28, 2014, until entry of judgment on August 29, 2017, and grant prejudgment interest in the amount of $171, 340.13.

         II. Attorney Fees

         A. Entitlement to attorney fees

         Oregon law governs whether attorney fees are available in this case. Northon 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 Chatelains 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 Chatelains submitted proof of loss; (2) Country Mutual did not settle within six months of the proof of loss; (3) the Chatelains filed a lawsuit; and (4) the Chatelains' recovery "exceeds the amount of any tender made by the defendant in such action." O.R.S. § 742.061(1). Here, the Chatelains meet each of these criteria: they submitted proof of loss on September 29, 2014; Country Mutual did not settle within six months; the Chatelains filed a lawsuit; and Country Mutual never offered more than $150, 000 to settle, but the Chatelains recovered $793, 375 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). The lodestar may be adjusted based on the factors specified in O.R.S. § 20.075. Alexander Mfg., Inc. Emp. Stock Ownership & Tr. v. Ill. 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 ...

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