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IDS Property v. Fellows

United States District Court, W.D. Washington, Seattle

September 14, 2017

IDS PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff,
v.
CHARLES H. FELLOWS, Defendant.

          ORDER

          Thomas S. Zilly, United States District Judge.

         THIS MATTER comes before the Court on defendant/counterclaimant Charles H. Fellows's motion for attorney fees and costs, docket no. 206. Having reviewed all papers filed in support of, and in opposition to, the motion, the Court enters the following order.

         Background

         IDS Property and Casualty Insurance Company (“IDS”) initiated this declaratory judgment action to obtain a ruling that, under a homeowners' policy issued to Fellows and his former wife, Michaela Osborne, it did not owe coverage for the following losses: (i) damage to the residence caused by Osborne and her two children, (ii) additional living expenses (“ALE”) necessarily incurred by Fellows to reside elsewhere while the dwelling was uninhabitable, and (iii) theft or other improper disposition of Fellows's personal property, including business attire and formal wear. Fellows brought six counterclaims against IDS. Two of them, for constructive fraud and negligence, were dismissed with prejudice on IDS's oral motion pursuant to Federal Rule of Civil Procedure 50(a). See Minute Order at ¶¶ 1(a) & (b) (docket no. 198). In addition, all counterclaims premised on the lost business attire and formal wear were dismissed. See id. at ¶ 1(c). After a six-day trial, the jury rendered a verdict in favor of Fellows on his four remaining counterclaims, for breach of contract, violation of the Insurance Fair Conduct Act (“IFCA”), violation of Washington's Consumer Protection Act (“CPA”), and insurance bad faith. See Verdict (docket no. 201). Based on the jury's factual findings, the Court ruled against IDS on its claim for declaratory relief, holding that coverage is owed for the damage to residence caused by Osborne and/or her children, as well as for Fellows's related ALE. See Order (docket no. 204). Judgment was entered in favor of Fellows and against IDS with respect to coverage and in the following amounts: (i) $164, 798.24 in contract damages; (ii) $494, 394.72 in increased damages under the IFCA; (iii) $102, 600 in actual damages on the CPA and bad faith counterclaims; (iv) $10, 000 in increased damages under the CPA; and (v) $145, 000 in noneconomic damages on the bad faith counterclaim, for a total of $916, 792.96, together with costs to be taxed as set forth in Local Civil Rule 54(d) and post-judgment interest. Judgment (docket no. 205).

         The pending motion for attorney fees and costs was filed before IDS sought judgment as a matter of law or, in the alternative, a new trial or remittitur. The Court has since denied IDS's post-judgment motions, see Order (docket no. 241), and IDS has appealed, see Notice (docket no. 243). The Court, however, continues to have jurisdiction to resolve the issues of attorney fees and costs. See Masalosalo v. Stonewall Ins. Co., 718 F.2d 955 (9th Cir. 1983). Fellows seeks: (i) $32, 876 for legal services provided by Lether & Associates PLLC, as well as deposition and trial testimony given by Thomas Lether; (ii) $626, 523.50 for work performed by Keller Rohrback L.L.P., taking into account agreed reductions and fees incurred after the pending motion was filed; and (iii) $88, 399.91 in costs. Fellows also requests a multiplier of 2.0 with respect to the fees associated with Keller Rohrback's efforts.

         Discussion

         Both the IFCA and the CPA authorize the Court to award attorney fees and costs to Fellows. Because the jury found an unreasonable denial of a claim for coverage or payment of benefits, see Verdict (docket no. 201); Instruction No. 14 (docket no. 196), the IFCA allows Fellows to recover “reasonable attorneys' fees and actual and statutory litigation costs, including expert witness fees.” RCW 48.30.015(3). The CPA entitles Fellows to “the costs of the suit, including a reasonable attorney's fee.” RCW 19.86.090. The Court may also grant Fellows reasonable attorney fees pursuant to Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991), which holds that “[a]n insured who is compelled to assume the burden of legal action to obtain the benefit of its insurance contract is entitled to attorney fees.” Id. at 54. For purposes of Olympic Steamship, reasonable attorney fees include “expenses necessary to establish coverage, ” including expert witness fees. Panorama Vill. Condo. Owners Ass'n Bd. of Dirs. v. Allstate Ins. Co., 144 Wn.2d 130, 143-45, 26 P.3d 910 (2001). In response to the pending motion, IDS has disputed the reasonableness of both the attorney fees and costs requested by Fellows.

         A. Attorney Fees

         When a fee-shifting statute is silent concerning how reasonable attorney fees should be calculated, Washington courts generally employ the lodestar method. See Brand v. Dep't of Labor & Indus., 139 Wn.2d 659, 666, 989 P.2d 1111 (1999). The lodestar method involves two steps: first, computing a lodestar amount by multiplying a reasonable hourly rate by the number of hours reasonably expended on the matter; and second, adjusting the lodestar figure either up or down to reflect factors that have not already been taken into account, namely the contingent nature of success and the quality of the work performed. See id.; see also Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581, 593-99, 675 P.2d 193 (1983) (quoting Miles v. Sampson, 675 F.2d 5, 8 (1st Cir. 1982), and citing Copeland v. Marshall, 641 F.2d 880 (D.C. Cir. 1980)). The Court is not bound by the lodestar value, but rather, is charged with making “an independent decision” as to what represents a reasonable amount of attorney fees. Nordstrom, Inc. v. Tampourlos, 107 Wn.2d 735, 744, 733 P.2d 208 (1987). With regard to reasonableness, an attorney's billing records, although relevant, are “in no way dispositive.” Id. The fee applicant bears the burden of proving the reasonableness of the amount requested, Scott Fetzer Co. v. Weeks, 122 Wn.2d 141, 151, 859 P.2d 1210 (1993), and of justifying any upward deviation from the lodestar result, see Bowers, 100 Wn.2d at 598.

         1. Lether & Associates

         In this action, Lether & Associates never appeared as counsel of record on Fellows's behalf, but the firm represented Fellows until December 31, 2015, the day after this action was commenced, in extrajudicial efforts to obtain coverage for him under the homeowners' policy at issue. With respect to those services, Fellows owes fees pursuant to a written agreement with Lether & Associates, which sets forth a rate of $325 per hour for Thomas Lether's services and a rate of $275 per hour for the work of associates. See Ex. A to Lether Decl. (docket no. 209-1). The fee agreement contemplated that Fellows would be responsible for compensating Lether & Associates not only for its legal representation, but also for any time reasonably spent transferring the matter to another attorney. See id.

         With respect to the period from September 10, 2015, to December 31, 2015, IDS challenges several billing entries. See Hill Decl. at ¶ 4 (docket no. 226). Having reviewed the explanations provided by Lether & Associates, see Colito Decl. at ¶¶ 4-9 (docket no. 234), the Court is satisfied that all but three (3) of IDS's objections lack merit. The Court agrees with IDS that Fellows is not entitled to fees for time spent pursuing contempt proceedings against Osborne or on the unsuccessful personal property claim, and the 0.6 hours ($165) recorded on November 3, 9, and 17, 2015 will be excluded.

         As to billing entries after December 31, 2015, IDS has taken the position that no fees are owed because Lether & Associates did not represent Fellows after such date, and that, with regard to time expended by Thomas Lether in his capacity as a fact witness, which might be treated as a litigation cost, Fellows has waived any recovery. The Court is of a different view. The Court concludes that, with one exception, [1] the services rendered in January, February, and March 2016 were necessary to transfer the representation to Keller Rohrback, and Fellows will be awarded fees for such efforts. With regard to Lether's deposition, trial testimony, and related preparations, the Court rejects the notion that Fellows's request for attorney fees operates as a waiver of the right to have such time compensated as witness fees. The Court treats Fellows's motion as seeking reimbursement of expenses associated with Lether's role as a witness, and addresses the merits of such request in the next section concerning costs.

         For the foregoing reasons, the following amounts are awarded to Fellows as reasonable attorney fees for legal services provided by Lether & Associates:

September 2015

$2, 325.50

October 2015

$1, 667.00

November 2015

$2, 440.00

December 2015

$2, 059.50

January 2016

$3, 324.50

February 2016

$302.50

March 2016

$2, 532.00

TOTAL

$14, 651.00

         2. Keller Rohrback

         With regard to the attorney fees sought for work performed by Keller Rohrback, IDS challenges the reasonableness of both the requested hourly rates and the amount of time spent on this matter. Some of IDS's arguments have merit and others do not.

         a. ...


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