Opinion
CV 01-360-BR.
March 7, 2002
FREDERIC E. CANN, Allen, Yazbeck, O'Halloran Hanson, Portland, Oregon. FRED MILLARD, Portland, Oregon, Attorneys for Plaintiff.
PETER J. MINTZER, CHRISTOPHER L. NEAL, Cozen O'Connor, Seattle, Washington, Attorneys for Defendants.
AMENDED OPINION AND ORDER
This matter comes before the Court on Plaintiff's Petition for Attorneys' Fees (#21), Plaintiff's Cost Bill (#31), Defendant's Request for Attorneys' Fees filed as part of its Response to Plaintiff's Motion for Attorneys' Fees (#37), and Plaintiff's Supplemental Statement of Costs filed as part of her Motion for Reconsideration (#42).
For the reasons that follows, the Court GRANTS Plaintiff's Petition for Attorneys' Fees (#21). The Court also GRANTS Plaintiff's Cost Bill (#31) to the extent it requests expenses listed with particularity, but the Court DENIES Plaintiff's request for unspecified expenses. The Court also GRANTS Plaintiff's Supplemental Statement of Costs filed as part of her Motion for Reconsideration (#42). Accordingly, the Court awards Plaintiff reasonable attorneys' fees, including costs, in the amount of $27,368.67. The Court DENIES Defendant's Request for Attorneys' Fees filed as part of its Response to Plaintiff's Motion for Attorneys' Fees (#37).
FACTUAL BACKGROUND
In 1996 Plaintiff's husband purchased group life insurance from the Insurance Company of North America (INA) through his credit union. A certificate of insurance was delivered to Plaintiff's husband at that time. Nothing in the certificate or the underlying master policy excluded coverage for death due to drunk driving.
The following year, INA's parent company, Defendant Life Insurance Company of North America (LINA), attempted to convert the life insurance policies of all Washington credit unions from the INA policy to a policy issued by LINA. The LINA master policy contained an exclusion for death due to driving while intoxicated. Benefit Consultants, Inc. (BCI), an agent for INA and LINA, was supposed to notify INA certificate-holders of the policy conversion. BCI, however, did not notify Plaintiff's husband nor provide him with a copy of the new LINA policy or a new certificate of insurance.
In July 1999, Plaintiff's husband died after his car was involved in a single-car collision. Two other passengers in the car were seriously injured. The passengers asserted Plaintiff's husband was driving the car at the time of the accident. Post-mortem toxicology reports indicated Plaintiff's husband was intoxicated at the time of his death. The passengers also were intoxicated.
Plaintiff retained an attorney, Michael T. Purcell, to assist her in making a claim on her husband's life insurance policy. Although Plaintiff apparently had in her possession a copy of the original 1996 INA certificate, Plaintiff did not provide this document to Purcell. The credit union through which Plaintiff's husband acquired the original insurance policy directed Purcell to BCI. BCI sent claim forms to Purcell that indicated they were applicable to policies issued by both INA and LINA. Purcell submitted the forms to BCI, and the claim was adjusted by Donald Cummings, a claims adjuster who works for both INA and LINA.
Cummings improperly adjusted the claim under the 1997 LINA master policy and sent various pieces of correspondence to Purcell that misidentified the LINA master policy as the operative policy. On December 29, 1997, Cummings declined Plaintiff's claim for benefits based on the drunk-driving exclusion in the 1997 LINA policy. Purcell then requested a copy of the insurance policy issued to Plaintiff's husband and referred to the incorrect 1997 LINA master policy number provided by Cummings. After reviewing the policy, Purcell determined the coverage dispute was not within the scope of his representation of Plaintiff, and he recommended Plaintiff seek counsel more familiar with insurance coverage issues.
Several attorneys reviewed the matter and declined to accept Plaintiff's case apparently because of the exclusionary language in the 1997 LINA master policy and the evidence that tended to show Plaintiff's husband was driving the car at the time of the accident. In December 2000, Plaintiff hired Fred Millard, one of her current attorneys, to represent her in this matter.
When Millard accepted Plaintiff's case on a contingency fee basis, his decision was influenced by Cummings's representation that the 1997 LINA master policy was the operative policy. According to his agreement with Plaintiff, Millard would receive forty percent of any recovery, and Plaintiff would bear all of her own costs.
Millard spent several months investigating the case to determine whether he could show Plaintiff's husband was not driving the car at the time of the accident. Millard later brought in Frederic E. Cann as co-counsel. Cann, too, relied on Cummings's representations regarding the applicable policy. The two attorneys agreed to split the forty percent contingency fee and all costs on an equal basis.
Plaintiff filed her Complaint for breach of insurance contract on March 19, 2001. Defendant subsequently produced its initial document disclosures pursuant to Fed.R.Civ.P. 26(a). One of the disclosed documents was a personalized specimen certificate of insurance that incorporated the drunk driving exclusion of the 1997 LINA master policy and that created the appearance that such a certificate had been sent by BCI to Plaintiff's husband at some time in the past. In fact, no such document was sent to Plaintiff's husband.
On July 12, 2001, Cann met Millard to discuss Plaintiff's initial disclosures pursuant to Rule 26. At that meeting, Cann reviewed Plaintiff's original documents for the first time and discovered the 1996 INA certificate of insurance that did not include the drunk-driving exclusion. Cann drafted a letter to Defendant and enclosed the 1996 INA certificate to support Plaintiff's claim that this certificate contained the operative policy language.
Millard first reviewed some of Plaintiff's documents in December 2000. The record does not reveal whether the 1996 INA certificate was among those documents or when Millard first became aware of the certificate's existence.
After receiving Cann's letter, Defendant investigated Plaintiff's claim again and quickly determined Plaintiff's husband had not received a copy of the 1997 LINA master policy. On August 1, 2001, defense counsel informed Cann that Defendant would pay Plaintiff the full death benefit including interest pursuant to the 1996 INA certificate. Defendant sent checks for the policy proceeds and interest to Plaintiff on September 25, 2001. After several months of negotiations, however, the parties failed to reach an agreement regarding attorneys' fees.
PLAINTIFF'S PETITION FOR ATTORNEYS' FEES Standards
In a diversity case, the availability of attorneys' fees and the amount of those fees are governed by state law. See Kern Oil Refining Co. v. Tenneco Oil Co., 792 F.2d 1380, 1388-89 (9th Cir. 1986), cert. denied, 480 U.S. 906 (1987). The parties agree Washington law applies in this matter. When reviewing a petition for attorneys' fees pursuant to Washington law, the court must first determine whether the prevailing party is entitled to an award of fees and then calculate a reasonable fee. McGreevy v. Oregon Mutual Ins. Co., 90 Wn. App. 283, 289 (1998) (internal citation omitted). "Whether a party is entitled to attorney fees is an issue of law." Id. The amount of a reasonable award of attorneys' fees, however, is left to the sound discretion of the trial court and will be overturned only if "the trial court manifestly abused its discretion." Id.
The Court cannot discern from the record the basis for filing this action in Oregon. The record is devoid of any facts that show Oregon is a proper venue for this matter under 28 U.S.C. § 1391(a). In fact, in its Notice of Appearance, Defendant asserted an improper venue defense. Defendant, however, waived that defense because it did not raise the defense in either a Motion to Dismiss pursuant to Fed.R.Civ.P. 12 or in its Answer to Plaintiff's Complaint. See Fed.R.Civ.P. 12(h). See also Costlow v. Weeks, 790 F.2d 1486, 1488 (9th Cir. 1986) ("A defendant must object to venue by motion or in his answer to the complaint or else his objection is waived."). The Court has no authority to raise the issue of defective venue on its own motion after Defendant has waived that defense. See Costlow, 790 F.2d at 1488.
Discussion
A. Entitlement to Attorneys' Fees
Under Washington law, a court may award attorneys' fees "only if authorized by contract, statute, or recognized ground in equity." McGreevy v. Oregon Mutual Ins. Co., 128 Wn.2d 26, 32 (1995) (quoting Dayton v. Farmers Ins. Group, 124 Wn.2d 277, 280 (1994)). Equity requires the court to award attorneys' fees to an insured "in any legal action where the insurer compels the insured to assume the burden of legal action, to obtain the full benefit of [the] insurance contract, regardless of whether the insurer's duty to defend is at issue." Olympic Steamship Co., Inc. v. Centennial Ins. Co., 117 Wn.2d 37, 53 (1991). The Olympic rule authorizes an award of attorneys' fees if the insurer denies coverage, but not if the insurer denies a claim or disputes the value of a claim. Dayton, 124 Wn.2d at 280.
Under Washington law, "insurance companies operating under a statutory mandate to issue certificates of coverage to holders of group insurance policies will be held to the terms it chooses to place in the certificate" if those terms differ from the terms in the operative master policy. Fittro v. Lincoln Nat'l Life Ins. Co., 111 Wn.2d 46, 53 (1988). Insurance companies that provide group life insurance must issue certificates of insurance containing a statement of the insurance protection provided to each individual insured under the group policy. See Wash. Rev. Code § 48.24.170.
A party to an insurance contract may not unilaterally amend the policy. McGreevy v. Oregon Mutual Insur. Co., 74 Wn. App. 858, 867 (1994), aff'd on other grounds, 128 Wn.2d 26 (1995). The insured must have notice of the proposed change in the policy and must agree to the terms before amendments may be made by the insurer. Id. A meeting of the minds and an agreement can be inferred if the insurer gives the insured actual notice of the change and the insured continues to pay policy premiums. Id.
Defendant concedes Plaintiff's husband only possessed the 1996 INA certificate of insurance and did not receive a copy of the converted 1997 LINA master policy. The 1996 INA certificate, therefore, applies to Plaintiff's claim. Defendant further admits it paid Plaintiff the full amount of life insurance benefits plus interest as required by the 1996 INA certificate as soon as it determined Plaintiff's husband did not receive a copy of the 1997 LINA master policy. Defendant contends, however, Plaintiff is not entitled to attorneys' fees pursuant to Olympic because Defendant denied coverage based on a "legitimate belief" that the operative policy was the 1997 LINA master policy. Defendant further contends Plaintiff's claim for insurance proceeds is not "justified" because she and/or her attorneys bore the responsibility for informing LINA of the correct operative policy. Plaintiff and her counsel did not notify Defendant of the correct operative policy until July 2001, which means, according to Defendant, "the only ones to blame for the delay and confusion" in this matter are Plaintiff and her attorneys. Defendant contends, therefore, Plaintiff may not recover attorneys' fees.
The Olympic fee-shifting rule was not premised on the insurer's bad faith denial of coverage. McGreevy, 128 Wn.2d at 37. Bad faith conduct constitutes a separate equitable ground that supports shifting attorneys' fees in an insurance matter while Olympic requires an insurer to pay the attorneys' fees of its insured even without a showing of bad faith "because of its enhanced fiduciary obligation" to the insured. Id. An insurer owes its insured "more than the honesty and lawfulness of purpose which comprises good faith." Tank v. State Farm Fire Casualty Co., 105 Wn.2d 381, 385-86 (1986). An insurer must deal "fairly" with an insured and "must refrain from engaging in any action which would demonstrate a greater concern for the insurer's monetary interest than for the insured's financial risk." Id. at 388.
In particular, "[w]hen an insurer unsuccessfully engages an insured in litigation to deny coverage, it can be said that the insurer not only delays the benefit of the bargain of the insurance contract to the insured but also that the insurer acts in contravention to its enhanced fiduciary obligations." See McGreevy, 128 Wn.2d at 36-37. It is this inequity that the Olympic court tried to remedy through the fee-shifting rule. Id. Thus, the issue of whether Defendant's denial of benefits to Plaintiff was made in good faith is irrelevant. Defendant is not relieved of its obligation to pay the costs of litigation incurred by Plaintiff in her efforts to compel Defendant to honor its commitments.
In addition, Defendant's assumption that its insured bears the responsibility for determining the applicable policy provisions is incorrect. Defendant violated its fiduciary duties to Plaintiff's husband as the insured and to Plaintiff as the beneficiary of the policy by failing to investigate and to adjust the claim properly from the beginning. Defendant should have kept better records of specific mailings of significant changes in policy coverage. See McGreevy, 74 Wn. App. at 898-69 (court did not put insurer in impossible situation by requiring it to prove endorsement was mailed to insured several years before because insurer made business decision not to maintain better records of mailings). If it had kept better records, Defendant would have known when it first adjusted Plaintiff's claim that BCI had not sent Plaintiff's husband a copy of the 1997 LINA master policy, and Defendant presumably would have adjusted the claim under the appropriate 1996 INA certificate. In any event, Defendant should have discovered BCI's oversight by conducting a thorough investigation of its own when Plaintiff first presented her claim. Defendant was able to verify BCI's error in July 2001 shortly after Plaintiff brought the oversight to Defendant's attention. The Court infers a similar investigation in December 1999 also would have revealed the negligence of Defendant's agent, BCI. Accordingly, Defendant is not fault-free as it contends.
Based on the foregoing, the Court concludes Plaintiff is entitled under Olympic to an award of attorneys' fees incurred to obtain the full benefit of her husband's life insurance policy.
B. Amount of Reasonable Attorneys' Fees
A party requesting attorneys' fees must establish that the amount of the attorneys' fees is reasonable. McGreevy, 90 Wn. App. at 291 (internal citations omitted). In Bowers v. Transamerica Title Ins. Co., the Washington Supreme Court approved the use of a modified lodestar method to calculate attorneys' fees in a case arising under the fee-shifting provision of the Consumer Protection Act, Wash. Rev. Code § 19.86.090. 100 Wn.2d 581, 593-601 (1983). The Bowers lodestar method is "the accepted starting point in those cases involving insureds that assume the burden of legal action to obtain the benefit of insurance." McGreevy, 90 Wn. App. at 291. See also Ross v. State Farm Mutual Auto. Ins. Co., 82 Wn. App. 787, 799 (1996), rev'd on other grounds, 132 Wn.2d 507 (1997) (trial court erred when it concluded the lodestar method of calculating fees does not apply in this type of case).
Under the Bowers modified lodestar method, the court first must determine whether the number of hours expended on the matter was reasonable. Id. Second, the court must determine whether the attorneys' hourly fee is reasonable. Id. If both the rate and hours are reasonable, the court must multiply the two together to reach the lodestar fee. Id. Finally, the court must consider whether the lodestar fee needs to be adjusted upward or downward to take into account considerations not otherwise reflected in the lodestar fee. Id. (internal citations omitted). The court must consider two categories of factors when determining whether to adjust a lodestar fee: the contingent risk and the quality of the work. Id. Although time spent by attorneys to obtain their fees is recoverable, that time is not subject to any adjustments. Id.
Plaintiff contends a reasonable attorneys' fee is the amount that would make Plaintiff "whole" again. Specifically, Plaintiff contends a reasonable fee is $87,000, which is the amount that would allow Plaintiff to net the full amount of the insurance benefits plus interest after she has paid her attorneys a contingent fee of forty percent of the insurance proceeds ($52,516) and forty percent of the Court's $87,000 attorneys' fee award ($27,484). In the alternative, Plaintiff argues the Court should award her attorneys' fees equal to the amount of the original contingency fee of $52,216. Although the contingency fee agreement and the amount of the contingency fee may be one of several factors to consider when the court determines the reasonableness of the attorneys' fees, Allard v. First Interstate Bank of Wash., N.A., 112 Wn.2d 145, 151 (1989), the lodestar amount is the beginning point for determining an appropriate award according to McGreevy and Ross.
Plaintiff correctly points out the underlying purpose of the fee-shifting rule is "[c]entral to the calculation" of an attorneys' fee award. Brand v. Dep't of Labor and Indust. of Wash., 139 Wn.2d 659, 667 (2000). The Brand court, however, concluded the Bowers modified lodestar method is consistent with a fee-shifting statute "designed to guarantee [the plaintiff] adequate legal representation in presenting his claim . . . without the incurring of legal expense or the diminution of his award . . . for the purpose of paying his counsel." Id. at 667 (court discussed purpose behind the fee-shifting provision in the workers' compensation statute and applied the lodestar method to calculate a reasonable fee under that statute). In other words, the lodestar method is the appropriate starting point for calculating a reasonable fee even if the purpose behind the fee-shifting rule is to make the plaintiff whole. As noted, the contingencies involved in the case and any contingent fee arrangement are appropriate factors to consider when calculating the reasonable hourly rate and the appropriate modified lodestar amount.
1. Lodestar Fee
a. Reasonable number of hours
To determine the reasonableness of the number of hours billed, the court must review "reasonable documentation" of the work performed that shows, at a minimum, the number of hours worked, the type of work performed, and the category of attorney who performed the work. Bowers, 100 Wn.2d at 203. The court must provide an analysis of the relevant factors and articulate sufficient reasons for its decision; however, a line-by-line analysis of the timesheets is not necessary. Id.
The court may consider the novelty and complexity of the issues in the case when determining the reasonableness of the hours expended. Scott Fetzer Co. v. Weeks, 122 Wn.2d 141, 150 (1993). The court also may discount the number of hours for time "spent on unsuccessful claims, duplicated effort, or otherwise unproductive time." Bowers, 100 Wn.2d at 203.
In this case, Plaintiff's counsel agreed Millard would handle the bulk of the client relations and the factual development of the case while Cann would complete the factual investigation specific to insurance coverage issues, perform all legal research, and take care of the pre-trial procedural aspects of Plaintiff's case. Millard's factual research was devoted to avoiding application of the drunk-driving exclusion by proving Plaintiff's husband was not driving the vehicle when it crashed. Millard reviewed Plaintiff's documents, met with and telephoned Plaintiff on several occasions, located and hired an expert witness to review the police reports and post-mortem examination, and hired an investigator to look into the events leading up to the accident. Millard had several telephone conversations with the investigator and expert witness and reviewed their work product. Millard also reviewed pleadings such as the Complaint and discovery requests prepared by Cann. In addition, Millard assisted with some legal research, none of which appears to overlap with work completed by Cann. In total, Millard spent 42.8 hours on this matter before Defendant agreed to pay Plaintiff the insurance benefits plus interest.
Cann spent most of his time performing legal research on the insurance enforcement and regulation issues. This research necessarily entailed review of the laws of several states because Plaintiff is a Washington resident, Defendant is a Pennsylvania corporation, and the group policy was issued through an Alabama credit union. In addition, Cann drafted the Complaint and discovery requests. He interacted with opposing counsel and representatives of the insurer. Cann also attended court hearings on Plaintiff's behalf. Cann eventually reviewed Plaintiff's documents in order to complete Plaintiff's initial disclosures required by Rule 26. It was this review that triggered Cann's letter to Defendant regarding the various policies. Cann also negotiated the settlement with Defendant. In total, Cann spent 35.09 hours on this matter before Defendant agreed to pay Plaintiff the insurance proceeds.
Defendant argues Millard's 42.8 hours and Cann's 35.09 hours are not reasonable because Plaintiff's counsel were pursuing "non-issues." Defendant further contends the matter could have been resolved quickly and efficiently if Plaintiff's attorneys had properly reviewed her files at the beginning; therefore, Defendant suggests this Court should award Plaintiff nominal attorneys' fees such as $1,000.
The Court finds Defendant's argument is without merit. Defendant erroneously denied Plaintiff's claim based on its own poor record-keeping. Plaintiff should not have to bear the costs of receiving the benefits of her bargain with Defendant simply because Plaintiff could have figured out sooner that Defendant adjusted her claim under the wrong policy. The mistake is still Defendant's mistake.
Although the legal issues presented in this case are not novel or complex, the factual development required substantial investigation and expert analysis as a result of Defendant's erroneous reliance on the drunk-driving exclusion. Plaintiff's attorneys efficiently divided up the work and did not spend their time on duplicative or unproductive work. After reviewing the timesheets and considering the issues in this matter, the Court concludes Plaintiff's counsel reasonably expended 77.89 hours on the substantive issues.
Plaintiff also requests attorneys' fees for the time spent preparing the attorneys' fees petition and associated pleadings. After Defendant agreed to pay Plaintiff the insurance proceeds including interest, Plaintiff demanded reimbursement for her attorneys' fees in the amount of $15,703.38. Defendant refused to pay that amount partly because Defendant contended Millard's hourly rate was too high and his time spent on the factual development of the case was excessive. Negotiations between the parties continued for several months but were unsuccessful.
Cann asserts he spent 66.27 hours on the attorneys' fees issue. More than half of Cann's time was spent performing legal research and drafting the Petition and the Reply Memorandum in support of the Petition. Cann also participated in settlement negotiations with opposing counsel. He contacted witnesses and drafted several affidavits in support of the Petition, including the affidavits of an expert attorney witness and several other witnesses who attested to Millard's competence and abilities.
In addition, Millard spent 8.0 hours on the attorneys' fees issue. Millard participated in conversations with Cann and Plaintiff regarding attorneys' fees, drafted his own Affidavit in support of the Petition, and reviewed the pleadings prepared by Cann. Thus, Plaintiff also seeks to recover attorneys' fees for a total of 74.27 hours spent working on the Petition and related documents.
Washington law on attorneys' fees awards is somewhat inconsistent and fact-specific, especially with regard to the reasonableness of the amount of fees; thus, research on the issue of attorneys' fees is time-intensive even though the law is not complex. In addition, a petition for fees must be accompanied by "reasonable documentation" that details the attorney's efforts on the case and that justifies the hourly rate charged by the attorney. This supporting documentation can be substantial in some cases.
In this case, Plaintiff's counsel had to justify the reasonableness of Millard's hourly rate, which was substantially higher than the average rate for an attorney of his experience in this area. Although Defendant concedes the reasonableness of the rate that Plaintiff eventually requested the Court to apply, the Court has an independent duty to review the reasonableness of hourly rates. Gates v. Deukmejian, 987 F.2d 1392, 1401 (9th Cir. 1993). The Court, therefore, finds the time spent drafting and reviewing the Affidavits regarding Millard's skill and experience level was necessary to justify his hourly rate.
During settlement negotiations, Plaintiff sought an award based on an hourly rate of $215 for Millard, and it appears the Affidavits originally were collected to support that rate. In her Petition, Plaintiff, however, seeks an award based on an hourly rate of $160 for Millard.
In addition, Defendant in this case challenged not only the reasonableness of Plaintiff's attorneys' fees but also Plaintiff's entitlement to those fees. Defendant, therefore, created additional work for Plaintiff's counsel on the attorneys' fees issue.
Finally, the Court notes both parties spent substantial time in attempting to settle the attorneys' fee issue. Although these efforts ultimately were not fruitful, the time spent on the exploration of settlement was reasonable, and, in the Court's opinion, time well spent.
The Court finds no evidence of duplicative, unnecessary, or unproductive efforts by Plaintiff's counsel regarding the attorneys' fees petition. Based on the foregoing, the Court concludes the large number of hours spent by Plaintiff's counsel researching Washington law and drafting the pleadings associated with the Petition were reasonable. The Court, therefore, finds Plaintiff's counsel reasonably expended a total of 152.16 hours.
b. Reasonable Hourly Rate
If an attorney has an established hourly rate for billing clients, that rate will likely be a reasonable rate. Bowers, 100 Wn.2d at 597. The court, however, is not bound by the attorney's usual rate. Id. The court may take into consideration additional factors, including the skill level required, time limits imposed on the litigation, the amount of the potential recovery, the attorney's reputation, and the undesirability of the case. Id. As Plaintiff notes, this Court generally refers to the 1998 Oregon State Bar Economic Survey as its initial benchmark when determining the reasonableness of rates. The court may adjust the Survey rates for inflation, specialization, or other factors. This approach appears to be consistent with Washington's market-value approach to lodestar calculations. Scott Fetzer, 122 Wn.2d at 150 ("In principle, [the lodestar fee] is grounded specifically in the market value of the property in question, the lawyer's services.") (internal quotations and citation omitted).
Cann, an attorney with over twenty years of experience as a member of the Oregon State Bar, has an established hourly rate of $180 per hour. Millard has only been a member of the Oregon Bar since 1998. Millard regularly charges $215 per hour for insurance-related matters, but he charges only $160 per hour for noninsurance cases. Although this case involves insurance issues, Plaintiff's counsel seeks to recover Millard's fees at the hourly rate of $160.
Defendant concedes these rates are reasonable. This Court, as noted, has an independent duty to review hourly rates for reasonableness even if no objections are made. Gates, 987 at 1401.
The Survey indicates the median hourly rate for Portland attorneys with Cann's level of experience was $180 in 1998. Cann asserts he has extensive civil litigation experience, including the area of insurance coverage. He also has tried numerous cases over the years. Based on these factors, the Court finds Cann's established hourly rate of $180 is reasonable.
The Survey indicates the median hourly rate for Portland attorneys with Millard's experience was $105 in 1998. Millard, however, regularly charges substantially more than that amount: $160 per hour for noninsurance work and a hefty $215 for insurance-related matters. Although Millard has been a practicing attorney for only four years, he was a public claims adjuster for several years before attending law school. Millard also had extensive criminal trial experience as a public defender but limited civil experience when he accepted this case. In addition, Millard is a sole-practitioner rather than an associate in a law firm where low rates may be offset by a senior partner's higher fees. Based on all of these factors, the Court concludes Millard's hourly rate of $160 is a reasonable rate.
The Court also finds the perceived undesirability of Plaintiff's case and the relatively low potential recovery make the fees charged by Plaintiff's counsel more than reasonable. Several attorneys rejected Plaintiff's case, presumably because of the improper adjustment of the claim under the 1997 LINA master policy and the drunk-driving exclusion therein. In addition, the Court notes inflation, general economic trends, and the pressures in this market since 1998 have led to a marked increase in the hourly rates charged by Portland attorneys and, in particular, in the fees charged by attorneys with less experience. Based on all of these factors, the Court concludes the hourly rates charged by both of Plaintiff's attorneys are reasonable.
The base lodestar fee is determined by multiplying the reasonable number of hours expended by the reasonable hourly rates. Based on the foregoing, the lodestar fee for Cann's work is 101.36 hours multiplied by $180 per hour or $18,244.80. The base lodestar fee for Millard's work is 50.8 hours multiplied by $160 per hour or $8,128.00. The total base lodestar fee, therefore, is $26,372.80.
2. Adjustments to Lodestar Fee
After the lodestar fee has been calculated, the court may adjust the amount to reflect factors not considered in calculating the lodestar fee itself. Bowers, 100 Wn.2d at 598. Common adjustments fall into two broad categories: adjustments due to the contingent nature of success and adjustments due to the quality of work performed. Id.
a. Contingent Nature
When determining whether to adjust the lodestar to account for contingency, the "court must assess the likelihood of success at the outset of the litigation." Bowers, 100 Wn.2d at 598-99. The lodestar fee should not be adjusted upward to the extent the hourly rate underlying the lodestar fee anticipates an allowance for the risky nature of the recovery of fees. Id. at 599. In any event, the risk factor should be applied only to time expended before recovery for the underlying claim is certain, and it should not be applied to time expended to obtain the fees themselves. Id.
Plaintiff entered into a contingency fee agreement with her counsel in which Plaintiff agreed she would pay her attorneys forty percent of any recovery they obtained on her behalf. Plaintiff contends this case was a "risky one" at the outset because of the drunk-driving exclusion in the 1997 LINA master policy. Plaintiff's expert, a local plaintiff's attorney, testified Plaintiff's counsel "were taking a substantial chance that they would not be able to recover anything" in light of "the facts known to the attorneys at the time they agreed to handle the case."
Plaintiff's argument, however, is simply the flipside of Defendant's argument that Plaintiff should recover nothing because of Defendant's mistake in adjusting this claim. Plaintiff asks the Court to conclude this case was a risky venture for Plaintiff's counsel due to the drunk-driving exclusion. Plaintiff also asks the Court to ignore the fact that Plaintiff would have known the drunk-driving exclusion was not applicable if Plaintiff's counsel had investigated the matter fully before agreeing to represent Plaintiff. Contrary to Plaintiff's argument, this case was a relatively simple case "at the outset" regardless of the parties' poor investigatory efforts. Within a few weeks of the discovery of the 1996 INA certificate by Plaintiff's counsel, Defendant agreed to pay Plaintiff the full insurance benefits including interest. The responsibility for adjusting the claim properly in the first place was squarely on the insurer and, as a result, the insurer must pay Plaintiff's reasonable attorneys' fees. Plaintiff, however, cannot justify an upward adjustment of the lodestar fee merely because she and her counsel failed to review the documents in Plaintiff's possession or to understand the import of those documents "at the outset" of the litigation. This case was not actually a risky venture "at the outset" because Plaintiff's own documents reflected the drunk-driving exclusion was not applicable.
Based on the foregoing, the Court finds Plaintiff has failed to satisfy her burden to prove her case carried a risk of recovery that justifies an upward adjustment of the lodestar fee. Accordingly, the Court exercises its discretion and declines to adjust the lodestar fee on contingency grounds.
b. Quality of Work Performed
The court may adjust the lodestar fee to reflect the quality of work performed by Plaintiff's counsel. Bowers, 100 Wn.2d at 599. This factor, however, is rarely used to justify an adjustment "because in virtually every case the quality of work will be reflected in the reasonable hourly rate." Id. Thus, an adjustment is appropriate only when the representation is "unusually good or bad." Id. (internal quotations and citation omitted).
Plaintiff does not appear to contend the quality of her counsel's work justifies an upward adjustment because this case did not proceed to trial on the merits. Plaintiff apparently concedes the Court cannot evaluate the quality of her counsel's work regarding the drunk-driving exclusion because that issue was not brought before this Court. Although Plaintiff's counsel recovered for Plaintiff the full amount of the insurance proceeds including interest, the record indicates Plaintiff's counsel could have done so much sooner if they had reviewed Plaintiff's documents earlier and recognized the import of the 1996 INA certificate. Accordingly, the Court exercises its discretion and declines to adjust upward the lodestar fee based on the quality of work performed by Plaintiff's counsel.
3. Plaintiff's Cost Bill
An award of reasonable attorneys' fees pursuant to Olympic "must, by necessity, contemplate expenses other than merely the hours billed by an attorney" if the purpose of the award is to make the insured whole again. Panorama Village Condominium Owners Assoc. Bd. of Directors v. Allstate Ins. Co., 144 Wn.2d 130, 144 (2001). The court, therefore, must award the insured "all of the expenses necessary to establish coverage as part of those attorney fees which are reasonable." Id.
Plaintiff filed a Cost Bill of $795.87, including charges for filing fees, photocopying, long distance telephone charges, facsimile charges, computer-assisted legal research, and expert witness fees incurred prior to filing the Petition for attorneys' fees. Cann avers these disbursements were "reasonably and necessarily incurred." Defendant does not object to these costs.
Cann also asserted there are additional unknown costs for which accounting has been delayed. Cann estimated the total of these costs to be approximately $200. The Court cannot determine the necessity or the reasonableness of the additional, unidentified expenses to which Cann alluded in the Cost Bill and, therefore, denies Plaintiff's Cost Bill to the extent it requests expenses not identified with particularity.
Plaintiff, however, filed a Supplemental Statement of Costs as part of her Motion for Reconsideration. The parties stipulate Plaintiff incurred additional reasonable and necessary expenses in the amount of $200 to prepare the Reply memorandum.
The Court finds Plaintiff necessarily incurred the expenses listed with particularity in the Cost Bill and the $200 of costs stipulated to by the parties in the Supplemental Statement of Costs. The Court further concludes the amount of each itemized expense is reasonable. The Court, therefore, awards Plaintiff costs in the amount of $995.87 as part of her reasonable attorneys' fees.
Based on the foregoing, the Court exercises its discretion and concludes the lodestar fee of $26,373.80 plus necessary expenses of $995.87 is a reasonable attorneys' fee. The Court, therefore, awards Plaintiff attorneys' fees in the amount of $27,368.67.
C. Defendant's Request that Fees be Awarded to Plaintiff Only
Defendant requests the Court to order any attorneys' fees awarded be made payable to Plaintiff herself rather than to her attorneys. Essentially, Defendant argues Plaintiff's counsel have received forty percent of the insurance proceeds, and they should not receive an additional forty percent of this award regardless of their contingent fee agreement with Plaintiff. Defendant offers no authority to support its novel argument. The Court's duty under Olympic is to determine whether the insured is entitled to attorneys' fees and, if so, the amount of a reasonable attorneys' fee. Pursuant to Olympic, the Court has awarded Plaintiff attorneys' fees in the amount of $18,046.27 for fees reasonably incurred in this matter.
The Court has no authority to void any agreements between Plaintiff and her attorneys. Moreover, the Court has no authority to require Defendant to draft its check in any particular manner as long as Plaintiff is the recipient. The Court, therefore, directs the parties to confer and to work out promptly the specifics of the form of payment to Plaintiff.
DEFENDANT'S REQUEST FOR ATTORNEYS' FEES
In its Response to Plaintiff's Petition for Attorneys' Fees, Defendant seeks an award of attorneys' fees and costs incurred in responding to the Petition. The Court in this Opinion and Order awards Plaintiff reasonable attorneys' fees pursuant to Olympic. The Olympic fee-shifting rule notably is a one-sided rule; i.e., the insured is entitled to recover attorneys' fees and costs if the insured prevails on a coverage dispute, but an insurer is not entitled to recover attorneys' fees and costs as a prevailing party. McGreevy, 128 Wn.2d at 38. Defendant has failed to show it is entitled to attorneys' fees under the reasoning of Olympic or any other provision of Washington law. The Court, therefore, denies Defendant's request for attorneys' fees.
CONCLUSION
For the reasons above, the Court GRANTS Plaintiff's Petition for Attorneys' Fees (#21). The Court also GRANTS Plaintiff's Cost Bill (#31) to the extent it requests expenses listed with particularity, but the Court DENIES Plaintiff's request for unspecified expenses. The Court also GRANTS Plaintiff's Supplemental Statement of Costs filed as part of her Motion for Reconsideration (#42). Accordingly, the Court awards Plaintiff reasonable attorneys' fees, including costs, in the amount of $27,368.67.
The Court DENIES Defendant's Request for Attorneys' Fees filed as part of its Response to Plaintiff's Motion for Attorneys' Fees (#37).
IT IS SO ORDERED.