Opinion
8:00CV91
August 30, 2002
MEMORANDUM OPINION
This matter is before the court for resolution of the issue of whether Millard Refrigerated Services, Inc. (Millard) is entitled to $11,900.00 in compensation for work performed by in-house counsel as a component of its damages in this case. See Filing No 68.
I. Background
This court entered a declaratory judgment that Travelers Indemnity, Inc. of Illinois (Travelers) had a duty to defend Millard in the underlying action filed against Millard by Signature Foods and others, SFH, Inc. v. Millard Refrigerated Serv., Inc., No. 8:99CV487 (D.Neb.). Filing No. 63. The parties have stipulated to most fees and costs of both the underlying action and this action. Filing No. 68.
Travelers objects, however, to allowance of fees for work performed by Millard's in-house counsel. Millard has submitted the affidavit of attorney Stephen Offner. Filing No. 68, Ex. A. In the affidavit, Offner states that, as general counsel for Millard, he has performed 199 hours of legal work in connection with the cases. He further states that he is salaried and that the rate of his compensation is approximately $100.00 per hour. Travelers contends that Millard should not be compensated for work performed by Millard's in-house counsel because Millard did not incur any additional expense by reason of in-house counsel's efforts in connection with the two suits.
II. Discussion
Under Nebraska law, a successful litigant in an action for breach of an insurer's duty to defend is entitled to attorney fees. Neb. Rev. Stat. § 44-359; Union Ins. Co. v. Land and Sky, Inc., 529 N.W.2d 773, 778 (Neb. 1995). That entitlement includes a reasonable attorney fee for in-house counsel actually engaged in the preparation and trial of the litigation to the same extent as outside counsel. Dale Electronics, Inc. v. Federal Ins. Co., 286 N.W.2d 437, 443 (Neb. 1979); see also, Textor v. Board of Regents of No. Ill. Univ., 711 F.2d 1387, 1396-97 (noting that "for every hour in-house counsel spent on this case defendants lost an hour of legal services that could have been spent on other matters" and "[t]he value to defendants of this lost time is, of course, the amount it would require to hire additional counsel to do the neglected work"); United States v. Myers, 363 F.2d 615, 621 (5th Cir. 1966) (noting that where an insurer wrongfully refuses to defend, the insured may recover its defense costs, including those attributable to in-house counsel — finding no sound reason to deny the government reimbursement "merely because the attorneys representing the United States are government employees, and are paid a salary by the United States for performing their services"); Pittsburgh Plate Glass Co. v. Fidelity Casualty Co., 281 F.2d 538, 542 (3d Cir. 1960) (noting work performed by in-house counsel reduces the workload and, consequently, the fee of the retained counsel).
Fees for work performed by in-house counsel are generally recoverable upon a showing that such counsel contributed something of substantive value to the litigation. Federal Deposit Ins. Co. v. Bender, 182 F.3d 1, 6 (D.C. Cir. 1999). Recovery, however, is not permitted for fees devoted to acting as a "liaison" between the company and outside attorneys who represent it. Id. at 5. Courts commonly use an hourly rate of compensation for in-house or salaried employees in awarding attorney fees. See, e.g., Pittsburgh Plate Glass Co., 281 F.2d at 542.
Millard has shown that attorney Offner provided substantive legal services. Millard does not seek attorney fees for time spent in various meetings as a mere liaison. Because Millard has shown that its in-house counsel participated actively in the actions, it is entitled to attorney fees for work performed by its in-house counsel. The court finds that 119 hours of work over a three-year period of time is reasonable, and that an hourly rate of $100.00 per hour is reasonable in this community. Accordingly,
IT IS HEREBY ORDERED THAT:
1. Travelers' objection to assessment of attorney fees for work performed by in-house counsel is overruled;
2. Millard is entitled to attorney fees in the amount of $11,900.00 for work performed by in-house counsel; and
3. A separate order and judgment in conformity with this memorandum opinion will issue.