Cause No. IP99-1188-C-B/S.
July 23, 2001
John R Maley Barnes Thornburg, Indianapolis, IN.
Carl A Eck, Meyer Darragh, Buckler Bebenek Eck, Pittsburgh, PA.
Richard H. Riegner, White Raub, Indianapolis, IN.
ENTRY ON PLAINTIFF'S VERIFIED MOTION TO AMEND JUDGMENT
On January 4, 2001, we ruled on cross-motions for partial summary judgment and entered judgment in favor of Plaintiff, Tom Raper, Inc. ("Raper"), and against Defendant, Safari Motor Coaches, Inc. ("Safari"). We found Safari liable for breaching the duties to defend and indemnify Raper in an Ohio state court proceeding and fixed Raper's damages at $136,600: $1,600 for damages assessed against it in an underlying suit and $135,000 for the attorney's fees Raper had been required to expend as a result of Safari's breach. In addition, we awarded Raper reasonable fees and expenses associated with the instant suit, then set at $10,000, bringing the total award in favor of Raper to $146,600.
Count II of Raper's two-count complaint had been voluntarily withdrawn prior to our consideration of the cross-motions for partial summary judgment on Count I.See Docket Entry No. 53. Thus, our ruling on the cross-motions led to final judgment being entered in favor of Raper.
Raper filed a timely motion to amend the judgment in order to modify the fees, expenses and the amount of the judgment in the underlying suit, as well as to obtain pre-judgment interest at 8%, as established by Indiana Code § 24-4.6-1-102. Raper requests that we increase the judgment by $19,209.48 to a total of $165,809.48. Its request breaks down as follows:
Attorney fees incurred during the Summit County Court of Common Pleas, Akron, Ohio, lawsuit entitled Merle Gill and C. Robert Gill v. Safari Motor Coaches, Inc., and Tom Raper, Inc., Civil Case No. CV-1997-01-1913 (1997) ("Gill litigation"), in the amount of $133,121.45 plus pre-judgment interest on those fees at the rate of 8%, equaling $7,582.28, for a sub-total of $140,703.73;
Attorney fees incurred during the prosecution of the case at bar, in the amount of $18,877.83 plus pre-judgment interest on those fees at the rate of 8%, equaling $999.90, for a sub-total of $19,877.73; and
Amount of judgment paid by Raper in the Gill case, $5,140.00 plus pre-judgment interest on that amount at the rate of 8%, equaling $111.02, for a sub-total of $5,251.02.See Pl.'s V. Mot. to Amend J. to Include Updated Fees and Expense Figures ("Mot. to Amend Judgment"), Ex. A, Summary of Fees and Costs ("Summary").
Safari objects to our having set the fees award as a part of our entry, contending that Raper had the burden of establishing the nature of the services rendered and the reasonableness of the charges. Safari asserts that Indiana law requires that there be objective evidence supporting the court's determination of reasonableness and, at a minimum, that Raper must submit an itemization of the hours spent, including a description of each task performed, as well as an itemization of out-of-pocket expenses claimed. Safari requests that we vacate the damages award and set an evidentiary hearing on the reasonableness of the entire amount now claimed.
We took judicial notice of the reasonableness of Raper's attorneys fees, relying in part on Safari's own citation of those fees as evidence of the value of the services Safari had rendered to Raper prior to the breach.
In reply, Raper has submitted to us the itemization identified by Safari as necessary for us to ascertain the reasonableness of the fees sought. In light of this submission, it does not appear necessary to require the parties to continue expending legal fees as would be necessary if we were to schedule an evidentiary hearing on the matter, especially since the evidence adduced at that hearing is likely to be duplicative of the information having already been provided to us. We therefore DENY Safari's request for an evidentiary hearing and rule on the merits of the motion to amend the judgment in this entry.
A. Pre-Judgment Interest Under Indiana Law
Raper requests that we award it pre-judgment interest on the entirety of the fees and expenses incurred, both those fees and expenses incurred during the Gill litigation and those spent pursuing the claims before us as well as on the judgment entered in Gill finding Raper liable. Raper utilizes the statutory rate of 8% for pre-judgment interest found in Indiana Code § 24-4.6-1-102, to which Safari raises no objection. Despite Safari's failure to substantively brief this issue, we have independently reviewed the appropriateness of awarding pre-judgment interest in the context of a breach of the duties to defend and indemnify and find it to be within our discretion to do so. Fed. Ins. Co. v. Stroh Brewery Co., 35 F. Supp.2d 650, 662-63 (N.D.Ind. 1998); Ind. Ins. Cos. v. Granite State Ins. Co., 689 F. Supp. 1549, 1563 (S.D.Ind. 1988).
Safari's request that we vacate the judgment and set an evidentiary hearing does not relieve it of the obligation to raise in its response brief all legal contentions, including what rate of pre-judgment interest should be applied, if any.
Pre-judgment interest is awarded in order to "fully compensate the plaintiff." Stephens v. Parkveiw Hosp., Inc., 745 N.E.2d 262, 266 (Ind.Ct.App. 2001).
In Indiana, a rate of 8% is set for pre-judgment interest when parties to an agreement have not previously established the rate to be used. Ind. Code. § 24-4.6-1-102. Under Indiana law, "an award of prejudgment interest is `proper when damages are ascertainable in accordance with fixed rules of evidence and accepted standards of valuation at the time damages accrue.'" Ind. Ins. Cos. v. Granite State Ins. Co., 689 F. Supp. 1549, 1563 (S.D.Ind. 1988) (quoting Ind. Indus., Inc. v. Wedge Prods., Inc., 430 N.E.2d 419, 427 (Ind.Ct.App. 1982));accord Fed. Ins. Co. v. Stroh Brewery Co., 35 F. Supp.2d 650, 662-63 (N.D.Ind. 1998). "Ascertainable" in this context refers to the amount of damages due, not the defendant's liability for those damages; thus, prejudgment interest is computed from the time the principal amount was demanded or due. Fed. Ins. Co., 35 F. Supp.2d at 663; Ind. Ins. Cos., 689 F. Supp. at 1563; Wilson v. Montgomery Ward Co., 610 F. Supp. 1035, 1041 (N.D.Ind. 1985). In the context of a breach of the duty to defend, the damages accrue from the time the insured pays the fees; likewise, where one party has a duty to indemnify, the damages accrue from the date that the insured makes a payment that is covered under the agreement.Fed. Ins. Co., 35 F. Supp.2d at 663.
In light of these guidelines, Raper's request for pre-judgment interest on the damages it incurred as a result of Safari's breach is well-taken. Since the parties did not previously establish an agreed-upon rate, Ind. Code § 24-4.6-1-102 establishes the pre-judgment interest rate at 8%, payable from the date on which Raper paid reasonable attorney's fees incurred during the Gill litigation and satisfying the judgment therein, until the date we entered judgment in favor of Raper, January 4, 2001.
B. Reasonableness of Attorney's Fees in the Gill Litigation
Before we can ascertain the amount of pre-judgment interest due, we must address Safari's contention that Raper has not established that its attorney's fees request from the Gill litigation is reasonable. Because we have ruled that Safari had a duty to defend Raper in the Gill litigation, it is liable for the reasonable and necessary expenses incurred by Raper in the defense of that action. Employers Ins. of Wausau v. Recticel Foam Corp., 716 N.E.2d 1015, 1027 (Ind.Ct.App. 1999), trans. denied, 735 N.E.2d 235 (Ind. 2000). Indiana courts have recognized that the rules of professional responsibility provide a useful reference point for ascertaining the reasonableness of the fees requested. Id. (citing Indiana Rule of Professional Conduct 1.5(a)); Midland-Guardian Co. v. United Consumers Club, Inc., 499 N.E.2d 792, 799-800 (Ind.Ct.App. 1986) (citing Code of Professional Responsibility, DR 2-105(B)); see also Shell Oil Co. v. Meyer, 684 N.E.2d 504, 524 (Ind.Ct.App. 1997), aff'd, 705 N.E.2d 962 (Ind. 1998) (noting that the nonexclusive list of factors found in Rule 1.5(a) provides a useful guideline, but that evidence on each factor is not required). Rule 1.5(a) lists the following factors to be considered in determining the reasonableness of an attorney's fees:
(1) the time and labor required, the novelty and difficulty of the questions involved; and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
As a result of Safari's breach, Raper was required to retain its own legal counsel in the Gill litigation after May 26, 1999. Included in this representation was a week long jury trial from January 18-25, 2000. Despite the Gills having brought three claims against Raper and Safari and having sought damages against them in excess of $250,000, the jury found Raper liable only on Count II, in the amount of $1,600.
The Gills also sought treble damages and costs pursuant to Ohio Rev. Code. Ann. § 1345.09(B) and (D).
Raper's attorneys found themselves faced with an unenviable task: they had to take up their client's defense after Safari abandoned it and after Safari had controlled the litigation strategy for five months; Raper's attorney's undoubtedly also had to defend Raper against Gills' accusations and those of Safari as well. These time limitations required Raper's attorneys to compress their preparations for trial into the short time frame then available to them. Moreover, we view the result achieved on behalf of Raper ($1,600 liability) in relation to the possible liability Raper faced (over $250,000) as evidence that Raper's counsel performed its duties with considerable skill and ability. Finally, having examined the invoices, we conclude that the fees charged by the attorneys are not outside the range of fees customarily charged in Indianapolis for high caliber legal representation comparable to that which Raper received in the Gill litigation.
Thus, we find that Raper's request for reimbursement of the attorney's fees and costs incurred during the defense of the Gill litigation to be reasonable warranting an amendment to the judgment to reflect damages in the amount of $133,121.45 to include attorney's fees in that matter.
C. Calculating the Pre-Judgment Interest Owed on the Gill Litigation's Attorney's Fees
We have examined both the Summary and the Appendix filed by Raper in support of its motion to amend the judgment (which Appendix includes invoices provided to Raper by its counsel for the payment of attorney fees) and have arrived at slightly different numbers than those figures laid out in the Summary. To calculate the pre-judgment interest on the attorney fees paid in theGill litigation, we first take the 8% interest rate provided for in the Indiana Code and derive the daily simple-interest for each of the invoices (for example, invoice number 623881 was in the amount of $192.61, so the daily interest associated with that invoice is $192.61 (*) .08 (/) 365 = $ 0.0422). We next calculate the number of days between the date that the invoice was paid and the date of our judgment (January 4, 2001), (for example, invoice number 623881 was paid on December 4, 2000, requiring 31 days worth of pre-judgment interest to be included). Finally, we multiply the daily interest by the number of days which elapsed in order to calculate the total pre-judgment interest due for that invoice (using invoice number 623881 as an example, $0.0422 (*) 31 = $1.31 in pre-judgment interest). Table A contains our calculations. Gill Gill Gill
The year 2000 was a leap-year, resulting in those invoices which were paid prior to January 4, 2000, receiving essentially an extra day's worth of pre-judgment interest.
Although the daily interest owed has been truncated to two decimal places in Table A, the actual calculations were made utilizing the real number.
D. The Gill Judgment Entered Against Raper
Although the parties have previously represented theGill judgment as being against Raper in the amount of $1,600, Raper now requests that our judgment here reflect an amount of $5,140. Raper has filed supplemental evidence indicating that Raper tendered a check to the Gills in the amount of $5,140 as satisfaction of the judgment in the Gill litigation. In light of that payment by Raper in the amount of $5,140.00 to satisfy the judgment in the Gill litigation, we shall use that amount as the basis for computing our damages award and shall amend our judgment accordingly.
As with the attorney's fees expended in the Gill litigation, Raper is entitled to the statutory 8% pre-judgment interest on the $5,140.00 as well, from the date that it was paid by Raper (October 9, 2000) through the date of entry of judgment in our case (January 4, 2001). Utilizing the same approach laid out previously, we calculate that Raper is entitled to 87 days worth of pre-judgment interest at a daily rate of $1.126, for a total of $98.01 in pre-judgment interest; adding the two together, we compute that Raper is entitled to damages in the amount of $5,238.01 for the Gill judgment, which brings Raper's total damages award to $145,953.92.
E. Raper's Attorney's Fees for the Instant Suit
In our January 4, 2001, Entry, we awarded Raper reasonable attorney's fees incurred during the prosecution of the breach of duty to defend and indemnify claims against Safari. At the time, Raper estimated those fees to be approximately $10,000, an amount which we regarded as reasonable. Raper's Appendix, submitted in support of this motion, includes the invoices representing those attorney's fees and expenses.
As previously noted, our review of the invoices submitted by Raper supports our conclusion that the attorney's fees requested by Raper are reasonable. The rates charged are consistent with those charged by area attorneys of similar experience and skill. Likewise, we deem the fees appropriate based on the complicated nature of the facts and issues and the relationship between these two large, sophisticated corporations. In addition, it is significant that Raper's recovery in this case was complete, with judgment entered for the entire amount sought by Raper.
All of these considerations lead us to conclude that Raper's request for attorney's fees of approximately $18,000 is entirely reasonable in this case. However, we note that by simply adding the amounts of the invoices which are represented on the Summary of Fees and Costs, we arrive at $18,854.53, $23.30 less than Raper calculated. We, therefore, without any real hesitation award Raper attorney's fees in the amount of $18,854.53.
One last matter requires our attention before we conclude this discussion: Raper's request for pre-judgment interest on its attorney's fees in this case. Pre-judgment interest is indeed available on the attorney's fees expended during the Gill litigation because those fees constituted a portion of the damages in this case. See Egan v. Burkhart, 657 N.E.2d 401, 406 (Ind.Ct.App. 1995) (holding that attorney's fees incurred during prior proceedings were a direct result of the defendant's breach and therefore were recoverable as damages and distinguishing those fees from the attorney's fees incurred during the present proceeding). In that light, those fees are no different than any other money judgment issued by a court.
However, the request for pre-judgment interest on the fees Raper incurred in this litigation is different. Raper provides no case-law to support its request and our independent review has uncovered no support for an award of pre-judgment interest on these attorney's fees.
While pre-judgment interest may be available on an attorney's fees award where there has been an "inordinate delay" between the entitlement to attorney's fees and the court's entry of judgment, such a ruling is typically found in cases involving complex, federal, civil rights violations. Cf. Smith v. Village of Maywood, 17 F.3d 219, 221 (7th Cir. 1994) (awarding pre-judgment interest on attorney's fees award when there had been a three-year delay between the entitlement to those fees and the entry of judgment). We find no support for this conclusion under Indiana law. Cf.Keifer v. Summers, 35 N.E. 1103 (Ind. 1894) (interest is not allowed on fees). In any event, there has not been any inordinate delay in this case, causing pre-judgment interest on the attorney's fees to be unwarranted. Raper's request for pre-judgment interest on the attorney's fees and expenses in the case at bar is therefore denied.
As explicated above, we DENY Safari's motion for an evidentiary hearing and GRANT Raper's motion to amend the judgment. We hereby alter our prior judgment to reflect damages in the amount of $145,953.92 in favor of Raper. In addition, Raper shall be awarded attorney's fees and expenses in the amount of $18,854.53.
As explained in the accompanying Entry in the above-named cause, Judgment is hereby entered in favor of Plaintiff and damages are awarded in favor of Plaintiff, Tom Raper, Inc. ("Raper"), and against the Defendant, Safari Motor Coaches, Inc. ("Safari"), in the amount of $145,953.92. Defendant is also Ordered to pay Plaintiff's reasonable attorney's fees and expenses in the amount of $18,854.53.