Hosp. Mgmt. v. Preferred Contractors Ins. Co. Risk Retention Grp.

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HOSPITALITY MANAGEMENT, INC., an Oregon corporation, Plaintiff, v. PREFERRED CONTRACTORS INSURANCE COMPANY RISK RETENTION GROUP LLC, a Montana corporation, Defendant.

No. 3:18-cv-00452-YY

United States District Court, D. Oregon

April 7, 2023

FINDINGS AND RECOMMENDATIONS

YOULEE YIM YOU UNITED STATES MAGISTRATE JUDGE

FINDINGS

Plaintiff Hospitality Management, Inc. (“HMI”) has prevailed against defendant Preferred Contractors Insurance Company Risk Retention Group LLC (“PCIC”) on summary judgment on its claims for breach of contract and bad-faith breach of the duty to settle. Order 8, ECF 101. A detailed factual background underlying the case is set forth in the court's prior order. Id. at 1-3. In short, plaintiff installed and repaired windows, siding, and roof vents for general contractor KeyWay Corp. (“KeyWay”) at a large apartment complex owned by Commons at Cedar Mill (“Commons”). Commons sued KeyWay, and KeyWay brought third-party claims against six subcontractors, including a common law indemnity claim against plaintiff. Plaintiff tendered the claim to defendant, its insurer, who defended under a reservation of rights. Defendant rebuffed plaintiff's demands to settle and settlement offers from Commons and Keyway. Twelve days before trial, plaintiff stipulated to a $2.5 million judgment with KeyWay in exchange for KeyWay's covenant not to execute on plaintiff's non-insurance assets. Plaintiff then brought this coverage action. This court found that defendant was obligated to pay plaintiff the greater of $2 million for the breach of contract claim or $2.5 million on the claim for bad-faith breach of the duty to settle.

Judgment in the amount of $2.5 million plus post-judgment interest was entered against defendant on July 6, 2021. Judgment, ECF 102. A supplemental judgment for prejudgment interest in the amount of $887,054.79 was entered on August 30, 2022. On that date, the court also issued an opinion and order denying PCIC's Motion to Dismiss or Remand for Lack of Subject Matter Jurisdiction and Motion for Relief from Summary Judgment (ECF 163) and granted in part HMI's Motion for Sanctions (ECF 160), including reasonable attorney's fees and costs.

The remaining matters to be resolved in this case pertain to HMI's motions for attorney's fees and costs, which should be decided as follows:

            Description
          
            Requested
          
            Recommended
          
            Motion for Award of Attorney Fees (ECF 110)
          
            $334,916.75 x multiplier of
            
              2.0
            
          
            $334,646.75
          
            First Supplemental Motion for Attorney Fees (ECF 131)
          
            Preparing motion for fees (ECF 110)
          
            $49,739.50
          
            $24,869.75
          
            Preparing motion for prejudgment interest (ECF 106)
          
            $12,855.00
          
            $12,855.00
          
            Enforcement and collections efforts
          
            $4,110.00
          
            $4,110.00
          
            Expert fees
          
            $9,600.00
          
            $9,600.00
          

Second Supplemental Motion for Attorney Fees (ECF 176)

Preparing response to motion to inquire/motion for reconsideration and dismiss (ECF 163)

$95,493.07

$95,493.07

Preparing motion for sanctions (ECF 160)

$63,857.13

$31,928.56

Preparing response to objections prejudgment interest (ECF 157)

$7,873.80

$7,873.80

Minus miscellaneous deductions

-$207.50

First Bill of Costs (ECF 113)

$14,300.45

$11,586.01

Second Bill of Costs (ECF 180)

$7,510.74

$7,510.74

I. Motion for Award of Attorney Fees (ECF 110)

Plaintiff seeks $334,916.75 in attorney's fees under the lodestar method, with a 2.0 multiplier, for a total of $669,833.50.^[1] Mot. Attorney Fees 1, ECF 110. The parties agree that plaintiff is entitled to a fee award under O.R.S 742.061^[2] and that O.R.S. 20.075(1)-(2) applies for determining what the award should be. See Mot Attorney Fees 2, 4, ECF 110; Objs. Mot. Attorney Fees 1, ECF 121. However, defendant objects to the application of any multiplier. Defendant also cites to several instances of duplicative work by plaintiff's counsel, and “suggests a reduction in the lodestar method by between 10 and 20% of the total fees.” Objs. Mot.

Attorney Fees 1, 6, ECF 121.

A. Relevant Law

Where an award of attorney fees is authorized by an Oregon statute, as it is here, the court considers the factors in O.R.S. 20.075(1) in determining “whether to award” fees:

(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 ORS 20.190.

(h) Such other factors as the court may consider appropriate under the circumstances of the case.

O.R.S. 20.075(1).

In “determining the amount” of fees, the court considers the factors in subsection (1) above as well as the following factors set forth in O.R.S. 20.075(2):

(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 attorney from taking other cases.

(c) The fee customarily charged in the locality for similar legal services.

(d) The amount involved in the controversy and the results obtained.

(e) The time limitations imposed by the client or the circumstances of the case.

(f) The nature and length of the attorney's professional relationship with the client.

(g) The experience, reputation, and ability of the attorney performing the services.

(h) Whether the fee of the attorney is fixed or contingent.

(i) Whether the attorney performed the services on a pro bono basis or the award of attorney fees otherwise promotes access to justice.^[3]

O.R.S. 20.075(2).^[4]

Under subsection (2), “factor (a) generally relates to the reasonableness of the number of hours expended by counsel for the prevailing party, factors (c) and (g) generally relate to the reasonableness of the hourly rates charged, and factor (d) generally informs whether an upward or downward adjustment might be appropriate.” Foraker v. USAA Cas. Ins. Co., No. 3:14-CV-87-SI, 2018 WL 3873575, at *7 (D. Or. Aug. 15, 2018). “Taken together, these factors are comparable to what is often referred to as the ‘lodestar' method for calculating a reasonable attorney's fee.” Id. (citing Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 552 (2010)).

The “lodestar approach” is the “guiding light” when determining reasonable fees and yields a presumptively reasonable fee. See Perdue, 559 U.S. at 551-52 (stating that there is a “strong presumption that the lodestar is sufficient”); see also Strawn v. Farmers Ins. Co. of Oregon, 353 Or. 210, 221 (2013) (“The lodestar approach that the parties have used is at least a permissible one under the statutes involved,” including O.R.S. 20.075(1)-(2)). The lodestar is calculated by multiplying the reasonable hourly rate by the number of hours worked. Perdue, 559 U.S. at 551.

To determine the reasonable hourly rates for attorneys, the court looks to the “prevailing market rates in the relevant community.” Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984). The relevant community “is one in which the district court sits.” Davis v. Mason County, 927 F.2d 1473, 1488 (9th Cir. 1991). Courts in this district use the most recent Oregon State Bar Economic Survey as a benchmark for comparing an attorney's billing rate with the fees customarily charged in the locality. Precision Seed Cleaners v. County Mut. Ins. Co., 976 F.Supp.2d 1228, 1244 (D. Or. 2013). The Economic Survey sets forth rates charged by Oregon attorneys in the relevant year, including rates specific to certain communities, such as the Portland area.

After determining the reasonable hourly rates, the court determines the number of hours “reasonably spent on the litigation.” McCown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009). The court excludes hours that are “excessive, redundant, or otherwise unnecessary.” Id. (quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). The party seeking an award of attorney's fees “has the burden of submitting billing records to establish that the number of hours it has requested [is] reasonable.” Gonzalez v. City of Maywood, 729 F.3d 1196, 1202 (9th Cir. 2013); see also Strawn, 353 Or. at 225. “Ultimately, a ‘reasonable' number of hours equals the number of hours which could reasonably have been billed to a private client.” Gonzalez, 729 F.3d at 1202.

Courts use two methods to determine whether hours are excessive redundant, or otherwise unnecessary, and thus excludable. “First, the court may conduct an ‘hour-by-hour analysis of the fee request,' and exclude those hours for which it would be unreasonable to compensate the prevailing party.” Gonzalez, 729 F.3d at 1203 (quoting McCown, ...