Free Reply to Response to Motion - District Court of Colorado - Colorado

Case 1:00-cv-02098-REB-MJW

Document 282-4

Filed 01/10/2008

Page 1 of 3

DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO Court Address: City & County Building 1437 Bannock Street Denver, Colorado 80202 Plaintiff: DREXEL HUDGINS v. Defendants: FINANCIAL INDEMNITY COMPANY
COURT USE ONLY

Case Number: 03cv1295 Ctrm.: 7

COURT ORDER (Re: Plaintiff's Motion for Attorney Fees

THIS MATTER is before the Court pursuant to Plaintiff's Motion for Attorney Fees, filed on July 24, 2007. The Court has reviewed the motion, the response filed thereto, the reply and testimony on December 14, 2007, as well as the Court's file and applicable authorities. Upon consideration thereof, the Court enters the following findings and order. To recover attorney fees under C.R.S. § 10-4-708(1.7), an insured must recover past due benefits, or, in other words, "succeed monetarily" at trial. Adams v. Farmers Ins. Group, 983 P.2d 797, 803 (Colo. 1999). When, as here, an insured has successfully recovered past due benefits, the insured is entitled to recover his reasonable attorney fees, which are "determined in light of all circumstances for the time and effort reasonably expended by the prevailing party's attorney." Spensieri v. Farmers Alliance Mut. Ins. Co., 804 P.2d 268, 270 (Colo. App.1990). After calculating this "lodestar" amount, which "represents the number of hours reasonably expended multiplied by a reasonable hourly rate [and] ...carries with it a strong presumption of reasonableness," id., the statute then requires that fees be awarded to the insured "in direct proportion to the degree by which the insured was successful in the proceeding." C.R.S. § 10-4-708(1.7). In this case, Plaintiff was completely successful at trial, recovering not only a jury verdict that FIC owed him past due benefits, but actual presentation of the overdue funds during trial (where the insurer's agent offered a check for 100% of the benefits due). In addition, the jury found that FIC's failure to pay him these benefits was willful and wanton, entitling him to further statutory damages pursuant to C.R.S. § 10-4-708. In light of these requirements, FIC argues a) that additional requirements should be imposed on Plaintiff beyond those found in the No-Fault Act and b) that the fee amount

Exhibit 3

Case 1:00-cv-02098-REB-MJW

Document 282-4

Filed 01/10/2008

Page 2 of 3

requested is too high because it exceeds the amount of benefits payable under FIC's reformed contract of insurance. Both arguments fail, as FIC relies on authorities other than the No-Fault Act and the rulings that construe it. It is instructive also to consider that the Spensieri court long ago anticipated FIC's many variations on the argument that the lodestar amount here is unreasonable because it is too large. Noting that § 10-4-708 "does not preclude an award of attorney fees in excess of either the total amount of medical bills in controversy or the amount awarded after trial," the court stated: We divine the intent of the General Assembly in enacting this statute to be that it wished to assure that all accident related expenses are promptly paid by the insurer and that, under appropriate circumstances, the wrongful refusal to pay will require an award of attorney fees which may exceed the economic value of the claim. Spensieri, 804 P.2d at 271. Although the jury concluded that Plaintiff's covered accident-related expenses are far in excess of the $100,000 available to him under the cap on coverage imposed in this case, that fact alone is not controlling. It is the degree of success in recovering past due benefits that is important, and FIC cannot contend that Plaintiff did not recover past due benefits in this case. The Court finds that these are the only requirements applicable to a successful insured's request for attorney fees under the No-Fault Act. The criteria to be applied by the Court in awarding attorney fees are specified in C.R.C.P. 1.5(a) as follows: (a) A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following: 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. The Court notes that this case was not simply a contract case but rather involved specialized issues of insurance law and the interplay of equitable and legal remedies under the No-Fault Act. A review of Plaintiff's counsel's time records supports the assertion that the number of hours spent on any specific task was reasonable and necessary (again, in consideration of the complexities of the case). Although more than one attorney may have worked on a particular task, there does not appear to be an unreasonable duplication of work. The work performed and the time allotted for specific tasks was appropriately and specifically delineated.

Case 1:00-cv-02098-REB-MJW

Document 282-4

Filed 01/10/2008

Page 3 of 3

Plaintiff concedes that there should be a reduction in the billing for Leif Garrison's phone calls and the Court agrees. This results in a reduction of $2,950.00 in the attorney's fees attributable to him. Additionally, Mr. Pringle and Mr. Aisenberg agree that the rate charged by Mr. Carey is higher than the rate customarily charged for an attorney with his background for cases of this nature in the Denver metropolitan area. Accordingly, Mr. Carey's hourly rate is reduced from $395.00 per hour to $300.00 per hour, resulting in a reduction of $27,075.00 ($112,575 - $27,075.00 = $85,500.00). Mr. Rodriguez's fee, based on his years of practice and experience, is reduced from $275.00 per hour to $245.00 per hour, resulting in a reduction of $30.00. The experts also agree that, in a fee shifting situation, the prevailing party should not be awarded attorney's fees for non-related matters in which the attorney was not successful. This applies to the class certification issues, an issue separate and apart from the substantive issues in the underlying lawsuit. The Court adopts the Carey law firm's figure of $42,193.00 attributable to the class certification and deducts this amount. As noted in Plaintiff's reply, there was a contingent fee agreement under which the Carey law firm served as associate counsel. On the one hand, the attorney operating under a contingent fee agreement risks his time and the advancement of costs against the chance of getting a favorable resolution of the case. If the attorney does not succeed, he or she receives nothing. In a contingent fee situation, the attorney, in justifying his or her fee, many times is awarded a multiplier which may range anywhere from 2 to 10 times his or her normally hourly rate depending on the nature of the case. See e.g. Brody v. Hellman, 167 P.3d 192 (Colo. App. 2007); Romano v. Lubin, 538 A.2d 487 (Pa. 1982). On the other hand, it may be argued that in a fee shifting situation, the defendant should not have to bear this burden. The Colorado Court of Appeals in Spensieri v. Farmers Alliance Mutual Insurance Co., 804 P.2d 268 (Colo. App. 1990) stated that the use of a contingent fee agreement is one factor for the court to consider. However, the criterion is not what the parties agreed, but what reflects the reasonable value of the services rendered. Thus, while the contingent fee agreement is not controlling, it serves to validate the reasonableness of the hourly rates inasmuch as if there had been no recovery, the attorneys would have recovered nothing. In consideration thereof, the Court determines that Plaintiff's attorney fees were reasonable and necessary. Accordingly, pursuant to C.R.S. § 10-4-708, the Court approves an award of $531,193.25 in attorney fees to the Plaintiff. SO ORDERED this 7th day of January, 2008. BY THE COURT

Sheila A. Rappaport District Court Judge