Masood v. Safeco Ins. Co. of Or., an Or. Ins. Co.

• Decision Date: 22 March 2017
• Docket Number: A149925 (Control), A149926
• Citation: 393 P.3d 277,284 Or.App. 427
• Parties: Sohail MASOOD, Plaintiff-Appellant Cross-Respondent, v. SAFECO INSURANCE COMPANY OF OREGON, an Oregon Insurance Company; Defendant-Respondent Cross-Appellant, and Overland Solutions, Inc., Defendant-Respondent, and A. O. A. West, Inc., an Oregon corporation, Defendant. Sohail Masood, Plaintiff-Appellant Cross-Respondent, v. Safeco Insurance Company of Oregon, an Oregon Insurance Company, Defendant-Respondent Cross-Appellant, and A. O. A. West, Inc., an Oregon corporation, Defendant.
• Court: Oregon Court of Appeals

284 Or.App. 427

393 P.3d 277

Sohail MASOOD, Plaintiff-Appellant Cross-Respondent,

v.SAFECO INSURANCE COMPANY OF OREGON, an Oregon Insurance Company; Defendant-Respondent Cross-Appellant,andOverland Solutions, Inc., Defendant-Respondent,

and

A. O. A. West, Inc., an Oregon corporation, Defendant.

Sohail Masood, Plaintiff-Appellant Cross-Respondent,

v.Safeco Insurance Company of Oregon, an Oregon Insurance Company, Defendant-Respondent Cross-Appellant,andA. O. A. West, Inc., an Oregon corporation, Defendant.

A149925 (Control), A149926

Court of Appeals of Oregon.

March 22, 2017

David W. Axelrod and Schwabe Williamson & Wyatt P.C., for petitions.

David W. Axelrod, Sara Kobak, and Schwabe Williamson & Wyatt P.C., for reply.

R. Daniel Lindahl, John A. Bennett, and Bullivant Houser Bailey PC, for response.

Before Armstrong, Presiding Judge, and Egan, Judge, and Nakamoto, Judge pro tempore.

ARMSTRONG, P.J.

Plaintiff, who prevailed on appeal, petitions for an award of $624,561.02 in attorney fees and $46,758.35 in costs. Defendant Safeco Insurance Company of Oregon (defendant) raises four objections to plaintiff's petitions, contending that plaintiff is not entitled to an award of attorney fees and, in all events, that three components of his fee and cost requests should be denied. As explained below, we conclude that plaintiff is entitled to an award of attorney fees, but we agree with defendant on two of its attorney-fee objections and, accordingly, award fees in an amount $107,583.25 less than plaintiff requested.

We briefly summarize the facts of the case, which stem from a fire that destroyed plaintiff's house and damaged surrounding buildings. Plaintiff had purchased an insurance policy from defendant that included extended dwelling coverage for loss of the house due to fire. The parties disagreed on whether plaintiff was entitled to recover amounts due under the extended dwelling coverage before plaintiff replaced the house. According to plaintiff, defendant's adjuster orally agreed that defendant would pay the full replacement value of the house, including the extended dwelling coverage, without regard to whether the house had first been replaced. Defendant subsequently refused to pay the extended coverage, and plaintiff filed suit for breach of contract. Defendant counterclaimed for breach of contract, alleging that plaintiff had misrepresented the value of certain components of the house, that defendant had relied on those misrepresentations in paying plaintiff under the insurance policy, that the insurance policy was void as a result of the misrepresentations by plaintiff on which defendant had relied, and, as a result, that defendant was entitled to recover from plaintiff the money that it had paid plaintiff on the policy.

Plaintiff moved for a directed verdict on defendant's counterclaim at the close of defendant's case on the ground that defendant had failed to introduce sufficient evidence to support a finding that it had reasonably relied on plaintiff's misrepresentations. The trial court denied plaintiff's directed-verdict motion. The jury returned a special verdict that found that plaintiff was entitled to the full amount of his damages from the fire, including the extended dwelling coverage, but that also found on defendant's counterclaim that plaintiff had misrepresented material facts to defendant on which defendant had detrimentally relied. Based on the verdict, the trial court entered a judgment in defendant's favor for the amount that defendant had paid plaintiff under the policy.

Plaintiff appealed, contending, among other things, that the trial court had erred in denying his directed-verdict motion on defendant's counterclaim. We agreed with plaintiff and remanded the case to the trial court to enter a judgment in plaintiff's favor for the amount of damages awarded by the jury. Masood v. Safeco Ins. Co. of Oregon , 275 Or.App. 315, 364, 365 P.3d 540 (2015), rev. den. , 359 Or. 525, 379 P.3d 515 (2016) (Masood I ).

Defendant petitioned for review of our decision by the Supreme Court, which denied review. Masood v. Safeco Ins. Co. of Oregon , 359 Or. 525, 379 P.3d 515 (2016). Plaintiff thereafter petitioned the Supreme Court for an award of the attorney fees that he had incurred in responding to the petition for review, relying on ORS 742.061(1) as authority for the award. Defendant opposed the award, arguing that ORS 742.061(1) did not apply to the claims on which plaintiff had prevailed and, hence, that plaintiff was not entitled to recover its fees. The Supreme Court rejected defendant's argument and awarded plaintiff the attorney fees that he sought. Masood v. Safeco Ins. Co. of Oregon , 360 Or. 638, 644, 386 P.3d 646 (2016) (Masood II ).

With that background in mind, we turn to plaintiff's petition for attorney fees and costs in this court. Defendant raises four objections to plaintiff's petitions. First, defendant challenges plaintiff's entitlement to recover attorney fees under ORS 742.061(1). That is the challenge that the Supreme Court has already rejected in awarding attorney fees to plaintiff, see Masood II , 360 Or. at 644, 386 P.3d 646, and we reject it as well.

Second, defendant challenges $92,583.25 in "deferred payment charges" that are included in plaintiff's attorney-fee petition. Defendant contends that the charges represent interest that plaintiff's attorneys charged plaintiff for failing to timely pay them for their work and, as such, they are not recoverable as attorney fees. Plaintiff responds that the charges represent an amount that he incurred for the work performed by his attorneys and, hence, are recoverable under ORS 742.061(1). As explained below, we agree with defendant's objection and award fees in an amount $92,583.25 less than plaintiff requested.

Third, defendant objects, and plaintiff concedes, that a $15,000 fee charged by plaintiff's attorneys was a fee paid to an expert witness and not a fee that plaintiff can recover from defendant. We accept plaintiff's concession and reduce plaintiff's fee award accordingly.

Finally, defendant objects to approximately $32,000 in transcript costs that represent the cost to produce daily transcripts at trial. Because, as explained below, the parties agreed that the daily transcripts would be the record on appeal, we conclude that plaintiff is entitled to recover the cost of those transcripts.

As noted, defendant objects to the deferred payment charges that are included in plaintiff's attorney-fee petition. Plaintiff contends that, because he incurred the charges as part of the cost of his representation by his attorneys, and ORS 742.061 is intended "to make insureds whole," the charges should be recoverable as part of the attorney-fee award.¹ We are not persuaded. Had plaintiff borrowed money from a bank to pay his attorneys for their work, the interest paid to the bank would not be recoverable from defendant. The result should not be different when the interest is charged by plaintiff's law firm rather than a bank. Thus, we deduct from the fee request the $92,583.25 in deferred payment charges.

We turn to the dispute over the cost of the transcript. The three parties involved in the trial (one of which, A.O.A. West, Inc., did not participate in the appeal) split the cost for a court reporter to prepare and deliver expedited draft transcripts after each day of the trial, commonly referred to as "dailies," so that the trial attorneys for each of the parties could use them at trial. Thus, plaintiff agreed to pay one-third of the cost of the dailies, which are more expensive than transcripts prepared in the normal course. The parties also agreed that the "stenographic reporting * * * shall be the official record for the purposes of a transcript on appeal," instead of the audio recording usually made in the trial court. There was nothing in the agreement among the parties that addressed whether a prevailing party on appeal could recover the cost of the dailies. The dailies ultimately were corrected and became the basis for the final trial transcript that was filed and used on appeal.

Plaintiff now seeks his share of the cost of the dailies—$32,746.15—in addition to the cost of obtaining final trial transcripts and transcripts of other proceedings required for the appeal,...