Strawn v. Farmers Ins. Co. of Oregon

• Decision Date: 27 January 2010
• Docket Number: A131605.,990809080.
• Citation: 233 Or. App. 401,226 P.3d 86
• Parties: Mark STRAWN, on his own behalf and as representative of a class of similarly situated persons, Plaintiff-Respondent, v. FARMERS INSURANCE COMPANY OF OREGON, an Oregon stock insurance company; Mid-Century Insurance Company, a foreign corporation; and Truck Insurance Exchange, a foreign corporation, Defendants-Appellants, and Farmers Insurance Group Inc., a foreign corporation, Defendant.
• Court: Oregon Court of Appeals

226 P.3d 86

233 Or. App. 401

Mark STRAWN, on his own behalf and as representative of a class of similarly situated persons, Plaintiff-Respondent, v. FARMERS INSURANCE COMPANY OF OREGON, an Oregon stock insurance company; Mid-Century Insurance Company, a foreign corporation; and Truck Insurance Exchange, a foreign corporation, Defendants-Appellants, and Farmers Insurance Group Inc., a foreign corporation, Defendant.

990809080.

A131605.

Court of Appeals of Oregon.

On Respondent's Petition for Attorney Fees, Request for Findings Under ORAP 13.10(7), and Request for Incentive Award and Supplemental Petition for Attorney Fees June 10, 2009 and August 5, 2009.

Defendants-Appellants' Objections to Petition for Attorney Fees and Request for Incentive Award and Supplemental Petition for Attorney Fees July 21, 2009 and August 17, 2009.

Reply to Defendants-Appellants' Objections to Petition for Attorney Fees and Request for Incentive Award and Request for Findings Under ORAP 13.10(7) August 5, 2009.

Decided January 27, 2010.

Richard S. Yugler, Portland, and Landye Bennett Blumstein LLP for petition and supplemental petition. With them on the reply was David N. Goulder.

James N. Westwood, P.K. Runkles-Pearson, Portland, and Stoel Rives LLP for response.

Before WOLLHEIM, Presiding Judge, and BREWER, Chief Judge,^* and SERCOMBE, Judge.

SERCOMBE, J.

In Strawn v. Farmers Ins. Co., 228 Or.App. 454, 457, 209 P.3d 357, rev. allowed, 347 Or. 258 (2009) (Strawn II), defendants Farmers Insurance Company of Oregon, Mid-Century Insurance Company, and Truck Insurance Exchange (collectively "Farmers") appealed a class action judgment awarding plaintiffs $898,323.80 in compensatory damages and prejudgment interest, $8 million in punitive damages, and more than $2.6 million in attorney fees, and a supplemental judgment awarding plaintiffs additional attorney fees. On appeal, we vacated both judgments with instructions to grant Farmers' motion for a new trial limited to punitive damages, unless plaintiffs agreed to remittitur of punitive damages to four times their compensatory damages and prejudgment interest. Otherwise, we affirmed. Id. at 488, 209 P.3d 357. Plaintiffs, who prevailed on appeal, now petition for attorney fees arising from and related to Strawn II and request that we make findings pursuant to ORAP 13.10(7) in support of our decision.

For the reasons explained below, we allow plaintiffs' petitions for attorney fees in part and order an attorney fee award of $542,469 for plaintiffs' "fee-shifting" claims under ORS 742.061(1), an attorney fee award of $41,136 for the common fund claims portion of the appeal, and an attorney fee award of $12,042 for plaintiffs' time litigating their initial attorney fee petition.¹ We deny plaintiffs' request for an additional incentive award to class representative Strawn.

Plaintiffs' class action claims arose out of Farmers' claims handling process with respect to the payment of personal injury protection benefits to its insureds. Plaintiffs brought claims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and declaratory relief. The first three of those claims were tried to a jury. The jury found in plaintiffs' favor and awarded $1.5 million in compensatory damages and prejudgment interest and $8 million in punitive damages on the fraud claim. The court granted declaratory relief. After a post-verdict claims administration process, the judgments noted above were entered. Strawn II, 228 Or.App. at 457, 209 P.3d 357.

On appeal, Farmers raised eight assignments of error "spanning nearly every stage of the case—from the court's order granting class certification, through trial and post-verdict proceedings, to the award of attorney fees." Id. at 461-62, 209 P.3d 357. We affirmed in all respects except for the amount of the punitive damages award. We concluded that "a punitive damages award that is four times plaintiffs' actual or potential harm is all that due process will bear." Id. at 485, 209 P.3d 357. Accordingly, we vacated the judgment for punitive damages with instructions to grant Farmers' motion for a new trial on punitive damages, unless plaintiffs were to agree to remittitur of punitive damages to four times their compensatory damages and prejudgment interest. Id.

Thus, plaintiffs successfully defended the parts of the judgments relating to their contractual claims, the fraud claim, and a portion of the punitive damages. As noted above, plaintiffs rely on two different bases for an allowance of attorney fees on appeal, depending on whether the fees were incurred to defend the judgment on the contractual claims or to defend the parts of the judgment that pertained to the fraud claim and the punitive damages award. Plaintiffs rely on ORS 742.061 for a fee-shifting award arising from their contractual claims against Farmers;² they rely on the equitable common fund doctrine for an award to compensate class counsel for defending the verdict on their fraud claim and punitive damages recovery on appeal; they also depend on the common fund doctrine in support of their request for an incentive award for Strawn, the class representative. Lastly, plaintiffs petition for supplemental attorney fees for the time and effort they have spent seeking their fees on appeal.³

"[W]hen an attorney fees petition comports with the requirements of ORAP 13.10(5), * * * our inquiry into the request generally will be limited to the objections that are filed by the party opposing the petition." Kahn v. Canfield, 330 Or. 10, 13-14, 998 P.2d 651 (2000); see also Dockins v. State Farm Ins. Co., 330 Or. 1, 6, 997 P.2d 859 (2000) (Dockins II). Here, Farmers objects to both petitions for attorney fees on various grounds. Although Farmers does not object to plaintiffs' entitlement to some award of attorney fees under ORS 742.061(1), it argues that the amount of fees that plaintiffs initially requested is unreasonable. Farmers likewise contends that the amount of fees requested in the supplemental petition is unreasonable. Lastly, Farmers asserts that plaintiffs are not entitled to any award of attorney fees as compensation for work done in defense of the verdict on plaintiffs' fraud claim and the punitive damages recovery or as an incentive award for the class representative.

I. FEE SHIFTING AWARD

In their initial petition for attorney fees, plaintiffs seek $1,065,560 for their fee shifting claims under ORS 742.061(1), itemized as $969,256.80 in fees and $96,303.38 in costs and expenses. Plaintiffs' itemized fee request results from (1) the determination of the total number hours spent on plaintiffs' appeal and the multiplication of those hours by class counsel's hourly rates, resulting in a "lodestar" amount of fees; (2) the allocation of hours to distinguish time spent on plaintiffs' fee-shifting claims from time spent defending plaintiffs' common-law fraud claim and punitive damages recovery, and a reduction of the lodestar based on that allocation; (3) the application of a fee enhancement or multiplier to that reduced lodestar; and (4) a request for costs and expenses not included in that reduced lodestar. We begin our analysis of plaintiffs' fee-shifting request by noting the standard that applies to such an award. We then address each of the four steps in plaintiffs' calculation method, taking into consideration Farmers' objections.

A. Standard

ORS 742.061(1) provides for an award of a "reasonable amount" of attorney fees for work done on appeal in an action "upon any policy of insurance." In determining a reasonable attorney fee award under ORS 742.061, we consider the factors enumerated in ORS 20.075. See also Dockins II, 330 Or. at 5-6, 997 P.2d 859 (citing those same factors as stated in DR 2-106). ORS 20.075 provides:

"(1) A court shall consider the following factors in determining whether to award attorney fees in any case in which an award of attorney fees is authorized by statute and in which the court has discretion to decide whether to award attorney 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.

"(2) A court shall consider the factors specified in subsection (1) of this section in determining the amount of an award of attorney fees in any case in which an award of attorney fees is authorized or required by statute. In addition, the court shall consider the following factors in determining the amount of an award of attorney fees in those cases:

"(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...