Subrogation Div., Inc. v. Brown, CIV. 16-5109-JLV

• Decision Date: 24 March 2021
• Docket Number: CIV. 16-5109-JLV
• Parties: SUBROGATION DIVISION, INC., Plaintiff, v. STANLEY BROWN and 21ST CENTURY INDEMNITY INSURANCE COMPANY, Defendants.
• Court: U.S. District Court — District of South Dakota

SUBROGATION DIVISION, INC., Plaintiff,
v.
STANLEY BROWN and 21ST CENTURY INDEMNITY INSURANCE COMPANY, Defendants.

CIV. 16-5109-JLV

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA WESTERN DIVISION

March 24, 2021

ORDER

INTRODUCTION

Plaintiff Subrogation Division, Inc., filed a motion for attorneys' fees and costs. (Docket 67). Defendants resist plaintiff's motion. (Docket 70). For the reasons stated below, plaintiff's motion is granted in part and denied in part.

ANALYSIS

The court entered an order granting summary judgment to plaintiff on its claim seeking application of the Graves Amendment, 49 U.S.C. § 30106. (Docket 62). By the order, plaintiff was awarded $2,271.75 against defendant Stanley Brown. Id. at p. 25. In addition, under the indemnification provision which was one of the topics of the litigation, the court concluded plaintiff was entitled to its attorneys' fees and costs. Id. at pp. 24-25.

With its motion and brief seeking attorneys' fees and costs, Subrogation Division Inc. ("SDI") filed a number of supporting documents, including Attorney Stephen Christiansen's attorney's fee invoices, Attorney Jay Shultz's attorney's

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fees invoices and two declarations of other attorneys in support of plaintiff's attorney's fees hourly rates. (Dockets 67-2 through 67-7). SDI proposes Mr. Christiansen's hourly attorney fee rate be approved at $315 and Mr. Shultz's hourly rate be approved at $275. (Docket 67 ¶¶ 16 & 17). For the 126.5 hours Mr. Christiansen spend in this case and the 60.15 hours spent by Mr. Shultz, SDI seeks approval of the following:

Mr. Christiansen	126.50 hrs. x $315 per hour =	$39,847.50
Mr. Shultz	60.15 hrs. x $275 per hour =	$16,541.25
Total fees		$56,388.75

Id. In addition, SDI seeks reimbursement for Mr. Christiansen's costs of $309.30, Mr. Shultz's costs of $506.45 and 6.5 percent South Dakota Sales Tax of$3,395.91¹ for an adjusted total of $60,600.41. Id. ¶¶ 16-19 & 21. To avoid double counting, SDI deducts $500 already awarded by the Clerk of Court for a net total request of $60,100.41. "This is the amount SDI seeks from the Court pursuant to its award of attorney fees and costs under the indemnification provision in the rental agreement through the date of this motion." Id. ¶ 21.

In its reply, SDI seeks additional fees for preparing the fee application documents. (Docket 75 at p. 17 n.5). Those requested fees are:

Mr. Christiansen	12.20 hrs. x $315 per hour =	$3,843.00
Mr. Shultz	4.25 hrs. x $275 per hour =	$1,168.75

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together with 6.5 percent sales tax of $249.80 and $75.97, respectively for a total of $5,337.52. Id.

Defendants oppose SDI's motion. (Docket 70). They claim:

The amount of attorneys' fees SDI seeks to recover is unreasonable because (1) SDI improperly attempts to recover out-of-forum rates for its lead attorney; (2) SDI seeks to recover fees which involve duplication of efforts or intra-attorney communications; and (3) the total amount sought is grossly disproportional to the amount in controversy.

Id. at pp. 1-2. Defendants submit this was simply "a subrogation case in the form of a declaratory judgment action." Id. at p. 3. The parties' particular arguments focused on the present motion will be addressed where appropriate in this order.

1. Complexity of the Case

While courts may address the relevant factors in a different sequence, the court believes it is most productive to evaluate the complexity of the case before looking to the rates charged or the hours spent by plaintiff's attorneys.

The parties agree the principal question in this case was whether the Graves Amendment preempts South Dakota state law prohibiting SDI from subrogating Overland West's assigned claim against Mr. Brown under the rental agreement with him. See Dockets 67 ¶ 2 & 70 at pp. 2-3. In a nutshell, defendants' affirmative defenses set the battle lines for resolving this case. Those affirmative defenses were:

Defendant affirmatively alleges that the claims raised by Plaintiff do not present a substantial federal question by the mere presence of

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the Graves Amendment and there is no federal cause of action created by the Amendment. (Docket 12 ¶ 3).

Defendant affirmatively alleges that Plaintiff's assignor was a statutory owner, pursuant to South Dakota's Financial Responsibility Law, SDCL § 32-35-70, of the vehicle it rented to Defendant, and is therefore liable to Dan Claymore under South Dakota law for damages that arose out of the May 3, 2013 motor vehicle accident. Id. ¶ 4.

Defendant affirmatively alleges that South Dakota's Financial Responsibility Law, SDCL § 32-35-70, is not subject to preemption under the Graves Amendment, and falls within the savings provision in 49 U.S.C. § 30106(b)(1)-(2). Id. ¶ 5.

Defendant affirmatively alleges that Plaintiff must provide primary liability coverage for its vehicles that its assignor owned and leased to its customers under Auto Owners Ins. Co. v. Enterprise Rent-A-Car Co. Midwest, . . . 663 N.W.2d 208 [(S.D. 2003)]. Id. ¶ 6.

Defendant affirmatively alleges that the Plaintiff's claims are barred by settled law under the South Dakota Supreme Court's decision in Auto Owners Ins. Co., . . . . Id. ¶ 7.

Defendant affirmatively alleges, in the alternative, that the Graves Amendment is unconstitutional on the basis that it seeks to regulate state imposed liability in

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