Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-01143-JLK

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-CV-1143 (CBS)

DOLLY LAU, Plaintiff, vs. ALLSTATE INSURANCE COMPANY, Defendant.

ALLSTATE'S RESPONSE TO PLAINTIFF'S MOTION FOR ATTORNEYS' FEES PURSUANT TO F.R.C.P. 54(d)(2) WITH RECITATION OF AUTHORITY

Defendant, Allstate Insurance Company (Allstate), through its attorneys, Walberg, Dagner & Tucker, P.C., responds to Plaintiff's Motion for Attorneys' Fees pursuant to F.R.C.P. 54(d)(2). A. Plaintiff's Complaint does not plead a claim for Attorney fees pursuant to C.R.S. 10-4-708(1.7) and she may not now assert such a claim. Plaintiff's Complaint sets forth three causes of action: the first for breach of contract, the second for bad faith breach of contract and the third for violation of the Colorado Consumer Protection Act. She does not set forth a claim under C.R.S. §10-4-708(1.7) in her complaint. She should not now be entitled to assert the same.

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B. Plaintiff did not actually recover any PIP benefits in her suit against Allstate, having failed to ask the jury to differentiate between past and future medical and rehabilitation expenses. Since the jury's findings were insufficient to permit any award of PIP benefits, the court may not award attorney fees to Plaintiff. In Allstate's Response to Plaintiff's Motion to Amend or Alter Judgment Re: Prejudgment Interest and Quantification of Jury Verdict, Allstate pointed out that the jury's findings on the Jury Verdict Form do not establish that Plaintiff is entitled to any amount of past due PIP benefits. The jury was asked, in relation to both medical and rehabilitation benefits, to determine the "total amount"of both past and future benefits which Plaintiff had incurred or would incur as a result of the collision during the effective period of the coverage. On the medical claim, the total amount was $28,071. The evidence supports a conclusion that the difference between this amount and the amounts actually paid was a future amount, not a past amount.1 On the rehabilitation claim, the total amount was $1,400. There was no evidence of past amounts submitted that remained unpaid. There was evidence that future amounts were claimed.2 The most significant evidence that the verdicts cannot be construed as amounts incurred in the past but unpaid as of the date of the verdict was Plaintiff's own testimony that all of her past bills had been paid, save for one OMT bill in the amount of $80.00. Taking the evidence in the light most favorable to Plaintiff, then, the only amount which Plaintiff could be said to have "recovered" in her suit would be this one bill. However even this is speculation since the jury did not make any distinction between past and future medical expenses.

See Allstate's Response to Plaintiff's Motion to Amend and for Quantification, filed contemporaneously.
2

1

Id. -2-

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Plaintiff's assertion that the amount awarded may represent past amounts because of the holding in Tait v. Hartford, 49 P.3d 337 (Colo. App. 2001) is unfounded. In Tait, the plaintiff had stated in his Notice to Insurer of Amount claimed that he was seeking $14,424.96 plus ongoing essential services amounts. The jury awarded $15,000. Hartford claimed that the verdict should be reduced to the amount claimed, but the court concluded that the award was proper because there was evidence of the ongoing essential services claims sufficient to justify the $15,000 figure. In this case, however, Plaintiff herself testified that only one $80.00 bill remained unpaid. The jury verdict form specifically asked that the jury provide a total of all past and future amounts. As a result, there is no support for a conclusion that the amounts which the jury listed are indeed for expenses incurred and submitted, but not paid. As a result, it is Allstate's position that the most Plaintiff can claim she "recovered" is $80.00, and that amount is insufficient to warrant an award of attorney fees. Additionally, as Plaintiff points out, the question of whether the benefits were paid late is not the measure of any entitlement to attorney fees. Thus, the jury's conclusion that $248.93 was paid late, has no bearing on the determination of Plaintiff's entitlement to attorney fees. Rather, as Plaintiff notes, the question is whether plaintiff successfully recovers the amounts actually claimed. In Adams v. Farmers Ins. Group, 983 P.2d 797 (Colo 1999), cited by Plaintiff in an effort to support her own claim to judgment for fees, the court noted that fees were allowable where the questions posed to the jury demonstrated an entitlement to benefits. In Adams, the questions read in the following format: 1. What is the total amount of medical bills and rehabilitation bills, submitted by Michelle Adams, if any, which you determine are reasonable and necessary and related to treatment received for injuries -3-

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in the automobile accident of April 23, 1992? [Answer:] $5,000.00. . . . 3. What is the total amount of bills for occupational retraining, submitted by Michelle Adams, if any, which you determine is reasonable and appropriate for Michelle Adams and will substantially contribute to rehabilitation, and which is reasonable in relation to its probable rehabilitative effects? [Answer:] $5,000.00. The answers to these questions clearly establish that bills that had been submitted to the insurer. The evidence clearly established that the insurer had not paid them. Thus, there was a clear finding of entitlement to payment. By contrast, plaintiff asked the jury for a finding of the total amount of past and future expenses which Ms. Lau had incurred or will incur during the period of the policy coverage for each category of benefits. Ms. Lau has neither evidence nor specific jury finding to establish that any past amount which the jury found reasonable has not been paid. Ms. Lau has failed to meet her burden of proving that she is entitled to any attorney fees, having failed to establish that she prevailed on any claim for incurred or submitted PIP benefits. C. The PIP statute conditioned a right of recovery of attorney fees upon consideration of any offers of settlement. Allstate made a $10,000 offer of settlement in December of 2004. That figure, adjusted for the interest that would have accrued as of that date, exceeded any claimed recovery regardless of the construction of the jury's verdict and precludes plaintiff's claim for fees. Plaintiff has failed to inform this court of the remaining element it is obligated to consider in addressing whether she is entitled to any award of attorney fees. C.R.S. §10-4-708 (1.7) states that the award of attorney fees may be modified after considering the amount of and the timing of any written settlement offers made by any party, as compared with the amount set forth in the notice of -4-

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amount of benefits claimed. On December 20, 2004, Allstate made a written offer of judgment in the amount of $10,000. As of that date, the interest which would have accrued on the UIM portion of the jury's verdict was as follows: Non- Economic Loss:

3/25/04 to 12/20/04 Economic Loss:

$5,000

3/25/04 to 12/20/04

Principal $852.00

The award to Plaintiff was $5,852.00. Defendant's offer did not include interest, so interest is not added into this calculation. Finally, Defendant disputes several of Plaintiff's statutory costs, and it is unlikely that the amount in costs actually permitted by statute would bring the total to an amount over $10,000. Thus, even if Plaintiff is considered to have "recovered" $2,547.82 in PIP benefits, which Allstate contends is a wholly improper construction of the jury's verdict, this sum, together with the amount recovered on her UIM claims, is only $8,399.82. By proceeding with this case, Plaintiff recovered at least $1,250 less than she would have if she had taken the $10,000 offer at the time it was made. Pursuant to the terms of the statute as written, Plaintiff is not entitled to any award of attorney fees regardless of whether the jury's verdict can be construed as an actual recovery of unpaid PIP benefits. D. Plaintiff has failed to provide sufficient evidence of her attorney fees to permit either the defense or the court to evaluate the reasonableness of the fees or the time claimed to be spent in the pursuit of the PIP claims. Although Allstate does not believe that Plaintiff is entitled to any fees in this matter since the jury's verdict cannot be considered a "recovery" of any PIP benefits and since Allstate's Offer of -5-

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Judgment would have been a more favorable resolution that was achieved at trial, nevertheless, if the court concludes that some award of attorney fees may be allowable, Plaintiff has failed to furnish enough information to permit the court or Allstate to determine what that might be. Plaintiff has submitted only summary affidavits claiming that fees in round numbers were incurred and should be considered to represent a reasonable number of hours at a stated rate. Her motion claims that this total number of hours has bee divided by two (because half of the case involved the UIM claim), and therefore represents a reasonable attorney fee. There is no itemization of the manner in which those hours were spent. Indeed, it does not appear that the fee was calculated from the hours, but rather that the hours were calculated from an estimated fee. For example, Mr. Cordova's affidavit states that his fee was an even number of $13,000 which amounts to 57.78 hours at $225. There is no explanation of how the figure of 57.78 hours could have been recorded, and considering that most attorneys bill in .10 or .25 hour increments, it is likely that it was not, but that the figure of $13,000 was randomly selected. The court, however, is obligated to make a determination upon consideration of a number of specific factors which cannot be assessed on the information provided. The trial court is to determine attorney fees in light of all circumstances for the time and effort reasonably expended. See, Spensieri v. Farmers Alliance Mutual Insurance Co., 804 P.2d 268 (Colo.App.1990). The proper starting point is the calculation of a lodestar amount. This results from multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate. However, the court must also disregard time spent on claims for which fees are not recoverable. In this case, that includes not only the UIM claim, but also the PIP bad faith claims. SeeMartin v. Principal Casualty Ins. Co., 835 P.2d 505; (Colo. App. 1991) Additionally, Plaintiff may not recover for fees billed -6-

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at the rate of an attorney for secretarial or other non professional functions.

See, Husband v.

Colorado Mountain Cellars, Inc., 867 P.2d 57 (Colo.App.1993) and Newport Pacific Capital Co. v. Waste, 878 P.2d 136 (Colo.App.1994). Without an itemized statement of what time Plaintiff's attorneys claim to have spent, and what tasks they claim to have been working on, this analysis cannot be undertaken. Colorado law holds that a party seeking attorney fees bears the burden of proving, by a preponderance of the evidence, his entitlement to the award. Board of County Comm'rs v.

Auslaender, 745 P.2d 999 (Colo. 1987); Little v. Fellman, 837 P.2d 197 (Colo. App. 1991). Allstate therefore requests that if the court concludes that fees may be awarded, Plaintiff be ordered to provide an itemized statement of the attorney's time for which fees are claimed setting forth with reasonable detail the work that was done and the time that is claimed for each task, such that Allstate may challenge these claims on their substance and the court may consider whether the plaintiff has met her burden. Conclusion: Plaintiff has failed to establish any entitlement to an award of attorney fees since the verdict form completed by the jury does not support her contention that she "recovered" any unpaid PIP benefit amounts. Additionally, even if the full amounts claimed by the plaintiff are considered, her judgment would still be less than the amount she would have recovered if she had accepted the offer of judgment made by Allstate in December of 2004. Allstate requests that the court enter an order that the plaintiff is not entitled to any award of attorney fees. In the event that the Court concludes that attorney fees may be awarded, Allstate requests that the plaintiff be ordered to submit an itemized statement of the time spent on the tasks completed so -7-

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that an objective assessment of the reasonableness of those fees can be undertaken. DATED: March 3, 2006 Respectfully submitted, WALBERG, DAGNER & TUCKER, P.C.

By:

/s/Deana R. Dagner Deana R. Dagner Walberg, Dagner & Tucker, P.C. 7400 E Caley Ave Suite 300 Centennial, CO 80111-6714 303-694-9300 ofc 303-694-9370 fax [email protected] Attorneys for Defendant Allstate

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CERTIFICATE OF MAILING I hereby certify that a true copy of the foregoing ALLSTATE'S RESPONSE TO PLAINTIFF'S MOTION FOR ATTORNEYS' FEES PURSUANT TO F.R.C.P. 54(d)(2) WITH RECITATION OF AUTHORITY was placed in the U.S. Mail, with postage prepaid, on March 3, 2006, copies addressed to: Pete Cordova, Esq. P.O. Box 1124 1604 H. Street Salida, CO 81201 Clerk of the Court United States District Court District of Colorado Alfred A. Arraj United States Courthouse 901 19th Street, Room A105 Denver CO 80294-3589

/s/Deana R. Dagner Deana R. Dagner

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