Free Response in Support of Motion - District Court of Arizona - Arizona

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40 North Central Avenue Phoenix, Arizona 85004-4429 Facsimile No.: Telephone: (602) 262-5311 Stephen M. Bressler, State Bar No. 09032 Direct Dial: (602) 262-5376 Direct Fax: (602) 734-3742 EMail: [email protected] Scott Bennett, State Bar No. 022350 Direct Dial: (602) 262-5338 Direct Fax: (602) 734-3816 EMail: [email protected] Attorneys for Plaintiff United of Omaha Life Insurance Company

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United of Omaha Life Insurance Company, a ) No. CV 04-0461 PHX-JAT Nebraska corporation, ) ) Plaintiff, ) UNITED OF OMAHA'S REPLY IN SUPPORT OF ITS MOTION FOR ) ATTORNEYS' FEES AND NONvs. ) TAXABLE EXPENSES ) Tanya Edmondson, Debrah Keys, Catholic ) Cemeteries of The Diocese of Phoenix, and ) Falconer Funeral Home, ) ) Defendants. ) ) Ms. Keys's vituperative response illustrates why United's fees and expenses were higher than in a typical, uncontested interpleader action. Rather than simply objecting to specific fees and expenses that she believes are objectionable, as LRCiv 54.2(f) requires, Ms. Keys has devoted a full 16 pages to arguing, among other things, that United had no right to bring the interpleader action in the first place and that she is entitled to interest on the proceeds--both contentions that this Court has already rejected. Ms. Keys refused to accept service of process, declined to allow United to deposit the funds at the outset, filed a counterclaim for breach of contract, and then filed a motion for summary judgment that challenged United's right to bring the interpleader action. These actions drove up United's fees and expenses. Now she contends that United's fees and expenses are too high. These complaints are--at best--disingenuous. This reply will briefly explain why each of Ms. Keys's objections lacks merit.
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This Court has ruled that United properly brought this interpleader action. Although this Court has already concluded that United had a right to bring the

interpleader action, Ms. Keys's response continues to argue this point. She contends, for example, that if United had "distributed to her, at the outset, the $66,000 in insurance proceeds to which the Court found she was entitled, there would have been no need for" this litigation. 1 Ms. Keys's argument overlooks the fact that there were always potentially competing claims to both policies. Ms. Keys was only the contingent beneficiary. To protect itself from liability, United needed this Court to determine the validity of the document produced by Ms. Keys (that substituted her as primary beneficiary four months after Allan Keys's death) and to determine whether the primary beneficiary, Tanya Edmondson, was entitled to the proceeds of either policy. United also needed this Court to sort out the claims of defendants Catholic and Falconer. United had a right to bring the interpleader action. Under Ninth Circuit law, therefore, the company has a right to recover its fees and costs.2 2. This Court has also ruled that United is entitled to its fees and expenses. Ms. Keys next contends that this Court has not yet decided whether to award United its fees and costs. She states: "The Court did not grant an unconditional award of legal fees and costs. The remaining issue is not, as United contends, merely the amount of legal fees which should be awarded, but whether any legal fees and costs should be awarded at all."3 United believes that this Court's order speaks for itself. It states that "IT IS FURTHER ORDERED awarding United of Omaha its reasonable attorneys' fees and costs in an amount to be determined at a later date and paid from the interpled funds."4

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(Response at 3) (emphasis in original); (see also Response at 13). See Schirmer Stevedoring Co., Ltd. v. Seaboard Stevedoring Corp., 306 F.2d 188, 194 (9th Cir. 1962); Gelfren v. Republic Nat'l Life Ins. Co., 680 F.2d 79, 81 (9th Cir. 1982). 3 (Id. at 7) (emphasis in original) 4 (Order dated August 18, 2005, at 12)
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Ms. Keys's argument--that this Court did not award fees and costs--is yet another example of the arguments she has made throughout this litigation that served only to escalate United's fees and expenses. 3. United has satisfied the requirements of LRCiv 54.2. Ms. Keys repeatedly claims that United failed to satisfy LRCiv 54.2. The basis for this argument is unclear. At various points in the response, Ms. Keys contends that United failed to comply with the rule by: · Requesting fees and costs unrelated to the interpleader action.5 This argument relates to the merits of United's request, not its compliance with LRCiv 54.2. · Not detailing--in its motion for fees and costs--every one of this Court's findings. 6 The basis of this complaint is United's discussion of Ms. Keys's motion for summary judgment. She now contends that her motion simply argued that the Court should award her the insurance proceeds. In fact, the motion challenged United's right to bring the interpleader action. · "[O]bfuscat[ing], omit[ting] or distort[ing] material and relevant facts."7 This argument is untrue. The only misstatement in United's motion for fees and costs is its reference to Ms. Keys's motion for summary judgment as a "cross-motion." United concedes that that was not the title of Ms. Keys's pleading. In sum, Ms. Keys has no valid argument about United's compliance with LRCiv 54.2. United has provided this Court with all of the materials that the rule requires, including a detailed itemization of its attorneys' fees and non-taxable expenses. 4. Ms. Keys has mischaracterized her motion for summary judgment. The primary arguments in Ms. Keys's response relate to her motion for summary judgment. She contends that, in its motion for fees and costs, United tried to "cover-up" the fact that the Court awarded her the policy benefits. 8 Ms. Keys also argues that

(Response at 2) (Id. at 3) (Id. at 5) 8 (Id. at 3)
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"United should not receive any attorneys' fees and costs it seeks with respect to Ms. Keys's successful motion for summary judgment."9 Ms. Keys implies that her summary-judgment motion did not challenge United's right to bring the interpleader action, but simply argued that this Court should award her the proceeds. If this were true, then United did not need to contest her motion in order to pursue the interpleader action, and therefore would not be entitled to the fees and costs incurred in drafting the response. But Ms. Keys's argument mischaracterizes the nature of her motion. Although this Court reasonably construed her motion as a request for the insurance proceeds, her motion was actually a challenge to United's right to bring the interpleader action. The following statements from her motion make this clear: · The title is "Motion for summary judgment by defendant Deborah Keys dismissing the complaint for interpleader and permanent injunction."10 · The opening line states that "Defendant DEBRAH KEYS . . . moves for summary judgment to dismiss the complaint herein for interpleader and permanent injunction..."11 · "Plaintiff's interpleader action pursuant to Federal Rule of Civil Procedure 22, must fail."12 · "Tanya Edmonson... was improperly joined as a defendant in this interpleader action under Federal Rule of Civil Procedure 22"13 · "[A]n interpleader against Debrah Keys was inappropriate under Federal Rule of Civil Procedure 22."14 · "[A]n interpleader action with respect to Master Policy No. GLG-XL10 was inappropriate under Federal Rule of Civil Procedure 22."15
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(Id. at 12) (Emphasis added.) 11 (Id. at 1) 12 (Id. at 2) 13 (Id. at 4) 14 (Id. at 6) 15 (Id. at 7)
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· "Plaintiff could not have faced, does not and cannot face the possibility of multiple litigation and multiple liability, as it contends."16 · "[United's] interpleader action was wholly unnecessary."17 The closing line of her motion, moreover, make it clear that she was seeking summary judgment on United's right to bring the interpleader action--not summary judgment on the ultimate issue of who should receive the proceeds: "Defendant Debrah Keys is entitled to summary judgment to dismiss the complaint herein for interpleader and permanent injunction."18 Because Ms. Keys's motion challenged United's right to bring the interpleader, United had to contest the motion as part of bringing the action. United did not take the position that Ms. Keys was not entitled to the funds. It argued, instead, that it could not make that decision without exposing itself to the possibility of multiple liability. In other words, United argued that the interpleader action was proper. This was a necessary part of bringing the action. United is therefore entitled to the fees and costs of responding to Ms. Keys's motion. 5. The specific fees and expenses to which Ms. Keys objects were reasonable and necessary. A. The hourly rates and total fees are reasonable.

Ms. Keys makes several general arguments about the reasonableness of the fees that United has requested. First, she contends that Mr. Stephen Bressler's elimination of duplicative and unnecessary time is irrelevant.19 United submitted an itemization of fees and costs that demonstrated that Mr. Bressler had written off nearly $2,300 in attorney time and approximately $250 in paralegal time. Contrary to Ms. Keys's argument, these write-offs show that Mr. Bressler has made sure that United was not charged for unnecessary work

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(Response at 9) (Id.) 18 (Id. at 10) 19 (Id. at 8)
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Ms. Keys next contends that the fact that United's attorneys provided discounted rates is also irrelevant to the reasonableness of the fees.20 The lead partner on this case, Mr. Bressler, had a standard A rate of $365 at the relevant time, and a standard B rate of $330. In accordance with United's fee agreement with Lewis and Roca, Mr. Bressler charged an hourly rate of only $225 for this matter. This reduction from standard rates is additional evidence that the hourly rates charged to United are reasonable. On a related matter, Ms. Keys contends that "[i]n actuality, neither Mr. Bressler nor the other partner discounted anything. The said $225 rate is a cap rate that Lewis and Roca provides for United of Omaha."21 This argument is difficult to understand. The standard hourly rates of Mr. Bressler and the other partner who worked on the case, Brenden Griffin, are well above $225 per hour. In this matter, however, they charged United only $225. That is obviously a discount. It is also further proof that the hourly rates of United's attorneys were reasonable. Ms. Keys's fundamental objection is that "United's request for attorneys' fees and costs of $18,339.05, against life insurance benefits $66,000, is particularly odoriferous."22 But Ms. Keys herself is responsible for the level of fees and costs. United certainly had no interest in driving up the fees and costs. Neither did United's counsel, who have a busy caseload apart from this matter. To keep down the expense, United requested at the outset that the Court allow it to deposit the funds with the clerk. That would have ended this dispute immediately, minimizing United's expenses. But Keys refused to agree to this. Instead, she filed a counterclaim for breach of contract. She also filed a motion for summary judgment that, contrary to the position she takes in her response, directly challenged United's right to bring the interpleader action. This was in addition to her earlier refusal to accept service of process, which required United's counsel to use Lewis and Roca's in-house

(Id. at 8) (Id. at 14) (emphasis in original) 22 (Id.)
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investigator, Ms. Patti Miller, to attempt to locate Ms. Keys. United then had to assume the expense of serving Ms. Keys by publication. B. The fees and costs between March 11, 2004 and June 29, 2004.

Ms. Keys contends that the charges for attorneys' fees and costs between March 11, 2004 and June 29, 2004 were not related to the interpleader action.23 To the contrary, United's itemization of fees shows that work involved in this time period was: · Preparing the service documents for the interpleader action; · Discussing the case with United's in-house representatives, counsel for defendants Catholic and Falconer, Ms. Keys, and her former counsel; and · Serving Ms. Keys by publication. The other charges for this period relate to counsel's efforts in responding to the complaint that Ms. Keys lodged with the Arizona Department of Insurance. This required counsel for United to brief the DOI on the status of the interpleader action. These charges totaled $90. C. The fees and costs between July 2, 2004 and July 22, 2004.

These entries relate to counsel's efforts in preparing an answer to Ms. Keys's counterclaim and drafting the motion to deposit the funds. The answer was necessary to respond to Ms. Keys's counterclaim for breach of contract. And the motion to deposit was United's attempt to resolve the case quickly and cost-effectively. These fees and costs were thus necessary to the interpleader action.

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(Id. at 9)
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D.

The fees and costs between August 3, 2004 and September 9, 2004.

These entries involve counsel's work in preparing the joint case management plan, and preparing for and attending the Rule 16 scheduling conference. These activities were necessary parts of the interpleader action. E. The fees and costs for United's motion for summary judgment on Keys's counterclaim.

Ms. Keys raises several objections to these amounts. First, she attacks Mr. Bressler's statement in his affidavit that he exercised "billing judgment."24 As discussed above, United's itemization of fees and costs demonstrates that Mr. Bressler wrote off approximately $2,500 of attorney and paralegal time that he did not feel was absolutely necessary. Next, Ms. Keys states that "United has offered nothing to substantiate or corroborate the Westlaw and Lexis charges, or to evidence that they had anything to do with its motion on Ms. Keys's counterclaim."25 As for substantiation, United's counsel have a duty, under both Fed. R. Civ. P. 11 and the Arizona Ethics Rules, to be truthful with this Court in all of their representations--including the itemization they submitted that outlines the Westlaw and Lexis charges. As for evidence that the computer-research charges relate to Ms. Keys's counterclaim, that is found by matching up the dates of the Westlaw charges with the dates of the attorneys' time entries. On September 16, 2004, for example, there are a number of Westlaw charges. On that same date, Scott Bennett is the only attorney who billed time, and his time entry reflects that he "[r]esearch[ed] law of i[nter]pleader (.5)" and "draft[ed] motion for summary judgment on i[nter]pleader claim and Keys's counterclaim for breach of contract (4.1)." Ms. Keys also challenges the $283.50 that United has requested for the work of Ms. Patti Miller.26 Ms. Miller is an in-house paralegal/investigator with Lewis and Roca. She has been in investigation services for approximately 20 years, possesses an Arizona

(Id. at 10) (Id.) 26 (Id. at 11)
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private investigator license (PI 9106006), and has worked for Lewis and Roca for the past 8 years. In May of 2004, because of counsel's difficulty in serving Ms. Keys, counsel asked Ms. Miller to attempt to locate her. Ms. Miller searched the relevant public records far more efficiently than any of the attorneys would have, and at a lower rate. An award of Ms. Miller's fees (under the category of either costs or fees) is just as appropriate as an award of fees for the work of any other paralegal. Ms. Keys's final argument on this point is that it is unreasonable for United to request $22.50 for Mr. Brenden Griffin's August 26, 2004 attempt to contact Ms. Keys.27 United disagrees. Mr. Griffin's billable rate for this matter was $225--which, as discussed above, was reasonable. And United's counsel bill their time in increments of 1/10 of an hour. Mr. Griffin placed a phone call to Ms. Keys. The time for that call was rounded to 1/10 of an hour and multiplied by his hourly rate of $225. F. The fees and costs related to Ms. Keys's motion for summary judgment.

Ms. Keys contends that United is not entitled to the fees and costs involved in responding to her motion for summary judgment. She argues that "United did not disclose in its Memorandum the details of this motion and the fact that it was unsuccessful in defeating Ms. Keys's thereon." Ms. Keys further contends that "[t]he Court did not hold that United should receive attorneys' fees and costs with respect to Ms. Keys's said motion."28 Once again, Ms. Keys has misrepresented her motion for summary judgment. That motion challenged United's right to bring the interpleader action. United's response argued that the interpleader action was appropriate. This Court ultimately decided that United was correct, that it had a right to bring the interpleader action. Ms. Keys is therefore wrong to say that United's response was "unsuccessful." United never argued against this Court awarding the proceeds to Ms. Keys. It argued that it properly brought the interpleader. And this Court agreed.
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(Id. at 11) (Id. at 12)
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6.

This Court should not award interest on the proceeds to Ms. Keys. Ms. Keys has renewed her request for interest on the proceeds of the $40,000

policy under the authority of A.R.S. § 20-462.29 This argument--as this Court has already determined--lacks merit. "United was unable to pay the proceeds because of the uncertainty regarding which beneficiaries had valid claims . . . ."30 7. Conclusion. United's requested fees and non-taxable expenses are reasonable in light of the difficulties that Ms. Keys created. United adequately detailed those fees and costs in the itemization that it submitted with its motion. This Court should therefore award United $12,917.50 in attorney's fees and $5,421.55 in non-taxable expenses, to be deducted from the $66,000 that United deposited with the Clerk of the Court on August 24. RESPECTFULLY SUBMITTED this 7th day of October, 2005. LEWIS AND ROCA LLP

By s/Scott Bennett Stephen M. Bressler Scott Bennett Attorneys for Plaintiff United of Omaha Life Insurance Company

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(Id. at 15) (Order date August 18, 2005, at 11)
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I hereby certify that on October 7, 2005, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: John M. McKindles McKindles Law Firm, P.L.L.C. 1108 East Greenway, Suite 1 Mesa, Arizona 85203 Attorney for Defendant Falconer Funeral Home, Inc. Ronald W. Meyer One Columbus Plaza 3636 North Central Avenue, Suite 700 Phoenix, Arizona 85012 Attorney for Defendant Catholic Cemeteries of the Diocese of Phoenix I hereby certify that on October 7, 2005, I served the attached document via U.S. Mail on the following, who are not registered participants of the CM/ECF System: Barbara H. Katsos Law Offices of Barbara H. Katsos, P.C. 777 Third Avenue, Suite 3200 New York, NY 10017 Attorney for Defendant Keys

s/Jody A. Crain

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