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

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JOSEPH C. DOLAN, ESQ. (007376) 1650 North 1st Avenue Phoenix, Arizona 85003 (602) 266-7667 Fax (602) 277-9839 Attorney for Plaintiff IN THE UNITED STATES DISTRICT COURT IN AND FOR DISTRICT OF ARIZONA JERRY SIMMS, a single man, Plaintiff, vs STATE FARM FIRE AND CASUALTY COMPANY, an Illinois corporation; ABC CORPORATIONS I-X; JOHN DOES I-X, Defendants. PLAINTIFF'S REPLY RE: MEMORANDUM IN SUPPORT OF AWARD OF ATTORNEYS FEES AND RELATED NON-TAXABLE EXPENSES CV-03-1415-PHX-ROS

Plaintiff Jerry Simms hereby replies to the issues raised by defendant State Farm in its October 3, 2006 response. The issues fall into three main categories: (1) the amount of attorneys fees to be awarded pursuant to the first fee agreement (30% contingent fee agreement entered on October 2, 2002); (2) entitlement to any attorneys fees pursuant to the September 22, 2006 "postverdict addendum"; and (3) entitlement to recover the fees of "Sanction," the company that assisted plaintiff's counsel at the trial of this matter in the presentation of exhibits ($9,308.00). The issues as to each categories will be addressed in the order set forth above. 1. Award of attorneys fees pursuant to the first fee contract.

Defendant apparently concedes that plaintiff was the prevailing party at the trial of this matter and is entitled to attorneys fees pursuant to A.R.S. § 12-341.01. (See defendant's response, p. 6, ll. 11-13: "Although plaintiff did prevail, to some degree, on his claims of breach of contract and bad faith, he did not prevail on "all relief sought beyond punitive damages.")

Case 2:03-cv-01415-ROS

Document 223

Filed 10/18/2006

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Defendant seems to imply that because the plaintiff received only partial breach of contract damages that this should somehow make some difference. Defendant overlooks that plaintiff received a bad faith verdict which required the plaintiff to bear the burden of proving that State Farm acted unreasonably toward Mr. Simms. Defendant also overlooks the fact that plaintiff received $41,000.00 in contract damages alone notwithstanding the defense counsel's arguments that Mr. Simms was not owed a single penny in damages. Although plaintiff fell short on the punitive damage theory, he proved every other theory of liability and proved his entitlement to contract and bad faith damages. He is thus entitled to all reasonable fees expended on the case. See Schweiger v. China Doll Restaurant, 138 Ariz. 183, 189, 673 P.2d 927,933 (1983) ("Thus, where a party has accomplished the result sought in the litigation, fees should be awarded for time spent even on unsuccessful legal theories." Id.) See also Orfaly, supra, 209 Ariz. At 266-267. Interestingly, if defendant is truly suggesting that only a portion of the fees claimed by plaintiff should be awarded, defendant should have delineated what portion of the Task based itemized statement of fees and expenses submitted by plaintiff counsel as Exhibit 5 to the memorandum is related to "unsuccessful legal theories." Defendant did not do so because defendant truly could not do so. It is true that defendant won a motion for summary judgment on some of the damages claimed by plaintiff for alternate living expenses; however, defendant did not prevail on all such expenses claimed and defendant failed to obtain summary judgment on the "uninhabitability" issue which was a central part of the earlier motion practice. The court found that this issue presented a jury question. Truthfully, defendant cannot create a good faith controversy about plaintiff's entitlement to these fees. What portion of the 605 hours documented in plaintiff's Exhibit 5 should be ignored? If the defendant wants to the court to cut out a number of hours would that still justify denying the plaintiff $42,300.00 in fees? Even if the court pulled out one hundred hours, this would still leave plaintiff counsel getting paid only about $80.00 per hour. It is not clear that State Farm is truly arguing to reduce plaintiff's claim for these reasons, but if it is, it is being unreasonable. William Phillips certainly made multiples of this amount for his work. His payments were not contingent upon recovery. To this day, present counsel has not received one dime for his work on this case.

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

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Defendant mentions two of the factors to be considered by the Court under Associated Indemnity Corp. v Warner, 153 Ariz. 567, 694 P.2d 1181 (1985) (see response at pp. 5-6) but does not argue that plaintiff's attorney fee claim arising from the first fee contract should be reduced because of application of those factors. Rather, defendant argues that the Court should not allow any attorneys fees above and beyond the amounts which would be allowed under the first fee contract. (See response, p. 6, ll. 17-19) ("In accordance with the express statutory language, any award must not exceed the amount agreed to be paid, i.e., 30% of all amounts recovered.") As such, there does not appear to be any argument with regard to plaintiff's entitlement to 30% of $141,000. Accordingly, defendant does not suggest that the court should award less than $42,300 in attorneys fees. Plaintiff would request the Court to note at this point that based upon the uncontroverted task based itemized statement of fees and expenses, at the billing rate of $250.00 per hour, plaintiff would have been entitled to apply for $151,300 in fees based upon the number of hours spent. The number of hours spent on this case, as documented in the itemization, Exhibit 5 to plaintiff's memorandum, is 605. An award of $42,300 for 605 hours of work amounts to an award of $65.00 per hour for the attorney time spent on this case. Plaintiff counsel has been practicing law, focusing on insurance related litigation, since 1982. Plaintiff would be willing to wager that defense counsel in this case billed far more in fees than $42,300. Plaintiff counsel is willing to wager that defense counsel received far more than $65.00 per hour for his efforts in this case. The money he received was not contingent upon his success at trial either. To the extent that State Farm has attempted to get the Court's attention by arguing several of the Associated Indemnity factors, plaintiff offers the following: firstly, with regard to whether this matter "could have been settled," State Farm suggests that the parties could have attended a settlement conference but makes no serious showing that this could have been settled short of trial. State Farm has supplied the Court with no references to any offers whatsoever made by State Farm. That is because State Farm never made any offers to settle in this case. Furthermore, plaintiff did offer to attend a mediation in this matter but merely requested that State Farm and the other defendants in the related construction case bear the costs of the mediator. See Ex. 1 hereto. That is

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

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because plaintiff had attended one mediation in May of 2005 involving the construction side of this case (Simms v McDougall, CV2003-005205) and the settlement conference was fruitless. In light of the fact that State Farm was continuing to argue "non-parties at fault" in the present case, plaintiff did not want to go to another settlement conference without a serious showing of a good faith intent on the part of State Farm. See correspondence attached hereto as Exhibit 1 dated October 3, 2005. ("With regard to the upcoming mediation, Mr. Simms would like to have an agreement that your two companies will pay the cost of mediation. Actually, since Warren Brown will also be involved, it will be your three companies. Please advise on this latter point.") Having never received such an agreement, the mediation never happened. State Farm never made any settlement offers. This Court will also recall that during the trial of this matter, State Farm argued up to the very end that it had already "overcompensated" Jerry Simms for all of the damages that he claimed. As such, it is requested that this Court enter its order awarding at least $42,300 in attorneys fees. 2. Post verdict fee addendum.

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

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State Farm argues that the first fee agreement for 30% of the total amount recovered places a "cap" on any amount that the Court should award to plaintiff in this matter. State Farm does not suggest that the "post verdict addendum" is illegal or unenforceable as between Mr. Simms and his counsel. Rather, State Farm relies on another Arizona District Court decision, Gametech International Inc. v Trend Gaming Systems, LLC, 380 F. Supp. 2d 1084, 1094-95 (D. Ariz. 2005), for the proposition that amended fee agreements for the sole purpose of increasing recovery of attorneys fees must be rejected by the courts. State Farm emphasized the language from the decision which states, "this court will not foist the burden of increased fees upon the losing party post-verdict with the benefit of the prevailing party's 20/20 hindsight." Plaintiff agrees that the decision in Gametech was a good one. The court was reasonable, logical, and within its discretion to enter this finding on the attorney fee issue. In Gametech, the plaintiffs attempted to more than double their allowed fee by changing their fee agreement after the trial.

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Importantly, in Gametech, the original fee agreement did not contain the proviso that is at issue in the present case. In the present case, the first fee agreement expressly stated, "However, in the event any proceedings are had subsequent to verdict or judgment to the trial court, such as a new trial or an appeal or appeals to an appellate court or courts, a new and additional fee agreement will be entered into." The original fee agreement contemplated that the parties may enter a subsequent fee agreement in the event of "any proceedings" subsequent to verdict. Defendant has undeniably instituted proceedings subsequent to the verdict in this matter in an attempt to change the jury's verdict. That effort has failed but caused plaintiff to perform even further legal services. That was not a factor in the Gametech matter. Furthermore, in the present matter, plaintiff is not attempting to re-fashion their original fee agreement as was the situation in Gametech. Plaintiff is simply doing that which the original contract contemplated: a post verdict modification of the contract . Moreover, Plaintiff is only asking for an award of fees incurred after the verdict was rendered in this case. In Gametech the attorneys were attempting to retroactively change the entire fee structure. In sum, Gametech really is inapposite to the present matter. Significantly, plaintiff Simms attempted to avoid incurring a substantial portion of these fees. 22.7 hours were incurred commencing September 18, 2006 simply preparing the itemization of attorneys fees. As such, $5,675 were billed in this matter to prepare the itemization of attorneys fees only because State Farm refused to agree that plaintiff would be entitled to at least 30% of the verdict amount. Plaintiff counsel had several conferences with Attorney Phillips requesting that he agree that plaintiff was entitled to at least $42,300 in attorneys fees. Plaintiff was never able to secure this agreement so was forced to incur these expenses to prove the obvious. State Farm did not act in good faith when it refused to stipulate that plaintiff was entitled to 30% of the final verdict amount. This Court can take judicial notice of the fact that State Farm's lawyer probably billed way more than $42,300 in the defense of this case. State Farm should have told Mr. Phillips that he could enter such an agreement with plaintiff's counsel rather than requiring plaintiff to incur further time and expense in wrapping up this matter.

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

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If the Court awards fees pursuant to the post-verdict addendum, plaintiff will receive $52,675 in attorneys fees. This would break down to $87.07 per hour for the uncontroverted number of hours spent by plaintiff's counsel in this matter. This is not an unreasonable fee for a 25-year plus trial attorney working on a contingent fee. State Farm would probably be correct in its argument if plaintiff was attempting to revamp the entire first agreement so as to allow him to increase his contingent fee recovery under the original contract. Since the guiding principles are "reasonableness" of the attorney fee application and a foundational showing that the client must be liable to the plaintiff's counsel for the amount of fees claimed, this Court would be certainly within its discretion to award $52,675 in fees. 3. Request for fees of trial assistants (Sanction bill).

Plaintiff agrees that Sanction offered technical support rather than legal support during the presentation of the trial of this matter. Plaintiff agrees that the case law suggests that the fees of a legal assistant are awardable only when that assistant assists in legal work. Defendant does not appear to have misstated the case law or the principles guiding the case law. Plaintiff admits that in requesting the fees of "Sanction" plaintiff would be asking for an extension of prior case law regarding the awardability of fees. For these reasons, plaintiff does not suggest that prior case law expressly authorizes the awarding of these fees. This matter is left to the Court's discretion. For the foregoing reasons, plaintiff requests that in addition to the taxable costs set forth in the "bill of costs" plaintiff be awarded $52,675 in attorneys fees and any other amounts which appear to be authorized under Arizona law. RESPECTFULLY SUBMITTED this 18th day of October, 2006.

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

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By

s/Joseph C. Dolan 007376 JOSEPH C. DOLAN, ESQ. 1650 North 1st Avenue Phoenix, Arizona 85003 Attorney for Plaintiff

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CERTIFICATE OF SERVICE I HEREBY CERTIFY that on October 18, 2006, 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: William Phillips, Esq. BROENING OBERG WOODS & WILSON 1122 East Jefferson Phoenix, Arizona 85036 Attorneys for State Farm

I HEREBY CERTIFY that on October 18, 2006 I served the attached document by mailing a copy of the following: Hon. Roslyn Silver United States District Court, Suite 624 401 W. Washington Street Phoenix, Arizona 85003-2158

JOSEPH C. DOLAN

1650 North First Avenue Phoenix, Arizona 85003

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s/Joseph C. Dolan, Esq. 007376 Attorney

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