Fairfield Homes, Inc. et al v. American Casualty Company of Reading, PA et al

Filing 126

*ORDER granting 112 Motion for Attorney Fees in the amount of $78,417.08; granting 117 Motion to Stay Execution of Judgment by Supersedeas Bond; Clerk to amend Judgment; Granite shall use a disinterested third-party underwriter for the bond, issued for $190,645.84, plus the amount of attorney fees and costs awarded, $78,417.08, and interest. Signed by Judge David C Bury on 5/24/11.(SMBE) Modified to correct typo on amount awarded on 5/25/2011 (SMBE).*

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UNITED STATES DISTRICT COURT

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DISTRICT OF ARIZONA

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Fairfield Homes, Inc., an Arizona corporation, )
Fairfield Green Valley, Inc., an Arizona )
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corporation,
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Plaintiffs,
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v.
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Granite State Insurance Company, a foreign )
corporation; Chartis Specialty Insurance )
Company, formerly American International )
Specialty Lines Insurance Company, a foreign )
corporation; American Casualty Company of )
Reading Pennsylvania, a foreign corporation; )
National Fire Insurance Company of Hartford, )
successor by merger of Transcontinental )
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Insurance Company, a foreign corporation,
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Defendants.
_______________________________________ )

CV 09-360 TUC DCB
ORDER

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Following crossmotions for summary judgment, the Court ruled in favor of Plaintiff

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Fairfield Homes, Inc., (Fairfield) and against Defendant Granite State Insurance Company

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(Granite) and entered Judgment for $190,645.85 for Fairfield on February 14, 2011.

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Subsequently, Plaintiff voluntarily dismissed its bad faith claims, and the Court amended the

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Judgment to add language allowing an interlocutory appeal, pursuant to Fed. R. Civ. P. 54(b).

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The Clerk of the Court entered the Amended Judgment on May 5, 2011.

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On March 14, 2011, Fairfield filed a Motion for an award of attorney fees and costs.

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On April 22, 2011, Granite filed a Notice of Appeal and a Motion to Stay by Supersedeas

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Bond the execution of the Judgment.

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Attorney Fees and Costs

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Under Arizona law, the Court may award the successful party reasonable attorney

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fees in an action arising out of contract. A.R.S. § 12-341.01(A). By affidavit, Fairfield’s

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counsel, Eugene Goldsmith, filed a 40 percent contingency fee agreement between Plaintiffs

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and counsel and filed billing statements for himself and co-counsel Dennis Rosen and Sue

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Ann Welch to reflect the number of hours worked by the attorneys on the case. Based on the

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contingency fee agreement and the damage award the attorney fees total $76,258.34.

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(Motion for Attorney Fees (doc. 112), Ex. 1-B: Contingency Fee Agreement, Ex. 1-A-1, 2:

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Time Sheets, Ex. 1-C: Statement of Costs.) Fairfield also seeks reimbursement of $2,158.74

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in taxable costs. (Reply, Ex. 1: Receipts.)

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The billing sheets reflect that together co-counsel spent approximately 216 hours on

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the case engaged in depositions and briefing a motion for summary judgment, cross-motion

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for summary judgment, motions to strike, and a motion for reconsideration. If the Plaintiffs’

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attorneys had billed by the hour, the attorney fees would have been close to $87,000.

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Consequently, the 40 percent contingency fee of $76,258.34 is reasonable.

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Contrary to Granite’s assertion that the subsidence exclusion at issue in the Granite

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insurance policy was “not novel,” (Response at 5), the Court found that the cases relied on

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by Granite, Miller v. State Farm Fire & Casualty Co., 804 P.2d 822 (Ariz. 1990) and Holy

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Trinity Greek Orthodox Church v. Church Mutual Insurance Co., 2006 U.S. Dist. LEXIS

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266 (Ariz. January 4, 2006), were inapposite, (Reply at 7). There was a substantial body of

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law which had to be researched and reviewed. Granite offered Fairfield $5,000 to settle the

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case for damages in the amount of $190,645.85. The damage amount was undisputed. The

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law suit was necessary to resolve the question of liability. There is no evidence that an

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attorney fee award would cause an extreme hardship on Granite. See LR Civ. 54.2(c)(3)

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(setting out 13 factors for assessing reasonableness).

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The Court finds that under the contingency fee, Fairfield’s attorneys will earn less

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than their regular hourly rates. The 40% contingency fee is especially reasonable in this case

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because given the damages at issue in the case, the Plaintiffs’ attorneys determined that

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“economically the case was not likely to provide for a significant return in relation to the

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work required” to represent the Plaintiffs. (Reply at 10.)
The Court finds Fairfield has established eligibility for an award of fees, and

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entitlement and reasonableness of the fees requested. LR Civ. 54.2(c)(1)-(3).

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Motion to Stay by Supersedeas Bond

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Granite seeks to stay execution of the Judgment, pending the posting of a

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supersedeas bond. Fed. R. Civ. P.62(d). Fairfield objects to the bond being underwritten by

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Granite and asks that the bond be underwritten by a disinterested third-party bonding

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company. Fairfield asks that in addition to covering the attorney fee award, the bond should

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include interest. Granite responds that the bond is being underwritten by National Union,

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which is not a party to this lawsuit and that the bond cannot include interest on an attorney

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fee award because there is no such award entered yet.

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Assuming National Union is not an interested party in Granite, i.e., and is truly a

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disinterested third-party, it may underwrite Granite’s bond. An attorney fee being hereby

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awarded, the bond shall also include interest.

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Accordingly,

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IT IS ORDERED that the Motion for Attorney Fees and Costs (Doc. 112) is

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GRANTED in the amount of $78,417.08.
IT IS FURTHER ORDERED that the Clerk of the Court shall amend the

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Judgement accordingly.
IT IS FURTHER ORDERED that the Motion to Stay Execution of Judgment by

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Supersedeas Bond (Doc. 117) is GRANTED.

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IT IS FURTHER ORDERED that Granite shall use a disinterested third-party

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underwriter for the supersedeas bond, which shall be issued for $190,645.84, plus the amount

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of attorney fees and costs awarded, $78,417.08, and interest.

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DATED this 24th day of May, 2011.

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