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Baughman v. United States Liability Insurance Co.

July 13, 2010

BECKY BAUGHMAN, ET AL., PLAINTIFFS,
v.
UNITED STATES LIABILITY INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Jerome B. Simandle, United States District Judge

OPINION

Presently before the Court is a motion submitted by Plaintiffs Becky and Stephen Baughman for summary judgment on damages for their successful breach of contract claim and for assessment of attorneys fees pursuant to New Jersey Court Rule 4:42-9(a)(6) [Docket Item 26]. Defendant United States Liability Company does not oppose summary judgment on damages, but objects to Plaintiffs' request for attorneys fees, arguing that they should not be imposed in this case and that even if imposed Plaintiffs request an unreasonable amount. For the reasons discussed below, the Court will grant Plaintiffs' motion for summary judgment as to damages in the amount of $82,695 and assess attorneys fees and costs in the amount of $208,748.5.

I. BACKGROUND

This action arose from a dispute regarding insurance coverage for several underlying state court actions arising out of alleged mercury contamination of Kiddie Kollege daycare center that had been owned by Plaintiffs. Defendant had declined to defend or indemnify Plaintiffs in the underlying actions despite their comprehensive general liability ("CGL") policy. In May 2008, Plaintiffs brought suit seeking declaratory judgment declaring that Becky Baughman, Stephen Baughman, and Kiddie Kollege are all insureds under the insurance policy and that Defendant was obligated to defend and indemnify them in the underlying actions, as well as reformation of the insurance policy, and damages for breach of contract, breach of implied duty of good faith and fair dealing, common law fraud, and fraud under the New Jersey Consumer Fraud Act.

Both parties brought motions for summary judgment.*fn1 On November 18, 2009, the Court granted partial summary judgment in favor of Plaintiffs, finding that Defendant was liable to Plaintiffs for breach of contract and ordering Defendant to defend and indemnify Plaintiffs in the underlying state court suits. Baughman v. United States Liab. Ins. Co., 662 F. Supp. 2d 386, 393-400 (D.N.J. 2009). The Court granted partial summary judgment in favor of Defendant on Plaintiffs' claims for breach of implied duty of good faith and fair dealing, common law fraud, reformation, and for violations of the New Jersey Consumer Fraud Act. Id. at 400-01.

Plaintiffs now seek summary judgment on the question of damages and ask the Court to order Defendant to reimburse Plaintiffs for the attorneys fees and costs they incurred defending in the underlying class action suits. Plaintiffs request a total of $82,695. In support of this request Plaintiffs submit the affidavit of Michael Kassak, a partner at White and Williams, LLP, regarding the fees and costs of the underlying defense, along with contemporaneous billing records. (Kassak Certification and Exh. A.) Defendant does not oppose this request for damages, (Def. Opp'n at 2), and this portion of Plaintiffs' damages claim will be awarded in the amount of $82,695.

Plaintiffs also request attorneys fees and costs for pursuing the instant claim for coverage with the law firm Gorman & Gorman, LLC. Plaintiffs ask for a lodestar of $158,477, with $57,947 covering the services of Scott B. Gorman, Esquire, at an hourly rate of $325 for 178.3 hours of work on Plaintiff's successful claims, and $100,530 is sought for the services of Danielle Childs, Esquire, at an hourly rate of $225 for 446.8 hours of work on successful claims.*fn2 The Plaintiffs ask for an enhancement of 100% the lodestar under Rendine v. Pantzer, 661 A.2d 1202 (N.J. 1995) as well as costs in the amount of $1,186, for a total award of fees and costs of $318,140.*fn3

The following chart summarizes the attorneys fees Plaintiffs seek as prevailing parties:

Scott B. Gorman, Esq.Total HoursHours on Successful Claims (a) Breach of contract45.945.9 (b) Block billed (successful and unsuccessful claims)60.748.5 (c) Fee Petition and Motion for Summary Judgment on Damages54.154.1 (d) Unsuccessful Claims65.70.0 (e) Reply Brief on Fee Petition29.829.8 Gorman Total Hours256.2178.3 Gorman Total Fees (x $325 hourly rate) $57,947 Danielle Childs, Esq.Total HoursHours on Successful Claims (a) Breach of contract351.5351.5 (b) Block billed (successful and unsuccessful claimns)104.583.6 (c) Fee Petition10.310.3 (d) Unsuccessful Claims113.00.0 (e) Reply Brief on Fee Petition1.41.4 Childs Total Hours580.7446.8 Childs Total Fees (x $225 hourly rate) $100,530 Total Lodestar with Enhancement of 100% $316,954 Costs $1,186 TOTAL FEES AND COSTS $318,140

Mr. Gorman has been a practicing attorney for over twenty-nine years, twenty of which have been almost exclusively devoted to handling breach of contract claims, with a heavy focus on the insurance industry. (Gorman Aff. ¶ 4.) Ms. Childs has practiced law for over sixteen years, and has spent the past thirteen years with Gorman & Gorman devoting her time to legal research and writing on contract disputes, with a heavy focus on the insurance industry. (Id. ¶ 5.) On June 1, 2007, Plaintiffs entered into a contingency fee agreement with Gorman & Gorman which states that "The Attorneys will be compensated for services rendered only if recovery is actually obtained for the Clients." (Gorman Aff. ¶ 9; Becky Baughman Certification Exh. A.) Gorman & Gorman has not billed, and will not bill, Plaintiffs for their services. (Gorman Aff. ¶ 10; Becky Baughman Certification ¶¶ 3-4.)

Mr. Gorman and Ms. Childs spent approximately one year gathering facts, performing legal research, preparing a demand letter to Defendant, preparing for litigation, and filing suit. (Gorman Aff. ¶¶ 12-13.) After initiation of the suit, the parties engaged in discovery, including requests for production of documents, exchange of interrogatories, and one deposition. (Gorman Aff. ¶ 14; Wynne ¶ 7.) Finally, Plaintiffs' attorneys worked on the motion practice both for their own motion for partial summary judgment and in opposition to Defendant's motion for summary judgment. (Gorman Aff. ¶ 14.)

In addition to Mr. Gorman's affidavit, and in further support of their request for fees, Plaintiffs offer the following evidence:

* Two affidavits from attorney Seth v.d.H. Cooley, Esquire, a partner at the law firm Duane Morris, LLP, certifying that the requested hourly rates for Mr. Gorman and Ms. Childs are "within the prevailing rates charged by attorneys with reasonably comparable skill, experience, and reputation" in southern New Jersey for environmental insurance coverage claims. (Cooley Certification ¶¶ 4-5; Cooley Supp. Certification ¶ 5.)

* Details regarding the date, number of hours, and type of work Mr. Gorman and Ms. Childs performed for Plaintiffs on this action. (Gorman Aff. Exhs. A-G; Gorman Supp. Aff. Exhs. K-L.)

* A sampling of contemporaneous time slips. (Gorman Aff. Exh. M; Childs Certification Exh. A.)

* A copy of Plaintiffs' contingency fee retainer agreement with Gorman & Gorman. (Becky Baughman Certification Exh. A.)

* A copy of Mr. Gorman's fourteen page demand letter to Defendant. (Gorman Supp. Aff. Exh. P.)

In opposition, Defendant submit a certification from defense counsel Lila Wynne, Esquire, as well as an e-mail exchange between Ms. Wynne and Mr. Gorman in which Mr. Gorman stated that no invoices were prepared because ...


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