Tracey v. American family Mutual Insurance Company, No. 2:2009cv01257 - Document 134 (D. Nev. 2010)

Court Description: ORDER Granting 119 Plaintiff's Motion for Attorney Fees. Plaintiff is awarded $11,825.00 for attorney's fees and pre-judgment interest on fees in the amount of $843.62. IT IS FURTHER ORDERED that Plaintiff is awarded $8, 532.76 for costs and pre-judgment interest on costs in the amount of $608.75. IT IS FURTHER ORDERED that pre-judgment interest on the $150,000.00 awarded as damages is awarded in the amount of $10,701.37. Signed by Judge Gloria M. Navarro on 12/30/10. (Copies have been distributed pursuant to the NEF - EDS)
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Tracey v. American family Mutual Insurance Company Doc. 134 UNITED STATES DISTRICT COURT 1 DISTRICT OF NEVADA 2 3 4 5 6 7 8 9 10 11 ) ) ) Plaintiff, ) vs. ) ) AMERICAN FAMILY MUTUAL ) INSURANCE COMPANY; DOES I through XX; and ROE CORPORATIONS ) ) I through XX, inclusive, ) ) Defendant. SHANE TRACEY, Case No.: 2:09-cv-1257-GMN-PAL ORDER INTRODUCTION 12 Before the Court is Plaintiff’s Motion for Bill of Costs (ECF No. 118) and 13 Attorney’s Fees (ECF No. 119). Defendant filed an Objection to the Bill of Costs (ECF 14 No. 132) as well as a Response to the Motion for Attorney’s Fees (ECF No. 131) on 15 November 5, 2010. Plaintiff filed a Reply (ECF No. 133) on November 15, 2010. 16 17 FACTS AND BACKGROUND This case arose from a breach of contract claim in which Plaintiff Shane Tracey 18 alleged that Defendant American Family Mutual Insurance Company breached a contract 19 and acted in bad faith when Defendant denied Plaintiff’s insurance claim. The matter 20 proceeded to trial before a jury and on October 1, 2010, the jury returned with a verdict in 21 favor of Plaintiff. (Judgment, ECF No. 117). 22 The jury found that Defendant did breach its contract of insurance with Plaintiff 23 and awarded $50,000.00 to the Plaintiff, with interest accruing from May 5, 2009. (Id.). 24 This Court found as a matter of law that Defendant violated NRS 686A.310 (1) (b) and 25 686A.310 (1) (n). (Id.). The jury found that Defendant did additionally violate 686A.310 Page 1 of 20 1 (1) (e) and 686A.310 (1) (f). (Id.). Finally, the jury found that Plaintiff did suffer 2 damages as a result of the violations of NRS 686A.310 and awarded Plaintiff the sum of 3 $150,000.00. (Id.). The jury found that Defendant did not breach the “implied covenant of good faith 4 5 and fair dealing” owed to the Plaintiff. (Id.). The jury did not find that Defendant 6 violated 686A.310 (1) (c). (Id.). Further, the jury did not find by clear and convincing 7 evidence that Defendant acted with malice, oppression, or fraud. (Id.). Plaintiff’s instant 8 motions for attorney’s fees and costs followed. Defendant does not contest Plaintiff’s 9 computation of fees or his detailed description of the work performed but rather disputes 10 whether Plaintiff is actually entitled to fees as a matter of law. (Response 3:23-26, ECF 11 No. 131). DISCUSSION 12 13 14 A. Attorney’s Fees Each party in a lawsuit ordinarily shall bear its own attorney’s fees; this is known 15 as the “American Rule.” Hensley v. Eckerhart, 461 U.S. 424, 429 103S.Ct. 1933, 1937 16 (1983). Federal court may, however, award attorney fees if there is a valid contract that 17 provides for the award, an express statutory authority or rule, or the court awards fees 18 pursuant to its inherent equitable power in the interest of justice. See U.S. v. Standard Oil 19 Co. of California, 603 F.2d 100 (9th Cir. 1979). 20 Federal Rule of Civil Procedure 54 (d) (2) requires that a motion for attorney fees 21 must be made within fourteen (14) days of judgment. Fed. R. Civ. P. 54 (d) (2) (A) (i). 22 The motion must specify the judgment it relates to and the statute, rule, or other grounds 23 entitling the movant to fees. Fed. R. Civ. P. 54 (d) (2) (A) (ii). The Federal Local Rules 24 of Civil Practice are very exacting. Rule 54-16 (b) of the Local Rules for the District of 25 Nevada require a motion for attorney’s fees to include: Page 2 of 20 1 2 3 (1) (2) (3) 4 5 6 7 8 9 10 11 12 (4) A reasonable itemization and description of the work performed; An itemization of all costs sought to be charged as part of the fee award and not otherwise taxable pursuant to LR 54-1 through 54-15; A brief summary of: (A) The results obtained and the amount involved; (B) The time and labor required; (C) The novelty and difficulty of the questions involved; (D) The skill requisite to perform the legal service properly; (E) The preclusion of other employment by the attorney due to acceptance of the case; (F) The customary fee; (G) Whether the fee is fixed or contingent; (H) The time limitations imposed by the client or the circumstances; (I) The experience, reputation, and ability of the attorney(s); (J) The undesirability of the case, if any; (K) The nature and length of the professional relationship with the client; (L) Awards in similar cases; and Such other information as the court may direct. 13 14 15 16 17 18 19 Local R. Civ. Prac. 54-16(b)(1)-(4). Additionally, sections (c)-(d) of the Local Rules further require: (c) Attorney Affidavit. Each motion must be accompanied by an affidavit from the attorney responsible for the billings in the case authenticating the information contained in the motion and confirming that the bill has been reviewed and edited and that the fees and costs charged are reasonable. (d) Failure to provide the information required by LR 54-1 6 (b) and (c) in a motion for attorney’s fees constitutes a consent to the denial of the motion. 20 21 Local R. Civ. Prac. 54-16(c)-(d). 22 1. 23 Where a federal court sits in diversity, as here, it must be determined if state law Legal Authority Allowing Attorney’s Fees 24 or federal law provides the standard to award attorney fees by applying the Erie doctrine. 25 Erie R.R. Co. V. Tompkins, 304 U.S. 64, 58 S.Ct. 817 (1938). The first step in an Erie Page 3 of 20 1 analysis is to determine whether the law involved is procedural or substantive. If the law 2 is procedural, the federal law will apply; if substantive, the court will apply the law of the 3 forum state. Here, the statutes that allow for the recovery of attorney’s fees are considered 4 5 substantive for Erie purposes. Walsh v. Kelly, 203 F.R.D. 597, 598 (D.Nev. 2001) (citing 6 McMahan v. Toto, 356 f.3d 1120, 1132 (11th Cir. 2001); In re Larry’s Apartment, L.L.C., 7 249 F.3d 832 (9th Cir. 2001) (“[A] federal court sitting in diversity applies state law in 8 deciding whether to allow attorney’s fees when those fees are connected to the substance 9 of the case.”). Thus state law of Nevada will be applied to determine if attorney fees can 10 be recovered. Plaintiff argues that under Nevada law he is entitled to recover attorney’s fees as a 11 12 cost of litigation or as compensatory or consequential damages. a) 13 Attorney’s fees as a cost of litigation. In Nevada, attorney’s fees cannot be recovered unless authorized by agreement or 14 15 by statute or rule. Young v. Nevada Title Co., 744 P.2d 902, 905 (Nev. 1987). 16 “Procedurally, when parties seek attorney fees as a cost of litigation, documentary 17 evidence of the fees is presented to the trial court, generally in a post-trial motion.” Sandy 18 Valley Associates v. Sky Ranch Estates Owners Ass’n, 35 P.3d 964, 969 (Nev. 2001), 19 receded from on different grounds by Horgan v. Felton, 170 P.3d 982 (Nev. 2007). 20 Opposing parties have an opportunity to contest the request for attorney fees and the trial 21 court must determine if any agreement, statute or rule authorizes attorney fees. Id. i) 22 Attorney’s Fees pursuant to N.R.S. 18.010 Nevada Revised Statute 18.010 provides for an award of attorney’s fees, as 23 24 follows: 25 /// Page 4 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1. The compensation of an attorney and counselor for his or her services is governed by agreement, express or implied, which is not restrained by law. 2. In addition to the cases where an allowance is authorized by specific statute, the court may make an allowance of attorney’s fees to a prevailing party: (a) When the prevailing party has not recovered more than $20,000; or (b) Without regard to the recovery sought, when the court finds that the claim, counterclaim, cross-claim or third-party complaint or defense of the opposing party was brought or maintained without reasonable ground or to harass the prevailing party. The court shall liberally construe the provisions of this paragraph in favor of awarding attorney’s fees in all appropriate situations. It is the intent of the Legislature that the court award attorney’s fees pursuant to this paragraph and impose sanctions pursuant to Rule 11 of the Nevada Rules of Civil Procedure in all appropriate situations to punish for and deter frivolous or vexatious claims and defenses because such claims and defenses overburden limited judicial resources, hinder the timely resolution of meritorious claims and increase the costs of engaging in business and providing professional services to the public. 15 16 17 N.R.S. 18.010 (emphasis added). Plaintiff recovered more than $20,000; accordingly, it is not proper to award 18 attorney’s fees pursuant to subsection (a) of this statute. However, Plaintiff claims that 19 subsection (b) of this statute authorizes an award of attorney’s fees because Defendant 20 maintained its defense without reasonable ground or to harass. Plaintiff argues that the 21 jury found that Defendant did breach the contract and did violate certain provisions of the 22 Nevada Unfair Claims Practices Act. 23 Defendant correctly points out that the standard for determining whether a party 24 maintained a claim or defense, without reasonable ground is the same as it would be for 25 assessing sanctions pursuant to Fed. R. Civ. P. 11, or in Nevada Nev. R. Civ. .P. 11. See Page 5 of 20 1 Bergmann v. Boyce, 856 P.2d 560 (Nev. 1993). In Bergman, the court compared N.R.S. 2 18.010(2)(b) to sanctions under Rule 11. The court stated that “[t]he trial court must 3 examine the actual circumstances surrounding the case to determine whether the suspect 4 claims were brought without reasonable grounds.” Id. at 676. 5 Therefore, this court must examine the circumstances surrounding this case to 6 determine whether the defenses were maintained without reasonable grounds. In the 7 present case, Plaintiff was the prevailing party on both his breach of contract and NRS 8 686A.310 Unfair Practice claims. Defendant asserts that since the jury did not find that it 9 breached the covenant of implied faith and fair dealing, Defendant’s action to defend 10 itself in the suit was necessarily reasonable. See Amer. Excess Ins. Co. v. MGM Grand 11 Hotels, et al., 729 P.2d 1352 (Nev. 1986) (AEI’s conduct was not unreasonable or in bad 12 faith and thus attorney’s fees were not appropriate under N.R.S. 18.010). 13 However, this Court found as a matter of law, that Defendant violated two sections 14 of N.R.S. 686A.310. During trial Plaintiff moved for a judgment as a matter of law under 15 Fed. R. Civ. P. 50(a)(1) with regard to Plaintiff’s claims under N.R.S. 686A.310. Under 16 the rule, “[i]f a party has been fully heard on an issue during a jury trial and the court 17 finds that a reasonable jury would not have a legally sufficient evidentiary basis to find 18 for the party on that issue, the court may resolve the issue against the party and grant a 19 motion of judgment as a matter of law against the party.” Fed. R. Civ. P. 50(a)(1). 20 Plaintiff moved for judgment as a matter of law after two witnesses who worked for 21 Defendant testified at trial. Based on their testimony the court was able to find as a 22 matter of law that Defendant violated N.R.S. 868A.310 (b) & (n). Defendant did not 23 have any evidence to dispute these findings. Later, after deliberation, the jury also found 24 that Defendant breached its contract with Plaintiff by violating two additional sections of 25 N.R.S. 686.310. Accordingly, the Plaintiff appears to be entitled to a finding that the Page 6 of 20 1 Defendant maintained its defense to the Nevada Unfair Claims Practices Act 2 unreasonably. 3 Nevertheless, looking at the entirety of the suit, Defendant was not unreasonable 4 in maintaining its defense that it did not breach the implied duty of good faith and fair 5 dealing. Had the jury found that Defendant was liable for punitive damages, Plaintiff 6 would have been entitled to attorney’s fees under this statute. In order to prevent any 7 punitive damages that could have been awarded against it, Defendant was required to 8 maintain its defense of the common law bad faith claim as well as the statutory Unfair 9 Practices claim. Therefore, this Court cannot find that Defendant’s defenses were 10 11 frivolous or maintained without reasonable grounds or to harass Plaintiff. ii) Unfair Practices Claim, N.R.S. 686A.310 12 Additionally, Plaintiff claims that N.R.S. 686A.310 permits attorney’s fees. The 13 statute indicates that “an insurer is liable to its insured for any damages sustained by the 14 insured as a result of the commission of any act set forth in subsection 1 as an unfair 15 practice.” N.R.S. 686A.310(2). Plaintiff argues that since the statute provides for “any 16 damages,” then if the insured is compelled to litigate a claim and incur attorney’s fees 17 because the insurer refuses to pay amounts due under the policy, the attorney’s fees 18 incurred by the insured are to be considered damages sustained as a result of the violation 19 of the statute by the insurance carrier. 20 In this case, the jury found that Defendant violated N.R.S. 686A.310(1)(f) by 21 “compelling insureds to institute litigation to recover amounts due under an insurance 22 policy by offering substantially less than the amounts ultimately recovered in actions 23 brought by such insureds, when the insureds have made claims for amounts reasonably 24 similar to the amounts ultimately recovered.” The Nevada statute generally states, “an 25 insurer is liable to its insured for any damages sustained by the insured as a result of the Page 7 of 20 1 commission of any act set forth in subsection 1 as an unfair practice.” N.R.S. 2 686A.310(2). Accordingly, hiring an attorney to recover an amount due would 3 reasonably appear to qualify as a type of damages sustained as a result of violating 4 subsection 1(f). 5 In Clausen v. M/V NEW CARISSA, the Ninth Circuit found that attorney’s fees 6 were a type of damages in the Oregon Oil Spill Act. 339 F.3d 1049 (9th Cir. 2003). 7 However, that statute specifically defined damages as “damages, costs, losses, penalties 8 or attorney fees of any kind for which liability may exist under the laws…” O.R.S. 9 §468B.300(6). The Nevada statute in this case, N.R.S. 686A.310, does not delineate 10 11 attorney fees as an element of damages. Defendant points out that no Nevada case has ever held that a Plaintiff may 12 receive attorney’s fees for a breach of the Nevada Unfair Claims Practices Act. This 13 court, likewise, has failed to find any Nevada case to hold as such. However, recent 14 legislative efforts clarify the issue. A review of the 2009 hearing transcripts related to 15 Assembly Bill 224 demonstrate that the proposed language of the bill was specifically 16 intended to add attorney’s fees to the damages already available under N.R.S. 686A.310. 17 In other words, the legislature did not deem attorney’s fees to be available under the 18 current language without the amendment. Unfortunately for Plaintiff, while AB 224 was 19 approved by the Assembly, it was not considered by the Senate and N.R.S. 686A.310 was 20 never amended to authorize attorney’s fees. 21 22 23 Therefore, Plaintiff has failed to demonstrate that attorney’s fees are a type of damage sustained as a result of litigation available under N.R.S. 686A.310. b) Breach of Contract Damages 24 Finally, Plaintiff argues that he is entitled to compensatory or consequential 25 damages based upon his successful breach of contract claim. The jury did find that Page 8 of 20 1 Defendant breached their contract with Plaintiff, however, their contract did not 2 specifically provide for attorney’s fees. Rather, Plaintiff asserts that since he was forced 3 to litigate his breach claim he should be awarded attorney fees as compensatory or 4 consequential damages. “Compensatory damages are awarded to make the aggrieved 5 party whole and … these damages should place the plaintiff in the position he would 6 have been in had the contract not been breached.” Dalton Properties Inc. v. Jones, 683 7 P.2d 30, 31 (Nev. 1984). 8 9 A party can claim attorney fees as foreseeable damages arising from a breach of contract and such fees are considered special damages. See Sandy Valley Associates at 10 971 (“When attorney fees are alleged as damages, they must be specifically pleaded and 11 proven by competent evidence at trial, just as any other element of damages.” Id.). 12 Furthermore, “when attorney fees are considered as an element of damages, they must be 13 the natural and proximate consequence of the injurious conduct.” Id. at 969. When 14 multiple claims are presented, the party claiming fees as damages must prove fees as to 15 each claim. Id. Moreover, attorney’s fees are “rarely awarded as damages simply 16 because parties have a difficult time demonstrating that the fees were proximately and 17 necessarily caused by the actions of the opposing party and that the fees were a 18 reasonably foreseeable consequence of the breach or conduct.” Id. “Because parties 19 always know lawsuits are possible when disputes arise, the mere fact that a party was 20 forced to file or defend a lawsuit is insufficient to support an award of attorney fees as 21 damages.” Id. at 970. 22 The findings of the jury in the instant case support the kind of rare scenario 23 contemplated such that attorney’s fees should be awarded as special damages. See 24 American Federation of Musicians v. Reno’s Riverside Hotel, Inc., 475 P.2d 220 (Nev. 25 1970) (awarding attorney’s fees as damages because the institution of the litigation was Page 9 of 20 1 due to the activity of the defendant such that the plaintiff had to retain counsel and 2 expend fees to pay for the litigation.) In this case, Plaintiff provided sufficient evidence 3 at trial that it was forced to litigate the matter because Defendant failed to timely pay the 4 policy limits. The jury specifically found that the Defendant breached its contract and 5 found that Plaintiff was compelled to institute the litigation to recover amounts due under 6 the insurance policy under N.R.S. 686A.310 (1) (f). Therefore, the jury found that this 7 litigation was a natural and proximate cause of Defendant’s breach of contract with the 8 Plaintiff. As explained supra to be awarded as damages, attorney fees must be pleaded as 9 10 special damages and need to be litigated at trial. Plaintiff’s Complaint included specific 11 allegations with regard to attorney’s fees. (See Amended Complaint ¶ 61, ECF No. 65). 12 Defendant cannot now argue that since specific evidence of attorney’s fees was not 13 presented at trial Plaintiff is not entitled to them. While settling the jury instructions both 14 parties agreed that it was for the court to determine whether costs and attorney’s fees 15 would be awarded as damages. 1 Thus, Defendant waived any objection to having the 16 court determine attorney’s fees at the close of litigation by agreeing that it was for the 17 18 19 20 21 22 1 The proposed jury instruction read: The following are specific items of damages claimed by Shane Tracey: ... 3. Costs and attorney’s fees necessary to recover the insurance policy benefits. ... To recover for attorney’s fees, Shane Tracey must prove that because of American Family’s breach of the obligation of good faith and fair dealing, it was reasonably necessary for him to hire an attorney to recover the policy benefits. Shane Tracey may recover attorney’s fees he incurred to obtain policy benefits, but not attorney’s fees he incurred for other purposes. 23 Plaintiff’s counsel stated the following about striking the above items from the jury instructions: 24 25 We feel like if there is an award of costs and fees that’s the judge’s discretion after the trial is over. . . I don’t’ think that is something for the jury to award at this point. Defense counsel did not object to this statement and agreed that it should be left up to the judge. Page 10 of 20 1 court and not the jury to determine. Therefore, the Court finds that as a result of the 2 jury’s specific factual finding that section (1) (f) of the Nevada Unfair Claims Practices 3 Act was violated by Defendants, attorney’s fees can be awarded as a matter of law to 4 Plaintiff as proximately and necessarily caused damages incurred as a reasonably 5 foreseeable consequence or result of Defendant’s breach of contract. 6 2. Reasonableness of Attorney’s Fees 7 “The district court has a great deal of discretion in determining the reasonableness 8 of the fee and, as a general rule, [an appellate court] will defer to its determination, 9 including its decision regarding reasonableness of the hours claimed by the prevailing 10 party.” Prison Legal News v. Schwarzenegger, 608 F.3d 446, 453 (9th Cir. 2010)(quoting 11 Gates v. Deukmejian, 987 F.2d 1392, 1398 (9th Cir. 1993)). “This is appropriate in view 12 of the district court’s superior understanding of the litigation and the desirability of 13 avoiding frequent appellate review of what essentially are factual matters.” Prison Legal 14 News, 608 F.3d at 435 (quoting Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 15 76 L.Ed.2d 40 (1983)). 16 Plaintiff seeks an award of attorney’s fees in the amount of $80,000, which is 40% 17 of the $200,000.00 jury award. Plaintiff addressed each item of Local Rule 54-16 in 18 compliance with the rule and demonstrated 312.3 hours of work were performed at the 19 rate of $250.00 per hour. Defendant conceded in its Response that it did not object to the 20 reasonableness of the attorney’s fees. (Response 3:23-26, ECF No. 131). As such, the 21 court finds that the amount requested by Plaintiff is reasonable. However, the Defendant 22 points out that it did eventually tender an offer for the full amount available pursuant to 23 the contract ($50,000.00) in November 2009, therefore any award of attorney’s fees 24 based upon its breach of contract should be limited to only the legal representation 25 provided up to that point in time. The Court agrees. Therefore the Court awards Plaintiff Page 11 of 20 1 fees for 47.3 hours of work done up to November 4, 2009 at a rate of $250.00 per hour. 2 Therefore, Plaintiff is awarded $11,825.00 in attorney’s fees for his breach of contract 3 claim. 4 B. Bill of Costs Fed. R. Civ. P. 54(d) and Local Rule 54-1 provide that the prevailing party shall 5 6 be entitled to reasonable costs. Pursuant to Federal Rule of Civil Procedure 54(d)(1), the 7 Court should allow costs other than attorney fees “as of course to the prevailing party 8 unless the court otherwise directs … .” Rule 54(d)(1) creates a strong presumption in 9 favor of awarding costs to the prevailing party. Miles v. State of Cal., 320 F.3d 986, 988 10 (9th Cir. 2003). “(A) party in whose favor judgment is rendered is generally the 11 prevailing party for purposes of awarding costs under Rule 54(d).” Amarel v. Connell, 12 102 F.3d 1494, 1523 (9th Cir. 1996)(quoting d’Hedouville v. Pioneer Hotel Co., 552 F.2d 13 886, 896 (9th Cir. 1977)). The types of costs that can be taxed in favor of the prevailing party in a federal 14 15 litigation are set by statute in 28 U.S.C. § 1920. Local Rules 54-1 through 54-12 further 16 explain what costs are allowed in this district. The court may not tax costs under Rule 17 54(d) that are not authorized by statute or court rule. Arlington Cent. School Dist. Bd. of 18 Educ. v. Murphy, 548 U.S. 291, 301, 126 S. Ct. 2455, 2461-62 (2006). Once the 19 prevailing party demonstrates the amount of its costs and that they fall within an 20 allowable category and because Rule 54(d) presumes the Court will award costs to the 21 prevailing party, the Court must specify reasons for denying costs. Miles, 320 F.3d at 22 988. 23 Factors that may support denying costs include the losing party’s limited financial 24 resources, the prevailing party’s misconduct, the chilling effect of imposing costs on 25 future civil rights litigants, the difficulty and closeness of the issues, the substance of the Page 12 of 20 1 prevailing party’s recovery, the losing party’s good faith, and whether the case raised 2 issues of national importance. Champion Produce, Inc. v. Ruby Robinson Co., Inc., 342 3 F.3d 1016, 1022 (9th Cir. 2003). The losing party bears the burden of showing why the 4 Court should not award costs. Save Our Valley v. Sound Transit, 335 F.3d 932, 945 (9th 5 Cir. 2003). 6 Local Rule 54-1 provides: 7 (a) . . . Unless otherwise ordered by the court, the prevailing party shall be entitled to reasonable costs. A prevailing party who claims such costs shall serve and file a bill of costs and disbursements on the form provided by the clerk no later than fourteen (14) days after the date of entry of the judgment or decree. 8 9 10 11 12 13 (b) . . . Every bill of costs and disbursements shall be verified and distinctly set forth each item so that its nature can be readily understood. The bill of costs shall state that the items are correct and that the services and disbursements have been actually and necessarily provided and made. An itemization and, where available, documentation of requested costs in all categories must be attached to the bill of costs. 14 15 LR 54-1. Local Rules 54-2 through 52-12 list the items that can be taxed and items that 16 cannot. A party objecting to a bill of costs shall submit its objections within fourteen 17 (14) days after service of the bill of costs. 18 19 20 (a) Any objections to a bill of costs shall be filed and served no later than fourteen (14) days after service of the bill of costs. Such objections shall specify each item to which objection is made and the grounds thereof, and shall include, if appropriate, supporting affidavits or other material. 21 22 23 LR 54-13(a). Plaintiff submitted his Bill of Costs on October 20, 2010. The docket entry set the 24 deadline to object to the Bill of Costs as November 7, 2010. Defendant submitted its 25 objection to the Bill of Costs on November 5, 2010. Therefore, Defendant’s objection is Page 13 of 20 1 timely. Plaintiff seeks a Bill of Costs in the amount of $49,367.33 (as amended) 2 . These 2 3 fees include the following: (1) fees of the clerk: $151.00, (2) fees for service of summons 4 and subpoena: $105.00, (3) fees for transcripts: $6,676.76, (4) fees for witnesses: 5 $33,825.00, (5) fees for exemplification and the costs of making copies of any materials 6 where the copies are necessarily obtained for use in the case: $1,240.00, and (6) other 7 costs: $7,369.57 3 . (ECF No. 118). Defendant objects to Plaintiff’s witness fees and other 8 costs. The Court rules on the costs as follows: 1. 9 Plaintiff requests $151.00 for fees of the clerk. Defendant has not filed an 10 11 Fees of the Clerk objection to this amount. The Court grants Plaintiff’s request for fees of the clerk. 12 2. Fees for Service 13 Plaintiff requests $105.00 for fees for service of summons and subpoena. 14 Defendant has not filed an objection to this amount. The Court grants Plaintiff’s request 15 for fees for service. 16 3. 17 Plaintiff requests $6,676.76 for fees for transcripts. Defendant has not filed an 18 Fees for Transcripts objection to this amount. The Court grants Plaintiff’s request for transcripts. 19 4. 20 Plaintiff requests $33,825.00 for fees for witnesses. Defendant has filed an 21 objection to this amount. As a preliminary matter, it must be decided whether to apply federal law or state 22 23 Fees for Witnesses law when determining how to award witness fees. State law controls the substance of 24 25 2 3 In Plaintiff’s Reply he requests an additional $3,500 as an “other cost” for Dr. Mark Kabins’ trial preparation time. This amount reflects the additional $3,500 bill from Dr. Kabins. Page 14 of 20 1 this lawsuit, but federal law controls the procedure by which the district court oversaw 2 the litigation. See Aceves v. Allstate Ins. Co., 68 F.3d 1160, 1167 (9th Cir. 1995). In 3 Aceves, the court held that federal law should control the reimbursement of expert 4 witnesses in federal courts sitting in diversity jurisdiction as it is a procedural matter. Id. 5 at 1168. The choice of law issue in Aceves was between state and federal expert witness 6 cost provisions. Id. 7 In contrast, the court in Clausen v. M/V NEW CARISSA was faced with a choice 8 between a federal cost provision and a state damages provision. 339 F.3d 1049 (9th Cir. 9 2003). The state damages provision allowed prevailing plaintiffs under the Oregon’s Oil 10 Spill Act to recover “costs of any kind” as one element of its compensatory damages. Id. 11 at 1064. In Clausen, the damages award was deemed to be a substantive issue because 12 “the question of the proper measure of damages is inseparably connected with the right of 13 action.” Id. at 1065. In holding that the Oregon Oil Spill Act’s measure of damages 14 provision trumps Federal Rule §1821(b) under Erie the court awarded expert costs in 15 excess of the statutory maximum allowed under §1821(b). Id. In that case, the district 16 court had found that the broad language of the statute suggests legislative intent to cover 17 litigation expenses including expert witness fees. Id. at 1064-65. 18 A California case, Drumm v. Morningstar, Inc., distinguishes Clausen. 695 19 F.Supp.2d 1014 (N.D.Cal. 2010). The Drumm case involved an unpaid wage claim under 20 California law. Focusing only on costs and not specifically on witness fees, the court 21 held that unlike Oregon’s Oil Spill Act, costs were not included as an element of damages 22 under the California law. Id. at 1027. “Rather, section 218.5 of the California Labor 23 Code simply requires a court to ‘award reasonable attorney’s fees and costs to the 24 prevailing party.’ Since the awarding of costs here is procedural, not substantive, federal 25 law governs.” Id. Page 15 of 20 1 Plaintiff does not dispute that federal law applies in this case since it is a 2 procedural matter. Plaintiff asserts that the court should allow costs other than attorney 3 fees as of course to the prevailing party unless the court otherwise directs under Fed. R. 4 Civ. P. 54(d)(1). Plaintiff only argues that NRS 868A.310 should be construed to award 5 witness fees in the amounts requested by comparing it to the Resource Conservation and 6 Recovery Act (RCRA) , 42 U.S.C. § 6972(a)(1)(B), fee-shifting statute. However for the 7 reasons given supra, the Court does not find that the Nevada Unfair Claims Practices Act 8 is a fee-shifting statute such that damages include attorney fees and costs. 9 In the Supreme Court case of Crawford Fitting Co. v. J.T. Gibbons, Inc., the Court 10 was clear that “[a]bsent explicit statutory or contractual authorization for the taxation of 11 the expenses of a litigant’s witness as costs, federal courts are bound by the limitations 12 set out in 28 U.S.C. § 1821 and § 1920.” 482 U.S. 437,445, 107 S. Ct. 2494, 2499 (1987). 13 The controlling statute in this case, N.R.S. 686A.310(2), nowhere defines damages nor 14 does it address if a litigant’s witness fee is an item to be taxed as a cost under damages. 15 The breadth of the language in Nevada’s Unfair Claims Practices Act, stating that 16 damages are to be awarded, is not as broad as Oregon’s Oil Spill Act which specifically 17 includes the term “costs …of any kind.” Furthermore, statutes that do allow for fee- 18 shifting of attorney’s fees and costs have consistently spelled out with specificity when 19 these fees and costs will be allowed. See Lovell v. Chandler, 303 F.3d 1039 (9th Cir. 20 2002) (dealing with the American with Disabilities Act). Unlike the recognized fee- 21 shifting statutes, N.R.S. 686.310 does not have explicit language declaring that damages 22 include costs and attorney’s fees. “[A]bsent explicit statutory or contractual authorization 23 for the taxation of the expenses of a litigant’s witness as costs, federal courts are bound 24 by the limitations set out in 28 U.S.C. § 1821 and § 1920.” Crawford Fitting Co., 482 25 U.S. 437,445, 107 S. Ct. 2494, 2499 (1987). Therefore, as the controlling Nevada statute Page 16 of 20 1 fails to provide explicit language authorizing the taxation of witness fees as costs, federal 2 procedural law governs the determination of the issue. 3 4 5 6 7 8 9 Federal Local Rule 54-5 allows for the payment with regard to witnesses, and provides in pertinent part: (a) The rate for witness fees, mileage, and subsistence are fixed by statute (see 28 U.S.C. § 1821). . . . Costs may be taxed for each day the witness is necessarily in attendance and are not limited to the actual day the witness testified. . . . ... (c) . . . Fees for expert witnesses are not taxable in a greater amount than statutorily allowable for ordinary witnesses unless authorized by contract or specific statute. 10 11 12 LR 54-5. 28 U.S.C. § 1821 sets the amount to be paid to a witness at $40.00 per day. In his bill of costs, Plaintiff seeks $33,825.00 in witness fees for the various 13 physicians who attended trial. This includes seven witnesses who attended trial for one 14 day and one witness that attended trial for two days. However, under federal law, the 15 recoverable costs for witnesses, both expert and general fact witnesses, are limited to $40 16 per day for the witness’s attendance at trial. 28 U.S.C. § 1821(a)(1) & (b). This amounts 17 to a total of $360 for all the Plaintiff’s witnesses appearing at trial. A court may tax 18 expert witness fees in excess of the limit set by 28 U.S.C. § 1821 only when the witness 19 is court-appointed and essential to the proceedings or the recovery of all witness fees 20 were explicitly authorized by contract. Crawford Fitting Co. 482 U.S. at 445, 107 S.Ct. at 21 2499. Therefore, unless Plaintiff’s contract with the defendant states otherwise, Plaintiff 22 may only recover $360 for his witness fees pursuant to LR 54-5 and 28 U.S.C. § 1821(b). 23 5. 24 Plaintiffs request $1,240.00 for exemplification and the costs of making copies of 25 Fees for Copies any materials where the copies are necessarily obtained for use in the case. Defendant Page 17 of 20 1 has not filed an objection to this amount. The Court grants Plaintiff’s request for copy 2 fees. 3 6. Other Costs 4 Plaintiff requests $7,369.57 for other costs. Defendant has filed an objection to 5 this amount. Defendant objects to the $84.00 for a runner services as well as charges of 6 $750, $600, $200 and $645 for fees to Drs. Dunn and Kabins for their “pre-depo 7 meetings” and “surgical letters.” Plaintiff, in his reply additionally asks for a bill for 8 $3,500.00 for “trial preparation time” submitted by Dr. Kabins. The court may not tax 9 costs under Rule 54(d) that are not authorized by statute or court rule. Arlington Cent. 10 School Dist. Bd. of Educ., 548 U.S. at 301. As explained supra, this amount is not 11 taxable as a witness fee and Plaintiff fails to specify which statute or rule authorizes this 12 amount as a cost and not a witness fee. Without the guiding authority, the strong 13 presumption to award costs disappears and the court will not grant these costs. The total amount of costs awarded is $8,532.76. 14 15 16 C. Pre-Judgment Interest Plaintiff moves for pre-judgment interest on the $150,000.00 awarded as damages 17 for Defendant’s violations of N.R.S. 686A.310, at the statutory interest rate of 5.25%. 18 Plaintiff also motions for pre-judgment interest on costs and attorney’s fees. 19 The general rule is that state law applies in diversity cases in determining whether 20 pre-judgment interest should be awarded. Citicorp Real Estate, Inc. v. Smith, 155 F.3d 21 1097, 1107 (9th Cir. 1998). Thus state law determines the rate of pre-judgment interest 22 in diversity cases. Northrop Corp. v. Triad Intern. Marketing, S.A., 842 F.2d 1154 (9th 23 Cir. 1988). Under NRS 17.130(2), “the judgment draws interest from the time of service 24 of the summons and complaint until satisfied, except for any amount representing future 25 damages.” See Schuette v. Beazer Homes Holdings Corp., 124 P.3d 530 (Nev. 2005). Page 18 of 20 1 Pre-judgment interest may not be awarded on an entire verdict “when it is impossible to 2 determine what part of the verdict represented past damages.” Id. “For example, when a 3 general verdict form does not distinguish between past and present damages, a trial court 4 cannot award pre-judgment interest.” Id. at 549-50. “However, when nothing in the 5 record suggests that future damages were included in the award, pre-judgment interest is 6 proper.” Id. at 550. 7 The jury verdict form in this case does not distinguish between past and present 8 damages. However, the Court finds that there is nothing in the record to suggest that the 9 jury included future damages in the award. The damages award was based on violations 10 of N.R.S. 686A.310 that occurred before judgment when Defendants did not fairly handle 11 plaintiff’s insurance claims. Therefore, the court will award pre-judgment interest on the 12 $150,000.00 awarded as damages for Defendant’s violations of N.R.S. 686A.310, at the 13 statutory interest rate of 5.25%, amounting to $10,701.37. ($150,000.00 x 5.25% = 14 $7,875.00 per year, or $21.575 per day. The Complaint in this matter was served on 15 Defendant on or about June 11, 2009. 6/11/09 through 12/31/09=203 days; 1/1/10 16 through 10/20/10=293 days; 203 days + 293 days = 496 days x $21.575 per day = 17 $10,701.37.) 18 Pre-judgment interest is recoverable on costs, as costs are part of judgment. 19 Gibellini v. Klindt, 885 P.2d 540 (Nev. 1994). Thus the court will grant pre-judgment 20 interest on costs of $8,532.76. Accordingly, pre-judgment interest on costs of $8,532.76 21 amounts to $608.75. ($8,532.76 x 5.25%=$447.9699 per year, or $1.2273 per day x 496 22 days= $608.75.) 23 Pre-judgment interest on attorney’s fees is awarded as an element of damages. 24 Albios v. Horizon Communities, Inc., 132 P.3d 1022 (Nev. 2006). Thus the court will 25 grant pre-judgment interest on attorney’s fees of $11,825.00. Pre-judgment interest on Page 19 of 20 1 attorney’s fees amounts to a total of $843.62. ($11,825.00 x 5.25% =$620.8125 per year, 2 or $1.7009 per day x 496 days=$843.62.) CONCLUSION 3 4 5 6 7 IT IS HEREBY ORDERED that Plaintiff is awarded $11,825.00 for attorney’s fees and pre-judgment interest on fees in the amount of $843.62. IT IS FURTHER ORDERED that Plaintiff is awarded $8,532.76 for costs and prejudgment interest on costs in the amount of $608.75. 8 IT IS FURTHER ORDERED that pre-judgment interest on the $150,000.00 9 awarded as damages by the jury for Defendant’s violation of N.R.S. 686A.310 is awarded 10 11 in the amount of $10,701.37. DATED this 30thday of December, 2010. 12 13 14 ______________________________ Gloria M. Navarro United States District Judge 15 16 17 18 19 20 21 22 23 24 25 Page 20 of 20