Young v. Mercury Casualty Co.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before the Court are two motions: Defendant Mercury Casualty Company's Motion for Attorneys' Fees, ECF No. 423, and Plaintiff David Brigham Young's Motion for a New Trial Pursuant to Federal Rule of Civil Procedure 59(a), ECF No. 429.

         II. PROCEDURAL BACKGROUND

         This matter arises from a car accident occurring on April 13, 2006. ECF No. 1. At the time of the accident, Plaintiff maintained an insurance policy issued by Defendant. Id. After Defendant refused to provide coverage under the uninsured or underinsured motorist (“UIM”) provision of the policy, Plaintiff sued Defendant to determine the coverage to which Plaintiff was entitled. See id. The matter was resolved by an arbitrator, who concluded that Plaintiff was entitled to the full UIM coverage of $250, 000. Id. An interpleader action was subsequently filed to divide the UIM benefits among multiple claimants and Plaintiff. Id.

         Plaintiff then brought this suit against Defendant on January 19, 2012, alleging two claims: (1) unfair claims practices in violation of Nevada Revised Statute (“NRS”) 686A.310(1)(b), (e), (f), and (n); and (2) bad faith. Id. Both claims were predicated on allegations that Defendant delayed paying the UIM coverage after the point in time at which Defendant's liability to do so became reasonably clear.

         On November 14, 2012, Defendant moved to appoint a guardian ad litem based on Plaintiff requiring a guardian in the first suit. ECF No. 21. Plaintiff opposed the motion. ECF No. 24. Magistrate Judge Peggy Leen canvassed Plaintiff on November 20, 2012 and found him to be competent. ECF No. 26. But Judge Leen deferred ruling on the motion after Defendant represented its intent to withdraw the it. Id. Defendant withdrew the motion via a stipulation on November 29, 2012. ECF Nos. 29, 31 (order granting the stipulation). Nearly one year later, Plaintiff moved to appoint a guardian ad litem, and Defendant opposed. ECF Nos. 83, 86. Magistrate Judge George Foley, Jr. granted the motion on November 21, 2013. ECF No. 98. Robert Ansara was appointed as the guardian ad litem on that same day. ECF No. 99.

         After discovery closed on August 7, 2013, Magistrate Judge Foley reopened discovery on Plaintiff's motion for a limited basis. ECF Nos. 51, 98. The Court then overruled Magistrate Foley in part, reopening discovery for a sixty-day period without the same limitations and allowing Plaintiff to take three additional depositions within the new deadline. ECF No. 112.

         Plaintiff moved to compel certain documents during the extended discovery period. ECF No. 114. Defendant opposed, asserting that the documents were privileged. ECF No. 131. On April 15, 2015, the Court ordered Defendant to submit the documents to the Court for in camera review. ECF No. 133.

         After the extended discovery period closed, the parties both moved for summary judgment. ECF Nos. 146, 148, 149. The Court heard oral argument on the motions on February 4, 2016. ECF No. 173. The Court ultimately denied Defendant's motion and granted Plaintiff's motion in part. ECF Nos. 181, 186, 198, 250. The Court granted judgment in favor of Plaintiff on the claim arising under NRS 686A.310(f)-a portion of Plaintiff's claim under Nevada's Unfair Claims Practices Act (“UCPA”). ECF No. 250.

         The Court later held a pretrial conference spanning from August 8 to August 11, 2016. ECF Nos. 278, 280, 285. A final pretrial conference was held over April 25, 2017 and May 1, 2017. ECF Nos. 358, 388. A nine-day trial began on May 3, 2017 and ended on May 15, 2017. ECF Nos. 410, 418. During trial, Defendant moved for judgment as a matter of law. ECF No. 395. The motion was denied as moot once the jury returned a verdict on May 15, 2017, finding in favor of Defendant on both claims. ECF Nos. 409, 418. Judgment was entered on June 1, 2017. ECF No. 419.

         Plaintiff now moves for a new trial under Rule 59(a). ECF No. 429. Defendant opposed the motion, and Plaintiff replied. ECF Nos. 438, 442.

         Defendant now moves for attorneys' fees based on an offer of judgment extended to and rejected by Plaintiff. ECF No. 423. Plaintiff opposed the motion, and Defendant replied. ECF Nos. 428, 437.

         The Court heard oral argument on both pending motions on April 17, 2018. ECF No. 448. The Court then ordered supplemental briefing to address any attorneys' fees incurred by Plaintiff through the litigation and any resolutions offered by Defendant as an alternative to litigation. Id. The parties filed the supplemental briefs on May 17, 2018. ECF Nos. 451, 452.

         III. FACTUAL BACKGROUND

         The Court reviews its Summary Judgment Order, the trial testimony and exhibits, and the jury instructions.

         a. Order Granting Summary Judgment

         The Court granted summary judgment in Plaintiff's favor in part prior to trial, finding that Defendant violated NRS 686A.310(1)(f). NRS 686A.310(1)(f) provides:

Engaging in any of the following activities is considered to be an unfair practice:

(f) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered.

         In awarding summary judgment in favor of Plaintiff, the Court found that undisputed evidence showed that: Plaintiff demanded the full $250, 000 provided for in the UIM coverage; Defendant denied the claim; and Plaintiff received the full policy limit from Defendant following the arbitrator's ruling. The Court also found that Defendant failed to provide any evidence to show it offered to settle the claim at all, let alone for an amount not substantially less than $250, 000. Thus, the Court found that Defendant violated NRS 686A.310(1)(f). But the Court left the determination of damages to the jury.

         The Court granted summary judgment only as to subsection f; the Court denied summary judgment as to subsections b, e, and n of Plaintiff's UCPA claim and as to Plaintiff's bad faith claim.

         Finally, the Court considered the types of damages that Plaintiff could seek at trial. The Court first ruled that the jury could consider awarding punitive damages for Plaintiff's bad faith claim as well as the UCPA claim in relation to subsections e and f. The Court then ruled that Plaintiff could also recover damages for which Plaintiff could “establish a causal link between [Defendant's] actions with respect to violating the UCPA and the damages he suffered from those actions.” ECF No. 250 at 17. While the Court also allowed Plaintiff to seek attorneys' fees under NRS 18.010, it found that the UCPA “does not serve as a separate vehicle for recovery of attorney's fees.”

         b. Trial Testimony

         Pertinent to the instant Order, four witnesses testified at trial about Plaintiff's attorneys' fees and financial struggles: (1) Matthew Aaron, (2) Marjorie Hauf, (3) Richard Small, and (4) Alfonso Garcia.

         Aaron testified that he began representing Plaintiff approximately two weeks after the accident and continued to represent Plaintiff until the end of 2007. He assisted Plaintiff with the processing of third-party claims and the UIM claim. While Plaintiff retained Aaron on a contingent-fee basis, the retainer allowed Aaron to charge an hourly rate if the representation was terminated prior to the resolution of the UIM claim. Thus, after Plaintiff terminated Aaron, Aaron filed a lien for approximately $33, 000 for his services. Aaron recovered half of his lien through the interpleader. But Aaron never initiated litigation against Defendant on behalf of Plaintiff.

         Hauf testified that she also represented Plaintiff during the time in which Defendant was processing the UIM claim. Plaintiff initially retained Hauf on a contingent-fee basis. However, Plaintiff terminated the representation after only one month. Like the fee agreement between Aaron and Plaintiff, the fee agreement between Hauf and Plaintiff allowed the fees to transform to an hourly basis. After Plaintiff terminated the representation, Hauf filed a lien and reduced the lien to judgment. Hauf did not file litigation on behalf of Plaintiff. She assisted only with the processing of the UIM claim, requesting by letter both the claim file and the claim evaluation. She recovered half of her fees, approximately $4, 000, through the interpleader.

         Small represented Plaintiff in the interpleader after arbitration was resolved in Plaintiff's favor. Small testified that he was owed $15, 000 for his services. He also testified that multiple attorneys made claims for fees through the interpleader. While the interpleader action resulted in an order settling most claims, the order did not detail the work performed by the claimants, the purpose of the fees, or the time at which the fees were incurred. See Exhibit 91. Small clarified that he did not file any litigation against Defendant on behalf of Plaintiff and did not assist Plaintiff in recovering the UIM benefits; he represented Plaintiff only in regard to the division of the UIM benefits among the multiple claimants.

         The fourth witness, Garcia, testified that Plaintiff rented a condominium from him for several years. Prior to the accident, Plaintiff was timely in his payments. But Plaintiff fell approximately ten months behind after the accident, owing Garcia nearly $7, 000. Garcia allowed Plaintiff to remain in the condominium despite the late rental payments due to their existing friendship and Plaintiff's circumstances. Garcia also lent Plaintiff additional funds to cover airline tickets and living expenses after the accident and prior to the interpleader.

         c. Jury Instructions

         The Court instructed the jury on NRS 686A.310(1)(f) through multiple jury instructions, which read as follows:

Mr. Young has also brought four separate claims against Mercury for violations of the Nevada Unfair Insurance Practices Act. You are to consider and decide each of these claimed violations separately from each other.

The Nevada Unfair Insurance Practices Act prohibits any person in the insurance business from engaging in activities which constitute an unfair or deceptive act or practice. In order to establish a claim for breach of the Nevada Unfair Insurance Practices Act, plaintiff must prove by a preponderance of the evidence:

1. That defendant violated a provision of the Nevada Unfair Insurance Practices Act; and 2. The violation was a substantial factor ...