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In a scathing, 100-page opinion from the U.S. District Court for the Middle District of Pennsylvania, the Court reiterated that the decision whether to assess attorneys’ fees, costs, and interest under the Pennsylvania bad faith statute is completely within the discretion of the trial court. In Clemens v. New York Central Mutual Fire Insurance Company, plaintiff obtained a jury verdict of $100,000 in punitive damage after a five-day trial. The parties had previously settled the UIM claim for $25,000. Plaintiff’s counsel then submitted a petition for attorneys’ fees seeking a whopping $1,122,156.43 in attorneys’ fees, interest and costs. The Court noted that although it may assess attorneys’ fees, costs and interest upon a finding of bad faith, it is not required to do so and the party seeking attorneys’ fees bears the burden of demonstrating the reasonableness of the fees. The Court further noted that the purpose of an attorneys’ fee award under the bad faith statute is to make the successful plaintiff whole by allowing the plaintiff to recoup funds unnecessarily expended to force the insurance company pay what it should have paid under the contract.
The opinion examined counsels’ submitted time logs line-by-line and rejected a vast majority of the entries as vague, excessive, duplicative, unnecessary, and administrative tasks. The Court was especially troubled by plaintiff’s counsel’s admission that contemporaneous time records were not kept in this matter and time logs were reconstructed over a six-year period for the petition, despite counsel’s awareness early in the case that they were likely going to assert a bad faith claim. Additionally, despite five different attorneys and multiple paralegals and IT staff billing time on the matter over that six-year period, the time logs were reconstructed by a single attorney based on her “guess” of the hours spent to perform each task. The reconstructing attorney also admitted that she was not present when many of the tasks were performed and was not even employed by the firm during the first 16 months of the case.
Plaintiff’s counsel alleged they had billed an astounding 562 hours for trial preparation and a total of 2,583 hours on the case. Even giving plaintiff’s counsel the benefit of the doubt, the Court found that approximately 87% of the hours billed by counsel should be disallowed. However, in the end, the Court found that the hours billed were so “outrageously excessive” and “shocked the conscience of the court,” that it exercised its discretion to deny the request for attorneys’ fees in its entirety and referred counsel to the Disciplinary Board of the Supreme Court of Pennsylvania.see all Commercial Litigation articles »
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