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Sawyer v. Westchester Fire Insurance Company11/20/2002
licy, the measure of damages for a wrongful failure to defend is limited to the costs and attorney fees expended by the insured in defending the underlying action. (Pruyn v. Agricultural Ins. Co., supra, 36 Cal.App.4th 500, 514, fn. 15; Amato v. Mercury Casualty Co., supra, 18 Cal.App.4th at pp. 1793-1794.) St. Paul contends that the attorney fees awarded to the State in the amount of $173,250 for St. Paul's breach of the duty to defend "is doubly excessive because the evidence is insufficient to support both the number of hours and the hourly rate that was apparently applied."
At the bench trial on September 12, 2000 on the issue of the amount of attorney fees incurred by the State, appellants presented the testimony and the timesheets of the State's two in-house lawyers who worked on the underlying actions, Robin Hoff and Corinne Lee (who replaced Mr. Hoff when he left the State's employment). Both lawyers testified that they were only allowed to record their time in hour increments, that they could not record more than eight hours per day to any particular case, and that as a result, the time reflected was less than what they had actually worked. Hoff estimated that his timesheets underestimated his work by at least 20 percent; Lee did not specify a percentage. Hoff's timesheets indicated that he had recorded a total of 334 hours from 1994 to 1997, and that at least five of his timesheets were missing. Lee's timesheets indicated that she had recorded a total of 385 hours in 1997 and 1998. Together, the timesheets reflected that Hoff and Lee recorded a total of 719 hours. Hoff also testified that in his current private practice, he charged $275 per hour, except in family law cases where he charged $200 an hour, and that it was his understanding this was below the market rate. Appellants also presented the testimony of attorney Donald Garrard, whom appellants had previously designated as an expert on bad faith. Upon objection by St. Paul, the trial court ruled that Garrard could not offer any expert opinions, but could testify as a percipient witness. Garrard testified that he represented insurance companies between 1995 and 1997 and his firm charged between $200 and $250 per hour, which was below market for large multi-service downtown law firms. When St. Paul objected to and moved to strike this testimony, the court sustained the objection and stated that it was "accepting the testimony of Mr. Hoff that the reasonable value of the services was $275 an hour." In opposition, St. Paul presented the testimony of its claim manager, Catherine Syhre, in which she stated that the amount St. Paul paid for the defense of MCM in the underlying actions was $69,879.77 at an hourly rate of $125 per partner. She also testified that this was the same rate paid by St. Paul to other attorneys of the same caliber in the Los Angeles area to defend similar cases, and was the rate paid by St. Paul to the State in other construction accident cases during the same period.
The trial court did not provide a breakdown of the $173,250 in attorney fees that it awarded. St. Paul believes the amount reflects a rate of $245 per hour multiplied by 707 hours.
In PCLM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, the California Supreme Court made the following observation regarding the issue of reasonable attorney fees:
"`It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court . . . . [Citations.] The value of legal services performed in a case is a matter in which the trial court has its own expertise. [Citation.] The trial court may make its own determination of the value of the services contrary to, or without the
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