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Thomas v. Farmers Insurance Co., Inc.

United States District Court, N.D. Oklahoma

March 27, 2019

LARRY W. THOMAS and JUDITH A.THOMAS, Plaintiffs,
v.
FARMERS INSURANCE COMPANY, INC., Defendant.

          OPINION AND ORDER

          Terence C. Kern, United States District Judge.

         Before the court is the Motion for Attorneys' Fees and Related Nontaxable Expenses (Doc. 157) filed by defendant Farmers Insurance Company, Inc. (“Farmers”). Farmers seeks $344, 447.50 in attorneys fees and related nontaxable expenses in the amount of $35, 933.72.[1]Plaintiffs Larry W. Thomas and Judith A. Thomas oppose the motion.

         I. Background

         Farmers issued to Plaintiffs a homeowners' insurance policy which included an Earthquake Endorsement that provided coverage to their property in Sand Springs, Oklahoma, for “direct physical loss or damage caused by earthquake.” On November 14, 2014, Plaintiffs submitted a claim to Farmers under the Policy, asserting that their residence and personal property were damaged by an earthquake that had occurred two days earlier. Farmers denied the claim on December 23, 2014, because it determined that the alleged damage to the house was caused by settling under the foundation rather than earthquake activity.

         After receiving notice of Farmer's denial of the earthquake claim, Plaintiffs reported a claim for a plumbing leak. In a letter dated January 7, 2015, Farmers concluded the leak was from the hot water tank. As a result, Farmers denied coverage for the slab settling, rusted duct work and clogged drain line. It extended coverage for the cleaning of the duct and plenum, but its estimate for the cleaning fell below Plaintiffs' deductible.

         In March 2015, Plaintiffs hired an engineer and sought a reevaluation of their earthquake claim. By way of a letter dated April 15, 2015, Farmers again denied the claim. On April 8, 2015, Plaintiffs provided additional documents to Farmers. On April 16, 2015, Farmers sent Plaintiffs a letter concerning the plumbing claim, and-based on the additional documents Plaintiffs had provided-determined there was a leak in the drain line running from the utility closet out the side of the home. Farmers extended coverage to access and egress the slab to make the necessary repairs, but concluded the pipe and the settling caused by the leak were excluded from coverage. Farmers issued payment to Plaintiffs in the amount of $5, 365.78 to access and egress the slab to make the necessary repair and reimbursements.

         On July 10, 2015, Plaintiffs reported additional damage and requested reinspection of their home. Michael Young, who performed the reinspection on July 17, 2015, concluded there was additional damage to the dwelling not present during the initial inspection. On August 19, 2015, he notified Plaintiffs that Farmers had concluded “the home suffered earthquake damage to the hot water tank closet slab” and that this was a covered loss under the earthquake endorsement, but the remaining damaged portions of the dwelling were a result of settling. No. payment was made because Farmers' estimate was less than Plaintiffs' deductible.

         Subsequently, Plaintiffs filed suit against Farmers in Tulsa County District Court on November 6, 2015. On January 11, 2016, Farmers removed the case to this Court pursuant to 28 U.S.C. §§ 1332 and 1446. Doc. 2.

         On February 5, 2018, Farmers made a written offer to Plaintiffs for settlement of all claims pursuant to 36 Okla. Stat. §3629 and subject to Fed.R.Evid. 408. The offer was the highest written offer Farmers made to resolve the claims. Plaintiffs rejected the offer.

         Farmers' initial denial of Plaintiffs' earthquake claim, its initial decision that coverage for Plaintiff's water damage loss claim was below the policy deductible, all other claim decisions made after Plaintiffs requested reconsideration, reinspection or consideration of additional documents submitted, were each made within 90 days of the claim submissions, requests or documents submissions. At no time did Farmers fail to offer to settle or reject any of Plaintiffs' claims within ninety days of the receipt of the claim or Plaintiffs' request to reopen such claim.

         Plaintiffs filed suit against Farmers in Tulsa County District Court on November 6, 2015, asserting claims for breach of contract and bad faith and unfair dealing. (Doc. 2). Farmers removed the case to this Court on January 11, 2016. Id. The case was tried to a jury April 9-13, 2018. The jury found in favor the Farmers and against Plaintiffs on both claims, and the Court entered judgment in favor of Farmers. (Docs. 153-154).

         II. Defendant's Motion for Attorneys' Fees

         Within 14 days after the entry of judgment, a prevailing party may file a motion for attorney's fees and related nontaxable expenses. Fed.R.Civ.P. 54(d)(2). The motion must specify the judgment and the statute, rule or other grounds entitling the movant to the award. Id.

         Farmers timely filed its motion, citing 6 O.S. § 3629(B), which permits the prevailing party in an insurance coverage dispute to an award of costs and attorney fee. Farmers seeks attorneys' fees ...


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