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Lundgren v. Empire Indemnity Insurance Co.

United States District Court, Fifth Circuit

December 12, 2013

LINDA LUNDGREN and FRED LUNDGREN
v.
EMPIRE INDEMNITY INSURANCE COMPANY, ET AL

FINDINGS OF FACT AND CONCLUSIONS OF LAW

JOHN R. FROESCHNER, Magistrate Judge.

This matter is before the Court with the consent of the Parties pursuant to 28 U.S.C. ยง636(b)(1)(c). Having now heard the evidence in a short trial on December 9, 2013, the Court issues its Findings of Fact and Conclusions of Law.

1. In September 2008, the home of Plaintiff, Linda Lundgren, located at 12837 Bermuda Beach Drive in Galveston, Texas, was damaged by Hurricane Ike. At the time, the building was insured under a forced placed policy issued by Empire Indemnity Insurance Company; although offered by Empire, Lundgren did not purchase insurance coverage for the building's contents. Empire adjusted the claim and as of April 2009, it had paid Lundgren about $139, 500.00 in benefits.

2. On June 3, 2009, Lundgren submitted a Proof of Loss to Empire for $254, 000.00 including a claim for contents benefits. Empire denied any additional payment.

3. On September 10, 2010, Lundgren, represented by the Merlin Law Group, filed suit against Empire for breach of contract.

4. On October 6, 2009, the Merlin firm moved to withdraw citing "irreconcilable differences"; the Motion was granted on that same day.

5. On October 2, 2010, after some preliminary communications, Lundgren entered into an "Attorney-Client Contingency Fee Agreement" with Intervenor, Attorney Ronald A. Ortman, for representation against Empire. The contract provided, inter alia, that Ortman "may withdraw... for good cause. Good cause includes... (Lundgren's) refusal... to follow (Ortman's) advise on a material matter, or any other fact or circumstance that would render (Ortman's) continuing representation unlawful or unethical." The contract further provided that if Ortman withdrew, "in the event there is any net recovery obtained by (Lundgren, she) remains obligated to pay (Ortman) for the reasonable value of all services rendered" to the date of withdrawal.

6. On October 14, 2010, Intervenor, Ronald A. Ortman, filed a Motion to Appear Pro Hac Vice for Lundgren, which was granted on October 18, 2010.

7. During his representation, Ortman determined that Lundgren had no legitimate claim for contents coverage and tried to convince Lundgren, whose interests were being handled completely by her husband, Fred Lundgren, to abandon the claim. However, Lundgren continually refused to do so. As a result, Ortman, who viewed the contents claim to be potentially fraudulent, filed a Motion to Withdraw which was granted by the Court on March 29, 2011. Thereafter, Ortman intervened in this cause and filed a counter-claim to protect his interest in attorney's fees. The Court severed and abated Ortman's intervention pending the resolution of Lundgren's claims against Empire.

8. In August 2012, new counsel appeared for Lundgren and on or about September 11, 2013, Lundgren and Empire settled their portion of the case.

9. On October 23, 2013, this Court, following a Hearing in which Ortman was now represented by counsel, Paul LaValle, ordered that $4, 000.00 of the settlement funds be paid into the Registry of the Court as security for Ortman's fees.

10. The Court finds that Ortman had good cause to withdraw as counsel for Lundgren because Lundgren insisted that he continue to urge her claim for contents coverage after Lundgren knew, or should have known, such a claim was baseless and potentially criminal. See Texas Disciplinary Rule 1.15 (A lawyer may withdraw if "the client persists in a course of action involving the lawyer's services that the lawyer reasonably believes may be criminal or fraudulent" or the "client insists upon pursuing an objective... with which the lawyer has fundamental disagreement.") Therefore, pursuant to the contract, Ortman is entitled to recover the reasonable value of all services rendered to the date of his withdrawal.

11. In support of his claim, Ortman simply testified that he "threw myself into the case" and offered, as proof, his 18 page Invoice for the amount of $10, 505.96 in attorney's fees. Unfortunately, the Invoice offers little insight into the value of Ortman's 51.40 hours of alleged work. For example, the Invoice reflects that up to the date of his withdrawal, Ortman had about 210 undescribed or insufficiently described email communications. In fact, the Invoice contains only 22 entries of any substantive work like document review, legal research, legal drafting and expert witness consultation, for a total of only 14.1 hours. At trial, Fred Lundgren testified that very few of the emails from Ortman were "of substance" which, if true, would add some more, but only minimal, substantive work. The Court, therefore, concludes that, at best, the evidence has proven that Ortman is entitled to compensation for 16 hours.

12. Accepting Ortman's billing rate of $200.00 per hour, the Court finds that by use of the required "Lodestar Method" to calculate attorney's fees, the lodestar calculation is $3, 200.00. See Johnson v. ...


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