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Gallup Med Flight, LLC v. Phoenix Insurance Co.

United States District Court, D. New Mexico

January 9, 2018

GALLUP MED FLIGHT, LLC, Plaintiff,
v.
PHOENIX INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

         This matter comes before the Court upon Defendant's Motion for Attorneys' Fees, Costs, and Expenses, filed on October 4, 2017. (Doc. 47). Plaintiff's Response was filed on October 18, 2017, and Defendant's Reply was filed on November 1, 2017. (Docs. 48, 49). Upon review of the briefing, exhibits, and relevant law, the Court grants Defendant's Motion for Attorneys' Fees, Costs, and Expenses.

         A. Background

         On September 20, 2017, the Court held a hearing on Plaintiff's First Amended Motion to Dismiss Without Prejudice. (Doc. 39). In that hearing, Plaintiff represented that it had been purchased by Air Medical Group Holdings, Inc. (“AMGH”), and did not know if AMGH would continue to pursue this litigation. On September 21, 2017, the Court entered an Order granting Plaintiff's First Amended Motion to Dismiss Without Prejudice, dismissing Plaintiff's claims without prejudice. (Doc. 45). Additionally, the Court granted Defendant's request for an award of attorney's fees and costs, and required further briefing on the amount of the attorney's fees and costs. In deciding to award attorney's fees and costs, the Court relied on Fed.R.Civ.P. 41(a)(2) and corresponding case law.

         In response to the order for further briefing, Defendant now requests $40, 516.52 in attorneys' fees, including the gross receipts tax, and $30, 718.57 in litigation costs. (Doc. 47) at 2. Plaintiff argues that Defendant's request should be denied for three reasons. (Doc. 48) at 4. First, Plaintiff argues that Defendant improperly removed the case from state court and so this Court lacks subject matter jurisdiction over any part of this case. Id. Second, Plaintiff argues that Defendant's Motion for Leave to File a Sur-Reply to the Motion for Judgment on the Pleadings (Doc. 25) was “improper and a waste of time.” Id. Third, Plaintiff argues that Defendant should not be awarded any expert witness costs or costs for discovery because (1) any expert work or discovery will be useful if there is subsequent litigation, and (2) Defendant did not provide enough information to determine whether the experts' costs were reasonable. Id. at 4-5.

         B. Fees and Costs

         1. Basis for the Award of Attorneys' Fees and Costs

         a. Rule 41(a)(2)

         The Court's basis for awarding fees and costs when granting motions to dismiss without prejudice is grounded in Fed.R.Civ.P. 41(a)(2). The Tenth Circuit is clear that “a district court may seek to reimburse the defendant for his attorney's fees because he faces a risk that the plaintiff will refile the suit and impose duplicative expenses upon him.” AeroTech, Inc. v. Estes, 110 F.3d 1523, 1528 (10th Cir. 1997) (citing Cauley v. Wilson, 754 F.2d 769, 771-72 (7th Cir. 1985). “In awarding reasonable attorney's fees and costs . . . this Court reasoned that costs and fees in preparing federal court filings are rarely de minimis.” Hunt v. Tuls Cattle Co. III, 2017 WL 3207833, at *4 (D.N.M.) (citation omitted). Moreover, an award of costs and fees is not unusual when the Court dismisses claims without prejudice under Fed.R.Civ.P. 41(a)(2). Id.; see also Rippetoe v. Taos Living Ctr., 2013 WL 12138880, at *3 (D.N.M.) (noting that “[o]ther circuits have ruled that such costs should be awarded, especially when the plaintiff plans to refile in state court, and many district courts have ruled accordingly”). Consequently, as the Court previously decided, Rule 41(a)(2) allows the Court to award Defendant attorney's fees and costs in this situation.

         b. Subject Matter Jurisdiction

         Plaintiff, however, argues that fees and costs are not recoverable because Defendant improperly removed the case from state court, and the Court, therefore, does not have subject matter jurisdiction under which to award attorney's fees and costs. Plaintiff argues that removal was improper under either a federal question or diversity jurisdiction theory. Specifically, Plaintiff argues that there was no federal question presented in its Complaint for Debt and Money Due and Breach of Contract (“Complaint”). (Doc. 48) at 5-6. Additionally, Plaintiff argues that diversity jurisdiction does not exist here because the amount-in-controversy requirement was not met. Id. at 6-7. Because the Court finds that it has diversity jurisdiction it need not reach the federal question issue.

         Plaintiff does not dispute that complete diversity under 28 U.S.C. § 1332(a)(1) exists because Plaintiff is a New Mexico resident and Defendant is a resident of Connecticut. See (Doc. 1) at 1; (Doc. 8) at 1, ¶ 1. Rather, Plaintiff argues that there is not an amount-in-controversy exceeding $75, 000. The Court disagrees. The Court notes that it can consider punitive damages as well as compensatory damages in determining the amount-in-controversy. Zozaya v. Standard Ins. Co., 2015 WL 11118066, at *4 (D.N.M.) (“[i]t is well established that punitive damages are included when calculating the amount in controversy.”).

         Plaintiff's Complaint contains three counts, Collection of Debt and Money Due (“Count I”), Breach of Contract (“Count II”), and Breach of Covenant of Good Faith and Fair Dealing (“Count III”). In its prayer for relief, Plaintiff requests compensatory damages in the amount of $44, 930.36, and “[a]ny other interest, damages, or relief available at law or equity.” (Doc. 1-1) at 5. The Court construes the prayer for relief to include a request for punitive damages under any of Plaintiff's claims.

         Under Plaintiff's Count III claim, Plaintiff alleges Defendant acted in bad faith. See (Doc. 1-1) at 4, ¶¶ 31, 32. Defendant cites several cases in which punitive damages were awarded against insurance companies, like Defendant, for claims involving allegations of bad faith. See, e.g., Capstick v. Allstate Ins. Co., 998 F.2d 810, 812, 823 (10th Cir. 1993) (finding jury's $2 million punitive damages award for bad faith reasonable). Moreover, under New Mexico law, punitive damages may be obtained if compensatory damages are awarded and if a jury finds a defendant acted in bad faith. See UJI 13-1827 NMRA (1998) (detailing punitive damages awarded if directly liable party acted in bad faith); UJI 13-1718 NMRA (1998) (detailing punitive damages awarded for insurance company's bad faith actions, reckless disregard of plaintiff's interest, dishonest judgment, or otherwise malicious, willful or wanton action). Thus, the Court considers Plaintiff's allegations of bad faith in its Count III claim to include a claim for punitive damages. The combination of punitive damages and compensatory damages could exceed $75, 000, the amount-in-controversy required under 28 U.S.C. § 1332(a). Therefore, the Court finds that it has subject matter jurisdiction over this case and can award appropriate attorney's fees and costs under Rule 41(a)(2).

         2. Reasonable Attorney's Fees

         “To determine the reasonableness of a fee request, a court must begin by calculating the so-called ‘lodestar amount' of a fee, and a claimant is entitled to the presumption that this lodestar amount reflects a ‘reasonable' fee.” Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998). Courts make the lodestar calculation by multiplying the attorney's reasonable hourly rate by the number of hours the attorney ...


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