* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### MAY 12 1998 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

DONNA DAVIS,

Plaintiff-Appellee,

v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellant. No. 97-3355 (D.C. No. 95-CV-4190) (D. Kan.)

ORDER AND JUDGMENT *

Before TACHA , LOGAN , and LUCERO , Circuit Judges.

After examining the briefs and appellate record, th is panel has determined unanimously that oral argument would not materiallyassist the determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The c ase is therefore ordered submitted without oral argument.-2-

Defendant Prudential Property and Casualty Insuranc e Company (Prudential) appeals from the district court’s orde r awarding attorney’s fees to plaintiff Donna M. Davis. We affirm. The underlying facts of this case are set out in ou r unpublished decision on Prudential’s previous appeal, Davis v. Prudential P roperty & Casualty Insurance Company , No. 97-3137, 1998 WL 51734, at *1-*2 (10th Cir. F eb. 2, 1998). In that decision, we affirmed the district court’s order granting Davis summary judgment in her action against Prudential for under insured motorist benefits. See id. at *2, *4. After the district court awarded her s ummary judgment, Davis filed a motion seeking an award of attorney’s fees pursuant to Kan. Stat. Ann. § 40-256, which provides in pertinent part: That in all actions hereafter commenced, in which j udgment is rendered against any insurance company . . . if it appear from the evidence that such company . . . has refused withou t just cause or excuse to pay the full amount of such loss, the cou rt in rendering such judgment shall allow the plaintiff a reasonabl e sum as an attorney’s fee for services in such action, includi ng proceeding on appeal, to be recovered and collected as a part of the costs[.] The district court found that Davis was entitled to attorney’s fees under § 40-256. It concluded that Prudential had not den ied coverage in reliance upon a “good faith legal controversy over liability,” bu t rather had done so in an attempt “to avoid the consequences of its own tacti cal miscalculation.” Davis v. Prudential Property & Cas. Ins. Co. , 985 F. Supp. 1251, 1254 (D. Kan. 1997).-3-

Davis’s right to recover attorney’s fees depends up on state law. See Gobbo Farms & Orchards v. Poole Chem. Co. , 81 F.3d 122, 123 (10th Cir. 1996). Our standard of review, however, is a matter of federal law. “We review a district court’s award of attorney’s fees for abuse of discr etion. The district court’s factual findings are only reversed if clearly erron eous. Legal conclusions and statutory analysis are reviewed de novo.” Parks v. American Warrior, Inc. , 44 F.3d 889, 892 (10th Cir. 1995) (further citation s omitted). In determining the appropriateness of the fee award , we will not revisit those legal and factual conclusions of the districtcourt we upheld in the previous appeal. They are law of the case. See Rohrbaugh v. Celotex Corp. , 53 F.3d 1181, 1183 (10th Cir. 1995) (discussing law of the case d octrine). “[U]nder Kansas law the accepted test for determini ng the existence of ‘just cause or excuse’ for purposes of § 256 is whether the insurance company’s refusal is based upon a bona fide controversy over policy c overage.” Glickman, Inc. v. Home Ins. Co. , 86 F.3d 997, 1002 (10th Cir. 1996) (citing cases) . “Bona fide controversy has been further defined to mean a posi tion which is not frivolous or patently without reasonable foundation.” Id. Prudential asserts that it had a bona fide and reas onable ground for contesting Davis’s claim. Prudential argues that D avis’s failure to give it sixty days’ notice before the order approving her settlem ent with the tortfeasor was-4-

entered, as required by Kan. Stat. Ann. § 40-284(f) , prevented her judgment against the tortfeasor from becoming binding on Pru dential. Because there was no binding judgment, it argues, it was not requiredto pay the underinsured motorist claim. Prudential further asserts that th is issue was one of first impression, thus barring an award of attorney’s fee s. See Garrison v. State Farm Mut. Auto Ins. Co. , 894 P.2d 226, 235 (Kan. Ct. App.), aff’d , 907 P.2d 891 (Kan. 1995); Nicklin v. Harper , 860 P.2d 31, 39-40 (Kan. Ct. App. 1993) (holding attorney’s fee award under § 40-256 is inappropriate where insurance company presents an issue of first impression). In Prudential’s previous appeal, we rejected this argument, and held that Prudential was liable to Davis for underinsured mot orist benefits. We now further determine that the argument did not provide Prudential with a bona fide reason for failing to pay benefits. Although, as P rudential argues, the order approving the settlement was entered before it shou ld have been, this factor is inconsequential in light of the facts and circumsta nces of this case. As detailed in our decision on the previous appeal, Prudential was barred from challenging the settlement agreement, because it had notice of but failed to timely intervene in Davis’s lawsuit against the tortfeasor. See Davis , 1998 WL 51734, at *2. Moreover, Prudential forfeited its right of subrogation by making an improper tender of substitutionary proceeds to itself and Davis. See id. at *3; see generally-5-

Kan. Stat. Ann. § 40-284(f). The premature entry o f the order approving the settlement agreement did not provide it with just c ause or excuse for its failure to pay benefits. We also reject Prudential’s contention that the Kan sas Court of Appeals decision in Dalke v. Allstate Ins. Co. , 935 P.2d 1067 (Kan. Ct. App. 1997), gave it a nonfrivolous basis for denying benefits i n this matter. See Davis , 1998 WL 51734, at *3 (rejecting Dalke argument on the merits). Dalke held that an underinsured motorist who failed to provide any notice to her underinsurance carrier lost her right to obtain benefits pursuant to § 40-284(f), regardless of whether she could show that the insurance company s uffered prejudice from the lack of notice. See Dalke , 935 P.2d at 1072. Dalke was published after Prudential had made its decision to deny benefits and after the parties had submitted their summary judgment materials in this case. Prudential could not have relied upon a good faith interpretation of Dal ke to justify denial of benefits. Moreover, Dalke does not address the circumstances at issue here; in Dalke the insured gave no notice at all to her insurance carr ier, and the carrier did not mismanage its own subrogation rights as Prudential did in this case. Prudential has failed to show that the district cou rt abused its discretion in awarding Davis attorney’s fees. Having determin ed that an attorney’s fee-6-

award was appropriate, we next address Prudential’s arguments concerning the amount of fees awarded. In its order, the districtcourt stated the following: Plaintiff submits statements of services documentin g 163.5 attorney hours and 88.2 law clerk hours. These totals appear somewhat excessive for this case, particularly in light of t he numerous vague entries. Nevertheless, it is clear that plaintiff’ s request for $15,000 is significantly below what the lodestar calculatio n would produce at the number of hours submitted. The court finds it reasonable to award fees for 120 attorney hours rather than the r equested 163.5 attorney hours and 88.2 law clerk hours. At an hou rly rate of $125.00, that still results in an award of $15,000. Appellant’s Supp. App. 641-42. Prudential asserts that the district court abused i ts discretion by failing to apply a lodestar calculation. The calculation of attorney’s fees in a diversity case is determined with reference to state law. See Public Serv. Co. v. Continental Cas. Co. , 26 F.3d 1508, 1520 (10th Cir. 1994); see generall yMangold v. California Pub. Util. Comm’n , 67 F.3d 1470, 1478 (9th Cir. 1995). We have found no Kansas case which applies the lodestar method to calculate the proper amount of attorney’s fees under Kan. Stat. Ann. § 4 0-256. The district court did not abuse its discretion by failing to apply the lo destar calculation. Prudential argues, alternatively, that the districtcourt did apply a lodestar calculation, but did so incorrectly, requiring reve rsal. We disagree. Although the court’s reliance on the number of hours submitted r ather than “the total number of hours reasonably expended,” see Phelps v. Hamilton , 120 F.3d 1126, 1131-7-

(10th Cir. 1997), might require reversal if this we re a case in which the lodestar method were used to arrive at an ultimate figure, t he district court here merely used the lodestar calculation as a gauge of reasona bleness. The district court arrived at a reasonable hourly rate ($125) and a re asonable number of hours on which to base the award (120), thus fulfilling the essential “reasonableness” function of the lodestar calculation. See generall yPennsylvania v. Delaware Valley Citizens’ Council , 478 U.S. 546, 563-66 (1986) (discussing lodestar analysis). Under Kansas law, the issue is whether the award pr ovided “fair and reasonable compensation” to the insured’s attorney. See Evans v. Provident Life & Accident Ins. Co. , 815 P.2d 550, 561 (Kan. 1991). The trial court i s presumed to be an expert in the area of attorney’s fees, and can draw upon this expertise in evaluating their reasonableness. See id. at 562. The party challenging the attorney’s fee award must show that the award is un reasonable. See id. This brings us to Prudential’s final argument, thatthe attorney’s fee award is unreasonable. Prudential points out the distric t court’s comments about excessive hours and vague entries. But Prudential ignores the fact that the district court addressed these concerns by completely elimin ating the 88.2 law clerk hours for which Davis sought payment, and by reducing the number of attorney hours requested by more than twenty-five percent.-8-

Prudential further argues that $15,000 is an extrao rdinary amount of attorney’s fees for what it deems a simple case bas ed on a brief complaint and decided on summary judgment without discovery. Pru dential’s argument is belied by its own summary judgment appendices filed in thi s court, which include over six hundred pages. We conclude that the district c ourt did not abuse its discretion in approving the attorney’s fee award of $15,000. AFFIRMED. Entered for the Court James K. Logan Circuit Judge