5 Fla. L. Weekly Supp. 825b

Attorney’s fees — Insurance — Liability — Insured entitled to recover reasonable attorney’s fees incurred in defense of litigation arising from its installation of pipeline and for amounts it paid in settlement of claims arising out of pipeline installation — Insured entitled to prejudgment interest from actual dates of payment rather than from date predecessor judge entered partial summary judgment with respect to insured’s entitlement to fees and costs — Insured entitled to recover policy limits for personal injury liability and property damage, with credit for amount already paid — Insured not entitled to completed operations coverage in view of predecessor judge’s ruling that insured failed to present evidence sufficient to prove an “occurrence” within completed operations policy period as that term is defined within policy

THE HARDAWAY COMPANY, f/b/o WRIGHT CONTRACTING COMPANY, individually and as a joint venture known as WRIGHT-HOWARD-SMITH, Plaintiff, vs. THE FIDELITY & CASUALTY COMPANY OF NEW YORK and UNITED STATES FIRE INSURANCE COMPANY, Defendants. 13th Judicial Circuit in and for Hillsborough County, Civil Division. Case No. 94-02453-“F”. July 17, 1998. Gregory P. Holder, Judge. Counsel: Thomas J. Roehn, Annis, Mitchell, Cockey, Edwards & Roehn, Tampa, FL; and Geoffrey Johnson, Lewis & McKenna, Saddle River, NJ, for Plaintiff. Anthony J. Russo, Butler, Burnette & Pappas, Tampa, FL, for Defendant.

ORDER CONTAINING FINDINGS OF FACT AND CONCLUSIONS OF LAW FROM NON-JURY TRIAL ON THE ISSUE OF DAMAGES

This cause came before the Court on April 6, 7, and 8, 1998, for trial without jury on the issue of damages.¹ This non-jury trial, conducted over three days, concerned only the quantum of damages to which HARDAWAY is entitled against FIDELITY. The February 27, 1997, summary judgment order of liability in favor of HARDAWAY issued by Judge Robert H. Bonanno (referenced below) is currently on appeal to the Second District Court of Appeal, which stays the entry of any verdict or Final Judgment in this cause. The Court received extensive testimony and documentary evidence from both the Plaintiff, THE HARDAWAY COMPANY, f/b/o WRIGHT CONTRACTING COMPANY, individually and as a joint venture known as WRIGHT-HOWARD-SMITH (hereinafter collectively referred to as “HARDAWAY”), and the Defendant, FIDELITY & CASUALTY COMPANY OF NEW YORK, INC. (hereinafter collectively referred to as “FIDELITY”). HARDAWAY presented testimony of its representative, Fred Dodelin, and its former corporate counsel, John Springer. In addition, HARDAWAY presented testimony from past and current attorneys for the Plaintiff, John Rains, Geoffrey Johnson, Paul Lewis, Donald Cox, Mark Fisher and Richard Earle, as well as from attorneys Benjamin Hill and Donald Conn, and Koni Manley, Director of Finance and records custodian of the West Coast Regional Water Supply Authority and by deposition, Mr. Paul Mastroianni, Director of Finance and Assistant Treasurer of ITT. HARDAWAY also presented the expert witness testimony of attorneys Michael F. Nuechterlien and Elvin Phillips relative to the legal services received and paid for by HARDAWAY, as well as the results obtained. FIDELITY presented testimony from two attorneys testifying as attorney fee experts, Linda Griffith, and Oscar Blasingame.

HARDAWAY is the successor corporation to Wright Contracting Co. Wright Contracting Co. and Wright-Howard-Smith were insureds under a policy of liability insurance issued by FIDELITY. HARDAWAY was originally sued in West Coast Regional Water Supply Authority v. Wright Contracting, et al., Case No. 88-5627-15, in the Circuit Court for Pinellas County, Florida, for breach of contract and negligence related to the installation of the Cypress Creek pipeline in Pinellas County. (hereinafter referred to as the “Pipeline Litigation”). The Plaintiff in the Pipeline Litigation sought damages against HARDAWAY and other Defendants in excess of $35,000,000. HARDAWAY tendered its defense of the action to FIDELITY, as well as to UNITED STATES FIRE INSURANCE COMPANY, both of which denied coverage. A final summary judgment in favor of the Defendant, UNITED STATES FIRE INSURANCE COMPANY, granted on December 27, 1996, eliminated that Defendant from these proceedings.

After approximately eight years of litigation with the Water Authority, HARDAWAY favorably settled the Pipeline Litigation for the sum of $850,000, and sued FIDELITY in this cause to recover its attorney fees and costs incurred in the Pipeline Litigation. HARDAWAY’s claims in this case include fees and expenses paid to the following five law firms:

Lewis & McKenna – Saddle River, New Jersey

Fowler, White, Gillen, Boggs and Villareal – Tampa, Florida

Annis, Mitchell, Cockey, Edwards & Roehn – Tampa, Florida

Earle & Earle – St. Petersburg, Florida

Schiff, Hardin & Waite – Chicago, Illinois

In addition to these fees, HARDAWAY seeks to recover the expenses of expert witnesses and related litigation costs from the Pipeline Litigation. Finally, HARDAWAY seeks to recover $500,000 in indemnity payments under the personal injury liability section its policy of insurance with FIDELITY, $100,000 in property damage liability coverage, and $100,000 in completed operations coverage. HARDAWAY has paid, or incurred liability in the amount of $850,000 to the Water Authority to settle the underlying case.

FIDELITY defended against the claims of HARDAWAY on the following four grounds, and generally stated:

First, that a certain portion of the payments to the law firms were made by entities other than HARDAWAY, specifically the Cigna Insurance Company, the ITT Corporation, and the Paul N. Howard Company. FIDELITY argued that HARDAWAY was not entitled to recoup the amounts paid by these three entities.

Second, FIDELITY argued that prejudgment interest on any amounts awarded must be calculated from the date of Judge Bonanno’s February 27, 1997 order of partial summary judgment, and not from the date of payment as claimed by HARDAWAY.

Third, FIDELITY argued that not all the fees incurred and paid were reasonable, and that some were unproven, unnecessary or redundant and therefore not payable under the case of Florida Patients Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985).

Fourth, FIDELITY argued that there was no proof of an “occurrence” as that term is used in the insurance policy, during the period of completed operations.

This Court, having reviewed the record evidence, as well as the legal authorities cited by counsel, and heard argument of counsel, makes the following findings of fact and conclusions of law:

LAW OF THE CASE

1. On October 28, 1996, this Court through the predecessor judge, Judge Robert H. Bonanno, entered a partial summary judgment order on the issue of applicable law. Judge Bonanno ruled that the Court would apply Georgia law in construing the terms, conditions, and provisions of FIDELITY’s insurance policy at issue in this litigation. (attached hereto as Exhibit “A”).

2. On February 27, 1997, Judge Bonanno granted HARDAWAY’s motion for summary judgment against FIDELITY, adjudicating FIDELITY liable to HARDAWAY. Judge Bonanno ruled that HARDAWAY was entitled to both coverage and a defense under FIDELITY’s policy issued to HARDAWAY for claims made against HARDAWAY by West Coast Regional Water Supply Authority in the Pipeline Litigation. (attached hereto as Exhibit “B”).

3. On May 23, 1997, Judge Bonanno issued an order denying FIDELITY’s motion to set aside or reconsider and clarify the February 27, 1997 order granting HARDAWAY’s motion for summary judgment against FIDELITY. (attached hereto as Exhibit “C”).

4. On November 20, 1997, Judge Bonanno issued an order in this cause addressing a number of issues. He granted FIDELITY’s motion to continue the case from the week of January 20, 1998, and rescheduled it for the week of March 23, 1998. Judge Bonanno also ruled that Florida law applies to the remedies available to HARDAWAY, and that the measure of damages available to HARDAWAY was its reasonable attorney fees incurred in the defense of the Pipeline Litigation. In addition, Judge Bonanno ruled that the policy limit available under FIDELITY’s insurance policy to HARDAWAY was $600,000. Further, Judge Bonanno ruled that FIDELITY could not challenge at trial the claims for reimbursements of the sums paid by HARDAWAY to the Water Authority for settlement of the Pipeline Litigation on the grounds that those liabilities were not covered by the subject policies. Finally, Judge Bonanno ruled that FIDELITY could not challenge at trial HARDAWAY’s claim for reimbursement for fees that the Plaintiff has expended for fees in various bankruptcy proceedings. (attached hereto as Exhibit “D”).

5. FIDELITY was precluded by Judge Bonanno’s November 20, 1997, order from arguing that it was not liable for the fees incurred by HARDAWAY related to a bankruptcy proceeding in the Northern District of Illinois where HARDAWAY is pursuing the assets of a co-defendant in the underlying action. FIDELITY submitted a written proffer to the Court of evidence it sought to introduce on this point which was received by the Court without further objection from HARDAWAY.

6. FIDELITY was likewise precluded from arguing, pursuant to Judge Bonanno’s November 20, 1997 order, that it was not liable to indemnify HARDAWAY up to its policy limits, $500,000 for personal injury liability, $100,000 for property damage liability, and $100,000 for completed operations. FIDELITY submitted a written proffer to the Court of evidence it sought to introduce on this point, which was received by the Court without further objection from HARDAWAY.

ANALYSIS

Both HARDAWAY and FIDELITY have stipulated in their April 17, 1998, “Stipulation Concerning Evidence Submitted to the Court” (hereinafter referred to as the “Stipulation”) that the chart attached to the Stipulation as Exhibit A, prepared by the Plaintiff, contains the most accurate summary of the number of hours actually expended and billed for by each time biller, i.e., attorney or paralegal, in the underlying case, and that this chart is the most accurate summary of the records regarding the hourly rates actually charged. (attached hereto as Exhibit “E”). The Court accepts and adopts the Stipulation and finds that this data summary is legally sufficient to perform the analysis required by Florida Patients Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985), and Rule 4-1.5 of the Rules of Professional Conduct of the Rules Regulating the Florida Bar. (hereinafter referred to as the “Rule”). The total monetary expenditure for legal services in the Pipeline Litigation by HARDAWAY and the constituent members of the joint venture as well as ITT Corporation, less the sums paid by the Cigna Insurance Company which are not recoverable, is $3,157,842.87. Interest on these sums from the individual dates of payment of the individual invoices through December 31, 1997, is $1,323,696.68. These findings, as stipulated by and between the parties within the Stipulation, are summarized in Chart A, below.

CHART A

                                     Interest from

                                     Date of payment

                      Expense        Through 12/31/97       Total

 Total Expenditure    $4,019,012.30  $1,694,006.00          $5,713,018.30

 (Fees & Costs)

 Less:

  Paid by Cigna         (687,153.07)   (357,920.82)          1,045,073.89

  Declaratory Action    (174,016.36)    (12,388.50)           (186,404.86)

 TOTAL:               $3,157,842.87  $1,323,696.88          $4,481,539.55

                                     Interest from          Total Payment

                     Payments        Date of Payment        Plus Interest

                       Made          Through 12/31/97       through 12/31/97

 The Hardaway Co.     $2,740,212.15  $ 986,901.80           $3,727,113.75

 Paul N. Howard Co.      308,475.88    259,473.66              567,949.54

 ITT Corporation         109,154.84     77,321.42              186,476.26

 TOTAL:               $3,157,842.87 $1,323,696.88           $4,481,539.55

The Pipeline Litigation involved protracted litigation over an eight-year time period involving five different law firms and multiple lawsuits. This Court accepts the characterization of the Pipeline Litigation as “scorched earth” litigation received through the testimony of virtually every witness in this cause. There are in excess of 10,000 time entries, 4,000 pages of billing records, and approximately 1,000 time billers whose fees must be assessed. Both parties and this Court have struggled, previous to the Stipulation, to define the universe of fees and rates actually charged over the years by the various firms to use as a starting point in this Rowe analysis.

Rowe requires that, as a first step, the Court determine the number of hours reasonably expended on the litigation. Id. at 1150. The second step requires this Court to determine a reasonable hourly rate for the services of the attorneys. Id. At trial, FIDELITY did not contest the reasonableness of the hourly rates actually charged by the individual billers. Therefore, the only issue before this Court is the determination of the number of hours reasonably expended and, therefore, recoverable, from the Pipeline Litigation.

In Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), cited in Rowe, the Federal Court, applying Georgia law, set forth the following guidelines to determine the reasonableness of attorney fees:

1) The time and labor required for litigation.

2) The novelty and difficulty of the questions present in the litigation.

3) The skill required to perform the legal services properly, including the Court’s observation of the attorney’s work product, preparation, and general ability before the Court.

4) A consideration of otherwise available business which is foreclosed because of conflicts of interest which occur from the representation of the case.

5) The customary fee for similar work in the community.

6) Whether the fee quoted to the client is fixed or contingent to demonstrate the attorney’s fee expectations when he or she accepted the case.

7) Time limitations imposed by the client or the circumstances that delay the lawyer’s other legal work.

8) The amount involved in the litigation and the results obtained.

9) The experience, reputation, and ability of the attorneys involved in the litigation.

10) The undesirability of the case.

11) The nature and length of the professional relationship with the client. A lawyer in private practice may vary his or her fee for similar work in the light of the professional relationship of the client with his office.

12) Awards made in similar litigation within and without the Court’s circuit.

Considering the factors set forth in Johnson, and cited by the Florida Supreme Court in Rowe, this Court finds that the fees and costs actually charged by HARDAWAY’s various attorneys and other legal professionals and set forth within the Stipulation, were reasonable, and therefore, must be awarded to HARDAWAY. As stated by the Fourth District Court of Appeal in the case of City of Boca Raton v. Faith Baptist Church of Boca Raton, 423 So. 2d 1021, 1022 (Fla. 4th DCA 1982), “reliance on generally prevailing market rates for attorneys with comparable skill, experience, and reputation simplifies the already difficult task courts face in awarding reasonable attorney fees.” The prevailing party seeking attorney fees bears the burden of producing satisfactory evidence that the requested fees are in line with prevailing market rates. Loranger v. Stierheim, 10 F. 3d 776 (11th Cir. 1994).

In this case, HARDAWAY presented the testimony of Fred Dodelin, HARDAWAY’s chief financial officer and vice president, and John Springer, HARDAWAY’s former general counsel. Mr. Dodelin, an expert with years of experience in the construction industry, reviewed the attorneys fees and billing records and accepted as satisfactory the billing records submitted by various law firms representing HARDAWAY in the Pipeline Litigation. Mr. Dodelin and Mr. Springer both testified that they contemporaneously reviewed the bills of all of the law firms and other legal service providers within the Pipeline Litigation. Each of these witnesses testified that the bills reflected work actually done by the respective law firms, accepted by HARDAWAY, and paid for or owed by HARDAWAY. Both of these witnesses testified that HARDAWAY was fighting for its very existence in the Pipeline Litigation. Moreover, in their opinions, it was only through the efforts of these legal service providers that HARDAWAY reached a favorable settlement allowing the continued existence of the company.

The Court also received the testimony of HARDAWAY’s attorneys as to the work performed on behalf of the client. These attorneys, Mr. Rains, Mr. Johnson, Mr. Lewis, Mr. Cox, Mr. Fischer and Mr. Earle, each testified that all of the work reflected on their bills was done on behalf of HARDAWAY in direct response to the tactics and efforts of HARDAWAY’s opponent in the Pipeline Litigation. Each testified that they reviewed and revised the bills before sending them to HARDAWAY. The Court also heard the testimony of Don Conn, general counsel for the West Coast Regional Water Supply Authority (the “Authority”), and Koni Manley, Director of Finance and records custodian for the Authority. Mr. Conn and Ms. Manley both testified to the $13,000,000 attorneys fees and costs incurred and paid by the Authority in the Pipeline Litigation.

The Plaintiff also called Ben Hill, trial counsel for HARDAWAY’s co-defendant in the Pipeline Litigation. Mr. Hill testified that the co-defendant who, unlike HARDAWAY, was not the primary target of the Authority, incurred $2,304,174 in attorneys fees between 1992 and 1997 in defending itself in the Pipeline Litigation. The Court also received the testimony of HARDAWAY’s attorney fee experts and construction litigation attorneys, Michael Nuechterlien and Elvin Phillips. Mr. Nuechterlien and Mr. Phillips each testified that, applying both Rowe and the Rule, both the number of legal services hours spent and attorneys fees charged on behalf of HARDAWAY in the Pipeline Litigation, were reasonable. In fact, HARDAWAY’s experts opined that a reasonable fee for the services provided and results obtained would actually exceed that actually charged to and paid by HARDAWAY. However, HARDAWAY makes no claim for any sum in excess of that charged and paid, and this Court will not award any sum in excess of that actually charged and paid or owed.

FIDELITY presented testimony from Attorneys Oscar Blasingame and Linda Griffith identifying specific entries and times which, in their individual and collective opinion were not reasonable, verifiable or awardable under the terms of Rowe, supra.

Attorney Griffith is an employee of Examen, Inc., a legal fee auditing service. Ms. Griffith testified that she, and attorneys working at her direction, reviewed each line of the more than 4,000 pages of billing invoices. Ms. Griffith and her colleagues compared a great volume of these entries to the work product of the attorneys, i.e., the correspondence and pleadings and notes generated by the attorneys. Attorney Blasingame based his opinion on Ms. Griffith’s work product regarding which entries were not verifiable, were improperly charged to the file, or were “unreasonable” under the body of case law that has developed from Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L.Ed. 2d 40 (1983), and Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), both cited in Rowe by the Florida Supreme Court. Mr. Blasingame testified that he relied exclusively upon the documents prepared by Ms. Griffith. Ms. Griffith testified and admitted that she never spoke with or interviewed any of the attorneys involved in the Pipeline Litigation. The Court finds that the work of Ms. Griffith was replete with mistakes and erroneous assumptions. Accordingly, this Court, as the finder of fact, gave her testimony and that of Mr. Blasingame very little weight.

Under Rowe, it is the duty and burden of the Plaintiff “to present records detailing the amount of work performed.” Rowe at 1150. This Court notes Florida Supreme Court’s admonition regarding “the importance of keeping accurate and current records of work done and time spent on a case, particularly when someone other than the client may pay the fee.” Id. In this case, the Plaintiff tendered the defense of the underlying action to the insurer at an early stage, and HARDAWAY’s representatives testified that they always intended to make the claim for reimbursement of the fees against FIDELITY. Therefore, HARDAWAY was at all times aware of the need for its attorneys to keep time records that were detailed enough to pass muster under Rowe and related authority. They have met, and indeed exceeded this requirement.

The Court finds that the record keeping of HARDAWAY’s various law firms absolutely complies with the requirements of Rowe. HARDAWAY supplied more than adequate records of the work performed by its counsel. The Court has ample and sufficient documentary evidence of the services performed in order to find the reasonable number of hours expended by HARDAWAY’s counsel. The Court finds that the hours shown in Exhibit A attached to the Stipulation are reasonable hours expended by HARDAWAY’s counsel in the case.

HARDAWAY, through the testimony of the witnesses and experts, proved beyond any reasonable doubt, the reasonableness of the fees it paid based upon the hours expended as contained within the Stipulation. Indeed, most of the fees claimed are unchallenged by FIDELITY and its experts. No claim was made nor proof provided that the work billed was not actually performed. Moreover, this Court finds that the work performed by the Plaintiff’s various law firms was absolutely necessary for the defense of the Pipeline Litigation.

RULING

I. PREJUDGMENT INTEREST

This Court is persuaded by HARDAWAY’s argument that Argonaut Insurance Company v. May Plumbing Company, 474 So.2d 212 (Fla. 1985), mandates an award of prejudgment interest to HARDAWAY from the actual dates of payment rather than February 27, 1997, when Judge Bonanno ruled and entered Partial Summary Judgment with respect to HARDAWAY’s entitlement to fees and costs. “When a verdict liquidates damages on a Plaintiff’s out-of-pocket, pecuniary losses, Plaintiff is entitled, as a matter of law, to prejudgment interest at the statutory rate from the date of that loss.” [emphasis added] Id. at 215. Argonaut Insurance Company paid $249,360.51 to apartment owners for damages from a fire caused by the negligence of May Plumbing Company. Ultimately, Argonaut was awarded a judgment for compensatory damages as well as prejudgment interest. The Fourth District Court of Appeal reversed the trial court’s award of prejudgment interest, holding that the comparative negligence factors made the award of damages, and thus interest, unliquidated.

Following the First District Court of Appeal decision in Bergen Brunswig Corporation v. State Department of Health and Rehabilitative Services, 415 So. 2d 765 (Fla. 1st DCA 1982), the Florida Supreme Court reversed the Fourth District Court of Appeal, holding that “a claim becomes liquidated and susceptible of prejudgment interest when a verdict has the effect of fixing damages as of a prior date.” Argonaut at 767. As noted by our state’s highest court, “since at least before the turn of the century, Florida has adopted the position that prejudgment interest is merely another element of pecuniary damages.” Argonaut at 214.

Like Argonaut, HARDAWAY has a liquidated claim, fixed as of the prior dates of payment or “loss.” Moreover, these amounts were certain, and FIDELITY refused to surrender these sums or tender a defense in the Pipeline Litigation “because of defenses determined to be meritless…” by this Court. Id. Thus, it is axiomatic that HARDAWAY is entitled as a matter of law, to prejudgment interest at the various statutory rates from the various dates of those payments or losses.

This Court is not persuaded by FIDELITY’s argument that both Visoly v. Security Pacific Credit Corp., 625 So. 2d 1276 (Fla. 3rd DCA 1993), and Bremshey v. Morrison, 621 So. 2d 717 (Fla. 5th DCA 1993), bar an award of prejudgment interest in this case. Both of these appellate decisions address interest awards on attorneys fees awarded pursuant to Section 57.105, Florida Statutes. Section 57.105 concerns the award of attorneys fees based on the absence of justiciable issues. It is important to note that in each of these cases, the damages sought by the parties were not attorneys fees. As the Third District Court of Appeal noted in Visoly, “Argonaut address prejudgment interest on damages awards. Argonaut does not address an interest award on Section 57.105 fees commencing on the date of final judgment entitling defendant to those fees.” Visoly at 1277.

In this case, Judge Bonanno’s February 27, 1997 order determined that HARDAWAY was entitled to recover its attorneys fees and costs incurred in the defense of the Pipeline Litigation. Judge Bonanno’s order did not determine the amount of fees to be awarded. The fact that HARDAWAY’s damages consist of attorneys fees in no way abrogate their legal right to be fully compensated for the wrongful deprivation by FIDELITY of HARDAWAY’s “property.” Therefore, based on the decisional law cited by both parties, and reasserting the stare decisis controlling effect of the Florida Supreme Court decisions, prejudgment interest on the funds recovered by HARDAWAY shall be calculated from the date of the individual payments, and not from the date of the February 27, 1997 order issued by Judge Bonanno which ruled that HARDAWAY was entitled to recover both prejudgment and post-judgment interest. Any other interpretation of the applicable decisional law defies logic.

II. RECOVERY UNDER THE INSURANCE POLICY

1. HARDAWAY shall collect from FIDELITY $500,000 for the personal injury liability coverage and $100,000 for the property damage liability, with a credit of $100,000 already paid by FIDELITY. HARDAWAY incurred liability in the amount of $850,000 to the Water Authority on a scheduled payment plan which has yet to be completed.

2. FIDELITY moved for a directed verdict at the close of HARDAWAY’s case on the issue of HARDAWAY’s entitlement to $100,000 in completed operations coverage contained in the FIDELITY policy. HARDAWAY failed to present evidence sufficient to prove an “occurrence” within the completed operations policy period as that term is defined within the policy. Therefore, FIDELITY’s motion for a directed verdict was granted. The matter of occurrence was settled by Judge Bonanno’s partial summary judgment order of February 27, 1997, as to the property damage and personal injury liability sections of the policy only.

III. RECOVERY OF PAYMENTS

1. In its opening statement, the Plaintiff withdrew its demand for recovery of the funds paid by the Cigna Insurance Company to HARDAWAY’s various law firms and experts. Therefore, the Plaintiff shall not recover as damages, the payments made by Cigna, nor any interest thereon.

2. The Plaintiff shall recover from FIDELITY the funds paid by THE HARDAWAY COMPANY, Paul N. Howard Company, and ITT Corporation, to HARDAWAY’s various law firms, experts, and service providers. The expenses paid to HARDAWAY’s legal service providers totals $3,157,842.87 (see Chart “A,” supra). The Plaintiff shall also recover prejudgment interest on those funds from the date of each individual payment made by HARDAWAY. The interest on the expenses paid totals $1,323,696.88 as of December 31, 1997 as agreed upon by the parties. Continuing prejudgment interest from December 31, 1997, to the date of this Order shall be calculated at the applicable statutory rate.

3. As previously stated, HARDAWAY shall recover from FIDELITY the funds paid by the ITT Corporation to HARDAWAY’s various law firms and experts. The Plaintiff shall also recover prejudgment interest on those funds from the date of each individual payment. As explained by Mr. Paul Mastroianni in his deposition testimony, ITT paid these sums on behalf of its subsidiary Paul H. Howard, a member of the Plaintiff joint venture. ITT Corporation assessed the payments made to HARDAWAY’s various law firms against Paul N. Howard in an indirect manner by adjusting its next annual budgeted contribution to an insured pool. Mr. Mastroianni testified that “excess pools were established in the beginning of the year and then they would be reviewed on an annual basis. You would use that loss history to formulate a budget for the next year. There was a chargeback mechanism within the unit retention.” (Page 42 of Mr. Mastroianni’s deposition admitted into evidence).

4. The Court finds and hereby rules that of HARDAWAY’s total defense expenditures, $282,103.24 was paid directly by the Joint Venture to service providers and expert witnesses in the Pipeline Litigation. The prejudgment interest on this amount is $47,035.81. Since the analysis utilized by the Court is based on what has been received by HARDAWAY’s various law firms, it is necessary to address this element of expense separately. The Court finds from the evidence that the joint venture recorded and paid those expenses that were paid to entities other than Lewis & McKenna, Fowler White, Annis Mitchell, Earle and Earle, and Schiff Hardin. The Court finds from the evidence of record that these expenses were all reasonable and necessary for the defense of the Pipeline Litigation. The Court finds that HARDAWAY is entitled to recover from FIDELITY these amounts, plus prejudgment interest from the dates of payment.

5. The Court finds, in sum, that the Plaintiff has proven damages in the following amounts:

 Attorney Fees and Costs                             $3,157,842.87  

 Interest from the Date of

 Individual Payments

 Through December 31, 1997                           $1,323,696.88  

 Property Damage Liability Indemnity                  $ 500,000.00 

 Personal Injury Liability Indemnity                  $ 100,000.00 

 Less $100,000 Credit for Prior Payment               $(100,000.00)

 Plus costs paid directly by the Joint Venture      $ 282,103.24 

 Plus interest on such costs                           $ 47,035.81  

 TOTAL (including prejudgment interest

 through December 31, 1997)                          $5,310,678.80  

The Court reserves jurisdiction for the specific award of additional prejudgment interest through the date of this Order and any additional relief requested by the parties and determined to be appropriate by this Court. The entry of any final judgment shall be deferred awaiting a ruling by the Florida Second District Court of Appeal and release of its jurisdiction to this Court.

________

¹The Court wishes to express its sincere appreciation to Law Clerk, Ms. Kristine Roningen, of Valparaiso University School of Law. Her assistance in the preparation of this Order has been noteworthy and absolutely invaluable.

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