The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.
Plaintiff M/A-COM Security Corporation ("M/A-COM") moves for an award
of additional legal fees in the amount of $20,000 plus interest, based on
a provision in a promissory note for payment of reasonable attorneys'
fees if required to enforce its terms. Defendant Francesco Galesi
("Galesi") opposes the motion.
The relevant facts to which the parties have stipulated are as
On October 19, 1989, this Court entered judgment for M/A-COM in the
underlying action to enforce the terms of a promissory note, in the
amount of $4,173,208.07, which included an award of principal and
interest on the note through October 18, 1989, costs and disbursements of
the action, and attorneys' fees and expenses up to that date. Galesi
appealed. On May 22, 1990, the Court of Appeals affirmed. 904 F.2d 134.
Prior to the appeal, Galesi provided M/A-COM with an irrevocable letter
of credit as security for the judgment entered on October 19, 1989. The
amount of the letter of credit was calculated to include "the sum of the
judgment plus interest for one year plus estimated attorneys' fees in the
Court of Appeals of $20,000 plus estimated disbursements." Stipulation of
Facts, ¶ 9. Counsel agreed that "when the actual time-based
attorneys' fees and disbursements were known," either Galesi would be
refunded any surplus if they resulted in an actual total lower than the
letter of credit's total or M/A-COM would receive additional funds from
Galesi if the letter of credit fell short of the actual total.
Stipulation, ¶ 11. The time-based legal charges for the appeal
amounted to $22,756.99. The parties agree that Galesi still owes M/A-COM
$2,756.99 plus interest. Stipulation at ¶ 12.
To date, M/A-COM has collected $4,413,997.00 from Galesi, which
includes the judgment, interest on the judgment, additional disbursements
and expenses, and additional time-based legal fees after the successful
defense of the appeal. In addition to attorneys' fees collected as set
forth above, counsel for M/A-COM has billed and collected from M/A-COM an
additional "premium" of $20,000 as legal fees "for the result obtained
relative to the time expended." Stipulation, ¶ 8. The additional
premium was not raised with M/A-COM until well after this Court entered
its judgment on October 19, 1989.
The issue on this motion is whether M/A-COM is entitled to receive the
additional $20,000 "premium" and any interest which may be due on that
amount as the "reasonable attorneys' fees" payable by Galesi in
connection with M/A-COM's enforcing its rights under the promissory
What are reasonable attorneys' fees should be judged by the intention
of the parties when the promissory note was executed. As in all
contracts, absent direct evidence of that intention, evidence based on
the performance of the agreement is of the utmost significance. During
the relevant time period, the attorneys for the parties reached
agreements concerning reasonable attorneys' fees. In this instance, there
are only two time periods in which attorneys' fees were earned: the
period of litigation up to October 19, 1989, the date on which judgment
was entered, and the period of litigation related to the appeal. As to
the first time period, plaintiff's counsel submitted a judgment to the
Court, agreed to by the defendant's counsel and signed by the Court on
October 18, 1989, which awarded the principal and interest thereon to
that date, "plus M/A-COM's attorneys' fees and expenses and the costs and
disbursements of this action of $43.584.35 . . ." Judgment, October 19,
1989. The judgment awarded the plaintiff's requested and agreed upon
attorneys' fees in proceedings before this Court. If the additional legal
fee is now sought in connection with the time period up to October 19,
1989, plaintiff's motion is essentially one to amend the judgment of the
Court and is untimely. Such motions must be made within 10 days after
entry of judgment. Fed.R.Civ.P. 52(b).
With respect to the second time period and M/A-COM's attorneys' fees
related to the appeal, such an award is also precluded by agreement
between the parties. Counsel agreed to estimated attorneys' fees of
$20,000 in connection with the appeal, with a possible adjustment up or
down based on time charges. Stipulation, ¶ 11. The $20,000 additional
fee is nowhere claimed to be an adjustment based on time charges. In view
of these agreements between counsel, as to the attorneys' fees to be paid
by Galesi, any further fee is not justifiable. The parties by their
actions in carrying out the agreement have determined what was a
reasonable attorney's fee for Galesi to pay and the Court will not
A provision for reasonable attorneys' fees contained in the enforcement
provision of a promissory note involves a different context than many of
the opinions relied on by plaintiff. Generally, court determinations of
reasonable attorneys' fees arise pursuant to statutory provisions for
reasonable attorneys' fees and the court applies a "lodestar" approach.
Those opinions are not totally relevant to this case because here the
issue arises out of a contractual provision. When there is a contractual
provision for reasonable attorneys' fees, as the Second Circuit has
explained, "contractual provisions for the payment of attorneys's fees
[will] be strictly construed, and general language will not be sufficient
to warrant an award for a type of expense that is not customarily
reimbursed." F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250,
1263 (2nd Cir. 1987) (reducing attorneys' fees to time-based charges). In
Krear, the court noted that a belated oral agreement to pay attorneys at
ever increasing rates could he "an impermissible `manipulat[ion of] the
actual damage incurred' . . . resulting in an unwarranted burden on
defendants to which the parties did not in fact agree." Id. at 1267,
citing Equitable Lumber Corp. v. IPA Land Development Corp., 38 N.Y.2d 516,
524, 381 N.Y.S.2d 459, 344 N.E.2d 391 (1976).
Plaintiff's counsel contends that M/A-COM has in fact paid the
additional $20,000 premium and that the total fees charged by it to
M/A-COM are reasonable in light of the results obtained. Plaintiff's
counsel does not disclose the terms of its original retainer and thus the
Court is unable to determine if a premium payment was anticipated.
Nevertheless, the Court would not dispute that the total fees paid by
M/A-COM to its counsel are reasonable in light of the results obtained.
The fact remains that the agreement by M/A-COM to pay the premium was
reached after judgment in the district court and after defendant and
plaintiff had agreed upon an estimated $20,000 to be adjusted "when the
actual time-based attorneys' fees and disbursements were known" as the
amount Galesi would bear. Stipulation, ¶ 11. It is the agreement
between Galesi and M/A-COM, or their counsel, that governs the
reasonableness of the attorney's fees that Galesi should bear, not the
agreement between M/A-COM and its counsel.