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RALEIGH-DURHAM v. MYERS

October 25, 1993

MILTLAND RALEIGH-DURHAM, MILTLAND SACRAMENTO and MILTLAND CHICAGO-SANTA FE, Plaintiffs,
v.
MICHAEL H. MYERS, MYERS MILTLAND RALEIGH-DURHAM LIMITED PARTNERSHIP, MYERS MILTLAND SACRAMENTO LIMITED PARTNERSHIP, CHICAGO-SANTA FE PARTNERSHIP and MYERS FINANCIAL GROUP, Defendants.


Motley


The opinion of the court was delivered by: CONSTANCE BAKER MOTLEY

BACKGROUND.

 The court, in an opinion dated August 26, 1992, found the Myers Defendants liable for civil violations of RICO, securities fraud, common law fraud and breach of fiduciary duty. The court then, in its order dated March 24, 1993, awarded Plaintiffs damages, attorneys' fees, and equitable relief by 1) permanently enjoining Myers and Myers Financial from further wrongful acts, 2) removing Myers as general partner of the Raleigh-Durham and the Sacramento Limited Partnerships and authorizing the limited partners of such partnerships to appoint a substitute general partner for each partnership while specifically requiring Myers' cooperation, 3) removing Myers Financial as general partner of Chicago-Santa Fe Partnership, 4) requiring an accounting by Myers of his conduct as a general partner of the Raleigh-Durham and the Sacramento Limited Partnerships and by Myers Financial for Myers Financial's conduct as a general partner of the Chicago-Santa Fe Partnership, 5) imposing equitable liens on Myers' interests in the Raleigh-Durham and Sacramento Limited Partnerships and on Myers Financial's interests in the Chicago-Santa Fe Partnership, and 6) imposing constructive trusts on the assets of the Raleigh-Durham and Sacramento Limited Partnerships and the Chicago-Santa Fe Partnership in order to protect Plaintiffs' investments.

 Plaintiff Miltland Raleigh-Durham was awarded judgment for compensatory damages in the amount of $ 383,962 with interest at the rate of 9% per annum from June 10, 1985, the closing date of the purchase of property of Myers Miltland Raleigh-Durham Limited Partnership, to the entry of judgment.

 Plaintiff Miltland Sacramento was awarded judgment for compensatory damages in the amount of $ 114,425.50 with an interest rate of 9% per annum from May 10, 1985, the date Myers received the benefit of such amount, to entry of judgment.

 The court additionally entered judgment for the Limited Partnerships on the derivative actions asserted on their behalf against the Myers Defendants for civil RICO violations, securities fraud, common law fraud and breach of fiduciary duty.

 The Chicago-Santa Fe Partnership was awarded compensatory damages for fraud and fraud in breach of fiduciary duty in the amount of $ 308,014.92 with an annual interest rate of 9% from December 11, 1986, the date Myers received such amount, to the entry of judgment. Plaintiff (and limited partner) Miltland Chicago-Santa Fe was awarded $ 104,725.07 with an interest rate of 9% per annum from December 11, 1986 to the date of entry of judgment as its 34% share of the $ 308,014.92 commission.

 The Chicago-Santa Fe Partnership also received compensatory damages in the amount of $ 108,569 with an annual interest rate of 9% from December 15, 1986, the date Myers received such amount, to the entry of judgment. As a result of Defendants' diversion of these partnership funds, Miltland Chicago-Santa Fe was awarded an additional $ 36,913.46, with a 9% annual interest rate, as its 34% share of the diverted funds.

 The Chicago-Santa Fe Partnership was awarded $ 32,828 for the wrongful failure of Myers Financial to make a capital contribution in that amount, from December 6, 1986, the date Myers Financial failed to contribute, to the date of the entry of judgment. Limited partner Miltland Chicago-Santa Fe was awarded $ 11,168.32, with an annual interest rate of 9%, as its 34% share.

 Judgment was entered for the Chicago-Santa Fe Partnership against the Myers Defendants for improper charges to the partnership of $ 145,000 for settlement of the Grant suit against Myers, $ 50,000 for a purported consulting fee in connection with such settlement, $ 41,000 for legal fees of Myers' counsel and finally $ 63,300 for the Landvest Real Estate Group's 1990 expenses.

 The court denied Defendants' post-trial motions to strike parol evidence, evidence of events which occurred after the amended complaint was filed and evidence admitted subject to proof of conspiracy.

 The court ordered that Plaintiffs and the Limited Partnerships were entitled to attorneys' fees and punitive damages due to the intentional, willful and malicious fraud in breach of fiduciary duty of the Myers Defendants. An evidentiary hearing on damages and fees was held on September 30, 1993. At that time, Defendants requested that the court additionally consider not awarding prejudgment interest on RICO damages. Pursuant to this hearing, the court makes the following determinations.

 DISCUSSION.

 1. Attorneys' Fees.

 a. Calculation of Attorneys' Fees.

 Plaintiff was awarded attorneys' fees plus costs pursuant to this court's opinion, dated August 26, 1992, and order, dated May 24, 1993. The court now addresses the issue of the amount of attorneys' fees to be awarded.

 It is within the district court's discretion to determine the amount of a fee award. U.S. Football League v. National Football League, 887 F.2d 408, 415 (2d Cir. 1989) cert. denied 493 U.S. 1071, 107 L. Ed. 2d 1022, 110 S. Ct. 1116 (1990) (citing Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983)). "Having tried the case, the District Court has the vantage point from which to assess the skill of the attorneys and the amount of time reasonably needed to litigate a case." Chambless v. Masters, Mates & Pilots Pension Plan, 885 F.2d 1053, 1057-8 (2d Cir. 1989) cert. denied, 496 U.S. 905, 110 L. Ed. 2d 268, 110 S. Ct. 2587 (1990); accord U.S. Football League v. National Football League, 887 F.2d at 415; Ortiz v. Regan, 980 F.2d 138, 141 (2d Cir. 1992).

 "In determining the amount of the award, a 'lodestar' figure is set by 'multiplying the hours spent on a case by a reasonable hourly rate of compensation for each attorney involved.'" U.S. Football League v. National Football League, 887 F.2d at 413 (quoting Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 563, 106 S. Ct. 3088, 3097, 92 L. Ed. 2d 439 (1986)); Blum v. Stenson, 465 U.S. 886, 888, 104 S. Ct. 1541, 1544, 79 L. Ed. 2d 891 (1984); Hensley v. Eckerhart, 461 U.S. at 433. A "reasonable hourly rate" is the rate charged by attorneys of like skill and experience, located in the same region, for comparable work. New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1140 (2d Cir. 1983); In re Agent Orange Product Liability Litig., 611 F. Supp. 1296, 1324 (S.D.N.Y. 1985), aff'd in pertinent part, 818 F.2d 226 (2d Cir. 1987). This process of calculation and adjustment of the lodestar figure is applied in RICO cases. See Nu-life Const. v. Bd. of Educ. of City or New York, 795 F. Supp. 602, 605 (S.D.N.Y. 1992).

 1) Inclusion of the Bankruptcy Litigation Fees in the Lodestar.

 Defendants argue that Plaintiffs should not recover fees incurred in the United States Bankruptcy Courts for the Central District of California and the District of Idaho. Plaintiffs sought relief in these courts because Defendants Myers and Myers Financial each filed bankruptcy petitions while the present case was pending. Plaintiffs, in order to continue with the prosecution of this case, were obligated to go to the these courts in order to get the automatic stays imposed under § 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) lifted.

 First, on February 19, 1992, Mr. Myers filed a petition under Chapter 7 of the Bankruptcy Code. Plaintiffs were successful with their motion to lift the stay as against Mr. Myers and were allowed to proceed against him due to the Central District of California bankruptcy court's finding that his debts to Plaintiffs were non-dischargeable pursuant to § 523(a) of the ...


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