B. Fees on Fees
Mr. Siegel also seeks the fees and costs he has incurred in
attempting to secure indemnification. He cites two cases that are
directly on point. In Sierra Rutile Ltd. v. Katz, No. 90 Civ.
4913, 1997 WL 431119, at *2 (S.D.N.Y. July 31, 1997), the
Honorable John F. Keenan, U.S.D.J., awarded the moving parties
their fees and expenses in seeking indemnification under the
B.C.L. Similarly, in Professional Insurance Co. of New York v.
Barry, 60 Misc.2d 424, 428, 303 N.Y.S.2d 556, 560-61 (1969), the
court granted the movant the costs incurred in enforcing his
right to indemnification. There the court reasoned that but for
the underlying action against him as a corporate officer, the
movant would not have incurred such expenses.
The difficulty with these cases is that they cannot be
reconciled with the general rule in New York that attorneys' fees
may not be awarded unless there is specific statutory or
contractual authorization. See Hooper Associates, Ltd. v. AGS
Computers, Inc., 74 N.Y.2d 487, 491, 549 N.Y.S.2d 365, 366,
548 N.E.2d 903 (1989); A.G. Ship Maintenance Corp. v. Lezak,
69 N.Y.2d 1, 5, 511 N.Y.S.2d 216, 218, 503 N.E.2d 681 (1986); see
also F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250,
1266-67 (2d Cir. 1987); Bourne Co. v. MPL Communications, Inc.,
751 F. Supp. 55, 57 (S.D.N.Y. 1990). This principle applies
specifically to indemnification. That is, where a party is
provided with indemnification by statute or agreement, it is
nevertheless not entitled to its fees for enforcing its rights
against the indemnitor absent specific language to that effect.
See Canpartners Investments IV, LLC v. Alliance Gaming Corp.,
981 F. Supp. 820, 826-27 (S.D.N.Y. 1997); Bourne Co., 751
F. Supp. at 57; Hooper Associates, 74 N.Y.2d at 491, 549
N YS.2d at 366, 548 N.E.2d 903.
There is no such provision in this case. Mr. Siegel has not
pointed to any section in the B.C.L. that provides for fees in
seeking indemnification. Nor is there such language in the HMS
by-laws. Accordingly, Mr. Siegel is relegated to arguing that it
is unfair for someone promised complete indemnification to have
to incur substantial costs to secure that right. So it is. But
that is an argument appropriately addressed to the New York
legislature rather than to this Court. Imposing a cost on someone
seeking to enforce his rights — whether those rights arise from
contract, statute, or common law — may seem inequitable. But
shifting fees in such situations would create an exception that
would swallow the "American rule" that each party generally bears
its own costs in litigation.
To be sure, Judge Keenan awarded fees on fees under the B.C.L.
in Sierra Rutile, but that opinion contains no analysis of the
issue. 1997 WL 431119, at *2. In Barry, the court reasoned that
fees on fees were "necessary" in connection with the defense of
the underlying litigation. 60 Misc.2d at 428, 303 N.Y.S.2d at
560-61. Yet this strained interpretation of the language of the
B.C.L. has not been adopted by any other court and is
inconsistent with the New York rule that an intent to shift fees
must be clearly stated. Fees on fees "are not a part of defending
the indemnified claim, but instead fall within the ordinary rule
that each party bears its own expenses." Thyssen, Inc. v. S/S
Eurounity, 21 F.3d 533, 541 (2d Cir. 1994) (citation omitted).
Accordingly, indemnification here should be limited to costs
incurred in defending Mr. Siegel in the core litigation.*fn4
C. Calculation of Fees
Based on the analysis above, it is necessary to winnow out
those fees and costs attributable to Mr. Siegel's efforts to
obtain indemnification. This is not an exact process. In some
cases it is evident from the time records that an entire entry is
related to seeking fees. On the other hand, some entries are
ambiguous or encompass some tasks that relate to the core case
and others that relate to indemnification. Accordingly, based on
an approximate allocation of time and expenses between these
issues, Mr.Siegel should be awarded attorneys' fees and costs as
Fees Costs Total
Allowed Disallowed*fn5 Allowed Disallowed*fn6 Allowed Disallowed
$60,959.50 $15,943.00 $6,677.23 $1,204.64 $67,636.73 $17,147.64
*fn5 The time entries for which fees are disallowed are:
two-thirds of the time spent by Ms. Roth on 5/21/97; one-half of
her time on 5/27/97; all of Ms. Roth's time on 5/30/97 and
6/2/97; all but two hours of her time on 6/11/97; all of her time
on 6/12/97; all time spent by all attorneys from 12/19/97 through
1/30/98; all of Ms. Roth's time on 6/1/98, 6/2/98, 7/16/98,
7/27/98, 7/29/98, 7/30/98, 7/31/98, 8/17/98, 8/18/98, 8/19/98,
and 8/21/98; and one-half of Ms. Roth's time on 8/6/98. All other
entries are allowed. (Fee Records).
*fn6 The costs disallowed are: all costs of 6/19/97, 6/25/97,
12/30/97 through 2/28/98, and 7/24/98 through 8/26/98. (Fee
For the reasons set forth above, I recommend that Mr. Siegel be
awarded indemnification against HMS for $60,959.50 in attorneys'
fees and $6,677.23 in expenses, for a total of $67,636.73.
Pursuant to Rule 72 of the Federal Rules of Civil Procedure, the
parties shall have ten (10) days from this date to file written
objections to this Report and Recommendation. Such objections
shall be filed with the Clerk of the Court, with extra copies
delivered to the chambers of the Honorable Richard M. Berman,
Room 426, 40 Foley Square, New York, New York 10007 and to the
undersigned, Room 1960, 500 Pearl Street, New York, New York
Oct. 25, 1999.