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KOEHLER v. BANK OF BERMUDA LIMITED

April 26, 2004.

LEE N. KOEHLER, Plaintiff, -against- THE BANK OF BERMUDA LIMITED, Defendant


The opinion of the court was delivered by: CHARLES HAIGHT, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Lee N. Koehler objects in part to the Report and Recommendation of Magistrate Judge Michael H. Dolinger dated January 12, 2004 (the "January 12th Report"). Specifically, Koehler objects to Judge Dolinger's use of historical billing rates in calculating attorneys' fees to be awarded plaintiff against defendant The Bank of Bermuda ("BBL"). For the reasons stated below, Koehler's objection is sustained, and the fee award recommended by Judge Dolinger will be increased.

This application for attorneys' fees arises out of a long-standing post-judgment garnishment proceeding between Koehler and the Bank of Bermuda, Ltd. ("BBL"). See Koehler v. Bank of Bermuda, Ltd., No. M18-302, 2004 WL 444101 (S.D.N.Y. Mar. 10, 2004). The facts of that case need not be recited here. It is sufficient for present purposes to note that one of the many speed bumps along the road of this tangled litigation stemmed from a lengthy discovery dispute between the parties. As Judge Dolinger has held, BBL's "multiple defaults" and a "pattern of inactivity" with respect to compliance with discovery orders had "probably impacted adversely . . . the ability of Koehler to unearth all reasonably pertinent information about the extent of the Bank's contacts with New York in or about 1992 and 1993." Koehler v. Bank of Bermuda, Ltd., No. M18-302, 931745, 2003 WL 289640, at *3, *12 (S.D.N.Y. Feb. 11, 2003). As a result of these failings, Judge Dolinger required BBL to pay "the reasonable expenses arising out of Koehler's motions to compel and for sanctions and his supplemental motion for sanctions." Id. at *16. The amount of the award was to be determined at a future date.

  That date came on January 12, 2004, when Judge Dolinger recommended an award to Koehler of $33,025.57 in fees and expenses. January 12th Report at 18. Koehler now objects to only one part of Judge Dolinger's decision, in which in the course of determining attorneys' fees, he calculated the hourly rate of Koehler's outside counsel based on historic rather than current rates, which are materially higher. Koehler submits that attorneys' fees should have been calculated based on the current rate of $250 an hour, which would increase his total award to $50,636.07.

  As I have previously recognized, Judge Dolinger's rulings on fee awards are nondispositive orders under Rule 72(a), Fed.R. Civ. P., which, as specified by the Rule, may be modified or set aside only if "clearly erroneous or contrary to law." Order of Aug. 11, 2003 at 4. They should only be reversed upon a finding of abuse of discretion. See Nikkal Indus., Ltd. v. Salton, Inc., 689 F. Supp. 187, 189 (S.D.N.Y. 1988).

  Judge Dolinger's award of attorneys' fees involved the calculation of the "lodestar" figure, a conventional method by which the number of hours reasonably expended on the litigation is multiplied by a reasonable hourly rate for attorneys and paraprofessionals. January 12th Report at 5. In his initial affidavit in support of legal fees and expenses, Koheler, who is an attorney, requested that Judge Dolinger determine the award based upon the following hourly rates for Koehler and his law partners, Paul L. Newhouse and Brian G. West:
Lee N. Koehler $175.00 per hour Paul F. Newhouse $100.00 per hour Brian G. West $150.00 per hour (1997 rate) 165.00 per hour (1998 rate) 175.00 per hour (2001 rate) 195.00 per hour (2003 rate)
Aff. of Lee N. Koehler, Paul F. Newhouse and Brian G. West in Supp. of Submission of Legal Fees and Expenses per Order of Feb. 10, 2003 at ¶ 5 (Mar. 19, 2003) (the "Koehler Affidavit").

  Plaintiff averred that the rates reflected hourly rates charged to other clients at the time the legal services in this case were actually rendered (hence the term "historic rates"), or, with respect to Newhouse, were well below hourly rates charged to other of his clients. Id. at ¶ 6.

  BBL disputed that portion of Koehler's application of attorneys fees arising out of his own activities. BBL argued that since a pro se party may not obtain an award of attorney's fees, legal services performed by Koehler on his own behalf should be excluded from the calculation of the award. See Mem. of Resp't, the Bank of Bermuda Ltd., in Resp. to Pet'r Submission Regarding Legal Fees and Expenses at 2-3 (Mar. 27, 2003) ("Mar. 27 Response Brief").*fn1

  However, as a partial response to BBL's argument, Koehler changed his position with respect to the hourly rates used. Abandoning the position that historic rates should be used, Koehler revised his request and asked that Newhouse's and West's time should be compensated at a current rate of $250.00 per hour, in order to reflect both a delay in payment as well as an adjustment for the relevant market area. Mem. in Reply to Resp't Resp. to Pet'r Submission at 8-10 (Apr. 30, 2003).

  In his Report and Recommendation, Judge Dolinger calculated Koehler's award based on historic rather than current rates. See January 12th Report at 14 ("[D]espite the fact that rates used in calculating a fee award should be current rather than historic, Mr. West has requested compensation at the rates actually billed to other clients at the time the relevant work was performed." (citations omitted)). I must now decide whether this decision was an abuse of discretion.

  The party seeking a fee award bears the burden of demonstrating that the hourly rates they seek are "in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Blum v. Stenson, 564 U.S. 886, 896 n.11 (1984). The relevant "community" is "the district in which the court sits," which in this case is the Southern District of New York. Polk v. New York State Dep't of Corr. Servs., 722 F.2d 23, 25 (2d Cir. 1983), Here, plaintiff has demonstrated that $250 per hour is a reasonable current rate for attorney's fees.

  Plaintiff cites several cases which indicate that $250 per hour is well in line with hourly rates allowed for attorneys with similar years of experience in small law firms within the S.D.N.Y. market. See Pet'r Objection to Report and Recommendations of Mag. Judge at 3-4 (Jan. 19, 2004). In fact, Judge Dolinger notes that Mr. West's request for historical fees (ranging from $150 to $195 per hour) "are well below the current hourly fees that have been awarded to solo practitioners and small-firm attorneys of comparable experience in this district." January 12th Report at 14-15. Based on the foregoing, I find that $250 per hour is a reasonable hourly rate based on current fees.

  However, that does not end the inquiry. What remains to be determined is whether Judge Dolinger application of historical rather than current rates in calculating attorneys' fees was an abuse of discretion.

  Prior to 1989, the practice in this circuit in calculating the lodestar figure had been to apply the historic rate or, in the case or protracted litigation, to divide the litigation into two separate periods and apply the current rate to the more recent period and the historic rate to the former. See Grant v. Martinez, 973 F.2d 96, 100 (2d Cir. 1992) (describing the prior practice). However, in 1989 the Supreme Court held in Missouri v. Jenkins, 491 U.S. 274 (1989) that "an appropriate adjustment for delay in payment — whether by the application of current rather than historic hourly rates or otherwise — is within the contemplation of the statute." Id. at 284. In accordance with that important decision, this circuit no longer mandated the ...


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