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Fountainhead Investments, Inc. v. Depalo

October 28, 2009

FOUNTAINHEAD INVESTMENTS, INC., ET. AL., PLAINTIFFS,
v.
ROBERT DEPALO, ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Andrew J. Peck, United States Magistrate Judge

OPINION AND ORDER

Presently before the Court is a motion by Fountainhead Investment, Inc. for attorneys' fees pursuant to a September 2, 2008 Civil Judgment against defendants Prem Ramchandani, Avi Sivan, and IGIA, Inc. (See Dkt. No. 37: Notice of Motion & Diener Aff.) The Judgment, awarding Fountainhead the amount of $58,581.04 plus costs (Dkt. No. 32: 9/2/08 Judgment ¶ 1),*fn1 resulted from defendants' default of a June 29, 2007 settlement agreement, made in open court, which provided that in the case of a default, the prevailing party would be granted "reasonable attorneys fees and expenses in connection therewith," and the Court (i.e., Magistrate Judge Peck pursuant to the parties consent under 28 U.S.C. § 636(c)) retained jurisdiction pursuant to the settlement. (Diener Aff. Ex. B: 6/29/07 Conf. Tr. at 13.)

Fountainhead requests legal fees against defendants Ramchandani and Sivan of $27,529.27, the amount Fountainhead claims to have expended seeking satisfaction of the Judgment. (Diener Aff. ¶ 14.) Defendants Ramchandani and Sivan do not contest Fountainhead's entitlement to reasonable attorneys' fees, but do contest Fountainhead's calculation thereof. (Dkt. No. 39: Mortner Aff.¶¶ 1-3.)

For the reasons discussed below, Fountainhead's motion (Dkt. No. 37) for attorneys' fees is GRANTED in the amount of $12,431.25.

FACTS

On June 29, 2007, Fountainhead entered into a settlement agreement with defendants Ramchandani, Sivan, and IGIA pursuant to which the defendants agreed to pay $50,000 in twenty five consecutive monthly installments of $2,000. (Dkt. No. 37: Diener Aff. Ex. B: 6/29/07 Conf. Tr. at 5.)*fn2 Beginning in July 2007, defendants made four payments, totaling $8,000, before defaulting. (Diener Aff. ¶ 6.) On November 28, 2007, Fountainhead sent defendants a notice of default, and when defendants did not cure the default by payment of the amounts then due, Fountainhead accelerated the balance under the terms of the settlement agreement. (Dkt. No. 31: Rendon Aff. ¶¶ 13-17 & Ex. C: 11/28/07 Rendon Ltr.)*fn3 When defendants failed to tender the balance due within the period prescribed by the settlement agreement, Fountainhead moved to enter judgment. (Dkt. No. 30: 8/12/08 Motion.) On September 2, 2008, the Court entered final judgment against defendants Ramchandani, Sivan and IGIA in the amount of $58,581.04, consisting of the remaining balance ($42,000) plus interest for a subtotal of $44,929.50, as well as $13,651.54 of attorneys' fees incurred by Fountainhead in enforcing the settlement agreement. (See Rendon Aff. ¶¶ 17, 30, 31; Dkt. No. 32: 9/2/08 Judgment ¶ 1.)

When defendants had not paid the judgment by May 12, 2009, Fountainhead subpoenaed defendants Ramchandani and Sivan to give deposition testimony regarding all three defendants' assets and to produce certain documents. (Diener Aff. Ex. C: 6/24/09 Sher Ltr. at 2.) The depositions were scheduled for May 27, 2009. (Id.) In hopes of reaching an agreement as to payment of the judgment, the depositions were postponed until June 17, 2009. (6/24/09 Sher Ltr. at 3.) On the eve of that date, Fountainhead agreed to adjourn the depositions to June 19, 2009 provided that defendants paid $1,500 to reimburse Fountainhead for its costs. (Id.) The parties also agreed that if defendants paid $25,000 prior to June 19, 2009, the deposition would be further adjourned to June 24, 2009. (Id.) Defendants tendered both payments and the deposition was rescheduled for June 24, 2009. (Id.) Defendants, however, failed to attend the scheduled depositions on June 24, 2009. (6/24/09 Sher Ltr. at 1.) On June 25, 2009, Sivan paid Fountainhead $33,581.04, the remainder of the balance owing. (Dkt. No. 35: 6/25/09 Mortner Ltr.; Dkt. No. 36: 7/31/09 Sher Ltr.) On July 2, 2009, Ramchandani was finally deposed in his capacity as an officer of IGIA . (Dkt. No. 39: Mortner Aff. ¶ 6.)

Fountainhead's Attorneys' Fees Motion

Fountainhead's motion seeks legal fees of $27,529.27 from defendants Ramchandani and Sivan. (Diener Aff. ¶ 14.) Specifically, Fountainhead seeks $12,029.27 for the work of its litigation counsel, Arnold & Porter; $5,000 for the work of Robert Diener, Esq., outside general counsel to Fountainhead; and $10,500 for the work of Neal Sher, Esq., special counsel to Fountainhead. (Diener Aff. ¶ 13.)

Defendants concede that Fountainhead is owed reasonable attorneys' fees but contest Fountainhead's calculation. (Mortner Aff. ¶ 2.) Defendants argue that Fountainhead is not entitled to the $12,029.27 attributed to Arnold & Porter because those fees were incurred prior to the September 2, 2008 judgment. (Mortner Aff. ¶¶ 3-4.) Defendants also contend that since Ramchandani and Sivan had satisfied their individual liability before the July 2, 2009 Ramchandani deposition, any costs incurred in relation to that deposition cannot fairly be charged against them as opposed to IGIA. (Mortner Aff. ¶¶ 5-6.)

ANALYSIS

I. THE LEGAL STANDARD FOR DETERMINING ATTORNEYS' FEES

Traditionally, "[i]n determining a fee award, the typical starting point is the so-called lodestar amount, that is 'the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.'" Healey v. Leavitt, 485 F.3d 63, 71 (2d Cir. 2007) (citing Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939 (1983)). "The party seeking an award of fees should submit evidence supporting the hours worked and rates claimed. . . . The district court . . . should exclude from this initial fee calculation hours that were not 'reasonably expended.' . . . Counsel for the prevailing party should make a good faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary." Hensley v. Eckerhart, 461 U.S. at 433-34, 103 S.Ct. at 1939-40.*fn4 Particularly in awarding statutory attorneys' fees, "[t]he product of reasonable hours times a reasonable rate does not end the inquiry. There remain other considerations that may lead the district court to adjust the fee upward or downward." Hensley v. Eckerhart, 461 U.S. at 434, 103 S.Ct. at 1940; see also, e.g., Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 186 (2d Cir. 2008) ("[T]he lodestar method involved two steps: (1) the lodestar calculation; and (2) adjustment of the lodestar based on case-specific considerations.").

Last year, however, the Second Circuit acknowledged that the lodestar's "value as a metaphor has deteriorated to the point of unhelpfulness," and abandoned use of the term due to longstanding confusion regarding its proper application, while leaving the methodology essentially the same.*fn5 Arbor Hill Concerned Citizens ...


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