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Mwh International, Inc. v. Inversora Murten, S.A.

United States District Court, Second Circuit

July 16, 2013

MWH INTERNATIONAL, INC., Plaintiff,
v.
INVERSORA MURTEN, S.A., ENERGOPROJEKT HOLDING COMPANY, and ENERGOPROJEKT HIDROINZENJERING CO., LTD., Defendants.

REPORT AND RECOMMENDATION TO THE HONORABLE HAROLD BAER, JR.

FRANK MAAS, Magistrate Judge.

Plaintiff MWH International, Inc. ("MWH") filed this interpleader action in an effort to resolve a dispute over certain funds MWH allegedly owes one of the defendants, Energoprojekt hidroinzenjering co., ltd. ("Energo"), pursuant to a joint venture agreement. After having deposited the contested funds with the Court and been dismissed from the case, MWH now seeks reimbursement for $26, 497.48 in attorney's fees and costs that it incurred in bringing this action. For reasons that are set forth below, MWH's fee application (ECF No. 64) should be granted, but the amount of the award reduced to $26, 338.98.

I. Background

On September 6, 1996, Inversora Murten S.A. ("Inversora") obtained a default judgment against Energoprojekt Holding Company ("EP-Holding") in the amount of $38, 750, 000. (ECF No. 1 ("Compl.") ¶ 2). Since then, Inversora has been pursuing the collection of that judgment - apparently without much success.

In February 2010, Inversora served MWH with a garnishment subpoena seeking certain funds MWH owed Energo in an attempt to obtain partial satisfaction of its judgment against EP-Holding. (Id. ¶ 12). EP-Holding is alleged to be Energo's parent company, although the precise legal relationship between the two entities is unclear. (Id. ¶ 3). After learning of the garnishment subpoena, Energo informed MWH that it disputed Inversora's claim to the funds. (Id. ¶¶ 14, 22). Accordingly, on October 5, 2010, MWH filed this interpleader action in the District of New Jersey. (ECF No. 1).

On April 11, 2011, the New Jersey court transferred the case to this Court at Inversora's request. (ECF Nos. 6-9). Subsequently, MWH was directed to deposit the contested funds with the Court so that it could be dismissed from the case. (ECF No. 31). On January 3, 2012, MWH deposited $178, 283.39 with the Cashier's Office of this Court and, later, it was dismissed. (See Unnumbered ECF Entry labeled "Cashier's Office Registry Deposit;" ECF No. 44).

On March 4, 2013, MWH filed a motion for attorney's fees and costs, (ECF No. 64), together with the affidavit of its attorney, Edwin R. Matthews, Esq., and a memorandum of law in support of its fee application. (Aff. of Edwin R. Matthews, Esq., sworn to on Feb. 28, 2013 ("Matthews Aff.") (ECF No. 65); Br. in Supp. of Pl.'s App. for Fees ("Pl.'s Mem.") (ECF No. 66)). On April 18, Inversora filed opposition papers. (Mem. of Inversora in Opp. to MWH's Mot. for Fees ("Inversora Opp. Mem.") (ECF No. 70)). The Energo Defendants did not oppose the motion. On April 24, Mr. Matthews filed a reply affidavit to which he annexed his firm's time records. (Reply Aff. of Mr. Matthews, sworn to on Apr. 24, 2013 ("Matthews Reply Aff.") (ECF No. 71)). Mr. Matthews supplemented those records by filing a further affidavit on May 31, which included additional billings accrued in connection with the filing of MWH's fee application. (Suppl. Aff. of Mr. Matthews, sworn to on May 31, 2013 ("Matthews Suppl. Aff.") (ECF No. 77)). On June 6, Inversora filed a supplemental memorandum of law in opposition to MWH's motion for fees. (Suppl. Mem. of Law of Inversora in Opp. to MWH's Mot. for Fees and Costs ("Inversora Suppl. Opp. Mem.") (ECF No. 79)). MWH seeks $25, 649 in attorney's fees and $848.48 in costs, totaling $26, 497.48. (Matthews Suppl. Aff ¶ 4).

II. Analysis

A. Attorney's Fees in Interpleader Actions

Pursuant to Rule 22 of the Federal Rules of Civil Procedure, attorney's fees are "commonly awarded to an innocent stakeholder who successfully initiates a suit as an interpleader." Landmark Chemicals, SA v. Merrill Lynch & Co. , 234 F.R.D. 62, 63 (S.D.N.Y. 2005) (citing Algemene Bank Nederland, N.V. v. Soysen Tarim Urunleri Dis Ticaret Ve Sanayi, A.S. , 748 F.Supp. 177, 183-84 (S.D.N.Y. 1990)). Such fees typically are awarded out of the interpleader fund, but "may be taxed against one of the parties when their conduct justifies it." Septembertide Pub. B.V. v. Stein & Day, Inc. , 884 F.2d 675, 683 (2d Cir. 1989) (citing Prudential Ins. Co. of Am. v. Boyd , 781 F.2d 1494, 1497-98 (11th Cir. 1986)).

The Court has substantial discretion in determining whether to award a stakeholder its fees and costs. Landmark , 234 F.R.D. at 63 (citing Pressman v. Estate of Steinvorth , 886 F.Supp. 365, 366-67 (S.D.N.Y. 1995)). An award of fees is proper when the party seeking reimbursement is "(1) a disinterested stakeholder, (2) who has conceded liability, (3) has deposited the disputed funds into court, and (4) has sought a discharge from liability." Estate of Ellington v. EMI Music Publishing , 282 F.Supp.2d 192, 193 (citing Septembertide , 884 F.2d at 683). Here, there is no question that MWH is entitled to its reasonable fees: MWH has no interest in the funds at issue, has conceded liability, and, since filing the action, has deposited the contested amount with the registry of this Court and sought a discharge of liability.

Inversora contends that MWH should be disallowed any fees because it "undermined the [garnishment] process in place" in favor of initiating this "separate, more costly" interpleader action. (Inversora Opp. Mem. at 3). When MWH filed the interpleader complaint, however, it was on notice that at least two parties were asserting a claim as to the disputed funds. "The very purpose of interpleader is to resolve such competing claims of entitlement." United States v. Barry Fischer Law Firm, LLC, No. 10 Civ. 7997 (TPG), 2012 WL 591396, at *6 (S.D.N.Y. Feb. 23, 2012). Furthermore, there was legitimate uncertainty over the legal relationship between Energo and EP-Holding. An interpleader action is appropriate when the stakeholder "legitimately fears multiple liability directed against a single fund, regardless of the merits of the competing claims." Fidelity Brokerage Servs., LLC v. Bank of China , 192 F.Supp.2d 173, 178 (S.D.N.Y. 2002) (Chin, D.J.) (brackets, quotation marks, and citation omitted). Had MWH simply complied with Inversora's garnishment subpoena, it is obvious that it would have been placing itself at a substantial risk of incurring double liability. Thus, MWH's decision to file an interpleader was not improper.

Although attorney's fees may be denied to a stakeholder who is partially responsible for the dispute, unduly delays filing the interpleader, or otherwise acts in bad faith, Indemnity Ins. Co. of N.A. v. Robinson, No. 90 Civ. 3765 (KC), 1991 WL 173115, at *8 (S.D.N.Y. Aug. 28, 1991) (collecting cases), none of those circumstances exists here. Indeed, MWH bears no responsibility for the dispute between Inversora and the Energo Defendants, and it filed this action within a reasonable time after learning that there was such a dispute. Moreover, there is no evidence that MWH contributed to the need for interpleader or otherwise acted inappropriately.

Inversora suggests that MWH "waived" its entitlement to fees by omitting a demand for them in the complaint and by failing to request fees contemporaneously with its dismissal. (Inversora Opp. Mem. at 3). However, MWH did request fees in the prayer for relief portion of its complaint, and Inversora's suggestion, that a plaintiff must set forth in detail the components of its claim for fees within a separate claim in the body of the complaint plainly is frivolous.[1] Indeed, how would the plaintiff be expected to know in advance the extent and nature of the work the case might require? Inversora's argument that an interpleader plaintiff is required to move for fees at the time it seeks dismissal similarly finds no support in law.[2] Tellingly, Inversora has cited no authority to that effect, and at least one case cited in this opinion awarded fees to an interpleader party after it had been dismissed. See Estate of Ellington, 282 F.Supp.2d at 193-94 (awarding fees to an interpleader party after it had "sought, and obtained, a discharge from [the] dispute") (emphasis added). In any event, Inversora ...


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