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Union Central Life Insurance Co. v. Berger

United States District Court, Second Circuit

December 13, 2013

UNION CENTRAL LIFE INSURANCE COMPANY, Plaintiff,
v.
HEA THER A. BERGER, RISE K. CROSS, and CYNTHIA STEINMETZ, Defendants.

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, District Judge.

This is an interpleader action brought by Union Central Life Insurance Company concerning competing claims to a $700, 000 life insurance policy (the "Policy") in the name of decedent Wayne Cross ("Decedent"). In a September 20, 2012 memorandum opinion and order, this Court determined that Cynthia Steinmetz is the proper beneficiary, and that Decedent's former spouse, Rise K. Cross ("Cross"), breached several provisions of a divorce settlement agreement with Decedent (the "Settlement Agreement") by asserting a claim to the Policy proceeds. Union Cent. Life Ins. Co. v. Berger, No. 10 Civ. 8408 (PGG), 2012 WL 4217795, at *12-13 (S.D.N.Y. Sept. 20, 2012) (Dkt No. 98).

The Settlement Agreement contains an indemnification provision that requires a breaching party to

indemnify the other party against or [] reimburse such other party for any [and] all expenses, costs and attorney's fees resulting from or made necessary by the bringing of any suit or other proceeding to enforce any of the terms, covenants or conditions of this Agreement to be performed or complied with by the defaulting party... provided such suit or other proceeding results in a judgment, decree or order in favor of the party seeking to enforce said indemnity.

Id. at * 14 (quoting Del Mauro Cert., Ex. 15 at 34).

Accordingly, in its September 20, 2012 decision, this Court ruled that Cross would be ordered to "reimburse decedent's Estate for its expenses, costs and attorneys' fees associated with the litigation, " id., and directed Steinmetz - acting as the Estate's executor - to submit documentation supporting the Estate's claim. Id . Steinmetz has done so, but Cross contends that the amount of attorneys' fees and costs sought by the Estate is unreasonable. See Stein Mot. (Dkt. No. 99); Cross Opp. Br. (Dkt. No. 100).

DISCUSSION

The Estate seeks an award of $271, 211.50 in attorneys' fees[1] land $8, 079.67 in costs.[2](Steinmetz Mot. (Dkt. No. 99)) The proposed award reflects the work of seven Wiggin and Dana attorneys and two paralegals. (Prout Aff., Ex. A (Dkt No. 99); Prout Supp. Aff., Ex. A (Dkt. No. 101)) The Estate has submitted contemporaneous time records that detail the nature of the work performed, the names of the attorneys and paralegals who worked on the matter, and the hours they expended. (Prout Aff., Ex. A at 10-51 (Dkt. No. 99)) Cross has raised a number of objections regarding the reasonableness of the proposed fees and costs awards. (Cross Opp Br. (Dkt. No. 100)) After reviewing the billing records and the other materials submitted by the parties, the Court concludes that the Estate is entitled to $169, 620.67 in attorneys' fees and costs.

I. THE ESTATE'S ENTITLEMENT TO FEES

A. New York Law Applies

It is undisputed that New York law governs the Estate's right to an award of attorneys' fees and costs.[3] "Under the general rule in New York, attorneys' fees are the ordinary incidents of litigation and may not be awarded to the prevailing party unless authorized by agreement between the parties, statute, or court rule." Oscar Gruss & Son. Inc. v. Hollander , 337 F.3d 186, 199 (2d Cir. 2003)). Parties are free, of course, to "agree by contract to permit recovery of attorneys' fees, and a federal court will enforce contractual rights to attorneys' fees if the contract is valid under applicable state law." McGuire v. Russell Miller, Inc. 1 F.3d 1306 , 1313 (2d Cir. 1993). In New York, "a contract that provides for an award of reasonable attorneys' fees to the prevailing party in an action to enforce the contract is enforceable if the contractual language is sufficiently clear." NetJets Aviation, Inc. v. LHC Communications LLC , 537 F.3d 168, 175 (2d Cir. 2008). Moreover, the Second Circuit has held that "where a contract authorizes an award of attorneys' fees, such an award becomes the rule rather than the exception." McGuire , 1 F.3d at 1313.

This Court has already determined that Cross and Decedent entered into a valid contract under New York law when they executed the Settlement Agreement. Union Cent. Life Ins. Co., 2012 WL 4217795, at *12 ("It is undisputed here that the Settlement Agreement constitutes a valid contract."). This Court has likewise ruled that Cross breached "multiple provisions" of that contract by wrongfully claiming entitlement to the Policy's proceeds. Id . The Court further noted in its summary judgment decision that the Settlement Agreement provides for an award of "expenses, costs and attorney's fees" to a party who prevails in any action to enforce its terms. Id. at * 14. Accordingly, the Estate is unquestionably entitled to an award of attorneys' fees and costs. What remains to determine is the appropriate amount of such an award.

The Award Must be Reasonable

While the Settlement Agreement does not explicitly impose a reasonableness limitation on the Estate's potential recovery, "[a] district court's award of attorneys' fees pursuant to a contractual fee-shifting provision must be reasonably related to the fee arrangement that the prevailing party would have made with counsel absent a fee-shifting agreement." In Time Products, Ltd. v. Toy Biz, Inc. , 38 F.3d 660, 667-68 (2d Cir. 1994). Courts will generally "order the losing party to pay the amount actually incurred, so long as those amounts are reasonable." Chinatrust Bank (U.S.A.) v. Pinter, No. 04-CV-5331 (SLT)(KAM), 2008 WL 2987152, at *2 (E.D.N.Y. July 31, 2008). However, "[a] party is not entitled to reimbursement for fees that it would not have agreed to pay if [] there had been no contractual provision for reimbursement." In Time Products, Ltd. , 38 F.3d at 668. The Estate may therefore only recover those "expenses, costs and attorney's fees" that a reasonable client in like circumstances would have expended absent an indemnification provision.

II. DETERMINING AN APPROPRIATE AMOUNT

A. General Principles

"When determining a fee award based upon a contractual attorneys' fees agreement between the parties, ... courts have broad discretion' and need not follow a specific formula. As such, the Court need not pore over every hour and minute billed but only make adjustments for any unnecessary, unreasonable, or excessive fees." Clarendon Nat. Ins. Co. v. Advance Underwriting Managers Agency. Inc., No. 06 Civ. 15361, 2011 WL 6153691, at *2 (S.D.N.Y. Dec. 8, 2011) (quoting U.S. Fidelity & Guaranty Co. v. Braspetro Oil Servs. Co. , 369 F.3d 34, 74 (2d Cir, 2004)). "Both the evaluation of reasonable attorneys' fees and the reduction of such tees lies within the sound discretion of the Court, " Amaprop Ltd. v. Indiabulls Fin. Srvs. Ltd., No. 10 Civ. 1853 (PGG), 2011 WL 1002439, at *4 (S.D.N.Y. Mar. 16, 2011) (quoting ACE Ltd. v. CIGNA Corp., No. 00 Civ. 9423 (WK) , 2001 WL 1286247, at *2 (S.D.N.Y. Oct. 22, 2001) (citing Shannon v. Fireman's Fund Ins. Co. , 156 F.Supp.2d 279, 298 ...


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