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Mazzei v. The Money Store

United States District Court, Southern District of New York

May 6, 2015

JOSEPH MAZZEI, et al., Plaintiffs,
v.
THE MONEY STORE, et al., Defendants.

OPINION AND ORDER

HONORABLE RONALD L. ELLIS UNITED STATES MAGISTRATE JUDGE

I. INTRODUCTION

Plaintiff Joseph Mazzei brought this class action on behalf of himself and all those similarly situated against The Money Store, TMS Mortgage, Inc., and HomEq Servicing Corporation. Mazzei alleged breach of contract and violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1666(d), TILA Regulation Z, 12 C.F.R. § 226.21, and California Business & Professional Code § 17200 et seq. (West 2011), in connection with Defendants' allegedly improper debt collection practices. (Docket No. 131.) A verdict was entered in this action on December 19, 2014, following a two-week jury trial. (Doc. No. 461)

On July 21, 2014, the Court sanctioned Defendants for violating the duty to preserve information relating to foreclosure and bankruptcy services provided to Defendants by Fidelity National Foreclosure Solutions ("Fidelity") through an electronic database created by Fidelity, "the New Invoice System." (PI. Letter to the Court, Nov. 25, 2013 at 7.) Mazzei now seeks an order granting fees of $17, 977.50 for class counsel Paul Grobman, a solo practitioner, and fees of $20, 733 for class counsel H. Rajan Sharma and Neil DeYoung of the firm Sharma & DeYoung, LLP. (Doc. Nos. 279, 286) For the reasons set forth below, Mazzei's application is GRANTED in the total amount of $30, 681.

II. BACKGROUND

Mazzei alleged that Defendants entered into a Master Service Agreement ("MSA") with Fidelity in 2000, under which Defendants would send foreclosure and bankruptcy matters involving borrowers to Fidelity and Fidelity would refer those matters to law firms Fidelity retained for that purpose. (PL Letter to the Court, Nov. 25, 2013 at 3.) In return, Fidelity was paid a portion of the attorneys' fees charged to borrowers. (Id.) Defendants tracked the invoicing and payment of the fees through "the New Invoice System, " "an electronic billing system created by Fidelity" (PL Letter to the Court, Oct. 17, 2013 at 1.) In 2006, Defendant The Money Store, Inc. sold the assets of Defendant HomEq Servicing Corporation, its wholly owned subsidiary, to Barclays. (Def. Letter to the Court, Nov. 25, 2013 at 1.) Those assets included the New Invoice System. (Id.)

In his letter request for sanctions, Mazzei claimed that information had been lost from the New Invoice System and was in the possession of a third party, Lender Processing Services ("LPS"), and would be costly for Mazzei to retrieve. (PL Letter to the Court, Oct. 17, 2013 at 3.) Accordingly, Mazzei asked the Court to direct Defendants to obtain the information from LPS, as a sanction for their failure to preserve the information in its original format. (PL Letter to the Court, Nov. 25, 2013 at 7.) The Court granted Mazzei's request and ordered Defendants to 1) bear the cost of determining whether the New Invoice System data currently in the possession of LPS is searchable; 2) pay Mazzei his attorneys' fees for this application.

Mazzei submitted affidavits detailing reasonable hours and rates associated with his request for sanctions on July 31, and August 1, 2014. (Doc. Nos. 279, 281.) Defendants filed no objections.

III. DISCUSSION

A. Mazzei's Requested Attorneys' Fees

A Court may impose sanctions against counsel and against a party and counsel pursuant to the Court's inherent authority to manage the cases before it. 28 U.S.C. § 1927 ("§ 1927"); see Revson v. Cinque & Cinque, P.C., 221 F.3d 71, 78 (2d Cir. 2000); accord Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (holding that a court's inherent power to sanction is "governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve orderly and disposition of cases"). Under § 1927, any attorney "who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927. Defendants' counsel does not challenge KGK's entitlement to attorneys' fees at this stage, but instead focuses on the reasonableness of the request.

In determining the appropriate amount of attorneys' fees to award, the Court must calculate the "presumptively reasonable fee" by multiplying a reasonable hourly rate by the reasonable number of hours worked. Arbor Hill Concerned Citizens Neighborhood Ass 'n v. County of Albany, 493 F.3d 110, 117-18 (2d Cir. 2007), amended on other grounds, 522 F.3d 182 (2d Cir. 2008). A "reasonable hourly rate is the rate a paying client would be willing to pay." McDaniel v. County of Schnectady, 595 F.3d 411, 414 (2d Cir. 2010). The factors relevant to this determination include: "(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment due to acceptance of the case; (5) the attorney's customary hourly rate; (6) whether the fee is fixed or contingent (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases." Arbor Hill, 493 F.3d at 114 n.3 (internal quotation marks omitted). Furthermore, this Circuit has affirmed the "forum rule, " whereby a district court will award fees at the going rate in the district in which the court sits. Simmons, 575 F.3d at 174. The burden is on the party seeking attorneys' fees to submit sufficient evidence to support the hours worked and the rates claimed. See Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984).

1.Mazzei's Counsel's Hourly Rates

a. Paul Grobman, Solo Practitioner


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