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MSC Mediterranean Shipping Co. Holding S.A. v. Forsyth Kownacki LLC

United States District Court, S.D. New York

March 30, 2017

FORSYTH KOWNACKI LLC, et al., Defendants.


          LORNA G. SCHOFIELD, District Judge.

         This application for attorneys' fees arises out of a default judgment in favor of Plaintiff MSC Mediterranean Shipping Company Holding S.A.'s (“MSC”) claims for an anticipatory breach of contract and breach of contract, granting Plaintiff injunctive relief, declaratory relief and attorneys' fees and costs pursuant to Federal Rule of Civil Procedure 54(d) and the terms of a financing agreement executed between the parties. Plaintiff seeks $489, 537.00 in costs and fees. For the following reasons, Plaintiffs motion is granted in part.

         I. BACKGROUND

         MSC and Defendant Forsyth Kownacki LLC (“FK”) executed an agreement about a potential confidential financing transaction (the “Financing Agreement”) in 2014. The terms of the Financing Agreement and a separate non-disclosure agreement contained confidentiality clauses, which bound FK and its principals, including Defendant Michael Kownacki. Default Judgment was entered against Defendants on February 2, 2017, for breaching the terms of the non-disclosure agreement by refusing to return or destroy the confidential information in their possession in response to MSC's request to do so and for anticipatorily breaching the non- disclosure agreement and Financing Agreement by threatening to disclose MSC's confidential information.

         The Financing Agreement also stated: “To the extent any dispute arises between the parties hereto regarding any of the subject matter hereof, the prevailing party in any action or proceeding brought in connection therewith will be entitled to reasonable attorneys' fees and courts costs from the losing party”

         Plaintiff filed a motion for attorneys' fees and costs on January 31, 2017, supported by a memorandum of law and attorney declaration requesting $455, 778.03 in fees and costs. Plaintiff filed a supplemental declaration seeking an additional $32, 727.19 in legal fees and $1, 031.78 in costs, bringing the total sought to $489, 537.00. Defendants have not appeared in this action.

         II. discussion

         Attorneys' fees and costs are appropriately awarded pursuant to the terms of the Financing Agreement and Federal Rule of Civil Procedure 54(d). “It is an ancient common axiom that a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint.” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (internal quotation marks omitted). “[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). “Although a district court has broad discretion in awarding attorneys' fees, . . . where a contract authorizes an award of attorneys' fees, such an award becomes the rule rather than the exception.” Id.

         The clear language of the Financing Agreement awards “reasonable attorneys' fees and court costs” to the “prevailing party in any action or proceeding” connected to the Financing Agreement. Plaintiff brought this action to enforce the confidentiality terms of the Financing Agreement and is the “prevailing party” by virtue of the Default Judgment entered in its favor. The Financing Agreement's clause granting fees is also enforceable. “Under New York law, 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 Commc'ns, LLC, 537 F.3d 168, 175 (2d Cir. 2008). Here, the Financing Agreement provided that New York law governs and contains clear language that a prevailing party is entitled to fees and costs. Accordingly, an award of fees and costs is warranted.

         To determine the amount of attorneys' fees to be awarded, a court begins with the “lodestar -- the product of a reasonable hourly rate and the reasonable number of hours required by the case, ” which results in a “presumptively reasonable fee.” Perez v. AC Roosevelt Food Corp., 744 F.3d 39, 44 (2d Cir. 2013) (citation omitted). “A district court may adjust the lodestar when it does not adequately take into account a factor that may properly be considered in determining a reasonable fee.” Millea v. Metro-N. R.R. Co., 658 F.3d 154, 167 (2d Cir. 2011) (internal quotation marks omitted). “The presumptively reasonable fee boils down to what a reasonable, paying client would be willing to pay, given that such a party wishes to spend the minimum necessary to litigate the case effectively.” Simmons v. N.Y.C. Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009) (internal quotation marks omitted).

         In determining what a reasonable client would pay, a court applies the Johnson factors:

(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 by the attorney 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 Concerned Citizens Neighborhood Ass'n v. Cty. of Albany, 522 F.3d 182, 186 n.3 (2d Cir. 2008) (citation omitted). The requesting party bears the burden of establishing the appropriateness of the hours expended and hourly rates. See SEC v. Cope, No. 14 Civ. 7575, 2016 WL 7429445, at *2 (S.D.N.Y. Dec. 23, 2016). “[T]he customary hourly rate and awards in similar cases are strong evidence of what the market will bear.” Dimopoulou v. First Unum Life Ins. Co., No. 13 Civ. 7159, 2017 WL 464430, at *2 (S.D.N.Y. Feb. 3, 2017) (internal quotation marks omitted). “[H]ours that are excessive, redundant, or otherwise unnecessary” should be excluded. Hensley v. Eckerhart, 461 U.S. 424, 434 (1983).

         Plaintiff requests $67, 122.00 in attorneys' fees for 86.2 hours of work by attorneys at Sheppard Mullin during the two weeks between September 22 and October 19, 2016. Plaintiff requests fees it paid Sheppard Mullin “associated with its pre-suit responses to Kownacki's threats, ” specifically, researching, drafting and sending three letters to Defendants in an attempt to enforce MSC's contractual rights. The Sheppard Mullin timesheets however show that the firm billed time for drafting a complaint and motion papers in support of a TRO, work that apparently was duplicated and completed by Gibson Dunn. This amount, which the Court in its discretion estimates to be $37, 173 should be deducted. Also, time billed by two attorneys, partner Charles Donovan and ...

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