United States District Court, S.D. New York
AVIRAL RAI and SANGEETA RAI, Plaintiffs and Counter-Defendants,
WB IMICO LEXINGTON FEE, LLC and GARY BARNETT, Defendants and Counter-Claimants.
MEMORANDUM OPINION & ORDER
G. GARDEPHE, U.S.D.J.
Aviral Rai and Sangeeta Rai (the "Rais" or the
"Rai Plaintiffs") are purchasers of a condominium
unit in "The Lucida, " a condominium development in
Manhattan sponsored and developed by Defendant WB Imico
Lexington Fee, LLC ("WB Imico") and its principal,
Gary Barnett. Having fully prevailed against the Rais in this
litigation, WB Imico has moved for an award of attorneys'
fees and costs pursuant to a fee-shifting provision in the
Rais' purchase agreement. (Dkt. No. 113) WB Imico seeks
$444, 059.79 in attorneys' fees and costs incurred over
six years of litigation against the Rais and four other
reasons stated below, WB Imico's motion for an award of
attorneys' fees and costs will be granted.
Lucida is a condominium development located at 151 East 85th
Street, New York, New York. (Am. Cmplt. (Dkt. No. 7) ¶
1) On November 12, 2007, the Rai Plaintiffs executed a
purchase agreement for a condominium unit in The Lucida (the
"Purchase Agreement") and paid WB Imico a deposit
of $643, 119.90 - constituting 15% of the purchase price of
the unit - pursuant to that agreement. (Id
November 10, 2009, within two years of executing the Purchase
Agreement, the Rai Plaintiffs sent a notice to WB Imico
seeking to rescind the Purchase Agreement due to WB
Imico's alleged violations of the interstate Land Sales
Full Disclosure Act, 15 U.S.C. §§ 1701-1720
("ILSA"). (See id ¶¶ 46, 50-79)
In addition to the rescission of the Purchase Agreement, the
Rai Plaintiffs sought the return of their deposit.
(Id. ¶¶ 48-49, 55, 67, 77)
procedural history of this matter and related cases is long
November 18, 2009, the Rai Plaintiffs commenced this action,
alleging that WB Imico failed to provide them with a printed
property report in advance of signing the Purchase Agreement,
in violation of Section 1703(a)(1)(B) of the ILSA. (Cmplt.
(Dkt. No. 1) ¶¶ 30-34) On the basis of this
violation, the Rai Plaintiffs sought to rescind the Purchase
Agreement and recover their $643, 119.90 deposit.
(Id ¶¶ 48-49, 55, 67, 77) That same day,
four other actions were filed in this District against WB
Imico by other purchasers of condominiums at The Lucida (the
"Other Plaintiffs"). In all four actions, plaintiffs
alleged that their purchase agreements violated (1) Section
1703(d)(1) of the ILSA, because the purchase agreements did
not include a tax lot number for the purchased unit, and (2)
Section 1703(d)(3) of the ILSA, because the purchase
agreements did not clearly communicate certain purchaser
rights in the event of the purchaser's default. (See 09
Civ. 9609 (Dkt. No. 1); 09 Civ. 9610 (Dkt. No. 1); 09 Civ.
9611 (Dkt. No. 1); 09 Civ. 9612 (Dkt. No. 1)) Like the Rai
Plaintiffs, the Other Plaintiffs sought to rescind their
purchase agreements and recover their deposits based on the
alleged violations of the ILSA. (See id.)
January 28, 2010, the Rais filed an Amended Complaint that
repeated their ILSA, Section 1703(a)(1)(B) claim concerning
the property report (Am. Cmplt. (Dkt. No. 7) ¶¶
50-57), but added claims for violations of ILSA, Sections
1703(d)(1) (tax lot number) and 1703(d)(3) (rights in event
of default). (Id ¶¶ 58-79 ("Counts II
and III")). The Rais' new claims mirrored those
asserted by the Other Plaintiffs in their respective
complaints. (Compare id, with 09 Civ. 9609 (Dkt. No.
1) ¶¶ 43-64; 09 Civ. 9610 (Dkt. No. 1) ¶¶
43-64; 09 Civ. 9611 (Dkt. No. 1) ¶¶ 43-64; 09 Civ.
9612 (Dkt. No. 1) ¶¶ 43-64)) Because the Rai
Plaintiffs' Amended Complaint now repeated both claims
presented in the Other Plaintiffs' complaints -thereby
raising common issues of law and fact - this Court's
subsequent orders and opinions addressed all five cases
together throughout the litigation.
7, 2010, the Rai Plaintiffs moved for partial summary
judgment on Counts II and III of their Amended Complaint,
which addressed the ILSA claims founded on the failure to
provide a tax lot number and to disclose rights in the event
of default. (Dkt. Nos. 12, 13) The Other Plaintiffs jointly
moved for summary judgment on these same claims, asserted in
their own complaints. (See 09 Civ. 9609 (Dkt. Nos. 13, 19);
09 Civ. 9610 (Dkt. Nos. 12, 18); 09 Civ. 9611 (Dkt. Nos. 11,
17); 09 Civ. 9612 (Dkt. Nos. 14, 20)) The Rai Plaintiffs and
Other Plaintiffs "submitted virtually identical briefs
in support of their separate motions for summary
judgment." (See Apr. 30, 2010 Rai Pltfs. Partial Sum. J.
Reply Br. (Dkt. No. 25) at 5) The briefs raised the same
legal arguments - that the condominiums were subject to the
ILSA, that the purchase agreements violated Sections
1703(d)(1) and 1703(d)(3) of the ILSA, and that WB
Imico's defense relating to the ILSA's "100-Lot
Exemption" did not apply - and did so using largely
identical language and citing the same case law.
(See Rai Dkt. No. 13; see also 09 Civ. 9609
(Dkt. No. 19); 09 Civ. 9610 (Dkt. No. 18); 09 Civ. 9611 (Dkt.
No. 17); 09 Civ. 9612 (Dkt. No. 20)) WB Imico cross-moved for
summary judgment against all plaintiffs, as to all claims.
Although WB Imico filed two sets of briefs - one set
addressed to the Rai Plaintiffs and another set addressed to
the Other Plaintiffs - the briefs were substantially the
same, except that in Rai WB Imico also addressed
Count I of the Rai Plaintiffs' Amended Complaint (failure
to provide property report). (Compare Dkt. Nos. 19,
23, with 09 Civ. 9612 (Dkt. Nos. 25, 29))
December 29, 2010, this Court denied the parties'
cross-motions for summary judgment without prejudice. (Dkt.
No. 33) The Court determined that the applicability of the
ILSA's "100-Lot Exemption" was a key issue
because - if the exemption applied - the ILSA did not cover
plaintiffs' units. (Id. at 3-4) Because there
were factual disputes about the number of units sold at The
Lucida, summary judgment was not appropriate, and this Court
directed the parties to conduct additional discovery.
(Id. at 5-8) Moreover, on March 2, 2011, the Second
Circuit issued Bodanskv v. Fifth on the Park LLC.
635 F.3d 75 (2d Cir. 2011), which addressed the applicability
of the "100-Lot Exemption." On May 23, 2011, the
parties filed renewed cross-motions for summary judgment. As
before, the Other Plaintiffs filed a joint brief, and the Rai
Plaintiffs separately moved for partial summary judgment on
their Amended Complaint's Count II (tax lot number) and
Count III (rights in the event of default) - the same claims
set forth in the Other Plaintiffs' complaints. (Dkt. Nos.
38, 43; see also 09 Civ. 9612 (Dkt. No. 57, 63)) In their
Notice of Motion, the Rai Plaintiffs stated that they were
"rely[ing] upon the Memorandum of Law filed by [the
Other] Plaintiffs in 09-cv-9609, 09-cv-9610, 09-cv-9611, and
09-cv-9612." (Notice of Motion (Dkt. No. 38) at 1-2) WB
Imico again cross-moved for summary judgment on all of
plaintiffs' claims, including Count I of the Rai
Plaintiffs' Amended Complaint (failure to provide
property report). (Dkt. No. 49) WB Imico filed two
substantially similar sets of moving briefs, which differed
only to the extent that one set addressed the Rai
Plaintiffs' separate claim under Count I
(compare Dkt. No. 49, with 09 Civ. 9612 (Dkt. No.
48)). WB Imico filed a single reply brief-on the dockets of
the Other Plaintiffs, not the Rai Plaintiffs - addressing
together all of plaintiffs' joint arguments concerning
the tax lot number and disclosure of default rights issues.
(See 09 Civ. 9612 (Dkt. No. 54))
March 19, 2012 - in a single order - this Court granted the
motions of the Rai Plaintiffs and the Other Plaintiffs for
summary judgment, and denied WB Imico's cross-motions for
summary judgment. The Court concluded that the
ILSA applies to condominium units, that the [ILSA's]
"100-Lot Exemption" is not applicable [here], and
that WB Imico's failure to include tax lot numbers in the
purchase agreements constitutes a violation of [the] ILSA
that permits Plaintiffs to rescind the purchase agreements
and recover their deposits.
(Mar. 19, 2012 Order (Dkt. No. 52) at 3) The Court directed
the parties to submit briefing concerning the plaintiffs'
joint application for an award of attorneys' fees, costs,
and prejudgment interest under the ILSA. (Id at 24
n.9; see also May 15, 2012 Pltfs. Joint Motion for
Attorneys' Fees (Dkt. Nos. 55, 56))
27, 2012, while the plaintiffs' joint motion for an award
of attorneys' fees, costs, and interest was still
pending, WB Imico filed a notice of appeal concerning the
Court's March 19, 2012 Order. (See Dkt. No. 61; 09 Civ.
9612 (Dkt. No. 72))
December 12, 2012, the Second Circuit issued Bacolitsas
v. 86th & 3rd Owner, LLC, 702 F.3d 673 (2d Cir.
2013), in which purchasers of a condominium sought to revoke
their purchase agreement under Section 1703(d)(1) of the
ILSA, because it did not contain a "unit description
clause." Bacolitsas, 702 F.3d at 681. The
district court had granted the purchasers' motion for
summary judgment, employing reasoning similar to that used in
this Court's March 19, 2012 Order. See Id. at
679. The Second Circuit rejected that analysis, however.
Given the Second Circuit's ruling in Bacolitsas,
this Court set a briefing schedule for WB Imico's
anticipated motion to vacate the March 19, 2012 Order. (Dkt.
No. 69; see also 09 Civ. 9612 (Dkt. No. 74)) In
support of its motion to vacate, WB Imico filed one set of
briefs applicable to both the Rai Plaintiffs and the Other
Plaintiffs. (Compare Dkt. Nos. 63, 65, 66, with 09
Civ. 9612 (Dkt. Nos. 75, 77, 78)) The Rai Plaintiffs and
Other Plaintiffs filed a joint brief opposing WB Imico's
motion to vacate. (Dkt. No. 67)
September 27, 2013, this Court granted WB Imico's motion
to vacate "to the extent that this Court's March
2012 decision holds that the purchase agreements at issue
violate [Section] 1703(d)(1) [of the ILSA], " and to the
extent that this Court had held "that [the Other
Plaintiffs] are entitled to summary judgment." (Sept.
27, 2013 Order (Dkt. No. 69) at 2-3) The Court further
granted WB Imico's cross-motion for summary judgment as
to its counterclaims against the Other Plaintiffs.
(Id.) However, the Court denied WB Imico's
cross-motion for summary judgment as to the Rai Plaintiffs,
and held that the Rai Plaintiffs were "entitled to
summary judgment [on Count I of their Amended Complaint],
because they were not provided with a copy of the property
report for [their] condominium, in violation of [Section]
1703(a)(l)(B)" of the ILSA. (Id. at 3) The Rais
thus - temporarily - prevailed on the one claim in their
Amended Complaint that differed from the claims set forth in
the Other Plaintiffs' complaints. This Court subsequently
set briefing schedules for the Rais' application for
attorneys' fees, costs, and pre-judgment interest under
the ILSA, and for WB Imico's application for an award of
attorneys' fees and costs against the Other Plaintiffs
pursuant to their purchase agreements. (Id. at 23)
As a result of the Court's resolution of WB Imico's
motion to vacate, the still-pending appeal of this
Court's March 19, 2012 Order was withdrawn as moot.
(See Dkt. No. 72; 09 Civ. 9612 (Dkt. No. 83))
November 4, 2013 - prior to submitting a brief in support of
its application for an attorneys' fee award against the
Other Plaintiffs - WB Imico entered into settlement
agreements with each of the Other Plaintiffs. (See 09 Civ.
9609 (Dkt. No. 89); 09 Civ. 9610 (Dkt. No. 83); 09 Civ. 9611
(Dkt. No. 86); 09 Civ. 9612 (Dkt. No. 86)) In each settlement
agreement, the parties agreed to the dismissal of the
complaint and counterclaims, and "waive[d] any right
either party may have, in law, equity or contract, to an
award of costs or attorneys' fees in [the] action."
(Id. ¶¶ 1, 3) Pursuant to the settlement
agreements, WB Imico retained the Other Plaintiffs'
deposits on the condominiums at issue (id. ¶
2), but "did not recover any of the attorneys' fees
it incurred in litigating" against the Other Plaintiffs.
(Dolan Decl. (Dkt. No. 115) ¶ 16)
January 17, 2014, while the Rai Plaintiffs' motion for an
award of attorneys' fees was pending, WB Imico filed a
notice of appeal from this Court's September 27, 2013
Order. (Dkt. No. 89) The Rai Plaintiffs filed a notice of
cross-appeal on February 6, 2014. (Dkt. No. 90) The Second
Circuit dismissed both appeals for lack of jurisdiction,
because a final judgment had not been entered and no
exception to the final judgment rule applied. (Dkt. No. 97)
12, 2014, this Court denied the Rai Plaintiffs' motion
for attorneys' fees and costs, but granted them
pre-judgment interest on their deposit at the post-judgment
statutory rate. (Dkt. No. 92) Judgment was entered on May 14,
2014. (Dkt. No. 93) WB Imico filed a notice of appeal, and
the Rai Plaintiffs cross-appealed. (Dkt. Nos. 95, 96)
September 21, 2015, the Second Circuit issued an opinion that
(1) affirmed the judgment of this Court that WB Imico did not
violate Section 1703(d)(1) of the ILSA (failure to provide
tax lot number); (2) reversed the judgment of this Court that
WB Imico violated Section 1703(a)(1)(B) by not delivering a
property report to the Rais directly; and (3) held that WB
Imico was entitled to retain the Rais' deposit on the
condominium unit, as well as any interest accrued thereon, as
a result of the Rais' breach of the Purchase Agreement.
Rai v. WB Imico Lexington Fee, LLC, 802
F.3d 353, 370 (2d Cir. 2015). The Second Circuit remanded the
case for further proceedings.
WB IMICO'S APPLICATION FOR AN AWARD OF ATTORNEYS'
FEES AND COSTS
March 17, 2016, WB Imico moved for an award of $444, 059.79
in attorneys' fees and costs pursuant to a fee-shifting
provision in the Rai Plaintiffs' Purchase Agreement.
(Dkt. No. 113; Def. Moving Br. (Dkt. No. 114) at 5-6) This
figure represents attorneys' fees and costs WB Imico
incurred in defending against the claims of all five sets of
plaintiffs - both the Rai Plaintiffs and the Other
Plaintiffs. (Id. at 15-16)
Plaintiffs oppose WB Imico's motion, contending that it
cannot recover attorneys' fees and costs "allegedly
incurred in defending against five separate matters,
involving five separate contracts, and five separate
plaintiffs." (Pltf. Opp. Br. (Dkt. No. 119) at 5) The
Rai Plaintiffs further contend that WB Imico's
application should be denied because the fee-shifting
provision in the Rais' Purchase Agreement (1) 'does
not make the Rai Plaintiffs jointly and severally liab[le]
for all fees incurred ... on any and all related agreements,
" and (2) makes the Rai Plaintiffs "only
responsible for their distinct, identifiable, and unique
attorneys' fees, " which WB Imico cannot now
specify, because defense counsel commingled the billing
records applicable to work against the Rai Plaintiffs and
work against the Other Plaintiffs. (Id. at 5-6,
14-16) The Rai Plaintiffs argue that the fee application also
fails because WB Imico has not "submit[ted] any evidence
that the work described in th[e] fee application was
reasonable or necessary, or that the rates charged are
reasonable." (Id. at 5, 16-24)
WB IMICO IS ENTITLED TO AN AWARD OF REASONABLE ATTORNEYS'
Imico's application for an award of attorneys' fees
and costs is premised on a fee-shifting provision in the Rai
Plaintiffs' Purchase Agreement. (Def. Moving Br. (Dkt.
No. 114) at 5-6; Dolan Decl. (Dkt. No. 115) ¶¶ 2-3)
Paragraph 32 of the Rai Plaintiffs' Purchase Agreement
[the purchaser] shall be obligated to reimburse [WB Imico]
for any legal fees and disbursements incurred by [WB Imico]
in defending [its] rights under this Agreement or, in the
event [the purchaser] defaults under this Agreement beyond
any applicable grace period, in canceling this Agreement or
otherwise enforcing [the purchaser's] obligations
(Dolan Decl. (Dkt. No. 115) ¶ 3)
Plaintiffs argue that "the express language of the fee
shifting [provision] in the Rai Plaintiffs' [Purchase]
Agreement does not.. . make the Rai Plaintiffs responsible
for fees [related to the] [O]ther [P]laintiffs." (Ptlf.
Opp. Br. (Dkt. No. 119) at 10) The Rai Plaintiffs further
argue that, "[a]s a matter of contract, . . . [they] are
only responsible for their distinct, identifiable and unique
attorneys' fees[, which] ... WB Imico has failed to
identify." (Id at 16)
Attorneys' Fee Awards Based on Contract
the 'American Rule, ' it is axiomatic that
'attorneys' fees are not ordinarily recoverable in
the absence of a statute or enforceable contract providing
therefor.'" Matsumura v. Benihana Nat.
Corp.. No. 06 Civ. 7609 (NRB), 2014 WL 1553638, at *3
(S.D.N.Y. Apr. 17, 2014) (quoting Summit Valley Indus.,
Inc. v. United Bd. of Carpenters & Joiners, 456 U.S.
717, 721 (1982)). "Parties may override the presumption
by contractually agreeing to permit recovery of
attorneys' fees, [however, ] in which case 'a federal
court will enforce contractual rights to attorneys' fees
if the contract is valid under applicable state
law.'" Id. (quoting 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 Commc'ns. LLC. 537 F.3d 168,
175 (2d Cir. 2008). Indeed, the Second Circuit has stated
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.
the Rai Plaintiffs' Purchase Agreement plainly provides
that they "shall be obligated to reimburse [WB Imico]
for any legal fees and disbursements incurred by [WB Imico]
in defending [its] rights under th[e] [Purchase]
Agreement." (Dolan Decl. (Dkt. No. 115) ¶ 3) This
language is "sufficiently clear" to permit WB Imico
to recover attorneys' fees and costs it incurred in
litigating against the Rai Plaintiffs. See NetJets
Aviation. 537 F.3d at 175.
Plaintiffs do not challenge the validity of the fee-shifting
provision, but instead dispute whether this provision permits
recovery of fees and costs WB Imico incurred in litigating
against the Other Plaintiffs, who each sued WB Imico under
separate purchase agreements. (See Pltf. Opp. Br. (Dkt. No.
119) at 10, 16) Accepting the Rai Plaintiffs' assertion
that the fee-shifting provision in their Purchase Agreement
only permits the reimbursement of fees and costs
"incurred by [WB Imico] in defending ...