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Kerr v. John Thomas Financial

United States District Court, S.D. New York

May 1, 2017

DR. EUBULUS J. KERR III, Plaintiff/Petitioner,
v.
JOHN THOMAS FINANCIAL et al., Defendants/Respondents.

          MEMORANDUM OPINION & ORDER

          KATHERINE B. FORREST United States District Judge.

         This Memorandum Opinion & Order resolves two motions in this unnecessarily long-fought case. On September 19, 2016, plaintiff moved to hold defendants in contempt of court. (ECF No. 119.) On November 16, 2016, plaintiff moved for summary judgment on his request for attorneys' fees and costs. (ECF No. 212.) This Court referred these motions to the Honorable Henry B. Pitman, who submitted Reports and Recommendations on these motions on January 31, 2017, and February 3, 2017, respectively. (ECF Nos. 235 (the “Summary Judgment R&R”) and 239 (the “Contempt R&R”).) Neither party objected to the Contempt R&R; however, both parties objected to the Summary Judgment R&R. (ECF Nos. 240, 241.)

         For the reasons set forth below, the Court adopts the Contempt R&R in full, adopts the Summary Judgment R&R with slight modification, and enters judgment for the plaintiff in the amount of $200, 297.02, to be satisfied by defendants in full not later than Friday, May 5, 2017, at 5:00 p.m.

         I. DISCUSSION

         In reviewing a Report and Recommendation, a district court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C). When specific objections are made, “[t]he district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to.” Fed.R.Civ.P. 72(b)(3); see also United States v. Male Juvenile, 121 F.3d 34, 38 (2d Cir.1997).

         A. The Reports and Recommendations

         Judge Pitman issued the Contempt R&R on February 3, 2017. (ECF No. 239.) Neither party has objected. Therefore, the Court adopts the Contempt R&R in full and enters judgment for defendants on plaintiff's motion at ECF No. 119. See Fed.R.Civ.P. 72(b)(2).

         On January 31, 2017, Judge Pitman issued the Summary Judgment R&R on plaintiff's motion for $241, 683.02 in attorneys' fees and costs. (ECF No. 235.) Judge Pitman agreed with plaintiff that the language of the parties' release agreement unambiguously provides for the shifting of costs and fees “[i]n the event of any judicial or arbitral proceeding to enforce or collect upon the Award or any judgment thereupon” without qualification, and that this provision was not waived. (Id. at 16-18.)

         However, the Summary Judgment R&R concluded that due to inadequate record-keeping and the inclusion of time spent seeking attorneys' fees, the amount requested by plaintiff was unreasonable. Judge Pitman applied New York law to determine the proper award, explaining that the reasonableness of a request for attorneys' fees and costs arising under a contract “can be measured by the standards that are used to evaluate fee awards under statutory provisions directing the court to award a ‘reasonable' attorney's fee.” Sidley Holding Corp. v. Ruderman, No. 08-cv-2513, 2009 WL 6047187, at *16 (S.D.N.Y. Dec. 30, 2009) (citing fee-shifting provisions under 42 U.S.C. § 1988(b) and 11 U.S.C. § 330). To determine a presumptively reasonable fee award, Judge Pitman applied the lodestar method, in which a court multiplies the hours reasonably spent by counsel on the matter by an hourly rate appropriate in the relevant community. See Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984); McDaniel v. Cnty. of Schenectady, 595 F.3d 411, 414 (2d Cir. 2010). To enable a court to determine the lodestar multipliers-first, the amount of time spent and how much of that time was reasonable, and second, what rate is appropriate for the relevant attorney-New York law requires that a “fee application . . . be supported by contemporaneous time records that ‘specify, for each attorney, the date, the hours expended, and the nature of the work done.'” Watson v. E.S. Sutton, Inc., No. 02-cv-2739, 2006 WL 6570643, at *3 (S.D.N.Y. Aug. 11, 2006) (quoting N.Y. State Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983)), adopted as modified, 2007 WL 2245432 (S.D.N.Y. Aug. 3, 2007). “[W]here adequate contemporaneous records have not been kept, the court should not award the full amount requested.” F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1265 (2d Cir. 1987) (citing decisions of New York courts in which fee requests were reduced due to inadequate records of work performed). Additionally, Judge Pitman explained that, under New York law, “a general contract provision for the shifting of attorneys' fees does not authorize an award of fees for time spent in seeking the fees themselves.” Id. at 1266.

         Applying this framework, Judge Pitman reviewed plaintiff's counsel's submissions in support of the fee request and found the amount unreasonable due to duplicative staffing, vague time entries, block billing, and the inclusion of time spent on collection of the fees themselves. Judge Pitman observed that there were significant instances of duplication or excessive staffing, such as three attorneys attending a deposition or a conference; that under New York precedents, plaintiff's counsel's time entries for activities such as “calls, ” “filing, ” and “[r]esearch, prep work” were sufficiently vague to justify a reduction in fees; and that block billing by plaintiff's counsel made it difficult to evaluate the reasonableness of time spent on individual tasks. (ECF No. 325 at 20-25; see also, e.g., Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 179 (2d Cir. 1998) (“[W]e see no abuse of discretion in . . . the 20% reduction for vagueness, inconsistencies, and other deficiencies in the billing records.”); Ng. v. King Henry Realty, Inc., 16-cv-13, 2016 WL 6084074, at *7 (S.D.N.Y. Oct. 7, 2016) (“[C]ourts in this district have generally frowned upon awarding fees to more than two attorneys for court appearances unless the case is uniquely complex.”); LV v. N.Y.C. Dep't of Educ., 700 F.Supp.2d 510, 525 (S.D.N.Y. 2010) (“[B]lock-billing . . . can make it exceedingly difficult for courts to assess the reasonableness of the hours billed.”).

         Judge Pitman subtracted the amount of fees attributable to the collection of fees themselves ($9, 645) from the $216, 575 sought. (ECF No. 325 at 26-27; F.H. Krear, 810 F.2d at 1266 (“[A] general contract provision for the shifting of attorney's fees does not authorize an award of fees for time spent in seeking the fees themselves.”). Judge Pitman then reduced the remainder by 20%: by 15% to account for redundant staffing, and by 5% to account for block billing and vague time entries. The Summary Judgment R&R therefore recommends the award of $165, 544 in attorneys' fees and $41, 386 in costs for a total of $190, 652.02.

         B. Defendants' Objections

         Defendants objected to the Summary Judgment R&R on February 14, 2017, arguing that the Summary Judgment R&R “failed to consider the fact that [the fees sought] are in addition to the contingency fees” earned by plaintiff's counsel and “the excessive, redundant and otherwise unnecessary billing” by plaintiff's counsel; and that plaintiff waived claims to costs. (ECF No. 240.) These objections simply restate the same arguments defendants made in their original opposition to the motion; indeed, defendants' objection specifically “refers to the Memorandum of Law submitted to the Magistrate in support of these objections.” (ECF No. 240 at 1.) The Court finds that defendants' pro forma objection letter “simply reiterate[s] arguments considered and rejected” in the Summary Judgment R&R and therefore will be reviewed only for “clear error.” See Jones v. Smith, No. 09-cv-6497, 2012 WL 1592190, at *1 (S.D.N.Y. Ma 7, 2012).

         The General Release Agreement unambiguously provided for recovery of attorneys' fees “[i]ncurred in the event of any judicial or arbitral proceeding . . . to enforce or collect upon the [Arbitration] Award or any judgment thereupon.” (ECF No. 151, Ex. G ¶ 4.) This is in addition to any contingency fee earned by plaintiff's counsel for representing plaintiff in the award proceeding. The plain text of the agreement therefore provides for granting of attorneys' fees incurred during all post-award collection efforts, including the extensive litigation before this ...


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