Opinion
3:21-cv-1552-JR
05-31-2022
IRINA KOSHILKA, Plaintiff v. K1 SPEED, INC., Defendant.
FINDINGS & RECOMMENDATION
Jolie A. Russo, United States Magistrate Judge
BACKGROUND
Plaintiff, Irina Koshilka, initiated this negligence action on February 10, 2021, in Washington County, Oregon Circuit Court against defendant K1 Speed, Inc. On March 31, 2021, plaintiff obtained a default judgment in the amount of $219,174.70 plus post-judgment interest at the rate of 9 percent per year.
On or about August 19, 2021, plaintiff served writs of garnishment on Citizens Bank and Wells Fargo garnishing defendant's property in the banks' possession to satisfy the judgment. The banks responded they had no such property in their possession. On or about October 13, 2021, plaintiff served a writ of garnishment on Chase Bank in regard to defendant's account with that bank. (ECF 12-1 at pp. 9-10). Chase responded by placing a hold on defendant's balance of $92,389.04. (ECF 12-1 at p. 1).
Defendant removed the action to this Court on October 26, 2021. Defendant subsequently moved to set aside the default judgment and dissolve the Chase bank writ of garnishment. Plaintiff then sought a remand.
This Court determined that plaintiff properly served defendant, removal was procedurally improper, and it had no jurisdiction to review the Washington County Court's default judgment. (ECF 36, 38). Accordingly, the Court remanded the case back to state Court. (ECF 39).
Plaintiff now moves for an award of attorney fees in the amount of $27,702.00.
Plaintiff also seeks fees in the amount of $2,102 incurred in preparing a reply to defendant's response to the motion for a total fee request of $29,804.
DISCUSSION
Plaintiff seeks fees related to the remand pursuant to 28 U.S.C. § 1447(c) and fees related to the garnishment challenge pursuant to Or. Rev. Stat. § 18.715.
A. Fees Incurred as a Result of Removal
“If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” 28 U.S.C.A. § 1447(c). “Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists, fees should be denied.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).
Defendant's removal of this case was based on its assertion that service of process upon it was not properly effectuated. However, as this Court found, and defendant's records demonstrated:
service was attempted at the location defendant designated as the address for its registered agent - i.e., 5579 N.E. Huffman Street #2, Hillsboro, Oregon, 97213. Notice of Removal Ex. A, at 7 (doc. 1-1); D'Ambrosio Decl. ¶ 6 (doc. 7); Boxer Decl. ¶¶ 5-7 (doc. 8); Boxer Decl. Exs. E-F (doc. 8); see also Def.'s Mot. for Order Dissolving Writ 5 (doc. 11) (defendant acknowledging that, at the time of service, “the Secretary of State's records mistakenly listed K1's registered address as K1's facility in Hillsboro”). That location is also defendant's place of business - namely, it is the go-cart facility where plaintiff was injured. Although defendant maintains that it inadvertently listed this address in its 2020 and 2021 corporate filings with the State of Oregon, the fact remains that service of the summons and complaint was made at defendant's designated registered agent's office. That these filings also correctly listed defendant's mailing address in Irvine, California, does not somehow render the location of plaintiff's service improper.
Findings and Recommendation (F&R) at p. 5. (ECF 36) Adopted ((ECF 39).
Plaintiff effectuated process by having a process server provide copies of the summons and complaint to an employee staffing the front desk of the location designated by defendant as the address of its registered agent. Under Or. R. Civ. P. 7D(3)(b)(i), service may be made by personal service upon any clerk on duty in the office of a registered agent. At the time of service, the Oregon Court of Appeals defined “clerk” as “a secretary, typist, or receptionist in the registered agent's office,” or any other employee “in the registered agent's office who interact[s] with the public, [has] regular contact with the registered agent, and for whom there is some obligation to pass along documents to the registered agent.” Abbots v. Bacon, 133 Or.App. 315, 320, 891 P.2d 1321 (1995). Under these circumstances, defendant did not have an objectively reasonable basis for seeking removal. Accordingly, the Court should require payment of attorney fees incurred as a result of the removal.
As noted in the F&R, the summons and complaint were forwarded to defendant's Chief Financial Officer who overlooked the email with the documents resulting in a disruption in forwarding them to counsel. Nonetheless, even if defendant had not failed to properly list the address of its registered agent, it nonetheless did get notice of the complaint. See F&R at p. 2 (ECF 36).
B. Fees Incurred Responding to Challenge to Writ of Garnishment
The day after removing this case, defendant moved to set aside the default judgment. Where a case is properly removed, the district court “takes the case as it finds it” and “treats everything that occurred in the state court as if it had taken place in federal court.” Butner v. Neustadter, 324 F.2d 783, 785 (9th Cir. 1963); see also Munsey v. Testworth Labs., 227 F.2d 902, 903 (6th Cir. 1955) (federal court's jurisdiction to review a state court default judgment is triggered by timely removal). Under these circumstances, a default judgment entered by the state court “should be treated as though it had been validly rendered in the federal proceeding,” and may be set aside under Fed.R.Civ.P. 60(b) where the state court lacked jurisdiction, or the federal or state court have a basis to vacate that judgment. Butner, 324 F.2d at 786; see also Hawes v. Cart Prod., Inc., 386 F.Supp.2d 681, 689 (D. S.C. 2005) (collecting cases involving motions for relief from an order of default entered in state court). Defendant asserted the same basis for this motion as it asserted for timely removal the case.
Shortly thereafter, defendant moved to dissolve a writ of garnishment served on Chase Bank under Or. Rev. Stat. § 18.700. Under section 18.700 a debtor may challenge a garnishment to assert the amount specified in the writ is greater than the amount owed, or to assert the property cannot be garnished. Or. Rev. Stat. § (1)(a-b). The challenge should be delivered to the court administrator for the court specified in the writ-which in this case is the Washington County Circuit Court. However, as noted above, were this case properly removed, this Court would treat everything that had occurred in the Washington County court as if it had occurred in this Court. Thus, this challenge hinges on defendant's assertion that removal was timely.
However, because removal was improper, this Court lacked jurisdiction to set aside the default or address the challenge to the writ. Plaintiff nonetheless asserts this Court should also award fees under Or. Rev. Stat. § 18.715 which provides:
A court may impose sanctions against any person who files a challenge to a garnishment in bad faith. The sanctions a court may impose under this subsection are a penalty of not more than $100 and responsibility for attorney fees under ORS 20.105.Or. Rev. Stat. Ann. § 18.715(1).
Or. Rev. Stat. § 20.105(1) in turn provides that a court shall award reasonable attorney fees against a party who raises a claim with no objectively reasonable basis. In determining whether to award fees under the Oregon statute, the Court must consider the factors in Or. Rev. Stat. § 20.075 which are similar to the Kerr factors noted below. See Graham v. Forever Young Oregon, LLC, 2014 WL 4472702, at *3 (D. Or. Sept. 10, 2014) (“The Johnson-Kerr factors are similar to those the Oregon legislature has directed courts to consider in determining whether to award attorneys' fees, and if so, in what amount.”).
Generally, in diversity cases, whether a party is entitled to attorney fees is determined by state law. Keith Mfg., Co. v. Butterfield, 256 F.Supp.3d 1123, 1132 (D. Or. 2017), vacated and remanded on other grounds, 955 F.3d 936 (Fed. Cir. 2020) (Federal law does not apply to the question of whether a party is entitled to recover attorney's fees in a diversity case). However, as noted above this Court lacked jurisdiction to set aside the default or to consider the challenge to the writ and thus whether fees are appropriately awarded under Or. Rev. Stat. § 18.715. Plaintiff, in complying with her obligations under Local Rule 7 attempted to negotiate with defendant to resolve her motion to remand prior to addressing defendant's other motions, but defendant declined. (ECF 16 at ¶ 6). Nonetheless, the challenge to the writ largely relied on the purported ineffective service. Because of the manner in which defendant sought to litigate its motions along with the motion to remand, the Court should find that the fees incurred in responding to the motions to set aside the default and dissolve the writ were incurred as a result of the removal and thus properly awarded under 28 U.S.C. § 1447(c) which does not require a showing of bad faith in addition to an objectively unreasonable basis for making a claim. Thus, the Court should determine the reasonableness of the fees under federal standards, which as noted, largely mirror the state law factors.
C. Reasonable Fee Award
Plaintiff, as the party seeking fees, has the burden of showing that time spent by her attorneys was reasonably necessary. Gates v. Deukmajian, 987 F.2d 1392, 1397 (9th Cir. 1992); Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 886 F.2d 1545, 1557 (9th Cir. 1989). In order to support a finding of reasonableness, defendant must document the hours spent on the litigation and provide evidence supporting those hours. Gates, 987 F.2d at 1397. Defendant, as the party opposing the fees, must then rebut plaintiff's evidence by "challenging the accuracy and reasonableness of the hours charged or the facts asserted by the prevailing party in its submitted affidavits." Id. at 1397-98.
In determining the reasonableness of fees, the court is not required to respond to each specific objection. Id. at 1400. Rather, all that is required is a "concise but clear" explanation of reasons for the fee award.
Calculating a reasonable attorney's fee involves a two-pronged approach. A court must first calculate a lodestar figure by multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate. Blum v. Stenson, 465 U.S. 886, 888 (1984). This lodestar figure is presumed to represent an appropriate fee. Under certain circumstances, however, a court may adjust the award upward or downward to account for the Kerr factors not subsumed within the initial lodestar calculation. Cunningham v. County of Los Angeles, 879 F.2d 481, 487 (9th Cir. 1988).
The Kerr factors are: (1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to the acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or circumstances; (8) the amount involved 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. Kerr v. Screen Guild Extras, Inc., 526 F.2d 67, 70 (9th Cir 1975). Among the many subsumed factors in the lodestar calculation are the novelty and complexity of the issues involved, the special skill and experience of counsel, and the results obtained. Cabrales v. County of Los Angeles, 864 F.2d 1454, 1464 (9th Cir. 1988).
Reasonable hourly rates are those that the local legal market would pay for a case of this nature to a lawyer of comparable skill, experience, and reputation. Blum, 465 U.S. at 897. Blum instructs courts to look at the prevailing market rates in the relevant market. Id. at 895, n. 11.
The fee claimant must demonstrate that the number of hours spent was reasonable and that counsel made a good faith effort to exclude excessive, redundant, or unnecessary hours. Hensley v. Eckerhart, 461 U.S. 424, 434 (1983).
Plaintiff seeks $380/ $400 per hour for 37.2 hours of work by attorney Colin Andries, $310 per hour for 48.1 hours of work by attorney Mathew Colley, and $250/$275 per hour for 2 hours of work by attorney Tanner Fiske. Attorney Andries has over 16 years of experience in the practice of law, attorney Colley has about ten years of experience, and attorney Fiske has about 1 year of experience. (ECF 43 at ¶ 3, ECF 42 at ¶ 5, OSB Member Directory). Defendant does not object to these rates and based on the 2017 Oregon State Bar Economic Survey, and accounting for inflation, these rates are reasonable for professionals with the experience noted in this market. See ECF 42-2.
Defendant also does not specifically object to the number of hours expended in this litigation. A review of the billing records demonstrates no redundant, excessive, or unnecessary work. Given the matters addressed in these proceedings and in light of the nature of the proceedings, the number of hours expended on this litigation by plaintiff's counsel was reasonable. Accordingly, the Court should award a reasonable attorney fee in the amount of $29,804.
CONCLUSION
Plaintiff's motion for attorney fees (ECF 41) should be granted in the amount of $29,804.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.