Opinion
CIVIL ACTION NO. 01-CV-0680
October 28, 2003
MEMORANDUM ORDER
Presently before this Court is Plaintiff's Amended Motion for an Award of Attorneys' Fees and Costs. (Dkt. No. 40). For the reasons discussed below, Plaintiff's Motion is GRANTED.
Factual Background and Procedural History
Plaintiff Telecom South America, Inc. ("Telecom") is a corporation engaged in the sale of network integration services to corporations and the United States Government. Findings of Fact and Conclusions of Law ¶ 1 (Dkt. No. 37). Defendant Presto Telecommunications, Inc. ("Presto") is a corporation engaged in providing telecommunication services, primarily within Mexico and between Mexico and the United States. Id. ¶ 2. Presto has one of five class A telecommunication concessions issued by the Mexican government. Id. ¶ 3. The concession was in jeopardy if Presto did not install an operational telecommunications network by September 2000. Id. ¶ 4.
In June 2000, Telecom and Presto entered into a Carrier Services Agreement whereby Telecom agreed to provide telecommunications services to Presto. Id. ¶¶ 7-13. Pursuant to the Agreement, Presto could purchase specific services by issuing a service order to Telecom. Id. ¶ 17. Thereafter, Presto executed service orders for local loop service and a colocation facility in San Antonio, Texas. Id. ¶¶ 19-20. After receiving the service orders, Telecom successfully provided the local loops and the colocation facility in San Antonio. Id. ¶¶ 22-23. Presto, however, failed to pay Telecom's invoices for services rendered. Id. ¶ 26.
The Carrier Services Agreement is governed by Pennsylvania law.
On February 9, 2001, Telecom brought an action against Presto alleging that Presto breached the Carrier Services Agreement by failing to pay the invoices and sought damages in the amount of $292,666.12. Compl. ¶¶ 7-13 (Dkt. No. 1). Following a bench trial in April, 2003, this Court found in favor of Telecom and concluded that Presto's total liability to Telecom was $228,895.06.
Telecom now moves this Court for an award of attorneys' fees and costs under Section 7.1 of the Carrier Services Agreement, which provides:
In the event [Telecom] employs the services of a collection agency or attorneys for collection of charges due under this Agreement, [Presto] shall be liable for all costs of collection and legal proceedings including reasonable attorney's fees and costs incurred by [Telecom] in prosecuting such proceedings and any appeals therefrom.
Plaintiff's Motion for an Award of Attorneys' Fees and Costs ("Pl. Mot.") ¶ 3 (Dkt. No. 35); Plaintiff s Amended Motion for an Award of Attorneys' Fees and Costs ("Pl. Am. Mot") ¶ 3. In response, Presto argues that: (1) pursuant to Federal Rule of Civil Procedure 54(d)(2)(A), the Advisory Committee Note interpreting that Rule and relevant caselaw, this Court must deny a post-trial motion for attorneys' fees due under a contractual provision where, as here, the claim for such fees was not presented and proved at trial; (2) even if Telecom can recover attorneys' fees through its post-trial motion, that motion fails to meet the Third Circuit's evidentiary standards for a post-trial fee petition; and (3) the amount sought by Telecom is excessive. Defendant's Memorandum of Law in Opposition to Plaintiff's Motion for an Award of Attorneys' Fees and Costs ("Def. Mem.") 2-8 (Dkt. No. 36).
Analysis I. Federal Rule of Civil Procedure 54(d)(2)(A)
Federal Rule of Civil Procedure 54(d)(2)(A) provides: "Claims for attorneys' fees and related non-taxable expenses shall be made by motion unless the substantive law governing the action provides for the recovery of such fees as an element of damages to be proved at trial." Fed.R.Civ.P. 54(d)(2)(A). The Rule, however, does not "apply to fees recoverable as an element of damages, as when sought under the terms of a contract; such damages typically are to be claimed in a pleading and may involve issues to be resolved by a jury." Fed.R.Civ.P. 54(d)(2)(A) advisory committee's note.
Relying on Sokoloff v. Gen. Nutrition Co., Inc., No. Civ. A. 00-641(JBS), 2001 WL 536072, at *8-*9 (D.N.J. May 21, 2001), and Caremark Inc. v. Coram Healthcare Corp., 924 F. Supp. 891, 891 (N.D. Ill. 1996), Defendant argues that this Court should deny Plaintiff s post-trial motion for attorneys' fees based on the contract between the parties because the claim for those fees was neither presented nor proved at trial. Def. Mem. 2. In Sokoloff. the court held that under New Jersey law the defendant, which failed to assert a counterclaim for attorneys' fees and costs, could not invoke Rule 54(d)(2)(A) to recover such fees and costs as contractual damages pursuant to the parties' contractual fee-shifting provision. Id. 2001 WL 536071, at *7 ("Under New Jersey law, a claim for attorneys fees pursuant to a contractual agreement is an element of damages that must be pleaded and proved at trial."). The court also noted that "Pennsylvania law does not clearly support recovery of contractual fees by motion, so, even if Pennsylvania law were applied in this case, it is not clear that defendant's Rule 54(d) motion would suffice. Id. (citing In re Pennsylvania Footwear Corp., 204 B.R. 165, 180-81 (Bankr. E.D. Pa. 1997). In Caremark, the court held that it lacked jurisdiction under Rule 54(d)(2) over defendant's contractual action for attorneys' fees after dismissing the case. Id. at 892. Two Circuit Courts, however, have recently criticized Caremark and its progeny. See Capital Asset Research Corp. v. Finnegaa 216 F.3d 1268. 1270-71 (11th Cir. 2000): See Rissman v. Rissman. 229 F.3d 586, 588 (7th Cir. 2000).
In In re Pennsylvania Footwear, the court stated:
Attorneys' costs and fees are generally not allowed as an element of damages in the absence of an express statutory allowance, or clear agreement by the parties, or some other established exception. But where the wrongful act of defendant has involved plaintiff in litigation with others or placed him in such relation with others as makes it necessary to incur expenses to protect his interests, such costs and expenses, including attorney's fees, should be treated as legal consequences of the original wrongful act, and may be recovered as damages.Id., 204 B.R. at 180-81 (citations omitted).
In Capital, plaintiff Capital Asset moved for attorney's fees after the district court's judgment in its favor. Id. at 1269. The district court granted the plaintiff's motion and defendant Finnegan appealed. Id. The Eleventh Circuit reversed both the judgment in favor of Capital Asset and the award of attorneys' fees. Id. On remand, Finnegan moved for an award of attorneys' fees based on a contractual provision allowing such fees to the prevailing party, and the district court granted same. Id. Capital Asset appealed the district court's award of attorney's fees in favor of Finnegan. Id. Capital Asset "argue[d] that motions for attorneys' fees filed after judgment are usually governed by Fed.R.Civ.P. 54(d)(2), but that Rule 54(d)(2) does not apply in the instant case because in the instant case `the substantive law governing the action provides for recovery of such fees as an element of damages to be proved at trial.'" Id. Capital Asset further argued that "when substantive law (such as the contractual provision here) must be pled and proved as damages at trial, and that the district has no jurisdiction to entertain a plea for attorney's fees when such a request was not made in the pleadings." Id.
The Eleventh Circuit rejected Capital Asset's jurisdictional argument:
Rule 54(d)(2)(A) mandates that claims for attorneys' fees be made by a motion "unless the substantive law governing the action provides for the recovery of such fees as an element of damages to be proved at trial." It is true that the Advisory Committee notes clarify that Rule 54(d)(2) is not applicable to attorneys' fees recoverable as an element of damages, and the Advisory Committee cites attorneys' fees pursuant to the terms of a contract as an example thereof. The Advisory Committee notes go on to say that such damages "typically" are to be claimed in a pleading and may involve issues to be resolved by a jury. However, nothing in the language of the Rule itself or in the Advisory Committee notes suggests that the failure to seek attorneys' fees in a pleading is a defect depriving the district court of subject matter jurisdiction.Id. at 1269-70 (citations omitted) (emphasis added). The Eleventh Circuit also rejected "as unpersuasive any implication in Caremark. . . that the failure to plead and prove attorneys' fees before judgment deprives a district court of subject matter jurisdiction to entertain a request for attorneys' fees after judgment." Id. at 1271, note 4.
Likewise, in Rissman. the prevailing defendants sought an award of attorneys' fees based on a provision in the contract between the parties. The district court declined awarding the defendants such fees, in part, because the defendants' failing to file a counterclaim against the plaintiff deprived the district court of "jurisdiction" to award them.Id. at 587. The defendants appealed and Judge Easterbrook found:
What Rule 54(d)(2)(A) requires is that a party seeking legal fees among the items of damages — for example, fees that were incurred by the plaintiff before the litigation begins, as often happens in insurance, defamation, and malicious prosecution cases — must raise its claim in time for submission to the trier of fact, which means before the trial rather than after. Fees for work done during the case should be sought after decision, when the prevailing party has been identified and it is possible to quantify the award. So Capital Asset Research Corp. v. Finnegaa 216 F.3d 1268 (11th Cir. 2000) holds, in the course of disapproving Caremark. The [E]leventh [C]ircuit added that the proper time to seek fees is at all events unrelated to the district court's jurisdiction. We agree with Capital Asset Research Corp. and conclude that the defendants are entitled to a decision on the merits for attorneys' fees.
Rissman, 229 F.3d at 588 (emphasis added). Persuaded by the foregoing authority, we conclude that Rule 54(d)(2)(A) does not require this Court to deny Plaintiff's post-trial motion for attorney's fees due under the Carrier Services Agreement.
II. The Third Circuit's Evidentiary Standards for a Post-Trial Fee Petition
Having concluded that Telecom's post-trial motion was the proper vehicle for seeking attorneys' fees and costs for work done during the case at bar, we now turn to Presto's argument that Telecom's Motion fails to meet the Third Circuit's evidentiary standards for a post-trial fee petition. Def. Mem. 4-5. Those standards were recently summarized inEvans v. Port Authority of New York and New Jersey:
An attorney requesting a fee award must establish that rate with reference to the community billing rate charged by attorneys of equivalent skill and experience performing work of similar complexity. A fee applicant bears the burden of documenting the applicable hourly rate. . . . A District Court may not set attorney's fees based on a generalized sense of what is usual and proper but must rely upon the record. The plaintiff bears the burden of producing sufficient evidence of what constitutes a reasonable market rate for the essential character and complexity of the legal services rendered in order to make out a prime facie case.273 F.3d 346, 360-61 (3d Cir. 2001) (citations omitted).
Telecom is represented by Robert M. Morris, Esq., a shareholder in the law firm of Morris Adelman, P.C. Pl. Am. Mot. ¶ 1. Morris Adelman is a "creditors' rights firm with 5 lawyers and a support staff of 8" located in Philadelphia, Pennsylvania. Id. ¶ 13. Mr. Morris' "hourly rate for commercial collection matters of limited complexity is $275." Id. ¶ 16. His hourly rate "reflects both Mr. Morris' experience and the firm's overhead;" Mr. Morris has practiced law for fourteen years, and is licensed in Pennsylvania, New Jersey and California. Id. ¶¶ 15-17.
Attached to Telecom's Motion are the affidavits of five attorneys of similar skill and experience handling commercial collection cases without complex legal issues: (1) James Mathieu, Jr., Esq., a sole practitioner with an office in Philadelphia, Pennsylvania, has practiced law for twenty-four years and his hourly rate is $200, Pl. Am. Mot., Ex. B at ¶¶ 2-3, 5-7; (2) Joann Needleman, Esq., a shareholder in the law firm of Maurice Needleman, P.C. in Philadelphia, Pennsylvania, has practiced law for ten years and her hourly rate is $260, Pl. Am. Mot., Ex. C at ¶¶ 2-3, 6; (3) Ronald Amato, Esq., a shareholder in the law firm of Amato Margie, P.C. in Bethlehem, Pennsylvania, which consists of five lawyers and fifteen support staff, has practiced law for twenty-three years and his hourly rate is $225, Pl. Am. Mot., Ex. D at ¶¶ 2-3, 5, 7; (4) David Grunfeld, Esq., a sole practitioner with an office in Philadelphia, Pennsylvania, has practiced law for thirty-five years and his hourly rate is $220, Pl. Am. Mot., Ex. E at ¶¶ 2-3, 6; and (5) James W. Adelman, Esq., who is Mr. Morris' partner, has practiced law for thirty-three years and his hourly rate is $375, Pl. Am. Mot., Ex. F at ¶¶ 2-3, 7. Although the affiants do not say anything about community billing rates generally, we conclude that Plaintiff, through these affidavits, has established that $275 per hour for handling simple commercial collection matters is a reasonable market rate. See Washington v. Philadelphia County Court of Common Pleas. 89 F.3d 1031, 1037 (3d Cir. 1996) (To calculate the "lodestar" amount, a court must first determine what hourly rate is reasonable based upon the prevailing market rates in the community.).
Defendant concedes that Plaintiff addressed its second argument by "including affidavits of other lawyers relating to their hourly rates."See Defendant's Memorandum in Opposition to Plaintiff's Amended Motion for Award of Attorney's Fees and Coss ("Def. R. Mem.") 1.
III. Telecom's Fee Request
We next address Presto's contention that the amount sought by Telecom is excessive. Def. Mem. 6-8 ("to a case had a total of two depositions, only a moderate level of motion practice, and a bench trial lasting less than one day," Presto's request for $77,162.50 in attorneys' fees and costs is "simply too high."). "Attorney's seeking fees must document the hours for which payment is sought `with sufficient specificity to allow the District Court to determine whether the hours claimed are unreasonable for the work performed.'" Evans. 273 F.3d at 361 (quotingWashington. 89 F.3d at 1037). The Third Circuit has "defined this to mean that the petitioning attorney must include fairly definite information as to hours devoted to general activities . . . and the hours spent by various classes of attorneys." Id. The billing records submitted by Telecom's attorneys are specific enough to meet this standard; they include the date, a description of the activity, and the hours spent by the responsible attorney. See Pl. Am. Mot., Ex. A.
Defendant does not challenge every time entry, but rather, directs the Court's attention to the time entries for June 4, 2002, and September 9, 2002, as illustrative of Plaintiff s "inflation of the total amount of time expended." Def. Mem. 6-7. See Bell v. United Princeton Props., Inc., 884 F.2d 713, 720 (3d Cir. 1989) (Although the defendant must "take issue with the amount of time spent," he or she does not need to challenge every specific time entry believed to be unreasonable or unnecessary.).
To determine whether Telecom's fee request is excessive, we must "review the time charged, decide whether the hours set out were reasonably expended for each of the particular purposes described and then exclude those that are excessive, redundant, or otherwise unnecessary." Evans. 273 F.3d at 362 (citations omitted). In making this determination, "the court will inevitably be required to engage in a fair amount of `judgment calling' based upon its existence with the case and its general experience as to how much time a case requires." Bell. 884 F.2d at 721. Thus, we "retain a great deal of discretion in deciding what a reasonable fee award is. . . ." Id.
After a "thorough and searching analysis" in which the Court has gone "line, by line, by line through the billing records supporting the fee request,"Evans. 273 F.3d at 362 (citations omitted), we conclude that some of the time expended by Mr. Morris was "excessive, redundant, or otherwise unnecessary," See Pub. Int. Research Group of N.J., Inc. v. Windall. 51 F.3d 1179, 1188 (3d Cir. 1995). Therefore, we have discounted the total amount of time spent on this matter by 15%. As a result, the total billable hours are 240.5. As it is well established that the award of attorneys' fees should be based upon the "`number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate,'"Washington. 89 F.3d at 1035 (quoting Henslev v. Eckerhart. 461 U.S. 424, 433, 103 S.Ct 1933, 1939 (1983)), the award of fees in this case will be $66,137.50.
Although we recognize that Presto's litigation tactics resulted in increased costs to Telecom, Mr. Morris' vast experience in handling cases of this kind leads us to the inescapable conclusion that he spent too much time on this case. Four hours revising a ten-page boiler plate motion to which he had already devoted more than nine hours is excessive. See Pl. Am. Mot., Ex. A. at 3. Twelve minutes to receive or forward e-mails is excessive. See. e.g., Id. at 16. Twelve minutes to receive and review Judge Fullam's one-page, one-sentence Order, dated February 7, 2002, denying as moot Plaintiff's Motion for Order Compelling Answers to Discovery, (Dkt. No. 15), is excessive. See Id. at 8. Billing for the receipt of a certificate of service by fax, and then, billing for the receipt of the same certificate by mail is redundant, see Id. at 2, and checking PACER nine times for this Court's judgment is unnecessary, as Mr. Morris receives electronic notification of every filing in this case, see id. at 21.
AND NOW, this day of October, ___ 2003, upon consideration of the parties' submissions and the evidence of the record, it is hereby ORDERED and DECREED that:
1) Plaintiff's Amended Motion for an Award of Attorneys' Fees and Costs (Dkt. No. 40) is GRANTED; 2) Plaintiff is awarded fees of $66,137.50 and costs of $130; and 3) The Clerk is directed to statistically close this matter.