Opinion
No. 3:00-CV-1801-G
April 9, 2003
MEMORANDUM ORDER
Before the court are the objections of the plaintiff American Realty Trust, Inc. ("ART") to the order entered by the magistrate judge on February 27, 2003 awarding attorney fees to the defendant Matisse Capital Partners ("Matisse"). For the reasons discussed below, the objections are overruled.
I. BACKGROUND
On September 16, 2002, this court entered judgment as a matter of law in favor of the defendants Matisse, Paul Bagley, and Jack Takacs. Memorandum Order (entered September 16, 2002). On September 30, 2002, Matisse filed a motion for the award of attorney fees. Motion of Matisse Capital Partners for Award of Attorneys' Fees ("fee motion"). This court referred the fee motion to United States Magistrate Judge Paul D. Stickney for determination pursuant to 28 U.S.C. § 636(b). Order of Reference (entered October 22, 2002). Following a hearing, Magistrate Judge Stickney granted Matisse $1,162,446.50 in attorney fees, but declined to award non-taxable costs and prospective attorney fees. Order (entered February 27, 2003) ("Magistrate Order") at 15. On March 25, 2003, ART timely filed its objections. American Realty Trust, Inc.'s Objections to the Findings and Conclusions of the United States Magistrate Judge dated February 26, 2003 ("Objections") at 1-2 and n. 2.
ART represents that it did not receive notice of the magistrate's ruling "until the morning of March 12, 2003, when the ruling was faxed to ART's counsel." Objections at 2 n. 2. Although Rule 72(b) requires parties to file objections within 10 days, Rule 6(e) extends this period by 3 days if service is by electronic means. Compare FED. R. CIV. P. 5(b)(2)(D), with FED. R. CIV. P. 6(e). Therefore, ART's objections were timely filed.
II. ANALYSIS A. Standard of Review
Federal Rule of Civil Procedure 72 sets forth the standard of review for magistrate findings and recommendations. FED. R. CIV. P. 72. Although Rule 72 generally applies only to pretrial orders, a district court may refer post-judgment motions for attorney fees "to a magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter." FED. R. CIV. P. 54(d)(2)(D). When a magistrate judge has ruled on a dispositive motion to which timely objections have been filed, Rule 72(b) requires the district court to "make a de novo determination." FED. R. CIV. P. 72(b).
B. A Duty to Segregate Attorney Fees?
The sole issue presented is whether Magistrate Judge Stickney correctly concluded that Matisse was relieved of its duty to segregate its attorney fees. Objections 2-3. ART argues that if attorney fees are capable of being segregated, Texas law requires segregation. Id. at 3-5. The court disagrees. As Magistrate Judge Stickney stated, "[t]he issue is not whether segregation of attorney fees is possible, but whether segregation of attorney fees is required." Magistrate Order at 6. Under Texas law, a party is relieved of the duty to segregate attorney fees where "the causes of action involved in the suit are dependent upon the same set of facts or circumstances and thus are 'intertwined to the point of being inseparable.'" Stewart Title Guaranty Company v. Sterling 822 S.W.2d 1, 11-12 (Tex. 1991) (quoting Gill Savings Association v. Chair King, Inc., 783 S.W.2d 674, 680 (Tex.App.-Houston [14th Dist.] 1989)). Therefore, determining whether attorney fees must be segregated under Texas law is a question of fact. See, e.g., Geodyne Energy Income Production Partnership I-E v. Newton Corporation, 97 S.W.3d 779, 790 (Tex.App.-Dallas 2003) (reviewing the evidentiary support and finding a duty to segregate); West Beach Marina, Ltd. v. Erdeljac, 94 S.W.3d 248, 268-69 (Tex.App.-Austin 2002) (reviewing the evidentiary support and finding no duty to segregate).
The legal and factual questions surrounding the segregation of attorney fees were fully briefed and later extensively discussed at the fee motion hearing. See American Realty Trust, Inc.'s Appendix in Support of its Objections to the Findings and Conclusions of the United States Magistrate Judge dated February 26, 2003 ("Appendix") at 2-5, 9-37. Magistrate Judge Stickney found that Matisse's defense of ART's breach of fiduciary duty claim and Matisse's prosecution of two counterclaims for fraud and tortious interference were grounded on the same set of facts and, therefore, relieved Matisse from a duty to segregate its attorney fees. Magistrate Order at 6-8. Now, ART asserts that the "evidence established that the fees are capable of segregation and are not so intertwined that segregation was not possible." Objections at 5. However, ART fails to point to anything in the record that might support this assertion. See id. at 3-5. ART instead boldly relies upon a single conclusory statement that "ART presented evidence both in its response and at the hearing establishing a logical and reasonable basis to segregate (among other things) the portion of the fees incurred by Matisse to prosecute Matisse's third-party tort claims against Mr. Cal Rossi and Mr. Gene Phillips." Id. at 4-5. Balancing this bare assertion against Magistrate Judge Stickney's well reasoned factual and legal analysis, this court concludes that any further discussion would be superfluous.
III. CONCLUSION
For the reason discussed above, the findings, conclusions and recommendation set forth in the Order of the United States Magistrate Judge dated February 27, 2003 are ADOPTED as the findings and conclusions of the court and the objections of ART are OVERRULED.