Opinion
CASE NO. 93-2123-CV-PAINE consolidated with CASE NO. 94-1692-CV-PAINE
May 1, 2000
Attorneys for Plaintiffs, Wampler, Buchanan Breen Joseph Randolph Buchanan, Esq. James Breen, Esq. 900 Sunbank Bldg. 777 Brickell Avenue Miami, FL. Counsel for Wampler, Buchanan Breen, Mesa, Rodriguez Machado, P.A. Albert J. Ziques, Esq. 1000 Brickell Avenue, Suite 660 Miami, FL. Counsel for Dictiomatic and Domingo Linale.
Attorneys for Defendants, Butler Burnette Pappas John J. Pappas, Esq. Matthew L. Litsky, Esq. Bayport Plaza — Suite 1100 6200 Courtney Campbell Causeway Tampa, FL, Counsel for Defendant USF G.
AMENDED REPORT AND RECOMMENDATION
The within Report and Recommendation is being amended solely to correct the following scrivener's errors: on page 2 the correct hearing date of March 2, 2000 has been substituted for March 3, 2000; and, at the first full paragraph on page 3 the party USFG has been substituted for the incorrectly identified party of Dictiomatic. In all other respects the Report-and Recommendation remains the same, with no substantive changes having been made.
THIS CAUSE is before the Court pursuant to an order of reference entered by the Honorable James C. Paine, United States District Judge for the Southern District of Florida in which he directed the undersigned United States Magistrate Judge to hold an evidentiary hearing and issue a Report and Recommendation as to the reasonable amount of attorneys fees and costs incurred by the Defendant United States Fidelity Guaranty Company ("USFG") in defense of this case. Pursuant to Judge Paine's Order the undersigned conducted an evidentiary hearing on this matter on February 24 and March 3, 2000. Having reviewed Judge Paine's Order granting Defendant's Motion for Attorney's Fees and Costs against Plaintiffs and their counsel, memoranda of the parties, the Verified Complaint, various pleadings of record, affidavits, discovery responses, billing statements and other matters of record and having heard arguments of counsel and taken oral testimony from witnesses at the hearing held February 24 and March 3, 2000, the undersigned issues the following recommendation.
BACKGROUND
USFG initiated the underlying action on August 17, 1993, by filing a Declaratory Judgment Complaint in the United States District Court for the Middle District of Florida. Dictiomatic, Inc. ("Dictiomatic") subsequently filed its own Complaint in the United States District Court for the Southern District of Florida on October 23, 1993, consisting of seven counts (two counts for breach of insurance contract; two counts for breach of good faith under Florida Statutes § 624.155; two counts for fraud; and one count for violation of provisions of Florida Statutes § 772.11, Florida Civil Remedies for Criminal Practices). Pursuant to a motion filed by Dictiomatic in the Declaratory Judgment case, Judge Merryday found no basis for venue in the Middle District and, on August 11, 1994, entered an order transferring the Declaratory Judgment action filed by USFG to the Southern District of Florida. Prior to trial, the District Court bifurcated the bad faith and fraud claims from the breach of contract claims. After a 10 day trial during which Dictiomatic was permitted ample opportunity to prove the factual allegations of its breach of contract claims (Counts I and II), the District Court dismissed the action with prejudice. USFG did not present any witnesses at trial, nor did Mr. Wright or Mr. Winsky testify as experts and, as such, were not court appointed experts. Subsequently, Judge Paine granted Dictiomatic's Motion to , Dismiss Counts V, VI and VII and on March 24, 1997, entered an Order dismissing those Counts without prejudice.
Thereafter, USFG filed a Motion for Attorney's Fees and costs against Plaintiffs and Their Counsel. In said Motion USFG argued that the Plaintiffs were liable for attorney's fees and costs pursuant to various Florida laws, namely, the offer of judgment rule, the civil theft statute and the frivolous claim bar provided for in Fla. Stat. § 57.105. USFG further contended that Plaintiffs' counsel was personally liable pursuant to the bad-faith exception contained in 28 U.S.C. § 1927. By Order dated June 15, 1999, Judge Paine granted USFG's Motion in its entirety, specifically finding that the claims of Plaintiffs were frivolous and the conduct of Plaintiffs' counsel, Wampler, Buchanan Breen, P.A. ("WBB"), was vexatious as a matter of law. The District Court then referred the matter to the undersigned United States Magistrate Judge to hold an evidentiary hearing and issue a Report and Recommendation "as to the reasonable amount of attorneys fees and costs incurred by the Defendant USFG in defense of this case." Order of June 15, 1999, p. 27.
Pursuant to Judge Paine's Order the attorneys' fee judgment runs against Plaintiffs and Plaintiffs' counsel, WBB, jointly and severally. WBB has submitted written pleadings, has conducted discovery and has participated in the hearing set by this Court in connection with the undersigned's job of assessing the reasonable amount of attorney's fees. Counsel for Plaintiffs have received notice of all proceedings within USFG's fee claim, including the depositions conducted and the February 24, 2000, hearing but have not participated whatsoever in such proceedings. Accordingly, the within determination as to the reasonable amount of attorney's fees and costs incurred by USFG in defense of this case shall apply with equal force to Plaintiffs by default.
Whether the judgment against WBB shall extend only to the law firm or shall also extend to the individual partners or to the partners who handled and were responsible for the case is an issue for Judge Paine to decide.
The undersigned notes that Dictiomatic is out of business and its principal Domingo Linale is deceased.
LEGAL ANALYSIS
By Order dated June 15, 1999, Judge Paine determined the conduct of Plaintiffs' counsel, WBB, to be vexatious as a matter of law and on that basis held that WBB was personally liable for the attorney's fees and costs incurred by USFG in defense of the case pursuant to the bad-faith exception contained in 28 U.S.C. § 1927. Title 28 U.S.C. § 1927 provides:
Any Attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses and attorneys' fees reasonably incurred because of such conduct.
The statute allows district courts to "assess attorney's fees against litigants, counsel, and law firms who willfully abuse the judicial process by conduct tantamount to bad faith." Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir. 1991); Roadway Express Inc. v. Piper, 447 U.S. 752 (1980). The matter is now before the undersigned for purposes of issuing a Report and Recommendation as to the reasonable amount of attorney's fees and costs that should be assessed.
ATTORNEY'S FEES
Where, as here, the award of attorney's fees and costs is pursuant to a federal statute, federal law applies. Hinkle v. Chicago St. Paul Minneapolis and Omaha Railway Company, 284 U.S. 444 (1932). The starting point in any "reasonable fee" determination is the number of hours reasonably expended on the litigation multiplied by the reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424 (1983); Popham v. Kennesaw, 820 F.2d 1570, 1578 (11th Cir. 1987). The resulting figure, known as the "Lodestar", may thereafter be enhanced or reduced based on the results obtained or the risk of non-payment. Pennsylvania v. Delaware Valley Citizens Council II, ("Delaware II") 483 U.S. 711, 745 (1987);Pennsylvania v. Delaware Valley Citizens Council I, ("Delaware I") 478 U.S. 546 (1986).
We now move to a determination of the reasonable hourly rate. The burden is on the moving party to establish the prevailing market rate, which is the rate charged in the community by lawyers of reasonably comparable skill, experience and reputation for similar services. Blum v. Stenson, 465 U.S. 886, 895 and 896 n. 11 (1984); NAACP v. City of Evergreen, 812 F.2d 1332, 1338 (11th Cir. 1987); Gaines v. Dougherty Co. Bd. of Education, 775 F.2d 1565, 1571 (11th Cir. 1985). "The decision regarding the appropriate hourly rate may be made either by analyzing the affidavits submitted by counsel or, if this documentation is insufficient, by relying upon the court's expertise." Avirgan v. Hull, 705 F. Supp. 1544, 1549 (S.D. Fla. 1989) (J. King) (citing Norman v. Housing Authority of City of Montgomery, 836 F.2d 1292, 1303 (11th Cir. 1988)). Satisfactory evidence of the market rate requires more than the mere affidavit of the attorney performing the work. Blum, 465 U.S. at 896 n. 11. Also insufficient is testimony that a given fee is reasonable; evidence must be of rates actually billed and paid. Hensley, 461 U.S. at 439 n. 15. Such evidence may be adduced from charges of lawyers under similar circumstances or by opinion evidence. Norman, 836 F.2d at 1299. When analyzing the market rates being attested to, the district court may wish to consider any of the twelve factors enumerated in Johnson v. Georgia Highway Express, Inc. 488 F.2d 714 (5th Cir. 1974). Delaware Valley I, 478 U.S. at 564-569. One of those factors, the hourly rate normally charged by the applicant's counsel, has been deemed the logical starting place in any rate determination. Vaughns v. Board of Education, 598 F. Supp. 1262 (D.Md. 1984), aff'd, 770 F.2d 1245 (4th Cir. 1985);Zeffiro v. First Pennsylvania Bank, NA., 574 F. Supp. 443, 447 (E.D.Pa. 1983), aff'd without opinion, 746 F.2d 1469 (3d Cir. 1984); see also Florida Pawnbrokers v. Fort Lauderdale, 711 F. Supp. 1084, 1086-87 (S.D. Fla. 1989). Also considered probative are the rates billed in similar lawsuits and the relative skill of the attorneys involved. Norman, 836 F.2d at 1299.
The 12 factors enumerated in Johnson are as follows: (1) the time and labor required; (2) the novelty and difficulty of the question; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorney; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. See Johnson, 488 F.2d at 717-719. These factors were taken from the American Bar Association Code of Professional Responsibility, Disciplinary Rule 2-106 (1980).
In the instant case there exists a fee agreement between Butler, Burnette and Pappas ("BBP"), counsel for USFG, and USFG which sets an hourly rate for counsel far lower than the community market rate. All parties agree that under these circumstances the rate to apply is the lower contract rate and not the higher rate which would customarily be charged. See WSS Response to USFG's Memorandum of Law for February 24, 2000 Evidentiary Hearing on USFG's Attorney Fee and Cost Claim filed February 23, 2000, p. 3 and USFG's Proposed Report and Recommendations in Connection with USFG's Fees and Costs Claim filed March 22, 2000, pp. 6-7. The contract rates charged by BSP to USFG are set forth in Def. Exh.9, Evidentiary Hearing (essentially the contract rates for attorney's fees range from $95.00 to $150.00 and the contract rate for paralegal's services range from $49.00 to $65.00). The Court notes that while it is bound to apply the contract rate charged by BBP to USFG, it shall take into consideration that the contract rate charged by BBP was essentially a "bargain" for USFG. For example, the Court agrees with the testimony of USFG's witness, Mr. Hugh Smith, when he testified at the hearing that regardless of whether USFG should recover fees for travel, USFG saved money by having BBP and not a West Palm Seach law firm or a Miami law firm with higher rates to represent them. Mr. Smith credibly testified that the rates for high-end insurance defense, such as this first party practice matter, are higher in Miami/Dade County than those charged by BBP.
Mr. Smith determined that the reasonable hourly rate for all of the BBP attorneys that worked on the case for USFG was consistently higher than the contract rate charged by BBP to USFG for the particular attorney. For example, Mr. Pappas, with 17 years experience and an expert in first party property and business interruption claims, was billed at $100, $115 and $150 during the seven year life of this matter. A Miami or West Palm Beach attorney with Mr. Pappas' extensive experience in the field of first-party property and business interruption claims would have easily justified a rate of $175-$225 an hour. See Def. Exh. 9, Evidentiary Hearing.
We next move to a determination of the reasonable amount of hours incurred by USFG in defense of this case. In ascertaining the amount of reasonable hours excessive, redundant, or otherwise unnecessary" hours should be excluded from the amount claimed. Hensley, 461 U.S. at 434. In addition to deducting excessive, redundant and unnecessary hours, the district court must also deduct for time spent on unsuccessful claims.Id. at 435. The fee applicant' s failure to prevail on every contention raised in the lawsuit is not a justification for reduction of the fee award. Lattimore v. Oman Construction, 868 F.2d 437, 440 (11th Cir. 1989). Unless the fee applicant obtained only limited success, where the successful and unsuccessful claims involved related legal theories, no fees should be deducted. Hensley, 461 U.S. at 242; Avila v. Coca-Cola Co., 849 F.2d 511, 514 (11th Cir. 1988); Popham v. City of Kennesaw, 820 F.2d 1570, 1579 (11th Cir. 1987). "A plaintiff obtains only limited success when the substantive relief granted is something less than that which he would have been granted had he succeeded on the unsuccessful claim." Avila, 849 F.2d at 514; see also Erkins v. Bryan, 785 F.2d 1538, 1545-46 (11th Cir.), cert. denied, 479 U.S. 960 (11th Cir. 1986). In determining whether to exclude hours on claims for which plaintiff did not obtain relief, the "court must consider the relationship of the claims that resulted in judgment with the claims that [did not] and the contribution, if any, made to success by the investigation and prosecution of the entire case." Jones v. Diamond, 636 F.2d 1364, 1382 (5th Cir.), cert. dismissed, 453 U.S. 950 (1981).
In connection with their fee claim USFG seek $551,181.30 they incurred in attorney's fees and paralegal fees from September 9, 1993 through January 31, 2000, an additional $28,463.00 in attorney's fees for a fee bill dated March 14, 2000, for services rendered through February 29, 2000, and $22,610.00 for in-house counsel fees for USFG's in-house counsel, James Kelly. WWB contests USFG's entitlement to fees incurred for paralegals and for in-house counsel. They also seek to reduce the amount of fees for what they describe as excessive or otherwise unreasonable billing and for time spent on non-sanctioned claims. Each of these arguments shall be addressed in turn.
BBP billed USFG $640,240.10 for attorney's fees and paralegal fees from September 9, 1993 through January 31, 2000. USFG's expert, however, Mr. Hugh Smith, Esq. testified at his deposition and at the hearing in connection with this matter that in his review of the billing statements he had to make "some rather sharp cuts in the time as recorded by some of the attorneys for the firm." Smith Deposition, p. 130; February 24, 2000, Hearing Transcript, pp. 78-79, 130-132. These cuts resulted in Mr. Smith reducing BBP's claim for attorney's fees by approximately $87,000.00, to $551.181.30. Mr. Smith did not cut any paralegal time. While USFG initially sought full recovery of the fees in question they have now agreed, in light of Mr. Smith's testimony, that the reasonable amount of attorney's fees and paralegal fees for the time period September 9, 1993, through January 31, 2000, is $551.181.30. See USFG's Proposed Report and Recommendation, p. 22.
USFG contends that the June 15, 1999, Order of Judge Paine is unclear as to when the attorney's fees and cost award commences to run. According to BBP, the Order could be read to mean that fees and costs should commence at the latest when WBB filed the Verified Complaint on behalf of Dictiomatic on October 26, 1993, when USFG filed their declaratory judgment action in the Middle District of Florida on August 17, 1993, or when WBB first took action on receiving notice of the declaratory judgment action by correspondence from WBB to counsel for USFG on September 9, 1993. At page 22 of the Proposed Report and Recommendation submitted by USFG, Defendant sets September 9, 1993, as the date fees and costs should begin to run. This Court disagrees. Judge Paine's Order of June 15, 1999, could not be any clearer on the issue of when fees and costs should begin to run. The last sentence of the Order provides that the "matter is hereby referred to Magistrate Judge Johnson to hold an evidentiary hearing and to issue a Recommendation as to the reasonable amount of attorneys fees and costs incurred by the defendant USFG in defense of this matter." USFG initiated the underlying litigation on August 17, 1993 by filing a declaratory judgment complaint in the United States District Court for the Middle District of Florida. Subsequently, Judge Merryday found no basis forvenue in the Middle District and on August 11, 1994, entered an order transferring the declaratory judgment action filed by USFG to the Southern District of Florida. In view of the foregoing the undersigned finds the date fees and costs begin to run is October 26, 1993, the date WBB filed the Verified Complaint on behalf of Dictiomatic. That is when USFG was first forced to incur fees and costs in defense of this matter. The undersigned further concludes that USFG should not recover any fees and costs incurred in connection with the declaratory judgment action in the Middle District.
Paralegal time may be included in the setting of attorney's fees where the work performed is that normally performed by an attorney. Jean v. Nelson, 863 F.2d 759, 778 (11th Cir. 1988); Maltzer v. Provident Life and Accident Insurance Company, 843 F. Supp. 692 (M.D. Fla. 1993). USFG's expert, Mr. Hugh Smith, testified that the paralegal hours spent on this case for which USFG was billed $133,999.70, were reasonable under the circumstances and fully recoverable. Ms. Lyons summarily opined that BBP had paralegals doing secretarial work. However, Mr. Pappas, lead attorney on the case for USFG testified that at no time did that happen. Given the complexity of the case, given the exposure ($45 million demand from WBS), given the allegations of "bad faith," given the number of documents (over 100, 000), Mr. Pappas credibly testified that indexing, tabbing and organization was crucial to presenting a competent defense for USFG and that he would not trust that to a secretary. As for Ms. Lyons' opinion that 552 had attorneys do paralegal work, such as reviewing the production of documents by non-parties and parties, the same holds true — plus it would have been redundant to have paralegals do what attorneys would eventually have to do anyway. Moreover, it is undisputed testimony that approximately 17% of the total hours were that of Mr. Pappas, 34% that of associates that sometimes billed at a lower rate, and 49% that of paralegals that billed at a significantly lower rate. Thus, this Court finds that BBP diligently kept fees at a minimum by delegating the work down to be performed by an attorney or paralegal who was billed at a lower rate. Accordingly, this Court recommends USFG be awarded fees for paralegal services rendered from October 26, 1993 to January 31, 2000 at the rates requested. To the extent any of the aforementioned paralegal hours relate to work performed in connection with the declaratory judgment action said hours should be deducted from the amount awarded.
It is this Court's understanding that BBP's supplemental bill dated March 14, 2000, for services rendered through February 29, 2000, did not contain any paralegal hours.
Attorney's fees for services of in-house counsel who act primarily as liaisons between the client and outside counsel are not recoverable under 28 U.S.C. § 1927. As noted by the Eleventh Circuit in Burger King Corporation v. Mason, 710 F.2d 1480 (11th Cir. 1983):
Attorneys fees for the services of in-house counsel are not recoverable. There is no precedent in Florida law for an award of attorneys fees for the services of in-house counsel. Cases from other jurisdictions awarding fees for the services of in-house counsel who actively tried the case are not factually similar to this case when in-house counsel acted primarily as a liaison between the client and outside counsel who had complete responsibility for the conduct of the case.Id. at 1498. The courts are generally in agreement with the Eleventh Circuit's approach. See, e.g., Federal Deposit Insurance Corporation v. Sender, 182 F.3d 1, 5 (D.C. Cir. 1999) (Where in-house counsel acts primarily as a liaison between the client and outside counsel, the party may not recover attorney's fees for the in-house counsel's actions);Revlon, Inc. v. Carson Products Co., 622 F. Supp. 362, 365 (S.D. N Y 1985) (reasonable fees do not include the hours in-house counsel spent acting as a liaison between the client and outside counsel), aff'd in part and rev'd in part on other grounds, 803 F.2d 676 (Fed; dir. 1986). Accordingly, the undersigned recommends no award be made for the $22,610.00 in fees and $4,418.26 in costs incurred by USFG for services of in-house counsel.
The next areas of reductions WBB seeks fall into two general categories: the first category involves several items of billing which WBB claims to be excessive or otherwise unreasonable: the second category is divided into two sub-categories involving (a) a $200,000 reduction based on an early estimate by Mr. Pappas as to how much the case would cost which she classified as fees that "would have been spent anyway" regardless of the vexatious actions of WBB and (b) as an alternative to the "$200,000 estimate reduction," a reduction of $252,033 based on what Ms. Lyons' described as the "unresolved fraud" claims. In this regard the undersigned turns to the testimony presented at the hearing.
The Court conducted an evidentiary hearing on February 24 and March 2, 2000. USFG called six witness in their case-in chief and one in rebuttal. Wampler Buchanan Breen, P.A. ("WBB") called one witness in their case.
John Pappas of BBP, USFG's counsel, testified on behalf of USFG. Mr. Pappas was lead counsel throughout USFG's investigation of the insurance claim, the litigation, the trial and USFG's motion for fees and costs. The Court finds Mr. Pappas to be a specialist and expert in the area of first party property claims under insurance contracts, including business interruption claims. The Court further finds that BBP as a firm specializes in such work in and outside the State of Florida including the Southeast United States and the Carribean. There was no evidence presented at the evidentiary hearing that any "local" attorney within the Southern District or elsewhere in the State of Florida (or anywhere for that matter) shared the same expertise as BBP or Mr. Pappas necessary for this first-party property and business interruption claim.
The Court finds that the supervision of and delegation of work by Mr. Pappas to associates, paralegals and secretaries was efficient, reasonable and effective. The Court likewise finds the billing procedures employed by BBP to be reasonable and consistent with acceptable billing customs in the legal community. The Court notes that BBP is used to the extremely stringent "eye" of the legal services auditing arm of the insurance industry which provides greater incentive for such billing procedures to be reliable. Apparently, the billing descriptions were adequate for USFG to be willing to pay such fees as reasonable and necessary, without any expectation that it would ever obtain restitution or reimbursement for such expenses.
Hugh Smith testified as an expert witness on behalf of USFG and opined that the reasonable amount of fees for USFG's services was $551,181.30. Def. Exh. 9, Evidentiary Hearing. Mr. Smith did not review USFG's March 14, 2000 fee bill in the amount of $28,463.00. The Court gives much weight to Mr. Smith's substantial background in Federal Court litigation and insurance matters and specifically first-party property insurance claims. The Court finds that Mr. Smith was more than conservative in his analysis of BBP's time.
Mr. Smith undertook a laborious process by creating a "timekeeper's grid" to determine the reasonable amount of hours and the reasonable rate for BBP attorneys. Def. Exh. 9, Evidentiary Hearing. Mr. Smith determined the reasonable amount of attorney hours to be 3,785.32; the reasonable amount of attorneys fees to be $416,181.60; the reasonable amount of paralegal hours to be $2,062.80; the reasonable amount of paralegal fees to be $133,999.70; and the reasonable hourly rate for all of the BBP attorneys who worked on the case for USFG to have been consistently higher than the contract rate charged by BBP to USFG for the particular attorney.
The Court agrees with Mr. Smith's opinion that this litigation was akin to complex commercial litigation. The Court also agrees with Mr. Smith that fees for travel time, for two attorneys to attend depositions, for attorneys to review non-party and party production of documents is recoverable and that such use of attorneys was reasonable given the circumstances of this case. There is further discussion on these points later in this Report and Recommendation.
Mr. Charles Murray testified on behalf USFG. He is an Executive General Adjuster with 29 years of experience in the adjustment and litigation of first party property and business interruption claims. He has worked frequently with attorneys and experts in litigation. Mr. Murray was intimately involved in the case from the beginning of the adjustment process through the trial. He was familiar with the course of the litigation from the filing of the complaint through the trial which he attended and at which he testified. He was involved in every aspect of the claim and litigation. For example, he read all of BBP's reports, all of the depositions, the motions, the documents filed by WBB, all of the correspondence in the case, he attended the hearings and had responsibility for overseeing the payment of BBP's fees and the fees of the two experts retained by USFG, Mr. Winsky and Mr. Wright.
Mr. Murray reviewed all of the billing statements from BBP and approved payment for all fees as reasonable and necessary based on his experience and familiarity with the claim and litigation. The only reduction in fees billed was for $10,000 based on an internal USFG audit. All of the costs incurred in this matter by USFG were approved by Mr. Murray, whether it was taxable costs, airfare, expert witness fees, etc. He approved payment for travel time, for two attorneys attending depositions, for attorneys reviewing non-party and party production of documents and other items that WBB has challenged because they were reasonable and absolutely necessary in his experience and based on his familiarity with the claim and litigation.
The Court found Mr. Murray to be extremely credible despite his obvious interest in the outcome and also found Mr. Murray to have significant experience 29 years dealing with similar litigation and attorneys billing statements. Thus, the Court gives much weight to Mr. Murray's decision to pay all of BBP'S fees (without expectation of reimbursement) and his testimony that he found BBP's work to be timely, efficient and their fees to be reasonable and absolutely necessary.
Also testifying on behalf of USFG was James Kelly, Esq., Group Counsel with USFG/St. Paul. Mr. Kelly has substantial experience in insurance defense matters, both first and third party, including specifically extra-contractual or "bad faith" claims, which were asserted by WBB on behalf of Dictiomatic in this litigation.
Mr. Kelly is responsible for deciding which counsel throughout the country defends USFG when such "bad faith" claims are asserted. Given Mr. Kelly's experience, the Court gives much weight to Mr. Kelly's testimony that BBP was only one of a handful of firms in the country with whom he and USFG would have trusted this case given the significant exposure faced by USFG — i.e., $45 million demands from WBB, claims for "bad faith," fraud in the marketing of insurance policies by USFG, civil theft, attorneys fees, etc. The Court also accepts Mr. Kelly's testimony that BBP was in essence a "local" firm despite being located in Tampa given BBP's experience and the type of litigation involved.
Marsha Lyons testified as an expert on behalf of WBB. Although Ms. Lyons has substantial experience in Federal Court litigation, the Court gives reduced weight to her testimony given her admission that she has virtually no experience in insurance defense including first party property and business interruption claims. WBB Exhibit 2 contains Ms. Lyons' reductions of fees sought by USFG (the "Lyons Chart"). In the Lyons Chart, Ms. Lyons made the following reductions:(a) $244,436.90 for such items as travel time, excessive work, attorneys time reduced to paralegal time and paralegal time reduced to secretarial functions (the "General Reduction"); (b) a $200,000 reduction based on an early estimate by Mr. Pappas as to how much the case would cost which she classified as fees that "would have been spent anyway" regardless of the vexatious actions of WBB; and (3) as an alternative to the "$200,000 estimate reduction," a reduction of $252,033 based on what Ms. Lyons' described as the "unresolved fraud" claims. The Court will consider each of the three categories of reductions in turn.
First, Ms. Lyons' reduction for $244,436.90 — the "General Reduction" — for bills WBB contends are excessive or otherwise unreasonable. Plaintiff's Exhibit 2 to the Evidentiary Hearing, which summarizes these reductions, is actually broken down into two parts regarding the $244,436.90 — the first and second page identify specific bills and specific time periods for fees eliminated by Ms. Lyons. These reductions start with a "bill/time period" for February 23, 1993 on page 1 and end with September 14, 1998 on page two. The total reductions made for that "subpart" is $85,018.65.
The next "subpart" within the $244,436.90 reduction reads as follows:
Entire Period Time 37,043.50 Excessive document organization, etc. 85,661.50 Excessive time Davis 195.50 Stronkis time eliminated 80.50 Frank time eliminated 46 Reynolds time eliminated 28 Nissen time — reduce to paralegal 204.75 Nisberg time eliminated 34,991 Additional time expense Middle District 4,197.50 Malkowski time eliminated Ms. Lyons admitted in her testimony that nothing was submitted into evidence, through testimony or documents, that "backs up" the above general reductions. She testified "it could be done, but I don't have anything like that". Hearing Transcript of March 2, 2000, p. 120. Thus, there is no evidence whatsoever; no specific entries, no specific bill, no specific time period identified by Ms. Lyons for the above mentioned $159,448.25 of reductions made by Ms. Lyons.The Court finds that such general summary reduction by category, without the necessary "back up," is insufficient as a matter of law to be considered by the Court. There simply is no evidence in the record of anything other than the general categories identified by Ms. Lyons. Thus, the only reductions that this Court will consider that were made by Ms. Lyons with respect to the first of the three separate items identified above are the $85,018.65 of specified reductions and not the general un-backed up reductions noted above.
If WBB does not identify for the Court the hours that should be disallowed, the Court is unable to develop a basis for reducing BBP's fees. See Fitzpatrick v. IRS, 665 F.2d 327, 332 (11th Cir. 1982)
Turning to the reductions Ms. Lyons did identify by fee bill, the Court will examine certain items within this category identified by Ms. Lyons. First, travel time "cut" by Ms. Lyons. The Court finds that such time was reasonable and necessary and is recoverable. Ms. Lyons' testified that "local" counsel could have been used, thus eliminating the need for a Tampa firm such as BBP to handle the matter. However, neither she nor WBB presented any evidence whatsoever of what "other" Miami firm could have handled this first party property and business interruption claim that also involved counts for alleged "bad faith." In fact, Mr. Kelly's testimony that BBP is one of only a handful of firms in the country that USFG would even trust with this case, was unrebutted.
Ms. Lyons' also admitted that she would not have cut any travel time for a firm in West Palm Deach because such firm would have been within the Southern District. This admission essentially "guts" Ms. Lyon's "cut" of travel time for the following reasons. It takes at least 1 and 1/2 hours if not more (i.e., rush hour traffic on 1-95) to drive from West Palm Beach to downtown Miami (the location of WBB's office) for a deposition and no work can be done during that drive. In contrast, attorneys can work on the plane and in airports while waiting for the plane. In fact, Mr. Pappas testified in USFG's case in chief and in USFG's rebuttal case that he and the attorneys in the firm make it a practice to always work on the case for which they are traveling when they travel. Further, Mr. Pappas testified that for the continued evidentiary hearing on March 2, 2000, he left his office at 8:00 a.m. and was in this Court's courtroom by 10:00 a.m. and worked while he was on the plane and while he waited for the plane. Further, Ms. Lyons admitted she would not have cut the travel time of a Miami firm in this case to drive over 3 hours to Ft. Pierce for the many hearings there before Magistrate Judge Lynch — it takes the same amount of time to drive from Tampa to Ft. Pierce.
The Court accepts Mr. Pappas' testimony that his firm handles travel time efficiently for USFG and other clients — in addition to working on the plane and in the airport, if a hearing, deposition or other matter can be handled by phone without prejudicing the client, it is done. The Court also accepts Mr. Pappas' testimony that some of the time billed as "travel time" could have easily been described as preparation for hearing or preparation for deposition" given Mr. Pappas' testimony that he and other BBP attorneys work on the plane and in the airport when they travel.
The Court rejects Ms. Lyons' testimony that at least USFG should have employed "local" counsel because "local" counsel would "get everything I get and know every-thing that I know about the case so they are ready to step in and handle whatever is necessary" because that would mean that USFG's fee and cost bills would be doubled. Hearing Transcript of March 2, 2000, p. 50.
Turning to Ms. Lyons' alternative reduction of Mr. Pappas' $200,000 estimate, the Court rejects this opinion as nonsensical. By The Order itself and as Ms. Lyons admitted, WBB should have never responded to USFG's Declaratory Judgment Action and should have never filed a Verified Complaint on behalf of Dictiomatic (verified by WBB). It simply does not matter how much USFG "expected" to spend in anticipation of litigation — the issue is how much in reasonable fees did USFGactually spend because of the vexatious actions of WBB. Ms. Lyons' erroneously presumes that Mr. Pappas' $200,000 estimate was an admission that such fees and costs would be incurred to. defend against a non-frivolous claim. Not only is the record devoid of any factual support for this presumption, but Mr. Pappas testified in rebuttal that such a presumption is false and actually contradictory to the truth.
Turning next to Ms. Lyons' opinion that as an alternative to the "$200,000 estimate reduction," a reduction of $252,033 based on what Ms. Lyons' described as the "unresolved fraud" claims should be made. The Court indicated its skepticism at this theory early on the first day of the hearing. Hearing Transcript of February 2, 2000, p. 96-98. Nothing has changed and WBB has not won the "uphill battle." The assumed factual predicate underlying Ms. Lyons' opinion that the seven causes of action were factually and legally unrelated is missing.
The Verified Complaint admitted into evidence contains seven causes of action. Def. Exh. 12, Evidentiary Hearing. The first two for "breach of contract," the next two for "bad faith"; the fifth for "fraud in the marketing of the policy," the sixth for "fraud in the processing of the claim," and the seventh for Statutory Civil Theft for not paying the insurance claim.
The Verified Complaint is 57 pages long and contains 224 separate paragraphs many of which have subsections and all of which contain multiple factual allegations. The first 147 paragraphs contain multiple factual allegations and then the seven causes of action are asserted. Before each of the seven causes of action the following allegation appears:
The Plaintiff, Dictiomatic, realleges Paragraphs 1 through 147 above as though fully set forth herein.
Ms. Lyons opined that the fraud counts dealt with "separate issues" but admitted that: (1) she did no analysis whatsoever on how much time BBP spent on the overall case defending the other five counts because it was not possible to break' down BBP's bills although she did not find the "failure" of BBP to do so unreasonable; (2) that paragraphs 1-147 were alleged to support all seven counts; and (3) she was unable to distinguish between the "bad faith" processing of the claim counts (Counts III and IV) from Count VI for fraud in the processing of the claim.
Mr. Pappas, credibly testified without any factual rebuttal, how USFG through BBP defended the litigation in light of the multiple counts. The Court accepts Mr. Pappas testimony that the "bad faith" and "fraud" counts were totally dependent upon the success or not of the breach of contract counts. WBB's argument that there can still be "bad faith" even whether there is no coverage ignores the point that the best defense to the entire litigation was to prove there was no coverage. Further, WBB's argument is quite suspect when one considers that not only was there no coverage but the claim was frivolous as a matter of law pursuant to Judge Paine's Order. Surely, there is no "bad faith" when the underlying claim violates Florida Statute § 57.105 and Rule 11 as set forth in The Order.
Further, the Court accepts Mr. Pappas' unrebutted factual testimony that it would be difficult to come up with $10,000 worth of activity that could be described as specifically only related to these "non-adjudicated" counts and that 95% to 98% of the work performed by BBP on behalf of USFG would still have been incurred if the only counts were the first two breach of contract counts that were tried and dismissed by Judge Paine.
Essentially, all of the seven counts were inextricably intertwined and the Court finds no reason to simply deduct 3/5ths of BBP's fees ($252,033) as opined by Ms. Lyons. Further, the Court finds WBB's position somewhat disingenuous given that it was WBB who asserted these causes of action, vigorously prosecuted the causes of action, and forced USFG through BBP to defend them and given that Judge Paine expressly found that all of the actions by WBB were vexatious as a matter of law including for example, Mr. Buchanan's $45 million demand to USFG's counsel without regard to any specific count.
If the issues are intertwined such that the lawsuit cannot be viewed as a series of discrete claims the attorneys should be compensated for their work on the case as a whole. Hensely v. Eckherhart, 461 U.S. 424, 435 (1983); Haitian Refugee Center v. Meese, 791 F.2d 1489, 1500 (11th Cir. 1986).
The Court also finds that much of the factual predicate upon which Ms. Lyons' testimony was based was inaccurate as evidenced by Mr. Pappas' rebuttal testimony. Ms. Lyons was without the benefit of any explanation from Mr. Pappas or any BBP attorney who worked on this matter because no such inquiry was made of Mr. Pappas during his deposition in the discovery process nor at the evidentiary hearing. Mr. Pappas testified and the Court accepts that 99% of the questions asked of him at his deposition had nothing to do with any time entries. Without such factual predicate, Ms. Lyons testimony is factually unsound speculation.
For example, Ms. Lyons commented that she found it unusual that BBP had multiple copies in the approximately 140 boxes of documents related to this matter. However, Mr. Pappas testified, quite understandably, that Federal Court requires multiple copies and at trial BBP provided copies for Judge Paine, his clerk and opposing counsel of all exhibits. The Court finds this process to be reasonable and efficient.
Ms. Lyons commented that she found it unusual that BBP had put every document in chronological order. However, Mr. Pappas testified that given that it was an extremely document intensive insurance fraud case spread out of a number of years, and based on his experience, he believed the best way to prepare for trial was to put all the documents in chronological order and then review all those documents a few weeks before trial to be prepared to try this case and to conduct efficient and effective cross-examination of Plaintiff and its many fact and expert witnesses. This Court finds this procedure to be reasonable, necessary, efficient and apparently highly effective.
Ms. Lyons' reduction of BBP's fees in connection with preparing USFG's motion for fees and costs against Dictiomatic and WBB by approximately 50% is likewise rejected by the Court. Putting aside the obvious fact that the result "speaks for itself, the record is clear that essentially USFG had to educate Judge Paine as to all of the evidence that was never presented during the two week bench trial that saw Dictiomatic put on its case for the two weeks and then have it dismissed. USFG had to submit virtually "everything". Pltf. Exh. 4, Evidentiary Hearing. For example, Judge Paine did not know about the evidence in support of USFG's "Concealment/Fraud" defense and other evidence such as Mr. Buchanan vouching for the claim, Mr. Buchanan being the only witness who could testify in support of the claim, Mr. Buchanan's demands of $21 million and $45 million and other similar evidence. USFG had to try a case through papers on the fee motion. Accordingly, as Mr. Pappas testified, it took an enormous amount of time to prove through papers how egregious and vexatious was WBB's conduct in this matter.
At the March 2, 2000 hearing, WBB moved into evidence USFG's Motion for Fees and Costs without the underlying appendices. Counsel for USFG requested that the Exhibit include the entire motion, memorandum of law and appendices, which request was granted.
It is unclear whether WBB is contesting USFG's right to collect fees for the time spent litigating the issue of fees. To the extent WBB contests such right, this argument is rejected. This matter is before the Court on a sanction meted out by the District Court pursuant to a Federal Statute. As such we look to federal law. Unlike the law in Florida which distinguishes between time spent litigating entitlement to fees, which is recoverable, and time spent litigating amount, which is not State Farm Fire Casualty Co. v. Palma, 629 So.2d 830, 832-33 (Fla. 1993), federal courts make no such distinction and allow recovery of fees for litigating fees as a matter of course. Johnson v. University College of the University of Alabama in Birmingham, 706 F.2d 1205, 1207 (11th Cir. 1983).
As for the few specific entries that Ms. Lyons did present to the Court and which were submitted into evidence, again, her opinion fails because of an incorrect factual predicate. For example, Ms. Lyons found fault with Mr. Pappas' visits to Baltimore on March 16, 1994, but Mr. Pappas testified that he met with Mr. Murray and Mr. Kelly (and USFG's experts) to review their files and talk about the case one where USFG was being sued for millions of dollars, for fraud, and for "bad faith" by a Brickell Avenue law firm composed of former Assistant U.S. Attorneys. Give those circumstances, the Court finds it more than reasonable for Mr. Pappas to have traveled to Baltimore to meet with his clients and with USFG's experts face to face. Anyway, Ms. Lyons admitted that she did not even know the "real reason" why Mr. Pappas went to Baltimore — this is the missing factual predicate from Ms. Lyons' opinions.
Another example is Ms. Lyons' finding that Mr. Pappas had no reason to travel to Los Angeles to meet with Pat Ormsby. First, Ms. Lyons did not know what role Mr. Ormsby played in the claim. Second, Mr. Pappas testified that Mr. Ormsby, who was the independent "Cat" (catastrophe adjuster) for USFG, was a key witness because it was Mr. Ormsby who payed Plaintiffs' $50,000 property claim right away and it was Mr. Ormsby who Dictiomatic and their counsel were telling USFG — in the Verified Complaint — that he was almost incompetent and had no understanding of Dictiomatic's multimillion dollar business interruption claim as evidenced by his offer of only a few thousand dollars for such claim. Mr. Pappas rightfully decided that given Mr. Ormsby's role, given that Mr. Ormsby was not a USFG employee, given that Mr. Murray did not know him personally, he needed to meet Mr. Ormsby face to face to judge his credibility and since Mr. Ormsby was on "Cat" duty for a California earthquake, Mr. Pappas went to California (and USFG paid the fees and costs associated with the trip). As stated above, the Court notes that WBB and Ms. Lyons never inquired of BBP about the specific time entries in order to determine if Ms. Lyons' opinions were based on accurate factual predicates.
The final issue to address is that of interest rates — pre-and post-judgment. For the following reasons the undersigned finds USFG is entitled to neither. In support of their position that they are entitled to pre-judgment interest on the award, USFG relies, at once, on Florida law, federal court decisions which take into account delay in payment and the Court's inherent authority. First, as we are here pursuant to a federal statute, 28 U.S.C. § 1927, for vexatious conduct which took place in federal court, state law does not apply. Second, while the undersigned recognizes that, in certain instances, the court may compensate for delay in payment by either basing the award on current rates or by adjusting the fees based on historical rates to reflect its present value, Missouri v. Jenkins, 491 U.S. 274 (1989); Johnson v. University College of the University of Alabama in Birmingham, 706 F.2d 1205, 1210-1211 (11th Cir. 1983), there is no need for such adjustment here as, by BBP's own admission, they have been paid on a regular and timely basis throughout the duration of this litigation. Finally, although this Court may have equitable powers which would permit it to determine the portion of time for which interest should be allowed, see, e.g., Gibbs v. Hawaiian Eugenia Corp., 966 F.2d 101, 109 (2d Cir. 1992), the undersigned has not been persuaded that such equitable powers should be exercised under the circumstances herein. As for post judgment interest, this Court agrees with WBB that until Judge Paine's Sanction Order becomes a "judgment" as contemplated by Rule 54(a), no interest may accrue. See Bank Atlantic v. Blythe Eastman Paine Webber, Inc., 12 F.3d 1045 (11th Cir. 1984); Georgia Association of Retarded Citizens v. McDaniel, 855 F.2d 794 (11th Cir. 1988).
See USFG's Memorandum of Law for the February 24, 2000 Evidentiary Hearing on USFG's Attorney Fee and Cost Claim, pp. 6-8.
COSTS
We now turn to the issue of what costs can appropriately be assessed against WBB in this matter. It is undisputed that USFG incurred and paid directly or reimbursed their counsel for payment $48,221.56 from October 26, 1993 through February 29, 2000. in taxable costs pursuant to 28 U.S.C. § 1920. WBB does not dispute USFG's entitlement to these § 1920 costs. What WBB does take issue with is the award of any costs outside the scope of § 1920. There is no dispute that USFG incurred and paid directly or reimbursed their counsel for payment of costs in addition to 28 U.S.C. § 1920 (excluding expert witness fees) $86,090.54 from October 26, 1993 through February 29, 2000. Def. Exh. 6, Evidentiary Hearing. It is also undisputed that USFG incurred and paid directly the following expert witness fees:
For the reasons mentioned previously the undersigned finds the date fees and costs begin to run is October 26, 1993, the date WBB filed the Verified Complaint on behalf of Dictiomatic.
Def. Exhs. 5 6, Evidentiary Hearing.
a. For Greg Winsky, $39,201.03 from October 26, 1993 through January 31, 2000;
b. For Dan Wright, $68,809.67 from October 26, 1993 through January 31, 2000.
Def. Exhs. 6, 10 11 , Evidentiary Hearing. And, finally it is undisputed that USFG incurred $15,785.75 in fees and $48.25 in costs for USFG's expert, Hugh Smith, who was retained as a fee expert on behalf of USFG. Def. Exh. 8, Evidentiary Hearing.
This Court agrees with WBB that the term "costs" in this instance should be limited to "taxable costs" as defined in 28 U.S.C. § 1920. The determination as to the reasonable amount of costs incurred by USFG in the defense of this case as sanctions against WBB under 28 U.S.C. § 1927 is governed by federal law. In Henkel v. Chicago St. Paul Minneapolis and Omaha Railway Company, 284 U.S. 444, 447 (1932), the court held that congressional "legislation must be deemed controlling, and excludes the application in the federal courts of any state practice." Any suggestion that federal courts should look to state law as to costs in deference to the doctrine Erie Railroad Company v. Thompkins, 304 U.S. 64 (1938), particularly those costs mentioned in § 1920 of Title 28, is clearly unsound. Brown v. Consolidated Fisheries Company, 18 F.R.D. 433 (D. Del. 1955). To the extent that fees are authorized by federal statute, the same analysis that pertained to the other cost provisions would apply and federal law should govern.Exxon Corp. v. Burglin, 42 F.3d 948, 950 (5th Cir. 1995) (Federal Rules of Appellate Procedure rather than state statutes governed in determining the right to and calculation of attorneys' fees in diversity action).
The recovery of costs under 28 U.S.C. § 1927 is limited to "taxable costs" as defined in 28 U.S.C. § 1920. As amended in 1980, 28 U.S.C. § 1927 provides, in part, that: "[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct."
"In construing 'costs,' however, we may look to the contemporaneous understanding of the term. . . This history suggests that § 1920 and § 1927 should be read together as part of the integrated statute approved in 1853." Roadway Express, Inc. v. Piper, 447 U.S. 752, 761 — 762 (1980). Within the meaning of this section (§ 1927) permitting a district court to require an attorney to personally satisfy costs when he "so multiples the proceedings in any case as to increase costs unnecessarily and vexatiously," the term "costs" should be limited to taxable costs. U.S. v. Ross, 535 F.2d 346, 350 (6th Cir. 1976). InRoss, the 6th Circuit determined that, because attorneys' fees are not considered "taxable costs," attorneys' fees could not be awarded as a sanction under § 1927. In response, Congress amended § 1927 in 1980 to include the term "attorneys' fees"; however, Congress did not add a definition of the term "costs" to § 1927. Hence, the definition of "costs" contained in § 1920 remains applicable. See Roadway Express, 447 U.S. 752.
Taxable costs under Section 1920 include fees of the clerk and marshall, fees of the court reporter for stenographic transcripts "necessarily obtained", fees for printing, fees for exemplification and copies of papers necessarily obtained for use in the case, docket fees under Section 1923, and compensation for "court appointed experts" and interpreters. Costs not specifically enumerated are not recoverable. For instance, costs incurred in mailing and sending documents by mail; express mail; facsimiles; travel expenses; and expert witness fees are not recoverable. See Tang How v. Edward J. Gerris, Inc., 756 F. Supp. 1540, 1545 (S.D. Fla. 1991), aff'd, 961 F.2d 174 (11th Cir. 1992). Additionally, "general copying, computerized legal research, postage (and) courthouse parking fees . . . are clearly not recoverable."Duckworth v Whisenant, 97 F.3d 1393, 1399 (11th Cir. 1996). Likewise, costs incurred in enlarging exhibits are not recoverable. Charter Medical Corporation v Cardin, 127 F.R.D. 111, 114 (D. Maryland 1989). The costs incurred for equipment rental and fees to a videographer for playback of video depositions at trial are not taxable costs. Morrison v Reichhold Chemicals, Inc., 97 F.3d 460, 465 (11th Cir. 1996).
This Court likewise agrees with WBB that expert witness fees may not be taxed as costs under 28 U.S.C. § 1927 in excess of the limits set out in 28 U.S.C. § 1821. In the absence of any other explicit statutory authority for taxing expert witness fees as costs, the costs which the court may tax pursuant to federal rule are governed by the general statute on taxing costs. 28 U.S.C. § 1920. Crawford Fitting Co. v. J.T. Gibbons, Inc, 482 U.S. 437, 439 (1987); In re: Philadelphia Mortoage Trust, 930 F.2d 306, 307 (3d Circuit 1991). In Crawford Fitting Company v. J.T. Gibbons, Inc., 482 U.S. 437, 439 (1987), the Supreme Court held that when a party who seeks reimbursement for fees paid to its own expert witness, a federal court is bound by the limits of § 1821(b). The Court went on to state that:
We think that it is clear that in §§ 1920 and 1821, Congress comprehensively addressed the taxation of fees for litigants' witnesses. This conclusion is all the more compelling when we consider that § 1920(6) allows the taxation, as a cost, of the compensation of court-appointed expert witnesses. There is no provision that sets a limit on the compensation for court-appointed expert witnesses in the way that § 1821(b) sets a limit for litigants' witnesses. It is therefore clear that When Congress meant to set a limit on fees, it knew how to do so. We think that the inescapable effect of these sections in combination is that a federal court may tax expert witness fees in excess of $30-per-day limit set out in § 1821(b) only when the witness is court appointed.482 U.S. at 442.
In Morrison v. Reichhold Chemicals, Inc., 97 F.3d 460, 462 (11th Cir. 1996) the Eleventh Circuit adopted the Crawford analysis in holding that the District Court erred in taxing fees in excess of the statutorily prescribed limits of § 1821 and 1920 regarding expert witnesses. See also Glenn v. General Motors Corp., 841 F.2d 1567, 1575 (11th Cir. 1988) (reversing the district's court award of expert witness fees pursuant to 28 U.S.C. § 216(b) stating that the district court had erred in awarding expert witness fees in excess of the amount permitted by 28 U.S.C. § 1920; In so ruling the court held that the broad language in Crawford Fitting does not permit a distinction whether or not the award is made under a fee-shifting statute or under the Federal Rules of Civil Procedure). In their Memorandum, USFG mistakenly relies on the Eleventh Circuit's decision in Barnes v. Dalton, 158 F.3d 1212 (11th Cir. 1998). In Barnes, the District Court recognized that it could not award expert witness fees as a sanction under 28 U.S.C. § 1927 and, thus, chose to award the fees under the Court's "inherent powers." UnlikeBarnes, however, Judge Paine in this case specifically held that the award of attorney's fees and costs were made pursuant to 28 U.S.C. § 1927 and referred the matter to the undersigned United States Magistrate Judge for a determination of the reasonable amount of attorney's fees and costs properly awardable under that section. Accordingly this Court finds that neither costs beyond those contemplated by § 1920 nor expert witness fees in excess of the limits set out in 28 U.S.C. § 1821 are properly awardable herein.
This interpretation was later adopted by the Supreme Court in West Va. Univ. Hospitals v. Casey, 499 U.S. 83 (1991).
CONCLUSION
USFG bears the burden of documenting the appropriate hours and hourly rates. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). USFG has more than met its burden. Given that a contract for fees is involved, USFG is limited to its contract rate and cannot recover a higher "reasonable hourly rate" — although the Court does take into consideration that USFG received a "bargain" with respect to the hourly rate charged by BBP.
This Court must determine the reasonable amount of hours. Norman v. Housing Authority, 836 F.2d 1292, 1301 (11th Cir. 1988). Excessive, redundant or otherwise unnecessary hours should be excluded. Id. Generalized statements that time spent was unreasonable is not entitled to much weight. Hensley v. Eckerhart, 461 U.S. 424, 439 n. 15 (1983);Norman, 836 F.2d at 1301. As the Court must be reasonably precise in excluding hours thought to be unreasonable or unnecessary, so should be the objections and proof from fee opponents. Id.
This was essentially an insurance fraud case where, as The Order makes clear, the uncooperative effort of Plaintiff and its counsel, WBB, who had all the knowledge underlying the frivolous insurance business interruption claim, forced USFG and its counsel to uncover the truth, which was a substantial task given the complexity of the issues and the more than 100,000 relevant documents. One cannot fault USFG or its counsel, BBP, for its defense of this case given the Verified Complaint sought as much as $45 million in compensatory, consequential, or punitive damages, and attorneys fees.
This Court finds that the quality and the results of the legal services for USFG paid were of the highest caliber. Not only was BBP able to get Plaintiffs' $45 million claim dismissed with prejudice before having to put on its case, but Judge Paine's written decision 958 F. Supp. 594 (S.D. Fla. 1997) stands as the leading published decision in the country on the topic of a business interruption claim. A reading of this case is factual evidence of its complexity and the need for USFG's counsel to be thoroughly prepared.
The fees and costs incurred by USFG were subject to rigorous internal review through BBP's billing procedures and to rigorous review and audit by one of the nations biggest and most sophisticated property and casualty insurers. Knowing the Plaintiff was "judgment proof," and USFG would have slight chance of recovering any of these expenses, USFG, as a sophisticated litigant, willingly incurred and paid them as was reasonable and necessary. In accordance with the above and foregoing, it is hereby,
RECOMMENDED as follows:
1. The time period for which USFG may recover fees and costs should be October 26, 1993, the date WBB filed the Verified Complaint on behalf of Dictiomatic, through the present;
2. The reasonable amount of fees incurred by USFG as a result of the vexatious actions of WBB should be $579,644.30, deducting therefrom any fees incurred prior to October 26, 1993, the date WBB filed the Verified Complaint on behalf of Dictiomatic, and deducting therefrom any fees incurred in connection with the declaratory judgment action in the Middle District. In this regard, the parties shall have twenty (20) days from the date of any order that may be entered by Judge Paine affirming the within Report and Recommendation within which to confer and come to an agreement as to the amount which should be deducted in accordance with this recommendation. Should the parties be unable to reach agreement in this regard within the twenty (20) day time period, notice thereof shall be filed with the Court, whereupon the undersigned shall issue a scheduling order and conduct a hearing on the matter;
3. The reasonable amount of taxable costs pursuant to 28 U.S.C. § 1920 incurred by USFG as a result of the vexatious actions of WBB should be $46,564,56;
4. No costs incurred by USFG in addition to 28 U.S.C. § 1920 and no expert witness fees in excess of the limits set out in 28 U.S.C. § 1821 should be recovered by USFG
5. No in-house counsel fees and no in-house counsel costs should be recovered by USFG and,
6. USFG should not be awarded pre-judgment interest on the award and post-judgment interest should not accrue until Judge Paine's Sanction Order becomes a "judgment" as contemplated by Rule 54(a).
This figure is arrived at by adding together $551,181.30, the reasonable amount of fees incurred by USFG as a result of the vexatious actions of WBB, as testified to by Mr. Smith, and $28,463.00 for USFG's March 14, 2000 fee bill.
The parties have ten (10) days from the date of this Report and Recommendation within which to serve and file written objections, if any, with the Honorable James C. Paine, United States District Judge. Failure to file objections timely shall bar the parties from attacking on appeal the factual findings contained herein. LoConte v. Dugger, 847 F.2d 745 (11th Cir. 1988), cert. denied, 488 U.S. 958 (1988); RTC v. Hallmark Builders, Inc., 996 F.2d 1144, 1149 (11th Cir. 1993).