Opinion
Case No. 09-10853-MSH
2020-10-27
IN RE: Julio C. MIRALDA, Debtor.
John A. Ullian, Esq., Amy Puliafico, Esq., The Law Firm of Ullian & Associates, P.C., Braintree, MA, for the Debtor Julio C. Miralda Lawson Williams III, Esq., Brock and Scott, PLLC, Pawtucket, Rhode Island, for the Creditor Franklin Credit Management Corporation
John A. Ullian, Esq., Amy Puliafico, Esq., The Law Firm of Ullian & Associates, P.C., Braintree, MA, for the Debtor Julio C. Miralda
Lawson Williams III, Esq., Brock and Scott, PLLC, Pawtucket, Rhode Island, for the Creditor Franklin Credit Management Corporation
MEMORANDUM AND ORDER ON DEBTOR'S REQUEST FOR FEES AND COSTS
Melvin S. Hoffman, U.S. Bankruptcy Judge By order entered on May 21, 2020 (ECF No. 242), I granted Mr. Miralda's motion for summary judgment against Franklin Credit Management Corporation, agent for the successor of GMAC Mortgage LLC, in a contested matter initiated by Mr. Miralda's motion for an order that the lien claims of these lenders had been satisfied. My order also granted Mr. Miralda's request for an award of attorneys' fees and costs, subject to further proceedings to determine the amount of the award. After reviewing the written submissions of the parties, including a detailed billing statement by Mr. Miralda's attorneys, I set forth in this memorandum and order my findings and rulings as to the award of attorneys' fees and costs in favor of Mr. Miralda.
I. Background
Mr. Miralda filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code on February 4, 2009. At the time, GMAC held a second mortgage on Mr. Miralda's home in Dedham, Massachusetts. Mr. Miralda took the position in his bankruptcy case that the value of his home was insufficient to provide any security for GMAC's mortgage and, thus, GMAC was merely a general unsecured creditor in the case. GMAC disagreed. In August 2009, Mr. Miralda and GMAC entered into a stipulation that was approved by the court resolving their dispute. Under the stipulation, which had been drafted by GMAC's attorney, Mr. Miralda agreed to pay GMAC $5980.18 in six consecutive monthly installments of $966.70 each, beginning in August, and GMAC agreed that if Mr. Miralda did so it would withdraw its proof of claim in the bankruptcy case and discharge its mortgage.
References to the Bankruptcy Code are to 11 U.S.C. §§ 101 -1532.
Mr. Miralda made all six installment payments on time. The problem was that no one had bothered to check the math in the stipulation. Mr. Miralda's six installment payments of $966.70 as required in the stipulation totaled $5800.20, which was $179.98 short of the stipulated total payment of $5980.18.
Mr. Miralda successfully completed his chapter 13 plan obligations and on January 2, 2013, this case was closed. During all this time and continuing for another six-and-a-half years after that, Mr. Miralda assumed that his debt to GMAC had been paid in full. Admittedly, during this time neither GMAC nor its successor delivered to Mr. Miralda a mortgage discharge or withdrew the proof of claim as the stipulation required, but neither did they inform Mr. Miralda that their failure to do so was because they believed Mr. Miralda still owed money.
There matters remained until around July of 2019, when Mr. Miralda began receiving demands for payment from Franklin on behalf of GMAC's successor mortgage holder. Upon inquiry with Franklin, Mr. Miralda and his attorney learned of the math error in the stipulation. Mr. Miralda promptly sent a check to Franklin for the $179.98 shortfall and requested a mortgage discharge. Franklin refused to accept the payment or issue the discharge, taking the position that Mr. Miralda had failed to complete his payment obligations under the stipulation by the agreed upon deadline and therefore Franklin was under no obligation to accept payment of the stipulated amount. Rather than discharging Mr. Miralda's second mortgage upon payment of $5980.18, as had been agreed, Franklin insisted that Mr. Miralda owed over $130,000 on the second mortgage, with no payments having been made in almost a decade.
Mr. Miralda sought and was allowed to reopen this bankruptcy case at which time he filed his motion seeking an order confirming that GMAC's mortgage debt had been satisfied in accordance with the terms of the stipulation and requiring that a mortgage discharge be delivered. Mr. Miralda also requested that Franklin be ordered to pay Mr. Miralda's legal fees and costs incurred as a result of Franklin's bad faith, which had forced Mr. Miralda to reopen his bankruptcy case and prosecute his motion. Franklin responded in steadfast opposition.
At the initial hearing on this matter in November 2019, I expressed concern about Franklin's position. I repeatedly cautioned Franklin's attorney that if the evidence ultimately proved that Mr. Miralda had acted in good faith under the stipulation, that is, if Mr. Miralda had been unaware of the math error, and that the stipulation containing the $179.98 error had been drafted by GMAC's attorneys, I would find in Mr. Miralda's favor, enforce the stipulation, and impose fees and costs, if not sanctions, upon Franklin. Franklin's counsel indicated that he did not expect Franklin would dispute that Mr. Miralda had acted in good faith or that GMAC's counsel had drafted the stipulation. I advised both parties that should Franklin agree to those facts, they could stipulate to them, which would streamline and accelerate the process of my ruling on Mr. Miralda's motion.
Despite ultimately having no quarrel with the salient facts as Mr. Miralda had presented them, Franklin opted not to support an abridged or fast-track procedure to dispose of this matter, choosing instead to play it out with discovery, including propounding interrogatories and a request for production of documents, and initiating pretrial motion practice. After a hearing on cross-motions for summary judgment, I entered judgment in Mr. Miralda's favor and granted his request for attorneys' fees and costs based upon Franklin's bad faith, including its relentless pursuit of the matter after having been expressly cautioned as to the outcome of such action. Mr. Miralda's attorney was instructed to file an affidavit with detail as to all fees and expenses incurred in this contested matter.
In limited circumstances, including when an unsuccessful litigant has acted in bad faith in pursuing a matter, the court is permitted to award the successful litigant's attorneys' fees and costs, thereby deviating from the "American Rule" in which each litigant's fees and costs are the litigant's own to pay, regardless of success. See F.D. Rich Co. v. United States ex rel. Indus. Lumber Co. , 417 U.S. 116, 129 & n.17, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974) (citing, among others, Vaughan v. Atkinson , 369 U.S. 527, 82 S.Ct. 997, 8 L.Ed.2d 88 (1962) ) (acknowledging that courts have "long recognized that attorneys' fees may be awarded to a successful party when his opponent has acted in bad faith, vexatiously, wantonly, or for oppressive reasons").
Mr. Miralda's counsel filed an affidavit, with itemized billing entries, showing $17,402.50 in fees and $261.60 in costs charged to Mr. Miralda. The fees cover the period from July 2019 through June 2020, during which two attorneys from The Law Firm of Ullian & Associates, P.C. spent 68.2 hours, resulting in an average rate for the two time-keepers of $255.17 per hour. Counsel's expenses included the filing fee to reopen Mr. Miralda's bankruptcy case, postage, and parking costs for a court hearing. Counsel also filed a copy of a September 3, 2019 engagement agreement with Mr. Miralda.
A May 22, 2020 billing entry contains a typographical error indicating a $750 charge rather than a $75 charge for 0.3 hours of work billed at $250 per hour. The total fee amount of $17,402.50, however, reflects the correct amount of $75, not $750.
In a ten-page response opposing Mr. Miralda's fee request, Franklin challenged at least forty of the seventy-two line item time entries in the billing detail submitted by Mr. Miralda's attorneys. Franklin proposed that counsel's fee be reduced from $17,402.50 to $7837.50. In its opposition, Franklin minimized the work of Mr. Miralda's counsel and asserted, without a clear reference to any objective standard for comparison, that counsel's hours "were clearly excessive" in light of the work performed, as that work was described by Franklin. Franklin also disputed numerous time entries as being "generic, vague" and "block-billing." Franklin further contended that time spent by counsel before Mr. Miralda executed a fee agreement should be disallowed entirely.
In a reply to Franklin's opposition, Mr. Miralda's attorneys offered a point-by-point rebuttal of several of Franklin's challenges and provided additional descriptive detail of their work to support their position that all fees, including those incurred before a formal engagement agreement had been entered into, were incurred as a result of this contested matter and were reasonable. Mr. Miralda also requested an additional award of $750 in attorneys' fees based upon the 3.0 hours that counsel expended in drafting its reply to Franklin's "frivolous" opposition.
II. Legal Standard and Analysis
In determining a reasonable fee for the work performed by Mr. Miralda's counsel in this matter, I apply the lodestar method assisted by the factors set forth in Bankruptcy Code § 330(a)(3). The lodestar method calls for a determination of a reasonable hourly rate that is to be multiplied by productively spent hours. See, e.g. , Lopez v. Consejo de Titulares del Condominio Carolina Court Apartments (In re Lopez) , 405 B.R. 24, 30 (B.A.P. 1st Cir. 2009). Bankruptcy Code § 330(a)(3) lists select relevant factors for determining reasonable compensation, including rates charged, amount and reasonableness of time spent, necessity or benefit to the case, and experience and skill in bankruptcy practice. Applying the lodestar method in conjunction with the relevant § 330(a)(3) factors is an approach used in other fee-shifting bankruptcy cases, see Lopez , 405 B.R. at 28, 30-33 (B.A.P. 1st Cir. 2009), and I see no reason to deviate from that approach here.
As previously noted, two attorneys from The Law Firm of Ullian & Associates, P.C. worked together to represent Mr. Miralda in this contested matter. John Ullian, with over 35 years of relevant experience, worked 8.3 hours on this matter and charged his going rate of $300 per hour. Amy Puliafico, with over 7 years of relevant experience, devoted 59.9 hours at her standard $250 per hour rate. Franklin does not quarrel with the two attorneys' experience, their division of labor, or their hourly rates. I find that their hourly rates are reasonable—well within the range of usual and customary rates charged in this district by comparably skilled attorneys—and adopt those rates in applying the lodestar method.
In determining the other variable in the lodestar equation, the number of hours productively spent, I do not include time spent " ‘unreasonably, unnecessarily, or inefficiently.’ " See United States v. One Star Class Sloop Sailboat , 546 F.3d 26, 38 (1st Cir. 2008) (quoting Torres-Rivera v. O'Neill-Cancel , 524 F.3d 331, 336 (1st Cir. 2008) ); cf. 11 U.S.C. § 330(a)(4) (prohibiting compensation for services unnecessarily duplicated, not "reasonably likely to benefit the debtor's estate," and unnecessary to case administration).
Having reviewed the line item time entries of Mr. Miralda's counsel, the issues raised by Franklin, and the supplemental descriptions set forth in counsel's reply to Franklin's opposition, I find only one entry that must be excluded. On September 25, 2019, counsel spent 0.4 hours and charged $100, to correct a deficiency in the service of a motion. If service had been completed correctly in the first instance, substantially all of that time would have been avoidable. Thus, due to inefficiency, the $100 charge shall be excluded. The balance of the time spent was reasonable, necessary, and beneficial in successfully protecting Mr. Miralda from Franklin's attempt to saddle him with over $130,000 in past-due mortgage debt based upon a $179.98 mistake that was no fault of Mr. Miralda's.
Contrary to Franklin's assertions, the itemized billing descriptions of Mr. Miralda's counsel are sufficiently detailed and reasonable so that counsel's productivity may be easily assessed. Counsel's supplemental descriptions more than adequately resolve any close calls. I find unpersuasive Franklin's proposed line item reductions of "excessive" time spent, as the alleged excessiveness and the proposed reduced amounts are unsupported by authority or logical explanations. I also reject Franklin's attempts to correlate the reasonableness of counsel's fee to the brevity of the documents prepared and filed by them. Franklin's contention that this contested matter was "simple" and "straightforward," requiring only minimal effort by Mr. Miralda's counsel is starkly contradicted by Franklin's own strategy to introduce complexity in this matter, including propounding discovery and filing a motion for summary judgment accompanied by a 35-page brief and 164 pages of exhibits.
Finally, apart from emphasizing the reference to "incurred in this contested matter" in my order directing Mr. Miralda's counsel to file an affidavit as to fees and expenses, Franklin cites no authority for its assertion that time spent by counsel prior to the execution of a fee agreement should not be compensated. The 3.2 hours spent by Mr. Miralda's counsel before executing a new fee agreement with Mr. Miralda were indisputably related to this contested matter and, if anything, illustrate a good faith effort to avoid the litigation that later became necessary due to Franklin's refusal to abide by the terms of the stipulation. I find no justification to exclude those hours.
In sum, I find that the lodestar method together with the § 330(a)(3)-(4) factors support a fee award in the amount of $17,302.50, which is $100 less than requested. As counsel's $261.60 in costs is undisputed and reasonable, I will award the requested amount in full. While unsuccessful, I do not find Franklin's opposition to Mr. Miralda's request for fees and costs to have been frivolous as suggested by Mr. Miralda as the basis for his request for an additional award of $750 for his counsel's time spent in replying to it. Thus, I will deny that request.
III. Order
For the reasons stated above, Mr. Miralda is awarded $17,564.10 consisting of $17,302.50 in counsel fees and $261.60 in costs in accordance with my May 21, 2020 order on summary judgment. Franklin shall remit payment by check payable to the order of The Law Firm of Ullian & Associates, P.C. IOLTA Account by no later than November 25, 2020.