Opinion
17-CV-03118 (KMW) (SN)
04-20-2021
LG CAPITAL FUNDING, LLC, Plaintiff, v. AIM EXPLORATION, INC., Defendant.
REPORT AND RECOMMENDATION
SARAH NETBURN, UNITED STATES MAGISTRATE JUDGE.
TO THE HONORABLE KIMBA M. WOOD:
On April 6, 2020, the Court entered a default in favor of Plaintiff LG Capital Funding, LLC (“LG”) and against Defendant, AIM Exploration, Inc. (“AIM”). This case was referred to my docket to conduct an inquest and determine LG's damages. LG submitted Proposed Findings of Fact and Conclusions of Law in support of its damages, seeking a total award of $163,366.70. AIM failed to respond. Because LG has provided a sufficient basis on which to award damages and it is appropriate to award attorney's fees and costs-albeit with some reductions to each-I recommend a total award in the amount of $138,456.57.
BACKGROUND
I. Procedural Background
LG sued AIM in the United States District Court for the Eastern District of New York on December 22, 2016, alleging breach of contract and unjust enrichment and seeking damages and attorney's fees and costs. See ECF No. 1. In April 2017, the case was transferred to the Southern District of New York and AIM answered the Complaint. ECF No. 11. Litigation proceeded with LG filing an Amended Complaint, AIM filing an unsuccessful motion to dismiss, and AIM filing an Answer to the Amended Complaint. See ECF Nos. 17, 20, 32.
After losing the motion to dismiss, AIM's counsel moved to withdraw, indicating that AIM was uncooperative, uncommunicative, and had failed to pay its attorney's fees. See ECF No. 34. The Court granted the motion and ordered AIM to file a notice of appearance of new counsel within 60 days. See ECF No. 35. AIM did not comply.
On July 11, 2019, LG filed a proposed certificate of default against AIM, and the Clerk of Court issued a certificate of default that same day. See ECF Nos. 39, 41. Following reassignment to this Court, AIM failed to respond to an order to show cause why the certificate of default should be set aside or risk default judgment. Accordingly, the Court entered a default and referred this matter to me to conduct a damages inquest and recommend a decision on LG's damages. See ECF No. 44. The next day, I directed LG to file proposed findings of fact and a memorandum of law describing all the claimed damages and any monetary relief, with AIM to respond within 30 days of service. See ECF No. 45.
LG filed its proposed findings of fact and memorandum of law on May 8, 2020. See ECF Nos. 46-48. It also filed a certificate of service indicating that AIM was served with its documents on May 12, 2020, giving AIM until June 12, 2020, to file any reply. See ECF No. 49. To date, AIM has not replied.
DISCUSSION
I. Legal Standard
The Court of Appeals set forth the procedural rules applicable to the entry of a default judgment in City of New York v. Mickalis Pawn Shop, LLC:
Federal Rule of Civil Procedure 55 is the basic procedure to be followed when there is a default in the course of litigation.” Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir.
2004). Rule 55 provides a “two-step process” for the entry of judgment against a party who fails to defend: first, the entry of a default, and second, the entry of a default judgment. New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005). The first step, entry of a default, formalizes a judicial recognition that a defendant has, through its failure to defend the action, admitted liability to the plaintiff. . . . The second step, entry of a default judgment, converts the defendant's admission of liability into a final judgment that terminates the litigation and awards the plaintiff any relief to which the court decides it is entitled, to the extent permitted by Rule 54(c).645 F.3d 114, 128 (2d Cir. 2011).
Where default has been entered against a defendant, courts are to accept as true all of the well-pleaded facts alleged in the complaint, except those concerning the amount of damages. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 108 (2d Cir. 1997) (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). “Even after a default it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.” In re Industrial Diamonds Antitrust Litig., 119 F.Supp.2d 418, 420 (S.D.N.Y 2000) (cleaned up). Where plaintiff's well-pleaded facts are sufficient to state a claim on which relief can be granted, the only remaining issue in an inquest is if plaintiff has provided adequate support for its requested relief. See Gucci Am., Inc. v. Tyrrell-Miller, 678 F.Supp.2d 117, 119 (S.D.N.Y. 2008) (citing Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)).
“[A] plaintiff seeking to recover damages against a defaulting defendant must prove its claim th[r]ough the submission of evidence. . ..” Malletier v. Carducci Leather Fashions, Inc., 648 F.Supp.2d. 501, 503 (S.D.N.Y. 2009). A court may determine the amount a plaintiff is entitled to recover without holding a hearing so long as (1) the court determines the proper rule for calculating damages, and (2) the evidence submitted by the plaintiff establishes “with reasonable certainty” the basis for the damages. Id. (citing Credit Lyonnais Sec. (USA), Inc., 183 F.3d at 155, and Transatlantic Marine Claims Agency Inc., 109 F.3d at 111).
II. Liability
A. Facts Related to Liability
The following facts are established by the admissible evidence submitted for this inquest and allegations in the Amended Complaint, which are deemed admitted except to the extent they concern the amount of damages.
On June 2, 2015, AIM issued a convertible redeemable note to LG (the “Note”). ECF No. 17 ¶ 9; Id. Ex. 2. The Note had a face value of $57,875.00, an 8% annual interest rate, and a maturity date of June 5, 2016. Id. The terms of the Note provided LG with the right to convert all or any amount of outstanding principal and interest of the Note into shares of AIM's common stock at a discount to the market rate by submitting a “Notice of Conversion.” ECF. No. 17 ¶¶ 13, 14; Id. Ex. 2 at § 4(a).
Although LG's Proposed Findings of Fact refers to this exhibit as “Exhibit B, ” the docket reflects that the exhibits were not named alphabetically, but with explanatory names: 1 - “Exhibit SPA”; 2 - “Exhibit Note”; 3 - “Exhibit Notices of Conversion”; 4 - “Exhibited Default Notice of Conversion”; and 5 - “Exhibit Default Letter.” Additionally, several of these exhibits contain pages marked “Exhibit A.” See, e.g., ECF No. 17, “Exhibit SPA” at 12; Id. “Exhibit Note” at 9. To avoid confusion, this Report and Recommendation will refer to the exhibits by the No. assigned on ECF, as indicated in this footnote.
Between December 17, 2015, and February 5, 2016, LG submitted four Notices of Conversion, totaling $25,375 of the principal balance. AIM honored the conversions by delivering the shares, leaving a principal balance on the Note of $32,500. ECF No. 17 ¶¶ 13, 14; Id. Ex. 3; ECF No. 32 [hereinafter “Answer”] ¶¶ 18, 19 (admitted).
On June 5, 2016, the Note reached maturity and became due and payable, however, AIM failed to remit payment. ECF No. 17 ¶ 25; Answer at ¶ 25 (admitted). Section 8 of the Note states that “[i]f the Note is not paid at maturity, the outstanding principal due under this note shall increase by 10%.” ECF No. 17, Ex. 2 § 8. Accordingly, when AIM failed to remit payment on June 5, 2016, the principal balance increased by $3,250, which represented 10% of the remaining principal balance, to $35,750.
On Tuesday, June 21, 2016, LG submitted a Notice of Conversion, seeking to convert $7,500 in principal and $621.37 of accrued interest in the Note into 369, 153 shares of AIM's common stock. ECF No. 17, Ex. 4; Answer at ¶ 22. Section 4(a) of the Note required AIM to deliver its shares of common stock to LG within three business days after receiving a notice of conversion. See ECF No. 17 Ex. 2. AIM failed to deliver the shares by the third business day, Friday, June 24, 2016. Answer ¶ 23 (admitted).
B. Breach of Contract
“To prevail on a breach of contract claim under New York law, a plaintiff must prove ‘(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages.'” Terwilliger v. Terwilliger, 206 F.3d 240, 245-46 (2d Cir. 2000) (quoting First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d Cir. 1998) (cleaned up)).
LG alleged a valid cause of action in its Amended Complaint for breach of contract by claiming that (1) AIM issued the Note to LG, subject to the Securities Purchase Agreement (“SPA”), which entitled LG to convert all and any amount of outstanding principal and interest into shares of Defendant's common stock; (2) LG performed by purchasing the Note for $57,875 less $2,875 in legal fees; (3) that AIM breached by failing to deliver shares of its common stock upon a Notice of Conversion, and by failing to settle the balance on the principal of the Note; and that (4) such breach resulted in LG's money damages, expectation damages, and attorney's fees and costs. See generally ECF No. 17. Accordingly, the Court finds that AIM is liable for breach of contract, and LG is entitled to damages in the amount determined below.
III. Damages
LG argues that it is entitled to (1) expectation damages for AIM's failure to deliver shares pursuant to the final Notice of Conversion, and (2) expectation damages for the remaining unpaid principal balance of the Note. In order to calculate the measure of damages, however, the Court must first determine the appropriate breach date.
A. Date of Breach
“Although the amount of recoverable damages is a question of fact, the ‘measure of damages upon which the factual computation is based is a question of law.'” Wolff & Munier, Inc. v. Whiting-Turner Contracting Co., 946 F.2d 1003, 1009 (2d Cir. 1991) (quoting United States ex rel. N. Maltese & Sons, Inc. v. Juno Constr. Corp., 759 F.2d 253, 255 (2d Cir. 1985)). “It is settled Second Circuit law that in a breach of contract case, damages are calculated at the time of the breach.” Boyce v. Soundview Tech. Group, Inc., 464 F.3d 376, 384 (2d Cir. 2006). This remains true in cases where the alleged breach involves the failure by one party to deliver shares of stock to another party. See Lucente v. International Business Machines Corp., 310 F.3d 243, 262 (2d Cir. 2002) (“New York's damages rule is precisely the same when the breach of contract is nondelivery of shares of stock.”) (quoting Simon v. Electrospace Corp., 28 N.Y.2d 136, 145 (1971) (cleaned up)); see also Aristocrat Leisure Ltd. v. Deutsche Bank Trust Co. Americas, 618 F.Supp.2d 280, 293 (S.D.N.Y. 2009) (“[T]he most obvious date on which Aristocrat breached the [agreement] is when Aristocrat refused to deliver the shares to the Bondholders after the Bondholders completed the necessary steps to convert their bonds.”).
On June 24, 2016, the last business day on which AIM was required to deliver its shares to LG, AIM's stock traded at a high of $0.0884 and low of $0.0600 per share, for an average of $0.0742 per share. See ECF No. 47 Ex. 1. LG claims, however, that the date of breach occurred on Monday, June 27, 2016, the fourth business day after it submitted its notice of conversion on June 21, 2016. On June 27, 2016, AIM's stock traded at a high of $0.095 and low of $0.0800 per share, for an average of $0.0875. This $0.0133 difference in share price between the two days, multiplied by the 369, 153 shares requested in the notice of conversion, would result in a nearly $5,000 difference in the value of LG's requested shares.
(369, 153 x $0.0875) - (369, 153 x $0.0742) = $4,909.7349.
Section 8(k) of the Note makes clear, however, that AIM's failure to deliver the requested shares to LG “within 3 business days of its receipt of a Notice of Conversion”-not after 3 business day-constituted an “Event of Default.” ECF No. 17, Ex. 2 (emphasis added). Furthermore, on July 6, 2016, approximately two weeks after LG sent the final Notice of Conversion to AIM, LG issued a letter to AIM through counsel stating that “[b]y failing to deliver these shares to our Client by June 24, 2016, [AIM's] conduct has resulted in a breach of Section 4(a) of the Note and caused certain ‘Events of Default' pursuant to Section 8 thereof.” ECF No. 17, Ex. 5 (emphasis added).
Perhaps it is merely coincidental that LG's preferred date on which to calculate the breach was also the date at which the mean share price was at its highest point-yet there is no legal basis for applying that as the breach date for its damages calculation. Indeed, apart from the “three business days” language, the only other date contemplated in the Note following a breach of Section 4(a) was the possibility to cure such a breach “within 5 days” or, in this instance, by June 29, 2016-not June 27, 2016. ECF No. 17, Ex. 2 at 5.
LG does not argue that the breach date should be calculated from the last day to cure. Such an argument would be unavailing, however, as the triggering of the cure period implies that a breach has already occurred. Cf. Aristocrat, 618 F.Supp.2d at 294 n.14 (“The Court rejects the Bondholders' argument that the breach date cannot be earlier than thirty days after the Conversion Date. . . . While the Indenture allows Aristocrat thirty days to cure a failure to deliver shares . . . this suit is not premised on the Trustee's declaration of an Event of Default.”).
“If the purpose of damages is to put the non-breaching party in the same economic position as if the breaching party performed its contractual duties . . . damages should be calculated from the date that the non-breaching party expected to receive the benefit of the contract.” Aristocrat Leisure Ltd. v. Deutsche Bank Trust Co. Americas, 618 F.Supp.2d 280, 294 (S.D.N.Y. 2009) (internal citations omitted). Here, had AIM performed as promised under the Note, the latest date for it to transmit shares to LG and comply with the term of the Note would have been on June 24, 2016-as was acknowledged in its counsel's letter. As such, the Court finds that the date of breach was June 24, 2016, and calculates damages from that date.
B. Expectation Damages for Failure to Deliver Shares Pursuant to the Notice of Conversion
“Under New York law, damages for breach of contract should put the plaintiff in the same economic position he would have occupied had the breaching party performed the contract.” Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 196 (2d Cir. 2003). Under substantially similar facts in Union Capital, LLC. v. Vape Holdings, Inc., the Honorable Richard J. Sullivan determined that “monetary damages are sufficient to remedy any harms caused by the [defendant's] failure to convert” a note into shares, and that such damages may be ascertained by “subtracting the contract price-the price at which [the plaintiff] is entitled to convert shares under the Note-from the market price of shares on the date of the breach.” No. 16-cv-01343 (RJS), 2017 WL 1406278, at *6 (S.D.N.Y. March 31, 2017); accord Adar Bays, LLC v. Genesys ID, Inc., 341 F.Supp.3d 339, 350 (S.D.N.Y. 2018). The Court of Appeals has determined that the market value of expected stock should be measured as “the mean between the highest and lowest quoted selling prices, as provided by the public exchange upon which the stock traded” on the date of the breach. LG Capital Funding, LLC v. CardioGenics Holdings, Inc., No. 18-1797- cv, 787 Fed.Appx. 2, at *4 (2d Cir. Sept. 10, 2019) (quoting Boyce v. Soundview Tech. Grp., Inc., 464 F.3d 376, 385 (2d Cir. 2006) (quotation marks omitted)).
As discussed above, the mean price per share of AIM's stock on the date of the breach was $0.0742. See ECF No. 47, Ex. 1. Under the Note (and as stated in the Notice of Conversion), LG was entitled to convert shares at a price of $0.022 per share. See ECF No. 17, Ex. 4. Accordingly, the measure of LG's expectation damages is calculated by subtracting the contract price of $0.022 per share from $0.0742, yielding an expected profit of $0.0522, and multiplying that by 369, 153-the No. of expected shares-totaling $19,269.79.
LG's proposed findings of fact inexplicably lists the expected share multiplier as 65, 536, 000. See ECF No. 46 ¶ 15. But it is clear from both the Notice of Conversion, as well as sound calculation, that the correct multiplier is 369, 153 shares. LG's Notice of Conversion sought to convert $7,500 in principal and $621.37 in interest into shares of AIM's stock at the price of $0.022 per share. (7, 500 + 621.37) / 0.022 = 369, 153 (rounded to nearest full share). Accordingly, this is used as the correct multiplier.
In addition, LG is entitled to recover the $7,500 in principal and $621.37 of interest it attempted to convert, totaling $8,121.37. See, e.g., LG Capital Funding, 787 Fed.Appx. 2, at *4 (vacating the district court's damages calculation that “subtract[ed] the conversion price from the damages award, ” which “awarded LG the equivalent of its lost profits on the conversion, but not the full value of the shares”). Therefore, AIM is liable for a total of $27,391.16 for its failure to deliver shares pursuant to the final Notice of Conversion.
C. Expectation Damages for the Remaining Principal Balance of the Note
In addition, LG argues that it is entitled to expectation damages on the remaining $28,250 balance on the Note. Although it does not allege that AIM refused to honor any Notices of Conversion beyond the last request on June 24, 2016, other courts have allowed plaintiffs to recover expectation damages for the balance of a note under substantially similar circumstances. See, e.g., Adar Bay, 341 F.Supp.3d at 350. Indeed, LG rescinded its initial request for liquidated damages under the Note and instead seeks expectation damages to conform with guidance issued by several courts in this Circuit since the filing of the Complaint. See, e.g., Union Capital, 2017 WL 1406278, at *7 (citing U.S. Fidelity & Guaranty Co. v. Braspetro Oil Servs. Co., 369 F.3d 34, 70-71 (2d Cir. 2004)).
Accordingly, the Court finds it appropriate to award expectation damages on the remaining $28,250 principal balance, calculated at the date of breach. See Adar Bay, 341 F.Supp.3d at 350. Applying the conversion price of $0.022, the balance of $28,250 would entitle LG to 1, 284, 090 shares. Applying the same expected profit of $0.0522 per share calculated above, LG is entitled to $67,029.49 in expectation damages. In addition, LG is entitled to recover the $28,250 balance, totaling $95,279.49 in damages stemming from the unpaid principal.
IV. Attorney's Fees and Costs
Sections 7 and 8 of the Note each state that AIM shall be liable for LG's costs and legal fees incurred in collecting any amount due under the Note, including through litigation. ECF No. 17, ¶ 39; Id. 17, Ex. 2 §§ 7, 8. Under New York law, “when a contract provides that in the event of litigation the losing party will pay the attorney's fees of the prevailing party, the court will order the losing party to pay whatever amounts have been expended by the prevailing party, so long as those amounts are not unreasonable.” Diamond D Enter. USA, Inc. v. Steinsvaag, 979 F.2d 14, 19 (2d Cir. 1992) (quoting F.H. Krear & Co. v. Nineteen Named Trs., 810 F.2d 1250, 1263 (2d Cir. 1987) (cleaned up)). Courts determine the “presumptively reasonable fee” for an attorney's services by looking to “what a reasonable, paying client would be willing to pay . . . who wishes to pay the least amount necessary to litigate the case effectively.” Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 184 (2d Cir. 2007).
The “presumptively reasonable fee” is the product of a reasonable hourly rate and a reasonable No. of hours engaged in litigating the matter. See Millea v. Metro-North R. Co., 658 F.3d 154, 166 (2d Cir. 2011). Requested fees must be supported “with contemporaneous time records establishing for each attorney for whom fees are sought, the date on which work was performed, the hours expended, and the nature of the work done.” Annuity, Welfare & Apprenticeship Skill Imp. & Safety Funds of Int'l Union of Operating Eng'rs, Local 15, 15A, 15C, 15D, AFL-CIO v. Integrated Structures Corp., No. 12-cv-00436 (LGS) (KNF), 2013 WL 2649644, at *7 (S.D.N.Y. June 13, 2013), adopted by 2013 WL 3684933 (July 12, 2013) (quoting New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983) (cleaned up)).
Here, LG requests a total of $18,175 in attorney's fees for 72.7 hours of work conducted by three associates. See ECF No. 47 ¶¶ 4-7; Id. Ex. 2. Attorney Kevin Kehrli graduated from Brooklyn Law School in 2014, was admitted to practice in 2015, and billed 43.6 hours at $250 per hour. See ECF No. 47, Ex. 2. Attorney Chris Han graduated from Boston University School of Law in 2014, was admitted to practice in 2015, and billed 18.6 hours at $250 per hour. Id. Attorney Morgan Romagna graduated from Benjamin N. Cardozo School of Law in 2018, was admitted to practice in 2019, and billed 10.5 hours at $250 per hour. Id.
LG's documents do not list Ms. Romagna's date of graduation, but it appeared on her firm profile. See Associates & Partners: Morgan Romagna, GS2Law, available at https://www.gs2law.com/team-morgan-romagna.
A. Reasonable Rates
In determining the reasonable fee for a particular case, courts rely on reasonable hourly rates prevailing in the district for similar services provided by attorneys with comparable skill and experience. See Id. (citing Blum v. Stenson, 465 U.S. 886, 896 n.11 (1984)); Sub-Zero, Inc. v. Sub Zero NY Refrigeration & Appliances Servs., Inc., No. 13-cv-02548 (KMW) (JLC), 2014 WL 1303434, at *8 (S.D.N.Y. Apr. 1, 2014). “It is the fee movant's burden to establish the prevailing market rate.” Sub-Zero, Inc., 2014 WL 1303434, at *8.
An appropriate associate rate depends upon their level of experience. Thor 725 8th Avenue LLC v. Goonetilleke, No. 14-cv-04968 (PAE), 2015 WL 8784211, at *11 (S.D.N.Y. Dec. 15, 2015). Case law, however, may not be current with prevailing rates. More than five years ago, when considering fee applications for smaller firms, courts typically awarded $300 per hour for “senior associates with at least eight years of experience, ” and between $125 and $215 per hour to associates “with three years of experience or less.” Id. (quoting Apolinario v. Luis Angie Deli Grocery Inc., No. 14-cv-02328 (GHW), 2015 WL 4522984, at *3 (S.D.N.Y. July 27, 2015)). More recent courts have approved billing rates in line with this framework. See, e.g., Plus Enters. LLC v. Sun Trading Int'l, LLC, No. 16-cv-08987 (VB) (FED), 2017 WL 6492117, at *9 (S.D.N.Y. Nov. 29, 2017) (approving $230 and $260 rates for associates in small law firm), adopted by 2017 WL 6496541 (Dec. 15, 2017); Skoogfors v. Lycos, Inc., No. 16-cv-02742 (PGG) (JCF), 2017 WL 10591577, at *5 (S.D.N.Y. Apr. 21, 2017) (finding that $225 per hour is “well within the range of acceptable rates” for a third-year associate), adopted by 2018 WL 4761521 (S.D.N.Y. Oct. 2, 2018).
Given that several years have passed since the above-cited cases and that reasonable rates increase steadily over time, the Court finds that the requested $250 hourly rate for both Mr. Kehrli and Mr. Han was reasonable because they each had over five years of experience at the time the inquest was briefed. Although Ms. Romagna was more junior when she performed her work, she is now a third-year associate. Accordingly, I find a $250 hourly rate reasonable for Ms. Romagna, as well. See Carey, 711 F.2d at 1153 (applying current rates for services “rendered over two or three years”). See also Garcia v. Pawar Bros Corp., No. 18-cv-2656 (BMC), 2018 WL 4100482, at *2 (E.D.N.Y. Aug. 28, 2018) (declining to “act as the defaulting defendants' lawyer by scrutinizing . . . overly severely” a fee rate within the high end of reasonable) (citing Greathouse v. JHS Sec. Inc., 784 F.3d 105, 120 (2d Cir. 2015) (Korman, D.J., concurring)).
B. Reasonable Hours
“[A]ny attorney . . . who applies for court-ordered compensation in this Circuit . . . must document the application with contemporaneous time records . . . . specify[ing], for each attorney, the date, the hours expended, and the nature of the work done.” Carey, 711 F.2d at 1148. The Court's task is to make “a conscientious and detailed inquiry into the validity of the representations that a certain No. of hours were usefully and reasonably expended.” Lunday v. City of Albany, 42 F.3d 131, 134 (2d Cir. 1994). In making this determination, “court[s] should exclude excessive, redundant or otherwise unnecessary hours.” Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1999). In doing so, the court may make specific reductions or an across the board reduction where the No. of billing entries is voluminous. See In re Agent Orange Prod. Liab. Litig., 818 F.2d 226, 237 (2d Cir. 1987). The critical inquiry is “whether, at the time the work was performed, a reasonable attorney would have engaged in similar time expenditures.” Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992) (citation omitted).
Counsel seeks to be paid for 72.70 hours of attorney time. Although this case was originally contested, it ended in default. Before the default, counsel filed a complaint and an amended complaint and successfully defended a motion to dismiss. Approximately 46 hours were spent during this contested phase. Counsel's submitted time records show that the tasks were necessary to prosecute this action, performed within a reasonable amount of time, and were the type of work in which a reasonable attorney would engage.
After the Defendant defaulted, counsel spent approximately 27 hours preparing the motion for default judgment. Some of this time was spent preparing (or training) Ms. Romagna, who joined the litigation team during the defaulting phase. Given that this firm has represented this Plaintiff in other default motions and given that additional time was likely incurred because a new lawyer joined the matter, 27 hours is an unreasonable amount of time to prepare default judgment papers. The Court reduces the time spent during the defaulting phase to 15 hours. See Kehrli Decl., ¶ 5 (counsel, “through the course of representing aggrieved convertible note holders in dozens of litigations, have developed a specific understanding of the terms and process of these types of notes, the specifics of breaches thereof, and the defenses thereto.”); see also LG Capital Funding, LLC v. CardioGenics Holdings, Inc., No. 16-cv-1215 (AMD) (SJB), 2018 WL 1521861 (E.D.N.Y. Feb. 20, 2018) (reducing same plaintiff's firm's hours to prepare default motion from 34.4 to 10), adopted by 2018 WL 2057141 (May 8, 2018).
Accordingly, the Court recommends awarding 61 hours of attorney time at $250/hour, for a total fee award of $15,250.00
C. Costs
LG also seeks $535.92 in court costs: $400 for the filing fee, $95.60 in process server fees, and $40.32 in courier fees. The Court finds these costs to be reasonable and comparable to other amounts awarded upon default judgment. See Romita v. Anchor Tank Lines Corp., No. 09-cv-09997 (DLC), 2011 WL 1641981, at *2 (S.D.N.Y. Apr. 29, 2011) (awarding $504 in court costs for filing and process server fees); Int'l Ass'n of Heat & Frost Insulators & Asbestos Workers Loc. Union No. 12A v. Trade Winds Envtl., No. 09-cv-01771 (RJH) (JLC), 2010 WL 8020302, at *6 (S.D.N.Y. Dec. 23, 2010) (awarding $701.75 in court costs for filing and process server fees).
CONCLUSION
I recommend that the Court award LG: (1) $122,670.65 in contract damages; (2) $15,250 in attorney's fees; and (3) $535.92 in costs.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from the service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D), (E), or (F)). A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Kimba M. Wood at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Wood. The failure to file these timely objections will result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).