Opinion
22-cv-3074 (LJL)
07-29-2024
RURADAN CORPORATION, Plaintiff, v. CITY OF NEW YORK, JIN CHOI, MATTHEW AHN, RAYMOND KIM, L&K 48 VENTURE, INC., and JLEE 19 CORP., Defendants.
MEMORANDUM AND ORDER
LEWIS J. LIMAN UNITED STATES DISTRICT JUDGE
By opinion and order dated June 6, 2024, the Court granted judgment in favor of Plaintiff Ruradan Corporation (“Plaintiff”) and against Defendants L&K 48 Venture, Inc. (“L&K Venture”), JLee 19 Corp. (“JLee”), Jin Choi, Matthew Ahn, and Raymond Kim (collectively the “Toasties Defendants”) on Plaintiff's claim for breach of a commercial lease at 8 East 48th Street, New York, New York (the “Lease”) and breach of an associated guaranty (the “Guaranty”). Dkt. No. 179. The Court's opinion and order followed a bench trial on the papers. Id. at 1 & n.1. The Court also concluded that Plaintiff was entitled to recover its reasonable attorneys' fees and costs and directed Plaintiff to submit evidence of its costs and reasonable attorneys' fees. Id. at 26-27, 29.
On June 12, 2024, Plaintiff filed an affirmation of legal services seeking an award of $230,100.00 in legal fees as well as $6,365.70 in costs, for a total sum of $236,465.70 in connection with the enforcement of the Lease and the Guaranty in this action. Dkt. No. 180 ¶ 4. The Toasties Defendants oppose the fee application. Dkt. No. 183. Plaintiff submitted a reply affirmation regarding legal services on July 15, 2024. Dkt. No. 184. For the reasons that follow, the fee application is granted in part and denied in part.
LEGAL STANDARD
Federal Rule of Civil Procedure 54(d)(2) provides that “[a] claim for attorneys' fees and related nontaxable expenses” may be made by motion unless substantive law requires those fees to be proved at trial as an element of damages and permits such motion to be made no later than fourteen days after entry of judgment. Fed.R.Civ.P. 54(d)(2); see Jones v. UNUM Life Ins. Co. of Am., 223 F.3d 130, 137 (2d Cir. 2000); Zero Carbon Holdings, LLC v. Aspiration Partners, Inc., 2024 WL 3409278, at *2 (S.D.N.Y. July 15, 2024).
“Under the American Rule[,] it is well established that attorney[s'] fees are not ordinarily recoverable[.]” U.S. Fid. & Guar. Co. v. Braspetro Oil Servs. Co., 369 F.3d 34, 74 (2d Cir. 2004) (quoting Summit Valley Indus., Inc. v. United Bhd. of Carpenters & Joiners, 456 U.S. 717, 721 (1982)). However, as the Court has previously ruled, “[u]nder New York law, a prevailing party may recover attorney's fees from the losing party where authorized by . . . agreement[.]” Dkt. No. 179 at 26-27 (quoting Varbero v. Belesis, 2020 WL 5849516, at *7 (S.D.N.Y. Oct. 1, 2020)). Plaintiff is entitled to recover its reasonable attorneys' fees and its costs under both the Lease and the Guaranty. The Lease provides:
If Tenant shall default in the observance or performance of any term or covenant on Tenant's part to be observed and performed under, . . . and if Owner, in connection therewith or in connection with any default by Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs any obligations for the payment of money, including but not limited to reasonable attorney's fees, in instituting, prosecuting or defending any actions or proceeding, and prevails in any such action or proceeding, such sums so paid or obligations incurred with interest and costs shall be deemed to be additional rent hereunder and shall be paid by Tenant to Owner[.]Dkt. No. 130-2 § 19. The Guaranty provides:
Guarantor shall and will forthwith pay such rent and additional rent to Landlord, . . . and will also forthwith pay to Landlord all damages that may arise in consequences of any default by Tenant under the Lease, including, without limitation, all reasonable attorney's fees and disbursements incurred by Landlord in connection with or by reason of any such default and/or in the enforcement of the terms of the Lease and this Guaranty.Dkt. No. 130-3 ¶ 2.
Under the text of both the Lease and Guaranty, as well as under the common law, attorneys' fees “must be reasonable.” UMB Bank, Nat'l Ass'n v. Bluestone Coke, LLC, 2021 WL 3292519, at *5 (S.D.N.Y. Aug. 2, 2021) (quoting Hack v. Stang, 2015 WL 5139128, at *8 (S.D.N.Y. Sept. 1, 2015) (Nathan, J.)). The party seeking the fee “bears the burden of showing the reasonableness of the fee by providing definite information regarding the way in which time was spent.” Crowhurst v. Szczucki, 2019 WL 6122645, at *4 (S.D.N.Y. Nov. 19, 2019) (quoting Flemming v. Barnwell Nursing Home & Health Facilities, Inc., 865 N.Y.S.2d 706, 708 (3d Dep't 2008), aff'd, 938 N.E.2d 937 (N.Y. 2010)), report and recommendation adopted, 2020 WL 133509 (S.D.N.Y. Jan. 11, 2020).
“The Second Circuit has held that the stringent standards applicable to fee requests under federal statute give way in diversity cases to the state court rule that ‘favor[s] . . . wider trial court discretion in evaluating fee petitions.'” UMB Bank, 2021 WL 3292519, at *5 n.4, 8 (quoting Riordan v. Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 53 (2d Cir. 1992)); accord Zero Carbon Holdings, 2024 WL 3409278, at *4 n.5.
Plaintiff seeks compensation for 460.20 hours of billable time at a rate of $500 per hour. Dkt. Nos. 180 ¶¶ 5-6; 180-1. Plaintiff was represented by two attorneys, both of Vlock & Associates, P.C. One of them, Steven Giordano, has submitted time records though it is unclear if the records reflect only his time, or also work performed by the other attorney, Stephen Vlock. Dkt. No. 180-1. The time records span the period from June 23, 2021 to June 12, 2024. Id. They do not identify the individual timekeepers responsible for each time entry. Id. The expenses of $6,365.70 run from July 12, 2021 to November 20, 2023 and include costs for court fees, deposition transcripts, postage, process servers, and photocopies. Id.
The Toasties Defendants object to the requested fees on the grounds that Plaintiff's counsel has offered no relevant background or experience or information about their qualifications to support the $500 hourly rate (and suggest that the Court award an hourly rate of $295), that Plaintiff should not receive any fees or costs for work done prior to the inception of this action on April 13, 2022, that Plaintiff is not entitled to fees on fees, and that the hours billed by Plaintiff's counsel were excessive and the time entries are vague. Dkt. No. 183.
As a general matter, the “starting point” and “lodestar” in analyzing whether claimed attorneys' fees are appropriate is “the product of a reasonable hourly rate and the reasonable number of hours required by the case.” Milea v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011); see also Lilly v. City of New York, 934 F.3d 222, 227-34 (2d Cir. 2019) (discussing calculation of reasonable hourly rates and reasonable number of hours expended). The party seeking fees bears the burden of demonstrating that its hourly rates and requested hours are reasonable, and must provide a court with sufficient information to assess the fee application. See Allende v. Unitech Design, Inc., 783 F.Supp.2d 509, 512-13 (S.D.N.Y. 2011). Absent sufficient information, courts may deny the fee application or reduce the reward. See Barbecho v. Matrat LLC, 2021 WL 3862662, at *4 (S.D.N.Y. Aug. 30, 2021); ACE Ltd. v. CIGNA Corp., 2001 WL 1286247, at *2 (S.D.N.Y. Oct. 22, 2001).
Hourly Rate
“The reasonable hourly rate is the rate a paying client would be willing to pay,” bearing in mind “that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively.” Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany & Albany Bd. of Elections, 522 F.3d 182, 190 (2d Cir. 2008). The Second Circuit has instructed district courts to “calculate a ‘presumptively reasonable fee' by determining the appropriate billable hours expended and ‘setting a reasonable hourly rate, taking account of all case-specific variables.'” Lilly, 934 F.3d at 229-30 (2d Cir. 2019) (citing Arbor Hill, 522 F.3d at 188-90).
Plaintiff's submitted rate is inflated given “the type of work required in this case, the case's relative simplicity, and the risk assumed.” Id. This case involved the typical application of contract law and, for many of the issues raised, followed the growing but already existent body of law assessing commercial lease disputes amidst the COVID-19 pandemic. See Dkt. No. 179 at 16-22. The case was additionally resolved without a trial, although the parties did appear for oral argument on the motion for summary judgment. Dkt. No. 178. The presumptively reasonable rate in this case thus cannot exceed the current rate in this district for comparable counsel. Gong v. Sarnoff, 2024 WL 1621347, at *4 (S.D.N.Y. Apr. 15, 2024).
“An attorney's hourly rate is considered reasonable when it is in line with those rates prevailing” in the district in which the court sits “for similar services by lawyers of reasonably comparable skill, experience, and reputation.” Trs. of N.Y.C. Dist. Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, & Apprenticeship, Journeyman Retraining, Educ. & Indus. Fund v. M&B Builders Grp. Inc., 2018 WL 6067229, at *5 (S.D.N.Y. Nov. 19, 2018) (citation and punctuation omitted); accord McDonald ex rel. Prendergast v. Pension Plan of the NYSA-ILA Pension Tr. Fund, 450 F.3d 91, 96 (2d Cir. 2006). Courts also “look to the area of legal practice at issue,” because “legal markets are today so interconnected that it is no longer meaningful, in assessing a reasonable rate, to look at geographic location alone.” J.G. v. N.Y.C. Dep't of Educ., 2024 WL 728626, at *3 (S.D.N.Y. Feb. 22, 2024).
“Courts should rely on both evidence submitted by the parties as to the rates they typically charge, and its own knowledge of comparable rates charged by lawyers in the district.” (punctuation omitted) (citing Farbotko v. Clinton Cnty. of New York, 433 F.3d 204, 209 (2d Cir.2005); Weather v. City of Mount Vernon, 2011 WL 2119689, at *2 (S.D.N.Y. May 27, 2011)). Plaintiff has submitted little evidence as to typical and comparable rates. Mr. Giordano's affirmation states only that he is an associate at Vlock & Associates, P.C., and that “[t]he customary fee charged by law firms in the area where our office is located, which is in Manhattan, is much higher than the rate of $500 per hour in this case, which is the average rate in the area in which we practice.” Dkt. No. 180 ¶¶ 1, 5. No information is provided as to Mr. Vlock. Plaintiff does not state either attorney's years of practice or prior experience with cases involving breach-of-contract claims. C.f. Singh v. Meadow Hill Mobile Inc., 2021 WL 4312673, at *16 (S.D.N.Y. Aug. 9, 2021), report and recommendation adopted, (S.D.N.Y. Aug. 29, 2021).
In assessing the “prevailing market rate,” courts may take “judicial notice of the rates awarded in prior cases and the court's own familiarity with the rates prevailing in the district.” Farbotko, 433 F.3d at 209. Accordingly, the Court takes notice of Cadles of Grassy Meadows II, L.L.C. v. St. Clair, in which, in 2012, the court found a $190 hourly rate to be reasonable for Mr. Giordano's work. 2012 WL 6617448, at *2 (E.D.N.Y. Dec. 18, 2012). That case was decided when Mr. Giordano had far less seniority than he does now. The Court further notes that more recent breach-of-contract cases have found hourly rates of $250-$350 appropriate for associates. See, e.g., Glob. Brand Holdings, LLC v. Accessories Direct Int'l USA, Inc., 2020 WL 9762874, at *8 (S.D.N.Y. May 29, 2020) (approving associate hourly rate of $300), report and recommendation adopted, 2020 WL 13823745 (S.D.N.Y. Aug. 4, 2020); Euro Pac. Cap., Inc. v. Bohai Pharms. Grp., Inc., 2018 WL 1229842, at *8 (S.D.N.Y. Mar. 9, 2018) (approving associate hourly rate of $250), report and recommendation adopted, 2018 WL 1596192 (S.D.N.Y. Mar. 28, 2018); Bank of Am., N.A. v. Brooklyn Carpet Exch., Inc., 2016 WL 8674686, at *8 (S.D.N.Y. May 13, 2016) (finding associate hourly rates of $300-$310 “well within the reasonable range of rates for experienced attorneys performing similar work”), report and recommendation adopted, 2016 WL 3566237 (S.D.N.Y. June 27, 2016); Nautilus Neurosciences, Inc. v. Fares, 2014 WL 1492481, at *3 (S.D.N.Y. Apr. 16, 2014) (approving associate hourly rate of $337.50); Rubenstein v. Advanced Equities, Inc., 2015 WL 585561, at *6 (S.D.N.Y. Feb. 10, 2015) (approving “blended” associate rate of $350 per hour).
In light of the prevailing market rate and the dearth of information as to Plaintiff's counsel's skill, experience, and reputation, the Court finds that an hourly rate of $300 is appropriate. See Trs. of N.Y.C. Dist. Council of Carpenters, 2018 WL 6067229, at *5 (citation omitted) (“When an attorney's requested hourly rate is higher than rates found to be reasonable in the relevant market, the court has discretion to reduce the rate.”); Zavala v. Top Shelf Elec. Corp., 2024 WL 1543605, at *10 (S.D.N.Y. Apr. 10, 2024) (“No information is provided about Bransford other than that she is an attorney. Given the lack of information, $200 per hour is a reasonable rate as it is a typical award for junior associates”), report and recommendation adopted, 2024 WL 2116457 (S.D.N.Y. May 10, 2024).
Requested Hours
Once a reasonable rate of pay has been calculated, it is multiplied by a reasonable number of hours expended to determine the award amount. In this process, the court has discretion to disregard hours viewed as “excessive, redundant, or otherwise unnecessary.” Bliven v. Hunt, 579 F.3d 204, 213 (2d Cir. 2009) (quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)).
First, Plaintiff may recover fees against the parties to the Guaranty for work performed in the prior state court litigation. While the terms of the Lease state that attorneys' fees and costs are only available if the Owner “prevails in [the] action or proceeding[,]” Dkt. No. 130-2 § 19, the terms of the Guaranty contain no such restriction, Dkt. No. 130-3 ¶ 2. The Guaranty permits recovery of “all damages that may arise in consequence of any default by Tenant under the Lease, including, without limitation, all reasonable attorney's fees and disbursements incurred by Landlord in connection with or by reason of any such default and/or in the enforcement of the terms of the Lease and this Guaranty[;]” it does not specify that the Landlord must “prevail.” Id. “[I]f parties to a contract omit terms-particularly, terms that are readily found in other, similar contracts-the inescapable conclusion is that the parties intended the omission.” Quadrant Structured Prod. Co. v. Vertin, 23 N.Y.3d 549, 560 (N.Y. 2014); see In re Ore Cargo, Inc., 544 F.2d 80, 82 (2d Cir. 1976) (applying the maxim “expressio unius est exclusio alterius” to preclude divining or implying existence of a right which was omitted from the agreement); KLS Diversified Master Fund, L.P. v. McDevitt, 507 F.Supp.3d 508, 543 (S.D.N.Y. 2020) (affirmative covenant to promptly report litigation was not limited to litigation that turned out to be meritorious where the covenant did not specify such limitation and a materiality requirement in a separate Recourse Event demonstrated “[t]he parties clearly knew how to limit an affirmative covenant or a Recourse Event to actions that could materially or adversely affect [repayment.]”), aff'd, 2022 WL 2759055 (2d Cir. July 13, 2022).
While parties to the Lease and Guaranty are not identical-L&K Venture was Plaintiff's counterparty to the Lease before it was assigned to JLee and Choi, Ahn, and Kim were Plaintiff's counterparties to the Guaranty-Choi, Ahn, and Kim are presumed familiar with the terms of the Lease as each Guarantor guaranteed “full and timely performance and observance of the all the terms, covenants, conditions, and obligations under the Lease.” Dkt. No. 130-3 ¶ 2.
This reading of the Guaranty does not boundlessly permit Plaintiff to recover fees for any self-styled enforcement action. In Integrity Real Est. Consultants v. Re/Max of N.Y., Inc., the Second Department considered a similar agreement that provided for payment of defendant's costs and expenses incurred in connection with “enforcement of the terms of this Agreement” if defendant “engage[s] legal counsel in connection with any failure by [the plaintiff] or [its] Owners to comply with this Agreement[.]” 185 N.Y.S.3d 160, 165-66 (2d Dep't 2023). The Second Department found that fees could not be awarded pursuant to the contract where the trial court issued injunctive relief in the plaintiff's favor and ultimately dismissed defendant's counterclaim for fees owed pursuant to the agreement based on a conclusion that the plaintiff did not fail to comply with the agreement when it declined to pay those fees. Id. As the Second Department explained, the court could not conclude that defendant “incurred attorneys' fees ‘as a result of' the plaintiff's ‘failure to comply with the Agreement, requiring [defendant] to ‘enforce the terms of the Agreement.'” Id. (punctuation omitted). Here, the discontinuance of the state court case “was upon agreement with the Toasties Defendants pursuant to a written stipulation[,]” after “the Toasties Defendants raised the issue of the New York City Guaranty Law” such that venue “in Suffolk County needed to be discontinued and re-commenced before a Court located in New York City to join the City as a defendant.” Dkt. No. 184 ¶ 9. Because the Toasties Defendants do not dispute that the state court action was litigated “in connection with or by reason of [a] default and/or [] the enforcement of the terms of the Lease and this Guaranty[,]” the Court finds that Plaintiff may recover fees for hours worked in connection with the state court action. Dkt. No. 130-3 ¶ 2. See Townsend v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 2019 WL 4511696, at *3 (S.D.N.Y. Sept. 19, 2019) (Nathan, J.) (where “the Note plainly awards Respondent attorneys' fees incurred in connection with enforcement of the Note” and “Petitioner's instant motion is an attempt to vacate an [arbitration] award under the Promissory Note in Respondent's favor, this action is connected to the Note's enforcement. Accordingly, the Court holds that Respondent is entitled to reasonable attorneys' fees for this action.”). Awarding such fees is particularly appropriate given that many of the hours spent prior to the initiation of the federal action relate to and benefit this case. They represent work that would have had to be conducted even if the state court case had not been filed. This includes the work conducted in reviewing the Lease and the Guaranty, the preparation of a complaint that would have served as a template for the federal complaint, legal research regarding City law service and United States constitutional law, and the preparation of memoranda regarding the constitutionality of the Guaranty Law. See Webb v. Bd. of Educ. of Dyer Cnty., Tenn., 471 U.S. 234, 243 (1985) (“[S]ome of the services performed before a lawsuit is formally commenced by the filing of a complaint are performed ‘on the litigation.'”).
By contrast, the Lease limits Plaintiff's recovery to matters in which it was the prevailing party. Dkt. No. 130-2 § 19. Therefore, Plaintiff is not entitled under the Lease to recovery for those hours spent exclusively on the New York State case and that did not benefit the federal case. Certain of the hours prior to April 11, 2022 appear to be exclusively related to the New York State case, including numerous hours relating to the service of process. Accordingly, the Court will reduce the number of hours for which Plaintiff may recover fees under the Lease by 25% of the hours prior to April 11, 2022 or, in other words, by 18.65 hours. The Court additionally reduces the costs Plaintiff may recover under the Lease to exclude costs prior to April 11, 2022, or $1,067.23.
Second, the Court agrees with the Toasties Defendants that Plaintiff may not recover “fees on fees,” i.e., the time spent litigating Plaintiff's fee application. Dkt. No. 183 at 14. Fees on fees are available only where permitted by the unmistakably clear terms of the applicable statute or contractual provision. See Novick v. AXA Network, LLC, 714 Fed.Appx. 22, 26 (2d Cir. 2017) (“Such a provision must evidence ‘unmistakably clear intent regarding the recovery of fees on fees.'” (quoting IG Second Generation Partners, L.P. v. Kaygreen Realty Co., 980 N.Y.S.2d 479, 481 (2d Dep't 2014))); 214 Wall St. Assocs., LLC v. Med. Arts-Huntington Realty, 953 N.Y.S.2d 124, 126 (2d Dept' 2012) (Attorneys' fees are “merely an incident of litigation and [are] not recoverable absent a specific contractual provision or statutory authority[.]” (citations omitted)).
Neither the Lease nor the Guaranty contain such unmistakably clear terms. The Lease provides for repayment of expenditures incurred “in instituting, prosecuting or defending any actions or proceeding” in connection with a default by Tenant. Dkt. No. 130-2 § 19. The Guaranty provides reimbursement of damages “incurred by Landlord in connection with or by reason of any such default and/or in the enforcement of the terms of the Lease and this Guaranty.” Dkt. No. 1303 ¶ 2. Both contracts contemplate that Plaintiff is entitled to attorneys' fees associated with the default, but neither contain language creating a clear entitlement by Plaintiff to post-judgment fees. See KLS Diversified Master Fund, L.P. v. McDevitt, 532 F.Supp.3d 126, 141 (S.D.N.Y. 2021) (denying “fees on fees” where Guaranty provided for payment of attorneys' fees and costs incurred for “enforcement of this Guaranty or any of its terms”), aff'd, 2022 WL 2759055 (2d Cir. July 13, 2022); 546-552 W. 146th St. LLC v. Arfa, 99 A.D.3d 117, 122 (1st Dep't 2012) (contract that authorized indemnification for “claims and demands” but did “not specifically authorize expenses or legal fees incurred in obtaining indemnification” did not provide for fees on fees because “it is not ‘unmistakably clear' that fees on fees were contemplated” by the contract). Plaintiff's time entries dated June 11 and 12, 2024, which indicate that the time was spent preparing the affirmation of legal services and proposed judgment, are therefore excluded and the Court reduces the award by 3.1 hours.
Third, the remaining hours are somewhat excessive and insufficiently described. The Court has discretion to reduce a fee award where the work performed was “inappropriately staffed.” E.F. ex rel. N.R. v. N.Y.C. Dep't of Educ., 2014 WL 1092847, at *5 (S.D.N.Y. Mar. 17, 2014); see, e.g., G.B. ex rel. N.B. v. Tuxedo Union Free Sch. Dist., 894 F.Supp.2d 415, 439 (S.D.N.Y. 2012) (reducing award for time spent by “attorneys engaging in less skilled work, like filing and other administrative tasks” (citation omitted)); Rosso v. Pi Mgmt. Assocs., L.L.C., 2006 WL 1227671, at *4 (S.D.N.Y. May 3, 2006) (reducing award where “some of the work done by a senior attorney at the law firm could have been performed by a junior attorney, and that work performed by a junior attorney might have been assigned more appropriately to a paralegal”). Many of the tasks for which Plaintiff seeks fees could have been undertaken by a paralegal or a less expensive attorney or were excessive. These include over four hours spent conducting research and then preparing a motion for a protective order, time spent preparing an application for a transcript and preparing an electronic case filing letter, the review of various emails from the court reporter, the review of notices of deposition, the review of a motion by counsel to withdraw, and the preparation of a notice of motion. Dkt. No. 180-1. The Court finds a 25% fee reduction appropriate. See Czymmek v. Fenstermaker, 2024 WL 1309316, at *4 (S.D.N.Y. Mar. 26, 2024) (“Because it is unrealistic to expect a trial judge to evaluate and rule on every entry in an application, the court has discretion simply to deduct a reasonable percentage of the number of hours claimed as a practical means of trimming fat from a fee application.” (citation omitted)).
CONCLUSION
Plaintiff's motion for attorneys' fees and costs is granted in part and denied in part. Against Choi, Ahn, and Kim, pursuant to the Guaranty, the Court awards Plaintiff $102,847.50 in attorneys' fees and $6,365.70 in costs, to be paid no later than August 12, 2024. Against L&K Venture and JLee, pursuant to the Lease, the Court awards Plaintiff $98,651.25 and $5,298.47 in costs, to be paid no later than August 12, 2024. All awards are joint and several such that Plaintiff may not recover more than $102,847.50 in attorneys' fees and $6,365.70 in costs.
SO ORDERED.