Opinion
23-CV-603 (PGG) (RWL)
10-16-2023
WELLS FARGO TRUST CO., N.A., As Owner Trustee, Plaintiff, v. FAST COLOMBIA S.A.S., d/b/a, VIVA COLOMBIA, Defendant.
REPORT AND RECOMMENDATION TO HON. PAUL G. GARDEPHE: DAMAGES INQUEST
ROBERT W. LEHRBURGER, UNITED STATES MAGISTRATE JUDGE.
In this breach of contract case, Plaintiff Wells Fargo Trust Co., N.A., as owner trustee, (“Wells Fargo” or “Plaintiff”) seeks recovery of damages from Defendant Fast Colombia S.A.S. d/b/a Viva Colombia (“VivaColombia” or “Defendant”) for breach of a settlement agreement. By orders dated June 8, 2023, the Honorable Paul G. Gardephe, U.S.D.J., granted default judgment against Defendant and referred this matter to me to conduct an inquest on damages. For the reasons set forth below, I recommend that the Court award Plaintiff $1,565,312.50, accruing contractual interest at 5% beginning December 14, 2023, as well as post-judgment interest, attorney's fees, and costs.
The facts are drawn from the Amended Complaint (Dkt. 16) (“AC”); the Declaration of Gregory M. Starner entered March 31, 2023 (Dkt. 25) (“First Starner Decl.”); the Declaration of Gregory M. Starner entered July 7, 2023 (Dkt. 40) (“Second Starner Decl.”); and all exhibits thereto; as well as Judge Gardephe's findings of fact on the record at the default judgment show cause hearing (see June 8, 2023 Transcript at Dkt. 37 (“June 8, 2023 Tr.”)). The Court also has considered Plaintiff's Proposed Findings Of Fact And Conclusions Of Law (Dkt. 39) (“FFCL”).
Wells Fargo is the owner trustee of the “Aircraft MSN 1370 Trust.” (AC ¶ 2.) VivaColombia is an airline in the business of leasing aircraft for flying passengers within Colombia and to other countries. (AC ¶ 3.) In December 2014, VivaColombia entered into an agreement to lease an Airbus A320-200 aircraft from Wells Fargo (the “Lease”). (AC ¶ 7.) In 2019, VivaColombia defaulted on the Lease by not making required payments. (Id.) Wells Fargo sued VivaColombia for its default, and the parties settled their dispute pursuant to a Release and Settlement Agreement dated June 3, 2021 (the “Settlement Agreement”). (AC ¶¶ 8-9 and Ex. 1.)
VivaColombia agreed to immediately pay Wells Fargo an initial settlement amount of $250,000 (AC ¶ 10 and Ex. 1 § 3.2(a)), and to pay a further settlement amount of $2.75 million in 11 equal installments of $250,000 each (each, an “Installment” or “Installment Payment”) (AC ¶ 10 and Ex. 1 § 3.2(b)). The Installments were to be paid in three-month increments. (Id.) The Settlement Agreement provides that if “any Installment is not paid within five (5) Business Days of the date when such Installment becomes due and payable ... Lessee [i.e., VivaColombia] consents to entry of a court judgment against Lessee and in favor of Lessor in an amount equal to the sum of all Installments due under this Agreement and not yet paid by Lessee.” (AC ¶ 11 and Ex. 1 § 3.2(c).) The failure to pay an Installment within five business days of its due date constitutes a “Settlement Default.” (Id.) If a Settlement Default occurs, Wells Fargo “shall have the option to change or accelerate the Installment Dates of any or all of the remaining Installments by written notice to” VivaColombia. (AC ¶ 12 and Ex. 1 § 3.2(b).) Any past due Installment amount, as well as any accelerated amount, bears interest “from and after its due date at a rate per annum of 5% (five percent).” (Id.) The Settlement Agreement also includes a provision entitling Wells Fargo, as the prevailing party, to recover reasonable attorneys' fees and other expenses incurred in enforcing the settlement. (AC ¶ 13 and Ex. 1 § 5.7.)
On September 4, 2022, VivaColombia defaulted under the Settlement Agreement by not paying the fifth Installment due on that date. (AC ¶ 14.) On September 9, 2022, VivaColombia informed Wells Fargo that it had “to preserve cash to survive” until a pending acquisition by Avianca S.A. took place. (AC ¶ 14 and Ex. 2.) On September 15, 2022, Wells Fargo sent VivaColombia a notice of default and demand for immediate performance. (AC ¶ 14 and Ex. 3.) The notice of default informed VivaColombia that Wells Fargo was exercising its option to accelerate the installment dates of all remaining installments, and setting a due date of September 16, 2022, for all accelerated amounts due and owing. (AC ¶ 16 and Ex. 3.) Wells Fargo also informed VivaColombia that, per the terms of the Settlement Agreement, the fifth Installment of $250,000 had accrued interest at the rate of 5 percent per annum since September 4, 2022. (Id.) The remaining accelerated amount - $1.5 million - would begin bearing interest at the rate of 5 percent per annum from the date of the first notice of default. (Id.)
As of September 15, 2022, when Wells Fargo accelerated the amounts due under the Settlement Agreement, VivaColombia owed $1,750,376.71 to Wells Fargo, with interest accruing on that full accelerated amount at the rate of 5 percent per annum beginning September 16, 2022. (AC ¶ 17.) After receiving the notice of default, VivaColombia agreed to resume its obligations under the Settlement Agreement and to pay - by September 26, 2022 - the September Installment, plus interest, as well as $15,000 for legal fees that Plaintiff had incurred as a result of its efforts to enforce the Settlement Agreement. (AC ¶ 18.) On September 23, 2022, Wells Fargo sent a notice to VivaColombia rescinding the first notice of default, while reserving all of its rights. (AC ¶ 19 and Ex. 4.) VivaColombia ultimately paid the September Installment, two days late, on September 28, 2022. To date, however, VivaColombia has not paid the $15,000 in legal fees. (AC ¶ 20.)
On December 4, 2022, VivaColombia again defaulted by not making the sixth Installment Payment due on that date. (AC ¶ 21.) On December 7, 2022, VivaColombia wrote that it “need[ed] a month to sort this out” in light of the continued pendency of the acquisition by Avianca S.A. (AC ¶ 21 and Ex. 5.) On December 13, 2022, Wells Fargo sent VivaColombia a notice of default and demand for immediate performance. (AC ¶ 21 and Ex. 6.) In this second notice of default, Wells Fargo informed VivaColombia that its failure to make the December 4, 2022, Installment Payment within five business days of its due date was a Settlement Default as defined in the Settlement Agreement, and that Wells Fargo was exercising its option to accelerate all remaining Installments, with a due date of December 16, 2022, for all amounts and attorney's fees due and owing. (AC ¶¶ 22-23 and Ex. 6.)
As of December 13, 2022, when Wells Fargo accelerated the amounts due under the Settlement Agreement, and as set forth in the second notice of default, VivaColombia owed $1,565,312.50 to Wells Fargo, with interest accruing on that full accelerated amount at the rate of 5 percent per annum beginning December 13, 2022. (AC ¶¶ 23-24 and Ex. 6.) VivaColombia has not paid the outstanding amounts due under the Settlement Agreement and remains in default. (AC ¶ 25.)
JURISDICTION AND PROCEDURAL HISTORY
The Court has subject matter jurisdiction under 28 U.S.C. § 1332(a) because the parties are diverse and the amount in controversy, exclusive of interest and costs, exceeds $75,000. (See AC ¶ 4.) The Court is satisfied that the parties are diverse. Defendant is a citizen of Colombia, and Plaintiff is a citizen of Utah. (AC ¶¶ 2-3.) The Court has personal jurisdiction over VivaColombia based on its consent to personal jurisdiction in the Southern District of New York in the Settlement Agreement. (AC ¶¶ 45 and Ex. 1 § 7.3.)
Wells Fargo commenced the instant case on January 24, 2023, asserting one claim for breach of the Settlement Agreement. (Dkt. 1.) On February 15, 2023, VivaColombia filed a notice of admission to a business recovery proceeding in Colombia. The notice is signed by the “appointed mediator,” who requests that the Court “suspend” the instant action. (Dkt. 15.) On February 22, 2023, Wells Fargo filed a letter requesting that VivaColombia's notice of admission to a business recovery proceeding be disregarded on the ground that, among other things, it is not clear what authority, if any, the appointed mediator has to make a request on VivaColombia's behalf, and no attorney has filed a notice of appearance on behalf of VivaColombia. (Dkt. 17.) Wells Fargo filed an affidavit of service showing that VivaColombia was served with the Amended Complaint on February 22, 2023. (Dkt. 18.) VivaColombia did not appear and did not respond to the Amended Complaint (or the initial complaint for that matter). The Court therefore denied the request for a stay from the mediator in Colombia. (June 8, 2023 Tr. at 8.)
On March 13, 2023, Wells Fargo obtained a clerk's certificate of default against VivaColombia. (Dkt. 23.) On March 29, 2023, Wells Fargo moved by order to show cause for a default judgment. (Dkts. 24-26). On May 18, 2023, the Court issued an order directing VivaColombia to show cause why default judgment should not be entered against it. (Dkt. 31.) VivaColombia filed no opposition and did not appear at the show cause hearing held on June 8, 2023, or since. (See June 8, 2023 Tr. at 8.) The Court entered an order of default against VivaColombia and referred the case to the undersigned for an inquest on damages and an award of attorney's fees and costs. (Dkts. 33-34.)
On June 8, 2023, I issued an order requiring Wells Fargo to file inquest materials in support of its request for damages, fees, and costs. (Dkt. 35.) Wells Fargo filed materials on July 7, 2023. (Dkts. 39-40.) Wells Fargo also timely filed proof of service of both the Court's June 8, 2023 order and Wells Fargo's inquest materials. (Dkts. 36, 41.) VivaColombia did not respond.
LEGAL STANDARDS
When a defendant defaults, all well-pled facts alleged in the complaint, except those relating to the amount of damages, must be accepted as true. City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ancient common law axiom that a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint”) (internal quotations marks omitted); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (trial court is “required to accept all of [the plaintiff's] factual allegations as true and draw all reasonable inferences in its favor”). “This principle applies regardless of whether default is entered as a discovery sanction or for failure to defend.” Walpert v. Jaffrey, 127 F.Supp.3d 105, 129 (S.D.N.Y. 2015) (internal quotation marks omitted). The court may also rely on factual allegations pertaining to liability contained in affidavits and declarations submitted by the plaintiff. See, e.g., Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993); Fustok v. ContiCommodity Services, Inc., 873 F.2d 38, 40 (2d Cir. 1989). Nonetheless, the court “must still satisfy itself that the plaintiff has established a sound legal basis upon which liability may be imposed.” Shld, LLC v. Hall, No. 15-CV-6225, 2017 WL 1428864, at *3 (S.D.N.Y. Apr. 20, 2017) (internal quotation marks omitted); see also Finkel, 577 F.3d at 84.
Once liability has been established, a plaintiff must provide admissible evidence establishing the amount of damages with reasonable certainty. Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Division of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997) (district court “could not just accept [the plaintiff's] statement of damages” at “face value” without satisfying “the court's obligations to ensure that the damages were appropriate”); see also Lenard v. Design Studio, 889 F.Supp.2d 518, 527 (S.D.N.Y. 2012) (in an inquest following a default, “[a] plaintiff must ... substantiate a claim with evidence to prove the extent of damages”).
To assess whether the plaintiff has established a sufficient basis for damages, a court has the discretion, but is not required, to hold a hearing. See Fed.R.Civ.P. 55(b)(2); Fustok 873 F.2d at 40. An inquest into damages may be conducted on the papers, without an evidentiary hearing, where there is a sufficient basis on which to make a calculation. See Bricklayers & Allied Craftworkers Local 2, Albany, New York Pension Fund v. Moulton Masonry & Construction, LLC, 779 F.3d 182, 189 (2d Cir. 2015); Tamarin 13 F.3d at 53-54; Maldonado v. La Nueva Rampa, Inc., No. 10-CV-8195, 2012 WL 1669341, at *2 (S.D.N.Y. May 14, 2012). There is sufficient basis to do so here; no party has requested an evidentiary hearing, and the Court has determined that none is needed.
LIABILITY
The Court finds that Wells Fargo has established VivaColombia's liability for breach of contract. The Settlement Agreement is governed by New York Law. (AC Ex. 1 § 7.1.) To state a claim for breach of contract under New York law, “the complaint must allege: (i) the formation of a contract between the parties; (ii) performance by the plaintiff; (iii) failure of [the] defendant to perform; and (iv) damages.” Johnson v. Nextel Communications, Inc., 660 F.3d 131, 142 (2d Cir. 2011); see also Terwilliger v. Terwilliger, 206 F.3d 240, 246 (2d Cir. 2000) (applying New York law). The Amended Complaint, the well-plead allegations of which are accepted as true, establishes each of the required elements: (1) the parties contractually entered into the Settlement Agreement (AC ¶ 9 and Ex. 1); (2) Wells Fargo performed as required under the Settlement Agreement (AC ¶¶ 8, 28, 31-32); (3) VivaColombia breached the Settlement Agreement by defaulting and failing to pay the accelerated amounts due (AC ¶¶ 14-25); and (4) Wells Fargo claims damages for the Installment Payments VivaColombia failed to pay, plus interest, and attorney's fees (AC ¶¶ 24-25. 36). Wells Fargo's well-pled allegations and supporting materials thus establish Viva Colombia's liability for breach of contract.
DAMAGES AND OTHER MONETARY RELIEF
As VivaColombia's liability has been established, the Court turns to evaluating damages and other monetary relief. Wells Fargo seeks to recover breach of contract damages totaling $ 1,565,312.50, plus contractual interest accruing at 5% since the time of default, as well as attorney's fees and costs. Each of those items should be awarded. Da Damages For Breach Of The Settlement Agreement
The Court begins its analysis with the fundamental principle that “'[d]amages for breach of contract should put the plaintiff in the same economic position he would have occupied had the breaching party performed the contract.'” Process America, Inc. v. Cynergy Holdings, LLC, 839 F.3d 125, 143 (2d Cir. 2016) (quoting Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 196 (2d Cir. 2003)). As the Second Circuit has explained, “a plaintiff may seek two distinct categories of damages” in a breach of contract case: “(1) general or market damages; and (2) special or consequential damages.” Schonfeld v. Hilliard, 218 F.3d 164, 175 (2d Cir. 2000) (internal quotation marks omitted).
“A plaintiff is seeking general damages when he tries to recover the value of the very performance promised[,]” whereas consequential damages “compensate a plaintiff for additional losses (other than the value of the promised performance) that are incurred as a result of the defendant's breach.” Id. at 175-76 (internal citations and quotation marks omitted). Once the fact of damages is established, a plaintiff is entitled to the general damages that are the natural and probable consequence of the breach. Kenford Co., Inc. v. County of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (N.Y.1989). To collect consequential damages, however, a plaintiff must demonstrate that the parties contemplated those special damages as the probable result of the breach at the time of or prior to contracting. Id., 73 N.Y.2d at 319, 540 N.Y.S. at 3-4. Further,“[i]t is settled Second Circuit law that in a breach of contract case, damages are calculated at the time of the breach.” Boyce v. Soundview Technology Group, Inc., 464 F.3d 376, 384 (2d Cir. 2006).
Here, whether characterized as general or consequential, Wells Fargo's damages are readily calculated and necessarily and directly follow from the terms of the Settlement Agreement and the facts establishing liability. On September 4, 2022, VivaColumbia defaulted by failing to pay the fifth Installment of $250,000. Upon default, that amount began to accumulate interest at 5% per annum. With transmission of the notice of the first default on September 15, 2022, Wells Fargo accelerated payment of the remaining $1,500,000. Thus, as of September 15, 2022, VivaColombia owed $1,750,376.71 to Wells Fargo, with interest accruing on that amount at 5% per annum beginning September 16, 2022. VivaColombia later paid the September 2022 Installment payment, thus reducing the amount it owed by $250,000, but still not having paid $15,000 in legal fees incurred by Wells Fargo in enforcing the Settlement Agreement as of then.
When VivaColombia defaulted again on the December 2022 Installment by failing to pay it within five days of its due date, that Installment of $250,000 began to accrue interest at 5%. And, as Wells Fargo newly accelerated all remaining payments due and owing, the then outstanding amount of $1,565,312.50 began to accrue 5% interest from December 14, 2022, the day after transmission of the second notice of default. In total then, to put Wells Fargo in the same economic position it would have been had VivaColombia performed as required, the Court should award damages of $1,565,312.50, with contractual interest accruing at the rate of 5% per annum beginning December 14, 2022, to the date of judgment.
Wells Fargo identifies the date for when interest begins to accrue on the second default amount as December 13, 2022. (AC ¶ 24.) That is the date upon which the second notice of default was transmitted to VivaColombia. (AC ¶ 21.) With respect to the first default, however, Wells Fargo identifies the day after the day the notice of default was transmitted as the date when interest began to accrue. (AC ¶ 17.) According to the Settlement Agreement, interest starts to accrue “from and after” the due date for any amount. (AC Ex. 1 § 3.2(b).) The Court therefore uses the day after the day the notice of default was transmitted as the point of accrual.
The relief requested in the Amended Complaint includes interest both as a component of damages and, separately, pre-judgment interest. (AC at Prayer For Relief (1) and (2).) Wells Fargo's Proposed Findings Of Fact And Conclusions Of Law, however, clarify that Wells Fargo does not seek what would effectively be double pre-judgment interest. Rather, it requests pre-judgment interest at the contractual 5% rate. (FFCL at 10-11; see also First Starner Decl. ¶ 27) (not requesting pre-judgment interest, so-called, but instead seeking enforcement of the 5% interest provision under the Settlement Agreement).) As set forth above, the damages calculated by the Court includes the requested interest under contractual damages.
B. Post-Judgment Interest
Post-judgment interest is governed by federal statute: “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court ... [and] shall be calculated from the date of the entry of the judgment.” 28 U.S.C. § 1961(a). In light of the statute's imperative language, the Second Circuit has “consistently held that an award of post-judgment interest is mandatory.” Schipani v. McLeod, 541 F.3d 158, 165 (2d Cir. 2008) (citing Westinghouse Credit Corp. v. D'Urso, 371 F.3d 96, 100 (2d Cir. 2004)).
Accordingly, post-judgment interest should be awarded in accordance with 28 U.S.C. § 1961.
C. Attorney's Fees
Pursuant to the Settlement Agreement, Wells Fargo, as the prevailing party, is entitled to recover its reasonable attorney's fees, costs, and expenses incurred in enforcing the Settlement Agreement. (AC Ex. 1 § 5.7.) Wells Fargo requests a fee award of $130,947.50. (FFCL at 9, 10; Second Starner Decl. ¶ 8.)
The traditional approach to determining a fee award is the “lodestar” calculation -the number of hours expended multiplied by a reasonable hourly rate. See Healey v. Leavitt, 485 F.3d 63, 71 (2d Cir. 2007); Tackie v. Keff Enterprises LLC, No. 14-CV-2074, 2014 WL 4626229, at *6 (S.D.N.Y. Sept. 16, 2014). The Second Circuit has held that “the lodestar ... creates a ‘presumptively reasonable fee.'” Millea v. Metro-North Railroad Co., 658 F.3d 154, 166 (2d Cir. 2011) (quoting Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany, 522 F.3d 182, 183 (2d Cir. 2008); and then citing Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 552, 130 S.Ct. 1662, 1673 (2010)); see also Stanczyk v. City Of New York, 752 F.3d 273, 284-85 (2d Cir. 2014) (reaffirming Millea). To arrive at a lodestar calculation, “[t]he party seeking an award of [attorney's] fees should submit evidence supporting the hours worked and rates claimed.” Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939 (1983). Wells Fargo has submitted some evidence here, including a declaration from counsel and copies of contemporaneous records of time expended by specific attorneys. (Second Starner Decl. ¶ 8 and Exs. A, B.)
Hourly Rates: Courts generally assess the reasonableness of a proposed hourly rate by considering the prevailing market rate for lawyers in the district in which the ruling court sits. Polk v. New York State Department of Correctional Services, 722 F.2d 23, 25 (2d Cir. 1983). “The rates used by the court should be current rather than historic hourly rates.” Reiter v. Metropolitan Transportation Authority Of New York, 457 F.3d 224, 232 (2d Cir. 2006) (internal quotation marks omitted). “[C]ourts may conduct an empirical inquiry based on the parties' evidence or may rely on the court's own familiarity with the rates if no such evidence is submitted.” Wong v. Hunda Glass Corp., No. 09-CV-4402, 2010 WL 3452417, at *2 (S.D.N.Y. Sept. 1, 2010) (internal quotation marks omitted).
“[T]he range of rates that plaintiff's counsel actually charge their clients ... is obviously strong evidence of what the market will bear.” Rozell v. Ross-Holst, 576 F.Supp.2d 527, 544 (S.D.N.Y. 2008); see also Lilly v. County Of Orange, 910 F.Supp. 945, 949 (S.D.N.Y. 1996) (“The actual rate that counsel can command in the market place is evidence of the prevailing market rate”). And, “[e]vidence that the client ‘actually paid' the fees requested is ‘compelling evidence of a reasonable market rate.'” Charlestown Capital Advisors, LLC v. Acero Junction, Inc., No. 18-CV-4437, 2021 WL 1549916, at *2 (S.D.N.Y. Apr. 20, 2021) (quoting Danaher Corp. v. Travelers Indemnity Co., No. 10-CV0121, 2014 WL 4898754, at *2 (S.D.N.Y. Sept. 30, 2014)). At the same time, “the Court retains some responsibility to discipline the market if necessary by stepping into the shoes of the reasonable, paying client, who wishes to pay the least amount necessary to litigate the case effectively.” Charlestown Capital, 2021 WL 1549916, at *2 (internal quotation marks and citations omitted).
A reasonable rate is not determined in a vacuum. Rather, “the ‘reasonable' compensation of an attorney depends on the factors of the case at bar, including the nature of the case and the difficulty of the questions presented.” VR Optics, LLC v. Peloton Interactive, Inc., No. 16-CV-6392, 2021 WL 1198930, at *3 (S.D.N.Y. March 30, 2021). “The inquiry is ‘case-specific,' Townsend v. Benjamin Enterprises, Inc., 679 F.3d 41, 59 (2d Cir. 2012), meaning that a reasonable rate for a routine task in a simple case may be quite different from a reasonable rate for a complex task in a challenging case, even when performed by the same firm or the same attorney.” Charlestown Capital, 2021 WL 1549916, at *2 (citing cases).
Plaintiff is represented in this action by the law firm White & Case LLP and seeks reimbursement of fees for nine billed time-keepers, consisting of four partners, two associates, a legal assistant, a project manager, and a researcher. (Second Starner Decl. Ex. A.) The rates are as follows:
(Second Starner Decl. Ex. A.)
Timekeeper
Title 2022
Rate 2023
Rate
Christian Hansen
Partner
$1,620
$1,750
Gregory Starner
Partner
-
1,590
James Robinson
Partner
-
1,590
Anna Andreeva
Partner
-
1,370
Jackson Herndon
Associate
-
1,240
William Fay
Associate
1,060
1,180
Julia Utkus
Legal Assistant
-
544
Thomas Wurster
Project Manager
-
340
Joyce Bang
Researcher
-
505
At first blush, these rates appear quite high. The Court cannot recall previously confronting an associate hourly rate approaching, let alone exceeding, $1,000. It seems like just yesterday, though it was at least a decade ago, that partner rates broke the $1,000 mark in the New York City legal market. See Themis Capital v. Democratic Republic of Congo, No. 09-CV-1652, 2014 WL 4379100, at *7 (S.D.N.Y. Sept. 4, 2014) (noting that “partner billing rates in excess of $1,000 an hour[ ] are by now not uncommon” in complex litigation).
It this is not difficult to find cases of recent vintage where courts in this District have matters for willing clients. See, e.g., Phyto Tech Corp. v. Givaudan SA, No. 18-CV-6172, 2023 WL 1437714, at *7 (S.D.N.Y. Jan. 31, 2023) (deeming reasonable the average discount rates of partners ranging from $897.50 to $1,079.97 per hour); Angelo, Gordon & Co., L.P. v. MTE Holdings, LLC, No. 20-MC-23, 2021 WL 1353756, at *3 (S.D.N.Y. Apr. 12, 2021) (rates of $1,175 and $1,350 per hour for partners at large law firm, “though on the higher end, [were] comparable to rates awarded in this jurisdiction”); Vista Outdoor, Inc. v. Reeves Family Trust, No. 16-CV-5766, 2018 WL 3104631, at *6 (S.D.N.Y. May 24, 2018) (partner rates of $1,170 and $1,260 per hour were reasonable and “not excessive in the New York ‘big firm' market”).
The White & Case rates exceed even the rates approved in those examples. Nevertheless, the rates are White & Case's “standard rates” for the attorneys identified and, compellingly, are the rates Wells Fargo actually paid for each timekeeper's services.(Second Starner Decl. ¶ 5.) While still short of the $1,750 rate sought by Plaintiff for the most senior partner, the Court is aware of at least one case from 2022 in which the Court approved a 2021 hourly rate of $1,600 per hour for the founding-name, senior partner at a relatively well-known New York City firm. Red Tree Investments, LLC v. Petroleos De Venuzuela, S.A., No. 19-CV-2523, 2022 WL 17834945 (S.D.N.Y. Nov. 29, 2022), R&R adopted, 2023 WL 3004883 (S.D.N.Y. Feb. 23, 2023); see also id. Docket 151-7 at ECF 17 identifying $1,600 hourly rate for most senior partner). The defendants in that case did not contest the rates billed by the plaintiff's firm, and the Court did not analyze the reasonableness of the rates. Id. at *2. Nonetheless, the fact that the defendants did not contest the rates is evidence of their being reasonable.
On two occasions, White & Case provided Wells Fargo a discount on fees totaling $10,502. (Second Starner Decl. ¶ 8.) Wells Fargo's fee request does not include the discounted amount. (Id.)
There is an important evidentiary gap, however, in what Wells Fargo has submitted to the Court in support of fees. Wells Fargo has not provided any evidence to support the reasonableness of the rates tendered for the particular lawyers and staff who worked on the instant case. It has not even provided the most basic information necessary to assess the reasonableness of rates: the years of experience of the particular attorneys and the type of experience they have had. See Charlestown Capital, 2021 WL 1549916, at *3 (reducing requested fees in part because the party had not “made any effort” to compare rates charged to rates charged by counsel in similar cases and approved by courts in this district, and also provided no information about the attorneys other than their titles and years of practice). “Inexplicably, [Plaintiff] has not provided any information regarding the experience of these attorneys and staff members. Such information is required if [the Court is] to engage in the necessary ‘case-specific inquiry into the prevailing market rates for counsel of similar experience and skill to the fee applicant's counsel.'” Danaher Corp., 2014 WL 4898754, at *3 (quoting Farbotko v. Clinton County of New York, 433 F.3d 204, 209 (2d Cir. 2005). The omission is all the more notable given the explicit requirement in the inquest scheduling order stating that “[c]ounsel should also provide the number of years they have been admitted to the bar, their hourly rate, and any information supporting the reasonableness thereof.” (Dkt. 35 at ¶ 3.)
Nor has Wells Fargo provided any authority or evidence to demonstrate the reasonableness of rates for associates, as distinct from partners, exceeding $1,000 per hour. Associate rates recently found reasonable have been far more modest. See Phyto Tech Corp., 2023 WL 1437714, at *7 (deeming reasonable the average discount rates of three associates ranging from $465.97 to $723.39 per hour); Flatiron Acquisition Vehicle, LLC v. CSE Mortgage LLC, No. 17-CV-8987, 2022 WL 413229, at *14 (S.D.N.Y. Feb. 9, 2022) (finding that associate rates “rang[ing] from $405 to $660” per hour were “within the spectrum [of] hourly rates approved in this district for attorneys at large New York City law firms”); Angelo, Gordon & Co., 2021 WL 1353756, at *3 (awarding fees for associates' legal services at rates of $650 and $625 per hour). It may be that the “going rate” for senior associates in New York City is near or above $1,000 per hour, but Wells Fargo has given the Court nothing on which to make such a finding. And, just as the Court has not been presented with any information about the experience of the partners involved, nothing filed by Wells Fargo offers even the barest information about the associates who worked on the matter.
The same is true of the rates identified for the legal assistant, project manager, and researcher who worked on the case. For instance, in Angelo Gordon & Co., the plaintiff requested hourly rates of $400 and $550 for paralegals and support staff, respectively. 2021 WL 1353756 at *3. The plaintiff did not provide any information regarding those individuals, and that the rates requested were “significantly higher than those generally awarded in this district, which range from $100 to $200.” Id. (citing cases). As a result, the court awarded an hourly rate of $180 for each individual. Id. While the range referenced by that court as “generally awarded” strikes this Court as on the low side and most likely considerably below today's reasonable rates for paralegal and legal assistant work in complex cases, Wells Fargo, like the plaintiff in Angelo Gordon, provided no information regarding the individual assistant, project manager, or researcher's experience that would allow the Court to evaluate the reasonableness of their rates.
Due consideration also must be given to the nature of this specific case. On one hand, the Court infers from descriptions of certain items in the billing records that there were complex or esoteric aspects to the case, including trust-related issues and evaluating foreign bankruptcy proceedings. And, by virtue of its default, VivaColombia has not contested the reasonableness of the rates for which reimbursement is sought. On the other hand, the case is a relatively straight-forward breach of contract matter and required less complex and challenging work than a case in which the defendant had not defaulted.
A particularly illustrative case bearing similarities to the matter currently before the Court is Macquarie Mexico Real Estate Management S.A. De C.V. v. Hoiston International Enterprises, Inc., No. 20-CV-8383, 2021 WL 4952693 (S.D.N.Y. Oct. 1, 2021), R&R adopted, 2021 WL 4951764 (S.D.N.Y. Oct. 20, 2021). As here, the case involved a lease (of a building, not an airplane) with international parties in which the lessee defaulted on its required installment payments. Id. at *1-2. As here, the defendant, who was a guarantor of the lease, defaulted not long after the complaint was filed. Id. at *2. The plaintiff was represented by, in the Court's experience, a well-known, nationally recognized firm. In its attorney's fees application, plaintiff sought rates comparable to those sought here: $1,750 (2021) and $1,650 (2020) for the managing partner of the firm's New York office; $1,325 (2021) and $1,240 (2020) for the supervising partner's work; $1,070 (2021) and $970 (2020) for the more senior associate; and $520 (2021) and $490 (2020) for support provided by a managing clerk. Id. at *7. Unlike the instant case, however, the attorney's fees submission in Macquarie included information about the level and experience of the specific timekeepers. See id. at *7-8.
Nonetheless, the Macquarie court did not find the rates requested to be reasonable. As the court explained, “[t]his is a simple breach of contract case in which the plaintiff sought a judgment by default soon after filing the complaint; the legal issues were not novel or complex.” Id. at *8. The Court similarly reasoned that, like Wells Fargo here, the “plaintiff does not provide support demonstrating either that the hourly rates requested are in line with the customary rates charged by the Bar for similar services or that they are in line with the prevailing market rates in this judicial district.” Id. And taking note of cases cited by the plaintiff such as Vista Outdoor, 2018 WL 3104631, and acknowledging (as stated in a 2016 case) that “partner billing rates in excess of $1,000 an hour[ ] are by now not uncommon in the context of commercial litigation,” the court observed that the requested rates, “particularly [the senior most partner]'s are far in excess of $1,000.” Id. The court determined that “given that the instant case is relatively straightforward and cannot be characterized as ‘complex commercial litigation,' the cases relied upon by the plaintiff do not support the hourly rates requested.” Id. Considering the record before it, the court reduced the rates awarded to $1,300 for the managing partner, $1,250 for the supervising partner, $800 for the senior associate, and $200 for the managing clerk. Id. at *8-9.
In the instant case, the Court has even less information about the individual timekeepers than did the court in Macquarie. Ultimately, (i) given the relatively straightforward nature of the case, (ii) there being a single claim for breach of contract based on failure to pay installment payments, (iii) Defendant's litigation default, and (iv) the lack of any information about the experience of the particular lawyers and staff whose rates are at issue, and mindful of the Court's duty to exercise “some responsibility to ‘discipline the market,'” Charlestown Capital, 2021 WL 1549916, at *2, the Court cannot conclude that the rates for which reimbursement is sought are reasonable in these particular circumstances. Accordingly, the Court deems it appropriate to trim the requested hourly rates by 20%. See Capitol Records, LLC v. Re-Digi Inc., No. 12-CV-95, 2022 WL 3348385, at *4 (S.D.N.Y. Aug. 12, 2022) (reducing requested rates and explaining that “Courts have responded to a prevailing party's failure to provide adequate information supporting the reasonableness of a fees request in a number of ways. Among other courses of action, they have employed an across-the-board percentage reduction in the rates requested because of inadequate proof of the reasonableness of the hourly rate charged, or reduced rates from ones that might be deemed reasonable if adequate documentation were provided to ones that are much closer to the lower end of a reasonable range of billing rates”) (internal quotation marks and citations omitted).
Hours Worked: To determine the compensable hours, “the court must examine the hours expended by counsel and the value of the work product of the particular expenditures to the client's case.” Tlacoapa v. Carregal, 386 F.Supp.2d 362, 371 (S.D.N.Y. 2005) (citing Gierlinger v. Gleason, 160 F.3d 858, 876 (2d Cir. 1998)). “In making this examination, the district court does not play the role of an uninformed arbiter but may look to its own familiarity with the case and its experience generally as well as to the evidentiary submissions and arguments of the parties.” Gierlinger, 160 F.3d at 876. “The relevant issue ... is not whether hindsight vindicates an attorney's time expenditures, but 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); see also Mugavero v. Arms Acres, Inc., No. 03-CV-5724, 2010 WL 451045, at *6 (S.D.N.Y. Feb. 9, 2010) (same). A court thus should exclude from the lodestar calculation “excessive, redundant or otherwise unnecessary hours.” Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1999); see also Luciano v. Olsten Corp., 109 F.3d 111, 116 (2d Cir. 1997) (“If the district court concludes that any expenditure of time was unreasonable, it should exclude these hours from the lodestar calculation”). Fees may also be reduced for other reasons, such as when the court finds billing entries overly vague, obscured by block billing, incomplete, or indicative of work that more appropriately should have been performed by someone more junior. See, e.g., Vista Outdoor Inc., 2018 WL 3104631, at *7-9 (reducing fees due to, inter alia, block billing, overstaffing, excessive conferencing, and clerical work performed by attorneys); LBBW Luxemburg S.A. v. Wells Fargo Securities LLC, 2016 WL 5812105, at *8 (S.D.N.Y. Sept. 22, 2016) (reducing fees based on “vague entries and block billing entries”).
White & Case billed a total of 120.8 hours on this matter. (Second Starner Decl. ¶ 7 and Ex. B.) Work efficiencies were achieved given the firm's longstanding client relationship with Wells Fargo, continuity of the firm's representation during both pre-suit and post-suit work, and significant familiarity with the issues. (Second Starner Decl. ¶ 7.) The Court has reviewed the records and finds the time spent to be reasonable. The work performed is of the nature and type that would be expected for a breach of contract case such as this one. The principal work performed included consulting with the client, strategizing, preparing default notices, drafting the complaint, and commencing the lawsuit; investigating VivaColombia's filing of what was essentially a notice of bankruptcy, and successfully resisting VivaColombia's request for a stay; preparing the requisite filings for default judgment; attending the order to show cause hearing; and preparing inquest submissions, including proposed findings of fact and conclusions of law. Most of the hours spent, broken down by each individual and supported by contemporaneous documentation, were reasonably necessary for the litigation of Wells Fargo's claims. Moreover, work appears to have been appropriately delegated as between partners and associates, with associates' work accounting for the majority of time (although, as noted above, the Court is in the dark about the seniority or experience of the associates involved).
The Court could quibble with the number of timekeepers who worked on the case -particularly the involvement of four partners - and a handful of entries that could be viewed as overly vague. The Court does not, however, believe any additional deductions should be made on those bases. Given the Court's overall assessment of the tasks performed and hours spent, and the relatively brief amounts of time involved for arguably vague entries, the Court is satisfied that the total time expended was reasonable. See Red Tree Investment, LLC, 2022 WL 17834945, at *6 (recognizing that “[w]hile these entries are certainly vague in a linguistic sense, the Court is unconvinced that they are problematic”).
In sum, and for the reasons explained above regarding hourly rates, the Court reduces the amount sought of $130,947.50 by 20%, arriving at a fee award of $104,758.
D. Costs
The Settlement Agreement also entitles Wells Fargo, again as the prevailing party, to recover other costs of enforcement. (AC Ex. 1 § 5.7.) See also Fed.R.Civ.P. 54(d)(1) (entitling prevailing party to costs “[u]nless a federal statute, these rules, or a court order provides otherwise”). Wells Fargo seeks recovery of $2,884.62 in costs, including the court filing fee ($402), the default hearing transcript fee ($71.82), and multiple instances of international courier to serve requisite process and notice on Viva Colombia ($2,410.80). (Second Starner Decl. ¶ 9 and Ex. C.) Such costs are routinely awarded. See, e.g., Malletier v. Artex Creative International Corp., 687 F.Supp.2d 347, 365 (S.D.N.Y. 2010) (costs such as filing fees, shipping costs, and research fees are “typically awarded when a defendant defaults”) (citing Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany, 369 F.3d 91, 98 (2d Cir. 2004)). The Court has reviewed Plaintiff's submissions and finds sufficient proof of the costs paid and that they are recoverable. Accordingly, Plaintiff should be awarded $2,884.62 in costs.
CONCLUSION
For the foregoing reasons, I recommend awarding Plaintiff Wells Fargo: (1) $1,565,312.50 in damages; (2) accruing contractual interest, up to the time of judgment, at a rate of 5% per annum starting December 14, 2022; (3) attorney's fees in the amount of $104,758.00; and (4) costs in the amount of $2,884.62.
SERVICE
Within three days after entry, Plaintiff shall serve this Report and Recommendation on Defendant through means previously approved by the Court. Within seven days after entry, Plaintiff shall file proof of service.
OBJECTIONS AND RIGHT TO APPEAL
Pursuant to 28 U.S.C. § 636(b)(1) and Rules 72, 6(a), and 6(d) of the Federal Rules Of Civil Procedure, the parties shall have fourteen (14) days to file written objections to this Report And Recommendation. Any party shall have fourteen (14) days to file a written response to the other party's objections. Any such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the Chambers of the Honorable Paul G. Gardephe, United States Courthouse, 40 Foley Square, New York, New York 10007, and to the Chambers of the undersigned, at United States Courthouse, 500 Pearl Street, New York, New York 10007. Any request for an extension of time for filing objections must be addressed to Judge Gardephe. Failure to file timely objections will result in a waiver of the right to object and will preclude appellate review.
Copies transmitted this date to all counsel of record.