Ceres Environmental Services, Inc. v. Colonel McCrary Trucking, LLC

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 11-12787 APRIL 25, 2012
Non-Argument Calendar JOHN LEY
________________________ CLERK
D.C. Docket No. 1:09-cv-00642-WS-B
CERES ENVIRONMENTAL SERVICES, INC.,
llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellant,
versus
COLONEL MCCRARY TRUCKING, LLC,
llllllllllllllllllllllllllllllllllllllll Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Alabama
________________________
(April 25, 2012)
Before EDMONDSON, MARCUS and BLACK, Circuit Judges.
PER CURIAM:
Plaintiff-Appellant Ceres Environmental Services (“Ceres”) appeals from a
final order of the district court awarding Ceres attorney’s fees, costs and litigation
expenses arising out of a contract with its subcontractor Defendant-Appellee Colonel
McCrary Trucking (“McCrary). On appeal, Ceres challenges the amount of attorneys’
fees and litigation expenses the district court awarded to it because: (1) the plain
language of the subcontract allows it to recover the full amount of legal fees and
litigation expenses it incurred; (2) the district court failed to apply the proper
procedures in setting the award; and (3) the full amount of investigative expenses was
reasonably incurred and supported by the record. After thorough review, we affirm.
We review a district court’s award of attorney’s fees and costs for abuse of
discretion, reviewing legal questions de novo and factual findings for clear error.
Bivins v. Wrap It Up, Inc., 548 F.3d 1348, 1351 (11th Cir.2008) (per curiam). In
determining the fees to which the payees are entitled, we look to the law of the state
governing the contract at issue. Resolution Trust Corp. v. Hallmark Builders, Inc.,
996 F.2d 1144, 1148 (11th Cir. 1993); Sure-Snap Corp. v. State of Vermont, 983 F.2d
1015, 1017 (11th Cir. 1993). In this case, the subcontract provides that it is governed
by the laws of the state of Louisiana.
The relevant facts are these. McCrary was under contract to Ceres to provide
debris removal services following Hurricane Katrina (“the subcontract”). On July 11,
2007, a McCrary driver, Joe Johnson was involved in a serious traffic accident in
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Baldwin County, Alabama. The injured parties sued McCrary, Ceres and others in
Alabama state court (“the Suit”). McCrary and Ceres eventually entered separate pro
tanto settlements in the Suit, and McCrary removed a contractual indemnity cross-
claim Ceres had filed to federal court. After reviewing the case on the briefs (as
requested by the parties), the district court ruled that Ceres was entitled to contractual
indemnity from McCrary for $2.9 million it had paid in settlement of the Suit. The
district court then asked the parties to file briefs addressing Ceres’s recovery of
attorneys’ fees and litigation costs.
The subcontract provides in pertinent part:
To the fullest extent permitted by law, [McCrary] agrees to save
harmless, indemnify and defend [Ceres] … from any and all claims,
losses, penalties, demands, judgments, and costs of suit, including legal
fees and litigation expenses of any kind, … incurred by [Ceres] …,
arising out of or in any way relating to the Contract Documents or
performance of the Work.
Under this provision of the subcontract, Ceres sought an additional recovery of
$1,659,939.13 for attorney’s fees and litigation expenses, plus $12,500 for guardian
ad litem fees. The district court ultimately awarded Ceres $1,118,293.16 in attorney’s
fees, costs and litigation expenses. This timely appeal follows.
First, we are unpersuaded by Ceres’s argument that it should have received all
fees and expenses it had requested based on the plain language of the subcontract.
Ceres relies on the subcontract’s clause providing indemnification “from any and all
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claims, losses, penalties, demands, judgments, and costs of suit, including legal fees
and litigation expenses of any kind… incurred by [Ceres] …, arising out of or in any
way relating to” the subcontract. However, under Louisiana law, trial courts may
determine the reasonableness of the fee awarded, no matter the language of the
contract at issue. For example, in Fern Creek Owners’ Ass’n, Inc. v. City of
Mandeville, 21 So. 3d 369, 382-83 (La. App. 1st Cir. 2009), a contract allowed a
prevailing party to receive “all attorney’s fees and costs,” but the trial court
nonetheless refused to award the prevailing party the entire amount of fees it had
requested. The reviewing court affirmed, holding that
despite a provision fixing attorney fees in the parties’ contract, courts
may inquire as to the reasonableness of the attorney fees as part of their
prevailing, inherent authority to regulate the practice of law. City of
Baton Rouge v. Stauffer Chem. Co., 500 So. 2d 397, 401 (La. 1987)). In
making an award of attorney fees, a court is not bound by the amount
actually charged by the attorney. Jackson Square Towne Home Ass’n.,
Inc. v. Hannigan, [867 So. 2d 960, 965-66 (La. App. 2d Cir. 2004)]. A
reasonable attorney fee is determined by the facts of an individual case.
The trial court has the ultimate discretion to determine the amount of
attorney fees that may be recovered, based on the court’s own
knowledge, the evidence, and the court’s observation of the case and the
record. Filson v. Windsor Court Hotel, [990 So.2d 63, 67 (La. App. 4th
Cir. 2008)].
Id.Similarly, in Trinity Universal Ins. Co. v. Good, 202 So. 2d 379, 380 (La. App.
1967), a contract provided for indemnification “from and against any and all liability,
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loss, costs, damages, attorneys’ fees and expenses of whatever kind or nature which
the Company may sustain or incur by reason or in consequence of executing any such
bond or bonds as surety or co-surety.” The court found that “[s]ince the agreement
merely stipulates the obligation for payment of attorney’s fees without fixing the
amount thereof, the amount should be reasonable, within the court’s discretion.” Id.
at 386.
Thus, contrary to Ceres’s argument, it is not entitled, under Louisiana law, to
recover all fees and expenses; rather, it is only entitled to recover reasonable fees and
expenses. In fact, Ceres conceded before the district court that the amount awarded
must be reasonable. The district court therefore did not err in performing a
reasonableness analysis before setting Ceres’s fee award.
We also conclude that in performing this reasonableness analysis, the district
court did not err in the approach it took. Specifically, Ceres asserts that the district
court “should have engaged in the Eleventh Circuit’s ‘familiar three-step process’:
first, determine whether Ceres is entitled to attorney’s fees; then, calculate the
‘lodestar,’ the ‘number of hours reasonably expended in the legal work on the case
multiplied by a reasonable hourly rate for the services’; finally, adjust the lodestar to
account for the results obtained by Ceres,” citing Atlanta Journal & Constitution v.
City of Atlanta Dep’t of Aviation, 442 F.3d 1283, 1289 (11th Cir. 2006). Yet, as the
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Louisiana cases discussed above suggest, Louisiana does not typically use the
“lodestar” test in setting attorneys’ fees. Indeed, one court has noted that few
Louisiana cases have used this test, which it described as “routinely utilized in
discrimination cases in federal court.” Brooks v. Southern University and Agr. and
Mechanical College, 877 So. 2d 1194, 1228 (La. App. 4th Cir. 2004). What’s more,
Ceres has not even shown us that federal courts use this test in cases like this one,
where attorneys’ fees are awarded by contract, as opposed to by statute.
Rather, our review of Louisiana case law reveals that when attorneys’ fees are
awarded pursuant to a contract, a court need not perform any specific test, but simply
determines the reasonableness of the fees based on the facts of the individual case.
Fern Creek, 21 So. 3d at 383; Gottsegen v. Diagnostic Imaging Services, 672 So. 2d
940, 943 (La. App. 5th Cir. 1996). In performing this inquiry, “[t]he trial court has
the ultimate discretion to determine the amount of attorney fees that may be recovered,
based on the court’s own knowledge, the evidence, and the court’s observation of the
case and the record.” Fern Creek, 21 So. 3d at 383.
Here, it is clear from the district court’s order that it determined the fee award
after scouring the parties’ briefs, as well as the detailed billing entries of Ceres’s lead
and local counsel and their paralegals. Because the record shows that the district court
based the award on its own knowledge and the circumstances of the case, as permitted
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by Louisiana case law, the district court did not err in failing to use the lodestar
method in this case.
Nor are we persuaded by Ceres’s challenge to the district court’s decision to
reduce the fee award based on community rates. In particular, the district court
refused to use a $350/hour fee for Ceres’s lead counsel, Karl Dix, Jr., and instead,
based on rates in the relevant community of Mobile, Alabama, used a rate of
$275/hour. As the district court noted, “[a] reasonable hourly rate is the prevailing
market rate in the relevant legal community for similar services by lawyers of
reasonably comparable skills, experience, and reputation.” Norman v. Housing
Authority, 836 F.2d 1292, 1299 (11th Cir. 1988). “The general rule is that the
‘relevant market’ for purposes of determining the reasonable hourly rate for an
attorney’s services is the place where the case is filed.” American Civil Liberties
Union v. Barnes, 168 F.3d 423, 437 (11th Cir. 1999) (internal quotes omitted).1
Because the case was filed in Mobile, the district court properly found that Mobile
was the relevant market.
The applicant bears the burden of producing satisfactory evidence that the
requested rate is aligned with prevailing market rates. See NAACP v. City of
1
Although these cases arose in the statutory fees context, we cannot say that the district
court abused its considerable discretion by looking to broad, and relevant, language from federal
cases in making its fees determination.
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Evergreen, 812 F.2d 1332, 1338 (11th Cir. 1987). Satisfactory evidence of the
reasonableness of the rate necessarily includes an affidavit of the attorney performing
the work and information of rates actually billed and paid in similar lawsuits.
Norman, 836 F.2d at 1292. However, mere testimony that a given fee is reasonable
is not satisfactory evidence of a market rate. See id. The court may award a non-local
hourly rate if, and only if, the party demonstrates “a lack of attorneys practicing in that
place who are willing and able to handle [its] claims.” Barnes, 168 F.3d at 437.
Moreover, “[a] prevailing plaintiff is not entitled to have the losing party pay for an
attorney with the most expertise on a given issue, regardless of price, but only for one
with reasonable expertise at the market rate.” Id.
Here, Ceres does not argue that $275/hour is not the prevailing rate in Mobile.
Instead, it claims that based on the complexity of this case, and Dix’s experience with
Ceres and his expertise in government contracts, $350/hour is reasonable, and asserts
that government contract attorneys are generally located outside of Mobile. Yet, as
the district court found, Ceres offered no evidence -- before the trial court, or in this
one -- to “show a lack of attorneys practicing in [Mobile] who are willing and able to
handle [its] claims.” Id. As the district court further found, Ceres offered no
information concerning the number of matters on which Dix had represented Ceres,
or the scope of the work, and he did not claim to have any particularly useful
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knowledge about Ceres. Nor did Dix claim 25 years of relevant experience, only 25
years as a lawyer, with no information about how much experience he actually has
litigating over government contracts. In light of the well-supported reasons provided
by the district court, and especially in light of the fact that it was Ceres’s burden to
show the reasonableness of its requested rate, the district court did not abuse its
discretion in capping Dix’s rate at $275/hour.
We also reject Ceres’s claim that the district court abused its discretion in
reducing fees based on “block billing” by Ceres’s attorneys. “Block billing” occurs
when an attorney lists all the day’s tasks on a case in a single entry, without separately
identifying the time spent on each task. In Barnes, we noted that block billing resulted
in “imprecision” in an attorney’s records and described it as a “problem” for which
the opponent should not be “penalized,” and approved the opponent’s solution of
dividing each day’s hours by the number of tasks listed and assigning the quotient to
each task. 168 F.3d at 429. Courts have also approved across-the-board reductions
in block-billed hours to offset the effects of block billing. See, e.g., Kearney v.
Auto-Owners Ins. Co., 713 F. Supp. 2d 1369, 1377-78 (M.D. Fla. 2010); Lil’ Joe
Wein Music, Inc. v. Jackson, 2008 WL 2688117 at *13 (S.D. Fla. 2008).
In this case, the district court recognized that there may be inefficiencies in
requiring counsel to break down their daily activities more completely, and that Dix’s
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entries were often informative. Nevertheless, the district court found that Dix’s
entries routinely included half a dozen or more separate tasks, making it difficult for
the court to gauge reasonableness, and were peppered with vague language such as
“working with [John Doe],” and the even more unhelpful (and somewhat unsettling)
entry, “continuing work on case.” The district court ultimately concluded that a 10%
reduction in Dix’s 1,561 hours adequately addressed the block billing issue.
As the Supreme Court has said, “the fee applicant bears the burden of
establishing entitlement to an award and documenting the appropriate hours expended
and hourly rates. The applicant . . . should maintain billing time records in a manner
that will enable a reviewing court to identify distinct claims.” Hensley v. Eckerhart,
461 U.S. 424, 437 (1983). Given the district court’s wide discretion in setting the fee
award, Ceres’s burden in documenting its entitlement to the award, and the well-
recognized problem of block billing, we cannot say the district court abused its
discretion in addressing the problem in this case by applying a 10% reduction in
counsel Dix’s billable hours.
Finally, we disagree with Ceres’s claim that the district court abused its
discretion in limiting Ceres’s recovery of investigative expenses. Specifically, the
district court allowed Ceres to recover only 10% of the almost $363,000 it paid an
investigator for 1,929 hours of work (plus $73,566.08 in expenses) “to locate and
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interview various witnesses.” As the district court found, however, the only witnesses
Ceres discussed in its brief to the court were the McCrary driver, Joe Johnson, and the
passenger in his vehicle. Moreover, while Ceres said Johnson was “difficult to locate”
due to the efforts of plaintiffs’ counsel in the Suit to keep him hidden, the district
court found that Johnson was interviewed in person by the investigator on January 29,
2008, only twelve days after the investigator opened his file. Through that date, the
investigator had billed only 65 hours and under $3,500 in expenses. Ceres also argued
that the unnamed passenger required a “nationwide search” to locate, but the district
court noted that Ceres failed to explain the efforts required and why they were
reasonable. Ceres claimed other witnesses were scattered across the country, but the
district court found that Ceres did not identify these witnesses, did not explain their
significance to the case, and did not explain why it required such an effort to find
them.
As we’ve repeatedly noted, Ceres, as the fee applicant, bore the burden of
proving its entitlement to the fee award. We recognize that Ceres submitted to the
district court voluminous billing records from its investigator that included, among
other things, the names of the 69 witnesses he attempted to locate. Importantly,
however, Ceres failed, as the district court found, to explain the significance of these
69 witnesses to the case, why they were so difficult to locate, and why it was
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reasonable to expend such effort and money to locate them. Indeed, its in brief to this
Court, Ceres again failed to explain these witnesses, and only claimed that they are
explained by including a citation to the 62 pages of the investigator’s billing records.
While these records admittedly detail the investigator’s efforts at locating these
witnesses, they do not otherwise answer the district court’s reasonable questions about
how the investigator actually contributed to the Suit. Accordingly, we are compelled
to conclude that the district court made no clear error in its findings, and did not abuse
its discretion in capping the investigator’s expenses at 10%.
AFFIRMED.
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