Carmel & Carmel PC v. Dellis Construction, Ltd.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
CARMEL & CARMEL PC, )
)
Plaintiff, )
)
v. ) Civil Action No. 11-158 (RMC)
)
DELLIS CONSTRUCTION, LTD., et al., )
)
Defendants. )
)
MEMORANDUM OPINION
On December 2, 2011, the Court granted Carmel & Carmel PC’s (“Carmel”) motion
to dismiss Clarity LTD’s (“Clarity”) counterclaims, finding no basis for Clarity’s conversion claim
and determining that Carmel did not exhibit willful default or gross negligence in failing to distribute
the escrowed funds to Clarity prior to filing this interpleader. Memo. Op. [Dkt. # 38]. Carmel now
moves for $123,085.47 in attorney’s fees and costs under the Escrow Agreement’s indemnification
provision. Clarity, however, claims that it is not responsible for paying for any of the fees, and even
if it is, the fee request should be substantially reduced. The Court will grant Carmel’s request for
fees in part.
I. FACTS
The relevant facts are set forth in this Court’s December 2, 2011 Memorandum
Opinion [Dkt. # 38] and will not be repeated here.
II. LEGAL STANDARD
“The usual method of calculating reasonable attorneys’ fees is to multiply the hours
reasonably expended in the litigation by a reasonable hourly fee, producing the ‘lodestar’1 amount.”
Bd. of Trs. of Hotel & Restaurant Employees Local 25 v. JPR, Inc., 136 F.3d 794, 801 (D.C. Cir.
1998). While there is a strong presumption that the lodestar figure represents a reasonable fee, the
amount may be adjusted by a multiplier in rare and exceptional cases. Id. (quoting Pennsylvania v.
Delaware Valley Citizen’s Council for Clean Air, 478 U.S. 546, 565 (1986)). The fee applicant
bears the burden of demonstrating that the claimed rate and number of hours are reasonable. Blum
v. Stenson, 465 U.S. 886, 897 (1984); Covington v. Dist. of Columbia, 57 F.3d 1101, 1107 (D.C. Cir.
1995).
Reasonable attorneys’ fees include charges for legal assistants and law clerks.
Missouri v. Jenkins, 491 U.S. 274, 285 (1989) (“Thus, the fee must take into account the work not
only of attorneys, but also of secretaries, messengers, librarians, janitors, and others whose labor
contributes to the work product for which an attorney bills her client; and it must also take account
of other expenses and profit.”). Various forms of litigation expenses that are not fees for attorneys’
time — such as copying charges, court reporter fees, and travel costs — may also be included in the
award if such expenses are routinely billed by the attorney to his or her client. See New York v.
Microsoft Corp., 297 F. Supp. 2d 15, 47-48 (D.D.C. 2003).
Fee applications must “include contemporaneous time records of hours worked and
rates claimed, plus a detailed description of the subject matter of the work with supporting
1
The “lodestar” approach to fee awards was established by the Supreme Court in Hensley
v. Eckerhart, 461 U.S. 424 (1983), and is the approach followed by the federal courts in most fee
award disputes. See Gisbrecht v. Barnhart, 535 U.S. 789, 802 (2002).
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documents, if any.” In re Donovan, 877 F.2d 982, 994 (D.C. Cir. 1989). A fee applicant may satisfy
its burden of demonstrating that its time was reasonably spent by submitting “‘sufficiently detailed
information about the hours logged and the work done’ that permits the district court to ‘make an
independent determination whether or not the hours claimed are justified.’” Cobell v. Norton, 231
F. Supp. 2d 295, 306 (D.D.C. 2002) (quoting Nat’l Ass’n of Concerned Veterans v. Sec’y of Def.,
675 F.2d 1319, 1327 (D.C. Cir. 1982)). The application need not, however, “present the exact
number of minutes spent nor the precise activity to which each hour was devoted nor the specific
attainments of each attorney.” Cobell, 231 F. Supp. 2d at 306. The billing descriptions can be read
in context, with clarification coming from surrounding billing entries as well as the docket. Heard
v. Dist. of Columbia, Civ. No. 02-296 (CKK), 2006 WL 2568013, at *14-15 (D.D.C. Sept. 5, 2006).
The number of billable hours in a fee application may be reduced for failure to
allocate tasks efficiently among attorneys based on their experience, i.e., where research tasks are
performed by relatively senior attorneys more frequently than seems justifiable, or where some
attorneys’ efforts have been duplicated by others. Davis County Solid Waste Mgmt. & Recovery
Special Serv. Dist. v. EPA, 169 F.3d 755, 761 (D.C. Cir. 1999). Fees should also not be awarded for
time spent litigating claims that were unsuccessful. Copeland v. Marshall, 641 F.2d 880, 891-92
(D.C. Cir. 1980). If a court determines that duplication or waste of effort has occurred, it has the
discretion to simply reduce the proposed fee by a reasonable amount without an item-by-item
accounting. LaPrade v. Kidder Peabody & Co., 146 F.3d 899, 906 (D.C. Cir. 1998). Outright denial
of a fee request or an item within the request is appropriate where a court finds that particular fee
request “outrageously unreasonable.” Id.-3-
III. ANALYSIS
Clarity makes two general arguments in response to Carmel’s request for fees: (1)
as the losing party in the interpleader action, Dellis Construction LTD (“Dellis”) is solely
responsible for the attorney’s fees, and (2) even if Clarity bears responsibility for attorney’s fees,
the amount claimed by Carmel is excessive.
A. Disputed Escrow Provisions
3. In the event [Carmel] shall have received the notice of objection provieded
for in paragraph 2 of this Escrow Agreement within the time herein prescribed,
[Carmel] shall continue to hold the Escrow Amount until . . . (iii) [Carmel] shall take
such affrimative steps as [Carmel] may, at [Carmel’s] option, elect in order to
terminated [Carmel’s] duties as Escrowee, including, but not limited to, deposit in
Court and an action for interpleader, the costs thereof to be borne by the party that
is not entitled to the Escrow Amount.
4. [Carmel] . . . shall not be liable in connection with the performance of any
duties imposed upon [Carmel] by the provision of this Escrow Agreement, except for
[Carmel’s] own willful default or gross negligence, all costs, expenses and losses,
(including, without limitation, legal expenses and costs) incurred, expended or
suffered by [Carmel] in connection with performing its duties hereunder and/or
defending itself hereunder shall be paid by [Dellis] and [Clarity] equally unless
specifically provided otherwise in paragraph 3 of this Escrow Agreement, in which
even the same shall be paid in whole by the party required by said paragraph 3 to pay
the same. . . . In the even that [Carmel] shall be uncertain as to [Carmel’s] duties
or rights hereunder, or shall receive instructions from [Clarity] or [Dellis] which, in
[Carmel’s] opinion are in conflict with any of the provisions hereof, [Carmel] shall
be entitled to hold and disburse the Escrow Amount pursuant to paragraph 3 of this
Escrow Agreement and may decline to take further action.
....
6. Other than for [Carmel’s] willful default or gross negligence, [Delli] and
[Clarity] hereby agree to jointly and severally indemnify and hold [Carmel]
harmless from any damage, cost, liability or expense (including, but not limited to,
reasonable legal fees either paid to retained attorneys or representing the fair value
of legal services rendered by [Carmel] which [Carmel] may incur by reason of its
acting hereunder without prejudice to any right either party may have to recover from
the other party for such damage, cost, liability or expense.
Compl., Ex. 2 (emphasis added).
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B. Responsibility for Fees
The parties dispute which provision of the Escrow Agreement covers their fee
dispute, and as a result, to what extent the Defendants are liable for the fees. Carmel contends
that Clarity and Dellis are jointly and severally liable for the entire fee award under paragraph six
of the Escrow Agreement. Clarity contends that paragraphs three and four of the Escrow
Agreement control and that Dellis is solely liable for the fees because the Court determined that
Dellis was “not entitled to the Escrow Amount.” Compl., Ex. 2 ¶ 3(iii). Carmel has the better of
the argument.
Paragraph 3(iii) provides that in “an action for interpleader, the costs thereof [are]
to be borne by the party that is not entitled to the Escrow Amount.” Id. Clarity is correct that
Dellis (who the Court found had waived any claim to the escrowed funds) is responsible for the
costs of the interpleader action; Clarity is incorrect that these costs include legal fees. Clarity
argues that the Escrow Agreement treats legal fees as a subset of costs, and therefore the costs for
which Dellis is responsible under paragraph 3(iii) also include the attorney’s fees Carmel is now
claiming. Clarity relies on the fourth paragraph of the Escrow Agreement, which provides that
“except for [Carmel’s] own willful default and gross negligence . . . all costs, expenses and
losses, (including, without limitation, legal expenses and costs) . . . shall be paid by [Dellis] and
[Clarity] equally . . . .” Pl.’s Opp’n [Dkt. # 43] at 3 n.2 (quoting Compl., Ex. 2 ¶ 4).2 Despite
Clarity’s contention, however, this provision does not treat legal expenses as a subset of costs;
2
Notably, Clarity does not argue that the provision in paragraph four, which specifically
provides that “legal expenses” shall be paid “equally” by Dellis and Clarity, means that Clarity is
responsible for only half of Carmel’s claimed fees. In light of the indemnification provision,
Carmel is responsible for the entirety of the fees but may seek later contribution from Dellis. See
Compl., Ex. 2 ¶ 6.
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instead, it treats legal expenses as a subset of “costs, expenses and losses.” Compl., Ex. 2 ¶ 4. If
the Escrow Agreement provided that the losing party in an interpleader action was responsible
for “costs, expenses and losses,” Clarity’s contention that Dellis is responsible for both costs and
attorney’s fees might have merit. The Court, however, declines Clarity’s invitation to rewrite the
Escrow Agreement’s plain statement that “costs . . . are to be borne by the party that is not
entitled to the escrow amount” to “costs, expenses and losses (including, without limitation, legal
expenses and costs) . . . are to be borne by the party that is not entitled to the escrow amount.”
Had the parties preferred this latter formulation, they should have included it in the Escrow
Agreement.
This conclusion is further buttressed by paragraph six in the Escrow Agreement
which provides that “[o]ther than for [Carmel’s] willful default or gross negligence, [Dellis] and
[Clarity] hereby agree to jointly and severally indemnify and hold [Carmel] harmless from any
damage, cost, liability or expense (including, but not limited to, reasonable legal fees . . . ) which
[Carmel] may incur . . . .” Compl., Ex. 2 ¶ 6. Just as in paragraph four, paragraph six
distinguishes between costs and legal fees/expenses. If, as Clarity claims, legal fees were merely
a subset of costs, there would be no reason to indemnify Carmel from both costs and legal fees in
paragraph six. See U.S. ex rel. K & R Ltd. Partnership v. Massachusetts Housing Finance
Agency, 456 F. Supp. 2d 46, 56 (D.D.C. 2006) (“The Court construes contracts in a manner that
gives effect to the words used by the parties, and assumes that the parties intend every part of a
contract to mean something, ‘so that no word, clause, sentence, or phrase is rendered surplusage,
superfluous, meaningless or nugatory.’”) (quoting Air Line Pilots Assoc., Int'l v. Pension Benefit
Guaranty Corp., 193 F. Supp. 2d 209, 218 n.4 (D.D.C. 2002)). Accordingly, Dellis is liable for
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the costs of the interpleader action, and Dellis and Clarity are jointly and severally required to
indemnify Carmel for the attorney’s fees it expended in this action.3
B. Reasonableness of Fees
Clarity contends that even if it is responsible for some attorney’s fees, the
amounts should be reduced because $123,085 in attorney’s fees for a $476,000 interpleader
action is clearly excessive. Clarity also argues that, as a matter of law, Carmel should not be
entitled to attorney’s fees with respect to their fee application (fees on fees). Clarity is incorrect
on the latter point; however, the Court will reduce some of the claimed fees.
First, as previously discussed, Dellis is solely responsible for the costs of the
interpleader action. Thus, Clarity is not responsible for the “$1,025.09 in costs” Carmel claims
in bringing and litigating this action. Pl.’s Reply [Dkt. # 46] at 27.
Second, “in assessing whether an attorney's billed hours have been reasonably
expended, courts must verify that the attorneys did not ‘waste or otherwise unnecessarily spend
time on the matter’ . . . .” Electronic Privacy Info. Ctr. v. United States Dept. of Homeland Sec.,
811 F. Supp. 2d 216, 237-238 (D.D.C. 2011) (quoting In re Donovan, 877 F.2d 982, 990 (D.C.
Cir.1989)). A court should deny fees “for time spent litigating claims upon which the party
3
The Court declines to hold Clarity jointly liable for the interpleader costs under the
indemnification provision because to do so would render nugatory paragraph three’s shifting of
costs to an unsuccessful defendant in an interpleader action. See K & R Ltd., 456 F. Supp. 2d 46,
566. Additionally, the cost shifting provision in paragraph 3(iii) is specific to interpleader
actions and therefore controls in any conflict with the general indemnification provision in
paragraph six. See, e.g., Southwestern Elec. Co-op., Inc. v. F.E.R.C, 347 F.3d 975, 982 (D.C.
Cir. 2003) (“where specific contract provisions are irreconcilably in conflict with more general
ones, the specific provisions control”).
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seeking the fee did not ultimately prevail” when those claims are fractionable. Copeland, 641
F.2d at 891-92. In this case, Carmel’s fee application seeks compensation for its attempt to
initiate an interpleader action in July 2010. That action was dismissed for failure to prosecute.
See Carmel & Carmel PC v. Dellis, Civ. No. 10-1168, Dkt. # 3 (D.D.C. 2010). Carmel then filed
a motion for reconsideration, which was denied. Neither Clarity nor Dellis is responsible for the
time Carmel unsuccessfully spent on this prior suit, and the Court will accordingly reduce the fee
amount by $7,838.41.4
Third, on October 27, 2011, Carmel filed a motion for leave to file a three-page
brief in opposition to Claritiy’s response to an order to show cause. The motion was filed
approximately seven weeks after Clarity’s response and more than a month after the Court had
discharged the order to show cause. Given that the Court had already discharged the order to
show cause, Carmel’s motion was both “unnecessary” and “nonproductive” and the Court will
reduce the fees by $11,513.75.5 Copeland, 641 F.2d at 891; Miroglio S.P.A. v. Conway Stores,
Inc., 629 F. Supp. 2d 307, 312 (S.D.N.Y. 2009).
Fourth, on July 8, 2011, Carmel filed a 13-page opposition to Dellis’s motion to
dismiss. Carmel spent 56.25 hours on the opposition and billed $15,565. Additionally, Mr.
4
This amount includes the June 2010 through December 2010 entries in Carmel’s
summary of attorney’s fees. Mot. for Fees [Dkt. # 41], Ex. 2.
5
Clarity contends, based on Carmel’s fee application, that the motion for leave to file
and accompanying reply were billed by Carmel at $9,763.75 for 35.75 hours of work. Carmel
does not dispute either of these figures. Additionally, Mr. Molster billed 3.5 hours of work on
October 24, 2011 and October 27, 2011 with respect to this motion. See Decl. Molster at 7-8.
The total reduction is therefore $11,513.75 ($9,763.75 + 3.5*$500).
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Molster spent as much as 8.2 hours and billed $4,100.6 Decl. Molster at 5-6. Clarity also filed
an opposition to Dellis’s motion to dismiss on July 8, 2011—an 8-page memorandum for which
Clarity billed 14 hours at a cost of $4,012.50. The Court has reviewed both oppositions and finds
that the more than 60 hours Carmel and Mr. Moslter spent on the opposition are excessive;
accordingly, the Court will reduce the requested fee amount from $19,665 to $8,000.
Fifth, Clarity claims that “as a matter of law” a party is foreclosed from being
awarded attorney’s fees for a fee application (fees on fees). Thus, Clarity seeks to preclude the
entire $24,462.75 Carmel spent in preparing its fee request. Clarity is wrong as a matter of law.
See, e.g. Sierra Club v. E.P.A., 769 F.2d 796, 811 (D.C. Cir. 1985); Environmental Defense Fund
v. E.P.A., 672 F.2d 42, 62 (D.C. Cir. 1982). The Court, however, will reduce the requested fees.
Mr. Molster spent 19.2 hours on the fee application and briefing for a total billing
of $9,600.7 See Decl. Molster at 8-10. Mr. Carmel spent 10.2 hours on the fee application and
briefing for a total of $5,049. See Decl. Carmel [Dkt. # 46], Ex. 5. There is no billing for any
paralegal work on this matter, although a “practice manager” billed 2.5 hours at $185 per hour
for a total of $462.50. See id ¶ 18. Additionally, two associates worked on the fee application
6
Because of the “block entry” in Mr. Molster’s declaration on 5/27/11 it is not possible to
tell how many of the 4.8 hours were spent on the opposition to Dellis’s motion to dismiss. Cf.
Teamsters Local 814 Welfare Fund v. Dahill Moving & Storage Co., Inc., 545 F. Supp. 2d 260,
268 (E.D.N.Y. 2008) (“commingling of activities within one time entry impedes the court’s
efforts to evaluate the reasonableness of the listed activities”) (quoting Soler v. G & U Inc., 801
F.Supp. 1056, 1061 (S.D.N.Y. 1992)).
7
Arguably, only 18.4 hours and $9,200 was spent given the December 2, 2011 entry
“Review Memorandum Opinion and Order; discussion with Carmel re same.” Decl. Molster at
13. Carmel, however, treats the entire $9,600 as a “related to the preparation and submission of
the fee application,” Pl.’s Reply at 27, and the Court will do the same.
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for 37.75 hours for a total of $9,813.75. Thus, partners billed 45.48% of the hours8 and 59.88%
of the cost9 for the fee application and associated briefing. Carmel has presented no justification
for the amount of partner time that was spent submitting a straightforward fee application and
memorandum. Accordingly, the Court will reduce the fee. See, e.g., Davis Co., 169 F.3d at 761(“Billable hours in fee applications are susceptible to reduction for failure to allocate tasks
efficiently to different attorneys based on experience.”). The Court also finds that nearly 65
hours is excessive and unreasonable for the fee application and the memorandum in support. For
these reasons, the Court will allow only $12,500 of the requested $24,462.75.
IV. CONCLUSION
Under the Escrow Agreement’s indemnification provision Clarity and Dellis are
jointly and severally liable for the fees Carmel expended in this action. However, the amount
due by Clarity in response to Carmel’s fee request of $123,085.50 is reduced to $79,080.47 based
upon the following reductions: (1) $1,025.09 in costs for the interpleader action (payable to
Carmel by Dellis); (2) $7,838.41 in fees with respect to the first interpleader action, which was
dismissed for failure to prosecute; (3) $11,513.75 expended on a motion for leave to file a reply
to an order to show cause which had already been discharged; (4) $11,665 with respect to
8
Mr. Carmel and Mr. Molster billed 29.4 of the 64.65 total hours (45.48%).
9
Mr. Carmel and Mr. Molster billed $14,649 of the $24,462.75 requested for the fee
application (59.88%).
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Carmel’s opposition to Dellis’s motion to dismiss; and (5) $11,962.75 with respect to the fee
application. A memorializing Order accompanies this Memorandum Opinion.
Date: May 1, 2012 /s/
ROSEMARY M. COLLYER
United States District Judge
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