Heritage Handoff Holdings, LLC v. Fontanella
Filing
213
MEMORANDUM regarding Motion for Attorneys' and Professionals' Fees, Costs, Expenses, and Post Judgment Interest (D.I. 187) and Motion for Reasonable Attorneys' Fees, Costs, and Expenses (D.I. 189 ). The Parties should meet and confer regarding the final figures and submit to the Court a proposed order consistent with this Memorandum within one week. Signed by Judge Richard G. Andrews on 5/31/2019. (nms)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
HERITAGE HANDOFF HOLDINGS, LLC,
Plaintiff,
v.
Civil Action No. 1:16-cv-00691-RGA
RONALD FONTANELLA,
Defendant.
MEMORANDUM
Presently before me are Heritage HandoffHoldings, LLC's Motion for Attorneys' and
Professionals' Fees, Costs, Expenses, and Post-Judgment Interest (D.I. 187) and Plaintiff Ronald
Fontanella's Motion for Reasonable Attorneys' Fees, Costs, and Expenses (D.I. 189). The
Parties have fully briefed the issues. (D.I. 188, 189, 198,200,202,203).
For the reasons discussed below, I will award Mr. Fontanella $120,743.52, plus any costs
or fees incurred litigating his motion, and I will award Heritage Handoff Holdings ("Heritage")
$538,405.05, plus any costs or fees incurred litigating both its motion and Plaintiffs Motion to
Alter or Amend the Judgment. I will also award post-judgment interest pursuant to 28 U.S.C. §
1961.
I entered fmaljudgment in this case on March 13, 2019. (D.I. 186). I awarded Mr.
Fontanella $499,520.72 for breach of contract and Heritage $5,266,899.13 for breach of contract
and securities fraud. (Id). The Parties now request attorneys' fees and costs pursuant to the
Stock Purchase Agreement ("SPA"). The SPA provides that the Purchaser (Heritage) and the
Shareholder (Mr. Fontanella) shall each indemnify the other for "Damages" arising out of their
breaches of the SPA. (PTX 4 at§ 6.1-6.2). The SPA defines "Damages" to include:
actual damages, penalties, fees, fines, costs, amounts paid in settlement, liabilities,
Taxes, losses, consequential damages actually paid to third parties, reasonable
expenses, including court costs and reasonable attorneys' and other professionals'
fees and expenses, ... and any other costs of enforcing an Indemnified Party's
rights under this Agreement or any Related Agreement.
(PTX 4, Exh. A at 2-3).
The Parties agree on a number of key issues. They agree that the language of the SPA
entitles them to attorneys' fees and costs for the claims on which they prevailed. They also do
not dispute the reasonability of the other's hourly billable rates. Thus, the only issues for me to
decide are (A) whether Mr. Fontanella preserved his right to attorneys' fees and (B) what portion
of its fees Heritage should receive.
A. Mr. Fontanella 's Attorneys' Fees
The Parties agree that the awardable amount of attorneys' fees attributable to Mr.
Fontanella's successful claims should be $120,743.52. (D.I. 202 at 1). Plaintiff, however, argues
that Mr. Fontanella waived his right to attorneys' fees by failing to raise the issue in his
complaint. Plaintiffs argument ignores the fact that Mr. Fontanella requested fees in the pretrial
order. (D.I. 140 at 17-18). Once adopted, the pretrial order supersedes all other pleadings in a
case. Rockwell Int'! Corp. v. United States, 549 U.S. 457,474 (2007) (citing Fed. Rule Civ.
Proc. 16(e)). Plaintiff did not object to Mr. Fontanella's request for attorneys' fees at or before
the pretrial conference. Thus, I find that Mr. Fontanella did not waive his right to collect such
fees. I will award Mr. Fontanella the agreed amount, $120,743.52. I will also award Mr.
Fontanella the fees he incurred litigating his motion.
B. Heritage's Attorneys' Fees
Plaintiff reports incurring between $803,999.40 and $897,341.75 in fees and expenses for
its successful claims throughjudgment and an additional $50,144.88 spent on its motion. (D.I.
203 at 10). Its suggested fees award is derived from an application of the lodestar method. (D.I.
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188 at 3). The lodestar method is normally applied in cases where the "prevailing party" is
statutorily entitled to receive all of its reasonable attorneys' fees. See, e.g., Knight v. Int'/
Longshoremen 's Ass 'n, 2012 WL 1132761, at *4 (D. Del. Mar. 29, 2012) (statutory fees
calculated using the lodestar method in Labor Management Reporting and Disclosure Act case);
Mattern & Assocs., L.L.C. v. Seidel, 678 F. Supp. 2d 256,272 (D. Del. 2010) (statutory fees
calculated using the lodestar method in Delaware Uniform Trade Secrets Act case); Tobin v.
Gordon, 614 F. Supp. 2d 514,518 (D. Del. 2009) (statutory fees calculated using the lodestar
method in Civil Rights Act case). The Parties agree, however, that neither of them is entitled to
all of its fees. Thus, the lodestar method is not a natural fit for this case.
Mr. Fontanella suggests, based on an application of the "reasoned fraction" approach,
that Plaintiff should receive 35% of the $975,038.75 in costs and fees it incurred in this case.
(D.I. 198 at 6, 13). The reasoned fraction approach is appropriate when "it is not reasonably
possible to parse between which fees are recoverable fees [and] which are not." Dow Chem.
Canada Inc. v. HRD Corp., 2013 WL 3942052, at *1 (D. Del. July 29, 2013). This occurs, for
example, when work for which a party owes fees overlaps with work for which it does not. Id
As the SPA awards fees only for claims on which a party prevails, it is necessary to apportion the
cost of the litigation between Plaintiff's claims. Thus, I agree with Mr. Fontanella that
application of the reasoned fraction approach is appropriate in this case. I do not, however, agree
with his proposed fraction. Instead, I will independently determine the reasoned fraction in this
case.
As an initial matter, the Parties agree that Plaintiff's costs incurred litigating Mr.
Fontanella's counterclaims are not recoverable. Thus, I will subtract the cost of defending the
counterclaims, $77,697 (D.I. 203 at 1 n.2), from the award. This leaves $897,341.75.
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Next, I recognize that there are certain baseline costs that do not vary depending on the
number of claims litigated in a case. It is difficult to determine exactly which portion of the cost
of litigation is constant, but I believe 20% is a reasonable estimate in this case. That 20%
represents costs that Plaintiff incurred as a result of all claims but would have incurred if it had
litigated only the claims on which it prevailed. Thus, I will award Plaintiff 20% of
$897,341.75-$179,468.35.
Based on having presided over the trial and my assessment of the post-trial briefing, the
remaining 80% of fees that Plaintiff incurred litigating this case was likely split about evenly
between the customer-based claims and the equipment-based claims. Thus, I will assign half of
the variable costs (40%) to the customer-based claims on which Plaintiff prevailed$358,936.70.
In total, I will award Plaintiff 60% of its costs incurred litigating its claims$538,405 .05. That riumber represents a reasonable estimate of the fraction of attorneys' fees and
costs attributable to the claims on which Plaintiff succeeded. I will also award Plaintiff the
entirety of its costs incurred litigating its motion for attorneys' fees and litigating Defendant's
Motion to Alter Judgment or Amend the Judgment (D.I. 197), assuming those costs are not
included in the present figures.
I will also grant the Parties post-judgment interest pursuant to 28 U.S.C. § 1961.
The Parties should meet and confer regarding the final figures and submit to the Court a
proposed order consistent with this Memorandum within one week.
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