Boardwalk Apartments, L.C. v. State Auto Property and Casualty Insurance Co.

Filing 408

MEMORANDUM AND ORDER denying 395 Motion to Strike ; denying 397 Motion for Discovery; denying 399 Motion for Hearing. State Auto shall have until 11/14/14 to submit a motion for leave to file any exhbits in support of its opposition to Motion for Attorneys' Fees. Signed by District Judge Julie A. Robinson on 10/24/14. (mm)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

BOARDWALK APARTMENTS, L.C.,
Plaintiff,
v.

STATEAUTOPROPERTY AND
CASUALTY INSURANCE COMPANY,

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Case No. 11-2714-JAR

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Defendant.

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MEMORANDUM AND ORDER
This insurance coverage action was tried to a jury, which found in favor of Plaintiff
Boardwalk Apartments, L.C. ("Boardwalk") on its claims of breach of contract under Kansas
law against Defendant State Auto Property and Casualty Insurance Company ("State Auto").
Plaintiff Boardwalk filed a posttrial motion for attorneys' fees (Doc. 349) that is now fully
briefed. Before the Court are several motions filed by State Auto that are related to the fee
dispute: Motion to Strike Affidavit of Kevin Bielawski (Doc. 394); Motion to Conduct
Discovery Pursuant to D. Kan. 54.2(f) (Doc. 397), and Motion for Oral Argument (Doc. 399).
These fee-related motions are ripe for decision and the Court is prepared to rule. As described
more fully below, the Court denies State Auto's motions for discovery and to strike the
Bielawski affidavit, and will consider Boardwalk's motion for attorneys' fees submitted on the
briefs.

I.

Procedural Posture and Relevant Background
Some discussion of the proper procedure for requesting and disputing attorneys' fees in

this District is warranted. Fed. R. Civ. P. 54(d)(2)(B)(i) provides that a claim for attorneys' fees

and expenses may be made by motion no later than fourteen days after the entry of judgment.
And "by local rule, the court may establish special procedures to resolve fee-related issues
without extensive evidentiary hearings."' The District of Kansas has adopted such procedures in
Local Rule 54.2:
(a) Consultation Required. A party who moves for statutory
attorney's fees pursuant to Fed. R. Civ. P. 54(d)(2) must promptly
initiate consultation with the other party or parties.
(b) Where the Parties Agree. If the parties reach agreement, they
must file an appropriate stipulation and request for an order.
(c) Where the Parties Disagree. Ifthey are unable to agree, the
moving party must file the following within 30 days of filing the
motion:
( 1) a statement that, after consultation in accordance with
this rule, the parties have been unable to reach an
agreement with regard to the fee award; and
(2) a memorandum setting forth the factual basis for each
criterion that the court is asked to consider in making an
award.
(d) Statement of Consultation. The statement of consultation must
set forth the date of the consultation, the names of those who
participated, and the specific results achieved. The court will not
consider a motion for statutory attorney's fees made pursuant to
Fed. R. Civ. P. 54(d)(2) until the moving party files the statement
of consultation in compliance with this rule.
(e) Memorandum and Response. The memorandum in support of
the Fed. R. Civ. P. 54 motion must be supported by time records,
affidavits, or other evidence. The memorandum need not be filed at
the same time as the motion. This is an exception to D. Kan. Rule
7.l(a). Other parties have 14 days to file a response to the
memorandum in compliance with this rule.
(f) Discovery. Discovery may not be conducted in connection
with motions for awards of attorney's fees unless the court permits
upon motion and for good cause.
In this case, Boardwalk timely filed its Motion for Attorneys' Fees and Expenses within

'Fed. R. Civ. P. 54(d)(2)(D).

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fourteen days of the entry of Judgment. 2 After receiving one extension of time, Boardwalk
timely filed its memorandum in support of the motion for attorneys' fees on September 5, 2014. 3
That memorandum properly includes a statement of consultation pursuant to Rule 54.2(c)(I),
setting forth the parties' attempts to meet and confer concerning the fee request and stating that
the parties were unable to reach an agreement. Boardwalk's memorandum proceeds to set forth
argument in support of its fee request and it attached over fifty exhibits, including Exhibit 2, the
Affidavit of Kevin Bielawski, Director of Strategic Pricing and Analytics for Husch Blackwell,
Boardwalk's counsel's law firm. Boardwalk also attached several exhibits upon which
Bielawski relies: Exhibit G, PricewaterhouseCooper's Billing Rate and Associate Salary Survey
("BRASS"); Exhibit H, annual totals for each timekeeper's rate, hours, and dollars billed; and
Exhibit I, a line-graph comparison of the rates charged on the Boardwalk matter and median
attorney and paralegal rates for several regions in and around Kansas City, based on the BRASS
survey. Boardwalk submitted the Bielawski Affidavit in support of its claim that the rates
charged by its attorneys are reasonable.
State Auto filed its opposition to Boardwalk's attorneys' fee motion and has submitted
several other motions tied to the fee request that the Court will resolve in this Order. First, State
Auto asks that the Court strike the Bielawski Affidavit because it was not previously disclosed.
Second, State Auto asks the Court to permit several categories of discovery on the issue of
attorneys' fees, including discovery concerning Bielawski. Finally, State Auto requests oral
argument on the motion for attorneys' fees. The Court will address each in turn.

2

Doc. 348 (entered July 10, 2014 ).

3

Doc. 387.

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II.

Motion to Strike Bielawski Affidavit
The Court first considers State Auto's motion to strike. State Auto argues that Bielawski

should have been previously disclosed because he renders an expert opinion on the
reasonableness of counsel's rates. Moreover, State Auto takes issue with the fact that Bielawski
relies on the PriceWaterhouseCoopers' survey, as it was not previously disclosed during
discovery. The Court finds no merit to these arguments.
First, State Auto misunderstands Fed. R. Civ. P. 26 and its relationship to Local Rule
54.2. State Auto contends that Bielawski should have been disclosed as either a fact or expert
witness under Rule 26. But Rule 26(a)(l)(A) only pertains to fact witnesses "that the disclosing
party may use to support its claims or defenses." And rule 26(a)(2)(A) only requires a party to
disclose any experts the party "may use at trial." The Court is convinced that Mr. Bielawski's
affidavit does not qualify as "expert testimony" under Rule 26. The foundational statements in
the affidavit make clear that his opinions on the prevailing market rates in the Kansas City area
are based on personal knowledge in his capacity as the Director of Strategic Pricing and
Analytics-he is explaining why the Husch Blackwell firm charges the rates that they do. His
testimony is based on his personal participation in setting the standard rates for the firm and he is
therefore merely a fact witness on the subject of attorneys' fees. Even if Bielawski's affidavit
constituted expert testimony, the Rule 26(a)(2) obligation only applies to expert testimony at
trial; the rule clearly does not apply in this context.
Moreover, the Court does not construe Rule 26(a)(l) as requiring disclosure of potential
attorney affiants in support of fee motions because attorneys' fees are merely a form of damages
that are typically decided collateral to the merits of an action. Rule 54 explicitly contemplates

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that a "claim" for attorneys' fees would be made by motion "unless the substantive law requires
those fees to be proved at trial as an element of damages." 4 And Rule 54 delegates to the district
courts the procedure by which they decide fee-related issues in order to avoid extensive
evidentiary hearings. Here, the local rule provides the default rule that no discovery should be
conducted on attorney fee motions. An exception to this general rule may be made on motion if
the Court finds good cause exists to order discovery. Indeed, courts in this district routinely
deny early requests for discovery of information about attorney fees, finding that they are not
relevant before the issue of entitlement to fees is reached. 5 The Court will take up State Auto's
discovery motion in the next section, but with respect to this motion, neither the federal rules nor
the local rule in this District required Boardwalk to disclose Bielawski.
Even ifthere was some disclosure obligation for attorneys or their representatives in this
capacity, the Court does not find any prejudice in allowing Boardwalk to submit this affidavit.
In determining the reasonableness of the rate on a fee request, this Court must "determine what
lawyers of comparable skill and experience practicing in the area in which the litigation occurs
would charge for their time." 6 In making this determination, if the court does not have before it
adequate evidence of prevailing market rates, the court may, in its discretion, "use other relevant
factors, including its own knowledge, to establish the rate." 7 Boardwalk has submitted the
Bielawski affidavit and supporting documentation in an effort to show that the Husch Blackwell

4

Fed. R. Civ. P. 54(d).

5

See, e.g., Newman v. Union Pac. R.R., No. 12-2518-JTM-KGG, 2013 WL 1308977, at *1 (D. Kan. Mar.
29, 2013); EEOCv. BNSF Ry. Co., No. 12-2634-JWL-KGG, 2014 WL 2589182, at *7 (D. Kan. June 10, 2014).
6

See Case v. Unified School Dist. No. 233, 157 F.3d 1243, 1256 (lOth Cir. 1998).

7

Lippoldt v. Cole, 468 F.3d 1204, 1225 (lOth Cir. 2006) (citing Case, 157 F.3d at 1257).

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rates are reasonable under this standard. It should not come as a surprise that each side of an
attorney-fee dispute would submit affidavits from their own counsel; here, the affiant is a
representative of Boardwalk's law firm who relies upon a third-party survey of market rates. In
the Court's experience, this is precisely the sort of evidence fee applicants submit in support of
their requests, which are then typically rebutted by affidavits or other objective evidence
submitted by the non-moving party. State Auto should have been on notice that Boardwalk's
attorneys would submit affidavits in support of its attorney fee request and it is certainly on
notice that under the law, one way in which State Auto could defeat that fee request would be to
show through its own affidavits that the rate is not reasonable under the applicable standard.
Even if Rule 26(a)(l) imposed a duty on Boardwalk to disclose Bielawski earlier in this
litigation, the Court finds no prejudice to State Auto in its failure to do so. 8 Nonetheless, out of
an abundance of caution, the Court would entertain a motion from State Auto, filed no later than
November 14, 2014, for leave to submit rebuttal affidavit(s), or other exhibits, out of time on the
issue of the reasonableness of applicable rates in this case. The motion for leave shall attach the
proposed exhibit( s), as required by D. Kan. Rule 15 .I.

II.

Motion for Discovery
"The principle of D. Kan. Rule 54.2 is that motions for attorney's fees should not usually

require discovery, thus discovery is permitted only for good cause after a motion has been made
for fees, and after the consultation requirements have been satisfied." 9 In determining whether
good cause exists, the Court is mindful that fee disputes should not tum into a second lawsuit for

8

See Fed. R. Civ. P. 37(c)(1) (providing that a party cannot use information that should have been disclosed
under Rule 26 "unless the failure was substantially justified or is harmless.").
9

EEOC, 2014 WL 2589182, at *7.

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the Court to resolve. 10 Moreover, in showing good cause, the moving party must make "a
particular and specific demonstration of fact, as distinguished from stereotyped and conclusory
statements."" State Auto contends that good cause exists to order discovery on the following:
(1) the engagement letter between Boardwalk and Husch Blackwell; (2) invoices establishing
that the fees were actually paid by Boardwalk; (3) unredacted and broken down billing entries;
and (4) investigation into the "previously undisclosed expert opinions" of Bielawski.
A.

Engagement Letter and Invoices

State Auto argues that the engagement letter should be produced because "it is entirely
possible that Mr. Fleischer entered into a 'sweetheart deal' with Husch Blackwell, whereby his
case was taken at a substantially reduced rate in order to accommodate him and Boardwalk." 12
The Court finds this statement to be conclusory and utterly unsupported by the record in this
matter. Boardwalk has submitted Fleischer's affidavit, 13 where he attests that Boardwalk entered
into an agreement with Husch Blackwell in 2006 wherein Boardwalk agreed to pay Husch
Blackwell on an hourly basis. He further attests that Boardwalk has paid these fees in full.
Furthermore, Mike Thompson, an attorney at Husch Blackwell, has submitted an affidavit
describing the parties' agreement and stating that Boardwalk has paid all bills submitted.
Therefore, State Auto argues one of two things: (1) Fleischer and Thompson perjured themselves
in their affidavits when they attested that Boardwalk paid the fees reflected on the billing

10

See Hensley v. Eckerhart, 461 U.S. 424, 237 (1983).

11

See, e.g, GulfOil Co. v. Bernard, 452 U.S. 89, 102 n.16 (1981).

12

Doc. 398 at 4.

13

Doc. 387-4.

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records, or (2) Boardwalk's fees were discounted based on the parties' preexisting relationship.
The first proposition essentially alleges fraud with absolutely no evidentiary support and
therefore does not constitute good cause. State Auto's attempt to rehash credibility arguments
about Mr. Fleischer from unrelated issues during trial are unavailing and do not constitute
"specific demonstrations of fact" on the issue before the Court in this motion. The second
proposition benefits State Auto-if Boardwalk received a reduced rate from Husch Blackwell
based on Fleischer's employment with that law firm, then Boardwalk is in fact requesting a
much lower fee award than it might otherwise had it retained a different law firm. State Auto's
motion for discovery of the engagement letter is denied.
State Auto also argues that it should receive invoices that show that the fees sought were
actually paid by Boardwalk, again suggesting that the Fleischer and Thompson affidavits falsely
state that the fees were actually paid. State Auto's position is again conclusory and therefore
insufficient to show good cause. Moreover, Boardwalk represents that it provided its invoices to
State Auto during the consultation process and attached to its response memorandum an
example. This production renders State Auto's motion moot. The invoice includes a remittance
page that shows the amount of each invoice, the last payment received from Boardwalk, and
whether any prior invoice amounts were outstanding. 14 To the extent State Auto contends these
invoices raise more questions than they answer, it is free to make that argument in response to
the motion for attorneys' fees. But Boardwalk has submitted exhaustive evidence of its billing
records and invoices sufficient to enable State Auto to contest the reasonableness of the fees. To
the extent State Auto is unsatisfied with the information contained in these records, it may so

14

Doc. 403, Ex. 1.

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argue, however the Court denies its request to order further discovery on these invoices.

B.

U nredacted and Broken Down Billing Entries

State Auto next seeks unredacted and broken down time entries, complaining that the
time entries submitted as Exhibit A to the fee motion are overredacted for attorney client
privilege and work product information and improperly utilize block billing. The Court does not
find good cause to grant this request. The Court has reviewed the billing entries and does not
find that the redactions prevent State Auto from challenging the reasonableness of the hours
spent litigating this matter. Furthermore, to the extent State Auto objects to Boardwalk's block
billing, the Court can consider that issue in the context of State Auto's challenge to the
reasonableness of the hours spent. The motion for more detailed billing records is denied.
C.

Discovery Related to Bielawski

The Court has already denied State Auto's motion to strike Bielawski's affidavit for
failure to disclose him as a potential witness earlier in the case. The Court explained that
Bielawski is not an expert and that neither his testimony nor the third-party survey he relies on
needed to be previously disclosed under Rule 26. Nonetheless, the Court has granted State Auto
additional time to harness evidence that challenges the reasonableness of the rates submitted by
Boardwalk. For substantially the same reasons explained in the Court's ruling on the motion to
strike, the Court is unable to find good cause exists to allow further discovery into this affiant.

III.

Motion for Oral Argument
The Court is permitted to set any motion for oral argument at the request of a party, or on

its own initiative. 15 The parties have submitted an exhaustive evidentiary record along with their

15

D. Kan. Rule 7.2.

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briefs on Boardwalk's fee request. The Court does not find that further argument would
materially assist the Court in deciding this motion, and therefore denies State Auto's motion for
oral argument on the motion for attorneys' fees.
IT IS THEREFORE ORDERED BY THE COURT that Defendant's Motion to Strike

Affidavit of Kevin Bielawski ( Doc 395) Motion to Conduct Discovery Pursuant to D. Kan.
;,
54.2(f) (Doc. 397), and Motion for Oral Argument (Doc. 399) are denied. State Auto shall have
until November 14, 2014 to submit a motion for leave to file out of time any exhibit(s) in
support of its opposition to the Motion for Attorneys' Fees on the subject of the reasonableness
of counsel's rates. The motion shall comply with the requirements of D. Kan. Rule 15 .1.
Dated: October 24, 2014
S/ Julie A. Robinson
JULIE A. ROBINSON
UNITED STATES DISTRICT JUDGE

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