Kansas Penn Gaming, LLC v. HV Properties of Kansas LLC

Filing 184

MEMORANDUM AND ORDER denying 160 Motion for Discovery; granting in part and denying in part 144 Motion for Attorney Fees; The court shall award attorneys' fees to these parties in the amount of $765,058.50 and expenses in the amount of $207,652.27. Signed by District Judge Richard D. Rogers on 5/18/2011. SEE ORDER FOR FURTHER DETAILS. (meh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

KANSAS PENN GAMING, LLC,
Plaintiff,
vs.

Case No. 08-4111-RDR

HV PROPERTIES OF KANSAS, LLC,
Defendant.
HV PROPERTIES OF KANSAS, LLC,
Plaintiff,
vs.

Case No. 08-4115-RDR

PENN NATIONAL GAMING, INC.
Defendant.
MEMORANDUM AND ORDER
This matter is presently before the court upon the motion of
Kansas Penn Gaming, LLC (KPG) and Penn National Gaming, Inc. (Penn
National) for attorneys’ fees and expenses.

Having carefully

reviewed the motion, the court is now prepared to rule.
I.
Some background is necessary to understand the context of this
motion.

These consolidated actions arose from the decision of KPG

to terminate a property purchase agreement with HV Properties of
Kansas, LLC (HV) for the acquisition of certain parcels of land in
southeast Kansas for the development of a casino. On September 23,
2008, KPG filed a declaratory relief complaint against HV seeking

a judicial determination that it had no liability to HV under the
real estate sale contract. On October 6, 2008, HV filed its answer
and also raised a breach of contract counterclaim against KPG.

On

October 7, 2008, HV filed a complaint against Penn National
alleging breach of contract based on Penn National’s breach of a
guaranty provision in the real estate sale contract.

On October

31, 2008, all parties’ claims were consolidated.
On July 23, 2010, the court granted KPG’s motion for summary
judgment and denied HV’s motion for summary judgment. Also on July
23, 2010, the court entered judgment for KPG and Penn National and
against HV.

The court further ordered that KPG and Penn National

shall recover their costs.

On August 17, 2010, HV appealed the

court’s judgment to the Tenth Circuit Court of Appeals.
On August 6, 2010, KPG and Penn National filed the instant
motion.

Thereafter, the parties consulted and sought to resolve

the motion, but have failed to reach an agreement.

KPG and Penn

National seek to recover $1,505,683.89 in attorneys’ fees and
$208,091.44 in expenses.

KPG and Penn National further seek to

recover $53,332.00 in attorney’s fees and $6,204.68 in expenses
incurred in the filing of the pleadings and documents related to
the instant motion.
II.
A.
The instant motion raises two issues:

2

(1) whether KPG and

Penn National are entitled to recover attorneys’ fees and expenses;
and (2) whether their requests are reasonable.
The

court

begins

by

noting

that

this

court

retains

jurisdiction to decide attorney’s fees issues even though an appeal
is

pending.

See

Harris

Mkt.

Research

v.

Marshall

Mktg.

&

Communications, Inc., 948 F.2d 1518, 1526 n. 3 (10th Cir. 1991).
This is so because the Tenth Circuit has determined that such
matters are procedural and ministerial functions.

Id.

An award of attorney’s fees in this diversity action is
governed by Kansas law.

King Resources Co. v. Phoenix Resources

Co., 651 F.2d 1345, 1353 (10th Cir. 1981).

In Kansas, a prevailing

party may recover attorneys’ fees if specifically authorized by
statute or contract.

Harris Mkt. Research, 948 F.2d at 1527.

Here, KPG and Penn National assert that the real estate sale
contract between the parties authorizes an award of attorney’s fees
and expenses.
The real estate sale contract provided as follows:
In case a lawsuit shall be brought because of the breach
or alleged breach of any agreement or obligation
contained in this Contract on the part of either party to
be kept or performed, the substantially prevailing party
shall be entitled to recover its reasonable attorneys’
fees and expenses in connection with such lawsuit.
In considering all of the issues raised by the parties, the
court notes initially the award of the attorneys’ fees and expenses
here turns on the construction of the contract between the parties.
The primary and overriding purpose of contract law is to ascertain
3

and give effect to the intentions of the parties.

Carrothers

Constr. Co. v. City of South Hutchinson, 288 Kan. 743, 207 P.3d
231, 239 (2009).

“The law favors reasonable interpretations, and

results which vitiate the purpose of the terms of the agreement to
an absurdity should be avoided.”

Johnson County Bank v. Ross, 28

Kan.App.2d 8, 13 P.3d 351, 353 (2000).
B.
KPG and Penn National argue that they were the prevailing
parties in this litigation and that they are entitled to reasonable
attorneys’ fees and expenses.

HV contends that Penn National has

no contractual right to the recovery of attorneys’ fees because it
was not a party to the real estate sale contract.

HV further

contends that KPG is a shell company which paid none of the fees in
question and is not obligated to pay them and, therefore, has no
fees or expenses to be recovered.
The argument of HV is based on the relationship between KPG
and Penn National and these two cases.

As the court explained in

our prior order, KPG is a limited liability corporation formed for
the purpose of applying for, and developing and managing, a gaming
facility in Cherokee County, Kansas.
member of KPG.

Penn National is the sole

Penn National guaranteed the performance and

payment of KPG’s obligations under the real estate sale contract.
The guaranty prompted HV’s suit against Penn National in Case No.
08-4115.

KPG sued HV based on the real estate contract in Case No.

4

08-4111.

The court consolidated the actions because the issues

were the same, even though KPG and Penn National were technically
separate parties.
HV begins by calling the court’s attention to the language of
the contract.

HV points to the term “recover” and suggests that

KPG cannot “regain” or “win back” something that it never incurred
or lost.

In support of its contention, HV points to two cases:

SEC v. Comserv Corp., 908 F.2d 1407 (8th Cir. 1990) and United
States v. 122 Acres of Land, 856 F.2d 56 (8th Cir. 1990).
The court is not persuaded by HV’s argument or its legal
support. Neither the particular provision nor the contract defines
the term “recover.” Without more, the court must look to the plain
meaning of the words used.
alternative definitions:

Black’s Law Dictionary provides

“recover” may mean “[t]o get back or

regain in full or in equivalence” or “[t]o obtain by a judgment or
other legal process.” See Black's Law Dictionary 1389 (9th ed.
2009).

In the context of the contractual provision, the court is

confident that recover means “to obtain by judgment or other legal
process.” The court finds nothing in the contractual language that
indicates that attorney’s fees are not available to the prevailing
party if another party has paid those fees. The critical fact here
is that KPG has incurred the fees even if they were paid by another
entity.
Neither side has cited a Kansas state case on this issue. KPG

5

has noted the decision by Judge Murguia in Terra Venture, Inc. v.
JDN Real Estate-Overland Park, L.P., 242 F.R.D. 600 (D.Kan. 2007).
In Terra Venture, Judge Murguia determined that defendant JDN
Overland Park, who was the prevailing party in a breach of contract
diversity action, was entitled to attorney’s fees under Kansas law
based upon the provisions in the contract between the plaintiff and
JDN, even though the attorney’s fees were paid by another party.
Terra Venture, 242 F.R.D. at 603.

Judge Murguia compared the case

to insurance litigation where an insurance company hires attorneys
and defends a case for a party, but the party still incurs the
expenses and is entitled to attorney’s fees.

Id.

The court is certainly not persuaded by the cases relied upon
by HV.

In the two cases noted by HV, the prevailing parties sought

attorney’s fees based upon federal fee-shifting statutes.

In both

instances, the courts denied fees to the prevailing parties based
upon the particular circumstances of those cases and the statutes
involved.

The court does not find that these cases provide any

support for HV’s arguments here.
The court is an agreement with the arguments of KPG and the
decision of Judge Murguia in Terra Venture.

The court finds that

KPG is entitled to attorney’s fees under the real estate sale
contract as the prevailing party regardless of who actually paid

6

the fees.1

Cases in other jurisdictions have reached the same

conclusion as Judge Murguia in Terra Venture on this issue.
e.g.,

See,

Menasha Forest Products Corp. v. Curry County Title Inc.,

350 Or. 81, 91 (2011)(defendants are entitled to attorney’s fees as
prevailing parties under contract provisions even though fees were
paid by another party pursuant to agency agreement); Weichert Co.
of Maryland, Inc. v. Faust, 191 Md.App. 1, 989 A.2d 1227, 1232-33
(2010)(employee who prevailed in employment action against former
employer was entitled to attorney’s fees even though fees were paid
by her new employer); International Billing Services, Inc. v.
Emigh, 101 Cal.Rptr.2d 532, 84 Cal.App.4th 1175, 1192-95 (2000)
(employees who prevailed in a suit against their former employer
were

entitled

confidentiality

to

attorney’s

agreement

fees

upon

though

even

based
their

new

a

written

employer

had

actually paid the fees).
In sum, the court finds that KPG is entitled to attorneys’
fees in this case as the prevailing party.

The issue of who

actually paid the fees is irrelevant.2

1

For the remainder of this opinion, the court shall refer only
to KPG unless required by the arguments of the parties or the
facts.
2

In connection with the instant motion, HV filed a motion for
limited discovery on KPG’s request for attorneys’ fees. HV sought
to obtain certain information concerning what entity paid the fees
sought to be recovered. Based upon the foregoing discussion, the
court shall deny this motion. The court has determined that the
issue of who paid these fees is immaterial to this matter.
7

III.
A.
The court shall now turn to the reasonableness of KPG’s
attorneys’

fees

request.

KPG

was

represented

in

this

case

primarily by William D. Beil from Rouse Hendricks German May PC
(Rouse Hendricks) in Kansas City, and Christopher Tayback from
Quinn, Emanuel, Urquhart & Sullivan, LLP (Quinn Emanuel), in Los
Angeles, California.

HV was represented primarily by C. Brooks

Wood from the Kansas City office of Stinson Morrison Hecker LLP,
and William M. Modrcin from Johnson, Ballweg & Tuley, LC, in
Overland Park.
The

law

firm

of

Quinn

Emmanuel

has

submitted

billing

statements for the period between October 2008 and August 2010.
These billing statements reflect a total of 3,392 hours of billable
time in connection with this litigation and which KPG seeks to
recover for the fees it paid. Rouse Hendricks has produced billing
statements for the period from September 2008 to July 2010.

These

billing statements reflect a total of 981.9 hours of billable time.
For sake of comparison, the law firm of Stinson Morrison Hecker
LLP, who represented HV, expended 2,012.85 hours in litigating this
action through July 2010.
The parties have asserted differing interpretations of how the
court

should

review

attorneys’ fees.

the

reasonableness

of

KPG’s

request

for

KPG, relying on Westar v. Lake, 552 F.3d 1215

8

(10th Cir. 2009), contends that the court should only consider
whether its request is unreasonable or inequitable.

Thus, KPG

suggests that the burden lies with HV to demonstrate that KPG’s
request for fees is unreasonable.

In doing so, KPG contends that

the court should not closely scrutinize its request, but should only
determine if it is unreasonable or inequitable.

HV, on the other

hand, suggests that KPG has misread or misinterpreted Lake.

HV

relies upon Westar v. Wittig, 44 Kan.App.2d 182, 235 P.3d 515
(2010) for support.

HV argues that the burden of showing that the

fees requested are reasonable rests with KPG and requires an
examination of the factors set forth in Kansas Rules of Professional
Conduct (KRPC) 1.5(a).
The two cases noted by the parties are related.

Both involved

the issue of the payment of attorneys’ fees for the criminal defense
of former officers of Westar who were charged with crimes arising
from

their

duties

with

Westar.

In

Lake,

the

Tenth

Circuit

considered whether the amount of fees sought by Lake for past and
future legal representation were reasonable.

The Tenth Circuit

found that the Kansas Supreme Court had not determined who bears the
burden of proof when a contract provides for the advancement of
attorneys’ fees and the payor disputes their reasonableness.

The

Tenth Circuit determined that it believed the Kansas Supreme Court
would not apply the rule set forth in United States ex rel. C.J.C.,
Inc. v. Western States Mech. Contractors, Inc., 834 F.2d 1533 (10th

9

Cir. 1987).

There, the Tenth Circuit had decided that, when

determining contractual attorneys’ fees based upon a Miller Act
claim,

the

requested

fees

inequitable or unreasonable.

are

to

be

upheld

if

they

are

not

Western States, 834 F.2d at 1549-50.

The contractual agreement at issue between the parties provided that
the breaching party would “pay all attorney’s fees.”

Id. at 1547.

The Tenth Circuit reached the aforementioned conclusion without
deciding whether the federal law or the state law of New Mexico
applied, but determined that the result would be the same under
either one.

Id. at 1549 n. 17.

But in Lake, the Tenth Circuit

concluded that the Kansas Supreme Court would place the burden on
the party seeking the fees to justify the reasonableness of the fees
by reference to KRPC 1.5(a).

Lake, 552 F.3d at 1229.

Thus, the

court rejected the application of the Western States standard
because the contractual provision for attorney’s fees in its case
allowed fees that were “reasonably incurred.”
stated:

Id.

The Court

“Since the [particular contract] only provide[s] for the

advancement of attorney’s fees reasonably incurred, the cases
interpreting
reasonableness
inapplicable.”

contractual
limitation,

fee-shifting
including

provisions
Western

with

States,

no
are

Id.

Subsequently, in Wittig, the Kansas Court of Appeals approved
the analysis applied by the Tenth Circuit in Lake. Wittig, 235 P.2d
at 532.

The Supreme Court determined that in Kansas the burden to

10

prove the reasonableness of the fees requested is upon the party
making the request, and the determination of the reasonableness of
the fees arising from an agreement to pay them should be based upon
the factors listed in KRPC 1.5(a).

Id.

Nevertheless, the Court

found merit in the several statements contained in Western States
including the notion that a court “should not ‘simply award the full
amount billed.’”

Id. (quoting Western States, 834 F.2d at 1548).

This court’s analysis of those two cases reveals that the
argument put forth by KPG is incorrect.

Since the instant contract

provides for the prevailing party to recover its “reasonable”
attorney’s fees, then the court must apply the rulings set forth in
Lake and Wittig.

Nonetheless, the overall impact on this court’s

decision is negligible.

In Western States, the Tenth Circuit

recognized that the distinction in the standard it applied there was
“subtle but important.”

Western States, 834 F.2d at 1549.

In

Wittig, the Kansas Supreme Court recognized that even Western States
allowed the court some discretion in determining the reasonableness
of the requested fee.

Wittig, 235 P.3d at 532.

As reflected in

both Lake and Wittig, the burden is on the party requesting the fees
to show their reasonableness.
P.2d at 532.

Lake, 552 F.3d at 1229; Wittig, 235

Reasonableness is determined by applying the factors

set forth in KRPC 1.5(a):

(1) the time and labor required, the

novelty and difficulty of the questions involved, and the skill
requisite

to

perform

the

legal

11

services

properly;

(2)

the

likelihood, if apparent to the client, that the acceptance of the
particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal
services; (4) the amount involved and the results obtained; (5) the
time limitations imposed by the client or the circumstances; (6) the
nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers
performing the services, and (8) whether the fee is fixed or
contingent.

See Johnson v. Westhoff Sand Co., 281 Kan. 930, 135

P.3d 1127, 1135-36 (2006). A trial judge, based upon experience and
knowledge of the legal profession, is deemed an expert on attorney’s
fees and may draw on that expertise in rendering an award in a
particular case.

Thoroughbred Associates, LLC v. Kansas City Royal

Co., LLC, ____ Kan.App.2d ____, 248 P.3d 758, 774 (2011).

The

determination of the reasonable value of attorney’s fees lies within
the sound discretion of the trial court.

See City of Wichita v. BG

Products, Inc., 252 Kan. 367, 845 P.2d 649, 653 (1993).
The key issues here are factors 1 (the time and labor required,
the novelty and difficulty of the questions involved, and the skill
requisite to perform the legal services properly) and 3 (the fee
customarily charged in the locality for similar legal services) of
KRPC 1.5(a).

The parties have concluded that factors 2, 5, 6 and

8 are essentially irrelevant here, and the court agrees.

HV has

further acknowledged that there is no need to discuss factor 4 (the

12

amount involved and the results obtained) because “the amount
involved

in

this

case

was

certainly

significant

and

[KPG’s]

attorneys obtained an excellent result for their client” or factor
7 (the experience, reputation, and ability of the lawyer or lawyers
performing the services) because “all of the attorneys representing
[KPG], both from Quinn Emanuel and [Rouse Hendricks], are excellent
attorneys with excellent experience.”
B.
The court shall initially turn to the issue of the novelty and
difficulty of the questions presented.
as “complex” and “hotly contested.”

KPG has described this case
In its motion for fees, KPG

points out the following:
To prevail, [KPG] was not only required to litigate the
meaning of the Sale Contract, including the interplay
between several distinct contractual provisions, but also
the meaning of the Kansas Expanded Lottery Act, around
which the Sale Contract was structured, and the proposed
management contract that [KPG] and the Kansas Lottery
signed in May 2008. [KPG] was also required to develop
factual support for its positions that it used “good
faith commercially reasonable efforts” yet did not obtain
a final management contract from the State that was
“reasonably acceptable” to it. Those issues put in play
in [KPG’s] extensive efforts over years of time to
develop a viable lottery gaming facility in Cherokee
County, as well as [KPG’s] internal-decision making
process and investment standards and the economic
viability of gaming in Kansas.
Given the breadth and
complexity of the issues involved and the amount at stake
in the case, [KPG’s] expenditure of time and labor was
reasonable.
KPG has further argued that much of the time and labor expended
by its attorneys was dictated by HV’s “legal maneuvering.”

13

KPG

points out that HV sought extensive discovery and insisted that the
parties prepare privilege logs.
discovery to HV.

KPG produced over 40,000 pages of

Nevertheless, KPG notes that HV filed two motions

to compel documents as well as a motion to reopen discovery so that
it could request even more documents.

KPG states it successfully

opposed all of these motions.
HV has a different take on the nature of this case and the fee
request made by KPG.

HV contends it is unreasonable to seek fees

of $1.5 million “for a case decided on summary judgment and which
did not involve an extraordinary amount of discovery.”

HV further

notes that the issue presented here “was not novel and at least from
a conceptual standpoint was not difficult.”
Recently, KPG suggested that HV’s position on appeal further
supported its position on the complexity and difficulty of this
case.

KPG points out that HV, in a Motion to Exceed Word Count

filed in the Tenth Circuit, stated that “[t]he facts relevant to the
appeal are considerably more involved than the usual case.”
This case was a rather typical breach of contract case.

That

initial statement, however, does not indicate the intensity of the
legal wrangling in this case.

Given the amount at stake ($37.5

million), the parties tenaciously and forcefully litigated every
issue involved.

The issues were not necessarily novel, but they

were difficult.

The case was decided on summary judgment, but the

preparation for that decision was substantial.

14

During the period

from February to October 2009, the parties engaged in extensive
document and deposition discovery.

KPG produced more than 40,000

pages of documents in response to HV’s requests, and HV produced
more than 24,000 pages in response to KPG’s requests.

The parties

took 21 depositions, 10 of which were noticed by KPG and 11 by HV.
Eight of those depositions took place in Kansas City, six in
Wyomissing, Pennsylvania (the home office of Penn National), two in
Topeka, two in Reno, Nevada, one in Boston, Massachusetts, one in
Portland, Maine, and one in Los Angeles.
motions between August and October 2009.
December

11,

2009,

HV

filed

a

motion

HV filed four discovery
All were denied.
to

reopen

On

discovery.

Magistrate Judge Sebelius denied that motion on December 28, 2009.
KPG did not file any discovery motions.

The briefing in support of

the parties’ combined motions for summary judgment spanned 257
pages, included 284 allegedly undisputed facts, and was supported
by 147 exhibits.

In sum, the court is persuaded that the actions

of HV made this case more complex and difficult than necessary.
C.
Now we turn to the reasonableness of the time and labor
expended by KPG in the litigation of this case.

The court must

begin by determining the amount of hours reasonably expended on the
litigation.

The burden is on the applicant to prove that the hours

billed are reasonable “by submitting meticulous, contemporaneous
time records that reveal, for each lawyer for whom fees are sought,

15

all hours for which compensation is requested and how those hours
were allotted to specific tasks.”

Case v. Unified Sch. Dist. No.

233, 157 F.3d 1243, 1250 (10th Cir. 1998).

An attorney may not bill

to opposing counsel fees it would not be able to bill to the client.
Id. In determining whether hours expended are reasonable, the court
considers factors such as complexity of the case, the number of
reasonable strategies pursued, the responses necessitated by the
maneuvering of the other side, and the potential duplication of
services.

Id.

The court must also analyze whether the applicant

has exercised “billing judgment,” and it may reduce the number of
hours used devoted to specific tasks if the number of hours claimed
by counsel includes hours that were “unnecessary, irrelevant, and
duplicative.” Id.

When performing such an adjustment, the court

need not identify and justify each disallowed hour, but need only
articulate reasons for a general reduction of hours needed to arrive
at a reasonable number of hours. Id.
HV

raises

a

attorneys’ fees.

variety

of

complaints

about

KPG’s

claimed

HV asserts the following problems with KPG’s

submitted requests:

(1) “block billing” prevents an examination of

the appropriate amount of time spent for a specific task; (2)
failure to exercise “billing judgment” to eliminate excessive hours
and

duplicative

work;

(3)

inadequate

description

of

the

work

performed; (4) use of associates to perform paralegal or clerical
work; and (5) travel time to and from Los Angeles should not be

16

allowed because it was unnecessary for KPG to have counsel outside
the immediate area.
demonstrate

that

excessive work.

the

HV also argues that the billing statements
KPG

attorneys

engaged

in

duplicative

or

As examples, HV points to (1) the early meetings

between KPG attorneys and their client representatives where several
attorneys attended; (2) deposition preparation and attendance where
multiple attorneys were involved on numerous occasions; (3) document
review and production and preparation of privilege logs where many
attorneys and other timekeepers were involved; (4) the preparation
of dispositive motions which required substantial amounts of time
from several attorneys; (5) expert witness preparation where several
attorneys engaged in many hours of work; and (6) the use of
associates to perform paralegal or clerical work.

Based upon all

of these alleged problems and deficiencies, HV suggests that the
court should reduce the hours for which recovery is sought by onehalf.
The court has undertaken a thorough examination of the records
provided by KPG in support of its fee request.

The court has also

thoroughly considered the arguments raised by HV.
that

the

billing

statements

submitted

are

The court finds
specific

and

comprehensive.

The court is not persuaded that the billing records

are inadequate.

The court further finds that the records show that

KPG exercised some “billing judgment” in assessing its fees here.
The various deficiencies noted by HV appear insignificant.

17

The court, however, finds some merit to HV’s contention that
KPG “overlawyered” in this case.

HV notes a number of instances

where several attorneys and support staff were involved in the
review and production of certain documents.

HV has suggested that

the

duplication

billing

matters.

statements

reflect

We must agree.

excessive

on

some

After careful review of the billing

records, the court is left with the distinct impression that parts
of this case were overlawyered.

As a result, the court will

exercise its discretion and reduce the number of hours claimed by
twenty-five (25) percent.
D.
The court must next determine a reasonable hourly rate.

The

court must base this on what lawyers of comparable skill and
experience, practicing in a similar area of specialty, would charge
for their time.

Case, 157 F.3d at 1255.

The party requesting the

fees bears the burden of showing that the requested rates are in
line with those prevailing in the community.

United Phosphorus,

Ltd. v. Midland Fumigant, Inc., 205 F.3d 1219, 1234 (10th Cir.
2000).

As a general rule, the court applies the fee rates of the

local community even when the attorneys are seeking fees from
another area.

Ramos v. Lamm, 713 F.2d 546, 555 (10th Cir. 1983).

The court must first determine whether evidence of the prevailing
market rates is inadequate before it may use its own knowledge to
establish the appropriate rate.

United Phosphorus, 205 F.3d at

18

1234.
The affidavits before the court reflect that the Quinn Emanuel
attorneys of Los Angeles gave KPG a substantial discount of 25 to
35 percent on the rates they customarily charge to their clients for
similar representation.

The average hourly rates charged to KPG by

the two Quinn Emanuel attorneys who did the majority of the work on
the case were $618.05 for partner Christopher Tayback and $299.73
for senior associate Posner.

The affidavits further indicate that

the “blended” average hourly rate charged by all professionals from
the Quinn Emanuel firm was approximately $370.

The affidavits also

indicate that the Rouse Hendricks firm in Kansas City charged KPG
the hourly rates they typically charge to their clients for similar
representation.

Those rates ranged from $180 to $430, with the

majority of the work being done by partner William Biel at $400 per
hour and associates Dan Hodes and Jeremy Suhr at $240 and $180 per
hour, respectively.

The “blended” average hourly rate for the

professionals from Rouse Hendricks was $254.80. C. Brooks Wood, who
did most of the work for HV, normally charges $385 per hour, but he
gave HV a 15% discount, leaving an effective billing rate of
$327.25.

Senior associates who worked on the case billed at rates

of $255, $235 and $210 per hour.
The court begins by considering the relevant community in order
to determine the prevailing market rate. KPG has suggested that the
court

should

simply

find

the

rates

19

charged

by

their

counsel

reasonable in light of the following circumstances:

(1) Quinn

Emanuel provided KPG a substantial discount; (2) the complex nature
of the case and the national scope of the parties and the issues;
(3) the case was litigated primarily outside of Topeka; and (4) HV
hired two Kansas City law firms to represent it.

KPG has submitted

an affidavit from William R. Sampson, a partner in Shook, Hardy &
Bacon, LLP, who have offices in Kansas City.

Mr. Sampson has

provided the following guidance on the appropriate rates for the KPG
attorneys:
The rates regularly charged by lawyers in Kansas
City with the skill and experience of Mr. Tayback range
from $550 to over $700 per hour.
The rates regularly
charged in Kansas City by lawyers with the skill and
experience of Mr. Beil range from $400 to $500 per hour.
The rates regularly charged in Kansas City for senior
associates with the experience level of Messrs. Hodes and
Posner range from $240 to $350 per hour.
The rates
regularly charged in Kansas for junior associates with
the experience level of Mr. Suhr range from $180 to $275
per hour. The rates regularly charged for paralegal work
by firms in Kansas City handling complex commercial cases
range from $125 to $175.
Mr. Sampson has opined that the rates charged by the attorneys
involved in this case were “reasonable and comparable to those
charged by others in the Kansas City area with similar expertise and
experience.”
HV suggests initially that the relevant community in this case
should be Topeka.

HV contends that the “blended rate” of $370

sought by KPG for the Quinn Emanuel attorneys is “higher than that
allowed for any attorney in any case in the District of Kansas

20

which counsel for HV Properties has seen, but here it is an
effective rate for all timekeepers, including law clerks, litigation
support personnel, paralegals and documents clerks.”
original).

HV

notes

that

a

recent

Kansas

Bar

(emphasis in
Association

publication indicates that in 2005, the median hourly rate in Topeka
was $150 per hour with the 75th percentile being $175 per hour and
the 95th percentile being $231 per hour.

The corresponding figures

for Kansas City, Kansas were $175, $200 and $329 while the figures
for Kansas City, Missouri were $190, $225, and $307.

HV points to

prior hourly rates approved by this court in Topeka of $121 to $200
and rates approved in Kansas City of $180 to $315.

HV asserts that

Mr. Sampson has failed to provide any specific basis for his
opinions.
The court finds that the relevant community here is Topeka.
The court is not persuaded that this case involved an area of law
so intricate and complex that local counsel could not have handled
it competently.

This case was simply a breach of contract action.

The collateral issues involving the gaming industry provided some
complexity, but not so much that local counsel could not have ably
litigated them. Courts in Kansas have granted fees in excess of the
local rates where the cases involved “specialized skills in a narrow
area of law, such as admiralty law, patent law, or antitrust and
other complex litigation.”

Reazin v. Blue Cross & Blue Shield of

Kan., Inc., 663 F.Supp. 1360, 1454 (D.Kan. 1987).

21

The court is not

convinced that the legal or factual issues in this case required the
services of attorneys outside this forum, even though both sides
chose to hire Kansas City counsel.
The parties have not provided the court with much information
on the rates of comparable counsel in Topeka.

HV has provided some

figures from a 2005 KBA study of median hourly billing rates.

The

court does not intend to place much reliance upon this study,
primarily due to its age.

The court has also considered the rates

that other judges have imposed in the District of Kansas. While the
evidence of specific rates in Topeka is limited, the rates provided
in Kansas City and Wichita do provide some guidance.

The court is

well aware that over the years Topeka has consistently lagged behind
Kansas City and Wichita in hourly rates.

The court has found only

two cases from Topeka in recent years that have awarded attorney’s
fees. See Brockmann v. Board of County Com’rs of County of Shawnee,
2009 WL 1095453 at * 3 (D.Kan. 2009)(Judge Melgren found that an
hourly rate of

$190 for an experienced lawyer in Topeka was

appropriate

insurance

in

action

where

fees

were

awarded

for

discovery violations); Meyer v. Nava, 2008 WL 58819 at * 2 (D.Kan.
2008)(this court approved an hourly rate of $200 for the Topeka
community in a civil rights action involving experienced counsel).
Recent awards for Kansas City and Wichita are substantially higher.
See Hayne v. Green Ford Sales, Inc., 2010 WL 2653410 at * 6 (D.Kan.
2010)(Judge Lungstrum applied the following hourly rates to the

22

Kansas City market in an action alleging fraud, breach of implied
warranty of merchantability and violation of the Kansas Consumer
Protection Act:

$300 for a trial lawyer with 34 years experience;

$180

experienced

for

less

associate

attorneys;

and

$95

for

paralegals); Ice Corp. v. Hamilton Sundstrand Corp., 2010 WL 4683981
at *4-5 (D.Kan. 2010)(Judge Robinson used the following hourly rates
for the Kansas City market in a case involving misappropriation of
trade secrets: $300 for equity shareholder and named principal with
28 years of experience; $250 for equity shareholder with 16 years
of experience; $185 for associate with 7 years of experience; and
$85 and $80 for legal assistants); University of Kansas v. Sinks,
2009 WL 3191707 at * 12-13 (D.Kan. 2009)(Judge Robinson found the
following

rates

for

the

Kansas

City

market

in

a

trademark

infringement action:

$315 to $300 for partners with considerable

experience;

$210

$150

to

for

associates

depending

upon

each

attorney’s experience; and $75 for legal assistants); Bell v. Turner
Recreation

Com’n,

2010

WL

126189

at

*

7

(D.Kan.

2010)(Judge

Lungstrum approved an hourly rate of $250 in Kansas City in an
employment discrimination action for an attorney who had 30 years
of

experience);

The

Paradigm

Alliance,

Inc.

v.

Celeritas

Technologies, LLC, 2011 WL 251452 at * 5 (D.Kan. 2011)(Judge Melgren
applied the following rates to the Wichita market in a breach of
contract action that was described as “complex and contentious”:
$300 for a senior partner (which was increased by 30% pursuant to

23

the factors of KPPC 1.5(a)); $200 for a junior partner; $175 for a
senior associate (which was increased by 25% pursuant to KRPC
1.5(a)); and $95 for a legal assistant).
Having carefully considered the evidence before the court and
the

court’s

own

familiarity

with

the

relevant

rates

in

this

community, this court shall allow the following hourly rates:

$325

per hour for the partners; $200 for the associates; $125 for the law
clerks; and $100 for the paralegals and other support staff.

The

court believes that these figures represent the top end of the
hourly rates in Topeka.

The court has chosen the top of the rates

due to the experience of the counsel in this case for KPG and the
quality of their representation.

The court fails to find that KPG

has presented the total number of hours for each attorney in this
case. In such a case, the court shall simply apply a “blended rate”
to the total hours noted by the attorneys for KPG.

With the

application of the aforementioned figures, the court believes that
a “blended rate” of $225 is appropriate here.

The court shall

multiply 3,280.42 hours by $225 per hour for a total of $738,094.50.
IV.
KPG also seeks to recover the attorney’s fees of $53,332.00
incurred primarily for the preparation of the instant motion.

KPG,

relying on a Tenth Circuit case, contends that it is entitled to
recover these fees.

HV argues that KPG is not entitled to recover

these fees because no mention is made of them in the real estate

24

sale contract.
Neither party has cited to a Kansas case where this issue is
discussed or decided.

In the absence of any limitation contained

in the contractual language allowing attorney’s fees, the court
believes that Kansas would follow the general rule that such an
award of attorney’s fees includes compensation for work performed
in preparing and presenting the fee application.

See, e.g., Case,

157 F.3d at 1254(“An award of reasonable attorney’s fees may include
compensation for work performed in preparing and presenting the fee
application.”) (citation omitted); Johnson, 135 P.3d at 1143(under
Kansas statute, attorney fees incurred litigating the amount of
attorney fees to be awarded are recoverable).

The contract here

provided that the prevailing party was entitled to attorney’s fees.
The court finds this language broad enough to include attorney’s
fees incurred by the prevailing party to establish its fee claim.
When attorney’s fees are authorized by contract, the reasonable
expenses of preparing an application for fees should be included in
the award.
HV makes similar arguments concerning the reasonableness of
KPG’s request for “fees on fees.”

HV suggests that the billing

statements again show duplication of research and writing.

HV

further argues again the hourly rates charged are not reasonable for
either the Kansas City or Topeka communities.
The court has again carefully reviewed the billing statements

25

in support of this request.

The court does not find as much

duplication of effort here as in the billing statements that were
submitted in support of the original request for attorneys’ fees.
Thus, the court shall only reduce this request by twenty (20)
percent.

The court shall again apply the “blended rate” of $225 to

remain consistent. This results in an attorney fee award of $26,964
(119.84 hrs. x $225).
V.
Finally, KPG contends it is entitled to recover its reasonable
expenses incurred in connection with this case.

KPG seeks to

recover $208,091.44 in expenses. Those expenses include charges for
court reporters and videographers at depositions, payments to expert
witnesses, legal research, travel, filing fees and photocopying.
KPG also seeks expenses in the amount of $6,204.68 that were
incurred in filing the instant motion.
HV contends that travel costs including hotel and meal expenses
and on-line research charges should be disallowed as unreasonable
and unnecessary.

HV further argues that the cost of the mediator

should be denied because the parties agreed to split the cost of the
fee paid to the mediator.

HV also objects to the fees paid to

expert witnesses Wilson, Eadington, Christianson Capital Advisors
and Wells Gaming Research.

HV suggests that these should be

disallowed because they are “fees,” not expenses. HV further argues
that these fees should be denied because those witnesses were “paid

26

to prepare for and consult with Penn’s attorneys prior to their
depositions.”

HV further objects to the expert witness fee of

Wilson because it was assessed at a rate of $890 per hour, which it
contends is unreasonable. HV notes that the magistrate has rejected
this argument, but contends that this court is not bound by the
magistrate’s ruling. Finally, HV contends that the amount of $2,250
paid to Schulze Haynes Loevenguth & Co. should be disallowed because
KPG has not explained what this item is, how it relates to the case,
or why it is reasonable or necessary.

HV has also suggested that

the expenses incurred for the preparation of the instant motion are
excessive. HV asserts in particular that the travel expenses should
not be allowed and again argues that the on-line research charges
should be denied.
Generally, the court finds no merit to most of the arguments
raised by HV in response to KPG’s request for expenses.

The court

notes that HV has failed to provide any legal support for its
contentions that most of these requested expenses should not be
allowed.

The court further notes that the contract signed by the

parties clearly provided for reasonable expenses.

Most of these

expenses have been allowed in other cases, and this court sees no
need to deny them here.

See The Paradigm Alliance, 2011 WL 251452

at * 6(expenses awarded for computer research, deposition expenses,
expert expenses, and hotel fees); Wirtz v. Kansas Farm Bureau
Services,

Inc.,

355

F.Supp.2d

at

27

1190,

1207-09

(D.Kan.

2005)

(awarding expenses for deposition-related costs and noting that
travel expenses may be awarded to the prevailing party); Reazin, 663
F.Supp. at 1457(awarding expenses related to photocopying, telephone
charges, computerized legal research, and travel expenses).
The court shall deny KPG’s request for the monies paid to a
mediator. KPG has not denied that it agreed to split this cost with
HV.

Given this agreement, the court shall not allow KPG to now

recover

this

cost

as

an

expense.

In

addition,

the

court

specifically finds no merit to HV’s contention that the payment made
to expert witness Wilson was unreasonable.
before the magistrate and he rejected it.
appeal that ruling to this court.

HV raised this issue

Thereafter, HV failed to

Failure to appeal a magistrate

judge’s order on a nondispositive matter to the district court
waives the claim that the magistrate erred.

Fed.R.Civ.P. 72(a);

Nicks v. Brewer, 2010 WL 4873647 at *1 (D.Kan. 2010).

Even if the

court were to consider this argument, we would reject it because we
believe that the magistrate correctly determined that the rate
sought by the expert witness was reasonable.
Finally, the court shall generally allow the travel expenses
sought by KPG. Considerable travel occurred in this case due to the
fact that parties and witnesses were located all over the country.
Depositions

were

taken

in

a

variety

of

places.

HV

has

not

specifically pointed the court to examples where the travel was
unnecessary or unreasonable.

Even if KPG had hired local counsel,

28

those attorneys would have been required to travel extensively. The
court shall not, however, allow the travel expenses that were
claimed for the preparation of the instant motion.

KPG has failed

to set forth any reason for this travel, and the court cannot
discern any valid basis for it.

Accordingly, the court will

subtract $1,643.85 from the amount sought by KPG.
The court shall award expenses to KPG in the amount of
$207,652.27.
VI.
In sum, the court shall award attorneys’ fees to KPG in the
amount of $765,058.50 and expenses in the amount of $207,652.27.
The court finds that these amounts are reasonable.

To the extent

that Kansas law allows for any adjustment of the award of attorneys’
fees, the court shall decline to adjust the amount upward or
downward.
IT IS THEREFORE ORDERED that the motion of HV Properties of
Kansas LLC for limited discovery relating to Penn parties’ request
for attorneys’ fees (Doc. # 160) be hereby denied.
IT IS THEREFORE ORDERED that the motion of Penn National
Gaming, Inc. and Kansas Penn Gaming, LLC for attorneys’ fees and
expenses (Doc. # 144) be hereby granted in part and denied in part.
The court shall award attorneys’ fees to these parties in the amount
of $765,058.50 and expenses in the amount of $207,652.27.
IT IS SO ORDERED.
29

Dated this 18th day of May, 2011 at Topeka, Kansas.
s/Richard D. Rogers
United States District Judge

30