Parkcrest Builders, LLC v. Housing Authority of New Orleans

Filing 680

ORDER AND REASONS granting in part 668 Motion for Attorney Fees. Liberty is awarded $526,192.25 in attorney's fees. Signed by Judge Carl Barbier on 12/2/20. (Reference: 15-1533)(cg)

Case 2:15-cv-01533-CJB-KWR Document 680 Filed 12/02/20 Page 1 of 10

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
PARKCREST BUILDERS, LLC

CIVIL ACTION

VERSUS

15-1533
c/w 16-15849
SECTION: “J” (4)

HOUSING AUTHORITY OF
NEW ORLEANS

Applies to 15-1533
ORDER & REASONS
Before the Court are a Motion for Attorney’s Fees and Costs (Rec. Doc. 668)
filed by Plaintiff-in-Intervention Liberty Mutual Insurance Company (“Liberty”), an
opposition thereto (Rec. Doc. 672) filed by Defendant Housing Authority of New
Orleans (“HANO”), and a reply (Rec. Doc. 675) by Liberty. Having considered the
motion and memoranda, the record, and the applicable law, the Court finds that the
motion should be GRANTED in part, as stated herein.
FACTS AND PROCEDURAL BACKGROUND
This litigation concerns a construction contract dispute between Parkcrest
Builders, LLC (“Parkcrest”) and HANO regarding the Florida Avenue: New
Affordable Housing Units project (the “Project”). Liberty was Parkcrest’s surety and
was called upon to perform after HANO terminated Parkcrest prior to completion.
Liberty entered into a Takeover Agreement with HANO to complete the Project and
retained Parkcrest as its completion contractor. The Project continued to suffer delays
and HANO eventually terminated Liberty and hired another firm to complete it.

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Parkcrest filed this suit shortly after it was terminated by HANO alleging that
HANO breached the Prime Contract by terminating Parkcrest for convenience.
HANO filed a counterclaim asserting that the delays were solely attributable to
Parkcrest. Liberty intervened shortly after it was terminated alleging breach of the
Takeover Agreement, bad faith breach of contract, and wrongful termination against
HANO. HANO asserted counterclaims against Liberty alleging bad faith breach of
the Takeover Agreement and fraudulent misrepresentation.
The Court held a seven-day bench trial on this matter from February 20, 2018,
to March 1, 2018. The Court found that the Project was substantially complete by
December 31, 2015, and therefore HANO breached the Takeover Agreement by
terminating Liberty on June 30, 2016, after substantial completion had been
achieved.1 The Court further found that “HANO [wa]s liable to Liberty for Liberty’s
reasonable attorney’s fees, costs and interest due to HANO’s breach of the Takeover
Agreement.”2 Before Liberty filed its original motion for attorney’s fees, HANO filed
its notice of appeal; therefore, the Court denied the motion without prejudice pending
resolution of the appeal. The Fifth Circuit largely affirmed the Court’s judgment but
held that it lacked jurisdiction over HANO’s appeal of the unquantified award of
attorney’s fees and dismissed that portion of the appeal. Parkcrest Builders, LLC v.
Liberty Mut. Ins. Co., 796 F. App’x 852, 852-53 (5th Cir. 2020) (per curiam). Liberty’s
renewed motion for attorney’s fees is now ripe for decision.

1
2

(Findings of Fact & Conclusions of Law, Rec. Doc. 537, at 61-62).
Id. at 66.
2

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PARTIES ARGUMENTS
Liberty seeks $526,192.253 in attorney’s fees and $101,231.82 in costs for its
two testifying expert witnesses. Liberty contends that its requested amount of
attorney’s fees is reasonable because it only accounts for hours worked following its
termination by HANO in accordance with Clause 34(b)(4) of the Prime Contract, as
incorporated by the Takeover Agreement, and the rates charged by its attorneys
ranged from $185 to $250 per hour, well within prevailing market rates in New
Orleans. Additionally, Liberty has excluded fees incurred by two attorneys that
assisted with tasks performed by one of its three primary attorneys. Liberty thus
asserts that it has excluded $643,757.25 in fees from its request. Liberty further
argues that its request for expert witness costs is appropriate because they constitute
“legal services” that were “reasonably necessary to prepare and present the
termination claim to” HANO.4
HANO contends that Liberty is not entitled to any attorney’s fees or expert
witness costs because the terms of the Prime Contract do not allow for either.
Specifically, HANO argues that Clause 34 does not allow for attorney’s fees incurred
in litigation but only for those incurred in preparing and presenting a termination
claim to it. HANO asserts that this litigation cannot constitute Liberty’s presentation
of its termination claim because it failed to follow the disputes procedure outlined in

While Liberty’s motion initially sought $540,443.75 in attorney’s fees, it acknowledged that
$14,251.50 of that amount was subject to a separate fee motion pending before Magistrate Judge Roby
(Rec. Doc. 489). Because that motion was resolved in Liberty’s favor (Rec. Doc. 669), it acknowledges
that it is appropriate to reduce the fees sought herein accordingly.
4 (Rec.Doc. 668-1, at 28) (quoting Rec. Doc. 500-4, at 36).
3

3

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Clause 31. Under that clause, HANO contends that Liberty could only file suit after
submitting its claim to the Contracting Officer for a determination. Because Liberty
never submitted a termination claim to HANO but instead went almost immediately
to this Court for relief, HANO asserts that Liberty cannot recover its attorney’s fees.
HANO further contends that Liberty is not entitled to recover its expert witness costs
under Clause 34 because that provision only provides for “costs of legal and
accounting services” and the two experts are neither accountants nor lawyers but
instead are an architect and a certified cost professional. Nevertheless, HANO offers
that the Court could exercise its discretion to award the estimated cost of legal
services Liberty would have incurred had it presented a claim in accordance with the
procedures outlined by the Contract.
In the alternative, should the Court find that attorney’s fees incurred in
litigation are awardable under the Contract, HANO argues that the amount awarded
should be reduced because there are numerous charges that either fall outside the
scope of allowable attorney’s fees or exhibit a lack of billing judgment.
Liberty maintains that the Court has already determined it is entitled to
attorney’s fees incurred during litigation and that HANO should not be allowed to
relitigate the issue. Liberty asserts that attempting to submit a termination claim to
HANO before instituting litigation would have been “vain, futile, and useless”
because HANO “never intended to admit in good faith that it terminated Liberty” and

4

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therefore “Liberty was forced to litigate the very issue of whether HANO terminated
Liberty as part of presenting its termination claim to HANO.”5
LEGAL STANDARD
“State law controls both the award of and the reasonableness of fees awarded
where state law supplies the rule of decision.” Mathis v. Exxon Corp., 302 F.3d 448,
461 (5th Cir. 2002). Accordingly, the Court will apply Louisiana law to Plaintiff’s
request for attorney’s fees.
Under Louisiana law, attorney’s fees are recoverable only where authorized by
statute or contract. Rivet v. State, Dep’t of Transp. & Dev., 96-145, p. 10 (La. 9/5/96),
680 So. 2d 1154, 1160. Here, the basis of Liberty’s fee award is contractual.
“An accepted method with which to begin calculation of a fee award under
Louisiana law is to multiply the hours worked by an hourly rate the Court deems to
be reasonable.” Bodin v. Butler, No. 07-3505, 2008 WL 5122354, at *5 (E.D. La. Dec.
4, 2008). Courts then consider the following ten factors for determining the
reasonableness of an award for attorney’s fees:
(1) the ultimate result obtained; (2) the responsibility incurred; (3) the
importance of the litigation; (4) the amount of money involved; (5) the
extent and character of the work performed; (6) the legal knowledge,
attainment, and skill of the attorneys; (7) the number of appearances
involved; (8) the intricacies of the facts involved; (9) the diligence and
skill of counsel; and (10) the court’s own knowledge.
Rivet, 680 So. 2d at 1161. These guidelines are permissive and consideration of all of
them is not necessary. Fourchon Docks, Inc. v. Milchem Inc., 849 F.2d 1561, 1568 (5th
Cir. 1988).

5

(Rec. Doc. 675, at 2).
5

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DISCUSSION
I.

ATTORNEY’S FEES

The Court has already determined that “HANO is liable to Liberty for Liberty’s
reasonable attorney’s fees, costs and interest due to HANO’s breach of the Takeover
Agreement”6 and therefore will not allow HANO to relitigate the issue. However, the
Court had reserved decision on “[w]hether or not Liberty is entitled to ‘litigation
expenses,’”7 specifically attorney’s fees incurred in litigation, and now concludes that
it is.
HANO contends that Liberty is not entitled to litigation expenses because (1)
Liberty failed to present a termination claim to HANO as required by Clause 34, and
(2) even if Liberty had, Clause 34 limits recoverable legal expenses to those incurred
before litigation.
Clause 34 of the Prime Contract, as incorporated into the Takeover Agreement,
provides, in pertinent part:
(b) If the performance of the work is terminated, either in whole or in
part, [HANO] shall be liable to the Contractor for reasonable and proper
costs resulting from such termination upon the receipt by [HANO] of a
properly presented claim setting out in detail: . . . (4) the actual or
estimated cost of legal and accounting services reasonably necessary to
prepare and present the termination claim to [HANO] . . . . 8
However, the Court found that HANO breached the Takeover Agreement by
terminating Liberty after substantial completion had been achieved and therefore

(Rec. Doc. 537, at 66).
(Rec. Doc. 555, at 2).
8 (Rec. Doc. 500-4, at 36) (emphasis added).
6
7

6

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Liberty was excused from performing under the contract.9 See, e.g., Commerce Ins.
Agency, Inc. v. Hogue, 618 So. 2d 1048, 1052 (La. App. 1st Cir. 1993) (“[W]here one
party substantially breaches a contract, the other party to it has a defense and an
excuse for nonperformance.”). Thus, HANO has no right to enforce Liberty’s
compliance with the procedure in Clause 34.
Nor does the language of Clause 34 unambiguously exclude litigation expenses
or limit expenses to those incurred before litigation. Because HANO breached the
contract, Liberty was not required to adhere to the procedures for presenting a claim.
Further, because HANO refused to acknowledge that it had terminated Liberty and
instead insisted that Liberty had abandoned the Project, litigation was “reasonably
necessary” for Liberty to present its termination claim to HANO. HANO’s refusal to
acknowledge Liberty’s termination distinguishes this case from Jeffrey B. Peterson &
Associates v. Dayton Metropolitan Housing Authority, No. 17306, 2000 WL 1006562,
at *13 (Ohio Ct. App. July 21, 2000), on which HANO relies, because there, the court
found that the defendant housing authority had not abused its discretion in
terminating the contract because the housing authority had legitimate grievances
with the contractor’s performance, whereas here, the Court found that “HANO’s
refusal to grant substantial completion to Liberty/Parkcrest and its subsequent
contract with Colmex was unjustified and economically wasteful[,] . . . caus[ing]
approximately four and one-half months of further delay . . . [and] greatly increas[ing]
the cost to final completion.”10 The Peterson court explained:

9

(Rec. Doc. 537, at 62).
(Rec. Doc. 537, at 65).

10

7

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[A]fter reading many cases, we believe that ‘bad faith’ and ‘clear abuse
of discretion’ should limit an agency’s ability to originally terminate a
contract for convenience as well as its later reliance on contractual
clauses allowing conversion of default termination. As the court in
Kalvar [Corp. v. United States, 543 F.2d 1298 (Ct. Cl. 1976)] noted:
[I]n the absence of bad faith or clear abuse of discretion, the effect of the
constructive termination for convenience is to moot all breach claims
and to limit recovery to costs which would have been allowed had the
contracting officer actually invoked the clause.
543 F.2d at 1304. Therefore, because legitimate breach claims are
mooted when the government or a public agency retroactively asserts
termination for convenience, some restraint is appropriate.
Id. at *10. Because HANO abused its discretion in terminating Liberty and refused
to acknowledge that it had done so, litigation was reasonably necessary for Liberty to
present its claim to HANO. Therefore, Liberty is entitled to recover its attorney’s fees
incurred in litigation.
HANO makes several challenges to the reasonableness of the amount of
attorney’s fees requested by Liberty. It contends that several categories of expenses
should be excluded because they do not fall within the scope of “preparing and
presenting Liberty’s termination claim,” including entries for (1) reporting to the
client, (2) reviewing HANO’s documentation that formed the basis for the default
termination, (3) reviewing any work performed by the completion contractor, and (4)
deposing witnesses not related to Liberty’s claim. HANO argues that the repeated
references to inner-office conferences and the various entries that are redacted due
to an improper assertion of attorney-client privilege demonstrate a lack of billing
judgment and should be excluded or, alternatively, that the Court should apply a
percentage reduction to the number of hour awarded in lieu of a line-by-line analysis.

8

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HANO’s arguments are meritless, as Liberty has already exercised billing
judgment by excluding $643,757.25 in fees from its request, including (1) fees
incurred before termination; (2) redundant fees incurred by junior attorneys; (3) fees
incurred from payment bond claims or disputes with subcontractors; (4) fees incurred
in defense of HANO’s non-contract claims; (5) fees incurred in association with thirdparty subpoenas; (6) fees incurred in opposing HANO’s motion for expert fees and
costs; (7) fees for administrative work by staff (except for paralegal assistance in
preparing for trial); and (8) fees incurred with execution of the Court’s judgment. The
Court finds Liberty’s requested fee amount to be reasonable, particularly in light of
the way in which HANO conducted itself throughout this litigation. Accordingly, the
Court will grant Liberty’s request for $526,192.25 in attorney’s fees.
II.

EXPERT WITNESS COSTS

Liberty contends that its expert witness costs constitute “legal services” but
fails to define the term other than to argue that it is “broader . . . than only attorneys’
fees.”11 HANO argues that Liberty is not entitled to these fees because its experts did
not provide “legal and accounting services,” as allowed by Clause 34, but instead were
an architect and a certified cost professional.
“[A]bsent explicit statutory or contractual authorization for the taxation of the
expenses of a litigant’s witness as costs, federal courts are bound by the limitations
set out in 28 U.S.C. § 1821 and § 1920.” Crawford Fitting Co. v. J.T. Gibbons, Inc.,
482 U.S. 437, 445 (1987). While § 1920(3) authorizes courts to tax costs for witness

11

(Rec. Doc. 668-1, at 30).
9

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fees, § 1821 limits these costs to a daily attendance fee and travel and lodging
expenses. See § 1821(b)–(d); Holmes v. Cessna Aircraft Co., 11 F.3d 63, 64 (5th Cir.
1994). However, these costs are not at issue here because Liberty had them taxed by
the Clerk of Court.12 Accordingly, Liberty’s instant request turns on the existence of
contractual authority for the Court to tax Liberty’s costs for its expert witnesses to
(1) review documents, (2) prepare their expert reports, and (3) prepare for trial.
The Court finds that Clause 34’s provision for “the actual or estimated cost of
legal and accounting services reasonably necessary to prepare and present the
termination claim to [HANO]” does not explicitly authorize costs for these expert
witnesses because they did not provide legal or accounting services. See Crawford,
482 U.S. at 445. Therefore, Liberty’s request must be denied.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Liberty’s Motion for Attorney’s Fees and
Costs (Rec. Doc. 668) is GRANTED in part, and Liberty is awarded $526,192.25 in
attorney’s fees.
New Orleans, Louisiana, this 2nd day of December, 2020.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

12

(Rec. Doc. 677, at 2).
10