RedHawk Holdings Corp., et al v. Schreiber, et al

Filing 223

ORDER AND REASONS: IT IS ORDERED that Schreiber's 213 motion for attorneys' fees and costs is GRANTED in part, awarding Schreiber $85,035.64, representing reasonable attorneys' fees and costs incurred with his successful efforts to enforce the settlement agreement, as stated herein. Signed by Judge Ivan L.R. Lemelle on 1/6/2022. (pp)

Case 2:17-cv-00819-ILRL-MBN Document 223 Filed 01/06/22 Page 1 of 14

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
REDHAWK HOLDINGS CORP., ET AL.

CIVIL ACTION

VERSUS

NO. 17-819

DANIEL J. SCHREIBER, ET AL.

SECTION “B”(5)

ORDER AND REASONS
Before the Court are defendant Daniel J. Schreiber’s motion
for attorneys’ fees and costs (Rec. Doc. 213) and plaintiffs’
response in opposition (Rec. Doc. 215).
For the reasons discussed below,
IT IS ORDERED that Schreiber’s motion for attorneys’ fees and
costs (Rec. Doc. 213) is GRANTED in part, awarding Schreiber
$85,035.64,
costs

representing

incurred

with

his

reasonable
successful

attorneys’
efforts

to

fees

and

enforce

the

settlement agreement.
I.

FACTS AND PROCEDURAL HISTORY
The facts of the underlying action have been well documented

on the record. Plaintiffs RedHawk Holdings Corporation (“RedHawk”)
and Beechwood Properties, LLC filed this lawsuit against Daniel J.
Schreiber, the former CEO and director of RedHawk, for, amongst
other claims, securities fraud. Rec. Docs. 1, 20. Schreiber filed
counterclaims

alleging

an

interference

with

his

ability

to

transfer his shares of RedHawk stock. Rec. Doc. 49. The parties
engaged in settlement discussions before the Magistrate Judge in
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Case 2:17-cv-00819-ILRL-MBN Document 223 Filed 01/06/22 Page 2 of 14

January

2019.

Rec.

Docs.

147,

148.

Shortly

thereafter,

the

undersigned was notified in February 2019 that a settlement had
been reached. Rec. Doc. 149. This court subsequently dismissed the
action but retained jurisdiction to enforce the settlement upon a
showing of good cause. Rec. Doc. 150.
Under the settlement agreement, Schreiber would transfer all
his RedHawk stock back to RedHawk. Rec. Doc. 151-2 at 2. In
exchange, RedHawk agreed to pay $250,000 immediately upon signing
the agreement and issue two non-interest-bearing promissory notes
in the amount of $200,000 each to be paid on or before September
6, 2020 and September 5, 2021 respectively. Id. The agreement
contained an acceleration clause for the two promissory notes that
included several terms including (1) a thirty-day grace period
following any RedHawk default, after which all payments would be
immediately due and payable plus 18% interest and the greater of
reasonable attorneys’ fees or 10% of the amount due and (2) a
provision that if RedHawk issued any shares of any series or class
for cash while any amounts are due, 50% of the monetary proceeds
were to be paid to Schreiber to reduce the amount owed. Id. at 34.
A

few

months

after

confecting

the

settlement

agreement,

RedHawk issued on September 16, 2019 a SEC Form 8-8k and a press
release providing that it “completed the sale of $500,000 in
aggregate principal amount of new convertible notes,” and issued
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Case 2:17-cv-00819-ILRL-MBN Document 223 Filed 01/06/22 Page 3 of 14

a number of stock warrants that are exercisable in ten years for
the purchase of an aggregate of 12.5 million shares of RedHawk
common stock. Rec. Doc. 151-1 at 3.
The

following

day,

Schreiber

informed

RedHawk

that

this

action triggered the acceleration clause because it failed to pay
Schreiber $250,000 from the proceeds of the sale and RedHawk was
now in default. Rec. Doc. 151-1 at 3. RedHawk responded it was not
in default because the transaction was for sale of convertible
notes and not for the sale of stocks. Id. at 4.
In

November

settlement

2019,

seeking

the

Schreiber
accelerated

filed

a

amounts

motion
of

the

to

enforce

notes

for

$400,000 plus 18% interest running from the date of the agreement,
and attorney fees of either the actual sums expended in pursuing
that payment or 10% of the amount due, whichever is greater.
RedHawk responded to the motion and this Court granted Schreiber
leave to reply. Rec. Docs. 157, 161. RedHawk opposed the motion
for leave and requested an opportunity to submit a sur-reply should
the Court grant it but leave to file a sur-reply was denied. See
Rec. Doc. 159.
In March 2020, this Court granted Schreiber’s motion to
enforce the settlement agreement, Rec. Doc. 162, and awarded
Schreiber

$519,495.78,

which

included

the

entire

accelerated

amount due on the notes plus 18% interest and attorneys’ fees.
Rec. Doc. 179. RedHawk appealed the judgment and the Fifth Circuit
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vacated and remanded to allow RedHawk to file a sur-reply and
thereafter reconsider the instant motion to enforce settlement.
RedHawk Holdings Corp. v. Schreiber, 836 F. App’x 232, 233, 237
(5th Cir. 2020) (per curiam).
While the appeal was pending, RedHawk paid all principal
amounts due to Schreiber under the settlement agreement and notes
($400,000 for the remaining notes plus the $250,000 RedHawk paid
at

the

time

of

settlement).

Rec.

Doc.

208

at

3.

RedHawk

subsequently filed its sur-reply to the motion, Rec. Doc. 208, and
Schreiber responded. Rec. Doc. 210. Therefore, the only remaining
issue at the time was whether RedHawk breached the acceleration
provision of the settlement agreement, thereby entitling Schreiber
to

interest

and

attorneys’

fees

or

10%

of

the

amounts

due,

whichever is greater. 1 On September 23, 2021, the Court ruled that
RedHawk did breach the acceleration clause, and thus, Schreiber
was

entitled

to

an

additional

$101,490.27,

representing

contractual interest in the amount of 18% on the outstanding
principal debts, until they were paid, plus reasonable attorneys’
fees and costs incurred with its successful efforts to enforce the
settlement agreement or 10% of the amounts due, whichever is
greater. Rec. Doc. 211. Shortly after the Court’s ruling, Schreiber
filed the instant motion for attorneys’ fees and costs. Rec. Doc.
While opposing entitlement issues, RedHawk did not appear to question
Schreiber’s statement that its current attorney fees in seeking enforcement are
greater than 10% of the amount allegedly due.
1

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213. RedHawk then filed a motion for reconsideration of the Court’s
Order granting Schreiber’s motion to enforce settlement (Rec. Doc.
211) and related Judgment (Rec. Doc. 212). Rec. Doc. 214. The
latter motion was denied. Rec. Doc. 222.
II.

LAW AND ANALYSIS
A. Standard for Recovering Attorneys’ Fees
The rule in the federal court system has long been that

attorneys' fees are not ordinarily recoverable in the absence of
a statute or enforceable contract providing therefor. Fisk Elec.
Co. v. DQSI, L.L.C., 740 F. App'x 399, 401 (5th Cir. 2018) (quoting
F.D. Rich Co., Inc. v. U.S. for Use of Indus. Lumber Co., Inc.,
417 U.S. 116, 126 (1974)). “Where attorney's fees are provided by
contract, a trial court does not possess the same degree of
equitable discretion to deny such fees that it has when applying
a statute allowing for a discretionary award.” Cable Marine, Inc.
v. M/V Trust Me II, 632 F.2d 1344, 1345 (5th Cir. 1980) (per
curiam). “Nevertheless, a court in its sound discretion may decline
to award attorney's fees authorized by a contractual provision
when it believes that such an award would be inequitable and
unreasonable.” Id.
When awarding attorney’s fees, the Fifth Circuit uses the
“lodestar” method. Heidtman v. Cnty. of El Paso, 171 F.3d 1038,
1043 (5th Cir. 1999). The lodestar is calculated by “multiplying
the number of hours reasonably expended by an appropriate hourly
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rate in the community for such work.” Id. The calculation may be
accepted as is or adjusted. Blanchard v. Bergeron, 489 U.S. 87, 94
(1989). There are twelve factors to consider in establishing
whether to accept or adjust the lodestar. See Johnson v. Georgia
Highway Exp., 488 F. 2d 714, 717-19 (5th Cir. 1974). Those twelve
factors are:
(1) the time and labor involved; (2) the novelty and
difficulty of the questions involved; (3) the skill
requisite to perform the legal services properly; (4) the
preclusion of other employment by the attorney due to
this case; (5) the customary fee; (6) whether the fee is
fixed or contingent; (7) time limitations; (8) the amount
involved and results obtained; (9) the experience,
reputation,
and
ability
of
counsel;
(10)
the
undesirability of the case; (11) the nature and length of
the proceedings; and (12) awards in similar cases.
See id. However, to the extent that any Johnson factors are
subsumed in the initial lodestar calculation, they should not be
reconsidered when determining whether adjustment to the lodestar
is required. See Migis v. Pearle Vision, Inc., 135 F.3d 1041, 1047
(5th Cir. 1998).
B. Recoverability
“Where

a

plaintiff

has

obtained

excellent

results,

his

attorney should recover a fully compensatory fee.” Hensley v.
Eckerhart, 461 U.S. 424, 435 (1983). In those cases,
the fee award should not be reduced simply because the
plaintiff failed to prevail on every contention raised
in the lawsuit. Litigants in good faith may raise
alternative legal grounds for a desired outcome, and the
court’s rejection of or failure to reach certain grounds

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is not a sufficient reason for reducing a fee. The result
is what matters.
Id. (citations omitted). However, if a party only achieved “partial
or limited success, the product of hours reasonably expended on
the litigation as a whole times a reasonably hourly rate may be an
excessive amount. This will be true even where [a party’s] claims
were interrelated, nonfrivolous, and raised in good faith.” Id. at
436. Nevertheless, “the most critical factor is the degree of
success obtained.” Id.
RedHawk argues that Schreiber is not entitled to attorneys’
fees for his motion to enforce settlement agreement because he did
not prevail on the legal arguments set forth in that motion’s
supporting memorandum. Rec. Doc. 215 at 3-4. According to RedHawk,
Schreiber only prevailed on arguments from his reply, and thus,
attorneys’ fees should be limited. Id. In this assertion, RedHawk
misunderstands

how

courts

apportion

attorneys’

fees

after

a

successful outcome.
Indeed, a district court may decide not to award attorneys’
fees

for

unsuccessful

claims.

See

Hensley,

461

U.S.

at

435.

However, in this case, there does not appear to be any distinct
unsuccessful claims. In Schreiber’s motion to enforce settlement
agreement, he principally argues that RedHawk’s 2019 convertible
note

transactions

triggered

the

acceleration

clause

in

the

parties’ settlement agreement, and as such, Schreiber was entitled
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to the proceeds of that acceleration clause. See generally Rec.
Doc. 151. In Schreiber’s initial motion, he posits one legal
theory. See Rec. Doc. 151. In his reply, he expands on that initial
theory and then adds an alternative one. See Rec. Doc. 161. Despite
the assertion of multiple legal theories, Schreiber maintained
only one claim: that RedHawk’s 2019 convertible note transactions
triggered

the

acceleration

clause

in

the

parties’

settlement

agreement. Cf. Holy Cross v. U.S. Army Corps of Eng’rs., No. 03370, 2008 WL 2278112, at *1 (E.D. La. May 30, 2008) (noting three
separate claims: one under the Resource Conservation and Recovery
Act,

the

second

under

the

National

Environmental

Policy

Act

asserting that the initial Environmental Impact Statement (EIS)
was inadequate, and the third that the defendant failed to file a
supplemental EIS when appropriate); Howell v. Town of Ball, No.
1:12-CV-00951, 2018 WL 580055, at *6 (W.D. La. Jan. 26, 2018)
(stating

that

plaintiff’s

claims

for

conspiracy,

intentional

infliction of emotional distress, and due process violations were
distinct from claims for First Amendment Retaliation and False
Claims Act claims).
Importantly, Schreiber was entirely successful on his claim.
On September 23, 2021, this Court found that Schreiber was entitled
to $101,490.27, representing contractual interest in the amount of
18% on the outstanding principal debts until they were paid. Rec.
Doc. 211 at 16. In other words, we found that the acceleration
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clause

in

the

settlement

agreement

was

triggered,

and

thus,

Schreiber was entitled to all the proceeds from that provision.
See id. That Schreiber prevailed on one legal theory and not the
other

does

not

necessitate

reducing

attorneys’

fees,

for

“litigants in good faith may raise alternative legal grounds for
a desired outcome, and the court’s rejection of . . . certain
grounds is not a sufficient reason for reducing a fee.” See
Hensley, 461 U.S. at 435; cf. Migis v. Pearle Vision, 135 F.3d
1041, 1048 (5th Cir. 1988) (reducing fees because plaintiff alleged
four separate acts of discrimination and only prevailed on one);
Jason D.W. by Douglas W. v. Houston Indep. Sch. Dist., 158 F.3d
205,

210-11

(5th

Cir.

1998)

(reducing

fees

because

although

plaintiff prevailed in receiving reimbursements from psychologists
and adjusting his behavior modification plan, he was unsuccessful
on his school placement claim, among others); Prejean v. Ochsner
Clinic, 669 F. Supp. 146, 149 (E.D. La. 1987) (reducing fees
because plaintiff “did not gain promotion to partnership and
attendant benefits” but “did receive substantial monetary relief,
limited

educational

opportunity,

and

a

favorable

employment

recommendation”). Accordingly, Schreiber is entitled to reasonable
attorneys’ fees and costs associated with his motion to enforce
settlement agreement. See Abner v. Kan. City S. Ry. Co., No. 030765, 2007 WL 1805782, at *5 (W.D. La. June 21, 2007) (quoting
Commonwealth Oil Refin. Co., Inc. v. EEOC, 720 F.2d 1383, 1385
9

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(5th Cir. 1983) (“The proper focus is whether the plaintiff has
been successful on the central issue as exhibited by the fact that
he has acquired the primary relief sought.”) (internal quotation
marks omitted). 2
C. Reasonableness
“[T]he

fee

applicant

bears

the

burden

of

establishing

entitlement to an award and documenting the appropriate hours
expended and hourly rates.” Hensley v. Eckerhart, 461 U.S. 424,
437 (1983). In documenting the hours expended, attorneys should
“exercise

‘billing

judgment’

by

excluding

time

that

is

unproductive, excessive, duplicative, or inadequately documented
when seeking fee awards.” Creecy v. Metro. Prop. & Cas. Ins. Co.,
548 F. Supp. 2d 279, 286 (E.D. La. 2008) (quoting Walker v. U.S.
Dept. of Hous. and Urb. Dev., 99 F.3d 761, 769 (5th Cir. 1996)).
“The remedy for failing to exercise billing judgment is to reduce
the hours awarded as a percentage and exclude hours that were not
reasonably expended.” Id. Courts may eliminate hours that are
excessive, duplicative, and too vague to permit meaningful review.
This finding is only bolstered by the plain language of the contract, which
states:
[I]n the event of litigation, arbitration or other proceeding is
brought concerning the interpretation or enforcement of this
Agreement,
or
because
of
an
alleged
dispute,
default,
misrepresentation or breach in connection with any of the provisions
of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys’ fees, expenses, and costs
actually incurred in connection therewith.
Rec. Doc. 151-2 at 8. As Schreiber is the prevailing party, he is entitled to
all reasonable fees associated with the instant dispute. See id.; see also Rec.
Doc. 211 at 16.
2

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Johnson v. Big Lots Stores, Inc., 639 F. Supp. 2d 696, 702 (E.D.
La. 2009).
Reasonable fees are calculated based on the prevailing market
rate

in

the

relevant

community

for

attorneys

of

reasonably

comparable skill and experience. See Blum v. Stetson, 465 U.S.
886, 895 (1984). “Determination of the reasonable hourly rate for
a particular community is generally established through affidavits
of other attorneys practicing there.” Chisholm v. Hood, 90 F. App'x
709, 710 (5th Cir. 2004) (per curiam) (citing Watkins v. Fordice,
7 F.3d 453, 458 (5th Cir. 1993)). A court determines hourly rates
on a case-by-case basis. Id. at 710-711.
Schreiber’s

counsel

requests

a

total

reimbursement

of

$85,280.89 in attorneys’ fees and costs. For the motion to enforce
settlement

agreement

and

ensuing

litigation,

they

claim

that

Kathryn Gonski, a partner practicing for over ten years spent
177.77 hours on this matter and charged $325 per hour, Paul Matthew
Jones, a partner with over thirty years’ experience, worked 30.25
hours at $425 per hour, Joseph P. Hebert and Phillip Kirk Jones,
Jr., counsel with over forty years’ experience in creditor issues
worked 12 hours at $450 per hour and $470 per hour respectively,
and Jaclyn E. Hickman, an associate with seven years’ experience
spent 10.75 hours at $295 per hour. Heather Vice, a paralegal,
spent

0.75

hours

at

$170

per

hour.

Schreiber’s

counsel

also

incurred $7,721.25 in fees preparing this instant motion and
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$4,091.25

opposing

RedHawk’s

motion

for

reconsideration

and

preparing the reply for this instant motion. Rec. Doc. 219 at 1;
Rec. Doc. 213-1 at 10. Total costs for Westlaw research and
recording

the

Court’s

judgment

in

Lafayette

Parish

mortgage

records equal $1,845.89. RedHawk does not oppose the hourly rates
of Schreiber’s counsel, indicating that the requested rates are
prima facie reasonable. See Big Lot Stores, 639 F. Supp. 2d at 702
(“That [defendant] has not opposed the rates is further evidence
of their reasonableness.”); La. Power & Light Co. v. Kellstrom, 50
F.3d 319, 328 (5th Cir. 1995). Schreiber also submits detailed
time

records

for

its

attorneys

that

reflect

the

date,

time

involved, and nature of services performed. See generally Rec.
Doc. 213-2. RedHawk also does not oppose these submissions. 3 See
generally Rec. Doc. 215.
After reviewing Schreiber’s detailed billing statements, and
considering that RedHawk has not specifically opposed Schreiber’s
calculations, the Court finds that the hours reported are generally
reasonable.

RedHawk

prolonged

this

dispute

for

two

years

by

contesting almost every issue, including a motion for leave to
file a reply, and continues to file motions in support of its
position after the Court has now twice carefully considered the
motion to enforce settlement agreement. See Rec. Docs. 159, 162,
However, as discussed in Part II.B, RedHawk does dispute whether Schreiber
should be entitled to attorneys’ fees for the motion to enforce settlement. See
supra Part II.B.

3

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211. Furthermore, in preparing this instant motion Schreiber’s
counsel was required to sustain its burden of proof by carefully
inspecting each time entry, an activity necessarily consuming
substantial attorney time, and had to prepare a brief and reply
brief. Therefore, Schreiber is also entitled to receive attorneys’
fees for this instant motion. See Chem. Mfrs. Ass’n v. U.S. EPA,
885 F.2d 1276, 1283 (5th Cir. 1989). Accordingly, it appears that
the hours Schreiber’s counsel incurred generally seem to represent
the time necessary to successfully litigate this matter.
Nevertheless, there are two entries where fees were either
unrelated to the settlement agreement dispute or were excessive.
On July 27, 2020, Schreiber’s counsel reported spending 0.5 hours
and $212.50 on “review of issues regarding needle destruction
technology.” Rec. Doc. 213-2 at 41. Schreiber does not explain how
this work connects to the settlement agreement dispute. See id.;
see generally Rec. Docs. 213-1, 219. Additionally, on November 13,
2019, Schreiber’s counsel indicated that they spent 0.25 hours and
$81.25 reviewing and analyzing the Court’s Order denying oral
argument. Rec. Doc. 213-2 at 7. As this Order was quite short and
routine, the Court finds the hours expended for this time entry
should be reduced to 0.15 hours or $48.75. Besides these two
reductions,

the

hours

reported

by

Schreiber’s

counsel

are

reasonable. Moreover, the rates offered by Schreiber’s counsel are
appropriate considering counsel’s experience in this field. See M
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C Bank & Tr. Co. v. Suard Barge Serv., Inc., No. 16-14311, 2017 WL
6344021, at *2 (E.D. La. Dec. 12, 2017) (finding that $395 was a
reasonable hourly rate for an attorney with over 30 years of
experience); Funez v. EBM, No. 16-01922, 2018 WL 5004806, at *4
(E.D. La. Oct. 16, 2018) (finding a partner rate of $350 per hour
reasonable); Kim v. Ferdinand, No. 17-16180, 2018 WL 1635795, at
*4 (E.D. La. Apr. 5, 2018) (finding $410 per hour “typical for
partners in this community”); Big Lot Stores, 639 F. Supp. 2d at
701 (finding $225 per hour was a reasonable rate for an associate).
After the lodestar is determined, the Court may adjust the
lodestar upward or downward depending on the twelve factors set
forth in Johnson. Johnson, 488 F. 2d at 717-19. In this case,
neither party has requested a lodestar adjustment pursuant to the
Johnson factors, except for RedHawk’s claim that Schreiber cannot
collect attorneys’ fees for his motion to enforce settlement
agreement, as discussed previously. The Court has considered the
Johnson factors and concluded that they do not warrant an upward
or downward departure here.
New Orleans, Louisiana this 6th day of January, 2022

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

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