Griaznov v. J-K Technologies, L.L.C.
Filing
65
MEMORANDUM OPINION. Signed by Judge Ellen L. Hollander on 5/16/2019. (kw2s, Deputy Clerk) Modified on 5/16/2019 (kw2s, Deputy Clerk).(c/m 5.16.19)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
KONSTANTIN GRIAZNOV,
Plaintiff/Counterclaim Defendant,
v.
Civil Action No. ELH-16-2522
J-K TECHNOLOGIES, LLC,
Defendant/Counterclaim Plaintiff.
MEMORANDUM
This Memorandum resolves the motion for attorneys’ fees and costs (ECF 60) filed by
defendant/counterclaim plaintiff J.K. Technologies, LLC (“J.K.”). It is supported by a
memorandum of law (ECF 60-1) (collectively, “Motion”) and several exhibits documenting J.K.’s
fees and costs. ECF 60-3 to ECF 60-5.
The Motion follows the Court’s entry of summary judgment in favor of J.K., finding
Griaznov liable to defendant in the amount of $131,012.83, plus costs. See ECF 58; ECF 59. The
judgment is rooted in a contract to bring a 2012 McLaren MP4-12C into compliance with
government regulations regarding safety and emissions. See ECF 45-4 (the “Agreement”). The
facts of that case are set out at length in my Memorandum Opinion of September 11, 2018, which
are incorporated here, and need not be restated. See ECF 58.
Plaintiff has not responded to the Motion, and the time to do so has expired. No hearing is
necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I will reduce
the attorneys’ hourly rates to bring them into compliance with the rates customarily permitted in
this District. As a result, I will award $92,530.00 in fees to defendant. I will also award $548.66
in costs, for a total of $93,078.66.
I.
Discussion
A.
The Agreement states, in pertinent part: “If J.K. employs attorneys to enforce any rights
arising out of or relating to this Agreement, and J.K. prevails in any action brought by its attorneys,
[Griaznov] shall pay J.K.’s reasonable attorneys’ fees, costs and other expenses.” ECF 45-4 at 4.
Pursuant to the Agreement, J.K. seeks attorneys’ fees and costs associated with this litigation. See
ECF 61.
In a diversity action such as this, see 28 U.S.C. § 1332, a party’s right to recover attorneys’
fees is ordinarily governed by state law. See IOM Corp. v. Brown Forman Corp., 627 F.3d 440,
451 (1st Cir. 2010); McCollum v. State Farm Ins. Co., 376 F. App’x 217, 220 (3d Cir. 2010);
Ranger Const. Co. v. Prince William County Sch. Bd., 605 F.2d 1298, 1301 (4th Cir. 1979); Rohn
Prods. Int’l, LC v. Sofitel Capital Corp., WDQ-06-504, 2010 WL 3943747, at *4 n.13 (D. Md.
Oct. 7, 2010).
Maryland is the forum state, and its law governs this Court’s choice-of-law analysis.
Ground Zero Museum Workshop v. Wilson, 813 F. Supp. 2d 678, 696 (D. Md. 2011). Under
Maryland law, “the parties to a contract may agree as to the law which will govern their
transaction.” Bank of Am., N.A. v. Jill P. Mitchell Living Trust, 822 F. Supp. 2d 505, 517 (D. Md.
2011) (internal quotation marks omitted). The Agreement contains a choice of law provision that
stipulates to the application of Maryland law. See ECF 45-4 at 5. Accordingly, I will apply
Maryland law here.
In general, Maryland follows the “American Rule,” under which “a prevailing party is not
awarded attorneys’ fees ‘unless (1) the parties to a contract have an agreement to that effect, (2)
there is a statute that allows the imposition of such fees, (3) the wrongful conduct of a defendant
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forces a plaintiff into litigation with a third party, or (4) a plaintiff is forced to defend against a
malicious prosecution.’” Nova Research, Inc. v. Penske Truck Leasing Co., 405 Md. 435, 445,
952 A.2d 275, 281 (2008) (quoting Thomas v. Gladstone, 386 Md. 693, 699, 874 A.2d 434, 437
(2005)).
“Contract provisions providing for awards of attorney’s fees to the prevailing party in
litigation under the contract generally are valid and enforceable in Maryland.” Myers v. Kayhoe,
391 Md. 188, 207, 892 A.2d 520, 532 (2006). “It is a fundamental principle of contract law that
it is ‘improper for the court to rewrite the terms of a contract, or draw a new contract for the parties,
when the terms thereof are clear and unambiguous, simply to avoid hardships.’” Calomiris v.
Woods, 353 Md. 425, 445, 727 A.2d 358, 368 (1999) (quoting Canaras v. Lift Truck Servs., 272
Md. 337, 350, 322 A.2d 866, 873 (1974)); see Loudin Ins. Agency, Inc. v. Aetna Cas. & Sur. Co.,
966 F.2d 1443, 1992 WL 145269, at *5 (4th Cir. 1992) (per curiam) (“[A] court will not rewrite
the parties’ contract simply because one party is no longer satisfied with the bargain he struck.”).
However, “Maryland law limits the amount of contractual attorneys [sic] fees to actual fees
incurred, regardless of whether the contract provides for a greater amount.” SunTrust Bank v.
Goldman, 201 Md. App. 390, 398, 29 A.3d 724, 728 (2011). Moreover, “[e]ven in the absence of
a contract term limiting recovery to reasonable fees, trial courts are required to read such a term
into the contract and examine the prevailing party’s fee request for reasonableness.” Myers, 391
Md. at 207, 892 A.2d at 532; see also Atl. Contracting & Material Co. v. Ulico Cas. Co., 380 Md.
285, 316, 844 A.2d 460, 478 (2004); SunTrust, 201 Md. App. at 401, 29 A.3d at 730 (“Current law
allows a court to grant only those attorney’s fees it finds reasonable.”). Thus, “courts must
routinely undertake an inquiry into the reasonableness of any proposed fee before settling on an
award.” Monmouth Meadows Homeowners Ass’n, Inc. v. Hamilton, 416 Md. 325, 333, 7 A.3d
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1, 5 (2010). The “reasonableness of attorney’s fees is a factual determination within the sound
discretion of the court.” Myers, 391 Md. at 207, 892 A.2d at 532.
“‘The burden is on the party seeking recovery to provide the evidence necessary for the
fact finder to evaluate the reasonableness of the fees.’” Ulico, 380 Md. at 316, 844 A.2d at 478
(citation omitted). Therefore, the party seeking a fee award must provide “‘detailed records’” that
specify “‘the services performed, by whom they were performed, the time expended thereon, and
the hourly rates charged.’” Rauch v. McCall, 134 Md. App. 624, 639, 761 A.2d 76, 84 (2000)
(citation omitted), cert. denied, 362 Md. 625, 766 A.2d 148 (2001). “‘[W]ithout such records, the
reasonableness, vel non, of the fees can be determined only by conjecture or opinion of the attorney
seeking the fees and would therefore not be supported by competent evidence.’” Id. at 639, 761
A.2d at 85 (citation omitted).
Maryland courts ordinarily utilize the “lodestar” approach when determining attorneys’
fees under fee-shifting statutes. Friolo v. Frankel, 373 Md. 501, 504-05, 819 A.2d 354, 356
(2003) (“Friolo I”).1 However, the Maryland Court of Appeals has held that the lodestar approach
is “an inappropriate mechanism for calculating fee awards” under contractual fee-shifting
provisions in “disputes between private parties over breaches of contract.”
Monmouth
Meadows, 416 Md. at 336, 7 A.3d at 7; see also E. Shore Title Co. v. Ochse, 453 Md. 303, 337,
1
The Friolo litigation has spawned numerous reported opinions of the Maryland appellate
courts concerning the award of attorneys’ fees. See Frankel v. Friolo, 170 Md. App. 441, 907
A.2d 363 (2006) (“Friolo II”) (holding that, when applying the lodestar approach, a court must
provide a “clear explanation of the factors employed”), aff’d, 403 Md. 443, 942 A.2d 1242
(2008) (“Friolo III”) (holding that an award of attorneys’ fees under a fee shifting statute should
include “appellate fees . . . incurred in successfully challenging . . . the attorneys’ fee
awarded”); Friolo v. Frankel, 438 Md. 304, 91 A.3d 1156 (2014) (“Friolo IV”) (reiterating the
loadstar approach and concluding that a plaintiff’s continued litigation in lieu of settlement does
not preclude attorneys’ fees and that appellate attorneys’ fees are available pursuant to an appeal
concerning attorneys’ fees).
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160 A.3d 1238, 1258 (2017) (stating that the “litigation did not involve a fee-shifting statute, and
therefore the lodestar method of calculation would not be appropriate”). This is because a
“contractual fee-shifting provision is designed by the parties, not by the legislature. . . . Thus, it
usually serves no larger public purpose than the interests of the parties.” Congressional Hotel
Corp. v. Mervis Diamond Corp., 200 Md. App. 489, 505, 28 A.3d 75, 84 (2011).
In Maryland, in regard to an award based on a contract, a court “should use the factors set
forth in Rule 1.5 [of the Maryland Rules of Professional Conduct (“MRPC”)2] as the foundation
for analysis of what constitutes a reasonable fee when the court awards fees based on a contract
entered by the parties authorizing an award of fees.” Monmouth Meadows, 416 Md. at 336-37, 7
A.3d at 8. MRPC 1.5(a) enumerates eight non-exclusive “factors to be considered in determining
the reasonableness of a fee”:
(1) the time and labor required, the novelty and difficulty of the questions involved,
and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular
employment will preclude other employment of 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 by 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
2
MRPC 1.5(a) is a standard of professional ethics, generally applicable to all attorneyclient relationships, which mandates that an attorney “shall not make an agreement for, charge, or
collect an unreasonable fee or an unreasonable amount for expenses.”
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(8) whether the fee is fixed or contingent.
A list of factors similar to those in MRPC 1.5 was enunciated for use in a lodestar analysis
in the seminal case of Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974).
The so-called ”Johnson factors” have been adopted for use in lodestar cases by the Fourth
Circuit, see Barber v. Kimbrell’s, Inc., 577 F.2d 216, 226 n. 28 (4th Cir. 1978), and in
Maryland. See Friolo I, 373 Md. at 522 n. 2, 819 A. 2d at 366 n .2.
Cases decided under the lodestar approach can “provide helpful guidance” in contractual
fee-shifting cases. Congressional Hotel, 200 Md. App. at 505, 28 A.3d at 85. This is because
“there is likely to be some overlap between the Rule 1.5 factors and the mitigating factors typically
considered in a lodestar analysis.” Monmouth Meadows, 416 Md. at 337, 7 A.3d at 8.
“In order to apply Rule 1.5 to a fee award, a court does not need to evaluate each factor
separately.” SunTrust, 201 Md. App. at 401, 29 A.3d at 730; see Monmouth Meadows, 416 Md.
at 337 n.11, 7 A.3d at 8 n.11. Indeed, a court need not “make explicit findings with respect
to Rule 1.5” at all, or even “mention Rule 1.5 as long as it utilizes the rule as its guiding principle
in determining reasonableness.” Monmouth Meadows, 416 Md. at 340 n. 13, 7 A.3d at 10 n.13.
Moreover, when conducting an MRPC 1.5 analysis, a court “should consider the amount
of the fee award in relation to the principal amount in litigation, and this may result in a downward
adjustment. Although fee awards may approach or even exceed the amount at issue, the relative
size of the award is something to be evaluated.” Id. at 337, 7 A.3d at 8. And, a “trial court also
may consider, in its discretion, any other factor reasonably related to a fair award of attorneys’
fees.” Id. at 337-38, 7 A.3d at 8.
This Court’s Local Rules also provide “Rules and Guidelines for Determining Attorneys’
Fees in Certain Cases.” See Local Rules app. B (the “Guidelines”).
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Among other things, the
Guidelines set out mandatory rules regarding billing format and time recordation, and require
submission of quarterly statements to the opponent. Id. § 1. It also outlines non-compensable time
and reimbursable expenses and sets guidelines for hourly rates for attorneys. Id. §§ 2-4.
Despite the Court’s previous discussion of the Guidelines, see ECF 58 at 41, defendant
failed to comply with of the Guidelines’ requirements. In his affidavit, Mr. Roussillion declares
that he sent “statements to Plaintiff’s counsel on an approximately quarterly basis setting forth the
total time and value of the time being expended on behalf of J.K.” ECF 60-3, ¶ 8; see also ECF
60-1 at 3-4. However, in its submission to the Court, defendant failed to organize the attorneys’
fees by stage of litigation as required by the Guidelines. See Local Rules app. B at § 1.b.
Nevertheless, the Court has adequate information to determine the proper fee award.
As noted, J.K. was awarded a judgment of $131,012.82. ECF 58. It has requested
$108,879.66 in attorneys’ fees and costs. ECF 60-1 at 2. The requested fee reflects an aggregate
of 297.1 billed hours. Defendant submitted three exhibits in support of the Motion. The first
exhibit (ECF 60-3) consists of an affidavit of Derek P. Roussillion. The second exhibit (ECF 604) consists of an affidavit of Matthew S. Sturtz. The third exhibit (ECF 60-5) consists of monthly
billing statements containing “time entry records with detailed descriptions of the services
performed by each attorney.” ECF 60-1.
B.
Under MRPC 1.5(a)(3), a court reviewing an attorneys’ fee request must consider “the fee
customarily charged in the locality for similar legal services.” In this inquiry, the Fourth Circuit
follows the “locality rule,” whereby “‘[t]he community in which the court sits is the first place to
look to in evaluating the prevailing market rate.’” Montcalm Pub. Corp. v. Commonwealth of Va.,
199 F.3d 168, 173 (4th Cir. 1999) (citation omitted). “Evidence of the prevailing market rate
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usually takes the form of affidavits from other counsel attesting to their rates or the prevailing
market rate. However, in the absence of sufficient documentation, the court may rely on its own
knowledge of the market.” CoStar Group, Inc. v. LoopNet, Inc., 106 F. Supp. 2d 780, 788 (D. Md.
2000).
“In the District of Maryland, this market knowledge is embedded in the Guidelines.”
Gonzales v. Caron, CBD-10-2188, 2011 WL 3886979, at *2 (D. Md. Sept. 2, 2011). The
Guidelines set forth advisory fee ranges for attorneys based on years of experience. The rates “are
intended solely to provide practical guidance to lawyers and judges when requesting, challenging
and awarding fees,” and “may serve to make the fee petition less onerous by narrowing the debate
over the range of a reasonable hourly rate in many cases.” Local Rules app. B at § 3 n. *. Although
“the Guidelines are not binding, generally this Court presumes that a rate is reasonable if it falls
within these ranges.” Gonzales, 2011 WL 3886979, at *2.
The hourly rates in the Guidelines are as follows:
a. Lawyers admitted to the bar for less than five (5) years: $150-225.
b. Lawyers admitted to the bar for five (5) to eight (8) years: $165-300.
c. Lawyers admitted to the bar for nine (9) to fourteen (14) years: $225-350.
d. Lawyers admitted to the bar for fifteen (15) years or more: $300-475.
e. Paralegals and law clerks: $95-150.
The exhibits reflect that four attorneys with the law firm of Miles & Stockbridge P.C.
(“Miles”) were primarily responsible for the work performed on the case for defendant. Matthew
S. Sturtz was a principal at Miles until February 28, 2018, and is presently a partner at Nelson
Mullins Riley & Scarborough, LLC. He was admitted to the bar in 2006. His hourly rate was $485
in 2015 and 2016, $495 in 2017, and $515 in 2018. Derek P. Roussillon is a principal at Miles,
admitted to the bar in 2003. His hourly rate was $375 in 2015 and 2016, $390 in 2017, and $410
in 2018.
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Because the hourly rates of Mr. Sturtz and Mr. Roussillon exceed the applicable rates
provided by the Guidelines, I will reduce the fee awards such that they are compensated for their
work at the highest level of the applicable Guidelines range, but lower than their requested hourly
rate.
Rachel Mech, Zachary Schultz, and Menachem Lanner are associates at Miles. Ms. Mech’s
hourly rate was $255 in 2017 and $285 in 2018. Mr. Schultz’s hourly rate was $255 in 2017. And
Mr. Lanner’s average hourly rate was $285. Because the defendant does not state when Ms. Mech,
Mr. Schultz, or Mr. Lanner were admitted to the bar, the Court shall assume that they have less
than five years of experience. The Guidelines suggest that lawyers admitted to the bar for less than
five years may generally bill at an hourly rate of $150 to $225. Pursuant to the Guidelines, I will
reduce the fee awards such that they are compensated for their work at the highest level of the
applicable Guidelines range, i.e., $225 per hour.
Legal assistants Susan M. Lee and Renee Coshin Coolbaugh charged an hourly rate of
$240 and $245, respectively. I shall reduce their hourly rate to $150, which corresponds to the
highest rate within the applicable Guidelines range.
Defendant failed to provide biographical information for three individuals who billed de
minimis amounts. Sandra S. Ekeson’s hourly rate was $235; Bob Ashlock’s was $110; and Joel
L. Perell, Jr.’s was $485. The Court shall assume that Ms. Ekeson and Mr. Ashlock are paralegals
or law clerks. Accordingly, the Court shall reduce Ms. Ekeson’s hourly rate to $150. But, the Court
shall not adjust Mr. Ashlock’s rate as it falls within the applicable Guidelines range. The Court
shall assume Mr. Perell is an attorney with less than five years of experience, and reduce his hourly
rate to $225.
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C.
The Guidelines provide, Local Rules app. B at § 2(d):
Generally, only one lawyer is to be compensated for client, third party, and
intra-office conferences, although if only one lawyer is being compensated the time
may be charged at the rate of the more senior lawyer. Compensation may be paid
for the attendance of more than one lawyer where justified for specific purposes
such as periodic conferences of defined duration held for the purpose of work
organization, strategy, and delegation of tasks in cases where such conferences are
reasonably necessary for the proper management of the litigation.
The invoices reveal 13 dates on which more than one attorney billed for the same
discussion or conference, for a total of 8.4 hours billed by more than one attorney.3 Nevertheless,
the duplicate time entries fit within the Guidelines’ allowance of compensation for more than one
lawyer for “periodic conferences of defined duration held for the purpose of work organization,
strategy, and delegation of tasks[.]” Id. Indeed, there were many occasions in the billing in which
a multiple-attorney conference occurred but, appropriately, only one attorney billed for it.
The invoice dated September 22, 2017, included $156 for outstanding accounts receivable.
See ECF 60-5 at 77. I shall exclude this amount from the fee award.
D.
It is not lost on me that the defendant’s attorneys’ fees are nearly as large as the judgment
against Griaznov. But, it was vigorously contested on both sides, which necessarily led defendant
to incur the legal fees now at issue. Accordingly, I shall not adjust the fees for disproportionality.
II.
Conclusion
Defendant has requested $108,879.66 in attorneys’ fees, reflecting 297.1 hours of work.
For the reasons stated, I will reduce the attorneys’ hourly rates to bring them into compliance with
3
Some of the duplicative intraoffice conferences are billed as one element of a larger
billing entry, making it difficult to determine the exact amount of the duplicative entry. This
number represents the Court’s best estimate of the duplicative charges.
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the Guidelines. Additionally, I shall exclude $156 for the accounts receivables. As a result, I will
award $92,530.00 in fees to defendant. I will also award $548.66 in costs, for a total of $93,078.66.
An Order follows.
Date: May 16, 2019
/s/
Ellen Lipton Hollander
United States District Judge
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