Castcapa Construction, LLC v. TMB Services Limited Liability Company et al

Filing 32

ORDER RE REPORT AND RECOMMENDATIONS, For the reasons stated above, the court ADOPTS IN PART and MODIFIES IN PART the R&R (Dkt. 25 ). Plaintiff's Motion for Default Judgment (Dkt. 22 ) is GRANTED. The court AWARDS Plaintiff damages in the amou nt of $111,519.31--representing $101,996.67 in unpaid principal and interest, $382.24 in default interest, and $9140.40 in attorneys' fees and costs--plus an additional $50.99 per day in default interest, from May 24,201 5, until entry of judgment, and post-judgment at the rate set forth in 28 U.S.C. § 1961. The proposed motion practice giving Plaintiff leave to file a motion seeking an order of attachment and other provisional relief, as discussed at the January 24, 2018, pre-motion conference, is MOOT. The Clerk of Court is respectfully DIRECTED to enter judgment and close this case. So Ordered by Judge Nicholas G. Garaufis on 1/29/2018. (fwd'd for jgm) (Lee, Tiffeny)

Vlf
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-X

CASTCAPA CONSTRUCTION,LLC,
MEMORANDUM & ORDER

Plaintiff,

17-CV-1023(NGG)
(SJB)
-againstTMB SERVICES LIMITED LIABILITY

COMPANY,MICHAEL MCCLAIN,and
TRACEYMCCLAIN,
Defendants.
-X

NICHOLAS G. GARAUFIS,United States District Judge.

On February 23,2017, Plaintiff Castcapa Construction, LLC,commenced this breach-ofcontract action against Defendants TMB Services Limited Liability Corporation("TMB")and
Michael and Tracey McClain(the "Guarantors"). (Compl.(Dkt. 1).) Defendants have not

appeared in this action and have failed to answer or otherwise respond to the Complaint. On

May 5,2017,the Clerk of Court entered default against Defendants. (Clerk's Certificate of
Default as to Guarantors(Dkt. 20); Clerk's Certificate of Default as to TMB (Dkt. 21).) On

May 19,2017,Plaintiff moved pursuant to Federal Rule of Civil Procedure 55 for a default
judgment against all defendants(the "Motion"). (Mot. for Default J.("Mot.")(Dkt. 22).) The
court referred the Motion to Magistrate Judge Ramon E. Reyes, Jr., for a Report and

Recommendation("R&R")pursuant to 28 U.S.C. § 636(b)(1)(B)and Federal Rule of Civil
Procedure 72(b)(1). (May 22,2017, Order.)

On July 24, 2017, Judge Reyes issued an R&R recommending that the court grant the
Motion and hold the Defendants "jointly and severally liable for $125,438 - representing

$101,996.67 in unpaid princip[al] and interest, $382.68 in default interest, and $23,058.65 in

attorney's fees - plus an additional $50.99 in default interest, from May 24,2015 until entry of
judgment, and post-judgment at the statutory rate." (R&R(Dkt. 25)at 1.)

No party has objected to the R&R and the time to do so has passed.

Fed. R.

Civ. P. 72(b)(2). The court therefore reviews the R&R for clear error. See 28 U.S.C.
§ 636(b)(1); Wider V. Colvin. 245 F. Supp. 3d 381, 385(E.D.N.Y. 20171: see also Porter v.
Potter. 219 F. App'x 112(2d Cir. 2007)(summary order). The court finds no clear error except

as to Judge Reyes's recommendation regarding attorneys' fees, as described below. Therefore,
the court ADOPTS the R&R in part and MODIFIES it in part, to the extent it is inconsistent with
the following. See 28 U.S.C. § 636(b)(1)(providing that district court"may accept, reject, or

modify, in whole or in part, the findings or recommendations made by the magistrate judge").
1.

PRINCIPAL AND INTEREST

The court finds no clear error in the R&R's conclusion that the Defendants should be

held jointly and severally liable for breach oftheir contractual obligations under the Notes and
Guarantees. (R&R at 2-3.) As Judge Reyes correctly notes, xmder New York law,"a plaintiff
need only show the existence of a promissory note, executed by the defendant, and a default
under the terms of said note" in order to find the defendant liable under the note. (Id. at 3 (citing

Cohen v. Movtadv. 751 F. Supp. 2d 436,439(E.D.N.Y. 2010)).) The analysis is similar for a
guarantee. (See id.)

The R&R proposes to award Plaintiff$101,996.67 in unpaid principal and regular interest
and $382.68 in default interest. (Id at 3-4.) The amount owed in principal and regular interest
was correctly calculated. In calculating the amount owed in default interest, however,the R&R
made a small typographical error. In the Complaint, Plaintiff states that Defendants have

paid $1003.33 in interest on the first note. (Compl. at 3.) In the R&R,that payment was credited
to the amount of money owed on the second note, rather than the first note. (R&R at 4.) This

typographical error only matters because the formula for calculating default interest on each note
is based on the amount of outstanding principal and regular interest on that note. Finding no
clear error with the calculation method set out in the R&R,the court recalculates the default

interest as follows: Plaintiffis entitled to $201.99 for the first note(((18% / 360 days)*

$50,496.67 owed)* 8 days), and $180.25 for the second note(((18% / 360 days)* $51,500
owed)* 7 days). Plaintiff is therefore awarded repayment of$101,996.67 in unpaid principal
and regular interest and $382.24 in default interest.
n.

ATTORNEYS'FEES

A.

Basis for the Award of Attorneys' Fees

The language ofthe contracts at issue in this case states that,"in the event [Plaintiff]

retains counsel after an uncured default in payment or with respect to the enforcement ofthis
Note or any other document or instrument given to [Plaintiff],[TMB]agrees to pay [PlaintifTs]
reasonable attorneys' fees." (Ex. 8 to Decl.(Dkt. 23-8); Ex. 10 to Decl.(Dkt. 23-10).) Plaintiff
has requested $23,058.65 in attorneys' fees and costs pursuant to this clause. (See Decl.
(Dkt. 23) at 5-7; Ex. 12 to Decl.(Dkt. 23-12); Ex. 13 to Decl.(Dkt. 23-13).)
B.

Legal Standard

In calculating the reasonableness ofa request for attorneys' fees, courts examine "the

lodestar—^the product of a reasonable hourly rate and the reasonable number ofhours required by
the case." Millea v. Metro-North R.R. Co.. 658 F.3d 154, 166(2d Cir. 2011). The lodestar

method is used to determine a "presumptively reasonable fee." Arbor Hill Concerned Citizens
Neighborhood Ass'n v. County of Albanv.522 F.3d 182,183(2d Cir. 2008). Courts assessing
whether an attorney's hourly rate and time expended are "reasonable" should consider the
following factors:

the complexity and difficulty ofthe case,the available expertise and
capacity ofthe client's other counsel(if any),the resources required
to prosecute the case effectively (taking account of the resources
being marshaled on the other side but not endorsing scorched earth
tactics), the timing demands ofthe case, whether an attomey might
have an interest(independent of that of his client) in achieving the
ends of the litigation or might initiate the representation himself,
whether an attomey might have initially acted pro bono (such that a
client might be aware that the attomey expected low or non-existent
remuneration), and other retums (such as reputation, etc.) that an
attomey might expect from the representation.
Id at 184.

The R&R was clearly erroneous because it did not, on the face ofthe opinion, make any
findings as to the reasonableness ofthe fee awarded to Plaintiff's counsel.

Millea. 658 F.3d

at 166("While the lodestar is not always conclusive, its presumptive reasonability means that,
absent extraordinary circumstances, failing to calculate it as a starting point is legal error."); see

also Kroshnvi v. U.S. Pack Courier Servs.. Inc.. 771 F.3d 93, 108(2d Cir. 2014)("Upon remand,
we strongly suggest that the district court begin its calculation by first performing a lodestar
analysis...."(citing Perdue v. Kennv A. ex rel. Winn. 559 U.S. 543,552-55 (2010))). As
shown below, the proper lodestar calculation yields the conclusion that Plaintiff's fee request is
unreasonable as to both hourly rates and the number of hours.
C.

Reasonableness of the Hourly Rates

The reasonable hourly rate is "what a reasonable, paying client would be willing to pay,
given that such a party wishes to spend the minimum necessary to litigate the case effectively."
Simmons v. N.Y. Citv Transit Auth.. 575 F.3d 170,174(2d Cir. 2009)(intemal quotation marks

omitted). Under the Second Circuit's "forum rule," the calculation ofa reasonable hourly rate
must be "consistent with those [rates] charged locally," i.e., in the district in which the litigation
occurred. Arbor Hill. 522 F.3d at 191. The forum mle is a presumption that can only be
overcome if the litigant "persuasively establishfes] that a reasonable client would have selected

out-of-district counsel because doing so would likely(notjust possibly) produce a substantially
better net result." Simmons. 575 F.3d at 175. Although "courts in this district have criticized

Simmons given the close proximity ofthe Eastern and Southern Districts, and the overlap of
their respective legal markets," the court is bound to apply the forum rule unless the presumption
is rebutted. 246 Sears Rd. Corp. v. Exxon Mobil Corp.. No.09-CV-889(NGG)
(JMA),2013

WL 4506973, at *10 & n.2(E.D.N.Y. Aug. 22,2013)(citing Simmons. 575 F.3d at 175).

David Berger, a partner with approximately twenty-seven years of experience, billed

Plaintiff at $525 per hour.^ He billed a total of 9.05 hours to this matter. (Decl. at 6.) For
partners with similar experience, courts in this district have approved hourly rates between $400
and $475 per hour. See 246 Sears Rd.. 2013 WL 4506973, at *11 (collecting cases). Courts in
this district have awarded rates higher than this range, but these have been in unusually
demanding cases. See, e.g.. United States v. Citv ofNew York. No.07-CV-2067(NGG)
(RLM),
2013 WL 5542459, at *8(E.D.N.Y. Aug. 30,2013)(awarding $550 hourly rate "[bjased on the

extraordinary nature ofthis litigation, the efforts it has required of counsel, and the exceptional
qualifications ofthe partners"); Manzo v. Sovereign Motor Cars. Ltd.. No.08-CV-1229(JG)

(SMG),2010 WL 1930237, at *8(E.D.N.Y. May 11,2010)(awarding $480 hourly rate to

partner who served as lead trial counsel). This case was a routine contractual action that did not
require special experience or impose unusual demands on counsel's time—^particularly in light of
the fact that Defendants never so much as answered the Complaint. Thus,there is no need for an

upward departure from the standard range of hourly rates for partners. The fees for work

performed by Mr. Berger should be recalculated based on an hourly rate of$450.

^ The rates for Plaintiffs counsel, with the exception of Mr. Ehrlich, were supposedly discounted from their
"current" rates. (Decl. at 5.)

Mark Bauman, a partner with approximately forty years of experience, also billed

Plaintiff at $525 per hour. He billed a total ofnine hours to this matter.^ For the same reasoning
as stated above regarding Mr. Berger,the fees for work performed by Mr. Bauman should be
recalculated based on an hourly rate of$450.
Kevin MacMillan, a partner with approximately sixteen years of experience, billed

Plaintiff at $450 per hour. He billed a total of4.75 hours to this matter. For partners with
aroimd sixteen years of legal experience, courts in this district generally award hourly rates

ranging from $300 to $400. See, e.g.. Favors v. Cuomo.39 F. Supp. 3d 276,306(E.D.N.Y.
2014)(awarding $400 hourly rate to a partner with sixteen years of experience); Fermin v. Las
Delicias Peruanas Rest.. Inc.. 93 F. Supp, 3d 19, 52(E.D.N.Y. 2015)(awarding a $350 hourly
rate to an attorney with sixteen years of experience in general civil litigation). Again, because

this case was rather straightforward and did not require a great expenditure of Mr. MacMillan's

time, there is no need to set Mr. MacMillan's rate at the upper end ofthe range. The fees for
work performed by Mr. MacMillan should be recalculated based on an hourly rate of$350.
Plaintiff seeks to recover fees for Alexander Ehrlich, an associate with less than one year
ofexperience and whose bar admission was pending at the time ofthe work for which Plaintiff

now seeks compensation, at $325 per hour. Unlike every other attorney and staff member billing
for work in conjunction with this litigation, Mr. Ehrlich did not discount his billing rate. (Decl.

at 6.) Mr. Ehrlich's hourly rate is well above that awarded by courts in this district to junior

associates, who are typically compensated at between $100 to $200 per hour.

Friedman v.

Self Help Cmtv. Servs.. Inc.. No. ll-CV-3210(NGG)
(JO),2017 WL 663539, at *2(E.D.N.Y.

^ While the declaration submitted with Plaintiff's motion for defaultjudgment stated that Mr. Bauman billed seven
hours to this matter(Decl. at 6), a review ofthe billing statements confirms that he actually billed nine hours to this
matter(see Ex. 12 to Decl. at ECF pp.3, 8,12; Ex. 13 to Decl. at p.3).
6

Feb. 17,2017); see also Sass v. MTA Bus Co..6 F. Supp. 3d 238,261 (E.D.N.Y. 2014)
(collecting cases). Fee awards at or above the upper end ofthis scale are only proper for

associates with particularly valuable experience. For example, a magistrate judge in this district
recently recommended awarding $200 to ajunior associate in a civil-rights action because "his
qualifications and experience in the short time since graduating firom law school...justif[ied] an
hourly rate on the high end ofthe range for junior associates." Thomas v. Citv ofNew York.

No. 14-CY-7513(ENV)
(VMS),2017 WL 6033532, at *5(E.D.N.Y. Dec. 1, 2017). While the
court has no reason to doubt Mr. Ehrlich's legal acumen.Plaintiff has shown no reason why he
merits an award outside the typical range. Additionally, as discussed below,the court has
concerns about the number of hours Mr. Ehrlich billed to this matter. Frankly,the court is at a

loss as to why,in light ofthe evidence showing that the hourly rate for Mr. Ehrlich is well
outside the range of similar awards in this district, counsel for Plaintiff did not discount his time,
as they did for their partners' time. CSee Decl. at 6.) The fees for work performed by Mr.
Ehrlich should be recalculated based on an hourly rate of$175.

Collins Burgess-Jackman, the firm's "Managing Clerk and Paralegal," with

approximately nineteen years of experience (Decl. at 6-7), billed Plaintiff at $125 per hour. He
billed a total of 11.75 hours to this matter. While the court appreciates Mr. Burgess-Jackman's

experience, his rate is still beyond that which is typically awarded in this district for work
performed by similarly experienced legal staff members.

Hilton v. UK Fragrances. Inc.,

No. 12-CV-6346(JFB)(AKT),2014 WL 794304, at *10-11 (E.D.N.Y. Feb. 25,2014)

(awarding $90 hourly rate to a"managing clerk" with a $230 regular hourly rate); see also
Thomas.2017 WL 6033532, at *6("Prevailing hourly rates for pardegals in this District are

typically between $75.00 and $100.00."). The fees for work performed by Mr. Burgess-Jackman
should be recalculated based on an hourly rate of$100.

Emily Sieme,a paralegal with three years ofexperience, also billed Plaintiff at $125 per
hour. She billed a total of0.50 hours to this matter. Although Ms. Sieme's billable work on this
matter is, in the scheme ofthings, ofrather little financial consequence, her hourly rate is still
beyond that which courts in this district generally award for time billed by legal staff without

extensive or specialized experience, as explained above. Plaintiff's declaration does not state
what Ms. Sieme's hourly rate is(Decl. at 7), but the court assumes it is lower than that of Mr.
Burgess-Jackman, given that Ms. Sieme is less experienced. The fees for work performed by
Ms. Sieme should be recalculated based on an hourly rate of$90.
D.

Reasonableness of the Number of Hours

When determining a reasonable number of hours for the purposes ofcalculating the
lodestar, the court must consider "whether the time records submitted by Plaintiffs counsel

reflect a reasonable expenditure ofhours for this particular case." Singh v. Zoria Hous. LLC.
No. 16-CV-2901 (SJ)(RER),2017 WL 6947717, at *2(E.D.N.Y. Nov. 17,2017), report and rec.
adopted, 2018 WL 437492(E.D.N.Y. Jan. 16,2018). "[I]f a court finds that claimed hoxirs are
'excessive, redundant, or otherwise unnecessary,' it should exclude those hours from its
calculation ofthe presumptively reasonable fee." Guaman v. J & C Top Fashion. Inc.. No. 14CV-8143(GBD)
(GWG),2016 WL 791230, at *8 (S.D.N.Y. Feb. 22,2016) rauoting Henslev v.
Eckerhart. 5461 U.S.424,434(1983)), report and rec. adopted. 2017 WL 111737(S.D.N.Y.

Jan. 11,2017). In so doing,"the court has discretion simply to deduct a reasonable percentage of
hours claimed as a practical means oftrimining fat from a fee application." Kirsch v. Fleet St..
Ltd.. 148 F.3d 149,173(2d Cir. 1998)(internal quotation marks omitted).

In this case, Plaintiff's counsel billed a total of64.30 hours.^ Over the course ofthis
litigation, Plaintiff has filed only two substantial papers with the court: the initial complaint
(Compl.); and the motion for defaultjudgment(Mot;Mem.in Supp. of Mot.(Dkt. 24)).
Defendants have not entered an appearance in this case. From all appearances,therefore, it

seems that "this case was not unusually complex; that it did not demand great resources; that it
involved no contested litigation; and that there were no particular timing demands on the case."
See Guaman.2016 WL 791230, at *10. Given the ease with which this case could have been

prosecuted, the court is perplexed as to how Plaintiff's counsel feels it is "reasonable" to
bill 52.05 hours for three partners' and one associate's time,in addition to 12.25 hours oflegal
staff time. This is particularly true for the time spent on the motion for defaultjudgment,for
which Plaintiffs counsel billed 34.75 hours, including 27.50 hours for Mr. Ehrlich's research for

and drafting ofthe motion for defaultjudgment."^ (Ex. 13 to Decl.)
At the end ofthe day,the 64.30 hours that Plaintiffs counsel billed on this matter is "an
imusually high number of hours for work on a case that involved merely the drafting of a

complaint and an application for a defaultjudgment." Guaman.2016 WL 791230, at *8; see
also Trs. ofthe Pension Fund ofHeat & Frost Insulators Local 12 v. Ideal Core Sols. NY Corp..

No. 17-CV-4147(MKB)
(VMS),2017 WL 6611707, at *5(E.D.N.Y. Dec. 4,2017)(collecting
cases that found 10-30 hours of work in ERISA defaultjudgment cases to be reasonable), report

^ The declaration provided by Plaintiffs counsel attested to 62.30 billable hours. (See Decl. at 6-7.) The billing
statements submitted as exhibits, however, add up to a total of64.30 billable hours. (See Ex. 12 to Decl; Ex. 13 to
Decl.) This figure does not include Plaintiffs' implied—^but not fully set out—reduction of hours, as discussed infia
note 4.

'• Plaintiffs counsel notes that, while Plaintiff"incurred $11,343.75 in attorneys' fees fi-om May 1,2017 to date,"

only $10,425.00 ofthose fees "were in connection with enforcement ofthe Agreements." (Decl. at 5 n.l.)
Assuming that Plaintiffs counsel is referring to the work by Mr. Ehrlich which is redacted in the billing statements
(Ex. 13 to Decl. at ECF p.5), subtracting the total submitted fi-om the total billed, divided by Mr. Ehrlich's billing
rate, leads the court to conclude that counsel for Plaintiffs is reducing Mr. Ehrlich's billed hours by 2.83. Thus, any
calculations by this court related to reasonable hours will include such a reduction. The court notes, though,that
more clarity on this point by Plaintiffs counsel would have been appreciated.

and rec. adopted. 2017 WL 6611572(E.D.N.Y. Dec. 27,2017); Maas v. Spencer Leasing Corp.,
No. 12-CV-2951(ADS)
(AKT),2013 WL 5308859, at *19(E.D.N.Y. Sept. 18,2013)

(finding 29.1 hours to be a reasonable expenditure oftime in a TILA defaultjudgment action).
A fifty-percent across-the-board reduction in the number of hours billed is proper to bring this
case in line with other similar actions. S^ Guaman.2016 WL 791230, at *8-9(reducing the
number ofhours billed by fifty percent in a similar action).
E.

Total Fees

The hours and rates described above produces an award of$7814.25, as shown in the
follovring table:
Attorney/

Requested

Reasonable

Requested

Reasonable

Total

Hours

Hours

Awarded:

Staff Member

Rate

Rate

D.Berger

$525
$525
$450
$325
$125

$450
$450
$350
$175
$100

$125

$90

M.Bauman
K. MacMillan
A.Ehrlich

C. Burgess-

9.05

4.525

9.00

4.500

4.75

2.375

26.42^

13.210

11.75

5.875

0.50

0.250

$2036.25
$2025.00
$831.25
$2311.75
$587.50

Jackman

E. Sieme

Total:
F.

$22.50
$7814.25

Costs

The court finds no clear error in the decision to award Plaintiff$1326.15 in costs. The

costs billed by Plaintiff's counsel include a filing fee of$400; a title fee of$250; printing,

imaging, and postage expenses of$406.15; and a "service fee" of$270. (See Ex. 12 to Decl. at
EOF pp.6,11,15; Ex. 13 to Decl. at EOF p.6.) These costs are reasonable and commensurate
with what the court would expect from this sort oflitigation.

See supra note 4.
10

in.

CONCLUSION

For the reasons stated above, the court ADOPTS IN PART and MODIFIES IN PART the

R&R(Dkt. 25). Plaintiffs Motion for Default Judgment(Dkt. 22)is GRANTED. The court
AWARDS Plaintiff damages in the amount of$111,519.31—^representing $101,996.67 in unpaid

principal and interest, $382.24 in default interest, and $9140.40 in attorneys' fees and costs—
plus an additional $50.99 per day in default interest, from May 24,2015, until entry ofjudgment,
and post-judgment at the rate set forth in 28 U.S.C. § 1961. The proposed motion practice giving
Plaintiffleave to file a motion seeking an order of attachment and other provisional relief, as
discussed at the January 24, 2018, pre-motion conference, is MOOT. The Clerk of Court is
respectfully DIRECTED to enterjudgment and close this case.
SO ORDERED.

s/Nicholas G. Garaufis
Dated: Brooklyn, New York
January

United States District Judge

,2018

11