Gallagher's NYC Steakhouse Franchising, Inc. v. NY Steakhouse Of Tampa, Inc. et al

Filing 34

MEMORANDUM OPINION AND ORDER re: 27 MOTION for Reconsideration re; 25 Memorandum & Opinion filed by Mitchell J. Walker, NY Steakhouse Of Tampa, Inc., James Tully. For the reasons set forth above, Defendants' motion for reconsideration is den ied, and Plaintiff is entitled to attorneys' fees in the amount of $40,693.65. The Clerk of Court is directed to enter judgment in favor of Plaintiff and against Defendants in the total amount of $158,861. 49, consisting of $106,393.27 in damages, $11,774.57 in interest, and $40,693.65 in attorneys' fees and costs. (Signed by Magistrate Judge Theodore H. Katz on 12/29/2011) (lmb)

;\ USDCSDNY
DOCUMENT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

--------x
GALLAGHER'S NYC STEAKHOUSE
FRANCHISING, INC.,

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Plaintiff,

11 Civ. 1456 (THK)

-against
MEMORANDUM OPINION AND
ORDER

NY STEAKHOUSE OF TAMPA, INC.,
JAMES TULLY, AND MITCHELL J.
WALKER,
Defendants.

x
THEODORE H. KATZ, UNITED STATES MAGISTRATE JUDGE.

On December 5, 2011, this Court granted Plaintiff Gallagher's
New York City Steakhouse Franchising, Inc.

("Gallagher's") summary

judgment, awarding Plaintiff damages in the amount of $106,393.27,
plus

interest

in

attorneys' fees.

the

amount

of

$11,774.57,

plus

reasonable

See Gallagher's NYC Steakhouse Franchising, Inc.

v. NY Steakhouse of Tampa. Inc.

("Gallagher's"), No. 11 Civ. 1456

(THK) , 2011 WL 6034481 (S.D.N.Y. Dec. 5, 2011).

The Court withheld

entry of judgment, directing Plaintiff to submit documentation to
enable the Court to determine the reasonableness of the requested
attorneys' fees.

In the same Opinion and Order, the Court denied

Defendants

York

New

Gallagher' S"),
("Walker")

James Tully

motion

counterclaims.

Steakhouse

See

for

of

("Tully"),

leave
at *7-9.

to

Tampa,

Inc.

and Mitchell

amend

the

Answer

J.

( "Tampa
Walker's
to

assert

Presently before

the

Court

is

Defendants'

motion

seeking

reconsideration of the Court's Order denying Defendants leave to
amend

the

Answer.

In

addition,

Plaintiff

has

submitted

the

Declaration of Kevin M. Shelley, which provides documentation of
the

attorney

Plaintiff

in

time

and

expenses

this

matter.

associated

Each

party

with

opposes

representing
the

other's

application.
For the reasons that follow, the motion for reconsideration is
denied, and attorneys'

s and costs are awarded to Plaintiff in

the amount of $40,693.65.

BACKGROUND

The facts underlying this action are discussed in detail
this Court's December 5 Opinion and Order, familiarity with which
is assumed.

The Court reiterates only those facts necessary to the

disposition of the instant motion for reconsideration.
On August 29, 2006, Gallagher's and Tampa Gallagher's entered
into a

Franchise Agreement

for

the operation of a

Gallagher's

Steakhouse in Tampa, Florida.

In conjunction with the Franchise

Agreement,

signed

ly

and

Walker

a

personal

Gallagher's terminated the Franchise Agreement,

guarantee.
November 2010,

based on Tampa Gallagher's failure to pay continuing royalties as

2

required

by

the

Franchise

Agreement. 1

Gallagher's

filed

the

instant action for breach of contract and breach of the personal
guarantee on March 3, 2011, seeking damages in the amount of the
past-due continuing royalt
On August 19, 2011, this Court issued a Scheduling Order that
required

any

motions

September 19, 2011.

to

amend

the

pleadings

to

be

(See Order, dated Aug. 19, 2011.)

filed

by

On October

12, 2011, after completion of pretrial discovery, Plaintiff filed
a motion for summary judgment.

On November 2,

2011,

nearly two

months after the deadline for amending the pleadings, Defendants
filed a motion to amend the Answer to add several counterclaims
related to Gallagher's alleged breach of the Franchise Agreement.
Defendants' motion was not based on newly discovered informationj
in fact,

Defendants had been aware of the facts underlying the

proposed counterclaims since October 2010.
for

Leave

("Motion

to
to

File

Amend")

Amended
at

2;

Answer
Answer

and
at

(See Defendants' Motion
Counterclaim

4

~

9.)

Instanter

Nevertheless,

Defendants argued that good cause existed to grant leave to amend
because Defendants had sought to save the expense and effort of
filing their counterclaims until settlement of this action proved

Gallagher's and Tampa Gallagher's entered into a limited
term franchise agreement in November 2010, which allowed for the
continued operation of the Tampa Gallagher's restaurant through
January 2, 2011.
1

3

ile and Plaintiff would not be prejudiced because it was aware
the counterclaims.

(See Motion to Amend at 3.)

In the December 5 Opinion, the Court found that Defendants had
failed

to

establish

good

cause

their

proposed

untimely

amendment of the Answer because Defendants were not diligent in
pleading the counterclaims and Plaintiff would suffer

udice if

leave were granted because discovery had not been taken on the
counterclaims

and

the

discovery

deadline

Gallagher's, 2011 WL 6034481, at *8.
the counterc
merits.

had

passed.

See

The Court further noted that

appeared to have little chance of success on the
at *8-9.

Defendants now move for reconsideration of the Court's denial
of Defendants' motion to amend

Answer.

They contend that the

Court labored under "factual misimpressions" when it issued the
Order, and that good cause exists such that the Court must grant
Defendants' motion.

DISCUSSION

I.

Motion for Reconsideration
A.

Legal Standard

Motions for reconsideration are governed by Local Civil Rule
6.3 of the Southern Dis

of New York ("Local Rule 6.3").

Rule 6.3 provides that a motion for recons
4

Local

ion of a court

order must be served with "a memorandum setting forth concisely the
matters or controlling decisions which counsel believes the court
has overlooked."

Local Rule 6.3.

"The standard for granting such

a motion is strict, and reconsideration will generally be denied
unless the moving party can point to controlling decisions or data
matters,

that the court overlooked

other words,

reasonably be expected to alter the
court."
1995)i

(RJH)

Shrader v. CSX Transp.,
accord Cohen v.

conclusion reached by the

Inc.,

70 F.3d 255, 257

Federal Express Corp.,

(THK) , 2007 WL 1573918, at *4

also Jones v. Donnelly, 487 F. Supp.

that might

No.

(2d Cir.

07 Civ.

(S.D.N.Y. May 24, 2007)
2d 418, 419

01288
i

see

(S.D.N.Y. 2007)

(holding that reconsideration is an "extraordinary remedy to be
employed sparingly in the interests of finality and conservation of
scarce judicial resources")
Sec.

Litig.,

113

F.

Supp.

Reconsideration is not a

(quoting In re Health Mgmt. Sys. Inc.
2d

613,

614

(S.D.N.Y.

2000)).

"second bite at the apple" for a party

dissatisfied with a court's ruling, see Fesco Ocean Mgmt. Ltd. V.
High Seas Shipping Ltd., No. 06 Civ. 1055 (NRB) , 2007 WL 1406624,
at *1 (S.D.N.Y. May 9, 2007)

(quoting Sequa Corp. v. GBJ Corp., 156

F.3d 136, 144 (2d Cir. 1998)), nor is it an opportunity to "advance
new facts,

issues,

or arguments not previously presented to the

court," Frierson-Harris v. Hough, No. 05 Civ. 3077 (DLC) , 2007 WL
1343843, at *1 (S.D.N.Y. May 8, 2007)
5

(quoting Shamis v. Ambassador

"A motion for

Factors Corp., 187 F.R.D. 148, 151 (S.D.N.Y. 1999))

reconsideration may not treat 'the court's initial decision as the
opening of a dialogue in which that party may then use such a
motion to advance new theories or adduce new evidence in response
to the court's rulings.

III

Frierson-Harris, 2007 WL 1343843, at *1

{quoting Questrom v. Federated Dep't stores, Inc., 192 F.R.D. 128,
131 (S.D.N.Y. 2000».

"The sole function of a proper motion for

reconsideration is to call to the Court's attention dispositive
facts or controlling authority that were plainly presented in the
prior

proceedings

but

were

somehow

overlooked

in

the

Court' s

decision; in other words, an obvious and glaring mistake.

Motions

for reconsideration allow the district court to correct its own
mistakes,

not

those

Antiguest Corp., No.

of

the

[p] arties. "

04 Civ. 1504

(KMK),

Levin

v.

Gallery

63

2007 WL 1288641, at *2

(S.D.N.Y. Apr. 30, 2007) (internal quotation marks, citations, and
parentheticals omitted)
B.

Application

Defendants
controlling

do

not

authority;

contend
rather,

that

the

Court

Defendants

overlooked

argue

that

reconsideration is proper in this case because "the Opinion rests
on factual misimpressions as to whether Defendants have good cause
to seek leave to plead the proposed counterclaim."
Motion for Reconsideration ("Mot.") at 1.)

(Defendants'

For substant

ly the

6

-,..,....",.,.,'·lI"lrIIl. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
_

1iIIiIii!i!J"'''~ •.

reasons

articulated

more

fully

in

Plaintiff's

Opposition

to

Defendants' Motion for Reconsideration ("Pl. 's Opp'n"), this Court
denies Defendants' request for reconsideration.
In brief, Defendants have
Local Civil Rule 6.3.

led to meet their burden under

Specif

ly,

Defendants have failed to

identify any dispositive facts overlooked by the Court that "might
reasonably be expected to
[C]ourt."
1995) .

alter the

conclusion reached by the

Shrader v. CSX Transp.! Inc.! 70 F.3d 255! 257 (2d
Defendants contend that the Court

"misunder [stood]

the

situation" when it concluded that Defendants did not demonstrate
diligence in asserting their counterclaims.

However, Defendants do

not point to any facts suggesting that the Court's conclusion was
incorrect.
have

Instead, Defendants

incurred had

they

timely

terate the expense they would
fi

the

counterclaims.

argument was asserted in Defendants' original motion
Amend at 3-4)

i

Motion to

it was not overlooked by the Court, see Gallagher's,

2011 WL 6034481,
Defendants'

This

at *8;

and it does not establish

part or good cause

for

ligence on

ling to comply with the

Court ordered deadline for amending the pleadings.
Moreover, Defendants have failed to identify facts overlooked
by the Court in determining that Plaintiff would suffer prejudice
if Defendants were granted leave to amend.

Defendants assert that

the Court's conclusion on prejudice was based on a "misimpression
7

that

Plaintiff

was

unaware

of

Defendants'

(Mot. at 2.)

November 2, 2011. n

Defendants are incorrect.

and,

instead,

until
The

Plaintiff had knowledge

Court did not make a finding as to whe
of the counterclaims,

counterclaim

found that Plaintiff would

suffer prejudice because "Plaintiff did not have the opportunity to
obtain discovery on the counterclaims, and the discovery deadline
has

now

passed.

Granting

Defendants'

motion

would

reopening discovery on a different set of facts than those
present pleadings.
this

spute."

This would s

ficantly delay resolution of

Gallagher's, 2011 WL 6034481, at *8. 2

As Defendants have failed to demonstrate disposit
overlooked

by

the

the

Court

in

s

December

5

Opinion

facts
denying

Defendants leave to amend, Defendants' motion for reconsideration
is denied.

2 Defendants also claim that the Court's "findings" on the
apparent futility of the proposed counterclaims were "based on
impressions.
(Mot. at 3 4.) Whatever observations the
Court may have made about the apparent futility of the proposed
counterclaims were not di
itive factors underlying the Court's
dec ion to deny Defendants leave to amend. The Court's findings
that Defendants were not diligent in asserting the counterclaims
and failed to show good cause for their delay were grounds enough
for denying Defendants' motion. See Presbyterian Church of Sudan
v. Talisman Energy, Inc., 582 F.3d 244, 267-68 (2d Cir. 2009)
(upholding district court's denial of leave to amend solely on
"good cause" grounds without reviewing the court's conclusion on
futility) i
Parker v. Columbia Pictures Indus., 204 F.3d 326, 340
(2d Cir. 2000) (discussing the primacy of diligence in the good
cause analysis).
ff

8

II.

Attorneys' Fees
In its December 5 Opinion,

Franchise

Agreement

the

unambiguously

Court determined that

provided

attorneys' fees to Gallagher's if it

for

the

led in the action.

Having granted Plaintiff summary judgment,

at *7.

award

the
of
See

the Court

determined that Plaintiff was entitled to reasonable attorneys'
fees

and directed

Plaintiff

to

submit

contemporaneous

supporting the requested fees.
Shelley

Declaration

in

Plaintiff submitted the

response

attorneys' fees and $1,583.94
6 7.)

records

and

requested

expenses.

$51,913.50

(See Shelley Decl.

in
~~

Defendants argue that some of the requested fees Plaintiff

seeks were

incurred before the

initiation of

the

litigat

Specifically, Defendants object to Plaintiff's inclusion of fees
related to Plaintiff's termination of the Franchise Agreement with
Defendants, in the amount
A.

$15,700.19.

Legal Standard

"Under New York law, a contract that provides for an award of
reasonable attorneys' fees to the prevailing party in an action to
enforce the contract

enforceable if the contractual language is

sufficiently clear."

NetJets Aviation, Inc. v. LHC Commc'ns, LLC,

537 F.3d 168, 175

(2d

2008)

(citations omitted).

However,

" [b]ecause promises in a contract to indemnify the other party's
attorney's fees run against the grain of the accepted policy that
9

+,

parties are responsible

for their own attorneys'

s,

.,

courts applying New York law should not infer a party's intention
to provide counsel fees as damages for breach of contract unless
the intention to do so is unmistakably clear from the language of
the contract.
Fine

Host

Mid-Hudson Catskill Rural Migrant Ministry, Inc. v.

If

Corp.,

418

F.3d

168,

177

(2d

quotation marks and citations omitted).

Cir.

2005)

Accordingly,

clauses providing for indemnification of attorneys'

(internal
contract

fees must be

narrowly interpreted.

See id. at 177; Hooper Assocs., Ltd. v. AGS

Computers,

N.Y.2d

Inc.,

(1989) ("When

a

74

party

is

487,

under

491,

no

549

legal

N.Y.S.2d

duty

to

365,

367

indemnify,

a

contract assuming that obligation must be strictly construed to
avoid reading into it a duty which the parties did not intend to be
assumed.")
B.

(citations omitted).
Application

Here,

the plain language of the attorneys'

indicates that
1

Plaintiff

is only entitled to

igation to enforce the contract.

fees provision

fees

relating to

The provision specifically

provides that Gallagher's may only recover "reasonable attorneys'
fees,

experts'

litigation,
against

if

fees,

court

[Gallagher's]

[Tampa Gallagher's]

costs,

and

prevail[s]

all

other

/I

of

in any action instituted

to secure or protect

rights under this Agreement

expenses

[Gallagher's]

(See Franchise Agreement

~

10

!!""'!'!'!;'l"';"1'"i"!!'l'iN!"'!III_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
if~~';

29.01)

(emphasis added).

language of the contract fails to

include pre-litigation costs as recoverable.

Accordingly,

the

Court construes the provision to permit only recovery of the fees
and expenses incurred in litigating the present action.
74 N.Y.2d at 491 92,

Hooper

549 N.Y.S.2d at 367

(finding

that promises for indemnification of attorneys' fees "should not be
found

sit

can be

language

and

purpose of

the entire agreement and the surrounding facts

and

circumstances") .
attorneys'

clearly implied from

Plaintiff,

fees

therefore,

is

the

not

entitled

to

incurred in terminating the Franchise Agreement

with Defendants or in entering into the limited term franchise
agreement with Defendants.
Having reviewed the attorney billing statements attached to
the Shelley Declaration,

the Court finds that the hourly rates,

hours expended, and costs incurred were reasonable.

Counsel for

Gallagher's had five different attorneys work on this matter, each
charging a different hourly rate based on relative experience.
(See

Shelley Decl.

~

6.)

3

Counsel

kept

contemporaneous

time

records of the labor expended on this matter, documenting the tasks
performed and the time spent by each attorney on each task.

3 The hourly rates range between $275 per hour and $600 per
hour, but only 1.4 hours were billed at the $600 rate. The vast
majority of the work was billed at rates ranging between $300 and
$450.

11

;"

;

Ex. A.)
id.)

Time expended was recorded to the tenth of an hour.

The amount of time expended on each task was reasonable.
Plaintiff provides time and cost records from two different

accounts: the 1193 02M account, a general account that predated the
current litigation,

and the 1193 05M account,

specifically for

this

Although some of

the

lit

ion.

(See

labor and costs

which was created

Shelly Decl.

~

5.)

recorded in the 1193 02M

account pertain to the current litigation and,
recoverable, several of the entries are unrelated.

accordingly,

are

The Court finds

that from the 1193 02M account, Plaintiff is entitled to the fees
incurred in 2010 on November 9 ($400), November II, November 16,
November 17 ($120), November 19 ($320), and December 9, and in 2011
on February 14, April 5, June 29, June 30, and July 7, which total
$4,010.

In addition, Plaintiff is entitled to all of the

sand

expenses incurred on the 1193-05M account, which total $35,601 and
$1,082.65

In

respectively.

total,

Plaintiff

is

entitled

to

attorneys' fees and costs in the amount of $40,693.65.

CONCLUSION

For

the

reasons

set

forth

above,

Defendants'

motion

for

reconsideration is denied, and Plaintiff is entitled to attorneys'
fees in the amount of $40,693.65.
to enter judgment

The Clerk of Court is directed

favor of Plaintiff and against Defendants in
12

the

total

amount

of

$158,861. 49,

consisting of

$106,393.27

in

damages, $11,774.57 in interest, and $40,693.65 in attorneys' fees
and costs.

So Ordered.

THEODORE H. KATZ
UNITED STATES MAGISTRATE JUDGE

Dated: December 29, 2011
New York, New York

13