Magder v. Lee et al

Filing 46

OPINION & ORDER re: 37 FIRST MOTION for Attorney Fees pursuant to copyright act 505 filed by Dining with Alex, LLC, Madhattan Film Company Global, LLC, Belton Lee, Christopher Bongirne. For the foregoing reasons, Defendants' motion for attorney's fees as prevailing parties under § 505 and the Purchase Agreement is denied. (As further set forth in this Opinion.) (Signed by Judge John F. Keenan on 8/17/2015) (mro)

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: Aug. 17, 2015

UNITED STATES DISTRICT COURT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SOUTHERN DISTRICT OF NEW YORK
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ANDREA MAGDER, 2008 SECURITIES
:
In re FANNIE MAE
:
08 Civ. 7831 (PAC)
:
LITIGATION
:
09 MD 2013 (PAC)
Plaintiff,
:
:
:
No. 14 Civ. 8461 (JFK)
:
OPINION & ORDER
-against:
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:
OPINION & ORDER
BELTON LEE, MADHATTAN FILM COMPANY :
GLOBAL, LLC, CHRISTOPHER BONGIRNE, :
MARC JACOBSON, P.C., MARC JACOBSON,:
HONORABLE PAUL A. CROTTY, United States District Judge:
and DINING WITH ALEX, LLC,
:
:
Defendants.
:
BACKGROUND1
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JOHN F. The early years of this decade sawDistrict Judge:
KEENAN, United States a boom in home financing which was fueled, among
Before the Court is Defendants Belton Lee, Madhattan Film
other things, by low interest rates and lax credit conditions. New lending instruments, such as
Company Global, LLC (“Madhattan”), Alt-A mortgages (low-documentation loans)
subprime mortgages (high credit risk loans) and Christopher Bongirne, Marc
Jacobson, P.C., Marc Jacobson, role too; they took on unmanageable risks on the
kept the boom going. Borrowers played a and Dining With Alex, LLC’S
motion for that the market would continue to rise and thatparties under would always be
assumption attorney’s fees as prevailing refinancing options both 17
U.S.C. § in the future.aLending discipline was lacking in the system. Mortgage originators did
provision of the Purchase Agreement entered
available 505 and
into hold these high-risk mortgage loans. Ratheron June the rising risk onFor books, the
not between Magder and Madhattan than carry 12, 2014. their the
reasons that their loans into the secondary mortgage market, often as securitized packages
originators sold follow, the motion is denied.
Familiarity with the background facts as set forth in Judge
known as mortgage-backed securities (“MBSs”). MBS markets grew almost exponentially.
Kevin Thomas Duffy’s1 bubble burst. In 2006, the demand for housing dropped abruptly
But then the housing opinion denying Plaintiff’s request for a
preliminary injunction islight of the changing Magdermarket, banksNo. 14 their
and home prices began to fall. In assumed. See housing v. Lee, modified
Civ. 8461, 2014 WL 6851271, at refinance home mortgages without 2014). As
lending practices and became unwilling to *1–3 (S.D.N.Y. Dec. 3, refinancing.
relevant here, after Judge Duffy denied the preliminary
1
injunction, Plaintiff filed a as “(¶ _)” or to the voluntary to the Amended Complaint,
Unless otherwise indicated, all references cited notice of “Complaint” are dismissal

dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.

1 Judge Duffy graciously agreed to hear the matter when I was
1
unable to, but at all times the case has been assigned to me.

without prejudice pursuant to Rule 41(a)(1)(A)(i) of the Federal
Rules of Civil Pdeferocedure on December 16, 2014.2 (ECF No. 33.)
Defendants made their motion for attorney’s fees on February 3,
2015.3
The Copyright Act provides that a court, in its discretion,
may award attorney’s fees to a prevailing party. See 17 U.S.C. §
505.

Here, Defendants are not entitled to fees because it is

not a “prevailing party.”

In Buckhannon Board & Care Home, Inc.

v. West Virginia Department of Health & Human Resources, 532
U.S. 598 (2001), the Supreme Court held that a party must
achieve a “judicially sanctioned change in the legal
relationship of the parties” in order to be a prevailing party.
Id. at 605.

Although it only directly addressed the provisions

in the Americans with Disabilities Act of 1990, 42 U.S.C. §
12205, and the Fair Housing Amendments Act of 1988, 42 U.S.C. §

2 Although Defendants had moved to dismiss Plaintiff’s claims,
they never entered an answer or moved for summary judgment.
Thus, Plaintiff was still free to unilaterally dismiss the
action without a court order. See Fed. R. Civ. P. 41(a)(1)
(allowing for unilateral dismissal by filing “a notice of
dismissal before the opposing party serves either an answer or a
motion for summary judgment”); Seippel v. Jenkens & Gilchrist,
P.C., No. 03 Civ. 6942, 2004 WL 2809205, at *1 (S.D.N.Y. Dec. 7,
2004) (“The filing of a motion to dismiss pursuant to Rule
12(b)(6) does not ordinarily affect the plaintiff’s right to a
Rule 41(a)(1) dismissal.”).
3 Defendants did not successfully file the motion on ECF until
February 24, 2015, having made unsuccessful attempts on February
3 and 4, 2015. The Court will consider, for the purposes of
this opinion, the motion filed as of February 3.
2

3613(c)(2), the opinion expressly referred to the “[n]umerous
federal statutes” that allow for fee-shifting. Id. at 600–01.
Taking the Supreme Court’s invitation, the Second Circuit
has subsequently indicated that Buckhannon’s holding applies
broadly to similar fee-shifting statutes. See J.C. v. Reg’l Sch.
Dist. 10, 278 F.3d 119, 123 (2d Cir. 2002) (noting that
Buckhannon “expressly signaled its wider applicability” and
applying it to the Individuals with Disabilities Education Act,
20 U.S.C. § 1415(i)(3)(B)); see also Perez v. Westchester Cnty.
Dep’t of Corr., 587 F.3d 143, 149 (2d Cir. 2009) (applying
Buckhannon to the Prison Litigation Reform Act, 42 U.S.C.
§ 1988(b)).

Although the Second Circuit has not specifically

applied Buckhannon to § 505, other courts in this district have.
See, e.g., EMI Entm’t World, Inc. v. Karen Records, Inc., No. 05
Civ. 390, 2015 WL 1623805, at *2 (S.D.N.Y. Feb. 27, 2015);
Ritani, LLC v. Aghjayan, 970 F. Supp. 2d 232, 265 & n.10
(S.D.N.Y. 2013); see also 6 William F. Patry, Patry on Copyright
§ 22:211 (discussing Buckhannon’s impact on § 505).
Applying Buckhannon, several courts in this district, in
both copyright and noncopyright cases, have distinguished
between a voluntary dismissal with prejudice and one without
prejudice. Compare, e.g., BWP Media USA, Inc. v. Gossip Cop
Media, LLC, No. 13 Civ. 7574, 2015 WL 321877, at *4 (discussing
the distinction and holding that the defendant was a prevailing
3

party under § 505 since parties had executed a stipulated
dismissal with prejudice), with United States v. Any and All
Funds on Deposit at JP Morgan Chase, No. 12 Civ. 7530, 2013 WL
5511348, at *4–5 (S.D.N.Y. Oct. 2, 2013) (applying Buckhannon
and holding that defendant had not substantially prevailed under
CAFRA because the Government voluntarily dismissed the complaint
without prejudice).
First, where, as here, the plaintiff unilaterally dismisses
the case without prejudice, such an act is not “judicially
sanctioned” since no court action is required. See TRF Music
Inc. v. Alan Ett Music Group, LLC, No. 06 Civ. 349, 2006 WL
1376931, at *2 (S.D.N.Y. May 18, 2006) (“The voluntary dismissal
lacks the judicial imprimatur to render defendants prevailing
parties.” (internal quotation marks omitted)).

Second, a

dismissal without prejudice is not a change in the legal
relationship between the parties because plaintiff can still
bring the claim again. See Ritani, 970 F. Supp. 2d at 265–66;
cf. Dattner v. Conagra Foods, Inc., 458 F.3d 98, 102–03 (2d Cir.
2006) (holding that a dismissal for forum non conveniens does
not satisfy the Buckhannon test because plaintiff is “free to
pursue his claims against the defendants” in another forum).
That Judge Duffy had denied the preliminary injunction and
indicated that Plaintiff had failed to show a likelihood of
success on the merits does not make the dismissal any more
4

“judicially sanctioned” or serve to change the parties’ “legal
relationship.” See Phila. Stock Exch. v. Int’l Sec. Exch., Inc.,
No. 05 Civ. 5390, 2005 WL 2923519, at *2 (S.D.N.Y. Nov. 2, 2005)
(“Judge Baer’s Order declining to extend the TRO (and
plaintiff’s subsequent withdrawal of its copyright claim) does
not constitute the kind of court-ordered change in the legal
relationship between parties that would render defendant a
prevailing party.”)

Thus, because Magder voluntarily dismissed

this action without prejudice, Defendants are not prevailing
parties under § 505. See 6 Patry on Copyright § 22:211
(“Consistent with Buckhannon, voluntary dismissals without
prejudice do not qualify for prevailing party status since they
do not require the court’s permission, and because they do not
result in a material alteration in the parties’ legal
relationship . . . .”).4
For much the same reason, Defendants5 are not entitled to
prevailing party fees under the Purchase Agreement. See N.
Waterside Redevelopment Co., L.P. v. Febbraro, 256 A.D.2d 261,

4 The two cases that Defendants cite from the Seventh Circuit do
not suggest otherwise. Both involve dismissals with prejudice.
See Riviera Distribs., Inc. v. Jones, 517 F.3d 926, 927 (7th
Cir. 2008) (“The district judge dismissed the case, but with
prejudice.”); Mother & Father v. Cassidy, 338 F.3d 704, 707 (7th
Cir. 2003) (“The initial June 12 order, after all, was a
dismissal without prejudice, and thus was not enough to make the
City a prevailing party for Rule 54 purposes.”).
5 The Court notes that only Madhattan, Magder, and non-party
Quentin Cline were parties to the Purchase Agreement.
5

262-63 (N.Y. App. Div., 1st Dep't 1998)

(affirming a denial of a

motion for attorney's fees where plaintiff had "dismissed the
complaint without prejudice" because "such fees are appropriate
only when a court's decision constitutes the ultimate outcome of
the matter"); J.P. & Assocs. Props. Corp. v. Krautter, 38 Misc.
3d 60, 62-63 (N.Y. App. Term 2013).
Having concluded that Defendants are not prevailing
parties, the Court need not consider whether this would be an
appropriate case for awarding attorney's fees.

The Court notes,

however, that motions for fees are to be made no later than
fourteen days after entry of judgment. See Fed. R. Civ. P.
54 (d) (2) (B) (i); see also Ritani, 970 F. Supp. 2d at 267; Mattel,
Inc. v. Radio City Entm't, 210 F.R.D. 504, 505 (2002).

Instead

of filing their motion within the two-week window set by Rule
54, Defendants waited nearly two months.

Defendants' motion for

fees would therefore also be procedurally barred as untimely.
For the foregoing reasons, Defendants' motion for
attorney's fees as prevailing parties under§ 505 and the
Purchase Agreement is denied.
SO ORDERED.

Dated:

New York, New York
August 17, 2015

/~1~

~JOHN

F. KEENAN
United States District Judge

6