Kerr v. John Thomas Financial et al

Filing 243

MEMORANDUM OPINION & ORDER adopting 235 Report and Recommendation re: 212 MOTION for Summary Judgment filed by Eubulus J. Kerr, III, adopting 239 Certification of Facts, Conclusions of Law and Proposed Remedy. The Rep orts and Recommendation at ECF No. 239 is hereby adopted in full. The Report and Recommendation at ECF No. 235 is adopted with the addition of $9,645 to plaintiff's fee award. Plaintiff's motion for summary judgment at ECF No. 212 is GRANTED, and judgment is hereby entered for plaintiff in the amount of $200,297.02. The Court is aware of defendants' history of repeatedly evading payment of properly entered judgments-and thereby expending unnecessary judicial res ources to hold them to longstanding obligations. The Court therefore directs defendants to pay $200,297.02 to plaintiff not later than Friday, May 5, 2017, at 5:00 p.m. Defendants may be immediately held in contempt of court for failure t o comply precisely with this order. The Court also reminds defense counsel of the Court's statutory authority to award excess costs, expenses, and attorney's fees reasonably incurred due to an attorney unreasonably and vexatiously mu ltiplying proceedings in this matter. 28 U.S.C. § 1927. The Court reiterates that the injunction entered November 7, 2016, remains in place, as it has continuously since that date. (ECF No. 206.) Any violation of this preliminary injunctio n, past or future, puts defendants at serious risk of being held in contempt of court. The Clerk of Court is directed to terminate the motions at ECF Nos. 199 and 212. (As further set forth in this Memorandum Opinion & Order.) (Signed by Judge Katherine B. Forrest on 5/1/2017) (mro) (Main Document 243 replaced on 5/1/2017) (mro). Modified on 5/1/2017 (mro).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
DR. EUBULUS J. KERR III,
:
:
Plaintiff/Petitioner,
:
:
-v:
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JOHN THOMAS FINANCIAL et al.,
:
:
:
Defendants/Respondents. :
:
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USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: May 01, 2017

14-cv-9168 (KBF)
MEMORANDUM
OPINION & ORDER

KATHERINE B. FORREST, District Judge:
This Memorandum Opinion & Order resolves two motions in this
unnecessarily long-fought case. On September 19, 2016, plaintiff moved to hold
defendants in contempt of court. (ECF No. 119.) On November 16, 2016, plaintiff
moved for summary judgment on his request for attorneys’ fees and costs. (ECF No.
212.) This Court referred these motions to the Honorable Henry B. Pitman, who
submitted Reports and Recommendations on these motions on January 31, 2017,
and February 3, 2017, respectively. (ECF Nos. 235 (the “Summary Judgment
R&R”) and 239 (the “Contempt R&R”).) Neither party objected to the Contempt
R&R; however, both parties objected to the Summary Judgment R&R. (ECF Nos.
240, 241.)
For the reasons set forth below, the Court adopts the Contempt R&R in full,
adopts the Summary Judgment R&R with slight modification, and enters judgment

for the plaintiff in the amount of $200,297.02, to be satisfied by defendants in
full not later than Friday, May 5, 2017, at 5:00 p.m.
I.

DISCUSSION
In reviewing a Report and Recommendation, a district court “may accept,

reject, or modify, in whole or in part, the findings or recommendations made by the
magistrate judge.” 28 U.S.C. § 636(b)(1)(C). When specific objections are made,
“[t]he district judge must determine de novo any part of the magistrate judge's
disposition that has been properly objected to.” Fed. R. Civ. P. 72(b)(3); see also
United States v. Male Juvenile, 121 F.3d 34, 38 (2d Cir.1997).
A. The Reports and Recommendations
Judge Pitman issued the Contempt R&R on February 3, 2017. (ECF No.
239.) Neither party has objected. Therefore, the Court adopts the Contempt R&R
in full and enters judgment for defendants on plaintiff’s motion at ECF No. 119.
See Fed. R. Civ. P. 72(b)(2).
On January 31, 2017, Judge Pitman issued the Summary Judgment R&R on
plaintiff’s motion for $241,683.02 in attorneys’ fees and costs. (ECF No. 235.)
Judge Pitman agreed with plaintiff that the language of the parties’ release
agreement unambiguously provides for the shifting of costs and fees “[i]n the event
of any judicial or arbitral proceeding to enforce or collect upon the Award or any
judgment thereupon” without qualification, and that this provision was not waived.
(Id. at 16-18.)

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However, the Summary Judgment R&R concluded that due to inadequate
record-keeping and the inclusion of time spent seeking attorneys’ fees, the amount
requested by plaintiff was unreasonable. Judge Pitman applied New York law to
determine the proper award, explaining that the reasonableness of a request for
attorneys’ fees and costs arising under a contract “can be measured by the
standards that are used to evaluate fee awards under statutory provisions directing
the court to award a ‘reasonable’ attorney’s fee.” Sidley Holding Corp. v. Ruderman,
No. 08-cv-2513, 2009 WL 6047187, at *16 (S.D.N.Y. Dec. 30, 2009) (citing feeshifting provisions under 42 U.S.C. § 1988(b) and 11 U.S.C. § 330). To determine a
presumptively reasonable fee award, Judge Pitman applied the lodestar method, in
which a court multiplies the hours reasonably spent by counsel on the matter by an
hourly rate appropriate in the relevant community. See Blum v. Stenson, 465 U.S.
886, 895 n.11 (1984); McDaniel v. Cnty. of Schenectady, 595 F.3d 411, 414 (2d Cir.
2010). To enable a court to determine the lodestar multipliers—first, the amount of
time spent and how much of that time was reasonable, and second, what rate is
appropriate for the relevant attorney—New York law requires that a “fee
application . . . be supported by contemporaneous time records that ‘specify, for each
attorney, the date, the hours expended, and the nature of the work done.’” Watson
v. E.S. Sutton, Inc., No. 02-cv-2739, 2006 WL 6570643, at *3 (S.D.N.Y. Aug. 11,
2006) (quoting N.Y. State Ass’n for Retarded Children v. Carey, 711 F.2d 1136, 1148
(2d Cir. 1983)), adopted as modified, 2007 WL 2245432 (S.D.N.Y. Aug. 3, 2007).
“[W]here adequate contemporaneous records have not been kept, the court should
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not award the full amount requested.” F.H. Krear & Co. v. Nineteen Named
Trustees, 810 F.2d 1250, 1265 (2d Cir. 1987) (citing decisions of New York courts in
which fee requests were reduced due to inadequate records of work performed).
Additionally, Judge Pitman explained that, under New York law, “a general
contract provision for the shifting of attorneys’ fees does not authorize an award of
fees for time spent in seeking the fees themselves.” Id. at 1266.
Applying this framework, Judge Pitman reviewed plaintiff’s counsel’s
submissions in support of the fee request and found the amount unreasonable due
to duplicative staffing, vague time entries, block billing, and the inclusion of time
spent on collection of the fees themselves. Judge Pitman observed that there were
significant instances of duplication or excessive staffing, such as three attorneys
attending a deposition or a conference; that under New York precedents, plaintiff’s
counsel’s time entries for activities such as “calls,” “filing,” and “[r]esearch, prep
work” were sufficiently vague to justify a reduction in fees; and that block billing by
plaintiff’s counsel made it difficult to evaluate the reasonableness of time spent on
individual tasks. (ECF No. 325 at 20-25; see also, e.g., Kirsch v. Fleet Street, Ltd.,
148 F.3d 149, 179 (2d Cir. 1998) (“[W]e see no abuse of discretion in . . . the 20%
reduction for vagueness, inconsistencies, and other deficiencies in the billing
records.”); Ng. v. King Henry Realty, Inc., 16-cv-13, 2016 WL 6084074, at *7
(S.D.N.Y. Oct. 7, 2016) (“[C]ourts in this district have generally frowned upon
awarding fees to more than two attorneys for court appearances unless the case is
uniquely complex.”); LV v. N.Y.C. Dep’t of Educ., 700 F.Supp.2d 510, 525 (S.D.N.Y.
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2010) (“[B]lock-billing . . . can make it exceedingly difficult for courts to assess the
reasonableness of the hours billed.”).
Judge Pitman subtracted the amount of fees attributable to the collection of
fees themselves ($9,645) from the $216,575 sought. (ECF No. 325 at 26-27; F.H.
Krear, 810 F.2d at 1266 (“[A] general contract provision for the shifting of attorney’s
fees does not authorize an award of fees for time spent in seeking the fees
themselves.”). Judge Pitman then reduced the remainder by 20%: by 15% to
account for redundant staffing, and by 5% to account for block billing and vague
time entries. The Summary Judgment R&R therefore recommends the award of
$165,544 in attorneys’ fees and $41,386 in costs for a total of $190,652.02.
B. Defendants’ Objections
Defendants objected to the Summary Judgment R&R on February 14, 2017,
arguing that the Summary Judgment R&R “failed to consider the fact that [the fees
sought] are in addition to the contingency fees” earned by plaintiff’s counsel and
“the excessive, redundant and otherwise unnecessary billing” by plaintiff’s counsel;
and that plaintiff waived claims to costs. (ECF No. 240.) These objections simply
restate the same arguments defendants made in their original opposition to the
motion; indeed, defendants’ objection specifically “refers to the Memorandum of Law
submitted to the Magistrate in support of these objections.” (ECF No. 240 at 1.)
The Court finds that defendants’ pro forma objection letter “simply reiterate[s]
arguments considered and rejected” in the Summary Judgment R&R and therefore

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will be reviewed only for “clear error.” See Jones v. Smith, No. 09-cv-6497, 2012 WL
1592190, at *1 (S.D.N.Y. Ma 7, 2012).
The General Release Agreement unambiguously provided for recovery of
attorneys’ fees “[i]ncurred in the event of any judicial or arbitral proceeding . . . to
enforce or collect upon the [Arbitration] Award or any judgment thereupon.” (ECF
No. 151, Ex. G ¶ 4.) This is in addition to any contingency fee earned by plaintiff’s
counsel for representing plaintiff in the award proceeding. The plain text of the
agreement therefore provides for granting of attorneys’ fees incurred during all
post-award collection efforts, including the extensive litigation before this Court.
The Summary Judgment R&R’s conclusion that plaintiff is entitled to reasonable
costs and fees is therefore correct. Jones, 2012 WL 1592190, at *1.
C. Plaintiff’s Objections
Plaintiff also objected to the Summary Judgment R&R. (ECF No. 241.)
Unlike defendants, plaintiff objects properly with citations to specific facts and legal
authority, and does not simply reiterate in general terms the arguments made
before Judge Pitman. The Court therefore “must determine de novo any part of the
magistrate judge’s disposition that has been properly objected to.” Fed. R. Civ. P.
72(b)(3).
Plaintiff raises two objections to the Summary Judgment R&R. First,
plaintiff objects to the exclusion of $9,645 in fees incurred in pursuit of costs and
fees because the parties’ release agreement allows recovery of attorneys’ fees
incurred during “any judicial or arbitral proceeding to construe or enforce any
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provision of this Agreement,” which, according to plaintiff, specifically covers such
fees. (ECF No. 241 at 4.) The Court agrees. While the Summary Judgment R&R
correctly notes that “a general contract provision for the shifting of attorney’s fees
does not authorize an award of fees for time spent in seeking the fees themselves,”
the parties may “contract for such an allowance.” F.H. Krear, 810 F.2d at 1266.
The phrase “any provision of this Agreement” includes the fee-recovery provision,
which is itself part of the agreement. (ECF No. 151, Ex. G ¶ 4 (emphasis added).)
The parties therefore contracted to permit recovery of fees reasonably incurred
during enforcement of this provision of the release agreement in “any judicial
proceeding,” including during resolution of the present motion before this Court.
Moreover, the Court believes that this interpretation best reflects of the intent of
the parties because defendants’ consistently evasive behavior—which has
repeatedly forced plaintiff and this Court to expend unnecessary resources to
compel satisfaction of the underlying award—is, in large part, what led to the
release agreement in the first place. Therefore, the Court modifies the Summary
Judgment R&R to include the $9,645 requested by plaintiff.1
Plaintiff also argues that the Summary Judgment R&R should have included
9% annual interest in its attorneys’ fees award. (ECF No. 241 at 6-7.) However,
plaintiff did not argue for the addition of this 9% interest in support of its motion for

The Court notes that this portion of the requested fees is supported by block billing records, as
plaintiff acknowledges. (ECF No. 241 at 6.) However, most of these fees were incurred during
preparation for and participation in the Court’s lengthy hearing held November 14, 2016, which the
Court knows involved significant attorney resources expended on relatively short notice. The Court
therefore does not discount this portion of the attorneys’ fees.
1

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summary judgment. The Court will not consider this argument, which should have
been made in the summary judgment briefing before Judge Pitman. See Rosello v.
Barnhart, 02-cv-4629, 2004 WL 2366177, at *3 (S.D.N.Y. Oct. 20, 2004) (“If the
Court were to consider . . . these untimely contentions, it would unduly undermine
the authority of the Magistrate Judge by allowing litigants the option of waiting
until a Report is issued to advance additional arguments.”).
Plaintiff does not object to the Summary Judgment R&R in any other respect.
Therefore, the Court adopts the Summary Judgment R&R with the addition of
$9,645 to the fee award to account for attorneys’ fees incurred due to defendants’
failure to pay fees as agreed in the release agreement.
II.

CONCLUSION
The Reports and Recommendation at ECF No. 239 is hereby adopted in full.

The Report and Recommendation at ECF No. 235 is adopted with the addition of
$9,645 to plaintiff’s fee award. Plaintiff’s motion for summary judgment at ECF No.
212 is GRANTED, and judgment is hereby entered for plaintiff in the amount of
$200,297.02.
The Court is aware of defendants’ history of repeatedly evading payment of
properly entered judgments—and thereby expending unnecessary judicial resources
to hold them to longstanding obligations. The Court therefore directs
defendants to pay $200,297.02 to plaintiff not later than Friday, May 5,
2017, at 5:00 p.m. Defendants may be immediately held in contempt of court for
failure to comply precisely with this order. The Court also reminds defense counsel
8

of the Court’s statutory authority to award excess costs, expenses, and attorney’s
fees reasonably incurred due to an attorney unreasonably and vexatiously
multiplying proceedings in this matter. 28 U.S.C. § 1927.
The Court reiterates that the injunction entered November 7, 2016, remains
in place, as it has continuously since that date. (ECF No. 206.) Any violation of this
preliminary injunction, past or future, puts defendants at serious risk of being held
in contempt of court.
The Clerk of Court is directed to terminate the motions at ECF Nos. 119 and
212.
SO ORDERED.
Dated:

New York, New York
May 01, 2017

______________________________________
KATHERINE B. FORREST
United States District Judge

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