American First Federal, Inc. v. Gordon et al
Filing
90
OPINION & ORDER re: 81 MOTION to Amend/Correct 54 Amended Complaint: For the foregoing reasons, AFF's motion is granted in part and denied in part. AFF may amend its complaint only with respect to attorneys' fees incurred in this action. It may not add claims for attorneys' fees in the California Action. AFF is directed to file its amended complaint by March 4, 2019. The Clerk of Court is directed to terminate the motion pending at ECF No. 81. (Amended Pleadings due by 3/4/2019.) (Signed by Judge William H. Pauley, III on 2/11/2019) (jwh)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
AMERICAN FIRST FEDERAL, INC.,
Plaintiff,
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Defendants.
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16cv3958
OPINION & ORDER
WILLIAM H. PAULEY III, Senior United States District Judge:
Plaintiff American First Federal, Inc. (“AFF”) moves for leave to amend its
complaint to add a claim for attorneys’ fees in this fraudulent conveyance action. For the
reasons that follow, AFF’s motion is granted in part and denied in part.
BACKGROUND
In 2006, Sheldon Gordon and his company, Gordon Group Investments (“GGI”),
executed a business loan agreement and a promissory note with a lender (the “2006 Note”).
(Decl. of D’Mark Mick, ECF No. 82 (“Mick Decl.”), ¶ 2.) In 2008, Gordon executed a second
Promissory Note (the “2008 Note”), which amended and restated the 2006 Note. (Mick Decl.
¶ 3.) Then, in 2009, Gordon and the lender entered into a Note Modification Agreement (the
“Note Modification”), followed by a forbearance modification agreement in 2010 (the
“Forbearance Modification Agreement,” and collectively with the 2006 Note, the 2008 Note, and
the Note Modification, the “Loan” or “Loan Documents”). (Mick Decl. ¶ 3.) In late 2010, the
original lender assigned and transferred the Loan to AFF. (Mick Decl. ¶ 5.) Thereafter, in May
2011, Gordon and GGI defaulted on the Loan, and AFF commenced an action in Connecticut
Superior Court for breach of the Loan Documents (the “Connecticut Action”). (Mick Decl. ¶ 5;
Am. First Fed., Inc. v. Gordon, Case No. FST-CV-11-6009881-S (Conn. Super. Ct. 2011).)
After the Connecticut Action was filed, Gordon sought to negotiate a forbearance
agreement with AFF. (Mick Decl. ¶ 7.) AFF demanded additional collateral in the form of
Gordon’s 132,826 partnership units (the “Shares”) in the Taubman Realty Group Limited
Partnership (“Taubman”) in exchange for an extension of the Loan’s maturity date. (Mick Decl.
¶ 7.) Gordon refused to pledge the Shares, citing their strict transfer restrictions and the adverse
tax consequences that he would suffer if they were secured as collateral. (Mick Decl. ¶ 7.) As a
result, no forbearance agreement was executed. (Mick Decl. ¶ 7.)
Next, AFF petitioned the Connecticut court for a writ of attachment to secure the
Shares, but Taubman refused to recognize the writ. (Mick Decl. ¶ 8.) AFF claims that after
Gordon learned of AFF’s efforts to attach the Shares, he sought to transfer them out of AFF’s
reach. (Mick Decl. ¶¶ 8–11.) 1
On July 10, 2015, the Connecticut court entered a judgment in favor of AFF in the
amount of approximately $4.4 million, including pre-judgment interest (the “Judgment”). (Mick
Decl. ¶ 14; Connecticut Action Dkt. No. 293.) In August 2015, a supplemental judgment
awarded AFF post-judgment interest and attorneys’ fees in the Connecticut Action (the
“Supplemental Judgment”). (Mick Decl. ¶ 14.)
Thereafter, AFF sought to prevent Gordon from secreting his assets and
frustrating collection of the Judgment. To that end, in October 2015, AFF initiated an action in
California state court alleging that the Gordon family fraudulently transferred their assets (the
“California Action”). 2 (Mick Decl. ¶ 19.) And in May 2016, AFF commenced this action,
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2
Those transfers formed the basis for AFF’s fraudulent conveyance action in this Court.
The Superior Court of California dismissed the action on forum non conveniens and personal jurisdiction
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alleging that the Gordons fraudulently transferred the Shares and any proceeds thereof (together,
the “Assets”) to hinder AFF’s efforts in satisfying the Judgment.
Meanwhile, in July 2015, Gordon and GGI appealed the Judgment, and in
September 2015, AFF appealed the Supplemental Judgment, effectively staying enforcement of
the Judgment. (Mick Decl. ¶ 14.) And in June 2017, the Connecticut appellate court affirmed
both the Judgment and the Supplemental Judgment. (See Connecticut Action Dkt. Nos. 294 and
295.)
In September 2017, Gordon passed away, and Defendants informed AFF that they
would satisfy the Judgment. (Vuotto Decl. ¶¶ 21–22.) On April 26, 2018, AFF advised this
Court that the fraudulent transfer claims were resolved. (ECF No. 74.) Accordingly, the only
issue remaining in this matter is whether AFF should be granted leave to amend its complaint to
add claims for attorneys’ fees incurred here and in the California Action. (Vuotto Decl. Ex. A
¶ 72.)
DISCUSSION
I.
Legal Standard
Courts “should freely give leave [to amend] when justice so requires.” Fed. R.
Civ. P. 15(a). The “liberal standard set forth in Rule 15 . . . is consistent with our strong
preference for resolving disputes on the merits.” Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo
Sec., LLC, 797 F.3d 160, 190 (2d Cir. 2015) (quotation marks omitted). Thus,
[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper
subject of relief, he ought to be afforded an opportunity to test his claim on the
merits. In the absence of any apparent or declared reason—such as undue delay,
bad faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing
grounds. In August 2016, AFF withdrew its appeal of the dismissal. (Decl. of Jonathan P. Vuotto, Esq., ECF No.
83 (“Vuotto Decl.”) ¶ 6.) AFF claims it brought the action in California because Gordon had ties and interests there,
but Defendants argue that AFF did so because AFF’s counsel lived in California.
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party by virtue of allowance of the amendment, futility of amendment, etc.—the
leave sought should, as the rules require, be “freely given.”
Williams v. Citigroup Inc., 659 F.3d 208, 213–14 (2d Cir. 2011) (quoting Foman v. Davis, 371
U.S. 178, 182 (1962)); accord Flores v. Nieva, 2017 WL 899942, at *5 (S.D.N.Y. Mar. 6, 2017).
In addition, parts of AFF’s motion may be better suited as a motion to supplement
its complaint, rather than to amend. See Fed. R. Civ. P. 15(d). However, the standard for leave
to supplement is essentially the same as for leave to amend: “Although language of Rule 15(d)
is plainly permissive, we have held that ‘[a]bsent undue delay, bad faith, dilatory tactics, undue
prejudice to the party to be served with the proposed pleading, or futility, [a Rule 15(d)] motion
should be freely granted.’” Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n, 898 F.3d
243, 256 (2d Cir. 2018) (quoting Quarantino v. Tiffany & Co., 71 F.3d 58, 66 (2d Cir. 1995))
(alteration in original).
II.
Analysis
A. Futility
“Leave to amend may properly be denied if the amendment would be futile.”
Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc., 779 F.3d 102, 110 (2d Cir. 2015)
(quotation marks omitted). Amending “will be futile if a proposed claim could not withstand a
motion to dismiss pursuant to Rule 12(b)(6).” Dougherty v. Town of N. Hempstead Bd. of
Zoning Appeals, 282 F.3d 83, 88 (2d Cir. 2002).
On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a
court must accept as true all well-pleaded facts and draw all reasonable inferences in the light
most favorable to the non-moving party. Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229,
237 (2d Cir. 2007). “To survive a motion to dismiss, the plaintiff’s pleading must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”
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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and quotation marks omitted). Moreover, a
claim must rest on “factual allegations sufficient to raise a right to relief above the speculative
level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). As such, a pleading that offers
“labels and conclusions” or a “formulaic recitation of the elements of a cause of action” fails to
state a claim. Iqbal, 556 U.S. at 678 (citation omitted).
The crux of this dispute is whether AFF has a valid claim for attorneys’ fees
incurred here and in the California Action. More specifically, the question is whether AFF’s
proposed claims for attorneys’ fees are barred by the merger/res judicata doctrines.
As a threshold issue, “[t]he parties’ briefs assume that Connecticut state law
governs this case, and such implied consent is . . . sufficient to establish the applicable choice of
law.” Trikona Advisers Ltd. v. Chugh, 846 F.3d 22, 31 (2d Cir. 2017) (quotation marks omitted)
(ellipsis in original). Under Connecticut state law, merger doctrine and res judicata are examined
under the Restatement of Judgments. See Lighthouse Landings, Inc. v. Conn. Light & Power
Co., 15 A.3d 601, 616 (Conn. 2011). While the parties mostly agree that §§ 18, 24, and 25
Second Restatement of Judgments apply, AFF contends that its claims fit under the exceptions to
the merger rule found in § 26 of the Restatement.
Under the Restatement, “[w]hen a valid and final personal judgment is rendered in
favor of the plaintiff . . . [t]he plaintiff cannot thereafter maintain an action on the original claim
or any part thereof, although he may be able to maintain an action upon the judgment . . . .”
Restatement (Second) of Judgments § 18 (Am. Law Inst. 1982) (“Restatement”). And,
[w]hen a valid and final judgment rendered in an action extinguishes the plaintiff’s
claim pursuant to the rules of merger or bar, the claim extinguished includes all
rights of the plaintiff to remedies against the defendant with respect to all or any
part of the transaction, or series of connected transactions, out of which the action
arose. . . . What factual grouping constitutes a ‘transaction,’ and what groupings
constitute a ‘series,’ are to be determined pragmatically, giving weight to such
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considerations as whether the facts are related in time, space, origin, or motivation,
whether they form a convenient trial unit, and whether their treatment as a unit
conforms to the parties’ expectations or business understanding or usage.
Restatement § 24 (citation omitted). Under this “transactional test,” courts look at “the group of
facts which is claimed to have brought about an unlawful injury to the plaintiff . . . and have
noted that [e]ven though a single group of facts may give rise to rights for several different kinds
of relief, it is still a single cause of action.” Lighthouse Landings, Inc., 15 A.3d at 616
(alterations in original) (quotation marks omitted).
Indeed, the rules of merger still apply even where the second action seeks
“remedies or forms of relief not demanded in the first action.” Restatement § 25. Thus,
if a plaintiff who has recovered a judgment against a defendant in a certain amount
becomes dissatisfied with his recovery and commences a second action to obtain
increased damages, the court will hold him precluded; his claim has been merged
in the judgment and may not be split. It is immaterial that in trying the first action
he was not in possession of enough information about the damages, past or
prospective, or that the damages turned out in fact to be unexpectedly large and in
excess of the judgment.
Restatement § 25, cmt. c (citation omitted).
However, “[t]his general rule [of merger] is subject to the exception stated in
§ 26.” Restatement § 18. Under § 26(1), the merger rule does not extinguish a claim, and part or
all of the claim may continue in a second action, if:
(a) [t]he parties have agreed in terms or in effect that the plaintiff may split his
claim, or the defendant has acquiesced therein; . . . [or] (c) [t]he plaintiff was unable
to rely on a certain theory of the case or to seek a certain remedy or form of relief
in the first action because of . . . restrictions on [the court’s] authority to entertain
multiple theories or demands for multiple remedies or forms of relief in a single
action, and the plaintiff desires in the second action to rely on that theory or to seek
that remedy or form of relief.
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Restatement § 26(1)(a) & (c). 3 Indeed, because “[a] main purpose of the general rule stated in
§ 24 is to protect the defendant from being harassed by repetitive actions,” § 24 is “not
applicable where the defendant consents” to splitting the claim. Restatement § 26 cmt. a. And
“[w]hen . . . formal barriers in fact existed [in the way of a litigant’s presenting to a court the
entire claim] and were operative against a plaintiff in the first action, it is unfair to preclude him
from a second action in which he can present those phases of the claim which he was disabled
from presenting in the first.” Restatement § 26 cmt. c. These “formal barriers . . . may stem
from limitations on the competency of the system of the courts . . . or from the persistence in the
system of courts of older modes of procedure.” Restatement § 26 cmt. c.
Defendants argue that any claims for attorneys’ fees premised on the Loan
Documents have merged into the Judgment and are barred. Defendants further argue that even if
the claims for attorneys’ fees have not merged into the Judgment, AFF’s fee request is
unreasonable. AFF counters that its claims for attorneys’ fees are not barred under the merger
doctrine or res judicata because (1) Defendants agreed in the Loan Documents to split claims for
attorneys’ fees (see § 26(1)(a)); (2) AFF never had an opportunity to fully and fairly prosecute its
claims, because the Judgment was entered before the attorneys’ fees at issue were incurred (see
§ 26(1)(c)); or (3) the merger doctrine sounds in equity and should not be applied here. In
addition, AFF argues that Defendants bear the burden of demonstrating that AFF’s fees are
unreasonable and that, in any event, reasonableness is an issue of fact to be determined later.
“[T]here does not appear to be any definitive on point Connecticut authority as to
the effect of the merger doctrine on attorneys[’] fee provisions.” Feinstein v. Keenan, 2013 WL
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The exceptions in § 26(1)(a) and (c) have been adopted by Connecticut courts. See A.J. Masi Elec. Co. v.
Marron & Sipe Bldg. & Contracting Corp., 574 A.2d 1323, 1324 (Conn. App. Ct. 1990) (§ 26(1)(a)); Conn. Water
Co. v. Beausoleil, 526 A.2d 1329, 1335 (Conn. 1987) (§ 26(1)(c)).
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5969137, at *4 (Conn. Super. Ct. Oct. 17, 2013). Thus, “determinations based on res judicata
must be made in light of the particular facts of . . . each case in order to best promote the
purposes of res judicata, which include promoting judicial economy, minimizing repetitive
litigation, preventing inconsistent judgments and providing repose to parties.” Barnett v. Conn.
Light & Power Co., 900 F. Supp. 2d 224, 239 (D. Conn. 2012) (applying Connecticut law). At
first blush, it would appear that AFF’s attorneys’ fees claims fall within the same transaction as
the Connecticut Action. Cf. Feeney v. Licari, 516 N.Y.S.2d 265, 266 (N.Y. App. Div. 1987)
(applying New York law, which employs the transactional test). Regardless, AFF’s claim is not
futile because of the § 26(1) exceptions.
1. Restatement Section 26(1)(a) Exception
To determine whether Defendants consented to AFF’s splitting its claims for
attorneys’ fees, the Loan Documents govern. The 2006 Loan Agreement states:
Borrower agrees to pay upon demand all of Lender’s costs and expenses, including
Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with
the enforcement of this Agreement. Lender may hire someone else to help enforce
this Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender’s attorneys’ fees and legal
expenses whether or not there is a lawsuit, including attorneys’ fees and legal
expenses for bankruptcy proceedings . . . , appeals, and any anticipated postjudgment collection services. Borrower also shall pay all court costs and such
additional fees as may be directed by the court.
(Mick Decl. Ex. 1 at Gordon00152–53.) Similarly, the 2006 Note states:
Lender may hire or pay someone else to help collect this Note if Borrower does not
pay. Borrower will pay Lender that amount. This includes, subject to any limits
under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses,
whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy
proceedings . . ., and appeals. If not prohibited by applicable law, Borrower will
also pay any court costs, in addition to all other sums provided by law.
(Mick Decl. Ex. 2 at 2.) Finally, the Forbearance Agreement states:
Obligors agree to pay the Lender upon demand (a) an amount equal to any and all
out-of-pocket costs or expenses (including legal fees (including allocable costs of
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staff counsel) and disbursements) incurred or sustained by the Lender in connection
with the preparation of this Agreement and all related matters and (b) from time to
time after the Forbearance Termination Date, any and all out-of-pocket costs or
expenses (including legal fees (including allocable costs of staff counsel) and
disbursements and reasonable consulting, accounting, appraisal and other similar
professional fees and expenses) hereafter incurred or sustained by the Lender in
connection with the administration of credit extended by the Lender to the
Borrower or the preservation of or enforcement of any rights of the Lender under
this Agreement and the Loan Documents or in respect of any of Obligors’ other
obligations to the Lender.
(Mick Decl. Ex. 4 ¶ 10.)
The parties cite little case law to support their arguments regarding § 26(1)(a).
AFF tethers its arguments to a footnote in City Savings Bank of Bridgeport v. Miko, 467 A.2d
929, 934 n.3 (Conn. App. Ct. 1983). In that case, defendants appealed an award to pay for
attorneys’ fees incurred by the plaintiff in connection with a motion for deficiency judgment
after foreclosure. Miko, 467 A.2d at 931. The underlying note evidencing the indebtedness
owed to the plaintiff contained an agreement to pay “reasonable attorneys’ fees incurred in the
collection of any sum due hereunder.” Miko, 467 A.2d at 934 (quotation marks omitted). “The
trial court found that [because] it was clear that the parties contemplated, and that plaintiffs
intended, that the obligation concerning attorneys’ fees continue until the debt was completely
collected . . . , the obligation could extend beyond the judgment date” and thus did not merge
into the judgment. Miko, 467 A.2d at 934 n.3. Notably, however, the Connecticut appellate
court only discussed the trial court’s holding with respect to consent in dictum and in a
footnote—it did not rely on that reasoning in its holding that § 49-7 of the Connecticut General
Statutes “permits attorneys’ fees to be awarded in any proceeding for collection of the debt and
that a deficiency judgment is such a proceeding.” Miko, 967 A.2d at 934. Still, the trial court
held that such language constituted consent, and the appellate court did not disturb that holding.
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In addition, here, the Loan Documents expressly contemplate attorneys’-fee
awards for “appeals, and any anticipated post-judgment collection services.” (See, e.g., Mick
Decl. Ex. 1 at Gordon00152–53.) Naturally, claims for attorneys’ fees incurred to collect on the
Judgment would be premature when it was not yet clear that the Judgment—if obtained—would
not be satisfied. Accordingly, Defendants’ consented to AFF’s bringing attorneys’ fee claims by
separate suit. This holding fits squarely within the purpose of § 24, which “is to protect the
defendant from being harassed by repetitive actions.” Restatement § 26 cmt. a. Simply put, this
is not a repetitive action—it is an action to collect contractually agreed upon attorneys’ fees
incurred while attempting to satisfy the Judgment.
2. Restatement Section 26(1)(c) Exception
With respect to whether formal barriers prevented AFF from bringing its current
attorneys’ fees claim during the Connecticut Action, AFF argues that they did because those
costs had not yet been incurred. AFF pins its argument on Miko once again. There, after
plaintiff cross-appealed the trial court’s refusal to award counsel fees for post-deficiencyjudgment services not yet performed, the Connecticut appellate court affirmed, holding that “[i]t
is manifestly improper for the court to award fees for services which have not yet been
performed and may never be performed at any time in the future.” Miko, 467 A.2d at 935.
AFF’s argument is also logical. The Loan Documents expressly contemplated
Defendants’ liability for attorneys’ fees incurred in AFF’s effort to collect on any judgment. It is
unclear how AFF would have pursued fees to collect on the Judgment before the Judgment had
been entered—i.e., such fees would have been purely speculative and hypothetical. Indeed, this
action and the California Action were not initiated until after entry of the Judgment. “It is true
that res judicata will not bar a suit based upon legally significant acts occurring after the filing of
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a prior suit that was itself based upon earlier acts.” Waldman v. Vill. of Kiryas Joel, 207 F.3d
105, 113 (2d Cir. 2000) (emphasis in original). In addition, while there is scant case law on
point, other circuits have noted that “a critical predicate for applying [res judicata] is that the
claimant shall have had a fair opportunity to advance all its ‘same transaction’ claims in a single
unitary proceeding.” Dionne v. Mayor & City Council of Balt., 40 F.3d 677, 683 (4th Cir. 1994)
(citing Restatement § 26 cmt. c). It defies logic and fairness to hold that AFF should have
brought a claim for attorneys’ fees to collect on a Judgment before it knew whether it would
have to incur fees to collect on that Judgment. Put another way, Defendants’ argument
contemplates that AFF should have assumed that Defendants would attempt to frustrate
collection of the Judgment.
That said, the commentary to § 26(1)(c) indicates that the primary purpose of the
exception is limited to the prevention of unfairness where a party could not have fully presented
its claim in the first action due to either the limited jurisdiction of a system of courts or old
modes of procedure, i.e., courts divided between law and equity. Neither of those concerns are
implicated here.
However, given that Connecticut appellate authority suggests that claims for yetto-be-incurred attorneys’ fees are impermissible and that the spirit of the exception seeks to
prevent unfairness, this Court finds that the § 26(1)(c) exception applies.
3. Reasonableness
Finally, Defendants argue that, even if AFF’s claims are not merged with the
Judgment, they are still futile because the fee requests are not reasonable. Specifically,
Defendants argue that AFF was successful in neither litigation and brought both actions while
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execution of the Judgment was stayed pending appeal. AFF counters that the burden of proving
that attorneys’ fees are unreasonable rests with Defendants.
As a threshold issue, attorneys’ fees may only be awarded pursuant to statute or
by contract or stipulation. See Brewster Park, LLC v. Berger, 14 A.3d 334, 337 (Conn. App. Ct.
2011). Here, AFF seeks attorneys’ fees pursuant to the Loan Documents. The Loan Documents
state that Defendants shall be liable for AFF’s “attorneys’ fees and legal expenses whether or not
there is a lawsuit, including attorneys’ fees and legal expenses for . . . appeals, and any
anticipated post-judgment collection services.” (Mick Decl. Ex. 1 at Gordon00152–53.)
With respect to fees incurred in this action, Defendants’ argument is meritless.
AFF’s suit here was primarily one for fraudulent conveyance. In other words, AFF was
attempting to prevent Defendants from secreting assets prior to the Judgment’s execution. While
this Court denied AFF’s motion for a writ of attachment, the fraudulent conveyance claim was
not meritless. Rather, it was mooted by Defendants’ satisfaction of the Judgment—which may
have been prompted by this action. In addition, any qualms over the reasonableness of the fees
can be raised during the ensuing litigation. This Court cannot say as a matter of law that the
requested fees are unreasonable, when a specific fee request has yet to be made.
However, the request for fees incurred in the California Action is unreasonable.
The California Action was dismissed for lack of personal jurisdiction and on forum non
conveniens grounds. It is absurd for AFF to expect attorneys’ fees incurred litigating a meritless
action. See Rhodes v. Davis, 2015 WL 1413413, at *1 (S.D.N.Y. Mar. 23, 2015) (awarding
plaintiff attorneys’ fees in a contract dispute but excluding attorneys’ fees incurred litigating an
unmeritorious ERISA claim); Bridgeport Harbour Place I, LLC v. Ganim, 30 A.3d 703, 748
(Conn. App. Ct. 2011) (explaining, in dictum, that trial court excluded expenses incurred
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litigating unmeritorious claims from attorneys’ fee award); In re Agent Orange Prod. Liab. Litig.,
818 F.2d 226, 236 (2d Cir. 1987) (explaining that a lodestar analysis should not unduly weigh
the risk of success because it would reward attorneys who bring dubious claims).
B. Prejudice
“A litigant may be ‘prejudiced’ within the meaning of [Rule 15] if the new claim
would: ‘(i) require the opponent to expend significant additional resources to conduct discovery
and prepare for trial; (ii) significantly delay the resolution of the dispute; or (iii) prevent the
plaintiff from bringing a timely action in another jurisdiction.’” Pasternack v. Shrader, 863 F.3d
162, 174 (2d Cir. 2017) (quoting Block v. First Blood Assocs., 988 F.3d 944, 950 (2d Cir.
1993)). “Mere delay, . . . absent a showing of bad faith or undue prejudice, does not provide a
basis for a district court to deny the right to amend.” Pasternack, 863 F.3d at 174 (alterations in
original) (quotation marks omitted). “Nor can complaints of the time, effort and money . . .
expended in litigating [the] matter, without more, constitute prejudice sufficient to warrant denial
of leave to amend.” Pasternack, 863 F.3d at 174 (alterations in original) (quotation marks
omitted).
None of the concerns contemplated by Rule 15 apply here. The ensuing litigation
will relate solely to attorneys’ fees, which will require minimal effort on Defendants’ part.
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CONCLUSION
For the foregoing reasons, AFF’s motion is granted in part and denied in part.
AFF may amend its complaint only with respect to attorneys’ fees incurred in this action. It may
not add claims for attorneys’ fees in the California Action. AFF is directed to file its amended
complaint by March 4, 2019. The Clerk of Court is directed to terminate the motion pending at
ECF No. 81.
Dated: February 11, 2019
New York, New York
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