EAST MARK INTERNATIONAL, LTD. v. ADAR, LLC

Filing 70

MEMORANDUM AND/OR OPINION SIGNED BY HONORABLE HARVEY BARTLE, III ON 1/24/14. 1/24/14 ENTERED AND COPIES E-MAILED.(ti, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
EAST MARK INTERNATIONAL, LTD.
v.
ADAR, LLC,
d/b/a THE LINCOLN ON LOCUST,
L.P.

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CIVIL ACTION

NO. 13-1204

MEMORANDUM
Bartle, J.

January 24, 2014
Before the court is the motion of intervenors Benzion

"Sam" Faibish ("Faibish") and Yehuda Olewski ("Olewski") for
reasonable counsel fees and costs pursuant to Rule 16(f)(1)(C) of
the Federal Rules of Civil Procedure.
This diversity action arose out of a dispute over the
ownership of the building located at 1222-1226 Locust Street in
Philadelphia.

Plaintiff East Mark International, Ltd. ("East

Mark"), a Marshall Islands corporation with its principal place
of business in Hong Kong, was the holder of a mortgage for
$3,600,000 on the building.

Following an alleged default by the

owner, defendant ADAR d/b/a The Lincoln on Locust, L.P. ("Lincoln
on Locust"), East Mark filed a complaint for confession of
judgment in this court in March 2013.

After the Clerk of Court

entered judgment in favor of East Mark and a Marshal's sale was
scheduled, the intervenors filed an "emergency motion for
temporary restraining order" in this court on June 6, 2013.

In their emergency motion, the intervenors alleged that
they had a 42.5% ownership interest in Lincoln on Locust and the
building at issue.

They further asserted that the mortgage held

by East Mark was a fraud intended to deprive them of their
ownership interest in the property.

We granted the motion for a

temporary restraining order on June 21, 2013.

The order

cancelled the Marshal's Sale of the property which was to take
place on June 24, 2013.

On July 2, 2013, we extended the

temporary restraining order through July 17, 2013.

We scheduled

a preliminary injunction hearing for August 14, 2013.
On August 13, 2013, a day before the hearing was to
occur, Faibish, Olewski, East Mark, and Lincoln on Locust filed a
stipulation for court approval.

We approved the stipulation the

same day, and the hearing was cancelled.

The Stipulated Order

stated in relevant part:
It is hereby stipulated agreed [sic] by and
between East Mark International, Ltd. ("East
Mark"), plaintiff herein, and Adar, LLC d/b/a
The Lincoln on Locust, L.P. (collectively
"Adar"), defendants herein, and Benzion
("Sam") Faibish and Yehuda Olewski
(collectively "Intervenors"), as follows:
1. Intervenors' Petition to Strike/Open
Confessed Judgment shall be deemed and marked
as withdrawn.
...
4. Defendants and intervenors have agreed
that the dispute between the parties relating
to the property located at and known as 12221226 Locust Street, Philadelphia,
Pennsylvania 19107 (the "Property"), shall be
resolved through an agreed upon Rabbinical
Court, in a Bet Din proceeding (the "Bet Din
proceeding").

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5. East Mark shall not take any further
action on the judgment by confession obtained
in this case on or about March 6, 2013,
except as specifically permitted or required
by the Bet Din proceeding.
6. The hearing scheduled for August 14-15,
2013, shall be canceled as moot.
7. Intervenors' bond posted in this matter
shall be released to Intervenors.
On October 17, 2013, Faibish and Olewski, along with
I.M. Rottenburg and Kalman Farkas, filed a motion "to enforce
stipulated Order and for mandatory injunctive relief."1

In their

motion, intervenors maintained that Lincoln on Locust as well as
East Mark violated the Stipulated Order when East Mark filed on
September 17, 2013 an "emergency petition to strike the lis
pendens filed against the property located at 1222-1226 Locust
Street, Philadelphia, Pennsylvania, and to complete specific
performance under agreement of sale" in the Court of Common Pleas
of Philadelphia County.

See East Mark Int'l, Ltd. v. Lincoln on

Locust, L.P. et al., Phila. Com. Pl. Ct., Sept. Term, 2013, No.
01879.

The lis pendens consisted of the July 30, 2012 order of a

Bet Din which had been filed with the Recorder of Deeds of
Philadelphia County and prohibited the sale of the building
without authorization of the Bet Din.

The Common Pleas Court

granted East Mark's petition on September 24, 2013 and struck the
lis pendens from the record.

1. Rottenburg and Farkas did not move to intervene as parties
and were not considered parties for the purpose of the emergency
motion.
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With the lien removed, there was no impediment recorded
on the title to prevent Lincoln on Locust from selling the
property to a third party without the approval of the
intervenors.

As it turned out, Lincoln on Locust had entered

into an agreement of sale with Pelican Properties, LLC
("Pelican"), an arms-length buyer, back on January 30, 2013,
subject to the removal of the lis pendens.

Closing took place on

September 25, 2013, a day after the Common Pleas Court had
granted the petition to strike the lis pendens.2

Since East

Mark, the mortgagee, was due more than the sale price, all moneys
would end up with East Mark and none with the seller, Lincoln on
Locust.
On October 24-25, 2013, we held an evidentiary hearing
on the emergency motion of the intervenors to enforce the
Stipulated Order and for injunctive relief.

In an order dated

October 28, 2013, we denied the emergency motion on the grounds
that East Mark had not violated the Stipulated Order when it took
action in state court to remove the lis pendens from the
building.

Paragraph 4 of the Stipulated Order related only to

Lincoln on Locust and the intervenors and did not apply to East
Mark.

For its part, East Mark was simply obligated in paragraph

5 "not [to] take any further action on the judgment by confession

2. The deed was immediately recorded in the name of Twelve22 LP,
a subsidiary of Pelican, which deposited $513,675.59 of the
purchase price in escrow with First Platinum Abstract Title
Company and was scheduled to pay the balance, $1,785,509.18, on
October 25, 2013.
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obtained in this case on or about March 6, 2013, except as
specifically required by the Bet Din proceeding."

Whatever the

legality of East Mark's actions in state court to remove the lis
pendens, its actions there did not involve "further action on the
judgment by confession" entered in this court.

East Mark Int'l

Ltd. v. ADAR, LLC, Civil Action No. 13-1204, 2013 U.S. Dist.
LEXIS 154039 (E.D. Pa. Oct. 28, 2013).

Moreover, the sale of the

property would cause no harm to intervenors since their alleged
interest in the property would be consumed by the satisfaction of
the mortgage held by East Mark.
As part of our October 28, 2013 Order, we ordered
defendant Lincoln on Locust and its counsel, O'Connor Kimball LLP
("Kimball"), jointly and severally, to pay intervenors their
reasonable counsel fees and costs on the ground that Lincoln on
Locust had flagrantly violated this court's August 13, 2013
Stipulated Order by proceeding to sell the building without prior
authorization from an agreed-upon Bet Din proceeding.

The court

relied on Rule 16(f)(1)(C) of the Federal Rules of Civil
Procedure which provides:

"On motion or on its own, the court

may issue any just orders... if a party or its attorney: ... (C)
fails to obey a scheduling or other pretrial order."

In the

event that intervenors, Lincoln on Locust, and Kimball could not
agree on the amount of reasonable counsel fees and costs, we
directed intervenors to file a motion, which they did on
November 15, 2013.

Rule 16(f)(2) provides:

"Instead of or in

addition to any other sanction, the court must order the party,
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its attorney, or both to pay the reasonable expenses—including
attorney's fees—incurred because of any noncompliance with this
rule, unless the noncompliance was substantially justified or
other circumstances make an award of expenses unjust."

I.
Lincoln on Locust and Kimball do not dispute under Rule
16(f)(2) that they failed to obey a pretrial order.

They do not

argue that their noncompliance was substantially justified or
that there were circumstances which would make an award of
expenses unjustified.

Instead, they object to individual time

entries logged by intervenors' attorney Kevin Watson, Esq. and
the hourly rate of both Watson and intervenors' other attorney,
Andrew Teitelman, Esq.
Intervenors have submitted detailed time records in
support of their motion.

Teitelman, the lead counsel for

intervenors, logged 41.6 hours at an hourly rate of $300, for a
total of $12,480.

However, the parties have agreed that

Teitelman will seek no more than $12,000 in fees.
Watson and his associates, Stephanie L. Anderson and
Julianne Darlus, who initially represented I.M. Rottenburg and
Kalman Farkas, logged 66.70 hours.

Watson's hourly rate is $300,

while his associates' rates are $200 and $90 respectively,
bringing his total to $17,462 in professional services rendered.
Watson also billed $781.96 in costs.
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II.
We turn first to the objections of Lincoln on Locust
and Kimball to individual time entries submitted by Watson.

A

court calculating the hours reasonably expended in litigation
must "review the time charged, decide whether the hours set out
were reasonably expended for each of the particular purposes
described and then exclude those that are 'excessive, redundant,
or otherwise unnecessary.'"

Public Interest Research Group of

N.J., Inc. v. Windall, 51 F.3d 1179, 1188 (3d Cir. 1995).

Our

Court of Appeals has stressed that the district court has "a
positive and affirmative function in the fee fixing process, not
merely a passive role."
(3d Cir. 2001).

Maldonado v. Houstoun, 256 F.3d 181, 184

Furthermore, the party opposing the motion for

fees has the burden "to challenge, by affidavit or brief with
sufficient specificity to give fee applicants notice, the
reasonableness of the requested fee."
F.2d 1177, 1183 (3d Cir. 1990).

Rode v. Dellarciprete, 892

We may only reduce the requested

fee, whether by reducing the hours worked or the hourly rate, on
grounds raised by the party opposing the fee award, but we
exercise our discretion to achieve a reasonable fee in light of
any objections raised.

Id.

Lincoln on Locust and Kimball contend that many of the
hours for which intervenors seek fees represent unnecessary or
duplicative work on the part of Watson.

Their first challenge to

individual time entries involves those entries that pre-date
Watson's appearance on behalf of intervenors.
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Prior to

October 22, 2013, when he entered his appearance on behalf of
Faibish and Olewski, Watson represented only Kalman Farkas and
I.M. Rottenberg, who were not parties to the action.

In our

view, while Watson may have worked on similar issues pertinent to
the matter while representing Farkas and Rottenberg, it would be
inappropriate to require Lincoln on Locust and Kimball to
reimburse intervenors for Watson's fees incurred while counsel to
other individuals and not to the intervenors.

As such, we will

reduce Watson's fees by $4,850.
Lincoln on Locust and Kimball also challenges three
entries, dated October 22, 2013 and October 23, 2013 that total
4.3 hours.

According to the entries, they correspond to time

spent researching and analyzing federal rules regarding subpoena
procedures.

Lincoln on Locust and Kimball argue that 4.3 hours

is excessive and unnecessary to complete the stated task.

They

also object to the third entry, dated October 23, 2013, on the
ground that the work described therein was performed after the
date the subpoena was issued and thus the research was
unnecessary.

We agree that 4.3 hours is excessive to perform the

task as described and that the research performed following the
date the subpoena was issued was unnecessary.

We will reduce the

hours to be reimbursed to 1.8, for a fee reduction of $500.
Lincoln on Locust and Kimball further contest two
entries dated October 22, 2013.

One entry is for .60 hours of

work performed by Stephanie Anderson, Watson's associate, for
drafting a subpoena "to appear and testify at hearing and
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accompanying letter for First Platinum Abstract."

The second

entry is for $90 in expenses for an "advance of witness fees" to
Dennis Richman Services.

Lincoln on Locust and Kimball argue

that neither they nor plaintiff East Mark ever received a copy of
the referenced subpoena and that it was improperly served ex
parte on the witness.

We find this objection to be without merit

and decline to reduce the fees and expenses in the aforementioned
entries.
There is also a challenge to two fee entries for
preparing and filing "petition to intervene and to strike in
state court," and legal research regarding "state court complaint
seeking enforcement of interim order from Rabbinical Court" as
well as an expense entry for "filing fee for motion," all
totaling $1,407.68.

It is contended that these three entries

relate to the filing of a state court case and are unrelated to
the intervenors' emergency motion in this court.

While we

recognize that the state court action may have substantially
overlapped with the emergency motion in this court, we concur
that it would be inappropriate to require reimbursement to the
intervenors for such fees.

Moreover, in his correspondence with

Kimball leading up to the filing of the pending motion for
counsel fees, Teitelman stated that his clients would concede
this objection.

As such, we will reduce the total fees and

expenses for Watson by $1,407.68.
Lincoln on Locust and Kimball further challenge
Watson's entry dated October 28, 2013 for "telephone conference

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with A. Teitelman and S. Faibish regarding: strategy- review and
respond to e-mail to G. Kimball requesting attorney fees and cost
info."

The objection to this entry is based on the ground that

any discussion of strategy relative to responding to Kimball's
request is outside the scope of reasonable counsel fees.

We are

not persuaded and will leave the entry undisturbed.
Lincoln on Locust and Kimball next object to a time
entry dated October 23, 2013 for "assist[ing] in preparation for
emergency hearing."

This entry for $400 describes two hours of

work by Watson's associate, Stefanie Anderson.

We reject the

argument that the entry is too vague and fails to explain the
task identified.

Two hours is a reasonable amount of time for

Anderson to spend helping Watson prepare for the hearing, which
was held on October 24 and 25, 2013.
The final objection focuses on two expense entries,
dated October 21 and 23, 2013, for "filing fee for stipulation"
and "filing fee for intervenor complaint," on the grounds that
there was no stipulation or complaint filed on either of those
dates.

We agree that no complaint or stipulation was filed on

the dates shown on the invoice.

Moreover, as the docket in this

matter reflects, the stipulation was filed in error and was
subsequently forwarded to the court for our approval.

We will

accordingly reduce Watson's expenses by $319.08.
In sum, the expenses and fees of Watson and his
associates will be reduced by $7076.76, for a total of
$11,497.20.

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III.
We turn next to the objection of Lincoln on Locust and
Kimball to the $300 hourly rate of Watson and Teitelman.
"Generally, a reasonable hourly rate is calculated according to
the prevailing market rates in the relevant community."
Maldonado, 256 F.3d at 184.

The party seeking fees has the

burden of establishing that the requested hourly rate is
reasonable.

Id. (citing Washington v. Phila. Cty. Ct. of Common

Pleas, 89 F.3d 1031, 1035 (3d Cir. 1996)).

The court "should

assess the experience and skill of the prevailing party's
attorneys and compare their rates to the rates prevailing in the
community for similar services by lawyers of reasonably
comparable skill, experience and reputation."

Id.

As noted,

intervenors have presented detailed invoices received from their
attorneys, Watson and Teitelman, showing an hourly rate of $300.
Affidavits from the attorneys or any other evidence of a
reasonable rate for their time have not been submitted.

However,

viewing the complexity of the case and the work product of the
attorneys, including Teitelman's participation at a hearing on
the emergency motion and the compressed time frame for this
matter, we find the hourly rate of $300 of both Watson and
Teitelman to be fair and reasonable.

See, e.g., Mantz v. Steven

Singer Jewelers, 100 F. App'x 78, 81 (3d Cir. 2004); Bell v.
United Princeton Props., Inc., 884 F.2d 713, 719 (3d Cir. 1989).
In accordance with the foregoing, intervenors'
reasonable costs and fees will be reduced to $12,000 for

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Teitelman and $11,497.20 for Watson and his associates, for a
total of $23,497.20.

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