Renaissance Marketing, Inc. vs. Monitronics International Inc., et al

Filing 48

OPINION AND ORDER. GRANTED 47 MOTION requesting that Motion for Attorneys' be Adjudicated without Opposition filed by Monitronics International Inc.; GRANTED in part and DENIED in part 46 MOTION for Attorney Fees filed by Monitronics International Inc. Signed by Judge Salvador E Casellas on 12/15/2009.(LB)

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IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF PUERTO RICO R E N A IS S A N C E MARKETING, INC. Plaintiff v. M O N IT R O N IC S INTERNATIONAL, IN C .; ALPHA ONE SECURITY S O L U T IO N S , INC.; JORGE JAVIER M A R E R R O ; JANE DOE; JOHN DOE; A B C COMPANY; XYZ INSURANCE CO M PA N Y D e f e n d a n ts Civil No. 08-1823 (SEC)

O P I N IO N and ORDER P e n d in g before this Court is Co-Defendant's Monitronics International Inc. ( " D e f e n d a n t" ) motion for attorney's fees. Docket # 46. In light of Plaintiff Renaissance M a rk e tin g , Inc.'s ("Plaintiff") failure to file an opposition, Defendant requested that the bill of c o s ts and request for attorney's fees be deemed unopposed. Docket # 47. After reviewing the f ilin g s , and the applicable law, Defendant's motion is GRANTED in part and DENIED in p a r t. F a c tu a l Background T h e facts and procedural background of this case were already set forth in this Court's M a rc h 31, 2009 Opinion and Order. Docket # 42. Therein, this Court denied Plaintiff's motion to remand the case to state court, finding that Co-Defendants Alpha One Security Solutions, Inc. (" A lp h a One") and Jorge Javier Marrero ("Marrero") were fraudulently joined for the sole p u rp o s e of depriving this Court of diversity jurisdiction. In said Opinion, this Court also granted D e f e n d a n ts ' motion to dismiss, concluding that the contract between the parties contained a v a lid forum selection clause that designated either the state of Texas, or the Federal District C o u rt of Dallas County, Texas, as the proper forums for suits arising out of said contract. Id.

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T h e accompanying Judgment, rendered on the same date, held that "[e]ach party shall bear its o w n costs and attorney's fees." Docket # 43. On May 15, 2009, Defendant filed the instant motion requesting attorney's fees. A c c o rd in g to Defendant, Plaintiff acted obstinately in fraudulently joining Alpha One and M a rre ro as co-defendants to deprive this Court of jurisdiction. Moreover, Defendant avers that P la in tif f willfully ignored the contract's forum selection clause, despite its clear language. B a s e d on the foregoing, and Puerto Rico Rule of Civil Procedure 44.1(d), Defendant argues that th e imposition of attorney's fees is warranted. Docket # 46. Plaintiff has not filed an opposition. A c c o rd in g ly, on July 30, 2009, Defendant filed a motion requesting that the bill of costs (D o c k e t # 44), and request for attorney's fees (Dockets ## 45 & 48) be adjudicated without o p p o s itio n . Docket # 47. S ta n d a r d of Review A tto r n e y 's Fees U n d e r the "American Rule," practiced in the United States, "parties are ordinarily re q u ire d to bear their own attorney's fees ­ the prevailing party is not entitled to collect from th e loser." Buckhannon v. West Va. Dept. Of Health, 532 U.S. 598, 602 (201); see Alyeska P ip e lin e Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975). Thus absent explicit s ta tu to ry authority, a prevailing party is not automatically entitled to attorney's fees. B u c k h a n n o n , 532 U.S. at 602 (citing Key Tronic Corp. v. United States, 511 U.S. 809, 819 (1 9 9 4 )).1 Notwithstanding, when jurisdiction in a case before the United States District Court " is premised on diversity of citizenship, the applicable standard of law for the determination of a tto rn e y's fees is the state law." Rodriguez-Lopez v. Institucion Perpetuo Socorro, Inc., 616 F. S u p p . 2d 200, 202 (D.P.R. 2009); see also Correa v. Cruisers, a Div. of KCS Int'l, Inc., 298 F.3d
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1 3 , 30 (1st Cir. 2002) (citing Grajales-Romero v. Am. Airlines, Inc., 194 F.3d 288, 301 (1 st Cir. 1 9 9 9 )); Colon v. Rinaldi, 547 F. Supp. 2d 122, 124 (D.P.R. 2008); Fajardo Shopping Ctr. ,S.E. v . Sun Alliance Ins. Co. of Puerto Rico II, 167 F.3d 1, 14 (1st Cir. 1999); Taber Partners I v. In su ra n c e Co. of North America, Inc., 926 F. Supp. 36, 38 (D. P.R. 1996) (citing Peckham v. C o n tin e n ta l Casualty Ins. Co., 895 F.2d 830, 841 (1 st Cir. 1983)); Navarro de Cosme v. Hospital P a v ia , 922 F.2d 926, 934 (1st Cir. 1991); Pan American World Airways, Inc. v. Ramos, 357 F.2d 3 4 1 , 342 (1st Cir. 1996)). It is well established that Puerto Rico's Civil Procedure Rule 44.1(d) is substantive for Erie doctrine purposes. Fajardo Shopping Ctr., S.E., 167 F.3d at 14; Servicios C o m e rc ia le s Andinos, S.A. v. Gen. Elec. Del Caribe, Inc., 145 F.3d 463, 478 (1st Cir. 1998). T h e re f o re , "Puerto Rico law governs the state law claim for attorneys' fees in this diversity a c tio n ." Citibank Global Mkts., Inc. v. Santana, 573 F.3d 17, 30 (1st Cir. 2009); see Mass. Eye & Ear Infirmary v. QLT Phototherapuetics, Inc., 552 F.3d 47, 74 (1 st Cir. 2009); Newell P.R. L td . V. Rubbermaid Inc., 20 F.3d 15, 24 (1st Cir. 1994). R u le 44.1(d) of the Puerto Rico Rules of Civil Procedure provides that "[i]n the event a n y party or its lawyer has acted obstinately or frivolously, the court shall, in its judgment, im p o se on such person the payment of a sum for attorney's fees which the court decides c o rre s p o n d s to such conduct."2 The Puerto Rico Supreme Court has stated that `[t]he main p u rp o s e of awarding attorney's fees in cases of obstinacy is to impose a penalty upon a losing p a rty that because of his stubbornness, obstinacy, rashness, and insistent frivolous attitude has f o rc e d the other party to needlessly assume the pains, costs, efforts, and inconveniences of a litig a tio n .'" Top Entm't, Inc. v. Torrejon, 351 F.3d 531, 533 (1 st Cir. 2003) (citing Fernandez M a rin o v. San Juan Cement Co., 830, 118 P.R. Dec. 713 (1987)). As such, awards of attorney's

As previously mentioned, this rule applies to awards for attorney's fees in diversity cases in federal courts. Sainz-Gonzalez v. Banco de Santander, 932 F.2d 999, 1004 (1st Cir. 1991).

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a r e proper if they are awarded (1) against the defeated party that (2) acted in an obstinate or f riv o lo u s manner. Reyes v. Banco Santander de P.R., N.A., 583 F. Supp. 1444, 1445 (1984); s e e Vazquez-Filippetti v. Banco Popular De P.R., 504 F.3d 43, 55 (1 st Cir. 2007) (finding that a n award of attorney's fees is appropriate only when the losing party had been obstinate or f riv o lo u s ); Corpak, Inc. v. Ramallo Bros. Printing Inc., 162, 125 P.R. Dec. 724 (1990) (holding th a t "in our system of justice, the assessment or award of attorney's fees does not lie in all cases; i t is appropriate only ... in those cases where the court believes that the losing party, or his c o u n s e l, has been obstinate or frivolous."(emphasis added)). This rule was "not designed as a p re m iu m to successful litigants, but rather as a penalty to be imposed on those litigants whose c o n d u c t in pursuing a course of action borders on unreasonable pertinaciousness." 3 Banco S a n ta n d e r, 583 F. Supp. at 1446; see also Rinaldi, 547 F. Supp. 2d at 124.4 T h e First Circuit has held that "[t]he basic parameters that should guide the district court in applying Rule 44.1(d) are well established." Top Entm't, 351 F.3d at 533; see Correa, 298 F .3 d at 30-31. In order to determine whether a party or its lawyer was obstinate, a court must e x a m in e whether `a litigant was unreasonably adamant or stubbornly litigious beyond the a c c e p ta b le demands of the litigation, thereby wasting time and causing the Court and the other litig a n ts unnecessary expense and delay.'" Rodriguez-Lopez v. Institucion Perpetuo Socorro,

The imposition of attorney's fees under Rule 44.1(d) "is a sanction designed to `punish the offending party as well as to recompense those who are victimized by the offender's recalcitrance.'" Id. at 125(citing Dopp v. Pritzker, 38 F.3d 1239, 1253 (1st Cir.1994). This goal is achieved by ordering the obstinate party to pay attorneys' fees in a reasonable amount to the opposing party. Id. On the contrary, under fee-shifting statutes, such as the Civil Rights Act, 42 U.S.C. § 1988, attorney's fees are awarded to the prevailing party for the expenses incurred, and in so doing, courts need to determine the hours reasonably expended in litigation, multiplied by a reasonable hourly rate (lodestar method). Guillemard Ginorio v. Contreras, 575 F. Supp. 2d 346, 354 (D.P.R. 2008). However, as previously noted, Rule 44.1(d) seeks to impose a penalty upon the losing party that has been obstinate or frivolous.
4

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In c ., 616 F. Supp. 2d 200, 202 (D. P.R. 2009)(quoting De Leon Lopez v. Corporacion Insular d e Seguros, 931 F.2d 116, 126 (1st Cir. 1991)); see also Top Entm't, 351 F.3d at 533; Correa, 2 9 8 F.3d at 30; Citibank v. Rodriguez-Santana, 573 F.3d 17, 30 (1 st Cir. 2009). Accordingly, a n award of attorney's fees is proper where a party engages in actions "which result in a litig a tio n that could have been avoided, which prolongs it needlessly, or that obliges the other p a rty to embark on needless procedures." Fernández Marino, 118 P.R. Dec. at 718-791. Courts possess inherent equitable powers to award attorney's fees against a party that " h a s `acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" Mullane v. C h a m b e rs , 333 F.3d 322, 337-38 (1st Cir. 2003) (citations omitted). Moreover, the " d e te rm in a tio n of obstinacy is dependent on the particular facts of each case and lies in the s o u n d discretion of the court." Institucion Perpetuo Socorro, Inc., 616 F. Supp. 2d at 202 (citing B a n c o Santander, 583 F. Supp. at 1445); Correa, 298 F.3d at 30. However, once the court c o n c lu d e s that a party has been obstinate, the assessment of attorneys' fees is mandatory. F a ja rd o Shopping Ctr., S.E. II, 167 F.3d at 14; De Leon Lopez, 931 F.2d at 126; Top Entm't, 3 5 1 F.3d at 533. A p p lic a b le Law and Analysis In the present case, Defendant seeks the imposition of attorneys' fees pursuant to Rule 4 4 .1 (d ) on the grounds that Plaintiff acted obstinately. Therefore, this Court must determine w h e th e r Plaintiff's fraudulent joinder of parties to defeat diversity jurisdiction, and filing suit in this Court despite the forum selection clause's clear language, constitutes obstinate conduct w h ic h merits the imposition of attorney's fees. A s mentioned above, determining whether a litigant acted obstinately or frivolously is " d e p e n d e n t on the particular facts of each case and lies in the sound discretion of the court." In stitu c io n Perpetuo Socorro, Inc., 616 F. Supp. 2d 200, 202 (citing Reyes, 583 F. Supp. at

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1 4 4 5 ) ; Correa, 298 F.3d at 30; Dopp v. Pritzker, 38 F.3d 1239, 1253 (1 st Cir. 1994); Banco S a n ta n d e r, 583 F. Supp. at 1445. Courts may consider several factors, such as, whether a litig a n t's conduct needlessly prolonged the litigation, wasted the other party's and the court's tim e , and if the other party and the court incurred in needless procedures, unreasonable efforts a n d expenses. Rodriguez-Lopez, 616 F. Supp. 2d 200, 202; De Leon Lopez, 931 F.2d at 126; F e rn á n d e z Marino, 118 D. P.R. at 718-791. Although "the degree of obstinacy is the critical f a c to r in determining whether attorney's fees are warranted, other factors to be weighed in c lu d e ...th e nature of the litigation, the legal issues involved, the time spent and the efforts and a b ilitie s of the attorneys." Correa, 298 F.3d at 31; Fajardo Shopping Center v. Sun Alliance Ins. C o . III, 81 F. Supp. 2d 331, 334 (D.P.R. 2000) (citing Corpak, 125 P.R. Dec. at 738). In the case at hand, this Court held that Plaintiff acted fraudulently in joining Alpha One a n d Marrero to defeat diversity jurisdiction. After determining that said parties were joined for th e sole purpose of defeating jurisdiction, and were not real parties in interest, the instant suit w a s removed to this Court. Thereafter, Defendant's motion to dismiss was granted in light of th e contract's forum selection clause. Defendant avers that as a result of the foregoing actions, it was forced to defend itself from unnecessary legal proceedings, and its legal fees should be re im b u rs e d . This Court agrees that Plaintiff acted obstinately in fraudulently joining the a f o r e m e n tio n e d parties. As a result of Plaintiff's actions, Defendant was forced to argue for re m o v a l, and later dismissal of the suit. Plaintiff involved both Defendant and this Court in n e e d le s s procedures, which unnecessarily prolonged and delayed the litigation of this case, w h ic h Defendant notes will continue in Texas. Considering the above, this Court finds that P la in tif f was "unreasonably adamant or stubbornly litigious, beyond the acceptable demands o f the litigation" and its conduct resulted in "wasting time and causing the court and the other litig a n ts unnecessary expense or delay." De Leon Lopez, 931 F.2d at 126. In light Rule 44.1(d),

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w h ic h explicitly grants this Court the authority to impose attorney's fees when a party has acted o b s tin a te ly, this Court awards Defendants attorney's fees. Notwithstanding, it is important to note that courts have not adopted any specific method to aid in calculating fee awards and, therefore, the criteria used to assess the amount of the a w a rd are not clear. Top Entm't, 349 F. Supp. 2d at 251-252. Our Circuit has recognized that " R u le 44.1(d) vests the court with considerable discretion in determining the amount of a tto rn e ys ' fees to be bestowed." Dopp, 38 F.3d at 1252; Top Entm't, 351 F.3d at 533. F u rth e rm o re , "[t]he Puerto Rico Supreme Court has [] held that trial courts `must bear in mind th a t the degree or intensity of the obstinate or frivolous conduct is the test or determining or c ritic a l factor to be considered when calculating the attorneys' fees that the obstinate or f riv o lo u s losing party shall bear...'" Top Entm't, 349 F. Supp. 2d at 251-252 (citing Corpak, 125 P .R . Dec. at 738); Correa, 298 F.3d at 31. "Trial courts may also take into account a host of o th e r factors, such as `the nature of the action, the questions of law involved, the amount at is s u e , the time spent, the efforts and professional activity needed for the case, and the skills and re p u ta tio n of the lawyers involved' when calculating an attorney's fees award." Fajardo S h o p p in g Ctr., S.E. v. Sun Alliance Ins. Co. III, 81 F. Supp. 2d 331, 334 (D.P.R. 2000); Correa, 2 9 8 F.3d at 31. In the instant case, Defendants spent time and effort in preparing the notice of removal, th e motion to dismiss, and additional documents in support thereof. Defendant also prepared th e present motion and accompanying memoranda. However, the Court finds that the nature of th e action and the questions of law involved in this case were not complicated. Furthermore, the tim e , effort, and professional activity needed for the case cannot be adequately characterized a s substantial. The amount of fees "may not be automatically determined by simply looking at w h a t the prevailing party paid, without taking into consideration the degree of obstinacy

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d isp la ye d be the losing party," as well as the above-mentioned factors. Fajardo Shopping Ctr. III, 81 F. Supp. 2d at 337. The Supreme Court of Puerto Rico has suggested that the amount of th e fees award should be directly proportionate to the duration of the litigation. Id. at 335 (citing C o rp a k , 125 P.R. Dec. at 738).5 Hence, when a case is disposed of through a motion to dismiss ra th e r than at trial it bears favorably on the losing party's conduct, by mitigating the degree of o b s tin a c y permeating such conduct. See id. More so when dismissal ensues at the early stages o f litigation. In Top Entm't, the court awarded $60,000 in attorney's fees to a defendant in a case that la s te d 5 years and had gone twice to the First Circuit. The case at bar, on the other hand, lasted o n ly 7 months prior to dismissal. Additionally, in the present case, the parties did not engage in discovery, nor attended hearings, or trial. Consequently, this Court finds that Defendants' re q u e st for $58,917.50 is not a reasonable amount of attorney's fees. A f t e r r e v i e w i n g t h e f ilin g s , and considering that this award seeks to sanction Plaintiff as an obstinate party, this C o u rt finds that $15,000 is an adequate and reasonable award of attorney's fees for Defendant's c o u n s e l. C o n c lu s io n B a s e d on the foregoing, Defendant's request for attorney's fees is GRANTED in part a n d DENIED in part, and Defendant's counsel is awarded $15,000.00 in attorney's fees. IT IS SO ORDERED. S a n Juan, Puerto Rico, this 15th day of December, 2009. S /S a lv a d o r E. Casellas

In Fajardo Shopping Ctr. III, 81 F. Supp. 2d at 335, n. 4, the Court noted that in several of its opinions, the Supreme Court of Puerto Rico awarded attorney's fees under Rule 44.1(d) without explaining the method utilized in reaching said award.

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S a lv a d o r E. Casellas U .S . District Judge