MB Auto Care Management, Inc. v. Plaza Carolina Mall, L.P. et al

Filing 54

OPINION AND ORDER. GRANTED IN PART AND DENIED IN PART 53 Amended MOTION for Attorney Fees and Costs filed by Simon PC, Inc., Plaza Carolina Mall, L.P., SPG Carolina, L.P.; MOOT 26 MOTION for Attorney Fees and costs filed by Simon PC, Inc., Plaza Carolina Mall, L.P., SPG Carolina, L.P. Signed by Judge Salvador E Casellas on 12/16/2010.(LB)

MB Auto Care Management, Inc. v. Plaza Carolina Mall, L.P. et al

Doc. 54

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IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF PUERTO RICO

M B AUTO CARE MANAGEMENT, INC. D /B /A PRONTO WASH PLAZA C A R O L IN A Civil No. 10-1095 (SEC) Plaintiff v. P L A Z A CAROLINA MALL, L.P. ET AL Defendants

OPINION and ORDER P e n d in g before this Court is Defendants' request for attorneys' fees and costs. Docket # 53. To this date, Plaintiffs have not filed an opposition. After reviewing the filings, and the a p p lic a b le law, Defendants' motion is GRANTED in part and DENIED in part. 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 A p ril 20, 2010 Opinion and Order. Docket # 24. Therein, this Court granted Defendants' m o tio n for judgment on the pleadings, and dismissed Plaintiff's claims. Plaintiff was also o rd e re d to vacate the premises, and pay Defendants holdover rent calculated at one thirtieth of 2 5 0 % of the minimum rent during the last full calendar month of the rental agreement. On April 26, 2010, Defendants filed a motion for attorneys fees and costs pursuant to S e c tio n 21(b) of the Lease Agreement, and Puerto Rico Rule of Civil Procedure 44.1. Docket # 26. According to Defendants, the Lease Agreement expressly provides that if the landlord is re q u ire d to defend itself against any litigation arising out of the lease, the landlord shall recover f ro m the tenant its reasonable attorneys' fees and costs. They further contend that they are e n title d to attorneys' fees as prevailing parties in this suit. Lastly, Defendants aver that Plaintiff

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a c te d frivolously and with obstinacy in the litigation of the case despite the agreement's clear la n g u a g e . S h o rtly thereafter, Plaintiff filed an appeal (Docket # 28), which was later voluntarily d ism is s e d . On November 10, 2010, Defendants filed an amended motion for attorney's fees and c o s ts , reasserting their previous arguments and supplementing their detailed account of costs a n d attorneys' fees. Plaintiff did not oppose. 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). Therefore, "a prevailing p a rty is prohibited from requiring the losing party to pay for attorneys' fees unless there is a s ta tu te or enforceable contract providing for attorneys' fees." Rodriguez-Torres v. Gov't Dev. B a n k of P.R., 708 F. Supp. 2d 195, 198 (D.P.R. 2010) (citing Fleischmann Distilling Corp. v. M a ie r Brewing Co., 386 U.S. 714, 717 (1967)). A prevailing party, notwithstanding, "may be e n title d to attorneys' fees in the absence of a statutory provision or a contract when the losing p a rty has `acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" Id. (citing C h a m b e rs v. NASCO, Inc., 501 U.S. 32, 45-46 (1991). Additionally, where, as here, the court's jurisdiction is based on diversity of the parties, a district court's award of attorneys' fees is governed by relevant state law, in this case Rule 4 4 .1 (d ) of the Puerto Rico Rules of Civil Procedure. P.R. Laws Ann. tit. 32, App. III, Rule 4 4 .1 (d ); see B. Fernández & Hnos., Inc. v. Kellogg USA, Inc., 516 F.3d 18, 28 (1st Cir. 2008).

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R u le 44.1(d) provides that "[i]n the event any party or its lawyer has acted obstinately or f riv o lo u s ly, the court shall, in its judgment, impose on such person the payment of a sum for a tto rn e y's fees which the court decides corresponds to such conduct." 1 The Puerto Rico S u p re m e Court has stated that `[t]he main purpose of awarding attorney's fees in cases of o b s tin a c y is to impose a penalty upon a losing party that because of his stubbornness, obstinacy, ra sh n e s s , and insistent frivolous attitude has forced the other party to needlessly assume the p a in s, costs, efforts, and inconveniences of a litigation.'" Top Entm't, Inc. v. Torrejon, 351 F.3d 5 3 1 , 533 (1st Cir. 2003) (citing Fernandez Marino v. San Juan Cement Co., 830, 118 P.R. Dec. 7 1 3 (1987)). As such, awards of attorney's are proper if they are awarded (1) against the d e f e a te d party that (2) acted in an obstinate or frivolous manner. Reyes v. Banco Santander de P .R ., N.A., 583 F. Supp. 1444, 1445 (1984); see Vazquez-Filippetti v. Banco Popular De P.R., 5 0 4 F.3d 43, 55 (1st Cir. 2007) (finding that an award of attorney's fees is appropriate only when th e losing party had been obstinate or frivolous); Corpak, Inc. v. Ramallo Bros. Printing Inc.,

This rule applies to awards for attorney's fees in diversity cases in federal courts. SainzGonzalez v. Banco de Santander, 932 F.2d 999, 1004 (1st Cir. 1991). 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 attorney's fees is the state law." Rodriguez-Lopez v. Institucion Perpetuo Socorro, Inc., 616 F. Supp. 2d 200, 202 (D.P.R. 2009); see also Correa v. Cruisers, a Div. of KCS Int'l, Inc., 298 F.3d 13, 30 (1st Cir. 2002) (citing Grajales-Romero v. Am. Airlines, Inc., 194 F.3d 288, 301 (1st Cir. 1999)); 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. Insurance Co. of North America, Inc., 926 F. Supp. 36, 38 (D. P.R. 1996) (citing Peckham v. Continental Casualty Ins. Co., 895 F.2d 830, 841 (1st Cir. 1983)); Navarro de Cosme v. Hospital Pavia, 922 F.2d 926, 934 (1st Cir. 1991); Pan American World Airways, Inc. v. Ramos, 357 F.2d 341, 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 Comerciales Andinos, S.A. v. Gen. Elec. Del Caribe, Inc., 145 F.3d 463, 478 (1st Cir. 1998). Therefore, "Puerto Rico law governs the state law claim for attorneys' fees in this diversity action." 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 (1st Cir. 2009); Newell P.R. Ltd. V. Rubbermaid Inc., 20 F.3d 15, 24 (1st Cir. 1994).

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1 9 9 0 P.R.-Eng. 710,162, 125 P.R. Dec. 724, 1990 Juris P.R. 37 (1990) (holding that "in our s ys te m of justice, the assessment or award of attorney's fees does not lie in all cases; it is a p p ro p ria te only ... in those cases where the court believes that the losing party, or his counsel, h a s been obstinate or frivolous."(emphasis added)). A p p lic a b le Law and Analysis In the instant case, the Lease Agreement between the parties expressly states that the te n a n t shall pay the landlord reasonable attorneys' fees and costs incurred in litigation arising o u t of said agreement. Moreover, Plaintiff's attitude in this case has forced the other party to n e e d le s s ly assume the pains, costs, efforts, and inconveniences of a litigation. As such, this C o u rt finds that Defendants are entitled to attorneys' fees. This does not, however, a u to m a tic a lly entitle Defendants to the amounts requested in their motion. It should be noted that we find that the $125.00 hourly rate is reasonable. Moreover, s in c e Plaintiff has not objected to the same, said rate will remain unaltered. Therefore, this C o u rt must analyze the itemized list of hours expended in the litigation of the case in order to d e te rm in e the reasonable amount of fees to be awarded. U n d e r Puerto Rico law, attorneys' fees are not meant to compensate a litigant for the to ta l costs incurred in the law suit. IOM Corp. v. Brown Forman Corp., 2010 U.S. App. LEXIS 2 4 6 4 4 , 28-29 (1st Cir. P.R. Dec. 2, 2010) (citing Corpak, 1990 P.R.-Eng. At 162). Instead, "fee a w a rd s `must be commensurate to that amount which, in the opinion of the court, reasonably re p re s e n ts the value of th[e] [legal] services, considering the degree of obstinacy [or f riv o lo u s n e s s] and other circumstances of the case.'"Id. (citing Asociación de Condóminos v. T re lle s Reyes, 20 P.R. Offic. Trans. 599, 605, 120 P.R. Dec. 574, 1988 Juris P.R. 25 (1988)). O n c e the court makes the threshold determination of obstinacy or frivolousness, the imposition o f attorneys' fees is mandatory. Correa v. Cruisers, a Div. of KCS Int'l, Inc., 298 F.3d 13, 30

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(1 st Cir. 2002). Notwithstanding, the amount of the fees awarded is left to the discretion of the c o u rt. Id. It is important to note that courts have not adopted any specific method to aid in c a lc u la tin g fee awards and, therefore, the criteria used to assess the amount of the award are not c le a r. Top Entm't, Inc., 351 F.3d at 251-52.2 The amount of fees "may not be automatically d e t e rm in e d by simply looking at what the prevailing party paid, without taking into c o n s id eration the degree of obstinacy displayed be the losing party. "Fajardo Shopping Ctr., S.E. v . Sun Alliance Ins. Co. III, 81 F. Supp. 2d 331, 337 (D.P.R. 2000). Courts may also take into a c c o u n t other factors, such as `the nature of the action, the questions of law involved, the a m o u n t at issue, the time spent, the efforts and professional activity needed for the case, and the s k ills and reputation of the lawyers involved' when calculating an attorney's fees award." Id. a t 334; see also Correa, 298 F.3d at 31. On this point, the Supreme Court of Puerto Rico has s u g g e s te d that the amount of the fees award should be directly proportionate to the duration of th e litigation. Fajardo Shopping Ctr. III, 81 F. Supp. 2d at 335 (citing Corpak, 1990 P.R.-Eng. A t 162) Hence, when a case is disposed of through a motion to dismiss, or one for judgment on th e pleadings, rather than at trial it bears favorably on the losing party's conduct, by mitigating th e degree of obstinacy permeating such conduct. See id. More so when dismissal ensues at the e a rly stages of litigation. In the instant case, Defendants spent time and effort in preparing the notice of removal, th e motion for judgment on the pleadings, and additional documents in support thereof, and d e f e n d in g themselves against Plaintiff's appeal as well as other motions filed before this Court.

Is is well settled that fee-shifting methodologies -- such as the "lodestar method" -- are not available under Puerto Rico law. Corpak, 1990 P.R.-Eng. At 162.

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D e f e n d a n t also prepared two motions for attorneys' fees. However, the Court finds that the n a tu re of the action and the questions of law involved in this case were not complicated. F u rth e rm o re , the time, effort, and professional activity needed for the case cannot be adequately c h a ra c te riz e d as substantial. In Top Entm't, Inc., the court awarded $60,000 in attorney's fees to a defendant in a case th a t lasted 5 years and had gone twice to the First Circuit. The case at bar, on the other hand, la s te d less than three months prior to dismissal. Additionally, in the present case, the parties did n o t engage in discovery, nor attended hearings, or trial. Consequently, this Court finds that D e f e n d a n ts ' request for $25,450.00 is not a reasonable amount of attorneys' fees. Accordingly, D e f e n d a n ts are awarded $15,000 in attorneys' fees. Conclusion B a s e d on the foregoing, Defendants' 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 attorneys' fees. IT IS SO ORDERED. S a n Juan, Puerto Rico, this 16th day of December, 2010. S /S a lv a d o r E. Casellas S a lv a d o r E. Casellas U .S . Senior District Judge