Dallas Gas Partners LP v. Prospect Energy Corporation
Filing
214
OPINION AND ORDER AWARDING FEES AND EXPENSES.(Signed by Judge Melinda Harmon) Parties notified.(arrivera, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PROSPECT ENERGY CORPORATION,
§
§
Plaintiff,
§
§
VS.
§
§
DALLAS GAS PARTNERS, LP, DALLAS §
GAS GP, LLC, DAVID NELSON,
§
JEFFREY WEISS, AND TOM MUSE,
§
§
Defendants.
§
CIVIL ACTION H-10-1396
OPINION AND ORDER AWARDING FEES AND EXPENSES
Now that all causes of action asserted in the above referenced
cause have been resolved, still pending before the Court in the
above referenced action is prevailing party Plaintiff Prospect
Energy
Corporation’s
(“Prospect’s”)
prayer
for
an
award
of
attorney’s fees and costs, with a supporting affidavit from lead
counsel Neil Kenton Alexander and extensive billing records (#17614 through -23, Exhibits 1-4).
The award of fees and expenses was
granted as part of Prospect’s entitlement to actual damages after
prevailing on its claim that Defendants breached the Release and
Covenant Not to Sue in the parties’ LLC Purchase Agreement (“the
Agreement”).
See United States Magistrate Judge John Froeschner’s
Memorandum and Recommendation, #104, adopted by the then-presiding
-1-
district court judge,1 who in turn granted the partial summary
judgment in favor of Prospect (#110).
After resolving Prospect’s
counterclaims in favor of Prospect in its Opinion and Order of
January 6, 2011, this Court ordered
counsel to file an affidavit
and records supporting its request for an award of fees and
expenses.
#190 at 49.
Relevant Law
In the two-step process for a court to determine an attorney
fee award, the Fifth Circuit first calculates the “lodestar,” i.e.,
the number of hours reasonably expended on the litigation times the
prevailing hourly rate for attorneys in the community of similar
skill for similar work, excluding all time that is excessive,
duplicative, or inadequately documented.
Jimenz v. Wood County,
Texas, 621 F.3d 372, 379 (5th Cir. 2010), citing Rutherford v.
Harris County, 197 F.3d 173, 192 (5th Cir. 1999), and Watkins v.
Fordice, 7 F.3d 453, 357 (5th Cir. 1993).
strongly presumed to be reasonable.
The lodestar amount is
Saizan v. Delta Concrete
Products Co., Inc., 448 F.3d 795, 800 (5th Cir. 2006). Second, once
calculated, the lodestar number may be reduced or enhanced by the
applying the relative weights of the twelve factors in Johnson v.
1
This case was reassigned to the undersigned judge on October
26, 2007 (#118) and ultimately transferred on April 26, 2010 (#183)
from the Galveston Division, where it had been designated 3:04-cv0669, to the Houston Division, where it was designated 4:10-cv1396. For a summary of the procedural and substantive background
of this action, see the undersigned judge’s Opinion and Order of
January 6, 2011 (#190 at 7-12).
-2-
Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974):
(1) the time and labor required to represent the client
or clients; (2) the novelty and difficulty of the issues
in the case; (3) the skill required to perform the legal
services properly; (4) the preclusion of other employment
by the attorney; (5) the customary fee charged for those
services in the relevant community; (6) whether the fee
is fixed or contingent; (7) the time limitations imposed
by the client or circumstances; (8) the amount involved
and the results obtained; (9) the experience, reputation,
and ability of the lawyer; (10) the undesirability of the
case; (11) the nature and length of the professional
relationship with the client; and (12) awards in similar
cases.
Jimenez, 621 F.3d at 379; Saizan, 448 F.3d at 800.
Of the Johnson
factors, the most important are the time and labor involved, the
customary fee, the amount involved and the result obtained, and the
experience, reputation and ability of counsel. Saizan, 448 F.3d at
800.
Because there is a strong presumption that the lodestar is
sufficient, upward adjustments should be limited.
Jimenez, 621
F.3d at 379, citing Perdue v. Kenny A., 130 S. Ct. 1662, 1669
(2010).
Moreover the lodestar may not be adjusted because of a
Johnson factor if that factor is already subsumed in the lodestar.
Saizan,
448 F.3d at 800, citing
1041, 1047 (5th Cir. 1998).
Migis v. Pearle Vision, 135 F.3d
Four of the Johnson factors are
presumably included in the lodestar calculation:
the novelty and
complexity of the issues, the special skill and experience of
counsel,
the
quality
of
the
obtained from the litigation.
representation,
and
the
results
Blum v. Stenson, 465 U.S. 886, 898-
99 (1984); Shipes v. Trinity Indust., 987 F.2d 311, 310 (5th Cir.
-3-
1993). “Although upward adjustments of the lodestar figure based on
these factors are still permissible, such modifications are proper
only in certain rare and exceptional cases supported by specific
evidence on the record and detailed findings by the lower courts.
Id.
Preclusion of other employment is also generally subsumed in
the lodestar calculation.
Shipes, 987 F.2d at 321-22.
The party moving for a fee award bears the “burden of showing
the
reasonableness
of
the
hours
exercised billing judgment.”
billed,
including
that
they
Saizan, 448 F.3d at 799, citing
Walker v. City of Mesquite, 313 F.3d 246, 251 (5th Cir. 2002).
See
also Wegner v. Standard Ins. Co., 129 F.3d 814, 822 (5th Cir.
1997)(party
seeking
attorney’s
fees
bears
the
burden
of
establishing the reasonableness of the fees by documentation and
time records of the hours reasonably expended and proving the
exercise of billing judgment).
The plaintiffs must also provide
evidence of the attorney’s qualifications and skills. Hensley, 461
U.S. at 437.
To demonstrate billing judgment, the party moving for a fee
award must document the hours charged and the hours written off as
unproductive, excessive or redundant.
citing Walker,
Saizan, 448 F.3d at 799,
313 F.3d at 251, and Green v. Adm’rs of Tulane
Educ. Fund, 284 F.3d 642, 662 (5th Cir. 2002).
If the movant fails
to demonstrate billing judgment, the court should not deny fees,
but should reduce the award by a percentage to substitute for the
-4-
exercise of billing judgment and eliminate hours that were not
reasonably expended.
Id., citing Walker,, 313 F.3d at 251; Gulf
Production Co., Inc. v. Hoover Oilfield Supply, Inc., Civ. A. No.
08-5016 et al., 2011 WL 5299620, *2 (E.D. La. Nov. 3, 2011).
See,
(5th
Cir.
e.g.,
Walker
v.
U.S.
Dept.
of
HUD,
99
F.3d
761
1996)(reducing fee award by 15% for lack of billing judgment);
Leroy v. City of Houston, 831 F.2d 576, 586 (5th Cir, 1987)(13%
reduction); Cambridge Toxicology Group, Inc. v. Exnicios, 495 F.3d
169, 181-82 (5th Cir. 2007)(affirming 12.5% reduction); Champion v.
ADT Security Services, No. 2:08-CV-417-TJW, 2010 WL 4736908, *6
(E.D. Tex. Nov. 16, 2010)(where plaintiffs failed to produce
evidence of billing judgment, court reduced lodestar by 5%); Coe v.
Chesapeake Exploration, LLC, Civ. A. No. 2:09-cv-290-TJW, 2011 WL
4356728, *3 (Sept. 15, 2011)(same).
A reasonable hourly rate is the prevailing market rate for
similar services by similarly trained and experienced lawyers in
the relevant legal community.
Riddle, 2011 WL 1103033, at *6,
citing Tollett v. City of Kemah, 285 F.3d 357, 368 (5th Cir. 2002).
The movant bears the burden of establishing the market rate and
presenting
evidence
the
allows
the
reasonableness of the proposed rate.
court
to
determine
Id., citing Riley City of
Jackson, Miss., 99 F.3d 757, 760 (5th Cir. 1996).2
2
the
An attorney
The fee applicant may use evidence of fees from a variety of
sources, including what fee the attorney has received in the past
or affidavits from other area attorneys. Callis v. Shelette’s Home
-5-
shall, in addition to his affidavit, submit sufficient evidence
that the requested rates are similar “‘to those prevailing in the
community for similar services by lawyers of reasonably comparable
skill,
experience
and
reputation.’”
Id.,
quoting
Deltatech
Constr., LLC v. Sherwin-Williams Co., No. Civ. A. 04-2890, 2005 WL
3542906, *3 (E.D. La. Nov. 3, 2005), quoting Blum v. Stenson, 465
U.S. 886, 896 n.11 (1984).
“Compensable hours, reasonably spent are determined from the
attorney’s time records.”
In re Enron Sec., Derivative & ERISA
Litig., 586 F. Supp. 2d 732, 755 (S.D. Tex. 2008), citing Hensley
v. Eckerhart, 461 U.S. 424, 434 (1983).
Courts generally require
the movant “to provide contemporaneous time or billing records or
other documentation which the district court must examine and
discern which hours are compensable and which are not.”
Id.,
citing Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 324
(5th Cir.), cert. denied, 516 U.S. 862 (1995).
Even if the movant
fails to provide contemporaneous billing statements, a fee award is
not precluded “as long as the evidence produced is adequate to
determine reasonable hours.’” Gagnon v. United Technisource, Inc.,
607 F.3d 1036, 1044 (5th Cir. 2010), citing Louisiana Power, 50 F.3d
at 325.
for Adults, Inc., No. 3:10CV748-HEH, 2011 WL 4836224, *2 (E.D. Va.
Oct, 12, 20011), citing Westmoreland Coal Co. v. Cox, 602 F.3d 276,
290 (4th Cir. 2010), and Daly v. Hill, 790 F.2d 1071, 1080 (4th Cir.
1986).
-6-
“‘If more than one attorney is involved, the possibility of
duplication of effort along with the proper utilization of time
should be scrutinized.
courtroom
or
discounted.’”
conference
The time of two or three lawyers in a
when
one
would
do
may
be
obviously
Abrams v. Baylor College of Medicine, 805 F.3d 528,
535 (5th Cir. 1986), quoting Johnson, 488 F.2d at 717.
“[P]urely clerical or secretarial tasks should not be billed
at a paralegal rate, regardless of who performs them.” Missouri v.
Jenkins by Agyei, 491 U.S. 274, 288 n.10 (1989).
For paralegal
fees the court should ask if the “‘work was sufficiently complex to
justify the efforts of a paralegal, as opposed to an employee at
the next rung lower on the pay-scale ladder.’”
Spegon v. Catholic
Bishop of Chicago, 175 F.3d 544, 553 (7th Cir. 1999), citing People
Who Care v. Rockford Bd. of Educ., Sch. Dist. No. 205, 90 F.3d
1307, 1315 (7th Cir. 1996).
Fees can only be recovered for
paralegal services to the degree that “the paralegal performs work
traditionally done by an attorney.”
Champion v. ADT, 2010 WL
4736908, at *6, citing Allen v. U.S. Steel Corp., 665 F.2d 689, 697
(5th Cir. 1982).
In accord with the “American Rule” that generally parties are
to bear their own attorney’s fees, Texas does not allow an award of
attorney’s fees unless one is authorized by statute or contract.
Tony Gullo Motors I, LP v. Chapa, 212 S.W. 3d 299, 310-11 (Tex.
2007); in accord, Rosano’s Farm Store, Inc. v. International
-7-
Collection Service, Inc., 115 A.D. 2d 195, 495 N.Y.S. 2d 264, 265
(1985)(“Absent
an
express
contractual
obligation
or
specific
statutory authority, counsel fees are not recoverable item of
damages . . . .”).
Without such authorization, the district court
lacks the inherent authority to require a losing party to pay the
prevailing party’s fees.
Chapa, 212 S.W. 3d at 311.
Here a Texas
statute cited by Prospect in its pleadings authorizes an award of
fees to Prospect:
a party is entitled to recover attorney’s fees
for success in a breach of contract claim.
Tex. Civ. Prac. & Rem.
Code § 38.001(8)(“A person may recover reasonable attorney’s fees
from an individual or corporation, in addition to the amount of a
valid claim and costs, if the claim is for . . . an oral or written
contract.”).
law.
The Agreement states that it is governed by New York
The Court has determined that Defendants have breached the
Release and Covenant Not to Sue in the Agreement.
New York law
clearly permits an award of fees and expenses where a party
breaches such a covenant not to sue.
See, e.g., Cefali v. Buffalo
Brass Co., 748 F. Supp. 1011, 1026-27 (W.D.N.Y. 1990); Manti
Transp., Inc. v. Associates Commercial Corp., No. 00-CV-6807, 2002
WL 369807, *4-5 (E.D.N.Y. Mar. 8, 2002)(authorizing award of fees
for breach of a covenant not to sue).
Even without express
authorization in a covenant not to sue, the court may still award
fees where the suit was brought in “obvious breach or otherwise in
bad faith.”
Cefali, 748 F. Supp. at 1027.
-8-
See also Lubrizol Corp.
v. Exxon Corp., 957 F.2d 1302 (5th Cir. 1992)(applying New York
law)(affirming district court’s ruling that Lubrizol’s breach of a
covenant
not
to
sue
was
obvious
and
warranted
the
award
of
reasonable litigation expenses to Exxon), cert. denied, 506 U.S.
864 (1992).
Section 11(F) of the Agreement authorizes recovery of
actual damages, including attorney’s fees, in defense of the
released claims, as do previous orders of the Court, i.e., now the
law of the case.
A party seeking a fee award has the duty to segregate fees for
claims for which fees are recoverable, from fees for claims for
which they are not.
Chapa, 212 S.W. 3d at 311, 313 (“reffirm[ing]
the rule that if any attorney’s fees relate solely to a claim for
which such fees are unrecoverable, a claimant must segregate
recoverable from unrecoverable fees”); see also CSC Consulting,
Inc. v. Thinkchain, Inc., 265 F. Supp. 2d 189, 190-92 (S.D.N.Y.
2003).
A recognized exception is when the fees relate to claims
arising out of the same transaction and are so entangled that their
“‘prosecution or defense entails proof or denial of essentially the
same
facts.”
Id.
at
311,
quoting
Flint
&
Assoc.
v.
Intercontinental Pipe & Steel, Inc., 739 S.W. 2d 622, 624-25 (Tex.
App.--Dallas 1987, writ denied). Only when discrete legal services
advance both a recoverable and an unrecoverable claim are they so
intertwined that they need not be segregated.
Id. at 313-14.
The
appropriate method for the party moving for fees is to estimate the
-9-
percentage of the legal services at issue that would have been
necessary without the unrecoverable claim.
314.
In
the
wake
of
Chapa,
federal
Chapa, 212 S.W. 3d at
courts
have
applied
a
percentage formula to reduce fees when the party seeking them
failed to segregate time spent on recoverable claims from time
spent on unrecoverable claims.
Chaparral Texas, LP v. W. Dale
Morris, Inc., Civ. A. No. H-06-2468, 2009 WL 455282,*8 (S.D. Tex.
Feb. 23, 2009)(and cases cited therein).
Moreover, as the court
opined in Chaparral Texas, 2009 WL 455282 at *13,
That the hours spent and the resulting fees are
disproportionate to the amount in controversy or the
amount recovered does not mean that the hours were
unreasonable or the fees excessive. But the cases show
that when the fees sought are much larger than the amount
at issue or recovered, a court must scrutinize whether
the hours and fees are excessive in light of the
complexity of the legal and factual issues and the extent
of litigation necessary to obtain a favorable result on
those issues. The court should also consider whether
frivolous or burdensome claims or motions by the opposing
party necessitated more work by the prevailing party.
Prospect’s Request for Fees and Expenses
On behalf of the firm of Porter & Hedges, LLP, Prospect’s lead
attorney, Neil Kenton Alexander (“Alexander”),3 supported by his
3
Alexander represented Prospect Energy Corporation, Prospect
Capital Management LLC, Prospect employees John F. Barry, John
Hopley, M. Grier Eliasek, and Eric Klaussman (the “Prospect
Parties”) throughout this litigation. #176-14. His affidavit,
id., Exhibit N, and resume (Ex. 1 to the affidavit) establish that
he has practiced civil trial law, with a focus on commercial
litigation, for thirty-one years, has been a partner in Porter &
Hedges for the past sixteen years and a partner in the Houston
office of Baker Botts, LLP before that.
-10-
affidavit and extensive and meticulous billing records (#176-14),
seeks reimbursement of certain fees and expenses incurred and paid
by Prospect (1) in this lawsuit; (2) in the separate lawsuit
originally filed in September 2006 in the Eastern District of Texas
that asserted claims identical to those is this lawsuit, which this
Court had previously held were legally barred by the Release and
Covenant Not to Sue and which was transferred and consolidated into
this lawsuit; and (3) in response to the appeal to the Fifth
Circuit of the judgment disposing of the claims. Alexander divides
the work into two periods:
(1) from December 2004, when Prospect
was served with the complaint, through February 2006, when the
Court granted Prospect’s motion for summary judgment dismissing
Defendant Dallas Gas Partners, LP’s (“DGP’s”) claims, requesting a
total of $810,545.00 in incurred fees and expenses; and (2) from
February 2006 until August 2009 when the Fifth Circuit affirmed
(#169) this Court’s Rule 54(b) final judgment (#150) on DGP’s
appeal and denied rehearing, requesting a total of $378,474.41 in
incurred fees and expenses.
In sum he claims that at least 3,073
hours of lawyer time and 686 hours of paralegal and law clerk time
were reasonably expended on defending the claims against the
Prospect parties, with fees totaling $1,189,019.41 and expenses,
$119,090.13.
See #176, Ex. 1 to Alexander’s affidavit (Ex. N),
resumes of professionals involved; Ex. 2, summary of time recorded
daily
by
the
lawyers
and
paralegals,
-11-
billed
to
and
paid
by
Prospect; Ex. 3, copies of invoices for professional services and
expenses, paid by Prospect; Ex. 4, hourly rates charged for the
lawyers and paralegals, individually; Ex. 5, chart of the 2007
rates for area firms, used in Newby as evidence of reasonable
rates4;
Ex.
$119,090.13).
6,
Expenses
in
Defense
of
Claims
(totaling
The work was done by professionals with appropriate
levels of experience for the tasks required and with billing rates
commensurate with their skills and experience.
Ex. 2.
Alexander
states that he has segregated fees incurred to defend against DGP’s
claims
against
Prospect
from
those
incurred
in
Prospect’s
prosecution of counterclaims against DGP and, unless the fees were
inextricably intertwined with defending Prospect from DGP’s claims,
the latter were not included in Table 1 (#176-14 at 6), which
summarizes the work for both periods.
Fees incurred on matters
that did not directly involve DGP’s claims were also not included
in the amounts in Table 1.
Alexander’s affidavit states that he
exercised billing judgment to make downward adjustments totaling
4
Newby v. Enron (In re Enron Corp. Sec., Deriv. & “ERISA”
Litig., 586 F. Supp. 2d 732 (S.D. Tex. 2008). See also Desert Rock
Energy Co. LLC v. U.S. E.P.A., No. H-08-872, 2009 WL 3247312, *4
(S.D. Tex. Sept. 29, 2009)(finding that the party seeking fee award
could rely on the billing rates chart for area firms used as
evidence of reasonable rates in Newby). The chart demonstrates
that Porter & Hedge’s requested fees are within the range for and
often less than those of comparable firms in the Houston area.
Alexander further asserts that the rates charged in this suit are
comparable to rates Porter and Hedges charges to other clients for
similar work by the same professionals working on this case. See
also the supporting affidavit of O. Ross Citti, #176, Ex. O.
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$7,723.09 in the work related to the defense of DGP’s claims
against Prospect.
He further identifies and provides the resumes
of the two other lawyers (Ray Torgerson, a senior associate who
became a partner in the firm
in 2007; Nancy Elliott, Of Counsel)
and the two paralegals (Myris Brown and Darlene Sanchez) who
assisted him in this litigation.
He explains that over 80% of the
professional time devoted to Prospect’s defense of the claims
against it was provided by the five of them and that over 99% of
the partner time was provided by himself and by Torgerson after
Torgerson became a partner. Regular secretarial and other strictly
administrative work is not included in the fee request.
states
that
he
does
not
seek
either
adjustment based on the Johnson factors.
5
an
upward
Alexander
or
downward
#176-14 at 16.5
Regarding the Johnson factors, Alexander states that as
shown, the hours expended in representing Prospect are reasonable;
there were a number of procedurally complex issues as reflected in
the history of this case; Porter & Hedges utilized professionals of
appropriate levels of experience for the various tasks required,
mixing partners, of counsel, associates, paralegals, and law clerks
with billing rates commensurate with their skills and experience;
necessarily the work reduced their availability to work on other
legal matters for the firm but did not inhibit them on other work
because of conflicts of interest; the fees are based on the
professionals’ usual fees, subject to downward adjustments; because
of the amount of damages DGP sought against Prospect the case
required prompt, aggressive and diligence attention by Prospect’s
counsel, reflected in the requested loadstar; Porter & Hedges
achieved success on summary judgment dismissing DGP’s claims
against Prospect; the rates charged were reasonable in light of the
experience, reputation and ability of the professions and
appropriate for the kinds of tasks each undertook; undesirability
was irrelevant in this action; Porter and Hedges did provide
professional services to Prospect a few months before and since
this lawsuit was filed but this action was Porter & Hedge’s most
-13-
Alexander additionally describes the harassing conduct by
Defendants that increased the work, fees, and expenses in this more
than-five-year litigation war.
DGP filed its initial complaint
against Prospect for fraud, breach of fiduciary duty, and tortious
interference with existing contract on November 30, 2004. Moreover
DGB sought damages of over $100 million despite the fact that the
financial
statements
of
Prospect,
a
publicly
held
company,
indicated that its net worth was substantially less than that
amount.
Nine months later, after some discovery, Prospect filed a
meritorious motion for summary judgment, arguing that DGP’s tort
claims against it were barred by the Release and Covenant Not to
Sue, Section 9 of the LLC Membership Interest Purchase Agreement
(#176, Ex. B), signed by all the parties.
Nevertheless the litigation continued for four more years and
required a very significant amount of legal work because DGB
persistently used dilatory tactics in the two meritless lawsuits
involving at least twenty motions (seven of them opposed), nine
fact witness depositions (two in Austin, three in New York, and
four in Houston), and two appeals (one premature), producing 171
docket entries by August 2009.
After the Court granted Prospect’s
motion for summary judgment on February 16, 2006, DGP sought, but
was
denied,
certification
for
an
interlocutory
appeal.
significant engagement by Prospect so far; and the rates charged
are within the range and often lower than those of comparable firms
in the Houston area.
-14-
Nevertheless DGP filed the appeal, which was ultimately dismissed
by the Fifth Circuit because no final appealable judgment had been
issued by the district court.
Meanwhile between February and
September 2006 Alexander documents the legal work required to
defend against the improper appeal.
Then in September 2006 DGP
filed the new suit against a Prospect affiliate and Prospect
employees in the United States District Court for the Eastern
District of Texas, which was later transferred to this Court and
consolidated with this case. Alexander documents the work his firm
provided between November 2006 and January 2008, caused by this
second, duplicative, and meritless suit.
After the Court granted
a summary judgment in favor of Prospect on the claims in the
transferred suit, in August 2008 DGP sought and was granted
severance
of
its
affirmative
claims
and
a
Rule
54(a)
final
judgment, which DGP then appealed. The Fifth Circuit affirmed this
Court’s final judgment per curiam.
The details of legal work on
behalf of Prospect during this appeal are carefully documented.
Alexander explains that he has segregated the fees incurred in
prosecuting certain counterclaims against DGP and not included them
in
Table
1.
To
the
extent
that
the
fees
relating
to
the
counterclaim were intertwined with defending DGP’s claims, those
fees were necessary for that defense.
-15-
As noted, the thirty-nine pages comprising Exhibit 6 to
Alexander’s affidavit document the expenses incurred relating to
the defense of the claims brought against Prospect by DGB.
Defendants’ Amended Objections (#196)
Defendants DGP, Dallas Gas GP, LLC, David W. Nelson, Jeffrey
Weiss, and Thomas P. Muse object that Plaintiff has failed to
segregate its attorney’s fees incurred in defending this matter
from the unrecoverable fees associated with its counterclaim,
specifically the amount of unrecoverable fees that it claims it has
segregated or what amount was purportedly intertwined with its
defense, or what percentage of fees should be reduced to account
for segregation.
They charge Prospect with trying to shift the
burden to segregate unrecoverable fees from recoverable fees to
Defendants.
They further complain that the billing records are
vague, making it difficult if not impossible to discern with any
certainty the fees which are not recoverable.
Nevertheless, if
“the
information
Court
is
inclined
to
rule
with
scant
that
Plaintiff has provided on segregation,” Defendants recommend a 25%
reduction for deficiencies in failing to perform segregation.
Defendants also charge Prospect with failing to exercise
billing judgment in inadequate reduction of fees for unproductive,
excessive or redundant time, e.g., for “multiple summer law clerks
to
review
previously-filed
briefs
arguments” and other excessive time.
-16-
and
to
attend
mock
oral
They point out that Prospect
has reduced its bill by only $7,723.09, a fraction of one percent
of the total fees and expenses that it seeks.
They also note that
a number of entries shows that two or more attorneys attended
several depositions and hearing in his case.
Prospect
requests
$221,396.30,
not
They observe that
including
preparing for and attending only nine depositions.
expenses,
for
They complain
about the billing by nine people (two partners, one associate, one
of counsel attorney, two paralegals and four summer clerks) for
preparation for oral argument on appeal as excessive, duplicative,
unreasonable and not necessary.
For this failure in billing
judgment they recommend an additional 15% reduction.
Defendants also insist that Plaintiffs’ expense report shows
no reduction for those related to Prospect’s counterclaim or for
excessive costs.
They recommend the same 30% reduction for lack
of segregation and of billing judgment.
Defendants support their objections with an affidavit from
attorney Susan Noe Wilson (“Wilson”).
Prospect’s Reply
Because the Court agrees with the responses in Prospect’s
reply
showing
that
Defendants’
objections
are
inaccurate
meritless, it does not summarize them in fine detail.
and
Prospect
clearly explains how it has segregated its noncompensable fees
incurred in prosecuting its counterclaims from those compensable
fees for legal work relating to its summary judgment against
-17-
Defendants.
Alexander’s affidavit and its Exhibit 2 demonstrate
this segregation.
Exhibit 2 states the specific daily time and
charges by lawyer and legal assistants taken from Porter & Hedges’
invoices, that Prospect has paid (Ex. 3).
None of the time
dedicated to the counterclaims in the daily time entries in Ex. B
was included in calculations of time for which Prospect seeks to
recover fees.
Moreover attached to its Reply, Exhibit 1 compares
Defendants’ Exhibit B to the time entries in Ex. 2 to Alexander’s
affidavit;
Exhibit 1 demonstrates that Prospect did not seek fees
for any of the time on 43 of the 71 daily entries of which
Defendants complain.
The remaining 28 entries in Exhibit B are
for intertwined work on defense of Defendants’ meritless claims and
on Prospect’s counterclaims, and of which Prospect seeks to recover
only that portion related to defendant against Defendants’ claims
(not the full time listed on the invoices for which Prospect paid).
Exhibit 2 identifies the amount of time for which it seeks recovery
of fees for every day for every biller, and that amount is
substantially less that the total time indicated on the invoices
for which Prospect paid.
Moreover Prospect divides the fees into
separate categories of work required to defend Prospect, including
motions and pleadings, discovery, motions to compel, preparation
for
and
taking
of
depositions,
the
premature
appeal,
the
duplicative suit filed in the Eastern District of Texas, and the
second appeal.
Alexander Affidavit, #176-14, Ex. N at ¶¶ 11-25.
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As for preparation for oral argument on the second appeal, the
total fees for paralegals and law clerks, including for briefing
and preparation for oral argument, was 60.6 hours and fees of
$8,373.28
at
reasonable
rates
that
Prospect
has
shown
were
generally lower that the average rates charged by similar firms in
Houston and Dallas.
The “negotiation and payment of fees by
sophisticated clients are solid evidence of their reasonableness in
the market.”
Prospect Capital Corp. v. Emmon, No. 08 Civ. 3721
(LBS), 2010 WL 2594633, *4 (S.D.N.Y. June 23, 2010),
citing
Bleecker Charles Co. v. 350 Bleecker St. Apt. Corp., 212 F. Supp.
2d 226, 230 (S.D.N.Y. 2002)(collecting cases).
As noted, Prospect seeks an amount in fees and expenses that
is substantially lower than what Prospect has actually paid to
counsel and that was only for the specific work set out in
Alexander’s affidavit, yet Defendants criticize entries for which
Prospect was not charged and did not pay and are not included in
the
instant
fee
request.
While
Defendants
complain
of
overstaffing, Defendants’ meritless claims and vexatious litigation
against Prospect and its five co-defendants required more than five
years of work. Only two Porter & Hedges’ partners were responsible
for 99% of the partner time for which Prospect was charged and for
which it paid, while only three lawyers and two legal assistants
covered
more
than
80%
of
the
professional
time
required
to
represent Prospect. Moreover only Alexander and Torgerson attended
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any of the hearings, depositions, and appellate arguments in a case
where Defendants sought damages of more that $100 million.6
Prospect points out that in its request for fees in its motion
for summary judgment it provided a detailed affidavit and extensive
supporting billing records.
issue
of
material
fact
Yet Defendants never raised a timely
regarding
the
reasonableness
of
the
requested fees or expenses.
Court’s Decision
This litigation is something of a David and Goliath tale,
with Prospect even threatened with extinction by the two meritless
suits
brought
and
prolonged
by
Defendants
against
it.
After
carefully scrutinizing the record, the Court finds Prospect’s fee
request extremely well constructed, meticulous, and thorough, with
highly persuasive support for the requested fees and expenses as
reasonable and necessary in this lengthy litigation, continually
obstructed, prolonged, and aggravated by Defendants’ conduct.
While the procedural history is complicated, the
clear and
unambiguous Release and Covenant Not to Sue in the Agreement,
signed by all parties, was not.
If anything, Prospect’s request
for fees and expenses is conservative, erring on the side of
6
Prospect criticizes Wilson’s accusation of overstaffing in
her Declaration since she never examined any transcript or any
brief filed in this matter, never attended any proceeding or made
an appearance in this case, and Defendants required services of
multiple lawyers at many of the hearings and depositions, including
at least five partners at three firms. #198 at 5 & nn.1&2.
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restraint.
judgment,
Prospect has submitted extensive evidence of billing
the
hours
for
which
it
seeks
fees
distinguished from those for which it does not.
and
expenses
Moreover Prospect
has shown that the fees of its professionals who worked on this
case were within then range of and even lower than those of
comparable firms doing similar work in the Houston and Dallas area.
It has used its staff judiciously, assigning tasks according to the
professionals’
knowledge
and
experience.
In
contrast
to
Defendants, it has not increased the dispute nor engaged in
excessive litigation that was not forced on it by the opposition.
Accordingly, the Court
ORDERS that Prospect shall recover from Defendants, as part of
its
actual
damages,
$1,189,019.41
$119,090.13 in expenses.
in
attorneys’
fees
and
The Court further
ORDERS that Prospect shall file a proposed final judgment,
including this award of fees and expenses, within twenty days of
receipt of this order. Defendants shall file any objections within
ten days after the proposed judgment is filed.
SIGNED at Houston, Texas, this
22nd
day of
November , 2011.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
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