TransAmerica Investment Group, Inc. v. Hamilton

Filing 57

MEMORANDUM AND ORDER entered GRANTING 55 MOTION for Attorney Fees.(Signed by Judge Lee H Rosenthal) Parties notified.(leddins, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
TRANSAMERICA INVESTMENT GROUP, §
INC., d/b/a Sky Cargo Solutions, Inc.,
§
§
Plaintiff,
§
§
v.
§
§
TRAVIS M. HAMILTON, et al.,
§
§
Defendants.
§

CIVIL ACTION NO. H-12-1102

MEMORANDUM AND ORDER
ON ATTORNEY’S FEES
I.

Background
This order addresses William W. Rucker’s amended application for attorney’s fees. (Docket

Entry No. 55). On February 3, 2012, TransAmerica Investment Group, Inc., d/b/a Sky Cargo
Solutions, Inc. (“Sky Cargo”), sued Travis Hamilton in state court, seeking payment for Sky Cargo’s
alleged role in arranging the financing and sale of six aircraft. Sky Cargo asserted claims for breach
of contract, quantum meruit, fraud, fraudulent transfer, and unjust enrichment. Hamilton timely
removed and moved to dismiss the complaint for lack of personal jurisdiction. (Docket Entry Nos.
1, 3). The court denied that motion on May 29, 2012. (Docket Entry No. 11). Almost a year later,
on May 6, 2013, Sky Cargo moved for summary judgment on its contract claim. (Docket Entry No.
29). On June 28, 2013, the court denied that motion and set a trial date. (Docket Entry No. 33).
The court held a bench trial on the breach of contract and quantum meruit claims on August
7, 2013, (Docket Entry No. 41), and issued its Memorandum and Opinion entering Findings of Fact
and Conclusions of Law on August 27, 2013, (Docket Entry No. 42). The court concluded that Sky

Cargo was entitled to recover $60,000 on the quantum meruit claim and was not entitled to any
recovery on the breach of contract claim or the other claims he had asserted but not pursued. The
court allowed Sky Cargo to submit an affidavit to support its request for attorney’s fees under
Federal Rule of Civil Procedure 54. (Id.). Sky Cargo submitted a motion with an affidavit by Rucker
seeking $72,340.00 in fees and expenses. The court concluded that the submissions were insufficient
to award fees and allowed Sky Cargo to submit additional documents. Sky Cargo then filed a fee
application seeking $55,367.81 in fees and $2,790.00 in expenses. (Docket Entry Nos. 55, 56).
Hamilton has responded, arguing that the fees sought are inadequately supported and unreasonable.
Based on the motion, the response, the record, and the applicable law, this court finds and
concludes that a reasonable fee is $33,693.31 and the expenses are $2,790.00. The reasons are
explained below.
II.

Analysis
A.

The Legal Standard for Fee Awards

Both the Fifth Circuit and the Texas courts use the lodestar method for calculating attorney
fees. See McClain v. Lufkin Indus., Inc., 519 F.3d 264, 284 (5th Cir. 2008); Fluorine On Call, Ltd.
v. Fluorogas Ltd., 380 F.3d 849, 867 (5th Cir. 2004); see also Guity v. C.C.I. Enter., Co., 54 S.W.3d
526, 528 (Tex. App. – Houston [1st Dist.] 2001, no pet.) (“In determining the reasonableness of
attorney’s fees, the fact finder must be guided by a specific standard. This standard is substantially
similar under both federal law and state law.”). The first step is to determine the reasonable hourly
rate for the attorneys and nonlegal personnel who worked on the case. The second step is to
determine the number of hours “reasonably expended.” McClain, 519 F.3d at 284. The court then
multiplies the hours “reasonably expended” by the reasonable hourly rate to determine the lodestar

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figure. Id. The burden of demonstrating the reasonableness of the hourly rates charged and of the
number of hours expended falls on the fee applicant. Id.
When a plaintiff seeks to recover attorney’s fees in a case involving multiple claims, at least
one of which supports a fee award and at least one of which does not, the plaintiff must offer
evidence segregating the hours worked among the various claims. Tony Gullo Motors I, L.P. v.
Chapa, 212 S.W.3d 299, 310-14 (Tex. 2006); Navigant Consulting, Inc. v. Wilkinson, 508 F.3d 277,
298 (5th Cir. 2007). There is an exception to the duty to segregate when discrete legal services
advance both a recoverable and unrecoverable claim that are so intertwined that they cannot be
segregated. Chapa, 212 S.W.3d at 313–14. The party seeking to invoke this exception has the
burden of demonstrating that it applies. Gallagher Headquarters Ranch Dev., Ltd. v. City of San
Antonio, 269 S.W.3d 628, 642 (Tex. App. – San Antonio 2008, pet. granted, judgm’t vacated by
agr.) (citing Hong Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 455 (Tex. App. – Houston [1st Dist.]
2007, no pet.)). When such legal services are at issue, the fee applicant should identify the
percentage of the time spent that would have been necessary even without the unrecoverable claim.
Chapa, 212 S.W.3d at 314.
One consideration in determining the hours reasonably expended is whether the party
seeking attorney’s fees exercised billing judgment. “Billing judgment requires documentation of
the hours charged and of the hours written off as unproductive, excessive, or redundant.” Saizan
v. Delta Concrete Products Co., 448 F.3d 795, 799. Fee applicants have the burden of showing that
they exercised billing judgment, by evidence, to the court of hours that have been written off. Id.
at 800. “The proper remedy for omitting evidence of billing judgment does not include a denial of
fees but, rather, a reduction of the award by a percentage intended to substitute for the exercise of

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billing judgment.” Id. at 799; see also Walker v. City of Mesquite, Tex., 313 F.3d 246, 251 (5th Cir.
2002); Mullins v. TestAmerica, No. 3:02-cv-0106, 2008 WL 4526182, at *10 (N.D. Tex. Oct. 8,
2008) (deducting 15% from the fee award because the fee applicant claimed to have exercised
billing judgment but did not show how many hours had been written off from the time entries
submitted, and because there were other errors and inconsistencies in the time entries); Heliflight,
Inc. v. Bell/Agusta Aerospace Co., L.L.C., No. 4:06-cv-425, 2007 WL 4373259, at *4, *8 (N.D. Tex.
Dec. 12, 2007) (reducing fee award by 20% for various reasons, including the plaintiff’s failure to
show the time that had been written off).
Another consideration is whether the hours claimed yield a fee that is excessive compared
to the amount at stake or owed. See Sibley v. RMA Partners, L.P., 138 S.W.3d 455, 459 (Tex. App.
– Beaumont 2004, no pet.). “Attorney’s fees must bear some reasonable relationship to the amount
in controversy.” Cordova v. Southwestern Bell Yellow Pages, 148 S.W.3d 441, 448 (Tex. App. –
El Paso 2004, no pet.) (citing Rep. Nat’l Life Ins. Co. v. Heyward, 568 S.W.2d 879 (Tex. Civ. App.
– Eastland 1978, writ ref’d n.r.e.); see also Thomas v. Bobby D. Assocs., No. 12-08-00007, 2008 WL
3020339, at *4 (Tex. App. – Tyler Aug. 6, 2008, no pet.).
Texas law, however, does not require precise proportionality between the fees awarded and
the amount of recovery or the original amount in controversy. See, e.g., Bank of Texas v. VR Elec.,
Inc., 276 S.W.3d 671, 677 (Tex. App. – Houston [1st Dist.] 2008, no pet.) (affirming $52,000 in
attorney fees on recovery for $8276 missing check); USAA Cnty. Mut. Ins. Co. v. Cook, 241 S.W.3d
93, 102–03 (Tex. App. – Houston [1st Dist.] 2007, no pet.) (affirming $52,310 in attorney fees for
recovering on a $2,000 insurance claim); Cordova, 148 S.W.3d at 448–49 (affirming $20,885 in

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attorney fees for recovering damages under a $7,092 contract); Sibley, 138 S.W.3d at 458–59
(affirming $82,748 in attorney fees for recovering on a note worth approximately $43,000).
Interpreting Texas law, federal courts have also held that “disproportion alone does not render the
award of attorneys’ fees excessive.” Northwinds Abatement, Inc. v. Emp’rs Ins. of Wausau, 258
F.3d 345, 355 (5th Cir. 2001) (affirming $712,000 in attorneys’ fees on recovery of $74,570 in
actual damages on various state statutory and common-law claims); see also Quanta Serv’s Inc. v.
Am. Admin. Grp. Inc., 384 Fed.Appx. 291, 298 (5th Cir. 2008) (affirming $116,767.68 in attorneys’
fees for $100,000 damages award obtained in contract suit).
An application for a fee large in proportion to the amount at issue is more likely to be found
excessive if the prevailing party’s counsel “overprepared,” expending more time and resources than
warranted by the legal issues or the amount in controversy. Mid-Continent Cas. Co. v. Chevron Pipe
Line Co., 205 F.3d 222, 234 (5th Cir. 2000) ($529,209.88 in fees for one year of work by 11
attorneys and 6 paralegals was excessive “for what was – or at least should have been – simply a
coverage dispute” about whether the insurer was obligated to indemnify and defend an additional
insured against a $435,000 negligence claim); Cordova, 148 S.W.3d at 449 (“If the prevailing party
has overprepared the case, then the party liable for attorney’s fees should not be held responsible
for time spent in overpreparation.”); Republic Nat’l Life, 568 S.W.2d at 887 (finding that attorneys
who “worked between 750 and 1,000 hours on [a] $12,000 [contract] lawsuit . . . overproduced and
defendant should not be held liable for such overproduction”).
Once the lodestar is calculated, the court must determine whether to increase or decrease the
amount based on the factors set out in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir.
1974). The twelve Johnson factors are (1) the time and labor involved, (2) the novelty and difficulty

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of the questions, (3) the skill requisite to perform the legal services properly, (4) the preclusion of
other employment due to this case, (5) the customary fee, (6) whether the fee is fixed or contingent,
(7) time limitations, (8) the amount involved and results obtained, (9) the experience, reputation, and
ability of counsel, (10) the undesirability of the case, (11) the nature and length of the professional
relationship with the client, and (12) awards in similar cases. Id. at 717–19. Texas courts weigh
similar factors under Rule 1.04 of the Texas Disciplinary Rules of Professional Conduct to
determine reasonable fees. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818
(Tex. 1997); Brazos Elec. Power Co-op, Inc. v. Weber, 238 S.W.3d 582, 585–87 (Tex. App. – Dallas
2007, no pet.).
B.

The Fee Application

Sky Cargo seeks attorney’s fees totaling $55,367.81 and expenses totaling $2,790.00. (Rec.
Doc. 56-3 at 6). That is less than the $72,340.00 in fees and expenses previously sought, which was
based on a lodestar calculation of a $325.00 hourly rate times the 214 total hours that Rucker worked
on this case. The current application is also based on a $325.00 hourly rate, which Hamilton agrees
is reasonable. (Id. at 4). Hamilton, however, disputes that the number of hours claimed — 227.15
— is reasonable. He also argues that the lodestar amount must be reduced, emphasizing the limited
success Sky Cargo achieved and its failure to segregate recoverable from nonrecoverable fees.
Rucker’s affidavit, (Docket Entry No. 56-3), and the accompanying “Detailed Summary of
Services Rendered by William W. Rucker” (the “Billing Summary,” Docket Entry No. 55-2, Ex. 2)
indicated that he spent 227.15 hours representing Sky Cargo in this litigation. At a rate of $325.00
per hour, the lodestar amount would be $73,823.75. Rucker recognized, however, the need to
segregate the fees relating solely to the claims for breach of contract, fraud, fraudulent transfer, and

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unjust enrichment on which Sky Cargo did not recover from the fees relating to the only claim for
which it did recover. Chapa, 212 S.W.3d at 313. The Billing Summary does not segregate such
amounts.
Sky Cargo’s motion for summary judgment related solely to the breach of contract claim;
the motion was denied. The bench trial related solely to the breach of contract and quantum meruit
claims. Sky Cargo prevailed only on the quantum meruit claim. To account for the nonrecoverable
fees, Rucker simply applied an across-the-board 25% discount, seeking a fee award in the amount
of $55,367.81.
Hamilton argues that this sum is excessive. He first argues that the primary support for the
number of hours claimed, the Billing Summary, is an unreliable and inadequate basis for the award
sought. Hamilton notes that there is no information as to when this Billing Summary was prepared
— it was not submitted in any of the prior fee filings — and that no underlying time records have
been submitted. Second, Hamilton objects to, and seeks a reduction of, the lodestar calculation on
the basis that Rucker has failed to segregate recoverable fees on the one claim on which Sky Cargo
prevailed and nonrecoverable fees on the claims for which no relief was granted. Third, Hamilton
seeks a reduction to the lodestar amount based on the limited degree of success Sky Cargo obtained
— a $60,000 recovery out of the much larger sums he sought at various points in the litigation —
and on the fact that it agreed to pay Rucker under a contingent fee contract that would limit the fee
to 40% of the amount recovered.
C.

The Support for the Lodestar Calculation

The court agrees that the support provided by the Billing Summary is limited, given the lack
of detail in the summary and the absence of supporting time records. Nothing in the Billing

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Summary reflects the subject matter of the work done. The Billing Summary does not state which
claims were the subject of which billing entries. The summary cannot be used to segregate
recoverable from nonrecoverable fees. This lack of detail, with no underlying time records, also
makes it difficult to use the Billing Summary to assess the reasonableness of the hours spent. The
failure to submit any underlying time records does not preclude recovery, but it is a factor in
assessing the adequacy of the documents and evidence submitted. See Glass v. United States, 335
F. Supp. 2d 736, 743 (N.D. Tex. 2004) (amended in part, CIV.A.3:00-CV-1543-L, 2004 WL
2189634 (N.D. Tex. Aug. 26, 2004)) (finding that the failure to submit a time sheet for billable hours
does not preclude recovery but can result in a reduced percentage). The lack of detail and of
supporting information weighs heavily in favor of a further restriction of the number of hours for
which fees are awarded.
Additionally, neither the Billing Summary nor Rucker’s affidavit indicate the exercise of
billing judgment. Some of the fee entries, in fact, are for time spent that under the court rules, was
unnecessary. Specifically, Sky Cargo seeks fees for the following:

Date
2/18/2013
2/21/2013

2/25/2013

Seeking Fees For…

Time

Amount of Fee

Initial work on motion to
Compel
Final preparation and filing
of motion to compel
discovery. TC clerk
regarding same. Filing of
corrected motion. TC clerk
regarding the 2/26
discovery hearing.

1.6hrs

$520.00

2.2hrs

$715.00

RR of Hamilton’s responses
to motion to compel.

0.4hrs

$130.00

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The court’s procedures preclude filing motions to compel discovery responses before a
premotion conference is held. In this case, Rucker filed the motion. The court struck it and held a
discovery hearing, resolving the dispute without any need for the motion. The fee award is reduced
by $1,365.00 for the unnecessary hours spent.
D.

The Failure to Segregate

The failure to segregate fees attributable to the successful claim from those attributable to
the claims on which there was no recovery does not preclude a fee award. See Navigant, 508 F.3d
at 298 (holding that the district court did not abuse its discretion by reducing the plaintiff’s
attorney’s fees by 40% after determining that some of the plaintiff’s claims were unrecoverable even
though segregation was impossible). Rucker claims that “[a]t most, 1% of the time spent in . . . this
case was attributable to [Sky Cargo’s] claims for fraud, fraudulent transfer, and unjust enrichment.”
(Docket Entry No. 56-3 ¶ 13). He also argues that the breach of contract and quantum meruit claims
“were intertwined to the point of being inseparable.” (Id.). Yet, as Hamilton points out, Sky Cargo
sought summary judgment only on its breach of contract claim. (Id. at ¶ 13). That undercuts the
argument that the two theories are intimately intertwined. Rucker asserts that he spent 21.5% of the
total time on this case on work relating to the (unsuccessful) summary judgment motion, which
related only to the (unsuccessful) breach of contract claim. Taking the two together would reduce
the $73,823.75 fee award by 22.5%.
Rucker makes no effort to segregate the time spent at the bench trial between the breach of
contract and quantum meruit claims. An across-the-board reduction is appropriate. Rucker’s 25%
reduction, however, is inadequate. The elements of a breach of contract claim are different than the
elements of a claim for quantum meruit, and a quantum meruit claim arises only when there is no

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express contract covering the services provided. See Vortt Exploration Co. v. Chevron U.S.A., Inc.,
787 S.W.2d 942, 944 (Tex. 1990). While there is overlap in the evidence relevant to showing
whether the parties agreed on a certain fee for services provided or whether the services were
provided without an express agreement but under circumstances that warrant payment under an
equitable theory, it is not intertwined to the point of inseparability. In addition to reducing the total
fees by $1,365 and by 22.5% to reflect the fees incurred in pursuing summary judgment on the
unsuccessful breach of contract claim, the fees are reduced across the board by 40%. This
adequately accounts for the failure to segregate fees attributable to the successful claim from those
attributable to the claims on which there was no recovery.
The resulting lodestar calculation is $33,693.31, reached as follows:
Total fees sought
Less the fees incurred in the motion to compel
Less the fees incurred solely on the fraud and
unjust enrichment claims and the motion for
summary judgment

$325/hr x 227.15hrs
$1,365
*

Less the 40% reduction for failure to segregate

(22.5%)
*
(40%)

Amount after reductions

=
$33,693.31

E.

Adjusting the Lodestar

Once the lodestar is determined, the court must determine whether to increase or decrease
the amount based on the 12 factors in Johnson, 488 F.2d at 717-19. Hamilton requests a further
reduction in the fee award due to the limited results obtained. Before trial, Sky Cargo consistently
claimed “at least” $300,000.00 in damages, based on a $50,000 per plane theory, (see Docket Entry

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No. 56 ¶¶ 11 - 14); Sky Cargo sought damages exceeding $1,000,000.00; at trial, the recovery was
$60,000.00. But the 40% reduction already takes the limited success into account. A further
reduction is not required.
Hamilton also seeks a reduction in the lodestar because Sky Cargo and Rucker had a 40%
contingent fee contract. Such an arrangement does not automatically limit the fee award but may
assist in determining reasonableness. See Blanchard v. Bergeron, 489 U.S. 87, 92 (1989). This
court’s 40% reduction further confirms the reasonableness of that amount. There is no basis for
further adjustment.
III.

Conclusion
This court awards Sky Cargo attorney’s fees in the amount of $33,693.31 and $2,790.00 in

expenses.
SIGNED on August 6, 2014, at Houston, Texas.
______________________________________
Lee H. Rosenthal
United States District Judge

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