Major et al v. Valdera Development et al

Filing 59

MEMORANDUM DECISION AND ORDER awarding defendants $15,237.00 in attorneys' fees and $499.50 in costs for the defense of Plaintiffs' first and fourth causes of action. Signed by Judge David Nuffer on 3/5/19 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
MICHAEL R. MAJOR; JAMES D.
GRANUM; JONE LAW KOFORD; and
ALLAN CARTER,

MEMORANDUM DECISION AND
ORDER AWARDING ATTORNEYS’
FEES AND COSTS TO DEFENDANTS

Plaintiffs,
v.
Case No. 2:17-cv-00974-DN
VALDERRA DEVELOPMENT, LLC;
DIVERSIFIED MANAGEMENT
SERVICES, LLC; VALDERRA
INVESTMENT PARTNERS, LLC; DMS
SERVICES, LLC; LYNN PADAN; ALLAN
WRIGHT; and DOES 1-50,

District Judge David Nuffer

Defendants.

Defendants are entitled to an award of their reasonable attorneys’ fees and costs incurred
in the defense of Plaintiffs’ first and fourth causes of action. 1 They submitted an Attorney
Declaration of Apportioned Attorney Fees and Costs (“Attorney Declaration”) requesting
$25,395.00 in attorneys’ fees and $499.50 in costs. 2 Plaintiffs objected arguing that Defendants’
requested attorneys’ fees are unreasonable, duplicative, involve non-compensable claims, and act
as a violation of Plaintiffs’ due process rights. 3
After careful review of Defendants’ Attorney Declaration, and consideration of the
complexity of the case, the work performed and the record, a forty percent (40%) reduction of

1

Memorandum Decision and Order Granting in Part Motion for Attorneys’ Fees and Costs (“Attorneys’ Fees
Order”) at 10, docket no. 55, filed Feb. 22, 2019.

2
3

Attorney Declaration ¶¶ 12.B-D, docket no. 56, filed Feb. 8, 2019.

Plaintiffs’ Objection to Attorney Declaration of Apportioned Attorney Fees and Costs (“Objection”) at 2, docket
no. 57, filed Feb. 14, 2019.

the hours billed by Defendants’ counsel is appropriate to achieve a reasonable attorneys’ fee
award.
DISCUSSION
To determine a reasonable attorneys’ fee, a “lodestar” figure is arrived at “by multiplying
the hours . . . counsel reasonably spent on the litigation by a reasonable hourly rate.” 4 Factors for
determining the reasonableness of the hours billed for a given task or to prosecute or defend the
litigation as a whole include: the complexity of the case; the number of reasonable strategies
pursued; the responses necessitated by the maneuvering of the other side; and the potential
duplication of services. 5
The reasonable hours awarded may be reduced if “the number of compensable hours
claimed by counsel includes hours that were unnecessary, irrelevant and duplicative.” 6
Reduction is also justified “if the attorney’s time records are sloppy and imprecise and fail to
document adequately how he or she utilized large blocks of time.” 7 But there is no requirement
that each disallowed hour be identified and justified. 8 Nor is there any requirement for the
number of hours permitted for each legal task to be announced. 9 Instead, a method of general
reduction to the hours claimed may be implemented in order to achieve a reasonable number, “so
long as there is sufficient reason for [the method’s] use.” 10

4

Case v. Unified Sch. Dist. No. 233, Johnson Cty., Kan., 157 F.3d 1243, 1249 (10th Cir. 1998) (internal quotations
omitted).
5

Id. at 1250.

6

Id. (internal quotations and punctuation omitted).

7

Id. (internal quotations omitted).

8

Id.

9

Id.

10

Id. (internal quotations and punctuation omitted).

2

Defendants request $25,395.00 in attorneys’ fees for their defense of Plaintiffs’ first and
fourth causes of action. 11 Defendants’ Attorney Declaration breaks down the requested
attorneys’ fees as follows:
•

For attorney Jeff Mills, 3.75 hours billed at a rate of $185.00 per hour and 89.95
hours billed at a rate of $200.00 per hour, totaling $18,683.75; 12 and

•

For attorney Lewis P. Reece, 22.75 hours billed at a rate of $295.00 per hour, totaling
$6,711.25. 13

Plaintiffs object to several specific billing entries included in the Attorney Declaration, 14 and
generally object to the reasonableness of the hours billed for counsels’ work relating to a motion
to dismiss and a motion for attorneys’ fees and costs. 15
It is unnecessary to address the specific billing entries to which Plaintiffs object. “[A]n
overly particularized approach ‘is neither practical nor desirable.’” 16 “What is ‘important is the
discretionary determination by the district court of how many hours, in its experience, should
have been expended on the specific case.’” 17 And considering the complexity of this case, the
work performed and the record, the total number of hours billed in the Attorney Declaration is
not reasonable. A general reduction of the hours billed by Defendants’ counsel is warranted.
This case involved challenges to Defendants’ operation and management of The Ledges
of St. George Master Homeowner’s Association (the “Association”). 18 Plaintiffs’ first and fourth

11

Attorney Declaration ¶¶ 12.B-C.

12

Id. ¶ 12.B.

13

Id. ¶ 12.C (Defendants’ Attorney Declaration miscalculated the total amount of fees for attorney Lewis P. Reece
as $6,711.00).

14

Objection at 2-5.

15

Id. at 5-7.

16

Sheldon v. Vermonty, 107 Fed. App’x 828, 834 (10th Cir. 2004) (quoting Case, 157 F.3d at 1250).

17

Id. (quoting Case, 157 F.3d at 1250) (emphasis in original).

18

Complaint ¶¶ 21-39, docket no. 2, filed Aug. 29, 2017.

3

causes of action alleged unreasonable and non-qualifying expenditures under the federal
corporate tax exemption statute, 26 U.S.C. § 501(c)(3), 19 and violation of the Fair Debt
Collection Practices Act (“FDCPA”) § 1692f(1). 20 These causes of action were not so factually
or legally complex to justify the number of counsels’ billed hours. Indeed, the causes of action
were dismissed early in the procedural stages of the case by the granting of a motion to
dismiss.21
The causes of action arose from allegations that Defendants collected and benefited from
management fees that exceed the actual costs of managing the Association. 22 And while pleaded
as federal claims, the causes of action were merely seeking to enforce Plaintiffs’ interpretation of
the Association’s governing documents. 23 They boiled down to straightforward breach of
contract issues that failed to state federal claims. 24 The issues presented did not involve novel or
unsettled areas of the law, and extensive research was unnecessary. Plaintiffs’ first cause of
action was dismiss because 26 U.S.C. § 501(c)(3) does not provide a private right of action, and
to the extent it was a state law claim for breach of contract, it did not confer federal “arising
under” jurisdiction. 25 Plaintiffs’ fourth cause of action was dismissed because Plaintiffs failed to
sufficiently allege that Defendants were “debt collectors” under the FDCPA, and because the
facts alleged were incapable of supporting a claim for violation of FDCPA § 1692f(1). 26

19

Id. ¶¶ 40-46.

20

Id. ¶¶ 62-71.

21

Memorandum Decision and Order Granting Motion to Dismiss (“Dismissal Order”) at 4-8, docket no. 48, filed
Sept. 10, 2018; Attorneys’ Fees Order at 7-8.
22

Complaint ¶¶ 18, 31, 36, 40-46, 62-71.

23

Dismissal Order at 4-7; Attorneys’ Fees Order at 7-8.

24

Dismissal Order at 4-7; Attorneys’ Fees Order at 4-8.

25

Dismissal Order at 4-5; Attorneys’ Fees Order at 6.

26

Dismissal Order at 6-8; Attorneys’ Fees Order at 6.

4

Regarding the work performed, Defendants’ counsel engaged in settlement and
scheduling discussions with Plaintiffs’ counsel; 27 attended a scheduling hearing; 28 drafted initial
disclosures and discovery; 29 briefed and attended oral argument on a motion to dismiss; 30 and
briefed a motion for attorneys’ fees and costs. 31 This work is reflected in Defendants’ Attorney
Declaration. 32
But the Attorney Declaration also includes over 13 hours billed for work on an unfiled
answer and research on affirmative defenses. 33 This number of hours billed is a stark contrast to
the representation that “Defendants identified the need for dismissal of the Federal Claims early
on in the litigation, and . . . thereafter reasonably focused their efforts on the Federal Claims.” 34
It was reasonable for Defendants’ counsel to begin the process of researching and responding to
Plaintiffs’ Complaint through work on an answer and affirmative defenses. However, the total
hours billed for this work is not reasonable in light of the issues in the case and Defendants filing
of a motion to dismiss.

27

Motion for Extension of Time to Respond to Complaint at 2, docket no. 23, filed Apr. 30, 2018; Motion for
Extension of Time to Respond to Complaint at 2, docket no. 28, filed May 15, 2018; Attorney Planning Meeting
Report, docket no. 35, filed June 7, 2018.
28

Minute Entry for Proceedings Held Before District Judge David Nuffer, docket no. 37, filed June 14, 2018.

29

Joint Statement Regarding the Scope of Discovery, docket no. 42, filed July 23, 2018.

30

Motion to Dismiss Complaint, docket no. 39, filed June 29, 2018; Reply Memorandum in Support of Motion to
Dismiss Complaint (“Reply to Motion to Dismiss”), docket no. 45, filed July 31, 2018; Minute Order, docket no. 46,
filed Aug. 10, 2018.
31

Motion for Attorney Fees and Costs (“Attorneys’ Fees Motion”), docket no. 50, filed Sept. 24, 2018; Reply
Memorandum in Support of Motion for Attorney Fees and Costs (“Reply to Attorneys’ Fees Motion”), docket no.
54, filed Oct. 16, 2018.
32

Attorney Declaration at Ex. A.

33

Id. Half of the billed hours for this work were allocated to Plaintiffs’ first and fourth causes of action.

34

Response to Objection to Attorney Declaration of Apportioned Attorney Fees and Costs at 2, docket no. 58, filed
Feb. 22, 2019.

5

The amount of hours billed for counsels’ work relating to the motion to dismiss is also
not reasonable. Defendants’ Attorney Declaration identifies over 70 hours billed for work
relating to the motion to dismiss.35 This is far greater than the number of hours expected given
the factual and legal issues presented. And although Plaintiffs’ response to the motion raised
additional arguments that were addressed in Defendants’ reply, 36 such maneuvering does not
justify the total hours billed for counsels’ work relating to the motion to dismiss.
Additionally, Defendants’ request for attorneys’ fees was expressly limited to the defense
of Plaintiffs’ first and fourth causes of action. 37 But counsel’s initial declaration in support of the
request did not apportion the hours billed among the compensable first and fourth causes of
action, and the non-compensable second and third causes of action. 38 It was because of this that
Defendants were ordered to file a new declaration which properly apportioned their attorneys’
fees. 39 Defendants’ newly submitted Attorney Declaration includes billing entries for the
preparation of counsel’s initial declaration, as well as the Attorney Declaration. 40 The inclusion
of billing entries for both declarations is duplicative and not reasonable given that counsel should
have apportioned the hours billed in the first instance.
None of this is meant to suggest that Defendants’ counsel inflated the raw time it took to
perform the various legal tasks in this case. Rather, the issue is one of billing judgment—
particularly in the hours billed by counsel for research and drafting—in the context of an award

35

Attorney Declaration at Ex. A.

36

Plaintiffs’ Opposition to Motion to Dismiss at 4-7, 15-21, docket no. 41, filed July 20, 2018; Reply to Motion to
Dismiss at 9-11.
37

Attorneys’ Fees Motion at 5-7; Reply to Attorneys’ Fees Motion at 2.

38

Declaration of Jeff Miles in support of Motion for Attorney Fees and Costs at Ex. C, docket no. 50-5, filed Sept.
24, 2018.
39

Attorneys’ Fees Order at 9-10.

40

Attorney Declaration at Ex. A.

6

of attorneys’ fees. “Because not all hours expended in litigation are normally billed to a client,
[counsel] should exercise billing judgment with respect to a claim of the number of hours
worked.” 41 “Billing judgment consists of winnowing the hours actually expended down to the
hours reasonably expended.” 42
Based on the complexity of the case, the work performed and the record a forty percent
(40%) reduction of the hours billed by Defendants’ counsel is appropriate to achieve a
reasonable attorneys’ fee award. Plaintiffs did not object to the reasonableness of counsels’
billing rates. Regardless, counsels’ rates are reasonable considering the fees customarily charged
in the locality for similar legal services. Therefore, Defendants’ are awarded $15,237.00 43 in
attorneys’ fees and $499.50 in costs for the defense of Plaintiffs’ first and fourth causes of action.
ORDER
IT IS HEREBY ORDERED that Defendants’ are awarded $15,237.00 in attorneys’ fees
and $499.50 in costs for the defense of Plaintiffs’ first and fourth causes of action. An amended
judgment will be entered to reflect this award.
Signed March 5, 2019.
BY THE COURT

________________________________________
David Nuffer
United States District Judge

41

Ellis v. Univ. of Kan. Med. Ctr., 163 F.3d 1186, 1202 (10th Cir. 1998) (internal quotations omitted).

42

Case, 157 F.3d at 1250.

43

$25,395.00 x 0.60 = $15,237.00.

7