HSBC Bank USA, National Association v. Resh et al

Filing 168

MEMORANDUM OPINION AND ORDER For the reasons that follow, the Court Grants the motion and Orders third-party Defendant Realty Concepts, Inc. to pay Defendants/Third-Party Plaintiffs, or their lawyers, the sum of $4,297.00 within thirty days of the date of this Order. Signed by Magistrate Judge Cheryl A. Eifert on 5/20/2013. (cc: attys; any unrepresented party) (skm)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
HSBC BANK USA, NATIONAL ASSOCIATION,
As Indenture Trustee under that certain Indenture
dated June 1, 2007, for the benefit of the Indenture
Trustee and holders of the Business Loan Express
Business Loan-Backed Notes, Series 2007-A, as
their interests may appear,
Plaintiff,
v.

Case No.: 3:12-cv-00668

RON RESH and VALARIE REYNOLDS-RESH,
Individually and as Trustees of the Resh Living
Trust and the Valarie Reynolds-Resh Living Trust,
Defendants; Counter Plaintiffs;
and Third-Party Plaintiffs,
v.
REALTY CONCEPTS, LTD.; ANDREW BROSNAC;
COLLIERS INTERNATIONAL VALUATION &
ADVISORY SERVICES, LLC; PHILIP STEFFEN;
LAWYER’S TITLE INSURANCE CORPORATION;
and HELEN SULLIVAN,
Third-Party Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants/Third-Party Plaintiffs’ Motion for an
Award of Reasonable Fees made in conjunction with their motion to compel
discovery responses from Third-Party Defendant Realty Concepts, LTD. (ECF No.
110). Defendants filed an affidavit and memorandum in support of an award of
attorneys’ fees, (ECF Nos. 154, 155, 156), and Realty Concepts has filed a
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memorandum in opposition to the request for fees. (ECF No. 166). Therefore, the
matter has been fully briefed and is ready for resolution. Having considered the
positions of the parties, the Court finds that Defendants are entitled to an award of
reasonable fees pursuant to Federal Rule of Civil Procedure 37(a)(5). For the reasons
that follow, the Court GRANTS the motion and ORDERS Third-Party Defendant
Realty Concepts, Inc. to pay Defendants/Third-Party Plaintiffs, or their lawyers, the
sum of Four Thousand Two Hundred Ninety Seven Dollars ($4,297) within
thirty days of the date of this Order.
I.

Relevant History
This action arises from the alleged failure of Defendants/Third-Party Plaintiffs

(“the Reshes”) to fulfill their obligations under certain notes used to finance the
purchase of commercial real estate in West Virginia. On August 2, 2012, the Reshes
filed a Third-Party Complaint against Third-Party Defendant, Realty Concepts, Inc.
(“Realty Concepts”), alleging that it conspired with others to defraud the Reshes in
the real estate transactions. On November 5, 2012, the Reshes served their first set of
discovery on Realty Concepts.
After agreeing to an extension of time, the Reshes received Realty Concepts’s
responses on January 2, 2013, followed with a document production on January 7,
2013. Twenty-three days later, the Reshes notified Realty Concepts by letter that the
discovery responses were inadequate. The Reshes outlined their problems with
responses and demanded supplemental answers by February 1, 2013. The letter
indicated that unless the responses were forthcoming, the Reshes would file a motion
to compel.

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Upon receipt of the letter, counsel for Realty Concepts began to exchange
emails with counsel for the Reshes to determine if the disagreement could be
resolved. The parties could not agree; accordingly, the Reshes filed a motion to
compel on February 1, 2013. Realty Concepts filed a response to the motion to
compel, arguing that its discovery answers were complete and compliant with federal
discovery law. On February 26, 2013, the undersigned entered an Order partially
granting the Reshes’s motion to compel. The Court ordered Realty Concepts to
provide responses to some of the outstanding requests, overruled all of its general
objections to discovery, and set a hearing to address the remaining issues. Thereafter,
the parties continued to negotiate a resolution of their differences and finally met and
conferred on March 6, 2013. According to Realty Concepts, this meet and confer
session resolved the parties’ disagreements. Subsequently, the parties twice requested
and received from the Court a continuance of the scheduled hearing to allow Realty
Concepts time to produce the materials that it had agreed to provide. The hearing was
ultimately set to take place on April 29, 2013,
On April 9, 2013, Realty Concepts produced several hundreds of pages of
documents. On April 24, 2013, counsel for Realty Concepts sent an email to counsel
for the Reshes, asking whether the discovery issues were resolved and inquiring
about the need for a hearing. Realty Concepts supplied additional documents the
following day and on April 26, 2013 notified the Reshes that more documents had
been located and would be produced the following week. At the time of the hearing,
the parties were generally in agreement as to what discovery remained outstanding.
However, the Reshes requested an order placing a ten-day time limit on production
of the remaining documents, arguing that they had waited long enough to receive the
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documents, were facing deadlines under the Scheduling Order, and needed “closure”
on the discovery issue. Realty Concepts agreed to produce the documents within ten
(10) days.
II.

Positions of the Parties
The Reshes argue that they are entitled to an award of reasonable fees and

costs incurred in bringing the motion to compel because the motion was necessary to
procure the requested discovery and they substantially prevailed. Consequently, Rule
37(a)(5) mandates that such an award be ordered. The Reshes supply an itemized
affidavit setting forth the time claimed to have been incurred by the three lawyers and
one paralegal who worked on the issue. They request reimbursement of the attorneys’
work at hourly rates of $395, $175, $120 and of the paralegal’s time at $100 per hour.
In response, Realty Concepts contends that an award of reasonable fees and
costs is not appropriate for four reasons. First, the Reshes never asked for an award
of fees in the motion to compel and only raised the subject of fees after all of the
discovery disputes had been resolved. Because the Reshes did not seek
reimbursement as part of the motion to compel, the issue is not properly before the
Court.
Second, in Realty Concepts’s view, the Reshes failed to make a good faith effort
to resolve the discovery dispute before filing the motion to compel. Pointing to both
Federal Rule of Civil Procedure 37(a)(5)(A)(i) and Local Rule of Civil Procedure
37.1(b), Realty Concepts argue that the Reshes should have arranged a “meet and
confer” instead of simply sending a letter threatening to file a motion in two-days
time if their demands were not fully satisfied.
Next, Realty Concepts asserts that its objections were justified because the
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discovery requests were overly broad. None of the requests were limited in time and
many of them required Realty Concepts to review documents from thousands of
transactions, most of which were unrelated to the issues in dispute. According to
Realty Concepts, during the meet and confer, the Reshes acquiesced to many of
Realty Concepts’s objections, resulting in much more reasonable discovery requests.
Finally, Realty Concepts claims that an award of fees in this case would be
unjust given that no remaining disputes existed at the time of the hearing. The parties
had agreed on the scope of discovery, and Realty Concepts had supplied records in
reliance upon that agreement. As new records were located, Realty Concepts
supplemented its responses by providing the documents. Realty Concepts argues that
the hearing was unnecessary and was nothing more than a “masquerade” to allow the
Reshes to seek reimbursement of attorneys’ fees.
In addition to disputing the propriety of awarding attorneys’ fees, Realty
Concepts objects to the amount requested by the Reshes. Realty Concepts contends
that many of the hours included in the affidavit are redundant, excessive, or clearly
not recoverable. Emphasizing the requirement that fee requests be reasonable, Realty
Concepts identifies time entries that allegedly reflect duplicate efforts, or work on
matters unrelated to the motion to compel, or work that would have been performed
regardless of the motion to compel. Realty Concepts suggests that the fees requested
should be substantially discounted based on the fact that the Reshes were only
partially successful on the motion to compel.
III.

Discussion
A.

Propriety of An Award of Reasonable Fees

Federal Rule of Civil Procedure 37(a)(5)(A) states as follows:
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If the motion [to compel] is granted—or if the disclosure or requested
discovery is provided after the motion was filed—the court must, after
giving an opportunity to be heard, require the party or deponent whose
conduct necessitated the motion, the party or attorney advising that
conduct, or both to pay the movant’s reasonable expenses incurred in
making the motion, including attorney’s fees. But the court must not
order this payment if: (i) the movant filed the motion before attempting
in good faith to obtain the disclosure or discovery without court action;
(ii) the opposing party’s nondisclosure, response, or objection was
substantially justified; or (iii) other circumstances make an award of
expenses unjust.
(emphasis added). Thus, if a motion to compel is granted, the Rule explicitly
mandates an award of reasonable expenses unless one of the three exceptions applies
to the situation. Contrary to Realty Concepts’s position, the Rule does not require the
moving party to request reasonable fees contemporaneously with a motion to compel.
Rather, the Rule directs the Court to consider an award of reasonable fees whenever a
motion to compel is granted. Here, the Court granted the Reshes’ motion to compel;
initially, the Court granted a portion of the relief requested, ordering that some
discovery be answered fully and completely and overruling all of Realty Concepts’s
improper general objections. Later, after the hearing, the Court granted the entirety
of the remaining relief sought by the Reshes. Therefore, an award of reasonable
expenses should be considered.
Realty Concepts also contends that if an award of fees is granted, it should be
reduced given that the Reshes abandoned some of their demands during the meet
and confer session. This argument is misplaced. At no time did the Court grant, in
part, and deny, in part, the motion to compel. Accordingly, Realty Concepts did not
succeed on any issue addressed by the Court. The fact that the parties were able to
compromise on some of their disputes does not trigger the apportionment option
available under Rule 37(a)(5)(C).
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Nonetheless, the Court does agree with Realty Concepts that the Reshes did
not comply with the spirit of Federal Rule of Civil Procedure 37(a)(1) or the explicit
language of Local Rule 37.1(b) when they filed a motion to compel without first
conducting a meet and confer session. Sending a letter more than three weeks after
receiving the responses, which gives the adverse party little time and opportunity to
address the disagreement, is insufficient to fulfill the meet and confer requirement.
However, under the facts of this particular case, the Court does not find that the
Reshes’ failure entitles Realty Concepts to entirely avoid an award of fees. While it is
true that the Reshes filed the motion somewhat prematurely, they subsequently met
and conferred with Realty Concepts and put forth a good faith effort to resolve the
dispute without judicial intervention. Despite making this effort, the Reshes were still
waiting for a final production of documents at the time of the hearing. Thus, filing a
motion to compel was the proper procedure at that point. The Court disagrees with
Realty Concepts’s contention that the hearing was merely a ruse. Put simply, the
hearing was necessary because the Reshes doubted Realty Concepts’s good faith
compliance with the discovery rules. As counsel for the Reshes explained at the
hearing, Realty Concepts’s document production had been inexplicably prolonged
and sporadic, leaving counsel to question whether Realty Concepts had conducted a
reasonable search for documents, and whether all responsive material would be
produced in a timely manner. The Reshes’ desire to bring the document production
process to a discernible close was certainly a legitimate reason for proceeding with
the hearing.
Taking these factors into consideration, the undersigned finds that the
exception for failure to make a good faith effort to obtain the discovery before filing a
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motion to compel does not preclude an award in this case. Nevertheless, the
undersigned concurs with Realty Concepts that fees should not be awarded for the
time spent by the Reshes negotiating a compromise, since that activity should have
preceded the motion to compel. Consequently, the Court has deducted from the
award all entries for time spent by counsel before January 31, 2013 and between
February 26, 2013 and March 6, 2013, as those entries reflect work that would
normally have occurred as part of pre-motion meet and confer sessions.
Turning to the second exception contained in Rule 37(a)(5)(A)(ii), Realty
Concepts contends that fees should not be awarded because its objections were
justified. Nothing could be further from the truth. A cursory review of the responses
attached to the Reshes’ motion to compel reveals that every response challenged in
the motion was answered with general objections. The law in this district, as in most
districts throughout the country, is well-settled and crystal clear; general objections,
without more, are inappropriate. In addition to the general objections that prefaced
every answer, Realty Concepts lodged additional objections to every request, even
those that sought clearly permissible material, such as information regarding
applicable insurance agreements. Moreover, many of the responses invoked the
attorney-client privilege, work product doctrine, or “other applicable privilege or
protection” without an accompanying privilege log. Some of the answers were
evasive, some were argumentative, and some were so bogged down with nonspecific,
boilerplate ramblings, it was difficult to discern whether any substantive information,
or legitimate objection, was buried within the jumble of words.
The Court also disagrees with Realty Concepts’s position that an award of fees
is unjust. The Reshes allowed Realty Concepts a substantial amount of time to
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produce the requested discovery; certainly, much more time than anticipated by the
Rules of Civil Procedure. Yet, even at the time of the hearing, which was five months
after the requests had been filed, relevant documents were still unproduced. Rule
37(a)(5)(A) does not require a showing of bad faith on the part of the compelled party
to justify an award of expenses. As the undersigned stated at the hearing, it appears
as though counsel for Realty Concepts acted responsibly in attempting to resolve the
discovery disagreements. In fact, all counsel expended considerable energy in
working out the issues. Still, it cannot be ignored that Realty Concepts’s production of
relevant material was unacceptably protracted. Therefore, circumstances do not exist
that would make an award of expenses unjust.
B.

Calculation of Award

Having concluded that an award of reasonable fees and expenses is
appropriate, the undersigned turns to the issue of determining the amount of the
award. When calculating an award of reasonable fees and costs pursuant to Fed. R.
Civ. P. 37(a)(5), the Court must “determine a lodestar figure by multiplying the
number of reasonable hours expended times a reasonable rate.” Robinson v. Equifax
Information Services, LLC, 560 F.3d 235, 243 (4th Cir. 2009), citing Grissom v. The
Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008). The United States Court of Appeals
for the Fourth Circuit has identified twelve factors to consider when making this
determination, including the following:
(1) the time and labor expended; (2) the novelty and difficulty of the
questions raised; (3) the skill required to properly perform the legal
services rendered; (4) the attorney’s opportunity costs in pressing the
instant litigation; (5) the customary fee for like work; (6) the attorney’s
expectations at the outset of the litigation; (7) the time limitations
imposed by the client or circumstances; (8) the amount in controversy
and the results obtained; (9) the experience, reputation and ability of
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the attorney; (10) the undesirability of the case within the legal
community in which the suit arose; (11) the nature and length of the
professional relationship between attorney and client; and (12)
attorneys’ fees awards in similar cases.
Robinson, 560 F.3d at 243-244 (citing Johnson v. Ga. Highway Express, Inc., 488
F.2d 714 (5th Cir. 1974)).
Beginning with the hourly rate, the Court notes that the Reshes are
represented by an associate attorney, as well as two experienced litigators, all of
whom participated in the motion to compel. According to the affidavit filed by
counsel for the Reshes, the supervising partner, Mr. Lau, and local counsel, Mr.
Ramey, each have been practicing law twenty five years or more. According to Mr.
Lau, he practices commercial litigation and has represented the Reshes in the past.
Both Mr. Ramey and Mr. Lau are admitted to practice before the Court in this case.
Mr. Ramey is a well-respected attorney in the State affiliated with a well-known law
firm. Although few facts are provided regarding the associate attorney assisting on
the case, Mr. Lau explains that he is primarily responsible for the litigation, and he
undoubtedly oversees the acts of the associate. Realty Concepts does not attack the
credentials or licensure of the attorneys, and the Court has no information to suggest
that their skills fall short of comparable attorneys practicing in this district.
Still, the discovery disputes in this case are not novel; rather, they are matters
routinely faced by general litigators. Therefore, a reasonable hourly rate would be one
consistent with the market rate of a general litigator practicing within the Southern
District of West Virginia. See Plyler v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990). The
duty to provide evidence of the prevailing hourly rate rests with the party seeking an
award of fees. Id. Here, the Reshes do not provide evidence of prevailing hourly rates.

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On the other hand, Realty Concepts does not object to the rates set forth in the
affidavit. Thus, the undersigned will look to other fees awarded in the Southern
District of West Virginia to assess the reasonableness of these hourly rates. In March
2013, District Judge Thomas E. Johnston determined that hourly rates of $375, $175,
and $160 were appropriate in a predatory lending case.1 In March 2011, District
Judge Joseph R. Goodwin accepted the hourly rates of $190 and $175 requested by
the attorneys of the prevailing party, based upon the affidavits of three local attorneys
uninvolved in the litigation, who commented on the prevailing market rate, as well as
recent awards in comparable cases.2 In February 2011, Chief District Judge Robert C.
Chambers determined that an hourly rate of $225 was appropriate in an ERISA
action in view of the attorney’s limited length of practice (six years) and his lack of
experience in ERISA disputes (this was his first such case).3 In January 2011, District
Judge John T. Copenhaver, Jr. approved, as reasonable, hourly rates of $350, $335,
and $215 in an environmental protection action, commenting on the specialized
experience of the attorneys and the expertise required by the nature of the case.4 In
June 2010, Judge Chambers found hourly rates of $350, $275, and $175 to be
reasonable in a predatory lending case, in part due to the specialized experience of
the attorneys and in part due to prior fee awards in similar cases involving the same

1

Koontz v. Wells Fargo N.A., 2013 WL 1337260 (S.D.W.Va. March 29, 2013).

Stalnaker v. Fidelity and Deposit Company of Maryland, 2011 WL 1113407 (S.D.W.Va. Mar. 25,
2011).
2

3

Frye v. Metropolitan Life Insurance Company, 2011 WL 466686 (S.D.W.Va., Feb. 4, 2011).

West Virginia Highlands Conservancy, Inc. et al. v. Huffman, 2011 WL 90163 (S.D.W.Va., Jan. 10,
2011).

4

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attorneys.5 In March 2010, Magistrate Judge R. Clarke Vandervort found an hourly
rate of $225 to be reasonable in an action brought under the United Services
Employment and Reemployment Rights Act of 1994 (“USERRA”) after considering
the affidavits of two local attorneys, who stated that the hourly rate typically charged
by attorneys in this type of litigation ranged between $200 and $300.6
Considering these awards, counsel’s level of skill and experience, and the
novelty of the issues, the Court finds the hourly rates of $170 and $120 for attorneys
and $100 for paralegals to be appropriate. In regard to Mr. Ramey’s hourly rate of
$395, the Court finds that rate to be excessive for the type of work performed by Mr.
Ramey in this matter. Taking into account the other fees, Mr. Ramey’s qualifications
and length of practice, and noting that his role in this matter is local counsel, the
Court finds an hourly rate of $250 to be within the reasonable range.
Having determined the reasonable hourly rates in this case, the Court must
examine the reasonableness of the number of hours expended on the Motion to
Compel. “When reviewing a fee petition, the Court must exclude any hours that are
excessive, redundant, or otherwise unnecessary.” Allen v. Monsanto Company, 2007
WL 1859046 at *2 (S.D.W.Va., June 26, 2007) (citing Hensley y v. Eckerhart, 461
U.S. 424, 434, 103 .Ct. 1933, 76 L.Ed.2d 40 (1983)). “Counsel for a prevailing party
has a duty to exercise ‘billing judgment’ to ‘exclude from a fee request hours that are
excessive, redundant or otherwise unnecessary, just as a lawyer in private practice
Watkins v. Wells Fargo Home Mortgage, 2010 WL 2486247 (S.D.W.Va., Jan 15, 2010). Judge
Chambers noted that in June 2006 the Court had awarded fees to the same lawyers based upon hourly
rates of $300 and $225, and the Circuit Court of Roane County, West Virginia had approved their
requested hourly rates of $400 and $300 in October 2009.

5

Mills v. East Gulf Coal Preparation Company, LLC, 2010 WL 1050359 (S.D.W.Va.). Magistrate
Judge Vandervort also noted that this hourly rate was at the high end of reasonable in the Beckley legal
community.

6

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ethically is obligated to exclude such hours from his fee submission. . .’” Daly v. Hill,
790 F.2d 1071, 1079 (4th Cir. 1986) (quoting Hensley, 461 U.S. at 434)).
The itemization provided by the Reshes’ counsel indicates that the associate
attorney at Mr. Lau’s firm spent 10.5 hours between January 31, 2013 and February
22, 2013 working on the motion to compel, supporting memorandum, and reply
brief; Mr. Lau spent .9 hours during that time period on revision of the briefs; and
Mr. Ramey spent 1 hour on the documents. In addition, the associate spent 2.8 hours
dealing with continuances of the hearing, and Mr. Lau spent .4 hours. Mr. Ramey
spent 2.5 hours related to the hearing and continuances, as well as approximately 2.7
hours driving to and from the courthouse and attending the hearing. The
undersigned finds this time to be reasonable. Time spent by counsel reviewing
documents produced by Realty Concepts, discussing the documents with adverse
counsel, and completing other tasks unrelated to the motion to compel are not
reasonable and have been deducted.
Next, Mr. Lau’s associate spent 2.9 hours planning and preparing for the
motion for reasonable fees. Since the Court does not understand what work activity
was involved in planning and preparing, those entries will be deducted. The
remaining time spent on the issue of reasonable expenses includes 8.9 associate
hours and 3.3 paralegal hours drafting the fee affidavit and memorandum in support
of an award. Considering the detail included in the affidavit, the paralegal time seems
appropriate. However, the supporting memorandum was only four and half pages
long with minimal legal citation and argument. Accordingly, the Court finds that an
assessment of 5 hours of associate time is reasonable for drafting the memorandum
and revising the affidavit.
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In summary, the Reshes are entitled to reimbursement of reasonable fees as
follows: 18.3 hours of associate time at $120 per hour; 1.3 hours of Mr. Lau’s time at
$170 per hour; 6.2 hours of Mr. Ramey’s time at $250 per hour; and 3.3 hours of
paralegal time at $100 per hour for a total award of Four Thousand Two
Hundred Ninety Seven Dollars ($4,297).
The Clerk is instructed to provide a copy of this order to counsel of record.
ENTERED: May 20, 2013.

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