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Volume 18

EAGLE SUSPENSIONS, INC., Plaintiff, v. HELLMAN WORLDWIDE LOGISTICS, INC., Defendant.

ORDER ACCEPTING FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

A. JOE FISH, Senior District Judge.

*1 After reviewing all relevant matters of record in this case, including the findings, conclusions, and recommendation of the United States Magistrate Judge for plain error, I am of the opinion that the findings and conclusions of the magistrate judge are correct and they are accepted as the findings and conclusions of the court.

 

For the reasons stated in the findings, conclusions, and recommendation, the plaintiff is awarded $230,153.09 for its initial fee request dated April 24, 2013, and additional attorneys’ fees in the amount of $127,002.38 for incurred in connection with the appeal and in litigating its fee request after the filing of its initial motion.

 

SO ORDERED.

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATION

IRMA CARRILLO RAMIREZ, United States Magistrate Judge.

Pursuant to the order dated April 11, 2014, before the Court are Plaintiff’s Motion for Attorneys’ Fees and Costs, filed April 24, 2013 (doc. 114), and Plaintiff Eagle Suspensions, Inc.’s Motion for Leave to File Supplemental Briej in Support of Motion for Attorneys’ Fees and Costs, filed August 15, 2014 (doc. 151). Based on the relevant filings, evidence and applicable law, the plaintiff should be awarded $230,153.09 of its initial fee request dated April 24, 2013. The motion for leave to file a supplemental brief is GRANTED, and the plaintiff should be awarded additional attorneys’ fees in the amount of $127,002.38.

 

 

I. BACKGROUND

On March 20, 2013, ajury found in favor of Eagle Suspensions, Inc. (Plaintiff) on its claims against Hellman Worldwide Logistics, Inc. (Defendant) for breach of contract, breach of fiduciary duty, and federal common law non-delivery. (Docs.111, 112.) Plaintiff moved for attorneys’ fees in the amount of $255,634.00, including $15,168.00 incurred in preparing for the motion for attorneys’ fees, on April 24, 2013. (Docs. 114; 115 at 24; 116 at 16.)1 It also sought conditional appellate attorneys’ fees in the amount of $75,000 for any appeal before the Fifth Circuit Court of Appeals and $100,000 for any appeal before the United States Supreme Court. (Doc. 115 at 21.) On February 11, 2014, it was recommended that the requested fees be awarded in full. (Doc. 140.) On April 11, 2014, the Court sustained Defendant’s objection to Plaintiff’s failure to segregate and exclude fees for work related solely to the claims for which fees were not recoverable, i.e., its federal common law non-delivery and breach of fiduciary duty claims, and re-referred the matter. (Doc. 147.) It accepted the remainder of the recommendation.

 

In the interim, Defendant unsuccessfully appealed the judgment against it. (Doc. 150.) Plaintiff filed a motion for leave to file a supplemental brief to provide evidence of the exact amount of attorneys’ fees it incurred in defending the judgment on appeal as well as in litigating its fee request. (Doc. 151.) Defendant filed a response on August 27, 2014. (Doc. 155.) A hearing was conducted on October 31, 2014. (See doc. 161.) Both parties’ counsel testified at the hearing.

 

 

II. EVIDENTIARY OBJECTION

*2 Plaintiff objected to Defendant’s counsel’s testimony on grounds that Defendant did not designate him as an expert on the attorneys’ fees and also failed to present expert qualifications.

 

Expert disclosures must be provided by the deadlines imposed in the scheduling order. Fed.R.Civ.P. 26(a)(2)(D). If a party fails to provide information or identify a witness as required by Rule 26(a), “the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or harmless.” Fed.R.Civ.P. 37(c)(1). Defendant failed to show that its failure to designate counsel as an expert was substantially justified or harmless. See PACT XPP Tech., AG v. Xilinx, Inc., 2:07–CV–563–RSP, 2012 WL 1034009, at * 1 (E.D.Tex. Mar. 27, 2012) (noting that the party facing sanctions bears the burden of showing harmlessness).

 

Even if the failure to designate was harmless, however, no evidence of his own qualifications to testify to the reasonable attorneys’ fees was presented. See Fed.R.Evid. 702 (“[A] witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise[.]”); Mathis, 302 F.3d at 459–60 (citing Bourjaily v. United States, 483 U.S. 171, 175 (1987)) (“The party offering the expert must prove by a preponderance of the evidence that the proffered testimony satisfies the rule 702 test.”). Plaintiff’s objection to the testimony is SUSTAINED.2

 

 

III. SEGREGATION OF FEES REQUESTED ON APRIL 24, 2013

Texas law3 does not allow recovery of attorney’s fees unless they are authorized by statute or contract. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310–11 (Tex.2006)). Where a statute or contract allows recovery of fees for only some of the claims upon which a party has prevailed, that party must segregate the fees it incurred for those claims for which fees are recoverable from those for which they are not. Id. at 311. An exception to the duty to segregate arises where both types of claims arise “out of the same transaction and are so interrelated that their ‘prosecution or defense entails proof or denial of essentially the same facts.’ “ Id. If the causes of action for which fees are not recoverable by statute or contract are “intertwined to the point of being inseparable” with those for which fees are recoverable, the prevailing party may recover the entire amount of fees. Id. For example, “[r]equests for standard disclosures, proof of background facts, depositions of primary actors, discovery motions and hearings, voir dire of the jury, and a host of other services may be necessary whether a claim is filed alone or with others. To the extent such services would have been incurred on a recoverable claim alone, they are not disallowed simply because they do double service.” Id. at 313.

 

Here, Plaintiff submitted its unredacted billing invoices in camera as ordered, but the invoices did not segregate fees between claims. “A failure to segregate attorney’s fees does not mean that the claimant cannot recover any attorney’s fees. To the contrary, the amount of unsegregated attorney’s fees for the entire case is some evidence of the amount of segregated attorney’s fees.” Jacks v. G.A. Bobo, No. 12–10–00163–CV, 2011 WL 2638751, at *4 (Tex.App.-Tyler June 30, 2011, no pet.) (citing Tony Gullo, 212 S.W.3d at 314); 7979 Airport Garage L.L.C. v. Dollar Rent A Car Sys., Inc., 245 S.W.3d488, 510 (Tex.App.-Houston [14th Dist.] 2007, pet. denied) (“But [the defendant] did not forfeit its right to recover attorneys’ fees by failing to segregate them. The evidence it presented regarding the total amount of attorneys’ fees it incurred is some evidence of what the segregated amount should be”). “Attorneys are not required to keep separate time records when drafting parts of a petition or completing other tasks that relate to claims for which attorney’s fees are unrecoverable. Rather, an attorney may testify, for example, that a given percentage of the drafting time would have been necessary even if the claim for which attorney’s fees are nonrecoverable had not been asserted.” Am. Intern. Indus., Inc. v. Scott, 355 S.W.3d 155, 163 (Tex.App.-Houston [1st Dist.] 2011, no pet.) (internal quotation marks omitted); see also Shed, L.L. C. v. Edom Wash’N Dry, L.L.C., No. 12–07–00431–CV, 2009 WL 692609 at *10 (Tex.App.-Tyler Mar. 18, 2009, pet. denied) (“The usual method of proof of the amount of reasonable attorney’s fees is the opinion testimony of lawyers testifying as expert witnesses”).

 

*3 During the hearing on October 31, 2014, Plaintiff’s counsel testified that the litigation process had nine different stages, and he assigned specific percentages of fees that should be excluded at each stage for work relating solely to claims other than the contract claim: (1) pre-suit investigation, 0%; (2) filing suit, 20%; (3) pre-discovery, 0%; (4) discovery, 10%; (5) mediation, 2%; (6) motion practice, 10%; (7) trial preparation, 10%; (8) trial, 15%; and (9) post-verdict, 5%. He concluded that a total reduction of 9.2 % was reasonable.

 

 

A. May 31, 2011–January 31,2012 (Pre-suit Investigation )

Plaintiff’s counsel testified that none of the fees incurred during the pre-suit investigation should be excluded. From May 31, 2011 through January 31, 2012, he deposed Defendant’s representative, contacted the Mexican border in search of the presses in question, and conducted legal research. (Doc. 116 at 26–46.) Counsel devoted about 28% of his time during that stage to legal research. (Id.) The billing records for this period show research for claims other than the breach of contract claim. The Court finds that 14% of the fees should be excluded to account for the time spent on legal research unrelated to Plaintiff’s contract claim. See e.g., Kimberly–Clark Corp. v. Factory Mut. Ins. Co., 3:05–CV–2098–B, 2008 WL 1958998, at *4–6 (N.D.Tex. Apr. 30, 2008) (segregating 30% of the time spent during the pre-suit stage as involving non-contract claims). The amount of $2,971.50 should be deducted from the $21,225.00 requested for this stage of the litigation, and $18,253.50 should be awarded.

 

 

B. February 6, 2012–March 15. 2012 (Filing Suit )

From February 6, 2012 through March 15, 2012, Plaintiff’s counsel conducted legal research, drafted and filed the complaint, served Defendant, and communicated with Plaintiff and opposing counsel. (Doc. 116 at 46–50.) He testified that 20% of the time spent on preparing and filing the complaint related to the federal common law claim and breach of fiduciary duty claim. Based on the record, the Court agrees that 20% of the fees should be excluded from the total fees incurred during this stage of the litigation ($7,175.00). (Id .) A total of $5,740.00 should be awarded.

 

 

C. March 20, 2012–June 12, 2012 (Pre-discovery Proceedings )

From March 20, 2012 through June 12, 2012, the parties engaged in pre-discovery proceedings, including a Rule 26 conference, and filed joint status report and scheduling order. (Doc. 116 at 52–59.) Plaintiff’s counsel testified that no fees should be excluded for this stage because Plaintiff would have incurred the same fees if it had pursued only the breach of contract claim. The Court agrees, and the total fee of $5,447.504 for this stage should be awarded.

 

 

D. July 19, 2012–March 17, 2013 (Discovery, Mediation, Motions, Trial Preparation )

Plaintiff’s counsel divided this stage into four areas: (1) discovery ($37,845.00); (2) mediation ($3,825.00); (3) motion practice ($38,187.50); and (4) trial preparation ($104,366.50). He testified that 10% of the fees incurred during discovery, motion practice, and trial preparation stages, and 2% of fees incurred for mediation should be segregated and excluded.

 

*4 The billing invoices reflect a total amount of fees incurred during this time period of $171,649.00,5 but Plaintiff requests $184,224.00. The four areas also overlap, and any division between them is not discernible from the billing invoices, except for one entry for mediation dated September 12, 2012. (See doc. 116 at 66.) Plaintiff incurred $1,375.00 in fees for that day. (Id.)

 

The Court agrees that the amount for mediation should be reduced by 2%, and a total of $1,347.50 should be awarded for mediation. (See id.) The fees incurred during the remaining three stages is $170,274.00, and counsel testified that 10% of fees should be excluded. This reduction is reasonable. Ten percent, $17,027.40, should be subtracted, and a total of $153,426.60 should be awarded. Plaintiff should recover $154,773.10 for the work done from July 19, 2012 through March 17, 2013.

 

 

E. March 18. 2013–March 20. 2013 (Trial )

From March 18, 2013 to March 20, 2013, Plaintiff tried the case to the jury. (Doc. 116 at 100–01.) Plaintiff’s counsel testified that 15% of the fees spent on the breach of fiduciary claim during the opening and closing arguments and the evidence should be segregated and excluded from the total fees incurred during the trial.6 Based on the evidence, a reduction of 15% appears reasonable. The amount of $3,369.38 should be excluded from the total fee of $22,462.50, and a total of $19,093.12 should be awarded for attorneys’ fees incurred during the trial stage.

 

 

F. March 21.2013 through April 11, 2013 (Post-verdict Matters )

From March 21, 2013 through April 11, 2013, Plaintiff’s counsel spent time on post-verdict matters, e.g., drafting the final judgment, calculating pre-judgment interest, and conferring with opposing counsel on a compromise. (Doc. 116 at 101–03.) He testified that 5% of the time spent on post-verdict matters should be deducted from the fee award because he spent some time on the breach of fiduciary claim when he drafted the final judgment. This assessment appears reasonable. From the total fee of $12,292.50, $614.63 should be deducted, and $11,677.87 should be awarded.

 

In conclusion, after reduction of the total requested fee award for work related solely to those claims for which fees are not recoverable by statute or contract, the total amount of fees that should be awarded through the post-verdict stage is $214,985.09.7 As noted, the Court’s order accepted the recommendation that $15,168.00 be awarded for drafting and filing the April 2013 fee motion. Plaintiff should therefore recover a total of $230,153.09 in reasonable and necessary attorneys’ fees based as a result of its original fee motion. (Doc. 147.)

 

 

IV. MOTION FOR LEAVE TO FILE A SUPPLEMENTAL BRIEF

Plaintiff moves for leave to file a supplemental brief to provide evidence of the “exact amount of reasonable and necessary attorneys’ fees” it incurred defending the “judgment through appeal to the Fifth Circuit Court of Appeals [.]” (Doc. 151 at 2.)

 

*5 On April 11, 2014, the Court granted Plaintiff contingent appellate attorneys’ fees in the amount of $75,000. (Doc. 147 at 5.) Defendant contends that this order was final, and that Plaintiff should not be allowed to re-litigate the issue. (Doc. 155 at 20.) Because the appellate attorneys’ fees granted was contingent on Defendant’s unsuccessful appeal, however, the award was not final. See Hughes v. Habitat Apartments, 828 S.W.2d 794, 795 (Tex. App .-Dallas 1992, no writ) (“Because an award of appellate attorney’s fees is conditional upon the unsuccessful outcome of the appeal, it is not final award until after the appeal.”) Plaintiff’s motion for leave to file a supplemental brief to provide evidence of the actual amount of fees incurred is therefore GRANTED.

 

Plaintiff has attached its proposed supplemental brief along with un-redacted billing invoices, Defendant has responded, and a hearing has been conducted. The request for additional fees will therefore also be considered.

 

 

V. ADDITIONAL ATTORNEYS’ FEES8

Plaintiff now seeks to recover an additional $133,534.00 incurred both in connection with the appeal, including a supersedeas bond motion, mediation, a supplemental letter brief, and in litigating its fee request after the filing of its initial motion in April 2013. (Doc. 151–1 at 3–5.)

 

Plaintiff submitted a supplemental declaration from its lead attorney and its unredacted billing records. (See docs. 116 at 3; 151–1 at 15–23.) The supplemental declaration also incorporated by reference from the original motion the background information and the hourly rates of the attorneys and paralegals who worked on this case.9 (Doc. 116 at 5–6, 8–11; 151–1 at 15.) Plaintiff’s counsel testified, as he stated in the declaration, that the fees incurred were usual and customary as well as reasonable and necessary. (Doc. 151–1 at 17.) Based on his exercise of billing judgment,10 he reduced the total fees by $13,327.50. (Doc. 116 at 12.)

 

Overall, Plaintiff’s evidence satisfies one, three, four, seven, and eight of the Andersen factors.11 See In re Estate of Tyner, 282 S.W.3d 179, 184 (Tex.App.-Tyler 2009, no pet.) (“… attorney swore under oath that he is a licensed attorney, he is familiar with the reasonable and necessary attorney’s fees charged for appeals in civil actions such as this case, he has personal knowledge of the services rendered to [the party] in this matter, and those services were reasonable, necessary, and customary. Thus, [the party’s] attorney’s affidavit sufficiently established reasonable attorney’s fees and is legally sufficient to support the trial court’s award of attorney’s fees.”). Under Texas law, Plaintiff’s evidence is “legally sufficient” for an award of attorneys’ fees on appeal.12

 

 

A. Supersedeas Bond Motion

Plaintiff seeks to recover the fees it incurred as a result of Defendant’s deficient supersedeas bond motion. (Doc. 151–1 at 5.)

 

*6 On May 9, 2013, Defendant filed a motion for approval of an insufficient supersedeas bond without conferring with Plaintiff. (Doc. 121.) Defendant withdrew the motion and filed a new unopposed motion only after Plaintiff helped Defendant “put[ ] the bond and motion into proper form.” (Docs. 125, 126; 151–1 at 6, 17–18.) Defendant contends that Plaintiff could have executed on thejudgment rather than working with it to correct its motion. (Doc. 155 at 10.) Even if Plaintiff had begun executing on the judgment, it still would have incurred attorneys’ fees to do so. Defendant also argues that any fees incurred curing Defendant’s supersedeas bond motion should be excluded because it was unrelated to the “prosecution of the breach of contract claim[.]” (Doc. 155 at 10.) The work for the supersedeas bond motion does not relate solely to the claims for which fees are not recoverable and should not be excluded. The amount of $4,440.00 should be awarded.

 

 

B. Fifth Circuit Appellate Conference Program

Plaintiff seeks an award of $17,752.50 in attorneys’ fees it incurred for mediation at the appellate level. (Doc. 151–1 at 4.) It provides evidence that it participated in the Fifth Circuit’s Appellate Conference Program at Defendant’s request. (Id.) Defendant argues that only part of the fees incurred for mediation should be awarded because Plaintiff voluntarily participated in the program. (Doc. 155 at 15–16.) It also contends that the time spent in preparation for mediation was largely duplicative of the efforts for the appeal itself. (Id.) There is no evidence of duplicative work by Plaintiff in preparing for the mediation. In fact, the parties participated in mediation before the parties filed their appellate briefs. (Doc. 151–1 at 42, 45.) The full amount of fees incurred, $17,752.50, should be awarded.

 

 

C. A ppeal

Plaintiff seeks an award of $82,239.13 (95% of $86,567.50) in attorneys’ fees for the appeal itself. (Doc. 151–1 at 4.)

 

Defendant raised four issues on appeal: federal preemption, jury instruction on damages, jury instruction on breach of fiduciary duty, and insurance. (See docs. 149; 151–1 at 8–9.) Plaintiffs counsel testified that 95% of the fees incurred while defending the judgment on appeal was recoverable because only the jury instruction on the breach of fiduciary duty issue related to a claim for which fees were not recoverable.

 

Defendant contends that the fees incurred in responding to its federal preemption defense should be segregated and excluded because it is “necessarily intertwined with [Plaintiff’s] decision to pursue a federal common law claim [.]” (Doc. 155 at 16.) In Texas, attorneys’ fees incurred in overcoming affirmative defenses to a recoverable claim and any “counterclaim that the plaintiff must overcome in order to fully recover on its contract claim” are recoverable. 7979 Airport Garage, LLC, 245 S.W.3d at 507; see also Tony Gullo, 212 S.W.3d at 314. Defendant argued that the federal common law non-delivery claim, under the Carmack Amendment, preempted any state law claims. (See docs. 23–1 at 17; 122 at 3; 149 at 3.) If Defendant had prevailed on its federal preemption defense, Plaintiff would not have recovered on the breach of contract claim. Any fees incurred in an effort to defeat the federal preemption defense is therefore recoverable. See Tony Gullo, 212 S.W.3d at 314; see also Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex.2007) (ruling that because the prevailing party’s attorney’s efforts to defeat a defense and counterclaim “were necessary to recover on their contract, [the fees related to the efforts were] recoverable.”).

 

*7 Defendant also argues for a reduction in the fee award because Plaintiff’s billing invoices evidences the disfavored “block billing,” citing to a federal case. (Doc. 155 at 13–14.) Texas law applies, however, and as noted previously (doc. 140 at 10), documentary evidence, e.g., billing records, is not required for recovery of attorneys’ fees. See In re A.B.P., 291 S.W.3d 91, 99 (Tex.App.-Dallas 2009, no pet.). Rather, “[t]he usual method of proof of the amount of reasonable attorney’s fees is the opinion testimony of lawyers testifying as expert witnesses.” Shed, L.L.C., 2009 WL 692609 at *10. Plaintiff’s counsel testified to the amount of reasonable attorney’s fees. Only the jury instruction issue related to a claim for which fees were not recoverable, and it was a relatively small issue. (See doc. 149 at 18–20.) Plaintiff’s counsel’s testimony that 95% of the time for the appeal itself was spent on the contract claim appears reasonable. Of the $86,567.50 in fees Plaintiff incurred for the appeal, it should be awarded $82,239.13. (See doc. 151–1 at4.)

 

 

D. Letter Briefs

Plaintiff asserts that it should recover the full amount of the fees it incurred in drafting and filing a letter brief to the Fifth Circuit. (Doc. 151–1 at 10.) Prior to the scheduled oral argument, the Fifth Circuit Court asked the parties to draft and submit additional letter briefs relating solely to the issue of federal preemption. (See doc. 151–1 at 4, 10; 155 at 16.) As noted, any fees incurred in an effort to defeat the federal preemption defense is recoverable because Plaintiff could not have prevailed on the breach of contract claim otherwise. See Tony Gullo, 212 S.W.3d at 314; see also Varner, 218 S.W.3d at 69. Defendant’s argument that Plaintiff admitted it was “embarrassed” that it ever pursued the federal non-delivery claim does not change the outcome. (See doc. 155 at 16.) The fees for the letter brief are recoverable, and $7,330.00 should be awarded.

 

 

E. Fee Award Litigation

Plaintiff seeks a total $21,772.50 ($17,212.50

? $4,560.00) in attorneys’ fees incurred after the filing of its original motion for fees in April 2013, while litigating its requests for attorneys’ fees. (Docs. 115 at 19–20; 151–1 at 6–7.) This includes fees for filing (1) a reply to Defendant’s response to its original fee motion, (2) a response to Defendant’s objections to the recommendation concerning the amount of fees to be awarded, (3) a response and motion to strike Defendant’s “unauthorized supplemental brief in response to the initial fee application, (4) its motion for leave to file a supplemental brief, and (5) a reply to Defendant’s response to the motion for leave to file a supplemental brief. (Doc. 151–1 at 6–7.)

 

Defendant argues that Plaintiff’s fees are excessive and duplicative because some of the fees were incurred due to its failure to produce unredacted fee bills. (Doc. 155 at 10–11.) Texas does not require fee invoices to adjudicate a fee application, however. See In re A.B.P., 291 S.W.3d 91, 99 (Tex.App.-Dallas 2009, no pet.).13 This is not a basis for reducing the award.

 

*8 Defendant also contends that its position that the requested fees for litigating the fee issue are excessive is supported by the cases Plaintiff cites. (Doc. 155 at 10–12.) The awards in those cases may be distinguished, however. In McCully v. Step hen ville Indep. Sch. Dist., No. 4:13–cv–702–A, 2013 WL 6768053, at *7 (N.D.Tex. Dec. 23, 2013), the court awarded $6,253 for drafting the attorney’s fee motion only, and noted that the attorney’s hourly rate was $75–125 lower than average. Id. In Shepherd v. Dallas County, No. 3:05–cv–1442–D, 2009 WL 977294, at *3 (N.D.Tex. Apr. 10, 2009), the court awarded $1,560 in fees for responding to a party’s objections to the magistrate judge’s recommendation only. Id. Shepherd is not clear on how complex or contentious the prosecution of the fee motion had been. Id. In Dippin’ Dots, Inc. v. Mosey, 602 F.Supp.2d 777, 785 (N.D.Tex.2009), the court reduced the attorney’s fees for preparing for oral argument in a second appeal and for preparing the motion for attorney’s fees by 13% as “excessive, redundant, or otherwise unnecessary[,]” without further elaboration. Id. Moreover, other courts have approved attorneys’ fees incurred on fee applications in a higher amount. See Bennigan’s Franchising Co., LLC v. Team Irish, Inc., No 3:11–CV–0364–D, 2011 WL 5921540, at *4 (N.D.Tex. Nov. 28, 2011) (awarding $27,078.30 “for attorney’s fees incurred in postjudgment briefing”); see also X Tech., Inc. v. Marvin Test Sys., Inc., No. SA–10–CV–319–XR, 2012 WL 470208, at *2 (W.D.Tex. Feb. 13, 2012) (awarding $581,322 in attorneys’ fees because the case was complex and highly contentious).

 

This case appears to have been highly contentious, and Plaintiff incurred attorneys’ fees responding to Defendant’s oppositions and supplemental briefs. Plaintiff “can recover any reasonable additional attorney’s fees and costs incurred in adjudicating its fee motion.” WesternSouthern Life Assur. Co. v. Head, No. 3:07–CV–0270–D, 2007 WL 2112666, at *2 (N.D.Tex. July 18, 2007); see Cruz v. Hauck, 762 F.2d 1230, 1233–34 (5th Cir.1985) (“It is settled that a prevailing plaintiff is entitled to attorney’s fees for the effort entailed in litigating a fee claim and securing compensation…. As any prudent and reasonable attorney would do in this situation, [the plaintiffs’ attorneys replied to the [d]efendants’ objections.”); Preston Exploration Co., LP v. GSP, LLC, No. H–08–3341, 2013 WL 3229678, at *8 (S.D. Tex. June 25, 2013) (finding that “it is common practice to file a reply [to a fee application] and does not believe the filing of the reply itself is unreimbursable.”); Shepherd, 2009 WL 977294, at *3 (awarding fees for responding to the defendant’s objection to the magistrate judge’s recommendation).

 

Because Defendant prevailed on its segregation argument, a deduction may be warranted, however. See e.g., In re Teraforce Tech. Corp., 347 B.R. 838, 866 (N.D.Tex.2006) (declining to award the prevailing party the fees it incurred responding to the non-moving party’s objections when the objections “resulted in a partial disallowance of the requested fees.”). Based on the record, a 30% deduction appears reasonable, and Plaintiff should be awarded $15,240.75 in additional fees incurred in litigating its fee award.14

 

 

VI. RECOMMENDATION

*9 Plaintiff should be awarded $230,153.09 in attorneys’ fees for the time spent on trial and prosecuting its original fee motion, and it should be awarded additional attorneys’ fees incurred in the amount of $127,002.38.

 

SO RECOMMENDED on this 18th day of December, 2014.

 

 

 

Footnotes

 

1

 

Citations to the record refer to the CM/ECF system page number at the top of each page rather than the page numbers at the bottom of each filing.

 

2

 

Even if Defendant’s counsel’s testimony is considered, however, the ultimate conclusion regarding the appropriate amount of fees to be awarded does not differ.

 

3

 

An award of attorneys’ fees “is governed by the same law that serves as the rule of decision for the substantive issues in the case.” Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir.2002). Texas law provided the rule of decision on the breach of contract claim in this case, and it also authorizes the award of attorneys’ fees related to the claim. See Tex. Civ. Prac. & Rem.Code § 38.001.

 

4

 

Plaintiff’s counsel testified that the total fees incurred during this stage was $8,422.50. The billing invoices, however, total $8,510. (Doc. 116 at 52–59.) The billing invoices also show that Plaintiff’s counsel discounted the fees by $3,062.50 during that same period. (See doc. 116 at 59.) The total is therefore $5,447.50 ($8,510 minus $3,062.50).

 

5

 

All entries on the invoices for this time period ($204,684) were added, and all of the adjustments ($33,035) were subtracted. (See doc. 116 at 60–100.)

 

6

 

Defendant had stipulated to liability on the federal common law non-delivery claim prior to the trial, so no time was spent on this claim. (Doc. 56 at 1.)

 

7

 

Based on the evidence, Plaintiff incurred a total of $240,451.50 in fees during this period, and a reduction of fees in the amount of $25,265.41 was required for work on claims for which fees are not recoverable. This amount constitutes 10.51% of the total fee.

 

8

 

As discussed in the February 11, 2014 recommendation, Texas law permits an award of attorneys’ fees that are “reasonable and necessary [.]” (Doc. 140 at 6–7.) This includes fees for appellate work. See Keith v. Keith, 221 S.W.3d 156, 169 (Tex.App.-Houston [1st Dist.] 2006, no pet). The reasonableness of the fees is determined by applying the eight factors identified in Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex.1997):

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly;

(2) the likelihood … that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.

 

9

 

Plaintiff’s counsel also incorporated by reference the relevant background information at the October 31, 2014 hearing.

 

10

 

Billing judgment “refers to the usual practice of law firms in writing off unproductive, excessive, or redundant hours[.]” Walker v. U.S. Dept of Housing and Urban Development, 99 F.3d 761, 769 (5th Cir.1996).

 

11

 

Factors two, five, and six are neutral. There is no evidence that Plaintiff’s counsel was precluded in accepting other employment, or that Plaintiff or the circumstances imposed any time limitations. There was also no evidence of a prior professional relationship between Plaintiff and its counsel.

 

12

 

As noted, Defendant’s counsel testified, but Plaintiff’s objection to that testimony has been sustained. In response to the motion for leave to file supplemental briefing, Defendant also submitted a document with comments on Plaintiff’s billing invoices. (See doc. 156.) In order to controvert Plaintiff’s evidence, Defendant must file an affidavit or submit testimony contesting the reasonableness of Plaintiff’s attorney’s fee claim. See Tex. Civ. Prac. & Rem.Code § 18.001(b) (“Unless a controverting affidavit is served as provided by this section, an affidavit that the amount a person charged for a service was reasonable at the time and place that the service was provided and that the service was necessary is sufficient evidence to support a finding of fact by judge or jury that the amount charged was reasonable or that the service was necessary.”); Ellen v. Carr, No. A14–92–0292–CV, 1992 WL 347783, at *2 (Tex.App.-Houston [14th Dist.] Nov. 25, 1992, writ denied) (unpublished). Defendant’s unsworn document is not competent evidence controverting Plaintiff’s evidence. See Keith, 221 S.W.3d at 169 (“The general rule is that an attorney’s statement must be under oath to constitute evidence.”).

 

13

 

Defendant has repeatedly objected to the redacted billing invoices in its opposition. (Docs. 122 at 6; 122–1 at 1–5; 142 at 7–8, 16–17.) Review of the un-redacted billing invoices after their production pursuant to the District Court’s order, however, did not assist in resolving the fee segregation issue. (See doc. 160.)

 

14

 

Plaintiff is seeking attorneys’ fees pursuant to Texas Civil Practice and Remedies Code § 38.001. (See docs. 115 at 8–9; 140 at 6; 147 at 2.) The parties cite no cases discussing whether the time spent on prosecuting a fee application is recoverable under § 38.001; both cite cases applying federal law. (Docs. 151–1 at 7–8; 155 at 12.)

 

 

 

ARCHITECTURAL CONTRACTORS, INC. and The Cincinnati Insurance Company, Inc., Plaintiffs, v. SCHILLI TRANSPORTATION SERVICES, INC., Defendant.

United States District Court,

W.D. Arkansas,

Fayetteville Division.

ARCHITECTURAL CONTRACTORS, INC. and The Cincinnati Insurance Company, Inc., Plaintiffs,

v.

SCHILLI TRANSPORTATION SERVICES, INC., Defendant.

No. 5:13–CV–05179. | Signed Dec. 29, 2014.

Attorneys and Law Firms

Grace K. Johnson, Bassett Law Firm LLP, Fayetteville, AR, for Plaintiffs.

Bianca M. Rucker, Wright Lindsey Jennings LLP, Rogers, AR, Gregory Turner Jones, Little Rock, AR, for Defendant.

 

 

MEMORANDUM OPINION AND ORDER

TIMOTHY L. BROOKS, District Judge.

*1 Currently before the Court are Plaintiffs Architectural Contractors, Inc.’s (“ACI”) and The Cincinnati Insurance Company, Inc.’s (“CIC”) Motion for Costs and Prejudgment Interest and brief in support (Docs. 47 and 48); Defendant Schilli Transportation Services, Inc.’s (“Schilli”) Response in Opposition and brief in support (Docs. 50 and 51); and Plaintiffs’ Reply (Doc. 52). For the reasons explained herein, Plaintiffs’ Motion (Doc. 47) is GRANTED IN PART AND DENIED IN PART. The Court grants Plaintiffs’ request for prejudgment interest and costs, but declines to award Plaintiffs’ total cost request of $3,435.45. Instead, the Court awards Plaintiffs $2,840.45 in costs and $15.83 in prejudgment interest.

 

 

I. BACKGROUND

Plaintiffs brought suit against Schilli, pursuant to the Carmack Amendment of the Interstate Commerce Act, 49 U.S.C. § 14706, for damages sustained to certain wall panels transported by Schilli to ACI’s job site in Springdale, Arkansas. Schilli denied that its driver, Douglas Edwards, delivered the panels in damaged condition, and contended that at least some of the damages claimed by ACI were unforeseeable. Schilli further contended that Plaintiffs’ claim was barred by a nine-month statute of limitations. The case came on for a one-day bench trial on December 1, 2014. For the reasons set forth in its Opinion and Order (Doc. 49), the Court found for Plaintiffs. The Court awarded Plaintiffs $6,375.76 in compensatory damages, which represents the replacement cost of the 55 damaged wall panels and fasteners.

 

Plaintiffs now request an award of prejudgment interest and costs, and supports its request with a number of exhibits, including: a Bill of Costs (Doc. 47–1); invoices for the depositions conducted on Jean McMillian and Douglas Edwards (Doc. 47–2); and an affidavit written by Plaintiffs’ counsel confirming that the itemization is accurate (Doc. 47–3). The Court will address Plaintiffs’ requests for prejudgment interest and costs in turn.

 

 

II. DISCUSSION

A. Prejudgment Interest

Plaintiffs seek an award of prejudgment interest, but fail to make a specific request or brief a calculation methodology. Schilli disputes that Plaintiffs are entitled to an award of prejudgment interest due to the unreasonable delay in reporting any damage to Schilli. Schilli also contends it should not be ordered to pay interest because the issue of liability was highly challenged, and the Court’s ruling was closely decided. In the alternative, Schilli requests that any prejudgment interest begin on May 23, 2013, the date Plaintiffs first reported the loss to Schilli.

 

Schilli’s liability was determined at trial, and the Court calculated the amount of damages through the invoices introduced into evidence. Because Plaintiffs’ damages were reasonably ascertainable from the date of accrual, Plaintiffs are entitled to prejudgment interest. See Stroh Container Co. v. Dephi Industries, Inc., 783 F.2d 743, 752 (8th Cir.1986). The basic purpose of prejudgment interest is to ensure that a party is fully compensated for its loss. See City of Milwaukee v. Cement Div. Nat’l Gypsum Co., 515 U.S. 189, 195 (1995). Further, it is appropriate to award compound, rather than simple interest in federal cases. “[A]bsent special circumstances, compound, not simple, interest ought to be awarded in Carmack Amendment cases.” Am. Nat’l Fire Ins. Co. v. Yellow Freight Sys. Inc., 325 F.3d 924, 937 (7th Cir.2003).

 

*2 Unlike in cases before this Court solely on the basis of diversity jurisdiction, wherein the Supreme Court’s ruling in Erie R.R. v. Tompkins, 304 U.S. 64 (1938), dictates that the issue of prejudgment interest be determined with reference to various state laws, see Capella Univ., Inc. v. Executive Risk Specialty Ins. Co., 617 F.3d 1040, 1052 (8th Cir.2010) (internal citation omitted), the present action is before the Court on a federal question and therefore federal law governs the rate of prejudgment interest, see Bishop v. Pennington Cnty., 2009 WL 1364887, at *2 (D.S.D. May 14, 2009) (citing Mansker v. TMG Life Ins. Co., 54 F .3d 1322, 1330 (8th Cir.1995)).

 

The first issue the Court must address is the appropriateness of awarding prejudgment interest in this case. This Court is not aware of any reason why prejudgment interest would be inappropriate in this action. The awarding of prejudgment interest “ensure[s] that an injured party is fully compensated for its loss,” City of Milwaukee, 515 U.S. at 195, by requiring that “[o]ne who has had the use of money owing to another … pay interest from the time payment should have been made,” Miller v. Robertson, 266 U.S. 243, 257–58 (1924). Here, the Court has determined that Schilli has had use of $6,375.76 which rightfully was owed to Plaintiffs as of May 23, 2013. Therefore the award of prejudgment interest in this case is appropriate.

 

The next issue to be resolved is the correct date on which prejudgment interest should begin to accrue. Prejudgment interest typically accrues from the date of the loss or from the date on which the claim accrued. See W. Va. v. United States, 479 U.S. 305, 310 n. 2 (1987). The Court has broad discretion in making this determination. Indep. Bulk Transp., Inc. v. The Vessel “Morania Abaco,” 676 F.2d 23, 25 (2d Cir.1982). The parties have suggested two different dates for the Court’s consideration. Plaintiffs contend that the relevant date is the date of loss, while Schilli argues that the date the claim was made is the proper date for prejudgment interest to accrue. The facts revealed that Plaintiffs did not make a claim until nearly two years after the shipment arrived in damaged condition, and therefore the Court finds that it is equitable for the interest to run from the date Plaintiff first alerted Schilli as to the loss, May 23, 2013, through the date of the Court’s Opinion and Order on December 10, 2014.

 

Finally, this Court must decide the applicable rate of prejudgment interest. Plaintiffs have not submitted any calculations regarding interest rates; however, Schilli provided a rate schedule from the United States Department of Treasury, dating from 2013. The appropriate rate of interest is left to the discretion of the district court. See N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 130–31 (2d Cir.2001). See also Werner Enterprises, Inc. v. Westwind Mar. Int’l, Inc., 554 F.3d 1319, 1328 (11th Cir.2009) (“In the absence of a controlling statute, the choice of a rate at which to set the amount of prejudgment interest is also within the discretion of a federal court.”). “That decision is ‘guided by principles of reasonableness and fairness, by relevant state law, and by the relevant fifty-two week United States Treasury bond rate, which is the rate that federal courts must use in awarding post-judgment interest.’ “ In re Int’l Admin. Serv., Inc., 408 F.3d at 710 (quoting Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1447 (11th Cir.1998) (citing 28 U.S.C. § 1961)). Although 28 U.S.C. § 1961 does not concern prejudgment interest, the Eighth Circuit has concluded that § 1961 provides the proper measure for determining rates of both prejudgment and postjudgment interest. Mansker, 54 F.3d at 1331. The annual yields on those treasury securities since May 2013 to the present have fluctuated from a low of .11% in May 2013, to a high of .21% when the Court’s Order was entered on December 10, 2014. When the annual yields are averaged, the resulting rate is .16%. When compounded annually, this rate provides a return of $15.83.1

 

*3 Accordingly, Plaintiffs are entitled to recover an interest rate of .16% compounded annually from May 23, 2013, which equals $15.83.

 

 

B. Costs

The Court now turns to Plaintiffs’ Bill of Costs under 28 U.S.C. § 1920. In its Bill of Costs, Plaintiffs seek reimbursement in the total amount of $3,435.45 for the following expenses it states were necessarily incurred in the defense of this action: $29.80 for fees incurred in the service of summons and subpoenas; $3,015.73 for costs of printed or electronically recorded transcripts of the depositions of Edwards and McMillian; $136.30 for witness fees; and $253.62 for costs of making copies of any materials necessarily obtained for the case.

 

Schilli disputes that Plaintiffs are entitled to costs, denying that Plaintiffs are the prevailing party, as Plaintiffs received less than half of what they requested at the trial of this matter, and Schilli prevailed as to state law claims on summary judgment. Schilli further argues that the “bulk of costs Plaintiffs request are comprised of costs associated with creating and procuring videotapes and written transcripts of depositions….” (Doc. 52, p. 3). Specifically, Schilli objects to: (1) the deposition video and transcripts of Edwards; (2) the deposition video of McMillian; and (3) meeting room rental fees for both depositions. However, Schilli does not quarrel with the remaining items of costs sought in Plaintiffs’ Bill of Costs.

 

Under the Federal Rules of Civil Procedure, “[u]nless a federal statute, these rules, or a court order provides otherwise, costs-other than attorney’s fees-should be allowed to the prevailing party.” Fed.R.Civ.P. 54(d)(1). The Eighth Circuit has held that Rule 54(d) codifies a rebuttable presumption that the prevailing party is entitled to costs. Leonard v. Sw. Bell Corp. Disability Income Plan, 408 F.3d 528, 533 (8th Cir.2005) (citing Martin v. DaimlerChrysler Corp., 251 F.3d 691, 696 (8th Cir.2001)). The costs available under the rule are stated in 28 U.S.C. § 1920:

A judge or clerk of any court of the United States may tax as costs the following:

(1) Fees of the clerk and marshal;

(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;

(3) Fees and disbursements for printing and witnesses;

(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;

(5) Docket fees under section 1923 of this title;

(6) Compensations of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.

A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.

28 U.S.C. § 1920.

 

Not all expenses of litigation are costs taxable against the losing party, and within the costs eligible to be taxed, the district court has discretion in determining and awarding costs in a given case. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441–42 (1987); Pershern v. Fiatallis N. Am., Inc., 834 F.2d 136, 140 (8th Cir.1987). The losing party bears the burden of making the showing that an award is inequitable under the circumstances. Concord Boat Corp. v. Brunswick Corp., 309 F.3d 494, 498 (8th Cir.2002). See also 168th and Dodge, LP v. Rave Reviews Cinemas, LLC, 501 F.3d 945, 958 (8th Cir.2007) (finding that a prevailing party is presumptively entitled to recover all of its costs and the losing party must suggest a rationale under which the district court’s actions constitute an abuse of discretion).

 

*4 Regarding whether Plaintiffs are the prevailing party, the Supreme Court has held, in the context of a civil rights action, that to be a prevailing party, the plaintiff must be able to point to a resolution of the dispute which changes the legal relationship between itself and the defendant.” Tex. State Teachers’ Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792 (1989). A “prevailing party” has also been defined as “[a] party in whose favor a judgment is rendered, regardless of the amount of damages awarded.” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603 (2001). Thus, Plaintiffs are clearly the prevailing party.

 

As to Schilli’s objections to deposition costs, the Eighth Circuit has held that the costs of video depositions are included under § 1920. Craftsmen Limousine, Inc. v. Ford Motor Co., 579 F .3d 894, 898 (8th Cir.2009). Schilli argues that expenses of video taping were an unnecessary addition to a stenographic deposition, indicating that the award of the video-deposition costs was unreasonable or unnecessary. However, the video deposition testimony was used at trial and alluded to by both parties, and the transcripts of the video deposition were requested by the Court. Further, it is easier to assess the credibility of witnesses through their manner and demeanor in the video deposition, rather than simply a written transcript.

 

Regarding the room rental for the depositions, these costs were incurred by necessity of the depositions themselves. Plaintiffs required a room in which to conduct these out-of-town depositions. As a result, Plaintiffs will be awarded the costs regarding the depositions of both Edwards and McMillian. However, the Court discovered that there is a discrepancy in the cost billed on Edwards’ deposition transcript. Although Plaintiffs were charged for 146 pages of the deposition transcript, the transcript only comprised 46 pages. Therefore, the cost awarded to Plaintiffs will be $2,840.45, which is reduced by the $595 overcharge on Edwards’ deposition transcript. While the Court is concerned about the great disparity in price between the two depositions, Plaintiffs were unable to negotiate reasonable terms as to the Edwards deposition. Thus, it is still a cost incurred by Plaintiffs at trial, and therefore will be awarded.

 

 

III. CONCLUSION

In consideration of the above reasoning, the Court in its discretion finds that Architectural Contractors, Inc.’s and The Cincinnati Insurance Company, Inc.’s Motion for Costs and Prejudgment Interest (Doc. 47) is GRANTED IN PART AND DENIED IN PART as follows: Schilli is ordered to pay Plaintiffs $2,840.45 in costs and $15.83 in prejudgment interest. Judgment will enter concurretly with this Order.

 

IT IS SO ORDERED.

 

 

 

Footnotes

 

1

 

The Court arrives at this amount by making the following calculations: 0.0016/365= daily rate; daily rate x $6375.76 = daily interest; daily interest x 365 days (date from May 23, 2013 through May 23, 2014) = $10.62; $6375.76 + 10.20 = $6385.96 for the first year plus interest. Next the Court makes the following calculations to determine the remaining interest: 0.0016/365 = daily rate; daily rate x $6385.96 = daily interest; daily interest x 201 days (date from May 23, 2014 through December 10, 2014)= $5.63. Total = $15.83.

 

 

 

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