Opinion
03 Civ. 7942 (DFE)
May 17, 2004
OPINION AND ORDER
Plaintiff 601 West Associates LLC ("601 West" or "plaintiff") is the owner of the Starrett Lehigh Building at 601 West 26th Street. (Compl. Exh. 1A.) Defendant Kleiser-Walczak Construction Co. is a California corporation that "specializes in the production of computer-generated animation, visual effects and live action for feature films, special venue attractions, television, advertising and interactive projects." (2/13/04 Galano Aff. ¶ 3.) On May 1, 1999, defendant entered into an 8-year lease with plaintiff for part of the 17th floor of 601 West 26th Street. (Compl. ¶ 5.) In February 2000, defendant stopped paying its rent because of an economic downturn in its industry; eventually it laid off its entire New York based staff and ceased occupying the premises. (Compl. ¶ 6; 2/13/04 Galano Aff. ¶ 3.) In July 2002, plaintiff re-rented the premises. (Compl. Exh. E.) After numerous attempts to collect the outstanding rental arrears, plaintiff brought this action in our Court. (Compl. ¶¶ 10-13.)
In December 2003, the parties consented to have the case assigned to me for all purposes. On January 27, 2004, I held a settlement conference, but the parties did not settle.
On February 5, 2004, plaintiff moved for summary judgment, alleging that defendant owes it $172,037.65 in unpaid rent, plus interest at 9% per annum from November 1, 2000, plus attorneys' fees of $57,333.00. It characterizes the $57,333.00 as "33.33% of the principal sum due." (2/4/04 Merlis Aff. ¶ 8.) By my arithmetic, the figure would be a few dollars higher.
On February 13, 2004, defendant served its opposition papers. In its attorney's affidavit, defendant concedes that it owes plaintiff $172,037.65 plus interest at 9% per annum starting from November 1, 2000. (The November 1, 2000 start date is not explained to me, but it is undisputed.) Defendant says that the only disputed issue is whether plaintiff's claim for $57,333.00 in attorneys' fees is reasonable. Defendant says that the claimed amount "is an unreasonable and excessive fee based on . . . the non-complexity of this case." Mr. Galano's affidavit noted that the moving papers had submitted no time entries from plaintiff's two attorneys (Mitchell Merlis and Vincent Lentini), and no explanation of what work they had performed.
On February 23, 2004, Mr. Lentini submitted a 5-page reply affirmation, which estimated that he and Mr. Merlis had worked a total of 100 hours, and he described that work.
For the reasons discussed below, I award plaintiff $172,037.65, plus interest at 9% per annum, starting from November 1, 2000, plus attorneys' fees in the amount of $11,250.00.
DISCUSSION
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment will be granted only when there are no genuine issues of material fact and the moving party is entitled to a judgment as a matter of law. The Court will construe the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The moving party bears the burden of demonstrating that no genuine issues of material fact exist, and all inferences and ambiguities will be resolved in favor of the non-moving party. Once the moving party has provided sufficient evidence to support a motion for summary judgment, the non-moving party must set forth specific facts that show that there is a genuine issue for trial. Jones v. New York City Housing Authority, 2001 WL 406180, at *5 (S.D.N.Y. Apr. 20, 2001) (Kaplan, J.)(Eaton, M.J.); Winkfield v. City of New York, 1999 WL 1191544, at *2 (S.D.N.Y. Dec. 15, 1999) (Baer, J.).
As noted above, the defendant concedes that the only disputed issue is whether plaintiff's claim for $57,333.00 in attorneys' fees is reasonable. I find that it is not.
Plaintiff's Notice of Motion annexes an affirmation from a Manhattan attorney, Mitchell Merlis, and an affirmation from Vincent Lentini, a Garden City attorney who says he was of counsel to Mr. Merlis. Mr. Merlis's affirmation, at ¶ 4, says:
The Plaintiff purchased the Building in 1998. Since that time, my firm has handled all legal matters for the Plaintiff regarding the Building and its tenants which matters can be delineated in two categories: (1) landlord-tenant and dispossess actions for which my firm has billed the Plaintiff at an hourly rate of between $250.00 to $300.00 per hour, and (2) collection matters regarding collection of past due rents and/or damages for breach of lease for which my firm has been retained by the Plaintiff on a 33.33% contingency fee basis plus costs and disbursements.
Annexed as Exhibit 6 is a June 4, 2003 retainer agreement that says:
This letter is to confirm that 601 West Associates, LLC has retained the undersigned Attorney [Mr. Merlis] to represent the Limited Liability Company, Landlord/Owner with respect to the outstanding rental arrears/collection matter involving the above referenced Tenant. As you know, I have been involved in this matter since November of 2000 and have issued previous written Demands and have had other correspondence and contact with the Tenant and its representatives.
* * *
The Retainer in this matter is agreed upon in the amount of a one third (33%) contingency collection fee of the amount collected similar to the ones we have had in the past for the other collection cases in the building which I have handled over the past four or five years.
* * *
Please be advised that in the event of litigation which could result in an Appeal, that my hourly billing rate will be $300 per hour for Appellate work. . .
(Notice of Motion, Exh. 6.)
To support its argument that defendant is responsible for paying plaintiff's legal fees, plaintiff refers to the lease's paragraphs 19, 57 and 70. Paragraph 57 merely discusses late fees. Paragraph 19 says (with my emphasis underlined) :
If Owner, . . . in connection with any default by Tenant: in the covenant to pay rent hereunder, makes any expenditures or incurs any obligations for the payment of money, including but not limited to reasonable attorney's fees, in instituting, prosecuting or defending any action or proceedings, and prevails in any such action or proceeding, then Tenant will reimburse Owner for such sums so paid or obligations incurred with interest and costs.
Paragraph 70.1 says (with my emphasis underlined) that in the event of a legal action brought by the plaintiff against the defendant where plaintiff prevails, the defendant:
hereby agrees to pay, as Additional Rental, all reasonable attorneys' fees and disbursements (and all other court costs or expenses of legal proceedings) which Landlord may incur. . .
Plaintiff claims that:
. . . [W]here an attorney is retained by a party on a one third contingency fee basis, an award of attorneys['] fees based on 33.33% of the amount which the Defendant owes the Plaintiff is not unreasonable and is in fact in "line with the kind of fee that plaintiff would normally anticipate paying for collecting a defaulted account". See, Lake Steel Inc. v. Imperial Linen Supply Co., Inc.[,] 60 A.D.2d 994 (4th Dept. 1978) [, appeal denied 44 N.Y.2d 643, 405 N.Y.S.2d 1027 (N.Y. 1978)]. See, also A.S.L. Enterprises, Inc. v. Venus Laboratories, Inc.[,] 298 A.D.2d 337 (2nd Dept. 2002).
(2/23/04 Lentini Reply Aff. ¶ 7.)
Since this is a diversity case, I will apply New York law concerning attorney's fees, but it is very similar to federal law. The Appellate Division decisions in Lake Steel and A.S.L. Enterprises do not support plaintiff's argument that a fee of one-third is "reasonable" regardless of the amount of work performed. In those cases, a substantial amount of work had been performed, because both cases were tried to verdict. In both cases, the court read in a requirement of reasonableness, even though the equipment lease in Lake Steel said "all its expenses, including attorney's fees" (with no mention of reasonableness) arid the asset-purchase agreement in A.S.L. Enterprises provided for attorney's fees (it is unclear whether it contained any mention of reasonableness).
In Lake Steel, excluding some charges not covered by the lease, the verdict was for $6,006.05. The Appellate Division awarded $2,002 and wrote (with my emphasis):
The testimony of counsel for plaintiffs concerning his fee established it as 25% before trial and one third contingent upon trial. A fee of one third of the recovery after a four-day trial is reasonable.60 A.D.2d at 995.
In determining whether a requested attorney's fee is "reasonable," federal courts uniformly state that the starting point is the "lodestar amount," even in cases where the prevailing party had a contingency fee arrangement with its attorney. Losciale v. Port Authority of New York and New Jersey-, 1999 WL 587928, at *8 (S.D.N.Y. Aug. 4, 1999) (Koeltl, J.). Under the lodestar method, the number of hours reasonably expended on the litigation is multiplied by a reasonable hourly rate for attorneys, paralegals and other legal personnel. Toys "R" Us, Inc. v. Abir, 1999 WL 61817, at *1 (S.D.N.Y. Feb 10, 1999) (Koeltl, J.). The fee applicant bears the burden of submitting contemporaneous time records that support the number of hours worked and the rates claimed, and there is a "strong presumption" that the lodestar amount is reasonable.Id. Once the lodestar is calculated, considerations such as the novelty and difficulty of the issues involved, the particular degree of success obtained, the length of the litigation and the experience and ability of the attorneys may justify an adjustment of the fee upward or downward. Toys "R" Us, 1999 WL 61817, at *2; Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc., 1998 WL 274285, at *2 (S.D.N.Y. May 27, 1998) (Cote, J.), aff'd, 166 F.3d 65 (2d Cir. 1999).
In the case at bar, plaintiff's attorneys each value their time at $300 per hour. Mr. Merlis says he charges the plaintiff at rates varying between $250 and $300 for non-collection work. Mr. Lentini does not tell me the rate he charges to clients. Neither attorney describes his legal education, training or experience. I conducted a Martindale-Hubbell lawyer locator search and learned that Mr. Lentini went to Hofstra University for his B.A. and J.D., and that he was admitted to the New York bar in 1990. There was no information on Mr. Merlis. "The `lodestar figure ` should be `in line with those [rates] prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. `" Luciano v. Olsten Corp., 109 F.3d 111, 115 (2d Cir. 1997) (internal citation omitted). A review of other awards by judges of this Court reveal that the hourly rate for a person who has been practicing for 10 to 15 years is generally between $225.00 and $250.00 per hour. See Kapoor v. Rosenthal, 269 F. Supp.2d 408, 415 (S.D.N.Y. 2003) (Ellis, M.J.) (awarding $225.00 to the principal attorney of a consumer advocacy center who had been practicing law for 10 years and $225.00 to an attorney who had been practicing law for 11 years, and who had focused his practice on consumer rights litigation for the past four years); Losciale, 1999 WL 587928, at *8 (S.D.N.Y. Aug. 4, 1999) (awarding $250.00 to an attorney practicing 15 years, who had litigated a number of cases in state and federal courts). In a recent case before me, Petrovits v. New York City Transit Authority, 2004 WL 42258, at *4 (S.D.N.Y. Jan. 6, 2004), I awarded a rate of $250.00 to an attorney who had 33 years of experience (a one-year clerkship, three years as a litigation associate, and 29 years as a full-time clinical litigation professor.) Moreover, her written submissions were of higher quality than those presented to me by Mr. Merlis and Mr. Lentini. I find that $225 is a reasonable hourly rate for each man.
Mr. Merlis and Mr. Lentini did not submit contemporaneous records. They estimate that they worked a total of 100 hours on this matter. Mr. Lentini's reply affirmation divides their time into four segments:
(i) Landlord/tenant matters. Mr. Merlis estimates that he Expended approximately 10 hours of time" in (1) reviewing the lease, (2) preparing and serving the three-day notice to cure the defendant's defaults in the payment of rent, and (3) discussing the same with his client.
(ii) Post-default matters. Mr. Merlis estimates that he "expended approximately 15 hours of time" in (1) researching the applicable law regarding the defendant's vacating of the premises prior to the expiration of the lease term, (2) advising his client of its options, (3) corresponding with the defendant to advise it of the default and demand payment, and (4) forwarding a final demand letter to defendant after plaintiff re-let the premises.
(iii) Pre-litigation settlement negotiations. Mr. Merlis estimates he "expended approximately 8 hours of time" in written and oral communications with defendant regarding possible settlement of the matter.
(iv) The litigation in our Court. Mr. Lentini estimates that he has "expended approximately 37 hours of time" and that Mr. Merlis has "expended approximately 30 hours of time" in (1) reviewing the lease and file in order to draft the complaint, (2) drafting the complaint, filing it and forwarding it for service, (3) settlement negotiations with defendant's CEO Gordon Dickson, (4) entering a stipulation to extend the defendant's time to answer and "forwarding the same to the court for so-ordering, " (5) appearing before Judge Marrero at a conference, (6) preparing for the settlement conference before me and preparing plaintiff's position letter to me (which was signed by Mr. Lentini), (7) participating in the settlement conference before me (which both attorneys attended), (8) drafting and serving plaintiff's summary judgment motion, (9) reviewing defendant's opposition papers, and (10) preparing plaintiff's reply.
The total of these estimate works out to exactly 100 hours. I find 100 hours to be excessive for several reasons.
First, the attorneys failed to keep contemporaneous records of their time.
Second, most of the work was routine and should have taken less time than the estimates. For example, reviewing the Standard Form of Loft Lease, researching the applicable law, writing the demand letters, attempting to negotiate a settlement, and preparing the complaint. Since 1998, Mr. Merlis has been handling "all legal matters for the Plaintiff regarding the Building," which is the well-known Starrett-Lehigh Building, a large commercial building with many tenants. (See ¶ 4 of 2/4/04 Merlis Affirmation.)
I find that the maximum reasonable number of hours was 50 hours. Multiplying by $225, I arrive at a lodestar fee of $11,250.
The U.S. Supreme Court has held:
The product of reasonable hours times a reasonable rate does not end the inquiry. There remain other considerations that may lead the district court to adjust, the fee upward or downward, including the important factor of the "results obtained."Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S.Ct. 1933, 1940 (1983) (footnote omitted). In the case at bar, the summary judgment motion was largely unsuccessful because plaintiff has not prevailed on the lone disputed issue (whether it is reasonable to impose a 33% fee on defendant). Nevertheless, I have decided not to reduce the lodestar amount, because I realize that plaintiff's attorneys are obliged, under the contingency fee agreement, to conduct future post-judgment collection efforts.
Plaintiff has asked for costs but has not submitted its costs to me. I will award plaintiff costs in the amount of $150 to pay for the filing fee.
CONCLUSION
I grant plaintiff's motion for summary judgment. I award plaintiff: (1) $172,037.65 plus interest at 9% per annum from November 1, 2000, (2) $11,250.00 in attorneys' fees, and (3) $150.00 in costs. I direct the Clerk's Office to enter judgment against the defendant and in favor of plaintiff, and to close this case.