Opinion
22 Civ. 6439 (JGK) (GWG)
04-03-2024
BYLINE BANK, Plaintiff, v. SDS DINING CORP. et al., Defendants. Name Law Firm Requested Hourly Rate
REPORT & RECOMMENDATION
GABRIEL W. GORENSTEIN, United States Magistrate Judge
Plaintiff Byline Bank (“Byline”) brings this action against SDS Dining Corp. (“SDS Dining”), Stephen B. Chopey, and Satish C. Arora for breach of contract. See Complaint, filed Aug. 1, 2022 (Docket #11) (“Compl.”). The defendants have defaulted and Byline seeks a judgment against them for damages, equitable relief, and attorney's fees.
See Plaintiff's Proposed Finding of Fact and Conclusions of Law Regarding Damages, filed Sept. 14, 2023 (Docket # 58) (“Prop. Find.”); Declaration in Support of Elizabeth McKeon, annexed as Ex. B to Prop. Find. (Docket # 58-2) (“McKeon Decl.”); Declaration of Anthony Scali in Support of Plaintiff's Proposed Findings of Fact and Conclusions of Law Regarding Damages, annexed as Ex. C to Prop. Find. (Docket # 58-3) (“Scali Decl.”).
I. BACKGROUND
A. Facts Alleged in the Complaint
On December 31, 2019, Byline granted SDS Dining a $735,000.00 loan through a United States Small Business Administration (“SBA”) loan program. Compl. ¶ 8. The loan was evidenced by SDS Dining executing a loan agreement and a note in favor of Byline. Id. ¶ 9; see Note, annexed as Ex. A to Docket # 1 (Docket # 1-1) (“Note”); Loan Agreement, annexed as Ex. B to Docket # 1 (Docket # 1-2) (“Loan Agreement”). In connection with the loan, defendants Chopey, the president of SDS Dining, see Loan Agreement at 14, and Arora executed guarantees as security for the loan. Compl. ¶¶ 12-13; see Unconditional Guarantee, annexed as Ex. C. to Docket # 1 (Docket # 1-3) (“Chopey Guarantee”); Unconditional Guarantee, annexed as Ex. D. to Docket # 1 (Docket # 1-4) (“Arora Guarantee”). The guarantees provide that Chopey and Arora “unconditionally guarantee[] payment to [Byline] of all amounts owing” under the Note “until the Note is paid in full.” Compl. ¶ 14 (quoting Chopey Guarantee and Arora Guarantee). SDS Dining also executed an SBA Security Agreement, which “granted the Plaintiff a blanket security interest and lien upon all property and assets of SDS [Dining] . . . as identified under the Security Agreement.” Id. ¶ 15; see Security Agreement, annexed as Ex. E to Docket # 1 (Docket # 1-5) (“Security Agreement”). The security interest was perfected on January 14, 2020, with Byline's filing of a UCC-1 financing statement. Compl. ¶ 16.
Byline's initial complaint (Docket # 1) attached exhibits but a refiled version, occasioned because the original complaint lacked a signature, did not include the attachments. See Compl. Nonetheless, in light of the refiled complaint's references to those exhibits, we consider them to be properly before us. See generally DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010) (“[A] district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint.”).
The loan provided that interest accrued monthly at a rate equal to the “prime rate of interest . . . as published in the Wall Street Journal plus 2.75% per annum,” and would “adjust[] every calendar quarter as set forth in the Note.” Id. ¶ 10. The initial interest rate was 7.5% per annum. Id. In addition to charging interest, Byline was entitled to charge a “late fee of up to five percent (5%) of the unpaid portion of the regularly scheduled payment” in the event a payment was more than ten days late. Id. ¶ 11.
Shortly after March 1, 2022, SDS Dining failed to make a required payment. Id. ¶ 17. In April 2022, Byline sent defendants a “default notice,” notifying them that the loan was in default and demanding payment. Id. ¶ 18. After SDS Dining failed to make a payment, Id. ¶ 19, Byline sent another letter to defendants in June 2022 notifying them that the loan had been accelerated and demanding “full payment of all amounts due and owing under the Note,” id. ¶ 20.
Defendants have failed to make any payments since failing to pay the March 1, 2022 installment. Id. ¶¶ 17, 21.
B. Procedural History
On July 29, 2022, Byline initiated the instant action and served the defendants shortly thereafter. See Affidavit of Service, filed Aug. 15, 2022 (Docket # 12); Affidavit of Service, filed Aug. 15, 2022 (Docket # 13); Affidavit of Service, filed Aug. 26, 2022 (Docket # 14). Defendants failed to respond and Byline obtained certificates of default against them. See Clerk's Certificate of Default, filed Mar. 22, 2023 (Docket # 29); Clerk's Certificate of Default, filed Mar. 22, 2023 (Docket # 32); Clerk's Certificate of Default, filed June 27, 2023 (Docket # 48). On July 31, 2023, the district court found that plaintiff was “entitled to a default judgment against all three defendants” and referred the matter to the undersigned “to determine the appropriate damages to be awarded, as well as any other provisions of an appropriate judgment.” Order, July 31, 2023 (Docket # 56) (“Default Order”).
This Court issued a scheduling order directing Byline to file proposed findings of fact and conclusions of law in support of its request for damages, see Scheduling Order for Damages Inquest, filed July 31, 2023 (Docket # 57) (“Scheduling Order”), which it filed on September 14, 2023, see Prop. Find. Byline's submission and the Scheduling Order were served upon defendants, see Affidavit of Service, filed Sept. 14, 2023 (Docket # 59); Affidavit of Service, filed Sept. 14, 2023 (Docket # 60); Affidavit of Service, filed Sept. 14, 2023 (Docket # 61), but defendants did not file any response.
II. LEGAL STANDARD
In light of defendants' default, Byline's properly pleaded allegations in the complaint, except those related to damages, are accepted as true. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ancient common law axiom that a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint.”) (citation and punctuation omitted); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (“In light of [defendant]'s default, a court is required to accept all . . . factual allegations as true and draw all reasonable inferences in [plaintiff's] favor.”).
As to damages, “[t]he district court must [ ] conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999). This inquiry requires the district court to: (1) “determin[e] the proper rule for calculating damages on . . . a claim” and (2) “assess[] plaintiff's evidence supporting the damages to be determined under this rule.” Id.
Byline bears the burden of establishing its entitlement to the amount sought. See Trs. of Local 813 Ins. Tr. Fund v. Rogan Bros. Sanitation Inc., 2018 WL 1587058, at *5 (S.D.N.Y. Mar. 28, 2018). In the case of a default where the defendants have never appeared, “a court may base its determination of damages solely on the plaintiff's submissions.” Id. (citing Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)). While a court must “take the necessary steps to establish damages with reasonable certainty,” Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997), a court need not hold a hearing “as long as it ensure[s] that there [is] a basis for the damages specified in a default judgment,” Fustok, 873 F.2d at 40.
Here, the Court's Scheduling Order notified the parties that the Court might conduct the inquest into damages based upon the written submissions of the parties, but that a party may seek an evidentiary hearing. See Scheduling Order ¶ 3. No party has requested an evidentiary hearing. Moreover, because plaintiff's submissions provide a basis for an award of damages, no hearing is required.
III. DISCUSSION
Byline seeks $712,223.82 in damages associated with unpaid amounts under the loan, consisting of unpaid principal, interest, and late fees, with prejudgment interest applied to the outstanding amount. McKeon Decl. ¶ 10; Prop. Find. at *11. In addition to these damages, Byline seeks $24,021.41 in “collection expenses,” including attorney's fees, and “an Order directing SDS [Dining] and any other persons or firms with control over the Collateral, as defined in the Security Agreement, to immediately surrender and make available the Collateral to Plaintiff.” McKeon Decl. ¶¶ 10-11. We address each of these requests next.
Page numbers identified by “*” refer to the pagination provided by the Court's ECF system.
Byline includes a $30.00 expense for “UCC Release” as a separate line item from “Collection Expenses.” See McKeon Decl. ¶ 10. We include this in “collection expenses.”
A. Contractual Damages
1. Compensatory Damages
To recover damages for breach of contract under New York law, a plaintiff must prove “(1) the existence of a contract, (2) the plaintiff's performance under the contract, (3) the defendant's breach of the contract, and (4) resulting damages.” Eun Suk Cho v. Byung Ki Koo, 164 A.D.3d 1306, 1307 (2d Dep't 2018) (citing Palmetto Partners, L.P. v. AJW Qualified Partners, LLC, 83 A.D.3d 804, 806 (2d Dep't 2011)); accord Deutsche Bank Nat'l Tr. Co. as Tr. for Home Equity Mortg. Loan Asset-Backed Tr. Series INABS 2007-A, Home Equity Mortg. Loan Asset-Backed Certificates Series INABS 2007-A v. Stewart Title Ins. Co., 2024 WL 680157, at *5 (S.D.N.Y. Feb. 20, 2024). Byline has demonstrated each of these elements.
The Loan Agreement provides that “each of the Loan Documents” shall be governed by either Illinois law or “at the sole option of Lender, any jurisdiction in which any collateral securing any of the Loan Documents is located.” Loan Agreement ¶ 8.5. Here, the security for the loan, consisting of assets of SDS Dining, see Security Agreement ¶¶ 3-4, are presumably located in New York inasmuch as SDS Dining is located in New York. See Compl. ¶ 2; id. ¶ 16 (“Plaintiff's security interest in the Borrower's Collateral was perfected by the filing of a UCC-1 Financing Statement in the Office of the New York Secretary of State.”). Because Byline relies on New York law in its submission, see Prop. Find. at *8, we apply New York law.
First, Byline has pleaded facts supporting the existence of a contract given the description in the complaint regarding the execution of the various agreements and guarantees. Compl. ¶¶ 815. See Emerald Town Car of Pearl River, LLC v. Philadelphia Indem. Ins. Co., 2017 WL 1383773, at *7 (S.D.N.Y. Apr. 12, 2017) (complaint sufficient as to existence of a contract where it pleads “factual allegations regarding, inter alia, the formation of the contract, the date it took place, and the contract's major terms”) (citation and internal quotation marks omitted). Second, Byline has submitted copies of the agreements, which are signed by the defendants. See Note (signed by Chopey on behalf of SDS Dining on December 31, 2019); Loan Agreement (same); Chopey Guarantee (signed by Chopey on behalf of himself on December 31, 2019); Arora Guarantee (signed by Arora on behalf of himself on December 31, 2019); Security Agreement (signed by Chopey on behalf of SDS Dining on December 31, 2019).
As to the second element, Byline alleges that it performed its obligations under the contract by making a loan of $735,000 to SDS Dining. See Compl. ¶ 8. As to the third element, Byline has alleged that defendants have failed to make any payments on the loan since missing a required payment in March 2022. See id. ¶ 17.
As to the fourth element, damages, “where the breach of contract was a failure to pay money, the plaintiff is entitled to recover the unpaid amount due under the contract plus interest.” House of Diamonds v. Borgioni, LLC, 737 F.Supp.2d 162, 172 (S.D.N.Y. 2010) (citing Scavenger, Inc. v. GT Interactive Software Corp., 289 A.D.2d 58, 58-59 (1st Dep't 2001)). Here, Byline has submitted a sworn statement with exhibits from Elizabeth McKeon, a Vice President for Byline who is the “Special Asset Group Manager.” See McKeon Decl. McKeon has calculated the amounts due under the loan agreement and has annexed to her statement a document showing the balances due from the beginning of the loan until the time of default. See Payoff Statement, annexed as Ex. 1 to McKeon Decl.; McKeon Decl. ¶ 10. Byline has shown that the damages are as follows:
(1) $644,998.10 for the outstanding principal due on the loan. See McKeon Decl. ¶ 10.
(2) $58,204.45 in unpaid interest as of September 14, 2023. See McKeon Decl. ¶ 10.
(3) $9,021.27 for late fees due on the loan. See McKeon Decl. ¶ 10; Note at 2 (“If a payment on this Note is more than 10 days late, Lender may charge Borrower a late fee of up to 5.00% of the unpaid portion of the regularly scheduled payment.”).
In sum, the damages under the terms of the loan agreement as of September 14, 2023, were $712,223.82. Because Byline has satisfied the elements of a breach of contract claim, it is entitled to these damages.
2. Prejudgment Interest
In a diversity case such as this one, “state law governs the award of prejudgment interest.” Schipani v. McLeod, 541 F.3d 158, 164 (2d Cir. 2008) (citing Baker v. Dorfman, 239 F.3d 415, 425 (2d Cir. 2000)); accord JVM Holdings LLC v. iAERO Group HoldCo 3 LLC, 2023 WL 1809369, at *4 (S.D.N.Y. Jan. 26, 2023), adopted by 2023 WL 3852400 (S.D.N.Y. June 6, 2023). “New York courts have long held that when an agreement involving an indebtedness ‘provides that the interest shall be at a specified rate until the principal shall be paid, then the contract rate governs until payment of the principal, or until the contract is merged in a judgment.'” NML Capital v. Republic of Argentina, 17 N.Y.3d 250, 258 (N.Y. 2011) (emphasis omitted) (quoting O'Brien v. Young, 95 N.Y. 428, 430 (N.Y. 1884)); see Yellow Book of New York, L.P. v. Cataldo, 81 A.D.3d 638, 640-41 (2d Dep't 2011) (requiring award of 18% interest rate contained in contract); Astoria Fed. Sav. & Loan Ass'n v. Rambalakos, 49 A.D.2d 715, 716 (2d Dep't 1975) (where the contract provides an interest rate, “the contract rate, rather than the statutory rate, governs the rate of interest after maturity and before judgment”); accord Wistron NeWeb Corp. v. Genesis Networks Telecom Servs., LLC, 2023 WL 5211352, at *4 (S.D.N.Y. Aug. 14, 2023). “Thus, inclusion of a clause directing that interest accrues at a particular rate ‘until the principal is paid' (or words to that effect) alters the general rule that interest on principal is calculated pursuant to New York's statutory interest rate after the loan matures or the debtor defaults.” NML Capital, 17 N.Y.3d at 258-59.
As noted, Byline has provided evidence that the total amount of interest due on the loan as of September 14, 2023, the date Byline filed its proposed findings of fact, was $58,204.45. See McKeon Decl. ¶¶ 10-11. In addition to this amount, Byline seeks $110.44 per day until judgment is entered, which represents the contractual interest rate calculated on a per diem basis. See id. ¶ 11. Given the Note allows for interest to accrue on any “unpaid principal balance, and all other amounts required by [the] Note,” see Note at 1, Byline is entitled to prejudgment interest of $110.44 per day from September 14, 2023, until judgment is entered.
B. Attorney's Fees
“Where attorneys' fees are provided for by a provision of a contract, such a provision is enforceable under New York law and courts ‘will order the losing party to pay whatever amounts have been expended . . . so long as those amounts are not unreasonable.'” Griffen Security, LLC v. Citadel Car Alarms, LLC, 2020 WL 3264173, at *2 (S.D.N.Y. June 17, 2020) (quoting F.H. Krear & Co. v. Nineteen Named Trs., 810 F.2d 1250, 1263 (2d Cir. 1987)). As the Second Circuit noted in Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182 (2d Cir. 2008), “[t]he most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” Id. at 186 (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). This calculation yields a “presumptively reasonable fee” and is commonly referred to as the “lodestar.” Arbor Hill, 522 F.3d at 183. The same principle has been applied to awards of contractual attorney's fees. See Wells Fargo Bank, N.A. v. Bivona & Cohen, P.C., 2016 WL 2745847, at *5 (S.D.N.Y. May 11, 2016) (“When awarding attorney's fees pursuant to the provisions of a contract, courts evaluate the reasonableness of the fee using the lodestar method.”) (quoting and citing Sidley Holding Corp. v. Ruderman, 2010 WL 963416, at *1 (S.D.N.Y. Mar. 15, 2010)), adopted by 2016 WL 3098843 (S.D.N.Y. June 1, 2016); CARCO GROUP, Inc. v. Maconachy, 718 F.3d 72, 86 (2d Cir. 2013) (“[T]he touchstone for an award of attorneys' fees pursuant to a contract is reasonableness.”).
Here, Byline seeks attorney's fees and costs in the amount of $22,219.41. See McKeon Decl. ¶ 12. The fees are associated with work done by two law firms: Hinshaw & Culbertson LLP (“Hinshaw & Culbertson”) and Chuhak & Tecson, P.C. (“Chuhak & Tecson”). See Prop. Find. at *10. As to Byline's entitlement to these fees, the Loan Agreement provides that SDS Dining must
promptly reimburse Lender for any and all reasonable expenses, fees and disbursements, including reasonable attorneys' fees, incurred in connection with
the preparation, interpretation and performance of this Loan Agreement, the Loan Documents and any instruments or documents related thereto, and all costs and expenses of collection of the Loan made hereunder or any loans made hereinafter, including reasonable attorneys' fees, whether or not suit is filed or for the pursuance of, or defense of, any litigation, appellate, bankruptcy or insolvency proceeding.Loan Agreement ¶ 3.3. Similarly, the unconditional guarantees signed by Chopey and Arora provide that they are liable for reasonable attorney's fees. See Chopey Guarantee ¶ 9; Arora Guarantee ¶ 9. Thus, Byline is entitled to reasonable attorney's fees.
1. Reasonable Number of Hours Expended
Under New York law, the party seeking a fee “bears the burden of showing the reasonableness of the fee by providing definite information regarding the way in which time was spent.” Flemming v. Barnwell Nursing Home & Health Facilities, Inc., 56 A.D.3d 162, 164-65 (3d Dep't 2008), aff'd, 15 N.Y.3d 375 (N.Y. 2010).
Here, Byline has submitted a series of invoices and time records related to work performed by Hinshaw & Culbertson and Chuhak & Tecson. See Scali Decl. at *5-44 (Exhibit 1); McKeon Decl. at *11-18. Byline also provides information on Hinshaw & Culbertson's billing, such as the background of the attorneys responsible for the work performed. See Scali Decl. ¶ 6. As for Chuhak & Tecson, the Court has been provided with only the initials of the billing individuals.
Byline has submitted the following hours:
See Scali Decl. ¶ 4; McKeon Decl. at *11-18. The work performed by Hinshaw & Culbertson generally consists of work done in connection with (1) initiating this case (i.e., drafting the complaint and serving the parties), (2) the motion for default judgment and the damages inquest, and (3) monitoring SDS Dining's bankruptcy case and providing updates to their client and the district court. See Scali Decl. at *5-44. As an initial matter, all three categories of work are recoverable under the contract, which provides that defendants are responsible for “all costs and expenses of collection of the Loan.” Loan Agreement ¶ 3.3; see Chopey Guarantee ¶ 9 (“Guarantor promises to pay all expenses Lender incurs to enforce this Guarantee, including, but not limited to, attorney's fees and costs.”); Arora Guarantee ¶ 9 (same). As to the bankruptcy-related work, the entries largely appear to be for work done in connection with this case - that is, providing updates to the district court on the status of the bankruptcy proceedings - rather than for work done in the bankruptcy itself. However, even entries for work done in the bankruptcy case are recoverable given the language in the contract that permits recovery for collection costs. See BankUnited, N.A. v. Blue Wolf Invs., LLC, 2019 WL 3416084, at *9 (S.D.N.Y. July 1, 2019) (attempts to collect on the loan - including pre-litigation bankruptcy proceedings - recoverable given contracts “provide for the reimbursement of attorneys' fees ‘in the collection of all or any portion of the Guarantor's obligations . . . .'”), adopted by 2019 WL 3409398 (S.D.N.Y. July 26, 2019); Knox v. John Varvatos Enterprises, Inc., 544 F.Supp.3d 384, 387 (S.D.N.Y. 2021) (“[C]ase law reflects that attorney's fees may be awarded for collection activities, including litigation in bankruptcy court, where the judgment debtor has declared bankruptcy.”). After reviewing the Hinshaw & Culbertson's billing records, the Court concludes that the requested hours were reasonably expended. See Scali Decl. at *5-44.
Name
Law Firm
Hours
Sullivan
Hinshaw & Culbertson
4
Scali
Hinshaw & Culbertson
37
Briganti
Hinshaw & Culbertson
9.5
Alexis
Hinshaw & Culbertson
1.6
Husson
Hinshaw & Culbertson
1.4
Landon
Hinshaw & Culbertson
0.2
“EMB”
Chuhak & Tecson
1.6
“MJC”
Chuhak & Tecson
4.1
TOTAL
59.4
The time entries for Chuhak & Tecson reflect that the firm primarily worked on the preparation of a “demand letter” and an “acceleration letter.” See McKeon Decl. at *11-18; see Letter, annexed as Ex. G to Docket # 1 (Docket # 1-7); Letter, annexed as Ex. H to Docket # 1 (Docket # 1-8). Such work represents “costs and expenses of collection of the Loan,” Loan Agreement ¶ 3.3, and are therefore recoverable under the terms of the contract.
Accordingly, we find that the hours expended are reasonable.
2. Reasonable Hourly Rates
New York law provides that
[i]n determining reasonable compensation for an attorney, the court must consider such factors as the time, effort, and skill required; the difficulty of the questions presented; counsel's experience, ability, and reputation; the fee customarily charged in the locality; and the contingency or certainty of compensation. While a hearing is not required in all circumstances, the court must possess sufficient information upon which to make an informed assessment of the reasonable value of the legal services rendered. There must be a sufficient affidavit of services, detailing the hours reasonably expended and the prevailing hourly rate for similar legal work in the community.Citicorp Tr. Bank, FSB v. Vidaurre, 155 A.D.3d 934, 935 (2d Dep't 2017) (citations and internal punctuation altered).
Here, six individuals from Hinshaw & Culbertson have performed work on this matter: four attorneys, Peter Sullivan, Anthony Scali, Dana Briganti, and Heather Alexis, and two persons “provid[ing] paralegal and legal administrative support services,” Nichole Husson and Samantha Landon. Scali Decl. ¶¶ 3-6. As for Chuhak & Tecson, two individuals have performed worked. However, we are only given their initials and have been provided no other information about them. The hourly rates each individual seek are as follows:
See Scali Decl. ¶ 4; McKeon Decl. at *11-18.
Name
Law Firm
Requested Hourly Rate
Sullivan
Hinshaw & Culbertson
$385
Scali
Hinshaw & Culbertson
$350
Briganti
Hinshaw & Culbertson
$350
Alexis
Hinshaw & Culbertson
$350
Husson
Hinshaw & Culbertson
$140
Landon
Hinshaw & Culbertson
$140
“EMB”
Chuhak & Tecson
$390
“MJC”
Chuhak & Tecson
$357
Scali's declaration provides only the barest support for the notion that these rates are “the prevailing hourly rate for similar legal work in the community,” Sterling Nat'l Bank v. Alan B. Brill, P.C., 186 A.D.3d 515, 520 (2d Dep't 2020), consisting essentially of the conclusory statement that it is his “opinion that the rates charged and hours expen[ded] . . . are reasonable and commensurate with peer firms in the industry located in New York City,” Scali Decl. ¶ 7; see Major League Baseball Properties, Inc. v. Corporation de Television y Microonda Rafa, S.A., 2021 WL 56904, at *3 (S.D.N.Y. Jan. 7, 2021) (criticizing a similarly conclusory statement). Scali does provide the bar admission dates for the four Hinshaw & Culbertson attorneys: Sullivan (1983, Illinois), Scali (2008, New York), Briganti (2009, New York), and Alexis (2007, Louisiana). Additionally, Scali indicates that he is a partner at Hinshaw & Culbertson. See Scali Decl. ¶ 1. No information is provided on the individuals performing work at Chuhak & Tecson. The billing records do not even identify them by name.
Turning to case law, the rate awarded to partners in breach of contract suits has recently ranged from $350 to $650. Major League Baseball Properties, Inc., 2021 WL 56904, at *4; see Hitachi Data Sys. Credit Corp. v. Precision Discovery, Inc., 2020 WL 5731953, at *2 (S.D.N.Y. Sept. 24, 2020) ($335 to $525 for three partners); Abraham v. Leigh, 2020 WL 5512718, at *10 (S.D.N.Y. Sept. 14, 2020) (approving rate of $435 in 2019 for junior partner in “complex commercial disputes”), reconsideration denied, 2020 WL 5836511 (S.D.N.Y. Oct. 1, 2020); Precise Leads, Inc. v. Nat'l Brokers of Am., Inc., 2020 WL 736918, at *7 (S.D.N.Y. Jan. 21, 2020) (awarding partner rate of $512.50 in breach of contract action and noting that “other courts in this district awarding attorneys' fees in straightforward breach of contract actions have found partner rates in the range of $375 to $650 to be reasonable”); Euro Pacific Capital, Inc. v. Bohai Pharmaceuticals Group, Inc., 2018 WL 1229842, at *7-8 (S.D.N.Y. Mar. 9, 2018) ($375 for shareholder and co-chair of firm practice group), adopted by 2018 WL 1596192 (S.D.N.Y. Mar. 28, 2018); Carlton Group, Ltd. v. Par-La-Ville Hotels & Residences Ltd., 2016 WL 3659922, at *3 (S.D.N.Y. June 30, 2016) ($450 reasonable for “experienced partners and senior attorneys”); 615 Bldg. Co. LLC v. Rudnick, 2015 WL 4605655, at *3 (S.D.N.Y. July 31, 2015) ($316 to $475 for partners characterized as the “mid-range of acceptable billing rates approved in this district”) (internal quotation marks omitted); Mazzei v. Money Store, 2015 WL 2129675, at *3 (S.D.N.Y. May 6, 2015) ($450 for attorneys with fifteen to twenty years of experience in complex litigation); Rhodes v. Davis, 2015 WL 1413413, at *3 (S.D.N.Y. Mar. 23, 2015) (in breach of contract action, awarding rates of “$450 per hour (for a founding partner with approximately forty years of practice)”), affd, 628 Fed.Appx. 787 (2d Cir. 2015). As for associates, courts have awarded rates far lower. See, e.g., Winklevoss Capital Fund, LLC v. Shrem, 360 F.Supp.3d 251, 257 (S.D.N.Y. 2019) ($265 for junior associate); Hitachi Data Sys. Credit Corp., 2020 WL 5731953, at *2 ($160 for associates in breach of contract suit); Rhodes, 2015 WL 1413413, at *3 ($300 “for an associate with approximately ten years of practice”). Finally, in regard to individuals performing administrative and paralegal support services, courts in this district award rates between $75 to $200, depending on the individual's experience. See KCG Holdings, Inc. v. Khandekar, 2020 WL 7053229, at *6 (S.D.N.Y. Dec. 2, 2020) (finding $75 is a “a standard paralegal rate in this district”), adopted by 2021 WL 623927 (S.D.N.Y. Feb. 17, 2021); JTH Tax LLC v. Sanchez, 2023 WL 6813449, at *6 (S.D.N.Y. Oct. 16, 2023) (approving a rate of $125 per hour), adopted by 2023 WL 8936352 (S.D.N.Y. Dec. 27, 2023); Glob. Ref. Grp., Inc. v. PMD Analysis Inc., 2023 WL 8895869, at *4 (S.D.N.Y. Dec. 8, 2023) (“[C]ourts have concluded that $200 per hour is the upper limit for experienced paralegals and $75 per hour is standard.”), adopted by 2023 WL 8893989 (S.D.N.Y. Dec. 26, 2023).
Turning first to the four Hinshaw & Culbertson attorneys, the Court is told only that Scali is a partner at the firm. Scali's requested rate of $350 per hour is at the lowest end of rates typically award to partners in breach of contract cases and thus is reasonable. As to the other three attorneys - Sullivan, Briganti, and Alexis - we are told that they have been admitted to the bar approximately 40, 14, and 16 years respectively. See Scali Decl. ¶ 6. Given the uncertain partnership status of these three attorneys, but also considering the lengthy period of practice, we find the requested rates appropriate as they are “at the highest end of associate rates and also within the range awarded for partners.” Brunswick Recs. Corp. v. Lastrada Ent. Co., 2023 WL 8703705, at *5 (S.D.N.Y. Dec. 15, 2023), adopted by 2024 WL 404340 (S.D.N.Y. Feb. 2, 2024); see Tabatznik v. Turner, 2016 WL 1267792, at *10-12 (S.D.N.Y. Mar. 30, 2016) (approving an hourly rate of $425 for an associate with seven years of experience); Rubenstein v. Advanced Equities, Inc., 2015 WL 585561, at *16 (S.D.N.Y. Feb. 10, 2015) (approving a rate of $350 for associates with four years of experience).
As for Husson and Landon, Byline does not provide any information on their background, identifying them only as “paralegal and legal administrative support.” Scali Decl. ¶ 6. Absent more information, the Court is “in no position to determine whether, and to what degree, the unique skills or experience of a[] . . . paralegal weighs in favor of deviating from the norms governing reasonable rates.” Gonzalez v. Scalinatella, Inc., 112 F.Supp.3d 5, 29 (S.D.N.Y. 2015). Thus, a rate of $75 per hour is appropriate. See Khandekar, 2020 WL 7053229, at *6 (“As for the paralegals, because this court has not been provided with any evidence justifying a significantly higher rate for their work in this case, an across the board reduction is warranted to $75 per hour for all paralegal work, a standard paralegal rate in this district.”).
As for the two individuals from Chuhak & Tecson, not only has the Cour not been informed of their names, but we have also not been informed if they are even attorneys. Accordingly, we will award rates at the lowest paralegal rate of $75.
Accordingly, Byline should be awarded the following attorney's fees:
Name
Law Firm
Hours
Rate
Total
Sullivan
Hinshaw & Culbertson
4
$385.00
$1,540.00
Scali
Hinshaw & Culbertson
37
$350.00
$12,950.00
Briganti
Hinshaw & Culbertson
9.5
$350.00
$3,325.00
Alexis
Hinshaw & Culbertson
1.6
$350.00
$560.00
Husson
Hinshaw & Culbertson
1.4
$75.00
$105.00
Landon
Hinshaw & Culbertson
0.2
$75.00
$15.00
“EMB”
Chuhak & Tecson
1.6
$75.00
$120.00
“MJC”
Chuhak & Tecson
4.1
$75.00
$307.50
TOTAL
59.4
$18,922.50
3. Costs
In addition to attorney's fees, Byline seeks $3,342.71 in costs. See Scali Decl. ¶ 8 (providing $1,278.44 in costs billed by Hinshaw & Culbertson); McKeon Decl. at *14, *17-18 (providing $254.27 in costs billed by Chuhak & Tecson); id. ¶ 12 (providing a total of $1,810.00 in costs associated with appraisal, “site visit/inspection,” and UCC release). As for the $1,532.71 in costs billed by Hinshaw & Culbertson and Chuhak & Tecson, these costs consist of filing fees, legal research/PACER, service fees, and FedEx charges. See Scali Decl ¶ 8; McKeon Decl. at *14, *17-18. Both law firms' invoices document these costs, and such costs are reasonable and recoverable. See Griffen Sec., LLC, 2020 WL 3264173, at *6 (awarding costs for “FedEx charges, PACER charges, fees to be admitted pro hac vice, . . . process server fees, filing fees, and fees to deliver courtesy copies to the Court”); U.S.A. Famous Original Ray's Licensing Corp. v. Famous Ray's Pizza Buffet Inc., 2013 WL 5363777, at *8 (S.D.N.Y. Sept. 26, 2013) (awarding costs for filing fees, copies, research, travel, and services of process), adopted by 2013 WL 5664085 (S.D.N.Y. Oct. 17, 2013). As to the remaining costs - consisting of “appraisal,” “site visit/inspect” and “UCC release” costs and totaling $1,810.00 - Byline submits a sworn declaration stating that such amounts were expended in connection with the loan, see McKeon Decl. ¶ 12, and the loan agreement provides that defendants are liable for such costs, see Loan ¶ 5.4; Note ¶ 6(B). Thus, such costs are recoverable.
Accordingly, Byline is entitled to $3,342.71 in costs.
C. Enforcement of the Security Agreement
In addition to monetary damages, Byline seeks
an Order directing SDS and any other persons or firms with control over the Collateral, as defined in the Security Agreement, to immediately surrender and make available the Collateral to Plaintiff, including, but not limited to (i) all inventory and accounts and other rights to payment of SDS; and (ii) all equipment, inventory, accounts, instruments, chattel paper, general intangibles, documents, and deposit accounts ....Prop. Find. at *11. Under the New York Uniform Commercial Code, “[a] security interest is enforceable against the debtor and third parties with respect to the collateral only if . . . the debtor has authenticated a security agreement that provides a description of the collateral.” N.Y. U.C.C. § 9-203(b)(3)(A); see also N.Y. U.C.C. § 9-102(a)(7) (“‘Authenticate' means . . . to sign.”); accord Bank of Am., N.A. v. Ave. Imaging LLC, 2023 WL 3818549, at *6 (S.D.N.Y. June 5, 2023). “[A]fter a borrower defaults, a secured party may reduce a claim to judgment, foreclose, or otherwise enforce the claim or security interest by any available judicial procedure,” including by “tak[ing] possession of the collateral.” Bank of Am., N.A. v. City View Blinds of N.Y., Inc., 2022 WL 580764, at *5 (S.D.N.Y. Feb. 25, 2022) (citations, internal quotation marks and alterations omitted). “Additionally, ‘New York U.C.C. § 9-610 authorizes a secured party to dispose of its collateral, including by selling it, upon a default by the debtor.'” Id. (quoting Rapillo v. CitiMortgage, Inc., 2018 WL 1175127, at *7 (E.D.N.Y. Mar. 5, 2018)).
The Security Agreement provides that “Debtor and Secured Party agree that this Agreement will be governed by the laws of the jurisdiction where the Debtor is located, including the UCC as in effect in such jurisdiction and without reference to its conflicts of laws principles.” Security Agreement ¶ 10. As SDS Dining is located in New York, see Compl. ¶ 2, New York's Uniform Commercial Code governs.
Here, Byline has provided a signed security agreement “grant[ing] the Plaintiff a blanket security interest and lien upon all property and assets of SDS [Dining],” Compl. ¶ 15; see Security Agreement, and a recorded UCC-1 financing statement, see UCC-1 Financing Statement, annexed as Ex. F to Docket # 1 (Docket # 1-6); Compl. ¶ 16. Because Byline has shown that SDS Dining defaulted under the loan, “the UCC enables [Byline] to take possession of the Collateral and dispose of it . . . .” Bank of Am., N.A. v. Vanderbilt Trading USA LLC, 2019 WL 8807747, at *7 (E.D.N.Y. Sept. 9, 2019); see Fonz, Inc. v. City Bakery Brands, LLC, 2021 WL 5235190, at *4 (S.D.N.Y. Sept. 27, 2021) (“Because Plaintiff has established [defendant]'s failure to pay and consequent default, Plaintiff has demonstrated its right to foreclose on the collateral.”), adopted by 2021 WL 4803821 (S.D.N.Y. Oct. 13, 2021); accord 358 & 360 Atl. Ave. Holdings, LLC v. 358 Atl. Realty LLC, 2023 WL 2969297, at *7 (E.D.N.Y. Mar. 1, 2023). Thus, Byline is entitled to a transfer of the secured collateral.
Conclusion
For the foregoing reasons, judgment should be entered against SDS Dining Corp., Stephen B. Chopey, and Satish C. Arora in favor of Byline Bank in the amount of $734,489.03 ($644,998.10 in principal plus $9,021.27 in late fees plus $58,204.45 in interest calculated until September 14, 2023, plus $18,922.50 in attorney's fees plus $3,342.71 in costs). In addition to this amount, the Clerk of Court should calculate and award interest in the amount of $110.44 per day from September 14, 2023, until the date judgment is entered.
In addition, the judgment should provide that defendants shall immediately surrender and make available to Byline Bank (i) all inventory and accounts and other rights to payment of SDS; and (ii) all equipment, inventory, accounts, instruments, chattel paper, general intangibles, documents, and deposit accounts belonging to SDS Dining.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See also Fed.R.Civ.P. 6(a), (b), (d). A party may respond to any objections within 14 days after being served. Any objections and responses shall be filed with the Clerk of the Court. Any request for an extension of time to file objections or responses must be directed to Judge Koeltl. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).