Opinion
C.A. Nos. 20281, 20285.
Submitted: March 1, 2004.
Decided: May 20, 2004. Revised: May 24, 2004.
Allen M. Terrell, Jr., Esquire, Brock E. Czeschin, Esquire, RICHARDS, LAYTON FINGER, Wilmington, Delaware; R. Laurence Macon, Esquire, Tonya P. Johannsen, Esquire, Eric Gambrell, Esquire, Jeffrey Goldfarb, Esquire, AKIN GUMP STRAUSS HAUER FELD LLP, Dallas, Texas, Attorneys for the Plaintiffs.
Jay Eisenhofer, Esquire, GRANT EISENHOFER, P.A., Wilmington, Delaware; William A. Brewer III, Esquire, John W. Bickel II, Esquire, Michael S. Gardner, Esquire, BICKEL BREWER, Dallas, Texas, Attorneys for the Defendants.
MEMORANDUM OPINION
I.
The defendants seek an award of attorneys' fees and costs amounting to $238,094, paid to two law firms — Bickel Brewer and Grant Eisenhofer — as a result of two short-lived Delaware litigations. The plaintiffs filed both those actions in this court but then moved to voluntarily dismiss them when it became apparent that the scope of the litigation in Delaware might expand to mirror that of already pending litigation in Texas.
The court granted the motions to dismiss over the defendants' objection, but conditioned dismissal, in accordance with Court of Chancery Rule 41(a)(2), on the payment of the defendants' reasonable attorneys' fees and expenses actually and necessarily incurred in these actions. The court instructed the parties that it would consider awarding fees and expenses roughly as follows: (1) those incurred by the defendants' Delaware counsel, Grant Eisenhofer; (2) those incurred in answering the complaints; and (3) those incurred in responding to the motions to dismiss. The record was unclear at the time of the hearing as to whether the defendants should be entitled to the fees and expenses incurred in formulating the counterclaims in the Delaware actions. However, the court told the parties that claims asserted in Delaware as counterclaims would be excluded if they were already asserted or likely to be asserted in the Texas litigation.
Trial Tr. at 8-9.
Id. at 9.
Id.
The plaintiffs challenge a portion of the attorneys' fees sought by the defendants as excessive and/or duplicative of work done in connection with the Texas litigation. Also, the plaintiffs argue that the defendants have failed to provide sufficient explanation for many of the fees charged by Bickel Brewer in the Delaware litigation.
For the reasons set forth herein, the court grants the defendants' request for attorneys' fees in the amount of $85,476 (as billed by Bickel Brewer) and $41,181 (as billed by Grant Eisenhofer).
II.
In April 2003, the plaintiffs filed Richmont Capital Partners I, L.P., et al. v. J.R. Investments Corp. et al., C.A. No. 20281, and Richmont Capital Partners I, L.P. et al. v. Nu-kote Acquisition Corporation, C.A. No. 20285 (the " Nu-kote action"), seeking a legal decision on certain narrow issues involving the interpretation of a Delaware partnership agreement. The issues were related to litigation already in progress in Texas. Acting for the defendants and related parties, Bickel Brewer prepared and submitted a complaint in intervention in the Nu-kote action on July 2, 2003, asserting claims similar to those that were or would be made in the Texas action. Fearing the expansion of the scope of the actions in Delaware, the plaintiffs promptly moved to voluntarily dismiss. The defendants objected, asserting that dismissal would cause them plain legal prejudice.
The two suits were not consolidated, but for sake of simplicity will be referred to hereinafter as the "Delaware actions."
On October 24, 2003, Bickel Brewer filed on behalf of its clients the original petition in Richmont Financial Services, Ltd. et al. v. Mary Kay Inc., et al., No. 03-11398, in the 44th Judicial District Court of Dallas County, Texas. Goldfarb Aff. Ex. L.
At the hearing, the court granted the motion to dismiss without prejudice, and required the plaintiffs to reimburse the defendants' reasonable attorneys' fees and expenses actually and necessarily incurred in connection with the Delaware actions. The defendants in the Delaware actions now seek to recover $184,360 in attorneys' fees and $6,153 in costs for services provided by Bickel Brewer, and $47,581 for legal fees and costs incurred by their Delaware co-counsel, Grant Eisenhofer. The Bickel Brewer fee request is supported by the affidavit of Michael S. Gardner, Esquire, a partner in that firm, accompanied by a one-page overview of the charges made by the attorneys working on the case. A declaration of Jay W. Eisenhofer, Esquire, provides support for his firm's fee request.
Michael S. Gardner Aff. ¶ 4.
Id., Ex. A.
The overview of charges lists a total of 454 billable hours charged at $240 to $850 by Bickel Brewer attorneys in connection with the Delaware actions, broken down as follows: $21,745 for answering of the Delaware complaint, preparing motions for admission pro hac vice and supporting declarations, and conducting related Delaware procedural research; $92,075 for preparing responses in opposition to motions to dismiss, conducting related research and presenting argument; $3,975 for work done on the counterclaim in the Nu-kote action, pursuing related strategies, and conducting related Delaware procedural research; $40,215 for preparing the motion to join necessary parties, motion to intervene, and conducting related research; $52,700 for William A. Brewer and John W. Bickel's supervision of the above-listed activities; and $6,153 for the travel and lodging expenses for court appearances at the motions to dismiss argument and fees for admissions pro hac vice in Delaware actions. The total Bickel Brewer fees and expenses are $216,863. In his affidavit, Gardner states that certain adjustments were made to the fee to reflect his firm's reasonable billing judgment.
Id.
Id.
Id. at ¶ 23.
The plaintiffs make no objection to Grant Eisenhofer's billings, except for $6,200 charged in connection with the Nu-kote counterclaim, discussed in section III(B)(2) herein. The plaintiffs do object vigorously to Bickel Brewer's billings as excessive and unsupported by the record.
Pls.' Objections to Defs.' Req. for Conditional Att'ys' Fees, at 2.
Id. at 5-15.
III.
A. StandardRule 41(a)(2) governs motions for the voluntary dismissal of a civil action, other than by stipulation of the parties, after an answer or a motion for summary judgment has been filed. Such an action may only be dismissed upon order of the court, which has the power to condition its order upon "such terms and conditions as [it] deems proper." The standard for assessing a request for attorneys' fees is well established. "The Court of Chancery shall make such order concerning costs in every case as is agreeable to equity." "[I]n equity the allowance of costs is largely a matter of discretion." "This discretion is, however, a legal discretion to be exercised, not capriciously or arbitrarily, but in the furtherance of justice."
Ch. Ct. R. 41(a)(2).
10 Del. C. § 5106.
Bodley v. Jones, 65 A.2d 484, 487 (Del.Ch. 1948).
Kennedy v. Emerald Coal Coke Co., 30 A.2d 269 (Del.Ch. 1943).
B. Attorneys' Fees
The court's decision to condition its order granting a voluntary dismissal of the Delaware actions on the payment of defendants' reasonable attorneys' fees and expenses was based on the fact that the plaintiffs filed their actions in this court only after they were becoming enmeshed in litigation in Texas involving aspects of the same complex business dispute. Presumably, they did so because they foresaw an advantage in having an issue of Delaware partnership law decided quickly and in isolation from the rest of the factual and legal issues involved in the case. Moving an aspect of the Texas litigation to Delaware would necessarily impose additional costs on the defendants. The court recognized at the hearing that the filing and later dismissal of the Delaware actions required the defendants to incur certain expenses that would be of no benefit in the prosecution of the related litigation in Texas, and conditioned dismissal of the Delaware actions on the reimbursement of those fees and expenses that were reasonably and necessarily incurred.
At the same time, the court recognized that a substantial portion of the fees and expenses incurred by the defendants in connection with the Delaware actions was the result of a tactical decision made not necessitated by the plaintiffs' actions. Most significantly, the defendants chose to "defend" these actions by trying to draw into Delaware all of the parties and issues already before the Texas courts. Fees and expenses in this aspect of the Delaware actions were not necessarily incurred and will not be awarded.
1. The Answer To The Complaints And Responses To The Motions To Dismiss
The total of Bickel Brewer's fees for answering the Delaware complaint and preparing motions for admission pro hac vice and supporting declarations, as well as for preparing responses in opposition to motions to dismiss and presenting the argument to the court, is $113,820. The plaintiffs' objection to these fees focuses on Bickel Brewer's high hourly rate structure and the large number of attorneys assigned to work on both the answers and the response to the motion to dismiss.
Pls.' Objections to Defs.' Req. for Conditional Att'ys' Fees, at 5-8.
In accordance with the court's earlier ruling, reasonable fees incurred answering the complaints and responding to the motions to dismiss are eligible for compensation. The award of fees and costs must reflect the reasonable value of services and not the amount that was actually billed. The reasonableness of the fees is evaluated under Rule 1.5(a) of the Delaware Lawyers' Rules of Professional Conduct. Factors include, but are not limited to, the time and labor required, the novelty and difficulty of the questions involved, the skill requisite to perform the legal services properly, the fee customarily charged in the locality for similar legal services, the nature and length of the professional relationship with the client, and the experience, reputation, and ability of the lawyer or lawyers performing the services. When considering attorneys' fees, a "court should greet with `healthy skepticism' `a claim that several lawyers were required to perform a single set of tasks and may discount the time for two or three lawyers in courtroom or conference when one would do.'" Courts generally exclude excessive, redundant, duplicative or otherwise unnecessary hours.
Trial Tr., at 9.
Great Am. Indemn. Co. v. State ex. rel. Mills, 88 A.2d 426, 431 (Del. 1952) ("[T]he amount of the fees allowed shall be fixed according to the reasonable worth of the attorneys' services) (emphasis added); see also PVI, Inc. v. Ratiopharm GmbH, 253 F.3d 320, 329-30 (8th Cir. 2001) (interpreting Delaware law and rejecting claim that party may recover everything paid to attorneys).
Van Dorn Retail Mgmt, Inc. v. Jim's Oxford Shop, Inc., 874 F. Supp. 476, 489 (D.N.H. 1994) (citations omitted).
Am. Civil Liberties Union v. Barnes, 168 F.3d 423, 428 (11th Cir. 1999); Judge v. City of Rehoboth Beach, 1994 WL 198700, at *7 (Del.Ch. Apr. 29, 1994) (excluding hours that appeared duplicative).
Here, Bickel Brewer assigned three attorneys to answer the Delaware complaints and prepare motions for admissions pro hac vice. The three Bickel Brewer attorneys worked a total of 59 hours on these tasks. Two of these attorneys and two others worked a total of 223 hours drafting responses to the motions to dismiss — motions that raised no novel issues of law or fact.
Michael S. Gardner Aff., Ex. A.
Giving full consideration Rule 1.5(a) of the Delaware Lawyers' Rules of Professional Conduct, the court finds that an award of the full amount of the fees and expenses requested is not warranted. It is not unusual that cases such as these should require the attention of more than one attorney. Nevertheless, an award of fees and costs pursuant to Rule 41(a)(2) should reflect the reasonable value of services. Taking into account the work done for the four documents and the oral argument, the court will award a blended rate of $403 for 150 hours, for a total of $60,450 for this aspect of the fee request.
The hourly rate used is the weighted average rate of the Bickel Brewer lawyers, other than Messers. Bickel and Brewer, who billed time for work associated with answering the complaints and responding to the motions to dismiss.
2. Preparation Of The Counterclaim
The defendants also request compensation for the preparation of a counterclaim in the Nu-kote action. The defendants request $3,975 for work done by Bickel Brewer and $6,200 for work done by Grant Eisenhofer. The court agrees with the plaintiffs that these amounts should not be allowed. The counterclaims were voluntary in nature and were not necessarily incurred in defense of the Delaware actions.
Pls.' Objections to Defs.' Req. for Conditional Att'ys' Fees, at 14.
3. Preparation Of The Motion To Join And Intervene
The defendants request $40,215 for work done by Bickel Brewer in preparation of the motion to join necessary parties and the motion to intervene, and in conducting related research. The plaintiffs claim that the work performed in Delaware will be duplicated in the Texas litigation and that the hours billed were excessive. For the reasons discussed above, the court will not include these fees in the amount awarded. The motions to join parties and to intervene were made for largely strategic purposes and were not necessarily incurred in defense of the complaints.
4. Supervision Of The Activities By Two Partners
The defendants seek to recover $52,700 in attorneys' fees attributed to the supervision of the Delaware litigation by William A. Brewer III and John W. Bickel II of Bickel Brewer (62 hours at $850). The plaintiffs argue that the request is excessive and duplicative because there were two other partners, James Renard and Michael Gardner, that billed 167 hours for performing services in this case.
Michael S. Gardner Aff., Ex. A.
The court will allow these fees in proportion to the other fees allowed. Since the court has determined to award approximately 38% of the balance of the defendants' fee request, it will also allow $20,026 for the supervisory work of Messrs. Bickel and Brewer.
5. Expenses
The defendants request reimbursement for expenses incurred and charged to the defendants by Bickel Brewer in the amount of $6,153. The plaintiffs argue that the expense of two partners to travel from Dallas to Delaware for the October 15 hearing was unnecessary and excessive. The court agrees that it is unreasonable to require the plaintiffs to pay for these extra travel expenses. The plaintiffs seek a reduction in the expenses requested by the defendants to $5,000, which will be allowed.
IV.
The court stated at the hearing the reasons why the plaintiffs' motion to dismiss should be granted pursuant to Rule 41(a)(2). For the additional reasons discussed in this memorandum opinion, that dismissal will be conditioned on the plaintiffs' payment to the defendants of $85,476 for the fees and expenses billed by Bickel Brewer and $41,181 for the fees and expenses billed by Grant Eisenhofer. The plaintiffs' counsel are directed to submit a form of order within 10 days of the date of this opinion, on notice to the defendants.