Opinion
98 Civ. 6635 (SAS)
January 23, 2001.
David Dunn, Esq., Scott Estes, Esq., Hogan Hartson, LLP, New York, New York, Appearances For Plaintiff.
Eduardo Tabio, Esq., Fox Horan Camerini, LLP, New York, New York, For Defendants.
MEMORANDUM OPINION AND ORDER
I. BACKGROUND
In January 1998, Norwest Financial, Inc. ("Norwest") purchased an Argentine consumer finance company, Finvercon S.A. Compania Financiera from defendants, who remained employed with the company until they were terminated in September 1998. Norwest then sued the defendants seeking, inter alia, damages for defendants' breach of the Stock Purchase Agreement ("SPA") resulting from defendants' failure to pay claimed Credit Losses on demand. Following a nine-day bench trial, I held, in part, that defendants breached the Stock Purchase Agreement when they failed to pay Norwest for the Credit Losses. See Norwest Fin., Inc. v. Fernandez, 86 F. Supp.2d 212 (S.D.N.Y. 2000).
Wells Fargo Financial, Inc. ("Wells Fargo"), Norwest's successor, now seeks supplemental attorneys' fees in the amount of $247,218.75 and costs in the amount of $39,496.14 for additional work performed in the ten-month period from January 1, 2000 through October 31, 2000. See Declaration of David Dunn, plaintiff's attorney, in Support of Plaintiff's Supplemental Application for Attorneys' Fees and Costs ("Dunn. Decl.") ¶¶ 5-6. For the following reasons, defendants are liable to Wells Fargo for attorneys' fees and costs in the additional amount of $137,779.50.
On September 7, 2000, this Court awarded plaintiff attorneys' fees and costs in the amount of $884,879.33 for work performed prior to January 1, 2000. See Norwest Fin., Inc. v. Fernandez, 121 F. Supp.2d 258 (S.D.N.Y. 2000). Familiarity with this Memorandum Opinion and Order is assumed for purposes of this motion.
II. DISCUSSION
The Stock Purchase Agreement, which contractually entitles Wells Fargo to the reimbursement of attorneys' fees, states in relevant part:
Sellers, jointly and severally, will indemnify and hold harmless Buyer, the Company, and their respective representatives, stockholders, controlling persons, and affiliates (collectively, the "Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys' fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Sellers in this Agreement, . . .
(b) any litigation or regulatory proceeding arising directly or indirectly or from or in connection with any representation, warranty or covenant, or guarantee made by Sellers in this Agreement, including, without limitation, any Proceeding regarding Taxes;
(c) any breach by any Seller or any covenant or obligation of such Seller in this Agreement; . . .
(e) any Credit Loss or Noncredit Loss.
§ 12.2 of the SPA, attached as Ex. A to the First Amended Complaint (emphasis added).
The SPA provides for an award of fees regardless of whether Wells Fargo is the prevailing party. There are, however, two requirements before defendants' liability for attorneys' fees attaches: (1) the fees and expenses must relate to a breach of the SPA; and (2) they must be reasonable.
Plaintiff submitted copies of detailed, unredacted invoices rendered by Hogan Hartson [its attorneys] documenting the time spent and expenses incurred during the ten-month period. Wells Fargo was billed on the basis of services provided at fixed hourly rates which were charged at Hogan Hartson's usual and customary rates. Id. ¶ 4. There is nothing in David Dunn's Declaration that would disqualify the fee request on grounds of reasonableness. See Banca Della Svizzera Italiana v. Cohen, 756 F. Supp. 805, 808 (S.D.N.Y. 1991) (reasonableness standard met where attorney's affidavit stated that hourly rates were firm's standard rates and sufficiently documented number of hours billed with a summary description of how those hours were spent).
Because Wells Fargo is only entitled to compensation for work relating to the SPA, the next step is to determine the amount of qualifying work performed during this ten-month period.
In his Declaration, Dunn provides a chart illustrating the total fees charged Wells Fargo from January 1, 2000 to October 31, 2000, the amount of fees unrelated to the SPA, and the amount of fees related to the SPA. See Dunn Decl. ¶ 5. These amounts are $292,473.75, $45,255.00, and $247,218.75, respectively. Id. The amount of fees unrelated to the SPA was determined after Dunn "examined each statement line by line to determine which of [Hogan Hartson's] services rendered to Wells Fargo for the period from January 1, 2000 through October 31, 2000 relate[d] to the SPA." Id. ¶ 4. Dunn then applied the percentage of total fees related to the SPA to total fees charges, 84.5%, to the amount of costs as adjusted for excess photocopying and telecopying costs ($46,740.99). Id. ¶ 6. The resulting amount of costs deemed related to the SPA under this method is $39,496.14. Id. Defendants contend that the work associated with the SPA could not possibly amount to 84.5% of the total work performed since January 1, 2000 and that the 84.5% figure is "inflated." See Memorandum of Law in Opposition to Plaintiff's Supplemental Application for Attorneys' Fees and Costs ("Opp. Mem.") at 3. According to defendants, the work performed since January 1, 2000 relating to the SPA includes, at most, "work performed in connection with the review of claims and accounting records by Mr. Bush, . . ., and Plaintiff's request for prejudgment discovery from the Defendants." Opp. Mem. at 3-4. Furthermore, defendants argue that during the period in question, extensive work was done in the following areas, none of which are compensable:
• Plaintiff's Rule 54(b) motion — according to defendants, the bulk of this motion had to do with employment matters involving the Sellers' Directors Agreements, not the SPA.
• Defendants' appeal to the Second Circuit — defendants' appeal of this Court's ruling concerning the Argentine law applicable to the Sellers' Directors Agreements allegedly necessitated extensive work by both sides.
• Continued work on matters involving the Sellers' Directors Agreements — plaintiff worked on its submission of Letters Rogatory for the certification of the Argentine trial transcript and also noticed the deposition of two of its operatives.
• Plaintiff's new action — even if fees are arguably related to the SPA on this matter, they cannot be included in the instant fee award at this preliminary stage.
Opp. Mem. at 5-6.
I have considered defendants' arguments carefully and I have also reviewed the unredacted time sheets. Based on defendants' arguments and the descriptions provided in the time sheets, I conclude that fifty percent of the time spent by Hogan Hartson was devoted to matters unrelated to the SPA. Therefore, only fifty percent of the requested fees will be included in this fee award. Cf. Luciano v. Olsten Corp., 109 F.3d 111, 117 (2d Cir. 1997) ("A district court can exclude excessive and unreasonable hours from its fee computation by making an across-the-board reduction in the amount of hours."). Applying this percentage, the resulting amount of recoverable attorneys' fees is $123,609.37.
With regard to costs, I agree with defendants that costs relating to airfare and hotel accommodations are not related to the SPA and are therefore non-compensable. Therefore, applying the allowable percentage determined above (50%) to the amount of adjusted costs ($46,740.00), reduced by the amount of non-compensable costs ($18,399.74), results in recoverable costs of $14,170.13.
Plaintiff also seeks prejudgment interest on the amount of attorneys' fees and costs awarded, relying on Baratta v. S.D. Cohn Co., 656 F. Supp. 1, 7 (S.D.N.Y. 1985) ("[Plaintiff] is entitled to prejudgment interest on both elements of its indemnity claim — the amount paid in settlement and attorney's fees."). New York law provides that "[i]nterest shall be recovered upon a sum awarded because of a breach of performance of a contract." N.Y. C.P.L.R. § 5001(a) (McKinney 1992). Despite the holding in Baratta, section 5001(a) is more properly construed as providing for prejudgment interest only on the sum associated with the breach of contract giving rise to the judgment in the first place. Under this interpretation, prejudgment interest should only be awarded on the amount of unpaid Credit Losses. Accordingly, I decline to award prejudgment interest on the award of attorneys' fees.
III. CONCLUSION
For the foregoing reasons, defendants are liable to the plaintiff in the amount of $137,779.50, which represents recoverable supplemental attorneys' fees ($123,609.37) and costs ($14,170.13) for the period January 1, 2000 through October 31, 2000. This is in addition to the $884,879.33 awarded on September 7, 2000.