Citicorp U.S.A., Inc. v. Edwards

118 F. App'x 698

• Court: Court of Appeals for the Fourth Circuit
• Decided: December 17, 2004
• Docket: 03-2172
• Status: Unpublished

Opinions

PER CURIAM.

Citicorp U.S.A., Incorporated appeals from the magistrate judge’s partial denial of its post-trial motion for attorneys’ fees and expenses. We affirm.

I

We review a district court’s decision awarding or denying attorneys’ fees and expenses for abuse of discretion. American Reliable Ins. Co. v. Stillwell, 336 F.3d 311, 320 (4th Cir.2003). “Reversal for abuse of discretion is reserved for those instances in which the court is clearly wrong; an award within the discretion of the court should be affirmed even though we might have exercised that discretion quite differently.” Brodziak v. Runyon, 145 F.3d 194, 196 (4th Cir.1998) (internal quotation marks omitted).¹

The parties agree that New York substantive law governs this appeal. Under New York law, when a contractual fee-shifting arrangement provides for payment by one party of another party’s attorneys’ fees and expenses, courts should order payment so long as the amount claimed is not unreasonable. F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1263 (2nd Cir.1987). However, “[t]o compute a reasonable amount of attorneys’ fees in a particular case requires more than simply a report of the number of hours spent and the hourly rate.” McGuire v. Russell Miller, Inc., 1 F.3d 1306, 1315 (2nd Cir.1993). Rather, courts must consider a variety of factors in determining the reasonableness of an attorneys’ fee request, including the difficulty of the legal issues involved; the skill required to handle the issues; the time and labor required; the experience, ability, and reputation of the attorney; the customary fee charged by attorneys for similar services; the burdensomeness of the fees; the fairness to the parties; and the amount involved. See McGuire, 1 F.3d at 1315; F.H. Krear, 810 F.2d at 1263.

II

The litigation underlying this appeal arises from a series of commercial lending transactions between the parties that began in 1996. It culminated in 2003 with a bench trial before a magistrate judge, who entered judgment for Citicorp on its claim against Appellees for default interest in the amount of $469,735. Because the parties’ loan documents entitle Citicorp to seek its reasonable attorneys’ fees and expenses associated with a default or collection of its loans to Appellees, Citicorp also sought judgment for fees and expenses it incurred during its business relationship with Appellees. These fees and expenses were generated by seven law firms which represented Citicorp both before and during this litigation, and they are documented in “several thousand pages of invoices.” Brief of Appellant, at 15. The parties agreed before trial that the magistrate judge would resolve Citicorp’s request for fees and expenses by way of motion after the bench trial.

Initially, the magistrate judge denied Citicorp’s request without prejudice “for lack of particularity.” J.A. 3017. The magistrate judge noted that although Citicorp’s right under the parties’ agreements to recover some fees and expenses related to any default or collection of the loans is undisputed, from the materials presented he was “unable to make a principled decision regarding reasonableness, or even to apply the factors in an informed manner.” J.A. 3017. The magistrate judge specifically observed that although Appellees had “raised significant issues regarding the number of law firms that provided services to Citicorp, the reasonableness of the work performed, the number of attorneys staffing the case, the possibility of duplication of effort between attorneys and firms, and the reasonableness of the rates charged,” Citicorp had responded “in a conelusory way, without support of any affidavits or other information” that would allow him to properly resolve the dispute. J.A. 3017. The magistrate judge also noted that “the format of the fee invoices presented, amounting to a mere chronological recitation of services provided, makes meaningful analysis nearly impossible, and any attempt to make sense out of the invoices would consume an inappropriately large amount of court time.” J.A. 3017.

To resolve the matter on the merits, the magistrate judge directed Citicorp to “provide a restatement of each of the bills in the format identified in Appendix B to the [district court’s] local rules.” J.A. 3017. The magistrate judge recognized that Appendix B — which applies to fee requests in civil rights and discrimination cases — was “technically inapplicable to this contract dispute,” but he believed that the requirements of Appendix B regarding the organization of fee invoices into specified categories would insure “the presentation of the information in a manner that facilitates efficient review and analysis by the court.” J.A. 3017 n. 1. The magistrate judge further instructed Citicorp:

Any explanation of underlying facts needed to address the evaluative factors set forth in the New York case law will be in the form of affidavits prepared by persons with personal knowledge and under penalty of perjury. As it is Citicorp’s burden of proof to establish reasonableness, any memorandum filed needs to discuss each of the factors and clearly explain Citicorp’s position with respect to each.

J.A. 3017-18.

In response to the magistrate judge’s order, Citicorp submitted a revised motion for attorneys’ fees and expenses, to which Appellees objected. The magistrate judge ruled on Citicorp’s revised motion in a twenty-nine page order.

The magistrate judge began by noting that of the $786,573.94 in fees and expenses requested by Citicorp, approximately 55% pertains to Citicorp’s actions related to Appellees’ alleged loan defaults prior to filing the underlying lawsuit, such as renegotiating the loan documents between the parties and monitoring the collateral used to secure the loans. After recognizing the factors pertinent to calculation of a reasonable fee award, the magistrate judge stated:

Having reviewed the parties [sic] contracts, and keeping in mind that Citicorp bears the burden of demonstrating its entitlement to reasonable fees, see Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), I conclude that Citicorp has not persuasively demonstrated that it would be reasonable to award it all fees generated as a result of [Appellees’] alleged defaults that date back to 1997. Under the facts of this case, it is reasonable to award attorneys’ fees related to reasonable efforts to enforce the agreements by filing suit and prosecuting it. To also award substantial fees for multiple amendments to the contract documents that [Citicorp] successfully renegotiated would be excessive, in the absence of evidence that the earlier negotiations were undertaken by [Appellees] in bad faith, facts that are not patent here.

J.A. 3111-12. The magistrate judge further observed that “many of the fees sought by Citicorp prelitigation have not convincingly been related to proven defaults by [Appellees].” J.A 3112.

The magistrate judge next turned to consideration of Citicorp’s evidentiary presentation and concluded that Citicorp failed to comply with his prior order that the fee request be resubmitted under the Appendix B format. The magistrate judge noted that Citicorp had instead “submitted, as it had done previously, a mass of invoices from the various law firms it engaged accompanied by a general description as to the work done with a total amount of fees and expenses generated.” J.A. 3114. The magistrate judge continued:

Citicorp is relying on ... a mass of unorganized invoices, billing records, and letters, presumably consisting of all information regarding the attorneys’ fees and expenses in this case. The revised request now also lists each law firm, the dates that it was involved in [Appellees’] loan arrangements, and the type of work done. Each law firm’s entry also lists the total amount of fees generated, hours worked, and expenses billed, which is further broken down into fees and expenses. There are no affidavits from the attorneys of the law firms attesting to the work performed and the hourly rates of the lawyers and paralegals involved in such work. In addition, Citicorp does not provide any worksheet breaking down each law firm by the amount billed, the work done, by whom, and at what hourly rate. Instead, Citicorp has offered the affidavits of [two Citicorp employees], who each attest to the law firms’ roles in connection with [Appellees’] loans.

J.A. 3114-15. In light of the foregoing, the magistrate judge ruled:

It is not the Court’s burden to sift through literally hundreds of pages of invoices relating to legal work performed over a six-year period in an effort to determine whether the fees sought are reasonable and not excessive. If a reviewing court is to conduct a review that is meaningful, the party seeking the fee award must do its part to facilitate this review. Where, as here, this was not done, even though specifically requested by the Court, it is appropriate to take this failure into consideration in determining a reasonable fee. Given the sheer volume of the invoices and the lack of specific details offered by Citicorp, I conclude that any fee award must be reduced by thirty-five percent to reflect the fact that a full accounting of each and every fee generated is impossible in this case.

J.A. 3115-16.

The magistrate judge then specifically considered and addressed Citicorp’s request as it pertains to each of the seven law firms.² With respect to four of these firms, the magistrate judge denied Citicorp’s requests in their entirety for a variety of reasons, including the fact that many of the fees and expenses involve prelitigation services; that Citicorp failed to establish a connection between some of the fees and expenses and a default by Appellees; that many of the fees and expenses appear to document services that are duplicative of work done by other firms; and that the legitimacy of some of the fees and expenses is questionable.

As for the other three firms, the magistrate judge found that Citicorp is entitled to an award for fees and expenses. However, the magistrate judge reduced the request for each of these firms by 20%. The magistrate judge made this reduction for the firms of Bilzin Sumberg Dunn Basena Price & Axelrod, LLP; and Howrey & Simon, because of “apparent duplicativeness of ... effort with other law firms, the breadth of the fees sought, and the lack of detail.” J.A. 3121, 3126.³ The magistrate judge made this reduction for the firm of Swidler Berlin Shereff Friedman, LLP, because Citicorp’s request lacks “specificity as to the number of attorneys, the type of work done, the billing rate, and the hours worked, all of which is important information to enable a court to conduct a meaningful review for reasonableness.” J.A. 3129.⁴

After making these determinations, the magistrate judge concluded that Citicorp was entitled to recover $412,660.02 for work done by three of the seven law firms. However, the magistrate judge then reduced this award by 35% based on his prior ruling concerning Citicorp’s failure to comply with his initial order. The final award to Citicorp is $268,229.02.

Ill

Citicorp argues on appeal that the magistrate judge acted arbitrarily in reducing its request for fees and expenses. Citicorp points specifically to the magistrate judge’s decision to deny prelitigation fees and expenses and to his decision to reduce the award by 35% (and then make additional reductions) “without even considering the reasonableness of the fees and expenses.” Brief of Appellant, at 8.

Having had the benefit of the parties’ briefs and oral argument, and after careful consideration of the applicable law, we are not persuaded that the magistrate judge abused his discretion in making the fee and expenses award. The record shows that under the circumstances the magistrate judge conducted a thorough review of Citicorp’s motion, and we do not find that his factual rulings are clearly erroneous or that his legal rulings are incorrect. See generally Trimper v. City of Norfolk, Va., 58 F.3d 68, 77 (4th Cir.1995) (holding that “the district court acted well within its discretion in disallowing those costs which were insufficiently documented” and noting that the ruling “is exactly the type of factual determination which should not be disturbed on appeal”); Fair Housing Council of Greater Washington v. Landow, 999 F.2d 92, 98 (4th Cir.1993) (rejecting the argument that “the district court has the burden to identify which hours in a fee applicant’s time sheets are recoverable”); In re Conklin, 946 F.2d 306, 316 (4th Cir.1991) (affirming district court’s reduction of fee and expense request to account for “duplicative and repetitive work” and for “incomplete, inaccurate and irregular records”); Daly v. Hill, 790 F.2d 1071, 1079-80 (4th Cir.1986) (finding no abuse of discretion in substantial reductions in fee requests based on lack of detailed affidavits supporting request and duplicativeness); Jane L. v. Bangerter, 61 F.3d 1505, 1510 (10th Cir.1995) (holding that 35% reduction based on inadequate fee request was within district court’s discretion).⁵

We therefore affirm the judgment of the district court.

AFFIRMED

1 . Generally, we will find that a district court has abused its discretion if its conclusion "is guided by erroneous legal principles” or "rests upon a clearly erroneous factual finding.” Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir.1999).

2 . The magistrate judge noted that Citicorp failed to provide a breakdown of the lawyers for each firm who worked on the particular tasks involved and their hourly rates.

3 . The magistrate judge also denied part of the request for the Howrey firm based on his finding that it represents prelitigation work and, in any event, the prelitigation work done by this firm appears to overlap with work that was done by other firms.

4 . The magistrate judge denied Citicorp's request for $22,277.50 in additional expenses based on his determination that "[n]o detailed explanation was provided as to why these services were performed.” (J.A. 3130).

5 . Concerning the denial of prelitigation fees, we note that the magistrate judge — sitting as the factfinder- — concluded based on the record presented to him that Citicorp failed to "persuasively demonstrate” its entitlement to prelitigation fees or that an award of such fees would be reasonable under the circumstances of this case. See J.A. 3108, 3111-13. In light of the record presented below, we are not prepared to say that these determinations constitute an abuse of discretion.