Crane v. Rave Restaurant Group, Inc.

District Court, E.D. Texas·Decided February 9, 2022·No. 4:20-cv-00013·Unknown

Opinion

United States District Court EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

SCOTT CRANE, § § Plaintiff, § Civil Action No. 4:20-CV-13-ALM § Judge Mazzant v. § § RAVE RESTAURANT GROUP, INC., § § Defendant. § §

MEMORANDUM OPINION AND ORDER

Pending before the Court is Plaintiff Scott Crane’s Motion for Attorneys’ Fees (Dkt. #117) and Request to Enter Plaintiff’s Bill of Costs (Dkt. #118). Having considered the motions and the relevant pleadings, the Court finds the Motion for Attorneys’ Fees (Dkt. #117) should be GRANTED and the Request to Enter Plaintiff’s Bill of Costs (Dkt. #118) should be GRANTED in part. BACKGROUND Defendant Rave Restaurant Group. Inc. (“Rave”) is a public company that owns a chain of pizza restaurants (Dkt. #1 ¶ 11). Plaintiff Scott Crane (“Crane”) worked as Rave’s Chief Executive Officer from January 2017 to July of 2019 (Dkt. #1 ¶¶ 18, 24). An employment agreement and multiple Restricted Stock Unit Award (“RSUA”) Agreements governed the terms of Crane’s employment and compensation with Rave. Under these agreements, Crane was entitled to a grant of 300,000 Restricted Stock Units (“RSU”). The vesting date for the RSUs was October 15, 2019 (Dkt. #1 ¶ 26). In addition, Crane had to meet certain performance criteria before the RSUs would vest (Dkt. #1 ¶¶ 25–29). According to Crane, the promise of future shares in Rave enticed him to join the company as its CEO (Dkt. #1 ¶ 16). Despite improvements to Rave’s balance sheets under Crane’s leadership, in July of 2019, Rave’s Chairman of the Board, Mark E. Schwarz (“Schwarz”), terminated Crane and refused to award Crane any of the RSUs he earned pursuant to the Agreements. On January 6, 2020, Crane filed suit against Rave for breach of contract, fraudulent inducement, statutory fraud, and declaratory judgment (Dkt. #1).

On November 27, 2020, Rave filed a motion for summary judgment (Dkt. #36). In its Memorandum Opinion and Order dated August 4, 2021, the Court disposed of all of Crane’s claims except for his breach of contract claim for RSUs and fraudulent inducement claim (Dkt. #72). Thus, the case proceeded to trial on October 25, 2021. On October 29, 2021, the jury rendered a verdict in favor of Crane on his breach of contract claim and found $924,000.00 would fairly and reasonably compensate Crane for damages stemming from Rave’s breach (Dkt. #108). The Court entered its Final Judgment on November 1, 2021 (Dkt. #111). On November 15, 2021, Crane filed his Motion for Attorneys’ Fees (Dkt. #117). Rave responded on December 3, 2021 (Dkt. #126). Crane replied on December 9, 2021 (Dkt. #131).

On November 15, 2021, Crane also filed his Request to Enter Plaintiffs’ Bill of Costs (Dkt. #118). Rave responded on December 3, 2021 (Dkt. #125). On December 9, 2021, Crane replied (Dkt. #133). LEGAL STANDARD “State law controls both the award of and the reasonableness of fees awarded where state law supplies the rule of decision.” Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). Further, when a statute allows a prevailing party to recover its fees, that provision applies to appellate fees as well. Williams v. Trustmark Ins. Co., 173 F. App’x 330, 334 (5th Cir. 2006). Under Texas law, it is the movant that bears the burden of proof to show the reasonable fees they are owed. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012) (citing Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)) (applying substantive federal law but also discussing Texas’s adoption of the lodestar method in other cases). The movant may calculate their reasonable and necessary attorneys’ fees using either the lodestar method or the market value method. Id.; AMX Enters. v. Master Realty Corp., 283 S.W.3d 506, 515 (Tex. App.—Fort Worth 2009, no pet.). There are

certain causes of action that require the use of the lodestar calculation. City of Laredo v. Montano, 414 S.W.3d 731, 736 (Tex. 2013). However, even if the lodestar calculation is not required, if the movant produces evidence of the lodestar calculation, courts typically apply the lodestar calculation. Montano, 414 S.W.3d at 736. Using the lodestar analysis, the computation of a reasonable attorneys’ fee award is a two- step process.1 El Apple, 370 S.W.3d at 760 (citing Dillard Dep’t Stores, Inc. v. Gonzales, 72 S.W.3d 398, 412 (Tex. App.—El Paso 2002, pet. denied)). First, courts determine the reasonable hours spent by counsel and a reasonable hourly rate, and then multiply the two together to get the base fee or lodestar. Id. (citing Gonzales, 72 S.W.3d at 412). Second, courts adjust the lodestar

up or down based on relevant factors, found in Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).2 The Johnson factors are: (1) time and labor required; (2) novelty and difficulty of issues; (3) skill required; (4) loss of other employment in taking the case; (5) customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by client or circumstances; (8) amount involved and results obtained; (9) counsel’s experience, reputation, and ability; (10) case undesirability; (11) nature and length of relationship with the client; and (12) awards in similar cases.

1 Although state law applies, Texas courts occasionally “draw on the far greater body of federal court experience with lodestar.” El Apple, 370 S.W.3d at 764–65. 2 Texas courts also use a similar set of factors, the Arthur Andersen factors, to determine reasonableness. However, when courts use the lodestar calculation, they tend to use the Johnson factors. Gonzales, 72 S.W.3d at 412 (citing Johnson, 488 F.2d at 717–19). “If some of these factors are accounted for in the lodestar amount, they should not be considered when making adjustments.” Id. (citing Guity v. C.C.I. Enter., Co., 54 S.W.3d 526, 529 (Tex. App.—Houston [1st Dist.] 2001, no pet.)). The lodestar is presumptively reasonable and should be modified only in exceptional cases. El Apple, 370 S.W.3d at 765.

ANALYSIS Crane seeks attorneys’ fees, pre-judgment interest, post-judgment interest, and any attorneys’ fees Crane may incur during the appeal any of the Court’s decisions (Dkt. #117). Crane also requests the Court enter Crane’s proposed Bill of Costs (Dkt. #118). The Court will begin with Crane’s motion for attorneys’ fees. I. Motion for Attorneys’ Fees Crane moves for attorneys’ fees on his breach of contract claim under § 38.001(b)(8) of the Texas Civil Practice and Remedies Code (Dkt. #117). Rave asserts Crane’s request should be reduced or denied. First, Rave argues Crane failed to present his claim for breach of contract to

Rave, and thus is not eligible for fees (Dkt. #126). Second, Rave maintains Crane’s request is unreasonable because Crane did not present evidence of the prevailing market rate (Dkt. #126). Finally, Rave argues Crane has not used proper billing judgment to reduce hours (Dkt. #126). More specifically, Rave argues: (1) fees for routine clerical work are not allowed; (2) fees for duplicative work performed by counsel are not allowed; (3) block billing is not allowed; (4) Crane’s submission contains vague billing entries; and (5) time was spent advancing unrecoverable claims (Dkt. #117 at pp. 8–12). The Court first addresses whether Crane is eligible for attorneys’ fees, then it examines Rave’s argument as to why the Court should deny Crane’s request for fees. A. Eligibility for Attorneys’ Fees As an initial matter, the Court finds Crane is eligible for an award of attorneys’ fees. The parties agree that the resolution of these issues is governed by Texas law because the underlying dispute is governed by Texas law. See Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002).

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Crane v. Rave Restaurant Group, Inc., (E.D. Tex. 2022).

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