1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 Case No.: 3:16-cv-3038-BTM-WVG ODYSSEY REINSURANCE 12 COMPANY, a Connecticut ORDER GRANTING IN PART, 13 corporation, DENYING IN PART PLAINTIFF’S MOTION FOR ATTORNEY’S FEES 14 Plaintiff, AND LITIGATION EXPENSES 15 v.
16 RICHARD KEITH NAGBY, et al.,
17 Defendants. [ECF Nos. 295] 18
19 Before the Court is Plaintiff Odyssey Reinsurance Company’s (“Plaintiff”) 20 motion for attorney’s fees. (ECF No. 295.) By way of its instant motion, Plaintiff 21 seeks to quantify the Court’s grant of attorney’s fees and litigation expenses to 22 Plaintiff as a remedial sanction in the Order (the “Contempt Order”) holding 23 Defendant Diane Dostalik (f/k/a Diane Nagby) (“Defendant”) in civil contempt for 24 violations of the preliminary injunction entered October 4, 2017 (the “Preliminary 25 Injunction”) and the temporary restraining order entered August 8, 2018 (the 26 “TRO”). (Id.; see also ECF Nos. 69, 172, 287.) In support of its motion, Plaintiff 27 provided an affidavit of its counsel attesting to the reasonableness of the requested 28 1 fees and expenses, including the relevant timekeepers’ rates, qualifications, 2 experience, and billing practices, as well as copies of the attorney’s resumes, the 3 copies of relevant attorney’s fees and expenses invoices submitted to Plaintiff for 4 payment, and a narrative summarizing the fees and expenses incurred by Plaintiff 5 in connection with its attempts to discover and remedy Defendant’s contemptuous 6 conduct. (ECF No. 295-2.) In total, Plaintiff seeks to recover $212,821.00 in 7 attorney’s fees and $23,163.00 in expenses as incurred in discovering and 8 prosecuting Defendant’s contemptuous conduct.1 (ECF Nos. 295, 315.) In her 9 response in opposition, Defendant concedes that “an award of fees is proper” but 10 argues that any such award must be “remedial and reasonable” and that Plaintiff 11 has improperly requested recovery of “unrelated or unnecessary fees and costs” 12 totaling $116,519.30.2 (ECF No. 314, at 2-3.) 13 “Civil contempt sanctions . . . are employed for two purposes: to coerce the 14 15 16 1 In its reply in support of its instant motion Plaintiff reduced its initial request for 17 $213,771.00 in attorney’s fees and $23,355.00 in expenses by $950.00 and $192.00, respectively. (ECF No. 315, at 10; see also ECF No. 295.) The 18 withdrawn fees and expenses consist of $192.00 in expenses for the service of 19 unrelated subpoenas on Defendant’s accountant, John Scannell, and bookkeeper, Suzanne Werden (ECF No. 295-2, at 16-17), $290.00 in fees for the review of an 20 unrelated objection to a subpoena served on an expert witness retained by 21 Defendant in her divorce case, Barbara Hopper (id. at 34), and $660.00 in fees for drafting an opposition to Knight Insurance Co.’s attempts to intervene in this action 22 (id. at 99). 23 2 (See ECF No. 314, at 2 (“Plaintiff wrongfully seeks recovery of $35,445.50 in fees 24 and $3,235.00 in costs incurred in the ordinary course of litigation and discovery, 25 all of which are unrelated to the contempt proceedings. Furthermore, the transcripts and court files demonstrate attorney time and expenses claimed are 26 unreasonably inflated or unnecessarily incurred by inefficient presentation of 27 evidence, and therefore an additional $61,725.00 in fees and $2,081.80 undesignated expert fees as ‘costs’ should be disallowed. Last, Plaintiff wrongfully 28 1 defendant into compliance with the court’s order, and to compensate the 2 complainant for losses sustained.” Whittaker Corp. v. Execuair Corp., 953 F.2d 3 510, 517 (9th Cir. 1992) (citations omitted). Because attorney’s fees and expenses 4 “frequently must be expended to bring a violation of an order to the court's 5 attention,” trial courts have the discretion to award “fees and expenses . . . as a 6 remedial measure.”3 Perry v. O'Donnell, 759 F.2d 702, 706 (9th Cir. 1985); see 7 also id. at 704 (“[C]ivil contempt need not be willful to justify a discretionary award 8 of fees and expenses as a remedial measure.”). 9 The Ninth Circuit “requires a district court to calculate an award of attorneys' 10 fees by first calculating the ‘lodestar.’” Caudle v. Bristow Optical Co., 224 F.3d 11 1014, 1028 (9th Cir. 2000) (citations omitted). “The ‘lodestar’ is calculated by 12 multiplying the number of hours the prevailing party reasonably expended on the 13 litigation by a reasonable hourly rate.” Morales v. City of San Rafael, 96 F.3d 359, 14 363 (9th Cir. 1996), opinion amended on denial of reh'g, 108 F.3d 981 (9th Cir. 15 1997) (internal quotations and citations omitted). “[H]ours that are excessive, 16 redundant, or otherwise unnecessary” should be excluded from the initial lodestar 17 calculation.4 Hensley v. Eckerhart, 461 U.S. 424, 434 (1983) (“Hours that are not 18
19 3 While Defendant argues that an award of fees and expenses as a remedial civil 20 contempt sanction should not include an award of expert witness fees, the cases 21 cited by Defendant, W. Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83 (1991) and Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291 (2006), 22 concerned statutory civil rights attorney’s fees shifting provisions that did not 23 explicitly include litigation expenses or expert witness fees as recoverable expenses and are therefore inapposite. 24
25 4 “Because a reasonable attorney's fee would not include compensation for such [excessive, redundant, or otherwise unnecessary] hours, the district court should 26 exclude them using one of two methods. First, the court may conduct an hour-by- 27 hour analysis of the fee request, and exclude those hours for which it would be unreasonable to compensate the prevailing party. Second, when faced with a 28 1 properly billed to one’s client also are not properly billed to one's adversary . . . .” 2 (citations and emphasis omitted)); but see Stetson v. Grissom, 821 F.3d 1157, 3 1166 (9th Cir. 2016) “[T]he district court should take into account the reality that 4 some amount of duplicative work is inherent in the process of litigating over time.” 5 (internal quotations and citations omitted)). The “reasonable hourly rate is the rate 6 prevailing in the community for similar work performed by attorneys of comparable 7 skill, experience, and reputation.” Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 8 979 (9th Cir. 2008) (internal quotations and citations omitted) (“[T]he relevant 9 community is the forum in which the district court sits.” (citations omitted)); see also 10 id. at 980 (“[A]ffidavits of the plaintiffs' attorneys and other attorneys regarding 11 prevailing fees in the community, and rate determinations in other cases are 12 satisfactory evidence of the prevailing market rate.” (internal quotations, citations, 13 and alterations omitted)). “After making [the lodestar] computation, the district 14 court then assesses whether it is necessary to adjust the presumptively reasonable 15 lodestar figure on the basis of the Kerr factors that are not already subsumed in 16 the initial lodestar calculation.”5 Morales, 96 F.3d at 363-64 (internal footnote and 17
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 Case No.: 3:16-cv-3038-BTM-WVG ODYSSEY REINSURANCE 12 COMPANY, a Connecticut ORDER GRANTING IN PART, 13 corporation, DENYING IN PART PLAINTIFF’S MOTION FOR ATTORNEY’S FEES 14 Plaintiff, AND LITIGATION EXPENSES 15 v.
16 RICHARD KEITH NAGBY, et al.,
17 Defendants. [ECF Nos. 295] 18
19 Before the Court is Plaintiff Odyssey Reinsurance Company’s (“Plaintiff”) 20 motion for attorney’s fees. (ECF No. 295.) By way of its instant motion, Plaintiff 21 seeks to quantify the Court’s grant of attorney’s fees and litigation expenses to 22 Plaintiff as a remedial sanction in the Order (the “Contempt Order”) holding 23 Defendant Diane Dostalik (f/k/a Diane Nagby) (“Defendant”) in civil contempt for 24 violations of the preliminary injunction entered October 4, 2017 (the “Preliminary 25 Injunction”) and the temporary restraining order entered August 8, 2018 (the 26 “TRO”). (Id.; see also ECF Nos. 69, 172, 287.) In support of its motion, Plaintiff 27 provided an affidavit of its counsel attesting to the reasonableness of the requested 28 1 fees and expenses, including the relevant timekeepers’ rates, qualifications, 2 experience, and billing practices, as well as copies of the attorney’s resumes, the 3 copies of relevant attorney’s fees and expenses invoices submitted to Plaintiff for 4 payment, and a narrative summarizing the fees and expenses incurred by Plaintiff 5 in connection with its attempts to discover and remedy Defendant’s contemptuous 6 conduct. (ECF No. 295-2.) In total, Plaintiff seeks to recover $212,821.00 in 7 attorney’s fees and $23,163.00 in expenses as incurred in discovering and 8 prosecuting Defendant’s contemptuous conduct.1 (ECF Nos. 295, 315.) In her 9 response in opposition, Defendant concedes that “an award of fees is proper” but 10 argues that any such award must be “remedial and reasonable” and that Plaintiff 11 has improperly requested recovery of “unrelated or unnecessary fees and costs” 12 totaling $116,519.30.2 (ECF No. 314, at 2-3.) 13 “Civil contempt sanctions . . . are employed for two purposes: to coerce the 14 15 16 1 In its reply in support of its instant motion Plaintiff reduced its initial request for 17 $213,771.00 in attorney’s fees and $23,355.00 in expenses by $950.00 and $192.00, respectively. (ECF No. 315, at 10; see also ECF No. 295.) The 18 withdrawn fees and expenses consist of $192.00 in expenses for the service of 19 unrelated subpoenas on Defendant’s accountant, John Scannell, and bookkeeper, Suzanne Werden (ECF No. 295-2, at 16-17), $290.00 in fees for the review of an 20 unrelated objection to a subpoena served on an expert witness retained by 21 Defendant in her divorce case, Barbara Hopper (id. at 34), and $660.00 in fees for drafting an opposition to Knight Insurance Co.’s attempts to intervene in this action 22 (id. at 99). 23 2 (See ECF No. 314, at 2 (“Plaintiff wrongfully seeks recovery of $35,445.50 in fees 24 and $3,235.00 in costs incurred in the ordinary course of litigation and discovery, 25 all of which are unrelated to the contempt proceedings. Furthermore, the transcripts and court files demonstrate attorney time and expenses claimed are 26 unreasonably inflated or unnecessarily incurred by inefficient presentation of 27 evidence, and therefore an additional $61,725.00 in fees and $2,081.80 undesignated expert fees as ‘costs’ should be disallowed. Last, Plaintiff wrongfully 28 1 defendant into compliance with the court’s order, and to compensate the 2 complainant for losses sustained.” Whittaker Corp. v. Execuair Corp., 953 F.2d 3 510, 517 (9th Cir. 1992) (citations omitted). Because attorney’s fees and expenses 4 “frequently must be expended to bring a violation of an order to the court's 5 attention,” trial courts have the discretion to award “fees and expenses . . . as a 6 remedial measure.”3 Perry v. O'Donnell, 759 F.2d 702, 706 (9th Cir. 1985); see 7 also id. at 704 (“[C]ivil contempt need not be willful to justify a discretionary award 8 of fees and expenses as a remedial measure.”). 9 The Ninth Circuit “requires a district court to calculate an award of attorneys' 10 fees by first calculating the ‘lodestar.’” Caudle v. Bristow Optical Co., 224 F.3d 11 1014, 1028 (9th Cir. 2000) (citations omitted). “The ‘lodestar’ is calculated by 12 multiplying the number of hours the prevailing party reasonably expended on the 13 litigation by a reasonable hourly rate.” Morales v. City of San Rafael, 96 F.3d 359, 14 363 (9th Cir. 1996), opinion amended on denial of reh'g, 108 F.3d 981 (9th Cir. 15 1997) (internal quotations and citations omitted). “[H]ours that are excessive, 16 redundant, or otherwise unnecessary” should be excluded from the initial lodestar 17 calculation.4 Hensley v. Eckerhart, 461 U.S. 424, 434 (1983) (“Hours that are not 18
19 3 While Defendant argues that an award of fees and expenses as a remedial civil 20 contempt sanction should not include an award of expert witness fees, the cases 21 cited by Defendant, W. Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83 (1991) and Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291 (2006), 22 concerned statutory civil rights attorney’s fees shifting provisions that did not 23 explicitly include litigation expenses or expert witness fees as recoverable expenses and are therefore inapposite. 24
25 4 “Because a reasonable attorney's fee would not include compensation for such [excessive, redundant, or otherwise unnecessary] hours, the district court should 26 exclude them using one of two methods. First, the court may conduct an hour-by- 27 hour analysis of the fee request, and exclude those hours for which it would be unreasonable to compensate the prevailing party. Second, when faced with a 28 1 properly billed to one’s client also are not properly billed to one's adversary . . . .” 2 (citations and emphasis omitted)); but see Stetson v. Grissom, 821 F.3d 1157, 3 1166 (9th Cir. 2016) “[T]he district court should take into account the reality that 4 some amount of duplicative work is inherent in the process of litigating over time.” 5 (internal quotations and citations omitted)). The “reasonable hourly rate is the rate 6 prevailing in the community for similar work performed by attorneys of comparable 7 skill, experience, and reputation.” Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 8 979 (9th Cir. 2008) (internal quotations and citations omitted) (“[T]he relevant 9 community is the forum in which the district court sits.” (citations omitted)); see also 10 id. at 980 (“[A]ffidavits of the plaintiffs' attorneys and other attorneys regarding 11 prevailing fees in the community, and rate determinations in other cases are 12 satisfactory evidence of the prevailing market rate.” (internal quotations, citations, 13 and alterations omitted)). “After making [the lodestar] computation, the district 14 court then assesses whether it is necessary to adjust the presumptively reasonable 15 lodestar figure on the basis of the Kerr factors that are not already subsumed in 16 the initial lodestar calculation.”5 Morales, 96 F.3d at 363-64 (internal footnote and 17
18 19 board percentage cuts either in the number of hours claimed or in the final lodestar figure as a practical means of excluding non-compensable hours from a fee 20 application.” Gonzalez v. City of Maywood, 729 F.3d 1196, 1203 (9th Cir. 2013) 21 (internal quotations, citations, and alterations omitted). Where the district court uses the “percentage cut” method, it must “set forth a concise but clear explanation 22 of its reasons for choosing a given percentage reduction” if the reduction exceeds 23 10 percent of the total fees sought. Id. (internal quotations and citations omitted).)
24 5 “The twelve Kerr factors bearing on the reasonableness are: (1) the time and 25 labor required, (2) the novelty and difficulty of the questions involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other 26 employment by the attorney due to acceptance of the case, (5) the customary fee, 27 (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount involved and the results obtained, (9) the 28 1 citations omitted); see also Perry, 759 F.2d at 706 (“Ordinarily, the failure to follow 2 the Kerr guidelines constitutes an abuse of discretion.” (citations omitted)). 3 Plaintiff is represented by Kirby & McGuinn, P.C., and its attorneys Dean T. 4 Kirby, Jr. and Kimberley V. Deede, with the assistance of paralegals Constantina 5 “Tina” Wright and Jacquelyn Wilson. (See ECF No. 295-2.) Mr. Kirby, who has 6 “practiced law for almost forty years” in the fields of bankruptcy and creditor rights 7 and is “certified as a specialist in the field of creditor rights by the American Board 8 of Certification,” seeks an hourly rate of $440. (Id. at 3, 135-36.) Ms. Deede, who 9 has practiced law in California since 2011 and appears to have focused on 10 bankruptcy and creditor rights since joining Kirby & McGuinn in 2014, seeks an 11 hourly rate of $350. (Id. at 3, 137-38.) Ms. Wright and Ms. Wilson, each of whom 12 claim hourly rates of $125, have seventeen and ten years of experience as certified 13 paralegals, respectively. (Id. at 3.) Notably, Defendant has not challenged the 14 hourly rates claimed by Plaintiff’s counsel and has failed to introduce any evidence 15 in support of her opposition, let alone any evidence that demonstrates the 16 aforementioned hourly rates claimed are unreasonable in San Diego, California for 17 similar work performed by attorneys of comparable skill, experience, and 18 reputation. See Camacho, 523 F.3d at 980 (“The party opposing the fee 19 application has a burden of rebuttal that requires submission of evidence to the 20 21 22 case, (11) the nature and length of the professional relationship with the client, and 23 (12) awards in similar cases.” Morales, 96 F.3d at 363 n.8 (citing Kerr v. Screen Guild Extras, Inc., 526 F.2d 67, 70 (9th Cir.1975), abrogated on other grounds by 24 City of Burlington v. Dague, 505 U.S. 557 (1992)). “Among the subsumed factors 25 presumably taken into account in either the reasonable hours component or the reasonable rate component of the lodestar calculation are: (1) the novelty and 26 complexity of the issues, (2) the special skill and experience of counsel, (3) the 27 quality of representation, (4) the results obtained, and (5) the contingent nature of the fee agreement.” Id. at 364 n.9 (internal quotations, citations, and alterations 28 1 district court challenging the accuracy and reasonableness of the facts asserted 2 by the prevailing party in its submitted affidavits.” (internal quotations, citations, 3 and alterations omitted)). 4 Based upon a review of the evidence submitted by the parties, the Court’s 5 familiarity with the rates charged in the San Diego legal community, and recent 6 prior attorney’s fees awards in this district, the Court concludes that the hourly 7 rates claimed by Plaintiff’s counsel (and paralegals) are in line with the customary 8 rates prevailing in the San Diego legal community for similar work performed by 9 attorneys (and paralegals) of comparable skill, experience, and reputation.6 See, 10 e.g., Lewis v. Cty. of San Diego, 2017 WL 6326972, at *13 (S.D. Cal. Dec. 11, 11 2017) (“In this District, $90 to $210 per hour is generally reasonable for paralegal 12 work . . . .”); Chamberlin v. Charat, 2017 WL 3783773, at *2 (S.D. Cal. Aug. 31, 13 2017) (hourly rates ranging between $250 and $500 for work performed by 14 associates and partners reasonable in debt-collection action); Nuvasive, Inc. v. 15 Madsen Med., Inc., 2016 WL 5118325, at *4 (S.D. Cal. 2016) ($500 hourly rate for 16 attorney with over ten years’ experience reasonable in breach of contract action); 17 Nguyen v. HOVG, LLC, 2015 WL 5476254, at *3 (S.D. Cal. 2015) ($450, $350, 18 and $125 were reasonable hourly rates for FDCPA-related litigation by senior 19
20 21 6 While not relied upon in reaching its conclusion as to the reasonableness of the hourly rates claimed in this matter, the Court notes that the rates claimed by 22 Plaintiff’s counsel are in line with those surveyed in San Diego in the United States 23 Consumer Law Attorney Fee Survey Report 2017–2018, by Ronald L. Burdge (the “USCLAFS Report”), available at https://www.nclc.org/images/pdf/litigation/tools/ 24 report-atty-fee-survey.pdf. (See USCLAFS Report, at 253 (“California, San Diego 25 . . . Average Paralegal Rate for All Paralegals [$]147[;] Average Attorney Rate for All Attorneys [$]452[;] 25% Median Attorney Rate for All Attorneys [$]331[;] Median 26 Attorney Rate for All Attorneys [$]475[;] 75% Median Attorney Rate for All 27 Attorneys [$]544[;] 95% Median Attorney Rate for All Attorneys [$]700[;] . . . [Median Rate for] Attorneys Handling Credit Rights Cases [$]400[.]; . . . [Median 28 1 partner, senior associate, and paralegal, respectively). 2 Having reviewed the hours billed by Plaintiff’s counsel for which recovery is 3 presently sought (ECF No. 295-2, at 12-125), the Court finds that some of the work 4 completed was excessive, redundant, or otherwise unnecessary to discovering 5 and litigating Defendant’s contemptuous conduct. The Court therefore excludes 6 from its award of attorney’s fees the following hours billed: 7 Time Time Amount Date Description Rate Keeper Billed Billed 8 Communicate (other 9 outside counsel) 11/23/18 Analysis/Strategy DTK 0.20 $440/hr $88 10 Respond to Inquiry from 11 Counsel for Knight Appear for/attend Attend 12 Hearings on Order to 11/07/18 KVD 2.60 hr $350/hr $910 13 Show Causes and Ex Partes 14 Appear for/attend Trial 15 and Hearing Attendance 11/28/18 KVD 2.00 hr $350/hr $700 Attend Evidentiary 16 Hearing 17 Appear for/attend Attend 12/19/18 Evidentiary Hearing. KVD 8.00 hr $350/hr $2,8007 18 Remaining Portion 19 20 21 22
23 7 No hearing was held in this matter on December 19, 2018. Rather, a contempt- 24 related evidentiary hearing was held on December 20, 2019, for which Mr. Kirby 25 billed eight hours at an hourly rate of $440. (See ECF No. 295-2, at 91.) Even assuming the December 19, 2018 entry was a scrivener’s error, Mr. Kirby attests 26 that his “firm does not charge for multiple timekeepers when more than one 27 attorney attends a hearing, client conference, or interoffice.” (Id. at 3.) Since counsel would not charge their own client for such fees, they are inappropriate to 28 1 Date Description Time Time Rate Amount Keeper Billed Billed 2 Plan and prepare for 3 Expert Witness Review 01/14/19 Goshong [sic] CV and KVD 0.10 $350/hr $35 4 Prepare Supplemental 5 Witness List Research Research 6 Case Law and Treatise 01/21/19 KVD 2.00 $350/hr $700 7 on Cryptocurrency Expert Admission 8 Draft/Revise Expert 9 Witnesses Edit and 01/27/19 KVD 1.00 $350/hr $350 Revise Cryptocurrency 10 Expert Outline 11 Plan and prepare for Review Documents for 12 01/28/19 Preparation as a Witness TW 2.00 $125/hr $250 13 in Contempt Motion Hearing 14 Appear for/attend First 01/29/19 DTK 1.50 $440/hr $6608 15 Day Contempt Hearing 16 Appear for/attend Appear 01/29/19 for Hearing on Contempt TW 4.50 $125/hr $562.50 17 Motion 18 Draft/Revise Continue Opposition to Knight 19 Motion to Intervene – 01/30/19 DTK 3.00 $440/hr $1,320 20 Additional Legal Research on Jurisdiction 21 Issue 22
23 8 The contempt hearing held on January 29, 2019 was scheduled to begin at 10:30 24 a.m. and concluded at 4:10 p.m. (See ECF Nos. 205, 229.) Nevertheless, Mr. 25 Kirby billed eight hours for his attendance at the January 29 hearing. (See ECF No. 295-2, at 99; see also ECF No. 315, at 6 (“The entry does not specifically refer 26 to preparation on the day of the hearing or to travel to and and [sic] from the 27 Court.”).) The Court has reduced this billing by one-and-a-half hours to account for this unexplained discrepancy while allowing for reasonable travel time to and 28 1 Date Description Time Time Rate Amount Keeper Billed Billed 2 Appear for/attend Appear 3 01/30/19 for Continued Hearing on TW 3.00 $125/hr $375 Contempt Motion 4 Review/Analyze Review 5 04/01/19 Chris Groshong Outline KVD 1.00 $350/hr $350 and Revise 6 Plan and prepare for 7 Expert Outline Review 05/14/19 and Prep. Meet with KVD 1.70 $350/hr $595 8 Chris Groshong for Final 9 Review Review/analyze Review 10 Objection to Use of 05/15/19 KVD 2.00 $350/hr $700 11 Expert. Prepare Oral Argument in Response. 12 Plan and prepare for 13 Draft Direct of Tina 05/19/19 Wright for Chain of KVD 0.30 $350/hr $105 14 Custody Testimony as to 15 Citibank Records 16 Appear for/attend Attend 05/20/19 Continued Contempt KVD 6.00 $350/hr $2,100 17 Hearing 18 Appear for/attend Trial and Hearing Attendance 19 05/20/19 – Attend Hearing on TW 2.00 $125/hr $250 20 Order to Show Cause re: Diane Nagby 21 Appear for/attend Trial 22 and Hearing Attendance 05/21/19 – Attend hearing on TW 4.00 $125/hr $500 23 Order to Show Cause re: 24 Diane Nagby Communicate (other 25 05/22/19 external) Phone Call with KVD 0.50 $350/hr $175 26 Groshong Total Fees 27 $13,525.50 Reduction: 28 1 The aforementioned excluded hours include work spent on matters that were 2 irrelevant to the contempt proceedings, including work related to a third-party’s 3 attempts to intervene in this action. They also include redundant billing for 4 appearances at hearings, which Mr. Kirby attested are not appropriately billed to 5 Plaintiff under counsel’s billing policies. (See ECF No. 295-2, at 3.) They also 6 include hours related to preparing the testimony of Mr. Chris Groshong, who was 7 retained by Plaintiff to serve as an expert in the area of cryptocurrency but was not 8 admitted as an expert in this matter. While the Court considers the time spent by 9 counsel consulting with Mr. Groshong regarding the nature of cryptocurrency and 10 its relation to Defendant’s contemptuous conduct to be reasonable, his testimony 11 was held by the Court not to be admissible and the Court finds counsel’s hours 12 spent preparing for such testimony therefore not compensable. Except as set forth 13 above, the Court finds the other attorney’s fees hours requested to be reasonable. 14 (See ECF No. 295-2, at 12-125.) Indeed, contrary to Defendant’s arguments, all 15 such remaining hours were related to investigating, exposing, halting, or 16 minimizing the damage of Defendant’s contempt rather than “ordinary litigation and 17 discovery expenses,” as they were necessitated by Defendant’s (and/or her 18 agents) attempts to transfer, conceal, dissipate, or squander assets and failure to 19 provide documents for Plaintiff’s review in violation of the Preliminary Injunction 20 and TRO, rather than the prosecution of Plaintiff’s underlying claims under 21 California’s Uniform Fraudulent Transfer Act (the “UFTA”).9 And while Defendant 22
23 9 Plaintiff initiated this action “seeking recovery of funds to which it claims an 24 interest as creditor, funds allegedly fraudulently transferred from Pacific Broker’s 25 Insurance Services (‘PBIS’) to Defendant . . . and her former husband.” (ECF No. 329-1, at 5 (citations omitted); see also id. at 6 (“The complaint alleges $2,500,000 26 was fraudulently transferred from PBIS to [Defendant].” (citations omitted)); see 27 generally, ECF No. 24 (Plaintiff’s operative second amended complaint).) On October 4, 2017, the Court entered the Preliminary Injunction that, inter alia, 28 1 objects to the number of hours expended by Plaintiff’s counsel in drafting relevant 2 filings and preparing for relevant hearings, Defendant has provided no evidence in 3 support of her objections and the Court concludes that the hours spent on such 4 matters were not excessive in light of the convoluted nature of Defendant’s 5 contemptuous conduct and her vehement defense thereof. Moreover, after 6 considering the Kerr factors, the Court concludes that no upward or downward 7 adjustment to the lodestar amount is warranted and that such amount constitutes 8 reasonable fees in this matter. 9 Further, having reviewed the litigation expenses billed by Plaintiff’s counsel 10 11 12 received in connection with the sale of PBIS to AmTrust” and required her to 13 “deposit in the registry of the Court . . . all funds already received in connection with the sale of PBIS to AmTrust” as well as any funds subsequently received by 14 Defendant from AmTrust or its agents. (ECF No. 69.) On August 8, 2018, the 15 Court entered the TRO that, inter alia, prohibited Defendant from transferring funds from any accounts associated with Caye International Bank or Rich Uncles, LLC 16 or any investment in real estate or cryptocurrency. (ECF No. 172.) The TRO 17 further compelled Defendant to provide Plaintiff’s counsel with copes of documents relating to Caye International Bank, Rich Uncles, LLC, and her investments in real 18 estate and cryptocurrency. (Id.) After a multiple-day evidentiary hearing, the Court 19 issued the Contempt Order on June 27, 2019, in which it held Defendant in contempt of the Preliminary Injunction for: (i) failing to deposit into the Court’s 20 registry at least $176,263.13 in PBIS sales proceeds in her possession in October 21 2017; (ii) commingling and transferring PBIS sales proceeds between October 2017 and September 2018; and (iii) failing to deposit into the Court’s registry at 22 least $551,750 in PBIS sales proceeds in her possession in July 2019. (ECF No. 23 287, at 26.) Further, Defendant was held in contempt of the TRO for: (i) transferring and disbursing funds held by Caye International Bank and Rich 24 Uncles, LLC in August and September 2018; and (ii) failing to provide Plaintiff’s 25 counsel with documents as required by the TRO. (Id.) A thorough explanation of Defendant’s contemptuous conduct and the further investigation and litigation 26 necessitated thereby is provided in the Contempt Order, which serves as a helpful 27 companion in the Court’s review of counsel for Plaintiff’s billing invoices and narrative summary. (See generally, ECF No. 287; see also ECF No. 295-2.) 28 1 for which recovery is presently sought (ECF No. 295-2, at 12-134), the Court finds 2 that some of the expenses sought were excessive or unnecessary to discovering 3 and litigating Defendant’s contempt. The Court therefore excludes from its award 4 of litigation expenses the following expenses billed: 5 Date Description Amount Billed 6 01/22/19 Experts Retainer for Expert Witness $2,000 7 04/16/19 Expert Witness Fees $1,212.5010 8 07/08/19 Experts Expert testimony regardin[g] $1,000 cryptocurrency 9 Total Expenses Reduction: $4,212.50 10 11 All of the disallowed expenses relate to Mr. Groshong’s service as an expert 12 witness on behalf of Plaintiff. (See ECF No. 295-2, at 2 (“Expenses total 13 $23,355.00 and include the fees of experts Brian Bergmark and Chris Groshong 14 . . . . The expenses requested in the Motion are reflected in the invoices themselves 15 with only one exception. The fees of expert witness Brian Bergmark, are billed to 16 Kirby & McGuinn and were paid directly by [Plaintiff].”).) Because Mr. Groshong 17 was not admitted as an expert in this matter, the Court declines to award Plaintiff 18 the expenses associated therewith. Nevertheless, as previously stated, the Court 19 considers the consultations between Plaintiff’s counsel and Mr. Groshong 20 regarding the nature of cryptocurrency and its relation to Defendant’s 21 contemptuous conduct to be reasonably necessary and a review of counsel’s 22 billing records reflects four (4) hours spent by Mr. Groshong on such consultations. 23 (See id. at 98, 105.) Further, while Plaintiff has failed to provide Mr. Groshong’s 24 25 26 10 Plaintiff requested reimbursement in the amount of $1,812.50 in connection with 27 this entry. The Court has reduced such amount by $1,212.50 to reflect its award of $600.00 in expenses related to Mr. Groshong’s services as Plaintiff’s 28 1 hourly rate for his services as a cryptocurrency consultant, the Court concludes 2 that a reasonable hourly rate for such services in the San Diego area would be 3 $150.00 per hour.11 Accordingly, the Court will award Plaintiff $600.00 in expenses 4 (i.e., four (4) hours at an hourly rate of $150.00) in connection with Mr. Groshong’s 5 consulting services. The Court finds the other expenses requested to be 6 reasonable. (See ECF No. 295-2, at 12-134.) Further, while Defendant argues 7 that “the claimed expert fees would have been incurred even in the absence of the 8 contempt proceedings” because “Plaintiff would still be required to prove the 9 tracing of funds by expert examination and testimony” (ECF No. 314, at 8), the 10 Court disagrees that such a showing would have been necessary, at least to the 11 extent necessitated by Defendant’s contemptuous conduct, to Plaintiff’s successful 12 prosecution of its underlying claims. (See, e.g., ECF No. 289 (granting summary 13 judgment to Plaintiff against Defendant on its claims under the UFTA).) 14 /// 15 /// 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 23 24 11 The Court considers Mr. Groshong’s services as a cryptocurrency consultant in 25 this case to be comparable to those of an accountant. Notably, the Criminal Justice Act Policies and Procedures for the Ninth Circuit provide that hourly rates between 26 $150 and $275 are presumptively reasonable for accountants. See Judicial 27 Council of the Ninth Circuit, Criminal Justice Act Policies and Procedures, Appendix 2, revised July 11, 2018, available at: https://www.ca9.uscourts.gov/cja/ 28 1 Based upon the foregoing and due consideration, Plaintiff's motion for 2 ||attorney’s fees and litigation expenses (ECF No. 295) is GRANTED IN PART, 3 DENIED IN PART. As a remedial sanction for Defendant’s contemptuous conduct 4 |las set forth in the Contempt Order (ECF No. 287), the Court awards Plaintiff 5 ||Odyssey Reinsurance Company its attorney’s fees in the amount of $199,295.50 6 ||and its expenses in the amount of $18,950.50, for a total of $218,246.00. The 7 ||Clerk shall enter judgment accordingly against Defendant Diane Dostalik (f/k/a 8 || Diane Nagby) in the above amounts. 9 IT IS SO ORDERED. 10 || Dated: December 27, 2019 11 Cay Miah’ 42 Honor le Barry Ted Moskoimtz United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28