United States v. Sixty-One Thousand Nine Hundred Dollars & No Cents ($61,900.00)

856 F. Supp. 2d 484, 2012 WL 1202015
CourtDistrict Court, E.D. New York
DecidedApril 5, 2012
DocketNo. 10 Civ. 1866(BMC)
StatusPublished
Cited by10 cases

This text of 856 F. Supp. 2d 484 (United States v. Sixty-One Thousand Nine Hundred Dollars & No Cents ($61,900.00)) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Sixty-One Thousand Nine Hundred Dollars & No Cents ($61,900.00), 856 F. Supp. 2d 484, 2012 WL 1202015 (E.D.N.Y. 2012).

Opinion

MEMORANDUM DECISION AND ORDER

COGAN, District Judge.

This civil forfeiture case was tried before me in a two-day bench trial. I found that the Government had failed to prove its theory that claimant, Robert Potenza, had intentionally structured cash deposits to avoid the reporting requirements of 31 U.S.C. § 5313(a). Familiarity with my Findings of Fact and Conclusions of Law, dated August 15, 2011, is presumed. I am now presented with claimant’s motion for attorneys’ fees and expenses in the amount of $940,810.60 as a substantially prevailing party under the Civil Asset Forfeiture Reform Act (“CAFRA”), 28 U.S.C. § 2465(b)(1)(A). The Government acknowledges claimant’s right to recover fees but challenges the amount, contending that the maximum reasonable award is $279,900.24.

For the reasons stated below, I find that some of the Government’s objections to claimant’s fee calculation are meritorious and I direct the parties to submit a revised calculation.

[488]*488I. Allegedly Unrecoverable Items

CAFRA provides that, “in any civil proceeding to forfeit property under any provision of Federal law in which the claimant substantially prevails, the United States shall be liable for reasonable attorney fees and other litigation costs reasonably incurred by the claimant.” 28 U.S.C. § 2465(b)(1)(A). It is undisputed that claimant meets the Supreme Court’s definition of a “prevailing party” under this provision of CAFRA, see Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603, 121 S.Ct. 1835,149 L.Ed.2d 855 (2001), and is therefore entitled to recover the attorneys’ fees and costs that he reasonably expended in defending against the Government’s lawsuit.

The key word in CAFRA’s fee-shifting provision is “reasonable.” Courts within the Second Circuit generally employ the “presumptively reasonable fee” method when analyzing attorneys’ fees motions. See, e.g., Arbor Hill Concerned Citizens Neighborhood Ass’n v. Albany County & Albany County Bd. of Elections, 522 F.3d 182, 190 (2d Cir.2008). Under this method, courts multiply the “amount of time reasonably spent by counsel” by a reasonable hourly rate to derive a presumptively reasonable overall fee which may be subject to an upward or downward departure for various reasons. Cover v. Potter, No. 05-CV-7039, 2008 WL 4093043, at *5 (S.D.N.Y. Aug. 29, 2008). The Arbor Hill method requires this Court to determine in the first instance whether the hours expended by counsel were reasonable in light of the nature of this case.

A. Champion

Claimant seeks $40,465.46 for fees and expenses paid to Richard Champion, Esq. The basis for the claim is that Champion was both co-counsel to claimant in this proceeding (although he never appeared as counsel) and a designated, but uncalled, expert witness. Claimant asserts that Champion is “an experienced tax controversy attorney,” and that he educated claimant’s counsel of record, Sean O’Shea of O’Shea Partners LLP, “by a thorough review and analysis of the business structure and practices” of claimant’s company and “by working as a potential expert witness and strategic advisor.”

O’Shea avers that he did not know anything about claimant’s business when he started this case, and thus needed Champion. However, Champion presumably did not know anything about the business either. Although claimant asserts that Champion’s expertise was necessary in this case, there is no showing of why it was necessary. The theory on which claimant pressed its claim, and the theory on which it prevailed, is that claimant is a simple man running a simple cash business with no nefarious intent. Claimant and his sister fully explained to the Court how they run the business, and there is no reason that they could not have explained it to claimant’s counsel the same way. This is presumably why it was unnecessary to call Champion at trial.

Nevertheless, the Government brought this cost, in part, upon itself. It relied heavily, for both investigative and testimonial purposes, on a specially-retained consultant, an experienced financial investigator, who testified as an expert witness. He rendered a report and his testimony contained numerous inferences based on his observations and experience. Claimant’s counsel would have been remiss to not have that report thoroughly vetted by someone of comparable expertise. Thus, at the very least, preparation of a rebuttal report was warranted. In addition, Champion provided some value in assisting counsel in preparing for depositions, and [489]*489undertook a number of other tasks that otherwise would have had to be performed by the O’Shea firm. If the O’Shea firm had performed these tasks, it would very likely have been at a higher rate, as Champion’s rate was below that of all of the lawyers in the O’Shea firm.1

Having reviewed Champion’s time slips, I find that Champion’s charges should be reduced by 30%. Although it was reasonable for claimant to hire Champion for some purposes, it was not reasonable to expend resources having Champion explain claimant’s business to the O’Shea lawyers who could have spent that time learning about the business themselves.

B. Graf and Harrington, Ocko, and Monk LLC

Claimant seeks reimbursement for additional professionals aside from its counsel of record and Champion. It appears that claimant’s accountants — Graf Repetti & Co. (“Graf’) — testified at deposition for two days at the request of the Government, and billed claimant for their time. (Although claimant’s moving papers did not request reimbursement for Grafs time at deposition, his reply papers note that this was omitted in error.) In addition, Graf retained its own counsel — Harrington, Ocko, & Monk LLC — which charged legal fees to Graf, and Graf passed along those charges for claimant to pay. Claimant thus seeks reimbursement for Grafs law firm’s fees as well.

I agree with the Government that the pass-through of these fees would be unreasonable. I do not see why a non-party witness, let alone its lawyers, is entitled to professional fees simply for explaining its accounting work at two depositions. There is no suggestion that Graf had legal exposure as a result of its work so that it would have a need for representation, and even if it did, that would strike me as Grafs problem, not its client’s. Claimant may have agreed to reimburse its accountants for these fees (although no contractual basis for doing so has been presented to me) merely as a way of maintaining its professional relationship with Graf, but that does not make it a recoverable item. Claimant spent these fees as a cost of doing future business with Graf; the fees were not a cost of defending this claim.

C. The Motions in Limine

The Government contends that reimbursement for the legal fees incurred in two motions in limine

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856 F. Supp. 2d 484, 2012 WL 1202015, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-sixty-one-thousand-nine-hundred-dollars-no-cents-nyed-2012.