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Branch Banking and Trust Co. v. Jarrett

United States District Court, D. Nevada

September 16, 2014

BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation, Plaintiff,
v.
MICHAEL E. JARRETT et al., Defendant.

ORDER

ROBERT C. JONES, District Judge.

Before the Court is Plaintiff's Motion for Attorneys' Fees (ECF No. 71) as well as Defendants' Motion to Seal (ECF No. 83) and Defendants' Motion for Stay of Execution on Judgment (ECF No. 78).

I. BACKGROUND

Clock Tower Center, LLC ("Clock Tower") borrowed $3, 400, 000.00 from Colonial Bank, N.A. secured by property located in Gardnerville, Nevada. Colonial Bank's interest in the loan was acquired by Plaintiff. Clock Tower defaulted on the loan and eventually filed for bankruptcy. The Bankruptcy Court for the District of Nevada confirmed Clock Tower's plan for reorganization and Plaintiff subsequently filed a lawsuit seeking recovery for the unpaid principle due on the loan plus interest. (Compl., ECF No. 1). Plaintiff received a $3, 488, 129.29 judgment in its favor when this Court granted Plaintiff's summary judgment motion (ECF No. 69). Plaintiff now requests attorneys' fees in the amount of $239, 594.40 for expenses incurred during the litigation. (Pl.'s Mot. Att'y Fees 1, ECF No. 71).

Defendants have filed a Notice of Appeal (ECF No. 73) and now move to have the judgment stayed pending the appeal. Instead of obtaining a supersedeas bond to secure the judgment while the appeal is pending, Defendants request that the Court waive the bond requirement, or alternatively, that they be allowed to use the Clock Tower property as security for the judgment. (Defs.'s Mot. Stay of Execution on J. 4-5, ECF No. 78). To support their request, Defendants submitted financial records from 2013 for Defendant Bing to demonstrate ability to pay the judgment. Plaintiff's Opposition does not object to Defendant's request of a stay, but instead it argues against waiving the bond requirement or allowing Defendants to use alternative security to secure the judgment. (Pl.'s Opp'n to Defs.'s Mot. Stay of Execution on J. 1-2, ECF No. 88).

II. DISCUSSION

A. Plaintiff's Motion for Attorneys' Fees

Federal courts sitting in diversity award attorneys' fees in accordance with state law when state substantive law applies. Johnson v. Incline Vill. Gen. Imp. Dist., 5 F.Supp.2d 1113, 1114 (D. Nev. 1998). The calculation of the amount of attorneys' fees is a substantive state right. Mangold v. Cal. Pub. Utils. Comm'n, 67 F.3d 1470, 1478 (9th Cir. 1995). Under Nevada law, "the method upon which a reasonable fee is determined is subject to the discretion of the court" and "is tempered only by reason and fairness." Shuette v. Beazer Homes Holdings Corp., 124 P.3d 530, 548-49 (Nev. 2005) (quoting Univ. of Nev. v. Tarkanian, 879 P.2d 1180, 1188, 1186 (Nev. 1994)). The court is not limited to one specific approach when calculating fees, but it must consider factors such as the advocate's professional qualities, the nature of the litigation, the work performed, and the result of the litigation. Id. at 549 (citing Brunzell v. Golden Gate Nat'l Bank, 455 P.2d 31, 33 (Nev. 1969)).

The Guarantee Agreement ("the Agreement") governing Clock Tower's loan states that "[i]f any legal action or any arbitration or other proceeding (including a proceeding in bankruptcy) is brought for the enforcement of any provisions of this Guarantee... the successful or prevailing party shall be entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding...." (Guarantee Agreement ΒΆ 9, ECF No. 71-1). Defendants' Opposition does not challenge whether this provision of the Agreement entitles Plaintiff to attorneys' fees. (Defs.'s Opp'n to Pl.'s Mot. Att'y Fees 2, ECF No. 84). Rather, Defendants argue that the amount of fees that Plaintiff seeks is unreasonable. ( Id. )

Plaintiff's motion addresses the Brunzell factors, and it includes an affidavit signed by counsel authenticating the billing records attached to the motion as required by LR 54-16. However, Defendants argue that the "block billing" style of Plaintiff's Fee Report makes it impossible to determine whether Plaintiff's counsel's work was reasonable or necessary. ( Id. at 2-4). They also argue that without an unredacted billing statement, Defendants and the Court cannot fully evaluate the requested fees. ( Id. at 4). The Court disagrees with both arguments. Block billing is problematic only if it inhibits the court's ability to determine whether the time spent and the work accomplished were reasonable. See Welch v. Metro. Life Ins. Co., 480 F.3d 942, 948 (9th Cir. 2007) (noting that black billing "makes it more difficult to determine how much time was spent on particular activities"). The burden on Plaintiff's counsel is to list the hours worked and identify the general subject matter of the time expended. See Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1121 (9th Cir. 2000) (citation omitted).

In this case, Plaintiff's counsel's Fee Report contains over 350 time entries. The majority of the entries are either single actions or activities that appear logically related to one another, such as researching law and drafting motions, ( see, e.g., Fee Report 10, ECF No. 71-2), or editing motions and drafting declarations, ( see, e.g., id. at 16). The Court acknowledges that there are entries containing multiple activities in a block billing format. Defendants, however, do not cite to any entries that they feel are problematic. They instead take issue with Plaintiff's time keeping reflected in the Fee Report as a whole, which the Court finds unpersuasive considering the low number of true block entries relative to the 356 total entries. Moreover, the Court's independent review of the Fee Report did not reveal any block entries of particular concern. Those blocks containing the largest amounts of time expended also include time intensive activities such as drafting motions, ( see, e.g., id. at 4, 10), conducting depositions, ( see, e.g., id. at 16), and attending hearings, ( see, e.g., id. at 16, 21). The explanations contained in the block entries sufficiently allow the Court to determine the reasonableness and necessity of each activity. See Secalt S.A. v. Wuxi Shenxi Constr. Mach. Co., 668 F.3d 677, 690 (9th Cir. 2012) (citing Hensley v. Eckerhart, 461 U.S. 424, 437 n.12 (1983)) (stating that counsel is not required to record in great detail "how each minute of his time was expended").

The Court also finds that the majority of the redacted portions of the Fee Report do not unduly inhibit its ability to determine the reasonableness of Plaintiff's counsel's entries. Not every entry is redacted and the entries that do contain redactions present pertinent information except the specific subject of conversations, conferences, and in some instances, research. ( See, e.g., Fee Record 2, 5, 16). Cf. Arndell v. Robinson, Belaustegui, Sharp & Low, No. 3:11-cv-469-RCJ-VPC, 2013 WL 1121802, at *2 (D. Nev. Mar. 14, 2013) (stating that the party seeking attorneys' fees had redacted every description of work performed making it impossible for the court to determine reasonableness). Plaintiff's counsel believes the redactions necessary since Defendants are appealing the judgment awarded in this case to the Ninth Circuit, and the entries in question contain information covered by the attorney-client privilege and the work-product privilege. (Pl.'s Reply to Defs.'s Opp'n 6, ECF No. 89). Defendants contend that Plaintiff's counsel possessed extensive knowledge on the legal issues involved in this case. (Defs.'s Opp'n to Pl.'s Mot. Att'y Fees 5). They assert that Plaintiff's redactions to their Fee Report demonstrate a failure to explain why additional research was necessary in this particular case or whether the research conducted was reasonable.

Counsel certainly benefits from familiarity with a specific area of law. It is that familiarity that increases the value an attorney contributes to a client's case. Knowledge and previous experience with particular legal issues surely aid attorneys when addressing similar problems for other clients. However, familiarity with an area of law does not equate to mastery of all legal intricacies as they relate to a client's unique situation. The legal issues presented in this case were sufficiently complex that Defendants' themselves invested considerable resources in defending against Plaintiff's complaint. The Court finds that Plaintiff's counsel's previous participation in the Clock Tower bankruptcy and litigation involving personal guarantees, NRS Chapter 40, and Assembly Bill 273 is not dispositive evidence that the research conducted in this case is unreasonable. Even where there may be overlap between legal questions between cases, the specific facts of a particular case generate new questions and ideas that require inquiry. Thus, the Court finds that Defendants' arguments regarding Plaintiff's counsel's previous experience does not require Plaintiff to submit a completely unredacted copy of its counsel's Fee Record. See MGIC Indem.Corp. v. Weisman, 803 F.2d 500, 505 (9th Cir. 1986) (holding that certain redactions were allowable concerning matters of attorney-client privilege).

The exhibit shows that Plaintiff's counsel used a partner-associate approach to complete the work and that lead counsel who is a partner at the firm used an associate at a lower billing rate to complete most of the work. The litigation in this case lasted for just over a year and included five separate motions, three of which were filed by Defendants, in addition to several hearings. Plaintiff prevailed on every one of those motions, including its motion for summary judgment in which it was awarded complete repayment plus interest on the loan at issue. The fees Plaintiff seeks are roughly 6% of the value of the overall $3, 488, 129.29 judgment. The total hours billed by all attorneys and staff working on the case during its course totaled 826.7 hours, which Plaintiff's counsel attributes to document review, research, drafting pleadings and motions, drafting correspondence, conducting discovery, and preparation and attendance at various hearings. The narratives contained in the Fees Report support ...


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