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Zoroastrian Center and Darb-E-Mehr of Metropolitan Washington, D.C. v. Rustam Guiv Foundation

United States District Court, E.D. Virginia, Alexandria Division

March 24, 2017

ZOROASTRIAN CENTER AND DARB-E-MEHR OF Metropolitan Washington, D.C., Plaintiff,
v.
Rustam Guiv Foundation, et al., Defendants. Time Keeper Total Hours Worked Hours Attributed to Slander of Title Other Hours Allowed Billing Rate Billing Judgment Adjustment Percentage Adjusted Amount TOTALS 383.1 14.1 369 $90, 602.39 Date of Service Amount Billed Hours Description Date of Service Amount Billed Hours Description Date of Service Amount Billed Hours Description Time Keeper Total Hours Worked Hours Attributed to Slander of Title Other Hours Allowed Billing Rate Billing Judgment Adjustment Percentage Adjusted Amount TOTALS 383.1 15.2 367.9 $89, 641.69 Time Keeper Name Years of Practice Experience Hourly Kate Years of Experience Hourly Rate Time Keeper Total Hours Worked Hours Subject to 10% Reduction for Relationship to Fee Issues Expressly Non-fee Hours Allowed Billing Rate Adjusted Amount TOTALS 383.1 1133 58.4 $5737.00

          MEMORANDUM OPINION

         This matter comes before the Court on remand from the Fourth Circuit Court of Appeals, Dkt. No. 140, and on Defendants' Motion for Attorney's Fees and Costs on Appeal. Dkt. No. 143. The Court reviews this matter after receiving supplemental briefing from Defendants. Dkt. No. 157. The Fourth Circuit remanded the case only with respect to the calculation of attorney's fees. For the reasons discussed below, the Court hereby ORDERS that Defendants' Motions are GRANTED IN PART and DENIED IN PART. Defendants are entitled to $89, 641.69 in fees incurred in the district court proceeding and $57, 237.00 in fees incurred on appeal less a credit of $99, 717.85 that Plaintiff previously tendered to satisfy the original fee award. Defendants' Motion for Costs on Appeal is DISMISSED WITHOUT PREJUDICE and any motions for costs which are not time-barred as discussed below may be refiled with the clerk of the appropriate court.

         I. Background

         This demand for attorney's fees arises out of litigation over a failed effort to construct a Zoroastrian worship center in Fairfax, Virginia. Plaintiff, Zoroastrian Center and Darb-E-Mehr of Metroplitan Washington D.C. entered into a ninety-nine year lease with Defendants Rustam Guiv Foundation of New York, the land owner, and other trustee defendants. Following difficulties in the relationship, Defendants terminated the lease.[1] Article XIII of the parties' lease states that "In the event of any litigation between the parties hereto, the prevailing party in such litigation shall be entitled to recover from the other party its costs, expenses and reasonable attorney's fees therein incurred." See Dkt. No. 1-1, Exh. C at 10-11. Plaintiff sued in Virginia state court for a declaratory judgment with respect to its rights under the lease. Defendants removed the case to federal court and filed three counterclaims against Plaintiff.

         The Court granted Defendants' Motion for Summary Judgment and on two of the three counterclaims on May 12, 2014. Dkt. No. 81. One of the counterclaims, for slander of title, was dismissed with prejudice. Id. The Court subsequently ruled that Defendants were the "prevailing party" in the dispute and on July 22, 2014 granted in part Defendants' Motion for Attorney's Fees awarding $99, 717.85 in fees and no additional costs or expenses. Dkt. No. 93. Plaintiff timely appealed to the Fourth Circuit on August 19, 2015 with respect to the jurisdiction of this Court to hear the case, the merits of the decision, and the award of fees. Dkt. No. 136. The Fourth Circuit issued its judgment on May 4, 2016 affirming the decision of the Court with respect to the jurisdictional and merits findings, but reversing and vacating the Court's award of attorney's fees for failure to disambiguate fees awarded for successful claims from those of Defendants' counterclaims upon which they were not successful. See Dkt. Nos. 139, 140. The Court ordered a new hearing on the issue of attorney's fees for June 24, 2016 at which time the Court took under advisement the parties' arguments and requested further briefing on die right to attorney's fees incurred on appeal. Dkt. No. 152. The parties supplied additional briefing on the fee issues and declined oral argument. The Court entered an order denying Defendants' Motion in so far as the methodology used to calculate fees was inappropriate and instructed the Defendants to provide an alternative method for calculating appropriate fees. Dkt. No. 156. Defendants submitted an additional memorandum and supporting exhibits on January 25, 2017. Dkt. No. 157.

         II. Legal Standard

         As the Fourth Circuit observed, "Virginia supplies the substantive law here since the district court was sitting in diversity." Dkt. No. 140, at 13 (citing Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d 114, 118 (4th Cir. 2004)). Pursuant to Virginia law, "parties are free to draft and adopt contractual provisions shifting the responsibility for attorneys' fees to the losing party in a contract dispute." Ulloa v. QSP, Inc., 271 Va. 72, 81 (2006). If, as in this case, the contract provides for an award of fees to the prevailing party, that party bears "the burden of establishing, as an element of its prima facie case, that the attorneys' fees it seeks are reasonable in relation to the results obtained and were necessary." Chawla v. BurgerBusters, Inc., 255 Va. 616, 624 (1998). "[U]nder contractual [fee-shifting] provisions a party is not entitled to recover fees for work performed on unsuccessful claims." Ulloa, 271 Va. at 82.

         III. Discussion

         The parties dispute whether Defendants have set forth a prima facie case for attorney's fees which deducts the amount of labor devoted to the slander of title claim. The parties also dispute whether and to what extent Defendants are entitled to attorney's fees incurred on appeal.

         A. Attorney's Fees for District Court Proceedings

         After the Court rejected Defendants' first attempt to apportion fees to their successful claims and discount labor attributable to their unsuccessful slander of title claim, Defendants submitted supplemental briefing in support of the apportionment of fees. Dkt. No. 157. Defendants now contend that they are entitled to no less than $90, 602.39 in attorney's fees for work expended prior to the appeal.

         Defendants reach this amount through a two-step process. First, Defendants have highlighted all of the billing records they believe are relevant to the slander of title issue for each of the four timekeepers previously considered by the Court in its original fee determination. Those billing records total 14.1 hours and, relying on the hourly rates the Court utilized in its initial award, Defendants reduced the amount of district court fees to $96, 242.00.[2] Second, in direct response to the Court's earlier ruling that the "page count method" of apportioning fees utilized in JTH Tax Inc. v. H&R Block Eastern Tax Services, Inc., 245 F.Supp.2d 756 (E.D. Va. 2002) was an inappropriate mechanism for apportioning fees in this case, Defendants exercised their billing judgment to further reduce each timekeeper's fees "by the same percentage as the identified time relates to the original award amount." Stated another way, Defendants divided the total hours worked by the hours not devoted to the slander of title claim (the "billing judgment adjustment percentage") and then divided the "other hours" by that percentage as reflected in the following table reproduced from Defendants' supplemental brief:

Time Keeper
Total Hours Worked
Hours Attributed to Slander of Title
Other Hours
Allowed Billing Rate
Billing Judgment Adjustment Percentage
Adjusted Amount
Abbie Green
30.7
3.7
27
$1 45.00
12%
$3, 445.20
Virginia Flynn
58.9
5.3
53.6
$200.00
9%
$9, 755.20
Massie Cooper
146.4
0
146.4
$200.00
9%
$26, 644.80
Billy B. Ruhling, II
147.1
5.1
142
$368.50
3%
$50, 757.19
TOTALS
383.1
14.1
369
$90, 602.39

Dkt. No. 157 at 5.

         Defendants' supplemental brief better delineates the unsuccessful slander of title claim from the successful claims. Accordingly, the Court adopts the methodology that Defendants employed. Nevertheless, the figures cited in Defendants' table do not precisely match the hours highlighted in Defendants' billing records. See Dkt. No. 157, Exhs. 3, 5. In addition, the billing records include instances of block billing which obscure the amount of time devoted to the unsuccessful claim.[3] Further reduction is necessary to account for the block billing. The memorandum explores each of the timekeepers and sets forth the instances in which amounts were block billed before providing a final table with the amended amounts.

         1. Abbie Green

         Defendants submit that Abbie Green contributed 30.7 hours to the district court proceedings and that 3.7 of those hours were devoted to the slander of title issue. Defendants further reduced the total award by a 12% billing judgment adjustment percentage. Ms. Green's hourly rate was $200 but her allowed rate for this litigation was $145.

         The following table, reproduced from Defendants' billing records, sets forth Ms. Green's billing entries related, at least in part, to the slander of title claim. For descriptions containing more than one entry, the section which Defendants highlighted is in bold.

Date of Service
Amount Billed
Hours
Description
11/6/2013
$171
0.9
Review Plaintiffs Opposition to Renewed Motion for Judgment on the Pleadings, Memorandum in Support of Motion to Dismiss, Motion to Dismiss Counterclaim or in the Alternative to Dismiss Counts II and III, and Answer and Defense to Counterclaim; calendar Hearing on 11/22/13 for Bill Ruhling.
11/11/2013
$456.00
2.4
Calendar deadline for Response to Motion to dismiss; continue reviewing and finalize Reply in Support of Renewed Motion for Judgment; review Memorandum in Support of Motion to Dismiss.
11/12/2013
$266.00
1.4
Review and cite-check Counterclaim Plaintiff's Opposition to Motion to Dismiss Counterclaim
11/14/2013
$361.00
1.9
Review and cite-check Opposition to Motion to Dismiss Counterclaim or in the Alternative to Dismiss Counts II and III; email Bill Ruhling re same; finalize Opposition with Eastern District Court of Virgina, Alexandria Division.

         Defendants assessed only 3.7 hours of Ms. Green's time to the slander of title claim. However, their records show that besides the entries on November 12 and 14 which do add up to 3.7, Ms. Green devoted time in the preceding weeks to the slander of title claim. The billing records obscure the amount of time that Ms. Green devoted to the slander of title claim in the remaining two entries. On November 6, 2013, Ms. Green reviewed three different documents and calendared a hearing for a total of 0.9 hours of billed work. Because one of those three documents was attributable to the slander of title claim, one-third of the time is assigned to the unsuccessful claim. The calendaring activity takes an insignificant amount of time and is excluded from the billing entry. For the same reason, despite the fact that the November 11, 2013 entry is block billed, the Court does not assign any of that time to the unsuccessful claim because the highlighted calendaring activity was not a material part of the billed hours for that entry.

         Factoring in the additional 0.3 hours, Ms. Green worked 30.7 hours, of which 4.0 were devoted to the unsuccessful slander of title claim. Thus her other hours were 26.7 billed at a rate of$145 for a total of $3, 871.50. Applying Defendants' billing reduction formula, this result is further reduced by a billing adjustment of 15%[4] for a final award of $3290.78.

         2. Virginia Flynn

         Next, Defendants submit that Virginia Flynn contributed 58.9 hours to the district court proceedings and that 5.3 of those hours were devoted to the slander of title issue. Defendants further reduced the total award by a 9% billing judgment adjustment percentage. Ms. Flynn's hourly rate in the entries is $285 but her allowed billing rate was $200.

         The following table, reproduced from Defendants' billing records, sets forth Ms. Flynn's billing entries related, at least in part, to the slander of title claim. For descriptions containing more than one entry, the section which Defendants highlighted is in bold.

Date of Service
Amount Billed
Hours
Description

2/27/2014

$630

2.1

Review and analysis of the law surrounding slander of titie and standard under summary judgment,

2/27/20! 4

$1, 860.00

6.2

Draft legal arguments for summary judgment brief, including slander of title, breach of contract, declaratory judgment, and injunction sections.

2/28/2014

$1, 410

4.7

Expand declaratory judgment section of brief to include standard under breach of contract section (2.3); revise undisputed statement of facts (2.1); review and analysis of law regarding absolute privilege and judicial statements (1.6); revise memorandum in support of summary judgment for final edits and to prepare for filing (3.1) (N/C-4.4)

         Defendants assessed 5.3 hours of Ms. Flynn's time to the slander of title claim. The 2.1 hour entry on February 27, 2014 is indisputably associated with the unsuccessful claim. Conversely, the February 28, 2014 entry can be excluded in its entirety. Defendants clearly set out how many hours they devoted to the slander of title claim in that entry' (1.6) but they wrote off more than that amount in the final billing entry. Because Defendants are free to choose which work they write off, their decision to write off the unsuccessful claims is appropriate and the remainder of that billing entry is attributable solely to successful claims. The 6.2 hour entry on February 27, 2014 is not so clearly delineated. Defendants did not clearly indicate how many hours were devoted to the different parts of the summary judgment briefing. Nevertheless, the balance of Ms. Flynn's hours attributable to unsuccessful claims is 3.2. It is generous to assume that over half of the time drafting the summary judgment brief focused on the slander of title claim when the billing entry indicates at least four different claims that were addressed. Because Defendants are in the best position to characterize this use of time, the Court adopts Defendants' breakdown of Ms. Flynn's time.

         3. Massie Cooper

         Third, Defendants submit that Massie Cooper contributed 146.4 hours to the district court proceedings and that zero of those hours were devoted to the slander of title issue. Defendants nevertheless reduced the total award by a 9% billing judgment adjustment percentage. Because Massie Cooper did not contribute any hours to the slander of title issue, it is unclear how Defendants calculated that her bill should be subject to a 9% downward adjustment. However, because the billing adjustment was an exercise of Defendants' judgment, the Court does not disturb the fee award demand for Ms. Cooper.

         4. ...


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