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Denton v. Pennymac Loan Services, LLC

United States District Court, E.D. Virginia, Newport News Division

May 12, 2017

DAVID D. DENTON, Plaintiff,
v.
PENNYMAC LOAN SERVICES, LLC, Defendant. Name Hours Hourly Rate Total Susan $ $ $ $ Name Hours Litigation Fee Petition TOTAL Date Description Requested Hours Name Hours Litigation Fee Petition Total Hours Name Hours Awarded Rate Awarded Total Date EE Activity Description Cost Qty. Line Total

          OPINION AND ORDER

          MARK S. DAVIS UNITED STATES DISTRICT JUDGE

         This matter is before the Court on a motion seeking attorney's fees[1] and costs, ECF No. 43, and a motion for leave to file supplemental authority, ECF No. 56, filed by Plaintiff David D. Denton ("Plaintiff"). Plaintiff's motion for attorney's fees and costs is filed pursuant to the Fair Credit Reporting Act, 15 U.S.C. §§ 1681o(a)(2) and 1681n(a)(3), based upon Plaintiff's acceptance of Defendant's Rule 68 Offer of Judgment. For the reasons discussed below, Plaintiff's motion seeking attorney's fees and costs is GRANTED, but the amount of such award is less than Plaintiff requested, and Plaintiff's motion for leave to file supplemental authority is DISMISSED as MOOT.

         I. Factual and Procedural Background

         On May 2, 2016, Plaintiff filed a complaint against Equifax Information Services, LLC, Experian Information Solutions, Inc., Trans Union, LLC ("Credit Reporting Agencies"), and PennyMac Loan Services, LLC ("Defendant"), [2] alleging a violation of the Federal Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. Compl. ¶ 1, ECF No. 1. According to Plaintiff, while acting as his mortgage servicer, Defendant incorrectly reported to the Credit Reporting Agencies that Plaintiff was thirty days delinquent on a mortgage payment, id. ¶ 28, and the Credit Reporting Agencies then deliberately and knowingly published this derogatory information regarding Plaintiff's credit, id. ¶ 29. Prior to filing his complaint, Plaintiff disputed the inaccuracies within his consumer credit report directly with Defendant and with each of the Credit Reporting Agencies. Pl.'s Opening Br. 1, ECF No. 44. However, the dispute process in which Plaintiff engaged did not resolve the dispute in his favor. Id.

         Plaintiff alleged two specific claims against Defendant in its capacity as his mortgage servicer: Count Six-violation of 15 U.S.C. § 1681s-2(b) (1) (A) "by failing to fully and properly investigate" Plaintiff's disputes regarding the inaccurate reporting of his mortgage payment, id. ¶ 70, and Count Seven-violation of 15 U.S.C. § 1681S-2 (b) (1) (B) "by failing to review all relevant information provided by the consumer reporting agencies, " id. ¶ 91. While Plaintiff did not demand a specific dollar amount in his complaint, Plaintiff requested relief in the form of actual damages, statutory damages, punitive damages, costs and attorney's fees, specific performance and injunctive relief, and "such other relief the Court deems just and proper." Id. ¶ 99.

         Plaintiff's billing records reflect contact with Defendant's counsel on August 18, 2016, to inquire about settlement. Billing Records 19, ECF No. 44-1. Plaintiff initially offered to settle the case against Defendant for $120, 000, and on November 10, 2016, Defendant responded with a counteroffer to settle for $5, 000. Emails Between Counsel, ECF No. 48-1, at 15. Plaintiff's counsel immediately responded, reducing Plaintiff's settlement demand to $119, 000, but explaining that " [w] e will not counter a response that is outside of a reasonable settlement range." Id. As of November 10, 2016, when this settlement discussion occurred, Plaintiff had accrued attorney's fees in the amount of $51, 193.75. 2d Rotkis Decl. ¶ 3, ECF No. 52-1. Between November 10, 2016, and November 30, 2016, the parties continued to pursue discovery, including coordinating, preparing for, and taking depositions. Id. ¶ 4. Then, on November 30, 2016, Defendant made the following Offer of Judgment:

Pursuant to Rule 68 of the Federal Rules of Civil Procedure, Defendant Pennymac Loan Services, LLC N.A. ("Pennymac"), by counsel, hereby offers to allow judgment to be taken against it in this action as to all claims asserted against it by Plaintiff David D. Denton ("Plaintiff"), in the amount of (a) Five Thousand Dollars ($5, 000.00) for actual, statutory, and/or punitive damages; and (b) all reasonable costs incurred in this action to the date of this offer, including reasonable attorneys' fees incurred as of the date of this offer, as determined by the Court, payable to Plaintiff's Counsel.

         Offer of J., ECF No. 41-1 (emphasis added). The same day, Plaintiff accepted the Offer of Judgment and filed a notice of acceptance with the Court. Not. of Acceptance of R. 68 Offer of J., ECF No. 41.

         After the parties failed to agree on reasonable attorney's fees, Plaintiff filed a motion seeking attorney's fees and costs, ECF No. 43, and a memorandum and exhibits in support, ECF No. 44. On January 18, 2017, Defendant filed a brief in response, arguing that the Court (1) should reduce Plaintiff's requested fee award due to Plaintiff's limited success and (2) should exclude fees incurred after the Offer of Judgment. ECF No. 48, at 5, 13. Plaintiff filed a reply brief on January 28, 2017, together with additional supporting documentation. ECF No. 52. On April 7, 2017, Plaintiff submitted a motion for leave to file supplemental authority in support of his motion for attorney's fees and costs. ECF No. 56. Defendant responded with a brief in opposition on April 20, 2017. ECF No. 57. Having been fully briefed, Plaintiff's motion for attorney's fees and costs, and Plaintiff's motion to supplement, are ripe for review.

         II. Standard for Attorney's Fees Award

         A. Entitlement to a Fee Award

         Traditionally, under the "American Rule, " each party in a lawsuit bears its own attorney's fees. Hensley v. Eckerhart, 461 U.S. 424, 429 (1983) . However, Congress may shift the attorney-fee burden through a fee-shifting statute, id., such as the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, et seq. Under FCRA, Congress directed courts to award "the costs of the action together with reasonable attorney's fees" to a consumer "in the case of any successful action to enforce liability" under this statute. 15 U.S.C. § 1681o; see also 15 U.S.C. § 1681n(a)(3).

         The parties also may shift and/or limit the attorney-fee burden, such as by an offer of judgment made pursuant to Federal Rule of Civil Procedure 68(a). See Grissom v. The Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008) (holding that, under the Rule 68 offer of judgment in the case, plaintiff was entitled to attorney's fees up to the date of the offer). Under Rule 68(a), a defendant may "serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued." Fed.R.Civ.P. 68(a). If, within 14 days, the plaintiff serves written notice accepting the defendant's offer of judgment, the clerk must then enter the judgment. Id.

         After a plaintiff accepts a Rule 68 offer of judgment, a plaintiff may recover attorney's fees according to the "specified terms" in the offer of judgment. Fed.R.Civ.P. 68(a); Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, 12 Fed. Prac. & Proc. Civ. § 3005.1 (2d ed. Apr. 2017 update) ("But here again defendants can provide otherwise in their [Rule 68] offers; if the offer explicitly limits the fee award to fees incurred before the date of the offer, further legal work should not be included."); see Guerrero v. Cummings, 70 F.3d 1111, 1114-1113 (9th Cir. 1995) (holding that an offer of judgment for "reasonable attorney fees and costs incurred . . . prior to the date of this offer in an amount to be set by the court" unambiguously excluded attorney's fees in preparation of the fee petition). Unless the "specified terms" in the offer of judgment provide otherwise, a plaintiff has two potential avenues for recovery of attorney's fees: (1) under Rule 68, as "costs then accrued, " or (2) under a fee-shifting statute, such as FCRA. Cooper v. Verifications, Inc., No. 1:04-CV-385-TS, 2008 WL 5332190, at *4 (N.D. Ind. 2008) .

         B. Calculation of a Reasonable" Fee Award

         If the plaintiff is entitled to attorney's fees, the Court must then calculate "reasonable" attorney's fees for the case. The United States Court of Appeals for the Fourth Circuit has outlined a three step framework for calculating a reasonable attorney's fee:

First, the court must "determine the lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate." Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009). To ascertain what is reasonable in terms of hours expended and the rate charged, the court is bound to apply the factors set forth in Johnson v. Georgia Highway Express Inc., 488 F.2d 714, 717-19 (5th Cir. 1974). Id. at 243-44. Next, the court must "subtract fees for hours spent on unsuccessful claims unrelated to successful ones." Id. at 244. Finally, the court should award "some percentage of the remaining amount, depending on the degree of success enjoyed by the plaintiff." Id.

McAfee v. Boczar, 738 F.3d 81, 88 (4th Cir. 2013), as amended (Jan. 23, 2014) (footnote omitted).[3]

         The calculation of a lodestar figure is "[t]he most useful starting point for determining the amount of a reasonable fee, " because it "provides an objective basis on which to make an initial estimate of the value of a lawyer's services.'7 Hens ley, 461 U.S. at 433; see Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551 (2010) (characterizing the lodestar calculation as "the guiding light of . . . fee-shifting jurisprudence") (quotation marks and citation omitted). The fee applicant bears the burden of proving the reasonableness of the hours expended and the requested hourly rates, which generally requires submission of the attorney's own affidavit and timesheets as well as "'satisfactory specific evidence of the prevailing market rates in the relevant community for the type of work for which [the attorney] seeks an award."' Grissom, 549 F.3d at 321 (quoting Plyler v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990)). In evaluating the submissions in order to determine both a reasonable rate and a reasonable number of hours expended, the lodestar analysis is guided by the following twelve factors (the "Johnson factors"):

(1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the unde sir ability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys' fees awards in similar cases.

Barber v. Kimbrell's Inc., 577 F.2d 216, 226 n.28 (4th Cir. 1978) (adopting the twelve factors identified by the Fifth Circuit in Johnson v. Ga. Highway Express Inc., 488 F.2d 714 (1974)); cf. Perdue, 559 U.S. at 550-52 (explaining why the objective lodestar approach is superior to the subjective approach outlined in Johnson, but failing to hold that it is improper to be informed by the Johnson factors when performing a lodestar analysis). Because Fourth Circuit precedent requires this Court to be guided by the Johnson factors in determining the lodestar figure, "to the extent that any of the Johnson factors has already been incorporated into the lodestar analysis, " such factor(s) are not later considered a second time to make an upward or downward adjustment to the lodestar figure because doing so would "inappropriately weigh" such factor. McAfee, 738 F.3d at 91.

         The second step in the fee calculation procedure requires the Court to exclude fees for counsel's time spent on unsuccessful claims that are unrelated to the successful claims. Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 244 (4th Cir. 2009); see Hensley, 461 U.S. at 435 ("The congressional intent to limit awards to prevailing parties requires that . . . [unrelated claims based on different facts and legal theories] be treated as if they had been raised in separate lawsuits, and therefore no fee may be awarded for services on the unsuccessful claim[s] .") . The Supreme Court has recognized that " [i]t may well be that cases involving such unrelated claims are unlikely to arise with great frequency, " because "[m]any civil rights cases will present only a single claim, " and in other cases, the claims "will involve a common core of facts or will be based on related legal theories." Hensley, 461 U.S. at 435. In such latter circumstance, '' [m]uch of counsel's time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis, " with the nature of the lawsuit precluding it from being "viewed as a series of discrete claims." Id.

         The third and final step, after a lodestar calculation has been made and any unsuccessful efforts on unrelated claims have been excluded, requires the Court to award ''' some percentage of the remaining amount, depending on the degree of success enjoyed by the plaintiff.'" Grissom, 549 F.3d at 321 (quoting Johnson v. City of Aiken, 278 F.3d 333, 337 (4th Cir. 2002)). It is appropriate for the Court to reduce an award at this third step of the analysis if '', the relief, however significant, is limited in comparison to the scope of the litigation as a whole.'" McAfee, 738 F.3d at 92 (quoting Hensley, 461 U.S. at 439-40). "What the court must ask is whether ' the plaintiff achieved a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award.'" Id. (quoting Hensley, 461 U.S. at 434) . Accordingly, when "a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount, " even in cases "where the plaintiff's claims were interrelated, nonfrivolous, and raised in good faith." Hensley, 461 U.S. at 436. An attorney's fees award is therefore not driven by whether it was reasonable to file suit or whether plaintiff's counsel litigated the case "with devotion and skill"; rather, ''the most critical factor is the degree of success obtained." Id.

         III. Discussion

         Defendant makes two arguments in response to Plaintiff's requested attorney's fees award. First, Defendant argues that Plaintiff is only entitled to reasonable attorney's fees incurred up to the date of the Offer of Judgment. Second, Defendant argues that Plaintiff's fee award should be substantially reduced to account for Plaintiff's limited degree of success, as reflected by the amount of damages Plaintiff demanded in initial settlement negotiations versus the amount of damages Plaintiff actually obtained. In considering Plaintiff's attorney's fees request and Defendant's arguments in opposition, the Court will determine Plaintiff's entitlement to a fee award (both pre and post Offer of Judgment), calculate the lodestar figure, and then adjust, if necessary, the lodestar according to Plaintiff's degree of success. McAfee, 738 F.3d at 88.

         A. Entitlement to a Fee Award

         The instant case was filed pursuant to FCRA, seeking to remedy Defendant's alleged failure to fully and properly investigate Plaintiff's disputes regarding the inaccurate reporting of his mortgage payment, Compl. ¶ 70, and the alleged failure to review all relevant information provided by the consumer reporting agencies, id. ¶ 91. On November 30, 2016, Plaintiff accepted Defendant's Offer of Judgment, in which Defendant "allow[ed] judgment to be taken against it in this action as to all claims asserted against it by Plaintiff." Offer of J.; Not. of Acceptance of R. 68 Offer of J. As part of the Offer of Judgment, Defendant offered to pay "all reasonable costs incurred in this action to the date of this offer, including reasonable attorneys' fees incurred as of the date of this offer, as determined by the Court." Offer of J.

         While the parties agree that Plaintiff is entitled to some award of attorney's fees, the parties vigorously dispute whether Plaintiff is entitled to attorney's fees incurred after the Offer of Judgment. Def. ' s Resp. Br. 13, ECF No. 48 (arguing that Plaintiff is not entitled to post-Offer attorney's fees because the explicit terms of the Offer of Judgment excluded such fees); Pl.'s Reply Br. 19, ECF No. 52 (arguing that a prevailing party is, as a matter of law, entitled to compensation for time spent litigating the fee petition). According to the billing records submitted, Plaintiff's counsel, Ms. Susan Rotkis, billed an additional 9.5 hours after November 30, 2016, the date that Plaintiff accepted the Offer of Judgment. Billing Records at 22-24. Counsel billed for the following tasks: client contact, compilation of a billing estimate for attorney's fees in the case, telephone conference with opposing counsel, drafting the declaration for the fee petition, and drafting the motion for attorney's fees and brief in support. Id.

         Plaintiff is a successful party because he accepted Defendant's Offer of Judgment. See Grissom, 54 9 F.3d at 319 (holding that a party who achieved a favorable resolution pursuant to an offer of judgment was a prevailing party for purposes of determining attorney's fees eligibility). As a successful party, Plaintiff may potentially recover attorney's fees under either (1) Rule 68, as "costs then accrued, " or (2) a fee-shifting statute, such as FCRA, according to the terms of the Offer of Judgment. Cooper, No. 1:04-CV-385-TS, 2008 WL 5332190, at *4. The Court will address Plaintiff's entitlement to attorney's fees both under Rule 68 and under FCRA.

         1. Rule 68: "Costs then accrued"

         Under Rule 68(a), a defendant may make an offer of judgment "on specified terms, with the costs then accrued." Fed.R.Civ.P. 68(a) (emphasis added). Thus, under Rule 68, a plaintiff who accepts an offer of judgment is entitled to costs accrued up to the point of the offer. Id. Recoverable "costs" include attorney's fees when "the underlying statute defines 'costs' to include attorney's fees." Marek v. Chesny, 473 U.S. 1, 9 (1985). In such cases, attorney's fees "are to be included as costs for purposes of Rule 68." Id.

         Here, Plaintiff is not entitled to attorney's fees under Rule 68 as "costs then accrued" because FCRA does not define "costs" as including attorney's fees. Cooper, No. 1:04-CV-385-TS, 2008 WL 5332190, at *5. The instant civil case was filed pursuant to FCRA, in which Congress directed courts to award "the costs of the action together with reasonable attorney's fees" to a consumer "in the case of any successful action to enforce liability" under this statute. 15 U.S.C. § 1681o (emphasis added); see also 15 U.S.C. § 1681n(a) (3) . "FCRA's definition of costs does not encompass attorney fees. Indeed, the plain language of the FCRA's provisions for civil liability for both willful noncompliance and negligence clearly treat costs and attorney fee separately." Cooper, No. 1:04-CV-385-TS, 2008 WL 5332190, at *5. Because attorney's fees are not considered part of "costs" under FCRA, Rule 68's authorization of "costs then accrued" does not encompass attorney's fees. Fed.R.Civ.P. 68(a); Marek, 473 U.S. at 9.[4] Therefore, Plaintiff may not recover attorney's fees as part of his Rule 68 costs then accrued.

         2. Fee-shifting Statute: FCRA

         While Plaintiff may not recover attorney's fees as part of Rule 68 "costs, " Plaintiff may recover attorney's fees pursuant to the fee-shifting provision of FCRA, though such attorney's fees may be limited by the terms in the Offer of Judgment. Cooper, No. 1:04-CV-385-TS, 2008 WL 5332190, at *4. When an offer of judgment "is ambiguous or silent as to whether attorney-fees have been included, the party may recover fees if independently authorized by statute." Id. A consumer has a statutory right to reasonable attorney's fees "in the case of any successful action to enforce liability" under FCRA. 15 U.S.C. § 1681n(a)(3); 15 U.S.C. § 1681o. It is undisputed that Plaintiff achieved a "successful" resolution of his action by accepting Defendant's Offer of Judgment, and therefore is entitled to attorney's fees under FCRA. See Offer of J. (allowing judgment to be taken against Defendant "as to all claims asserted against it by Plaintiff"); Pl.'s Opening Br. 3; Def.'s Resp. Br. 3; see also Grissom, 549 F.3d at 319 (holding that a party who achieved a favorable resolution pursuant to an offer of judgment was a prevailing party for purposes of determining attorney's fees eligibility). While the parties agree that Plaintiff is entitled to some award of attorney's fees, the parties disagree as to whether Plaintiff is entitled to attorney's fees incurred after the Offer of Judgment. Def.'s Resp. Br. 13; Pl.'s Reply Br. 19.

         It is "well settled that the time spent defending entitlement to attorney's fees is properly compensable" when a party recovers attorney's fees under a fee-shifting statute. See Trimper v. City of Norfolk, 58 F.3d 68, 77 (4th Cir. 1995) (internal citation omitted). However, while Plaintiff achieved a successful resolution of his action and therefore would usually be entitled to all reasonable attorney's fees, including fees in preparation of a fee petition, Plaintiff achieved the successful resolution pursuant to a Rule 68 Offer of Judgment authorizing judgment "on specified terms." Fed.R.Civ.P. 68 (a) (emphasis added) . Courts interpret an offer of judgment as a contract, enforcing the terms that the parties agreed upon when the terms unambiguously address attorney's fees. Grissom, 549 F.3d at 320 (looking to the "contract language" of the offer of judgment to determine whether post-offer attorney's fees were included in the terms of the offer of judgment); see Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663, 670 (2016), as revised (Feb. 9, 2016) (applying "basic principles of contract law" to evaluate the effect of a rejected Rule 68 offer of judgment); Webb v. James, 147 F.3d 617, 620 (7th Cir. 1998) ("[I]n general, courts use contract principles to interpret offers of judgment."). In order for the terms of the Offer of Judgment to limit Plaintiff's statutory right to attorney's fees under FCRA, the terms of the Offer of Judgment must specifically address entitlement to attorney's fees. Cooper, No. 1:04-CV-385-TS, 2008 WL 5332190, at *5 (quoting Aynes v. Space Guard Prods., Inc., 201 F.R.D. 445, 448 (S.D. Ind. 2001)).

         Here, in the Offer of Judgment, Defendant explicitly-offered to pay Plaintiff's "reasonable attorneys' fees incurred as of the date of this offer, as determined by the Court." Offer of J. (emphasis added); see Guerrero, 70 F.3d at 1114-1113. Plaintiff accepted Defendant's Offer of Judgment on these terms. Not. of Acceptance of R. 68 Offer of J. Thus, the terms of the Offer of Judgment determine Plaintiff's entitlement to attorney's fees. Cooper, No. 1:04-CV-385-TS, 2008 WL 5332190, at *5; see Doe v. Odenton Volunteer Fire Co., No. CIV.A RDB-08-1281, 2009 WL 3418567, at *4 (D. Md. 2009) (holding that post-offer fees were not allowed when the offer of judgment expressly provided that the plaintiff was entitled to "reasonable attorney's fees and costs accrued to date"); Watson v. NCO Fin. Sys., Inc., No. 14-CV-1755-JAD-VCF, 2015 WL 1959163, at *2 (D. Nev. 2015) ("Fees incurred after [the date of the offer of judgment], are excluded under the offer of judgment's plain language."). Because the plain language of Defendant's Offer of Judgment excludes attorney's fees after the "date of this offer, " Offer of J., pursuant to the terms of the Offer of Judgment, the Court finds that Plaintiff is not entitled to fees incurred while preparing the attorney's fees petition. Guerrero, 70 F.3d at 1114-1113 ("Because the plain language of the settlement offers limits attorney's fees to those accrued prior to the date of the offers, the district court did not err in finding that the [plaintiff's] acceptance clearly and unambiguously waived attorney's fees incurred thereafter.").

         Thus, Plaintiff is not entitled to attorney's fees under Rule 68 "costs, " but ijs entitled to attorney's fees under FCRA's statutory fee-shifting provision, as limited by the "specified terms" that Plaintiff accepted in the Offer of Judgment. Grissom, 549 F.3d at 320 ("Rule 68, by its plain and unambiguous terms, provides for entry of judgment in favor of the plaintiff on [the] terms specified in an offer of judgment."). The "specified terms" of the Offer of Judgment in this case limited the attorney's fees to only fees incurred as of the date of the Offer of Judgment. Consequently, the Court reduces Plaintiff's attorney's fees award by the 9.5 post-Offer hours requested because the terms of the Offer of Judgment explicitly exclude such hours.

         B. Calculation of a "Reasonable" Fee Award

         1. Lodestar Analysis

         The first step in calculating a reasonable fee is to determine the "lodestar" figure "by multiplying the number of reasonable hours expended times a reasonable rate." McAfee, 738 F.3d at 88 (quoting Robinson, 560 F.3d at 243) . Based upon the billing records and affidavits submitted to the Court, ...


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