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Blowers v. Lerner

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

September 14, 2017

ANDREW BLOWERS, Plaintiff,
v.
ANDREW S. LERNER, ESQ., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          GERALD BRUCE LEE UNITED STATES DISTRICT JUDGE.

         THIS MATTER is before the Court on Defendants Andrew S. Lemer, Esq. and Gregory B. Walz, Esq.'s Statement of Costs and Fees (Dkt. No. 99) and Respondent Ernest P. Francis' Opposition to Defendants' Statement of Costs and Fees (Dkt. No. 136). This matter concerns the reasonableness of the attorneys' fees that Defendants seek in connection with the Court imposing sanctions against Mr. Francis, pursuant to 28 U.S.C. § 1927, for multiplying the proceedings unreasonably and vexatiously.

         There are three issues before the Court. The first issue is whether the Court lost jurisdiction to award Defendants attorneys' fees, costs, and expenses, where the Court dismissed Plaintiffs claims but indicated its intent to maintain jurisdiction over Plaintiffs' former counsel, Mr. Francis, to impose sanctions. The Court holds that it has subject-matter jurisdiction to impose sanctions against Mr. Francis based on the text of 28 U.S.C. § 1927, the relevant case law, and the procedural posture of this case.

         The second issue is whether Defendants reasonably incurred the attorneys' fees they seek and provided adequate documentation. The Court finds that Defendants reasonably incurred the attorneys' fees as a result of Mr. Francis' misconduct from September 30, 2015 (when Mr. Francis failed to convey Defendants' settlement offer to Plaintiff) through February 2016 (when the Court had resolved substantive motions and the parties completed briefing their cross-motions for sanctions). However, the Court will reduce the overall award by $5, 000-from $84, 752 to $79, 752-because Defendants' provided inadequate documentation for certain fees.

         The third issue is whether Defendants reasonably incurred the costs and expenses they seek, and whether Defendants provided adequate documentation. Because the time for one of Defendants' attorneys who traveled from outside the state is compensable, the Court finds that the attorneys' costs and expenses are compensable under 28 U.S.C. § 1927. Further, the Court finds that Defendants provided adequate documentation for the out-of-state attorneys' costs and expenses.

         For the reasons stated above and those that follow, the Court will require Mr. Francis to pay $79, 752.00 to Defendants for the excess costs, expenses, and attorneys' fees that they reasonably incurred as a result of Mr. Francis' misconduct.

         I. BACKGROUND

         The Court previously set forth details concerning the factual and procedural background in the case. (See Dkt. Nos. 113 & 134). This opinion focuses only on those facts pertinent to the reasonableness of Defendants' costs, expenses, and attorneys' fees.

         Plaintiff Andrew Blowers, through counsel, filed a Complaint against Defendants Andrew S. Lemer, Esq. and Gregory B. Walz, Esq. (collectively, "Defendants"), alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (Dkt. No. 1.) Defendants were represented by John Altmiller and Joshua Morehouse of Pesner Kawamoto, PLC, and by pro hac vice counsel Manuel Newburger (collectively, "Defense Counsel").

         Plaintiff's Complaint in federal court concerned allegations that Defendants improperly sought to collect a debt in a state court action. (See Id. ¶¶ 7-9.) On October 9, 2014, Defendants filed suit against Plaintiff in the Fairfax County Circuit Court to recover a debt of approximately $40, 000 owed on Plaintiffs credit card. (Id. ¶¶ 27-28.)

         In this case, Plaintiff filed the Complaint against Defendants on July 9, 2015. (Dkt. No. 1.) The Complaint alleged that Plaintiff incurred $50, 000 in actual and statutory damages, and the allegations primarily stemmed from Defendants' purported failure to properly serve Plaintiff with a summons before seeking default judgment in the debt collection action. (See id.) On December 24, 2015, Defendants moved for the admission pro hac vice of attorney Manuel H. Newburger. (Dkt. No. 39 at 1.) Despite Plaintiffs opposition to the pro hac vice application, the Court granted Mr. Newburger's pro hac vice application on December 30, 2015. (Dkt. Nos. 46, 47.) On January 12, 2016, at Plaintiffs deposition, he agreed to a settlement agreement in which Plaintiff agreed to dismiss with prejudice his claims in this Court and his counterclaim in the Fairfax County Circuit Court case. (See Dkt. Nos. 56-1, 89-1.) During the deposition hearing, Plaintiff also discharged Mr. Francis as counsel after learning that Defendants made an offer of settlement through Mr. Francis, which he not convey to Plaintiff. (See Dkt. No. 89-1.)

         The day after the deposition, Mr. Francis filed a Motion to Withdraw as Counsel. (Dkt. No. 56.) In Defendants' response, they did not challenge the withdrawal as counsel but requested that the Court retain jurisdiction over Mr. Francis for alleged attorney misconduct. (Dkt. No. 61.) On January 29, 2016, the Court granted the Motion to Withdraw as Counsel and retained jurisdiction over Mr. Francis. (Dkt. No. 65.)

         Mr. Francis previously filed a Motion for Sanctions Under Rule 11 (Dkt. No. 74), in which he asserted that Defendants' Motion for Sanctions Pursuant to 28 U.S.C. § 1927 (Dkt. No. 69) is frivolous. On February 19, 2016, the Magistrate Judge held a two-hour hearing. (See Dkt. No. 97 at 12.) On August 31, 2016, the Court issued a Memorandum Opinion and Order adopting the Magistrate Judge's recommendation, granting Defendants' Motion for Sanctions, and denying Mr. Francis' Motion for Sanctions. (Dkt. No. 113.) Defendants requested a total of $89, 177.57 for attorneys' fees, various expenses, and costs. (See id.) Based on the calculations provided in the affidavit of a non-party attorney, Mikhael Charnoff, the Court awarded Defendants a total $84, 752.00. The Court broke down that amount as follows:

Counsel

Hours

Hourly Rate

Fees and Costs

Mr. Newburger

124.4

$400.00

$48, 160.00

Mr. Altmiller

87

$385.00

$33.495.00

Pesner Kawamoto, PLC (for work performed by Associate Mr. Morehouse)

16.3

$190.00

$3, 097.00

Total

$84, 752.00

(Dkt. No. 113 at 25.)

         At that point, Mr. Francis had not asserted any substantive arguments about the unreasonableness of the fees, expenses, or costs sought by Defendants, even though Mr. Francis had months to make such arguments. Contemporaneous with issuing the Memorandum Opinion on August 31, 2016, the Court entered the initial Final Judgment in favor of Defendants and against Mr. Francis in the amount of $84, 752.00. (Dkt. No. 114.)

         On September 28, 2016, Mr. Francis moved to vacate the Final Judgment. (Dkt. No 116.) The Court denied Mr. Francis' Motion to Vacate based on the ground that the Court erred in concluding that Plaintiff would have accepted Defendants' settlement offer in September 2015. However, the Court granted in part Mr. Francis' Motion to Vacate to provide an opportunity for Mr. Francis to challenge the reasonableness of Defendants' attorneys' fees and costs. On August 4, 2017, Mr. Francis filed his Opposition to Defendants' Statement of Fees and Costs. (Dkt. No. 136.) On August 11, 2017, Defendants filed a reply. (Dkt. No. 138.)

         II. DISCUSSION

         A. Standard of Review

         Pursuant to 28 U.S.C. § 1927,

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

         The Fourth Circuit has established a three-step process for calculating attorneys' fees. McAfee v. Boczar, 738 F.3d 81, 88 (4th Cir. 2013). First, a district court "must 'determine the lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate.'" McAfee, 738 F.3d at 88 (quoting Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009)). Second, "the court must 'subtract fees for hours spent on unsuccessful claims unrelated to successful ones."' McAfee, 738 F.3d at 88. Third, "the court should award 'some percentage of the remaining amount, depending on the degree of success enjoyed by the [litigant].'" Id.

         B. Analysis

         Each of the three major issues before the Court is addressed in turn. First, the Court holds that it has jurisdiction to impose sanctions against Mr. Francis pursuant to 28 U.S.C. § 1927. Second, the Court finds that Defendants reasonably incurred attorneys' fees as a result of Mr. Francis' misconduct, but the Court will reduce the overall award by $5, 000 because of inadequate documentation. Third, the Court finds that Defendants reasonably incurred the costs and expenses they seek and finds that Defendants provided adequate documentation for those costs and expenses.

         1. Jurisdiction to Award Attorneys' Fees

         The Court holds that it continues to have jurisdiction to award attorneys' fees, costs, and expenses to ...


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