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Building Materials Corporation of America v. Henkel Corp.

United States District Court, M.D. Florida, Orlando Division

February 22, 2018



          ANNEC CONWAY United States District Judge

         This cause comes before the Court on Plaintiffs' Verified Motion to Quantify Fees and Costs (Doc. 180) filed on May 8, 2017 following the Court's previous Order finding Plaintiffs entitled to reasonable attorneys' fees and costs incurred as a result of Defendant's improper removal. The United States Magistrate Judge has submitted a report (Doc. 184) recommending that the Motion be granted in part and denied in part, to which Plaintiffs have filed objections.[1]Doc. 185.

         After an independent de novo review of the record in this matter, including Plaintiffs' Objections (Doc. 185), the Court agrees entirely with the findings of fact and conclusions of law in the Report and Recommendation. For the reasons stated below, Plaintiffs' Verified Motion to Quantify Fees and Costs (Doc. 180) will be GRANTED in part and DENIED in part.


         On March 10, 2015, Plaintiffs Building Materials Corporation of America[2] d/b/a GAF Materials Corporation (“GAF”) and Roofing Supply Group Orlando LLC (“Roofing Supply”) (collectively “Plaintiffs”) filed a breach of contract action in state court against Defendant Henkel Corporation based on Defendant's alleged failure to indemnify Plaintiffs for underlying litigation stemming from a water-based adhesive product. Doc. 2. Defendant timely removed the action to the Middle District of Florida. Doc. 1. In the Notice of Removal, Defendant asserted that it was a Connecticut corporation and maintained its principal place of business in Connecticut. Doc. 1 ¶ 6. Because Plaintiff GAF was a Delaware corporation with its principal place of business in New Jersey, and Plaintiff Roofing Supply was a limited liability company organized under Delaware law with its principal place of business in Florida, Defendant alleged diversity jurisdiction to support a claim pursuant to 28 U.S.C. § 1332 existed, with the requisite amount in controversy greater than $75, 000. Doc. 1. Plaintiffs did not file a motion to remand the case, and the case proceeded with a discovery period lasting approximately one year. Doc. 28, 50.

         On August 30, 2016, the Court granted Defendant's motion for summary judgment and denied Plaintiffs' motion for partial summary judgment. Doc. 153. Plaintiffs filed an appeal on September 22, 2016 challenging the Court's summary judgment ruling, and a second appeal on November 28, 2016 challenging the cost judgment against them. Docs. 157, 163. As part of a subject matter jurisdiction review for the appeal, on October 17, 2016, the Eleventh Circuit questioned the citizenship of Plaintiff Roofing Supply Group, LLC, noting that a party must identify each member of a limited liability company and provide each member's citizenship. Doc. 172-3. At that point, Defendant informed the Eleventh Circuit and Plaintiffs that it had mistakenly asserted in its notice of removal that it was a Connecticut corporation when, in fact, Defendant is a Delaware corporation. Doc. 172-6 at 5. Because both Defendant and Plaintiff GAF asserted to the Eleventh Circuit that they were Delaware corporations, [3] the case was remanded on January 31, 2017 to this Court for consideration of subject matter jurisdiction on the basis of diversity. Doc. 168.

         On February 24, 2017, Defendant filed a motion to remand to state court. Doc. 171. Plaintiffs filed a motion to vacate the summary judgment entered against them, to remand the case to state court, and for attorney's fees and costs. Doc. 172. Plaintiffs sought to recover their attorney's fees and costs as well as sanctions[4] against Defendant for all of their attorney's fees and costs incurred in “litigating this action” in federal court. Doc. 178 at 7.

         On April 17, 2017, the Court granted the motion to remand and vacated the rulings on the dispositive motions and the judgment in favor of Defendant. Doc. 178 at 10-11. The Court denied Plaintiffs' request for sanctions, but granted in part Plaintiffs' request for an award of attorney's fees and costs for Defendant's improvident removal of the case under 28 U.S.C. § 1447(c), allowing Plaintiffs to file a motion to determine the appropriate amount of fees and costs. Id. The Eleventh Circuit subsequently issued the mandates in the two appeals on August 22 and 23, 2017, dismissing them for lack of jurisdiction as moot and denying as moot any outstanding motions. Doc. 182 (Appeal No. 16-16180), Doc. 183 (Appeal No. 16-17323).

         This Court's Order finding an award of attorney's fees and costs to be appropriate for the improvident removal determined:

Defendant lacked an objectively reasonable basis when it removed this case after failing to investigate and determine its state of incorporation. . . . Because Defendant's sole explanation for removing this case is that it “inadvertently overlooked” its own state of incorporation and “considered only the principal place of business, ” Defendant has not demonstrated a reasonable basis for removing this action. The result of Defendant's carelessness is a removal that was blatantly unjustified under settled law. . . . The Court has discretion to award attorney's fees for a removal such as this that is patently improper. Though Plaintiffs could have- and should have-moved to remand this case themselves, the Court cannot excuse Defendant's failure to investigate and properly assert its own citizenship. Defendant's improper removal has wrought needless litigation costs upon the other party, upset the sensitive principles of federalism underlying our nation's dual court system, and frustrated judicial economy. Furthermore, awarding Plaintiffs reasonable attorney's fees and costs does not serve a punitive purpose, and instead reimburses Plaintiffs for unnecessarily incurred expenses caused by Defendant's wrongful removal.
For the foregoing reasons, Defendant should be held liable for Plaintiffs' “just costs and actual expenses, including attorney fees, incurred as a result of the removal.” 28 U.S.C. §1447(c). Courts have interpreted the “incurred as a result” language to include expenses caused by the improper removal, including those expenses incurred in remanding the case and the necessary expenses of being in the second judicial system. The Court rejects Plaintiffs' request for all fees and costs incurred in this litigation as this amount is unreasonable. A large majority of the parties' fees were incurred performing work that would have been necessary, and will likely be necessary, for litigation in the state forum. Plaintiffs are only entitled to those additional attorney's fees and costs incurred by litigating in federal court as opposed to state court.

Doc. 178 at 8-10 (citations and quotations omitted; emphasis added).

         With these marching orders, when Plaintiffs filed their Motion requesting the Court award $569, 589 in fees (Doc. 180), Magistrate Judge Kelly issued a Report and Recommendation recommending that Plaintiffs be reimbursed for only 5% of the fees incurred, or $16, 705, for fees related to the improvident removal. Magistrate Judge Kelly recommended an award of 5% of the reasonable hours expended because, based on his experience, litigating the case in federal court required, at most, five percent more work than litigating in state court; he further recommended a reduced cost award of $491 instead of the $2, 144 sought[5]. Doc. 184 at 19-20.

         On November 1, 2017, Plaintiffs filed their Objections to the Magistrate Judge's Report and Recommendation, arguing that the recommended 95% reduction in the amount of fees sought was arbitrary, penal, and without foundation in the case law; Plaintiffs also objected to the reasonable hourly rates to be reimbursed, arguing they should be much higher. Doc. 185. For the reasons discussed below, the Court finds that a 95% reduction in the hours submitted is reasonable, and an award calculated at the hourly rates actually billed to Plaintiffs is reasonable.


         A. Review of Magistrate Judge's Report and Recommendation

         District courts review de novo any portion of a magistrate judge's disposition of a dispositive motion to which a party has properly objected. Fed.R.Civ.P. 72(b)(3); Ekokotu v. Fed. Express Corp., 408 F. App'x 331, 336 n.3 (11th Cir. 2011) (per curiam).[6] The district judge may reject, modify, or accept in whole or in part the magistrate judge's recommended disposition, among other options. Fed.R.Civ.P. 72(b)(3). De novo review of a magistrate judge's findings of fact must be “independent and based upon the record before the court.” LoConte v. Dugger, 847 F.2d 745, 750 (11th Cir. 1988). The district court “need only satisfy itself that there is no clear error on the face of the record” in order to affirm a portion of the Magistrate Judge's recommendation to which there is no timely objection. Fed.R.Civ.P. 72 advisory committee's note (1983) (citations omitted); see also, Gropp v. United Airlines, Inc., 817 F.Supp. 1558, 1562 (M.D. Fla. 1993). The District Court reviews legal conclusions de novo regardless of whether objections have been filed. Cooper-Houston v. S. Ry.Co., 37 F.3d 603, 604 (11th Cir. 1994).

         B. Recovery of Fees for Improvident Removal

         It is the general rule in this country that, unless Congress provides otherwise, parties are to bear their own attorney's fees. Fogerty v. Fantasy, Inc., 510 U.S. 517, 533, 114 S.Ct. 1023, 1033, 127 L.Ed.2d 455 (1994) (citing Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975) (tracing the origins and development of the American Rule)). Costs and attorney's fees are not awarded on remand as a matter of course. Martin v. Franklin Capital Corp., 546 U.S. 132, 139, 126 S.Ct. 704, 710, 163 L.Ed.2d 547 (2005) (“we see nothing to persuade us that fees under § 1447(c) should either usually be granted or usually be denied.”). However, the Court has already determined that Plaintiffs are entitled to an award of attorney's fees pursuant to 28 U.S.C. § 1447(c) for improvident removal. Doc. 178. Under 28 U.S.C. § 1447(c), “[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. 28 U.S.C. § 1447(c).” Rae v. Perry, 392 Fed. App'x 753, 754- 55 (11th Cir. 2010). An award of attorney's fees pursuant to § 1447(c) is left to the district court's discretion. Id.

         C. Calculation of Reasonable ...

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