United States District Court, M.D. Florida, Orlando Division
DONALD A. PETERSON and LORI HILDMEYER, Plaintiffs,
PNC BANK, N.A., Defendant.
MEMORANDUM OPINION AND ORDER
matter is before the Court on Defendant's Motion to
Quantify Attorney's Fees and Costs (Doc. 109).
Plaintiffs' counsel responded to that motion (Doc. 112),
and Defendant filed a Reply (Doc. 115). On May 28-29, 2019,
the Court held an evidentiary hearing on the matter, which is
now ripe for decision.
October 4, 2018, Defendant filed a motion to disqualify
Plaintiffs' counsel and for the imposition of sanctions
(Doc. 76). The motion grew out of an alleged violation of
Federal Rule of Civil Procedure 26(b)(5)(B), which governs a
party's obligations when the other side has inadvertently
produced information subject to a claim of privilege. On
January 24, 2019, Magistrate Judge Irick issued a report in
which he found that the conduct of Plaintiffs' counsel in
utilizing the inadvertently produced material was inexcusable
and recommending that Defendant's Motion be granted.
(Doc. 100 at 19). Specifically, Judge Irick recommended that
Plaintiffs' three attorneys be disqualified and that two
of them - Darren Newhart and J. Dennis Card - bear the costs
incurred by Defendant in litigating this issue. (Doc. 100 at 19).
On May 8, 2019, the Court affirmed that report in part,
finding that disqualification of Plaintiffs' third
attorney, Nicholas Heath Wooten, was not warranted, but
disqualifying Newhart and Card and ordering them to
“bear the cost incurred by the Defendant in litigating
the issue of their disqualification.” (Doc.
February 22, 2019, Defendant filed the instant motion,
seeking to recover fees in the amount of $16, 292.50, and
costs of $599.05, representing the amounts incurred in
connection with the disqualification issue through February
14, 2019. (Doc. 109-1). These fees and costs were supported
by an affidavit of Defendant's counsel, with an attached
summary of relevant time entries. Counsel's fee was
calculated at $275 per hour for partner's time (Kim
Israel) and $225 per hour for associate's time (Amy
Kisz). On March 7, 2019, Plaintiffs' counsel filed a
response (Doc. 112) to Defendant's motion for fees and
costs. The first 12 pages of that 20-page response simply
reiterated counsel's argument regarding the merits of
disqualification; accordingly, the Court struck that portion
of Plaintiffs' counsel's response. (Doc. 116). The
balance of the response raised objections to portions of
defense counsel's time entries. Defendant filed a reply
(Doc. 115) on March 28, 2019, contending that all the time
entries questioned by Plaintiffs' counsel were directly
related to the disqualification issue.
13, 2019, the Court issued an Order and Notice of Evidentiary
Hearing (Doc. 120). That Order required the parties to file
and exchange a list of witnesses, with a summary of their
testimony, and a list of exhibits to be offered into
evidence. (Doc. 120 at 1). On May 22, 2019, the parties
complied with that Order.
witness list included defense counsel and Bradley Luczak, an
expert witness regarding the reasonableness of the
attorney's fees incurred by Defendant in litigating the
disqualification issue. Defendant also filed a supplemental
affidavit (Doc. 123) covering fees incurred from February 15,
2019 (the end date of the prior affidavit) to May 21, 2019.
(Doc. 123 at 4-11). The additional time incurred totaled 62.5
hours, resulting in an (additional) fee request of $15,
405.00. (Doc. 123 at 2). Finally, defense counsel estimated
that they would spend a total of 11 hours preparing for and
attending the evidentiary hearing, thereby incurring another
$4, 675.00 in fees. (Doc. 123 at 2). For their part, the
exhibit and witness lists filed by Plaintiffs' counsel
(Doc. 126) reflected no additional witnesses and listed only
evidentiary hearing began on May 28 and extended into the
next day. At the hearing, Defendant introduced the testimony
of Kim Israel and Amy Kisz, the primary lawyers representing
Defendant in this proceeding. They testified that the time
entries at issue began on June 1, 2018, with a conversation
between Ms. Israel and Plaintiffs' counsel regarding the
inadvertent disclosure of documents that triggered this
extraordinarily contentious dispute. Ms. Israel explained
that defense counsel used conservative billing judgment
regarding the time entries included in the affidavits. She
further testified that the rates charged to PNC of $225 to
$275 per hour are well below the firm's standard rates.
Ms. Kisz confirmed the accuracy of her affidavits and stated
that the total amount sought by PNC was $36, 971.55, which
included costs of $599.05.
also called Mr. Luczak, a lawyer who has practiced in Central
Florida since 1985, as an expert witness. Mr. Luczak is
board-certified in business litigation and specializes in
real estate-related disputes. He has served on a grievance
committee as well as the arbitration committee of The Florida
Bar, and has prior experience as an expert witness regarding
reasonableness of attorney's fees. Mr. Luczak
testified that the normal hourly rate in Central Florida for
litigation of this type is in the $300 to $400 range, and
that the rates charged by defense counsel here were well
below the market rate. In the process of arriving at a
reasonable attorney's fee for this case, Mr. Luczak
reviewed all of the pertinent documents, including
Defendant's time entries. Using the federal lodestar
test, Mr. Luczak concluded that as of May 21, 2019, defense
counsel had expended a total of 129.4 hours on this dispute.
At a blended rate of $244, this amounted to a total
(reasonable) fee of $31, 670.00. Mr. Luczak also opined that,
going forward, defense counsel would incur an additional 19
hours in connection with the disqualification issue,
resulting in an additional reasonable fee of $4, 675.00. At
his own hourly rate of $400, Mr. Luczak estimated he would
expend a total of 22 hours, for a fee of $8, 800.
counsel offered no evidence on their own behalf.
the hearing, plaintiffs' counsel filed objections (Doc.
135) to PNC's amended time entries, and Defendant filed a
response (Doc. 136). In their objection, Plaintiffs'
counsel contend that the Defendant should not be able to
recover for time spent (1) attempting to disqualify Mr.
Wooten or (2) preparing for and attending the evidentiary
hearing. Plaintiffs' counsel also object to the recovery
of Mr. Luczak's fee and recovery for any time entries
that contain a redaction. Finally, Plaintiffs' counsel
make generalized objections to the reasonableness of certain
categories of Defendant's time records.
response, Defendant points out, among other things, that
Plaintiffs' counsel identified only 12.2 hours of time
that related to Mr. Wooten's disqualification; that
expert fees are recoverable as a part of a sanction award,
and that the time spent preparing for and attending the
Court-ordered evidentiary hearing was necessarily incurred.
courts possess “inherent powers, ” not conferred
by rule or statute, “to manage their own affairs so as
to achieve the orderly and expeditious disposition of
cases.” Link v. Wabash R. Co., 370 U.S. 626,
630-631, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962). That authority
includes the ability to fashion an appropriate sanction for
conduct that abuses the judicial process. Chambers v.
NASCO, Inc., 501 U.S. 32, 44-45, 111 S.Ct. 2123, 115
L.Ed.2d 27 (1991). One permissible sanction is an assessment
of attorney's fees - an order instructing a party that
has acted in bad faith to reimburse legal fees and costs
incurred by the other side. Id., at 45, 111 S.Ct.
2123. Such a sanction, when imposed pursuant to civil
procedures, must be compensatory rather than punitive in
nature. See Mine Workers v. Bagwell, 512 U.S. 821,
826-830, 114 S.Ct. 2552, 129 L.Ed.2d 642 (1994)
(distinguishing compensatory from punitive sanctions and
specifying the procedures needed to impose each kind). In
other words, the fee award may go no further than to redress
the wronged party “for losses sustained”; it may
not impose an additional amount as punishment for the
sanctioned party's misbehavior. Id., at 829, 114
S.Ct. 2552 (quoting United States v. Mine Workers,
330 U.S. 258, 304, 67 S.Ct. 677, 91 L.Ed. 884 (1947)). The
necessary causal connection is appropriately framed as a
but-for test: The complaining party may recover only that
portion of its fees that it would have paid but for the
misconduct. Goodyear Tire & Rubber Co. v.
Haeger, 137 S.Ct. 1178, 1187, 97 L.Ed.2d 585 (2017).