Free Order on Motion for Attorney Fees - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Pending before the Court is Plaintiff's Amended Motion for the Award of Attorneys' 18 Fees and Costs. (Doc. 67) For the following reasons, the motion will be granted in part. 19 This case is based on Plaintiff's attempt to collect on a promissary note. In the 20 promissory note, Defendant agreed to "pay all costs and expenses, including without 21 limitation reasonable attorney's fees, which may be incurred by [Plaintiff] in collecting any 22 amount due under this Note." (Doc. 67 p. 4) Plaintiff filed suit, obtained a default judgment, 23 and began collection efforts. Before Plaintiff could recover the amount owing, Defendant 24 initiated bankruptcy proceedings. Defendant eventually paid Plaintiff the entire amount 25 owing on the note, $395,728.20. Plaintiff now seeks the fees it incurred in obtaining that 26 payment. 27 28
Case 2:02-cv-02641-ROS Document 78 Filed 07/11/2006 Page 1 of 5

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

) ) ) Plaintiff, ) ) vs. ) ) Technology Systems International, Inc., et) ) al., ) ) Defendant. ) ) Solinvest Group, Ltd.,

No. 02-2641-PHX-ROS ORDER

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The Court denied Plaintiff's first request for attorneys' fees based on the request being untimely. (Doc. 62) Upon reconsideration, however, the Court found that Plaintiff's request was timely filed. (Doc. 65) When granting the motion for reconsideration, the Court ruled that "the Bankruptcy Court should address the issue of fees for work done in connection with the bankruptcy." (Doc. 65) The Court ordered Plaintiff to submit "a revised request for fees containing only work done in this Court." (Id.) (emphasis added) In his amended request for an award of fees and costs, Plaintiff seeks $213,537.82 for non-bankruptcy related proceedings. Despite the clear wording of the Court's prior Order that Plaintiff should not seek bankruptcy fees in this Court, Plaintiff also asks the Court for an award of $86,087.48 for bankruptcy-related proceedings.1 (Doc. 67 p.3) In light of the previous order directing Plaintiff to not seek bankruptcy related fees in this Court, the request for $86,087.48 will be disregarded.2 Defendants respond to Plaintiff's request for $213,537.82 by arguing that the amount requested is not reasonable. Specifically, Defendants point out that Plaintiff is requesting over $16,000 for fees allegedly incurred in obtaining a default judgment and over $80,000 for fees allegedly incurred in preparing fee applications. Defendants ask the Court to substantially reduce the fee award. I. Applicable Law This suit was a diversity action based on the parties' promissory note. The parties do not dispute that Arizona law applies to the issue of attorneys' fees. (Doc. 67 p.27, Doc. 74 p.4) In Arizona, "[t]he awarding of attorneys' fees to a prevailing party pursuant to a contract between the parties is mandatory." Bennett v. Appaloosa Horse Club, 35 P.3d 426, 432 (Ariz. Ct. App. 2001). The promissory note allows for Plaintiff to recover "reasonable

These figures represent the total amounts requested for services by attorney Michael Simes and attorney Dennis Brovarone. Plaintiff's refusal to comply with the Court's order regarding bankruptcy related fees complicates the issues presently before the court because the fees documentation contains time entries for both this litigation and the bankruptcy litigation. -2Case 2:02-cv-02641-ROS Document 78 Filed 07/11/2006 Page 2 of 5
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attorneys' fees." (Doc. 67 p.4) Thus, the only issue is the reasonableness of the amount of fees requested. II. Analysis Attorney Michael Simes ("Simes") claims to have devoted 781 hours, at $250.00 per hour, to this litigation. Attorney Dennis Brovarone ("Brovarone") claims to have devoted 81 hours at $200.00 per hour. "The fundamental rule . . . for determining attorneys' fees is that the trial court must determine: (1) reasonable billing rate, and (2) hours reasonably expended." ABC Supply, Inc. v. Edwards, 952 P.2d 286, 290 (Ariz. Ct. App. 1996) (citing Schweiger v. China Doll Restaurant, Inc., 673 P.2d 927, 931-32 (Ariz. Ct. App. 1983)). Defendant does not object to the hourly billing rate of either Simes or Brovarone. The issue, therefore, is whether a combined total of 862 hours is reasonable. It is not. This litigation consisted of Plaintiff obtaining a default judgment against Defendant and then seeking to force Defendant to pay that judgment. Plaintiff obtained a Turnover Order to satisfy the judgment and eventually asked that Defendant be held in contempt for failing to comply with that Order. (Doc. 28, 36) Defendant then sought bankruptcy protection and Plaintiff sought to have this Court withdraw the matter from Bankruptcy Court. (Doc. 38) That request was denied. (Id.) Defendant emerged from bankruptcy, but later reentered bankruptcy after an internal struggle for control. Plaintiff eventually obtained an Order from the Bankruptcy Court directing Defendant to pay the entire amount owing on the promissory note. At the conclusion of the second bankruptcy proceedings, Plaintiff sought an award of attorneys' fees. The amount of time spent by Plaintiff's counsel on these activities is not reasonable. Simes spent approximately 64 hours in obtaining default judgment.3 That is $16,000 in attorneys' fees to file a complaint, file an amended complaint, and file a motion for default judgment. Simes then spent approximately 197 hours in seeking to force Defendant to satisfy Brovarone's time will not be evaluated separately because the time spent by Simes is already excessive, meaning Brovarone's time would only make the amounts of time more egregious. -3Case 2:02-cv-02641-ROS Document 78 Filed 07/11/2006 Page 3 of 5
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the judgment. That is just over $49,000 for filing a Motion for Leave to File Writ of Execution, filing a Motion for Turnover Order, filing a stipulation, and filing a Motion for Order of Contempt. It was after these actions that Defendant entered bankruptcy for the first time. Simes claims to have spent hundreds of hours on this case while Defendant was in bankruptcy court. These hours are not relevant here because of the previous determination that Plaintiff was not entitled to recover fees from this Court for actions related to the bankruptcy proceedings.4 Finally, Simes claims to have spent hundreds of hours researching and drafting requests for attorneys' fees. According to Defendant, Simes spent over 330 hours researching and "draft[ing] a motion for attorney fees, a reply in support of fees, a comprehensive supplement for fees and the amended motion for fees." This is over $82,000 in fees for documenting and seeking to collect fees.5 This is simply unconscionable. Plaintiff has chosen to seek an award of fees so absurd that the Court is left with little guidance regarding what an appropriate award would be. In light of the history of this case, Plaintiff's ultimate success in obtaining full payment on the promissory note, and the Court's experience in other similar cases, a substantial fee award is appropriate. A reasonable attorney would have spent 100 hours in this Court filing a complaint, obtaining default judgment, engaging in collection efforts, and seeking an award of fees. Therefore, Plaintiff is entitled to an award of $25,000 dollars in attorneys' fees. Because Plaintiff is entitled to recover the reasonable attorneys' fees pursuant to the promissory note, Plaintiff's alternative theories justifying recovery need not be addressed. Accordingly,

Simes was involved in some minor non-bankruptcy related matters in this Court during the pendency of the bankruptcy, such as providing status reports. These issues should not have taken any substantial time and will be included with the total amount awarded. Simes also requests $5,000 for fees incurred in filing his Reply regarding attorneys' fees. Simes claims to have spent twenty hours drafting the Reply, a document that is just over ten pages and addresses issues that he already spent 330 hours working on. It would not take twenty hours for a reasonable attorney to draft such a document. -4Case 2:02-cv-02641-ROS Document 78 Filed 07/11/2006 Page 4 of 5
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IT IS ORDERED Plaintiff's Amended Motion for the Award of Attorneys' Fees and Costs (Doc. 67) is GRANTED IN PART and DENIED IN PART. Plaintiff is entitled to an award of $25,000 in attorneys' fees and $1,377.26 in costs. Defendant is ordered to pay these amounts within thirty days of this order.

Dated July 7th, 2006.

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