KO OLINA Dev. LLC. v. HOMES

• Decision Date: 29 March 2011
• Docket Number: CV. NO. 09-00272 DAE-LEK
• Parties: KO OLINA DEVELOPMENT, LLC, a Delaware limited liability company, Plaintiff, v. CENTEX HOMES, a Nevada general partnership, JOHN DOES 1-20; JANE DOES 1-20; DOE CORPORATIONS and OTHER ENTITIES 1-20, Defendants.
• Court: U.S. District Court — District of Hawaii

KO OLINA DEVELOPMENT, LLC, a Delaware limited liability company, Plaintiff,

v.CENTEX HOMES, a Nevada general partnership, JOHN DOES 1-20; JANE DOES 1-20; DOE

CORPORATIONS and OTHER ENTITIES 1-20, Defendants.

CV. NO. 09-00272 DAE-LEK

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF HAWAII

DATE: March 29, 2011

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR ATTORNEYS' FEES AND RELATED NON-TAXABLE EXPENSES

Pursuant to Local Rule 7.2(d), the Court finds this matter suitable for disposition without a hearing. Before the Court is Defendant Centex Homes' ("Centex" or "Defendant") Motion for Attorneys' Fees and Related Non-Taxable Expenses ("Motion"), filed on November 29, 2010. Defendant requests an award of $918,129.48 in attorneys' fees and $26,435.74 in non-taxable costs. Plaintiff Ko Olina Development, LLC ("KOD" or "Plaintiff") filed its memorandum in opposition on December 13, 2010, and Defendant filed its reply on December 20, 2010. Plaintiff filed a supplemental memorandum in opposition on January 18, 2011, and Defendant filed a reply thereto on January 27, 2011. After reviewing the parties' submissions and the relevant case law, the Court GRANTS IN PART and DENIES IN PART Defendant's Motion. The Court AWARDS Defendant $499,993.94 in attorneys' fees and $9,173.61 in costs, for a total award of $509,167.55.

BACKGROUND

The parties and the Court are familiar with the factual and procedural background of this case. The Court will therefore only discuss the background that is relevant to the instant motion.

2. The instant lawsuit was filed on June 15, 2009. A Second Amended Complaint was filed October 16, 2009.¹ Plaintiff seeks injunctive relief and damages as to a dispute over a parcel of land known as Ko Olina Resort Parcel 53 and as to exclusive easements appurtenant to certain "KOD Commercial Apartments" on Parcel 53 for the use of certain "Limited Common Elements" appurtenant to the same.

3. Plaintiff additionally claims that Section 17 of the Right of First Refusal, Purchase Option, Agreement of Lease ("ROFR") (Joint Ex. 510), as created by the Second Amendment to the ROFR (Joint Ex. 531), provides Plaintiff with an option, not a right of first refusal, to purchase the "KOD Commercial Apartments."

4. The term "KOD Commercial Apartments" refers to those commercial apartments designated as CA-l ,CA-2, CA-3, CA-B, and CA-C within the Ko Olina Beach Villas. (Joint Ex. 531.)

5. Plaintiff asserts that its right to purchase the KOD Commercial Apartments under the ROFR, together with the ROFR's First (Joint Ex. 522) and Second (Joint Ex. 531) Amendments, includes the right to exclusive use of the easements appurtenant to those apartments on the day on which Plaintiff acquired the option . . . . Accordingly, the parties' dispute is whether Plaintiff's right to purchase the KOD Commercial Apartments includes an interest in easements appurtenant to the KOD Commercial Apartments for the exclusive use of certain Limited Common Elements, not whether KOD has the right to purchase the fee to the Limited Common Elements or the Limited Common Elements per se.

6. Through this action, Plaintiff seeks to prevent Defendant from recharacterizing the Limited Common Elements as Common Elements. Plaintiff argues that Defendant's recharacterization of the Limited Common Elements to Common Elements would violate Defendant's contractual duties to Plaintiff because Plaintiff allegedly has a fixed property interest in the KOD Commercial Apartments (and any appurtenant easements thereto) as they existed on the day KOD acquired its option to purchase those apartments.

. . . .

10. On July 6, 2009, Defendant filed a Counterclaim. By Court order on July 7, 2010, the parties stipulated to partially dismiss Defendant's Counterclaim with prejudice. The dismissal included multiple paragraphs within the Counterclaim, as well as Count I ¶ 4(c), Count III, Count IV, Count VII, Count VIII, and Counts IX and X as relating to the residential apartments. Count V is deemed dismissed with prejudice pursuant to the parties' stipulation to diversity jurisdiction on July 29, 2010. This action went to trial on portions of Counts I, II, VI, IX, and X.

("FFCL," Doc. # 386, ¶¶ 2-10.)

After a non-jury trial from August 3-6, 2010, the Court ultimately found for Plaintiff in part and for Defendant in part as to the claims in Plaintiff's Second Amended Complaint and as to Defendant's Counterclaims.¹ As to Counts I and II of the Second Amended Complaint, the Court found in favor of Plaintiff in part and in favor of Defendant in part. The Court found in favor of Defendant as to Counts III and IV of the Second Amended Complaint. With respect to Defendant's Counterclaim, the Court found in favor of Defendant as to Counts I and II and in favor of Plaintiff as to Counts IX and X. The Court also dismissed Count VI of Defendant's Counterclaim for lack of prosecution. (FFCL ¶¶ 123-31.)

On October 29, 2010, the Clerk of the Court entered final judgment in favor of Plaintiff in part and in favor of Defendant in part pursuant to the FFCL and the Order: (1) Granting in Part and Denying in Part Without Prejudice Centex's Motion for Summary Judgment; (2) Denying Without Prejudice KOD's First Motion for Partial Summary Judgment; (3) Denying KOD's Second Motion for Partial Summary Judgment; and (4) Denying Without Prejudice KOD's Third Motion for Summary Judgment, filed June 8, 2010 ("Summary Judgment Order").²(Doc. # 387.)

The instant motion followed.³ In the Motion, Defendant argues that, under Hawaii law, it is the prevailing party in this action. Defendant contends that it is entitled to its reasonable attorneys' fees and costs in this action pursuant to the ROFR, the Purchase and Sale Agreement between Plaintiff and Defendant dated December 23, 2004 ("PSA"), and Haw. Rev. Stat. § 607-14. Defendant further contends that the twenty-five percent limitation set forth in § 607-14 does not apply in this case because monetary liability was not at issue. Defendant asserts that its requested hourly rates and number of hours expended are reasonable, and Defendant emphasizes that it sought to limit its attorneys' fees and costs. Finally, Defendant argues that it is entitled to all of its non-taxable costs.

In its Opposition, Plaintiff argues that Defendant is not the prevailing party in this action and therefore Defendant is not entitled to an award of attorneys' fees. Plaintiff argues that there were two major issues in this action: the recharacterization of the Limited Common Elements, and whether Plaintiff had an option to purchase the Commercial Apartments upon the happening of certain events. Plaintiff emphasizes that it prevailed on the second issue and that this Court directed the entry of judgment in favor of both parties. Further, Plaintiff argues that Defendant is not entitled to attorneys' fees and costs pursuant to the ROFR or the PSA because neither the Second Amended Complaint nor the Counterclaim sought to enforce rights under the ROFR or the PSA. Plaintiff also argues that the claims in this case do not sound in the nature of assumpsit. Plaintiff contends that if the Court is inclined to find that some of the claims in this case sound in assumpsit, the award of attorneys' fees must be apportioned between assumpsit claims and non-assumpsit claims. If the Court is inclined to award attorneys' fees to Defendant, Plaintiff urges the Court to deny fees that: have a suspect basis; are excessive or duplicative; relate to work performed outside of the litigation; relate to matters that were settled; relate to matters that are premature; reflect clerical or ministerial work; or are inadequately described or block billed. Finally, Plaintiff argues that Defendant's requested non-taxable costs are not recoverable.

In its reply, Defendant argues that, although there were two primary issues in this case, the recharacterization of the Limited Common Elements has always been the main disputed issue. Defendant asserts that because it prevailed on this issue, it is therefore entitled to its attorneys' fees and costs because in this action Plaintiff attempted to stop Defendant from exercising its rights under the ROFR. Defendant contends that the Court need not even address whether the claims in this case sound in assumpsit because of the contractual entitlement to attorneys' fees. Defendant argues that its itemization of fees was proper, and it reiterates that all of the time incurred in this case was reasonable in the exercise of counsel's sound billing judgment. Finally, Defendant argues that Plaintiff's objections to the claimed non-taxable costs are misplaced because Plaintiff's cited authorities relate to claims for taxable costs. Defendant reiterates that all of its requested non-taxable costs are compensable under the ROFR.

The parties' supplemental memoranda addressed Defendant's January 14, 2011 Motion for Leave to Extend Time to Appeal (Doc. # 429), and whether the parties' positions with regard to that motion affect the analysis of the entitlement to attorneys' fees and costs.

DISCUSSION

I. Attorneys' Fees

A. Entitlement to Attorneys' Fees

The Court has jurisdiction over this case pursuant to 28 U.S.C. § 1332. (FFCL ¶ 7.) A federal court sitting in diversity must apply state law in determining whether the prevailing party is entitled to attorneys' fees. Farmers Ins. Exch. v. Law Offices of Conrado Joe Sayas, Jr., 250 F.3d 1234, 1236 (9th Cir. 2001). Under Hawaii law, "[o]rdinarily, attorneys' fees cannot be awarded as damages or costs unless so provided by statute, stipulation, or agreement." Stanford Carr Dev. Corp. v. Unity House, Inc., 141 P.3d 459, 478 (Haw. 2006) (citation and quotation marks omitted). In the instant case, Defendant seeks an award of fees pursuant to Haw. Rev. Stat. § 607-14 and the provisions of its agreements with Plaintiff.

1. Haw. Rev. Stat. § 607-14

Section 607-14 states in pertinent part:

In all the...