Ocg Microelec. Materials v. White Consol. Indus.

• Decision Date: 02 April 1999
• Docket Number: No. Civ.A. 95-450L.,Civ.A. 95-450L.
• Citation: 40 F.Supp.2d 83
• Parties: OCG MICROELECTRONIC MATERIALS, INC., Swank, Inc., Benjamin Moore & Co., and Franklin Environmental Service, Inc., Plaintiffs, v. WHITE CONSOLIDATED INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — District of Rhode Island

Page 83

40 F.Supp.2d 83

OCG MICROELECTRONIC MATERIALS, INC., Swank, Inc., Benjamin Moore & Co., and Franklin Environmental Service, Inc., Plaintiffs, v. WHITE CONSOLIDATED INDUSTRIES, INC., Defendant.

No. Civ.A. 95-450L.

United States District Court, D. Rhode Island.

April 2, 1999.

Valerie E. Michael, Cranston, RI, for plaintiffs.

Allen P. Rubine, Providence, RI, Dale E. Stephenson, Squire, Sanders & Dempsey, Cleveland, OH, for defendants.

DECISION AND ORDER

LAGUEUX, Chief Judge.

In 1995, this suit began with more than a dozen parties, poisoned land and a complex federal statute. It ends today with a sheaf of legal bills and an abacus.

White Consolidated Industries ("WCI") moves to recover attorneys' fees and other expenses from OCG Microelectronic Materials, Inc., Swank, Inc., Benjamin Moore & Co., Franklin Environmental Service, Inc. and Olin Corporation¹ (collectively "plaintiffs"). Plaintiffs and WCI settled their environmental quarrel on April 11, 1996 with a written settlement agreement (the "Agreement"). Unfortunately, plaintiffs tried to repudiate the deal almost immediately. This Court ruled on May 22, 1996 that the Agreement was valid and enforceable and issued an order to that effect on May 30, 1996. Since then, the parties have spent almost three years fighting over legal fees, because a clause in the Agreement requires a breaching party to pay the reasonable legal fees that the opposing party incurred to enforce the compact.

WCI has requested $41,135.04 to cover the legal expenses it actually paid to its Ohio and Rhode Island attorneys. Plaintiffs have made various objections to the bills, although they have offered no evidence to dispute the affidavits and billing records assembled by WCI's lawyers. On October 6, 1998, Magistrate Judge Robert W. Lovegreen recommended that WCI be awarded $20,000. WCI has objected to Judge Lovegreen's Report and Recommendation. Plaintiffs have not.

This Court reviews the issue de novo. It has examined all of WCI's bills and affidavits, and applying the relevant law, it has reduced the totals to make them reasonable as the Agreement required. In the end, it finds that WCI should receive $27,786.53 for legal fees and expenses.

I. Background Facts

This matter was commenced as a suit for contribution pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. ("CERCLA"). WCI was one of several defendants from which plaintiffs sought reimbursement for previously incurred response costs and for future costs in connection with remedial action undertaken in relation to the Western Sand and Gravel Superfund Site located in Burrillville and North Smithfield, Rhode Island.

A trial on the merits was schedule before this Court on April 11, 1996. On that date, counsel for plaintiffs, WCI, American Water Works Company, Inc. ("American Water") and Bristol County Water Company ("Bristol County") met with the Court and advised that the matter was settled. Counsel for plaintiffs executed a dismissal stipulation. However, in the afternoon of that same day, counsel for plaintiffs notified defense counsel that she believed the settlement was invalid because she lacked the necessary authority to settle. Plaintiff's counsel then attempted to renegotiate the terms of the Agreement, but was rebuffed by defense counsel.

On April 26, 1996, defendants delivered the Agreement to plaintiff's counsel along with two checks, one from WCI in the amount of $16,000.00 and the other from American Water and Bristol County for $40,000.00 which represented full payment of the settlement amount from those defendants. On April 30, 1996, plaintiffs returned the two checks and defendants responded by filing a Joint Motion to Enforce the Settlement Agreement and for Entry of Stipulation of Dismissal.

On May 22, 1996, this Court granted that Motion. In an Order dated May 30, 1996, this Court held that plaintiffs' attorney had the authority to settle, and furthermore that the Agreement was fully binding and enforceable as of April 11, 1996. No appeal was taken from that Order.

On July 10, 1996, plaintiffs requested that defendants fulfill their obligations under the Agreement by tendering the settlement checks. Defendants responded by stating that plaintiffs, by returning the settlement checks in April 1996, defaulted, repudiated and/or breached the Agreement. Defendants sought attorneys' fees and costs incurred in their attempt to enforce the Agreement. Defendants relied upon Section 13 of the Agreement:

13. Costs and Attorneys' Fees. Each Party to the Agreement shall bear its own costs and attorneys' fees incurred in the litigation arising out of the Complaint through the date of dismissal. However, in the event a party to this Agreement defaults, breaches, or repudiates this Agreement or fails to render full and complete performance of this agreement, the other party shall be entitled to recovery of its expenses (including, without limitation, reasonable attorneys' fees) incurred by such other party as a result of any default or breach of this Agreement.

In July 1996, WCI sought attorneys' fees in the amount of $27,933.62 which were incurred during the period April 11 to June 30, 1996 and which were caused by plaintiffs' repudiation of the Agreement. WCI offered to resolve the dispute by treating the opposing obligations (the $16,000 owed the plaintiffs under the Agreement and the $27,933.62 purportedly owed WCI as attorneys' fees under section 13 of the Agreement) as mutually offsetting. Plaintiffs declined. At some point which is unclear, plaintiffs resolved the attorneys' fee issue with American Water and Bristol County.

On August 13, 1996, WCI filed a Motion to Compel Performance of the Settlement Agreement relating to attorneys' fees. That was referred to Magistrate Judge Lovegreen. He held a hearing on October 28, 1996. On December 10, 1996, he issued a Report and Recommendation proposing that the motion be granted and that the request for attorneys' fees be supplemented. By Order dated January 2, 1997, this Court accepted that recommendation. Consequently, the matter was resubmitted to Magistrate Judge Lovegreen to determine the amount WCI was entitled to receive.

On October 6, 1998, Judge Lovegreen recommended that WCI be awarded $20,000. WCI has objected to Judge Lovegreen's analysis. This Court will hear the issue de novo as commanded by the Federal Rules of Civil Procedure.

WCI has introduced a series of affidavits and a pair of legal bills which it paid to the Cleveland law firm of Squire, Sanders & Dempsey. For a July 25, 1996 bill, WCI paid $27,933.62. For a December 23, 1996 bill, WCI paid $13,201.42. Those bills included charges for the services of local counsel, the Providence law firm of Winograd, Shine & Zacks P.C. A breakdown of those bills is included at Figure 1.

II. The Legal Standards

A. Review of the Magistrate Judge

A district court may refer a motion for attorneys' fees to a magistrate judge for disposition. See Fed.R.Civ.P. 54(d)(2)(D). If a timely objection is filed to the magistrate judge's determination, the district court reviews the matter de novo because the Federal Rules of Civil Procedure require that the motion for attorneys' fees be treated "under Rule 72(b) as if it were a dispositive pretrial matter." See Fed. R.Civ.P. 54(d)(2)(D); Fed.R.Civ.P. 72(b). See also R.A. v. Department of Children, Youth and Families, 18 F.Supp.2d 157, 159 (D.R.I.1998).

In making a de novo determination, the district court "may accept, reject, or modify the recommended decision, receive further evidence, or recommit the matter to the magistrate judge with instructions." Fed.R.Civ.P. 72(b); see also 28 U.S.C. § 636(b)(1). In reviewing a magistrate judge's recommendations, the district court must actually review and weigh the evidence presented to the magistrate judge, and not merely rely on the magistrate judge's report and recommendation. See United States v. Raddatz, 447 U.S. 667, 675, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980); Gioiosa v. United States, 684 F.2d 176, 178 (1st Cir.1982).

B. The Award of Attorneys' Fees

Rhode Island law controls this case because the right to recovery is premised on a breach of contract. See Northern Heel Corp. v. Compo Indus., Inc., 851 F.2d 456, 475 (1st Cir.1988). Under Rhode Island case law, an award of attorneys' fees should be "consistent with the services rendered, that is to say, which is fair and reasonable." Palumbo v. United States Rubber Co., 102 R.I. 220, 229 A.2d 620, 622 (1967) (punctuation omitted).

[W]hat is fair and reasonable depends, of course, on the facts and circumstances of each case. We consider the amount in issue, the questions of law involved and whether they are unique or novel, the hours worked and the diligence displayed, the result obtained, and the experience, standing and ability of the attorney who rendered the services. Each of these factors is important, but no one is controlling.

Id. at 622-23 (citations omitted).

Therefore, this Court examines the evidence presented by the party claiming the fees, and it considers the Palumbo factors to decide whether to accept the claim or reduce it. Where possible, this Court will make concrete findings and reduce the claim by corresponding, precise amounts. However, a reduction can also be achieved by an across-the-board discount rather than a line-byline critique of billing records. In an attorneys' fees dispute based on federal law, then-Chief Judge Francis Boyle noted that such a detailed critique would be a labor equivalent to Hercules cleansing the Augean Stables. See Mokover v. Neco Enter., Inc., 785 F.Supp. 1083, 1090 (D.R.I.1992). This Court agrees with Judge Boyle's view that the First Circuit generally approves of such across-the-board discounts:

In similar cases with voluminous fee applications, courts have recognized that it is unrealistic to expect a trial judge to evaluate and rule on...