Paddington Partners v. Bouchard, Nos. 1815

CourtU.S. Court of Appeals — Second Circuit
Writing for the CourtSWEET
Citation34 F.3d 1132
PartiesPADDINGTON PARTNERS, Plaintiff, v. Jean-Louis BOUCHARD, Herbert A. Denton, Defendants, Econocom Finance NV; Econocom International N.V., Defendants-Appellants, Jeffries & Company, Inc., Defendant-Appellee. ockets 93-9324, 94-7090.
Decision Date22 August 1994
Docket Number1818,D,Nos. 1815

Page 1132

34 F.3d 1132
29 Fed.R.Serv.3d 1306
PADDINGTON PARTNERS, Plaintiff,
v.
Jean-Louis BOUCHARD, Herbert A. Denton, Defendants,
Econocom Finance NV; Econocom International N.V.,
Defendants-Appellants,
Jeffries & Company, Inc., Defendant-Appellee.
Nos. 1815, 1818, Dockets 93-9324, 94-7090.
United States Court of Appeals,
Second Circuit.
Argued June 20, 1994.
Decided Aug. 22, 1994.

Page 1134

Lisa Klein Wager (John M. Vassos, Martin J. Murray, Morgan, Lewis & Bockius, New York City, of counsel), for defendant-appellee.

Chavie N. Kahn (Ira S. Sacks, Fried, Frank, Harris, Shriver & Jacobson, New York City, of counsel), for defendants-appellants.

Before: VAN GRAAFEILAND and LEVAL, Circuit Judges, and ROBERT W. SWEET, Senior District Judge. *

SWEET, Senior District Judge:

Econocom Finance N.V. and Econocom International N.V. (collectively, "Econocom") have appealed from amended judgments of the United States District Court for the Southern District of New York, Barbara A. Lee, United States Magistrate Judge, entered November 16, 1993, and December 16, 1993, granting Jeffries & Company, Inc. ("Jeffries") summary judgment on its cross-claim for indemnification against Econocom for attorneys' fees (the "Cross Claim"), together with prejudgment interest on these fees. For the reasons set forth below, these judgments are affirmed in part and vacated in part.

BACKGROUND

In 1987, Econocom engaged Jefferies, pursuant to a Dealer-Manager Agreement (the "Dealer-Manager Agreement"), to act as its investment banker in connection with Econocom's efforts to acquire the stock of Decision Industries Corporation ("Decision"). Econocom negotiated the purchase of a block of Decision stock from an entity called Paddington Partners ("Paddington").

The stock purchase agreement provided that Econocom would pay Paddington the market price for its Decision stock. In addition, Econocom agreed that, if it announced a tender offer for Decision within 180 days after purchasing Paddington's Decision stock and consummated its tender offer or subsequently divested its Decision shares, Econocom would pay Paddington 50% of the difference between the price at which Econocom bought the shares from Paddington and either the amount it paid for Decision stock in the tender offer or the amount it received for selling its Decision stock to a third party (the "upside protection").

On the day after Econocom purchased Paddington's Decision stock, Econocom announced a tender offer for 100% of Decision's outstanding stock. A bidding war ensued, and Econocom ultimately decided to withdraw its tender offer and to sell its Decision stock to a rival suitor. As Econocom's sale of its Decision stock closed after the passage of the 180 days referenced in its stock purchase agreement with Paddington, Econocom declined to pay Paddington the upside protection.

In February 1988, Paddington commenced this litigation, suing Econocom for breach of

Page 1135

contract and for alleged violations of the federal securities laws and the Racketeer Influenced and Corrupt Organizations Act. Paddington's complaint also charged Jeffries with abetting Econocom's wrongdoing.

In Paragraph 12(a) of the Dealer-Manager Agreement (the "Indemnification Provision"), Econocom agreed to indemnify and hold Jeffries harmless for any losses, claims, damages, liabilities, and expenses, including attorneys' fees, arising out of, relating to, or based upon actions taken by Econocom with respect to its purchase of Decision stock or its tender offer. When and if it became necessary for Econocom to indemnify Jeffries for attorneys' fees, such indemnification was to "be made promptly against delivery of an invoice therefor."

Relying upon the Indemnification Provision, beginning in June 1988, Jeffries sent Econocom invoices for Jeffries' attorneys' fees in this litigation. Econocom refused to pay the invoices based upon its contention that Jeffries was not entitled to reimbursement or indemnification until such time as Jeffries was absolved of wrongdoing in connection with Paddington's claims.

In December 1988, Jeffries filed the Cross Claim against Econocom. On February 2, 1990, the District Court granted Paddington's motion for partial summary judgment against Econocom with respect to Paddington's breach of contract claim. On March 21, 1990, Econocom entered into a settlement agreement with Paddington, and on March 30, 1990, the District Court entered a stipulation dismissing Paddington's litigation against Econocom with prejudice. Following Econocom's settlement with Paddington, the case was referred to Magistrate Judge Lee to try to settle remaining claims and for general pretrial supervision.

In November 1990, Econocom filed an answer to Jeffries' Cross Claim, alleging, as affirmative defenses, failure to state a claim and "prematurity." In December 1990, Jeffries moved for summary judgment dismissing Paddington's claims against it, Econocom moved for summary judgment dismissing Jeffries' Cross Claim, and Jeffries cross-moved for summary judgment on its Cross Claim (Jeffries' "First Summary Judgment Motion").

In support of its First Summary Judgment Motion, Jeffries submitted affidavits which specified the amount of attorneys' fees incurred by Jeffries and the dates on which the invoices for such fees had been forwarded to Econocom. In its responsive papers, Econocom did not submit an affidavit pursuant to Rule 56(e), Fed.R.Civ.P., identifying factual issues precluding summary judgment, nor did it submit an affidavit pursuant to Rule 56(f), Fed.R.Civ.P., explaining why evidence essential to opposing summary judgment could not be presented. It did, however, note in its brief that it had taken no discovery on the Cross Claim and that it assumed that there would be discovery if it lost on the issue of prematurity.

On November 20, 1991, Magistrate Judge Lee heard oral argument on the three motions and dictated her opinion into the record, recommending that Paddington's claims against Jeffries be dismissed and that Econocom be ordered to indemnify Jeffries for its attorneys' fees in the amount of $646,438.91, representing fees incurred through February 7, 1991.

Magistrate Judge Lee found that Econocom's statement in its brief that summary judgment was unavailable because there had been no discovery was insufficient to preclude summary judgment, explaining that:

Jefferies has submitted affidavits on personal knowledge as to the amount of legal expenses it has incurred.... Econocom has not controverted any of these allegations, nor has it submitted an affidavit under Rule 56(f) seeking additional discovery in order to controvert the evidence submitted by Jefferies.

What Econocom has done is to put all its eggs in the basket of dismissal, arguing that Jefferies is entitled to no indemnification and, therefore, not considering the possibility of the need for a hearing on the amount of such indemnification....

(App. at 293.)

On December 11, 1991, Magistrate Judge Lee issued a written Report and Recommendation (the "Report") which incorporated by

Page 1136

reference her opinion dictated into the record on November 20, 1991. On December 26, 1991, Econocom filed its objections to the Report together with an affidavit of its counsel, Ira S. Sacks (the "Sacks Affidavit I"), which reiterated Econocom's position that under the Indemnification Provision indemnification was not available until Jeffries was absolved of wrongdoing.

The Sacks Affidavit I also stated that summary judgment was inappropriate in that there had been no discovery concerning the reasonableness of Jeffries' attorneys' fees. On September 1, 1992, the Honorable Shirley W. Kram adopted, in substantial measure 1 the Magistrate's Report and issued an order dismissing all claims against Jeffries, granting Jeffries summary judgment on the Cross Claim, and awarding Jeffries $646,438.91 in damages incurred through February 7, 1991. A judgment consistent with this order was entered on October 5, 1992 (the "1992 Judgment").

Econocom persisted in its nonpayment of Jeffries' attorneys' invoices and, in November 1992, Jeffries filed a second motion for summary judgment (the "Second Summary Judgment Motion") seeking attorneys' fees and expenses incurred from February 7, 1991, through November 14, 1992. The parties stipulated to be bound by Magistrate Judge Lee's decision on the summary judgment motion pursuant to 28 U.S.C. Sec. 636(c). 2

In opposition to this motion, Econocom submitted a second affidavit by Sacks (the "Sacks Affidavit II"), opposing summary judgment on the grounds that there had been no discovery concerning the reasonableness of Jeffries' attorneys' fees subsequent to February 7, 1991, for which discovery there was a "plain need."

On February 8, 1993, Magistrate Judge Lee granted Jeffries' Second Summary Judgment Motion and awarded Jeffries its damages incurred during the period from February 7, 1991, through November 14, 1992, in the amount of $289,491.65. Judgment was entered by the Clerk of the Court on March 22, 1993 (the "1993 Judgment").

After the 1993 Judgment was entered, Econocom filed a Notice of Appeal. The 1993 Judgment was defective in a variety of respects, 3 and following conferences with the Staff Counsel's Office for the Second Circuit, the parties stipulated to the withdrawal of Econocom's appeal in order to address the need for a corrected judgment. Once again, the parties stipulated that any motions to correct the judgment would be submitted to Magistrate Judge Lee for a final decision pursuant to 28 U.S.C. Sec. 636(c). Thereafter, Jeffries moved pursuant to Rule 60, Fed.R.Civ.P. ("Rule 60") to correct the 1993 Judgment.

On November 1, 1993, Jeffries' Rule 60 motion was granted and prejudgment interest in the amount of $53,252.55 was awarded on the 1993 Judgment, which judgment was amended to reflect the district court's decision on November 15, 1993. Pursuant to the Court's...

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  • Mckinley Associates, LLC v. Mckesson Hboc, Inc., No. 99-CV-398A.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • 26 Junio 2000
    ...for discovery was inadequate," and the court may decide the motion without allowing further discovery. Paddington Partners v. Bouchard, 34 F.3d 1132, 1137 (2d Cir. Here the court finds, based on the record before it on summary judgment, that no reasonable finder of fact could conclude that ......
  • Praileau v. Fischer, No. 1:12–CV–1261 (GTS/RFT).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Northern District of New York
    • 8 Marzo 2013
    ...and why, and unsupported by legal authority, was not sufficient to preserve the Title VII claim.”). 2.See Paddington Partners v. Bouchard, 34 F.3d 1132, 1137–38 (2d Cir.1994) (“In objecting to a magistrate's report before the district court, a party has no right to present further testimony......
  • All Am. Tel. Co. v. AT & T Corp., 07cv861
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 10 Septiembre 2018
    ...fact; what efforts the affiant has made to obtain those facts; and why those efforts were unsuccessful." Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir. 1994) ; see also 328 F.Supp.3d 357 Alphonse Hotel Corp. v. Tran, 828 F.3d 146, 151 (2d Cir. 2016) (citation omitted) (explain......
  • Castanza v. The Town Of Brookhaven, No. 06-CV-6654 (SJF)(AKT).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • 22 Marzo 2010
    ...of the defendant is insufficient to justify a denial of a motion for summary judgment under Rule 56(f).” Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir.1994) (citations and quotation marks omitted). However, “[a]s a general matter, ... ‘only in the rarest of cases may summary j......
  • Request a trial to view additional results
826 cases
  • Mckinley Associates, LLC v. Mckesson Hboc, Inc., No. 99-CV-398A.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • 26 Junio 2000
    ...for discovery was inadequate," and the court may decide the motion without allowing further discovery. Paddington Partners v. Bouchard, 34 F.3d 1132, 1137 (2d Cir. Here the court finds, based on the record before it on summary judgment, that no reasonable finder of fact could conclude that ......
  • Praileau v. Fischer, No. 1:12–CV–1261 (GTS/RFT).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Northern District of New York
    • 8 Marzo 2013
    ...and why, and unsupported by legal authority, was not sufficient to preserve the Title VII claim.”). 2.See Paddington Partners v. Bouchard, 34 F.3d 1132, 1137–38 (2d Cir.1994) (“In objecting to a magistrate's report before the district court, a party has no right to present further testimony......
  • All Am. Tel. Co. v. AT & T Corp., 07cv861
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 10 Septiembre 2018
    ...fact; what efforts the affiant has made to obtain those facts; and why those efforts were unsuccessful." Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir. 1994) ; see also 328 F.Supp.3d 357 Alphonse Hotel Corp. v. Tran, 828 F.3d 146, 151 (2d Cir. 2016) (citation omitted) (explain......
  • Castanza v. The Town Of Brookhaven, No. 06-CV-6654 (SJF)(AKT).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • 22 Marzo 2010
    ...of the defendant is insufficient to justify a denial of a motion for summary judgment under Rule 56(f).” Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir.1994) (citations and quotation marks omitted). However, “[a]s a general matter, ... ‘only in the rarest of cases may summary j......
  • Request a trial to view additional results

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