Sheldon v. Vermonty
| Decision Date | 08 November 2002 |
| Docket Number | Case No. 98-2277-JWL. |
| Citation | 237 F.Supp.2d 1270 |
| Parties | David SHELDON, Plaintiff, v. Jay VERMONTY, et. al., Defendants. |
| Court | U.S. District Court — District of Kansas |
Darren K. Kearns, Overland Park, KS, for Plaintiff.
Jane L. Stafford, Patrick J. Whalen, Spencer, Fane, Britt & Browne, Norman Siegel, Amy E. Bauman, Stueve, Helder, Siegel, LLP, John W. Shaw, Timothy S. Millman, Berkowitz, Feldmiller, Stanton, Brandt, Williams & Shaw, LLP, Kansas City, MO, Mario Aieta, Garvey, Schubert & Barer, New York, NY, Tanya Biller, Miriam G. Bahcall, Ungaretti & Harris, Chicago, IL, for Defendants.
Jay Vermonty, Flushing, NY, pro se.
Carmen Vermonty, Flushing, NY, pro se.
Gershon Tannenbaum, Brooklyn, NY, pro se.
On September 20, 2002, a jury returned its verdict in this securities fraud case finding defendants Jay Vermonty, Carmen Vermonty, and Gershon Tannenbaum liable to plaintiff David Sheldon in the amount of $38,722.89 for compensatory damages. It also found that plaintiff is entitled to an award of punitive damages.1 On October 30, 2002, following the receipt of written submissions, this court conducted a hearing regarding the punitive damage issue as provided by K.S.A. § 60-3702, and to hear argument on plaintiff's motion to alter or amend the judgment to include an award of attorney fees, costs, and interest pursuant to K.S.A. § 17-1268.
Having considered all of the evidence introduced in the trial of this case and the additional evidence which was admitted at the hearing on punitive damages, as well as the papers filed by the parties2 and the arguments of counsel, the court is now prepared to issue its ruling concerning the amount to be awarded as punitive damages and attorney fees in this case. For the reasons set forth below, the court directs the Clerk of the Court to modify and amend the judgment previously entered in this case to award plaintiff the following: attorney fees in the amount of $186,000; costs in the amount of $12,000; statutory interest in the amount of $35,921.06; and punitive damages in the amount of $150,000.
Pursuant to K.S.A. § 17-1268, plaintiff seeks an award of attorney fees in the amount of $325,152.54, plus costs in the amount of $17,985.57, for a total award of $343,138.11. Defendants argue that the total number of hours spent is unreasonable and ask the court to reduce the attorney fees for several reasons.
Defendants first argue that a portion of plaintiff's attorney fees should not be recoverable because those fees relate to work on claims for which attorney fees are not recoverable. Plaintiff's counsel conceded at the punitive damages hearing ("the hearing") that attorney fees attributable to claims submitted to arbitration are not recoverable. Therefore, the court is subtracting 154.85 hours for that portion of the fees relating to arbitration.3
Second, defendants argue that plaintiff cannot recover a reasonable attorney fee for all of his claims because only three of his claims, the three Kansas Securities Act claims, permit the award of attorney fees. Under Kansas law, however, plaintiff is entitled to recover a reasonable fee for all of his claims. In DeSpiegelaere v. Killion, 24 Kan.App.2d 542, 947 P.2d 1039 (1997), the Kansas Court of Appeals addressed the issue of whether a plaintiff is entitled to recover all of his or her attorney fees when only one of the claims permits the recovery of attorney fees. Id. at 544-47, 947 P.2d 1039. The court concluded that the plaintiffs were entitled to recover all of their attorney fees, despite only having one claim, a Kansas Consumer Protection Act claim, that permitted the recovery of attorney fees. Id. In so holding, the court adopted the general rule and exception set out in Stewart Title Guaranty Company v. Sterling, 822 S.W.2d 1 (Tex.1991). In Stewart, the defendants sought to invalidate the plaintiff's claim for attorney fees because the plaintiff failed to segregate the claims between the different defendants in the case. Id. at 10. The Texas Supreme Court stated the general rule that "an award of attorney's fees erroneously based upon evidence of unsegregated fees requires a remand." Id. at 11. The court added:
A recognized exception to this duty to segregate arises when the attorney's fees rendered in connection with claims arising out of the same transaction and are so interrelated that their prosecution or defense entails proof or denial of essentially the same facts. Therefore, when the causes of action involved in the suit are dependent upon the same set of facts or circumstances and thus are intertwined to the point of being inseparable, the party suing for attorney's fees may recover the entire amount covering all claims.
Id. (internal quotations and citations omitted). The exception to the general rule, as set out in Stewart and adopted by the Kansas Court of Appeals in DeSpiegelaere, applies to plaintiff's causes of action here because they are dependent upon the same set of facts or circumstances and thus are intertwined to the point of being inseparable. Specifically, plaintiff's claims all relate to the events surrounding his purchase of Power Phone/TMC Agroworld ("the company") stock. Accordingly, plaintiff is entitled to recover all of his reasonable attorney fees.
To arrive at a reasonable attorney fee, Kansas courts multiply a reasonable number of hours worked by a reasonable hourly rate. See, e.g., Naff v. Davol, Inc., 28 Kan.App.2d 726, 729, 20 P.3d 738 (2001). The court may then adjust that number to account for the eight factors set out in Rule 1.5 of the Kansas Rules of Professional Conduct. Davis v. Miller, 269 Kan. 732, 751, 7 P.3d 1223 (2000) (). Often, however, no adjustment is needed as the eight factors listed in Rule 1.5 are the factors on which the initial calculation, known as the lodestar calculation, is made. Shrout v. Holmes, No. 00-2069-KHV, 2001 WL 980280, at *2 (D.Kan. Aug.10, 2001) ().4
In calculating a reasonable attorney fee, the court must first determine the number of hours counsel reasonably expended on the litigation. Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243, 1249 (10th Cir.1998). The burden is on the applicant to prove that the hours billed are reasonable by "submitting meticulous, contemporaneous time records that reveal, for each lawyer for whom fees are sought, all hours for which compensation is requested and how those hours were allotted to specific tasks." Id. at 1250. The court "is justified in reducing the reasonable number of hours if the attorney's time records are `sloppy and imprecise' and fail to document adequately how he or she utilized large blocks of time." Id. (citing Jane L. v. Bangerter, 61 F.3d 1505, 1517 (10th Cir.1995)).
After the court has adequate time records before it, it must ensure that the applicant has exercised "billing judgment." Id. (quoting Ramos v. Lamm, 713 F.2d 546, 553 (10th Cir.1983)). Such judgment consists "of winnowing the hours actually expended down to the hours reasonably expended." Id. (citing Ramos, 713 F.2d at 553). An attorney may not recover fees from an adversary that could not be billed to the client; such fees are presumptively unreasonable. Id. (citing Ramos, 713 F.2d at 553-54).
Finally, "the district court should look at the hours expended on each task to determine if they are reasonable." Id. The court may reduce the reasonable hours awarded if "the number [of compensable hours] claimed by counsel include[s] hours that were unnecessary, irrelevant and duplicative." Id. (quoting Carter v. Sedgwick County, Kan., 36 F.3d 952, 956 (10th Cir. 1994)).
The district court should not feel compelled to identify each disallowed hour. As the Tenth Circuit explained: "Because mandating that the district court identify hours reasonably expended by billing entry or litigation activity would, in many cases, be practically impossible, there is no requirement ... that district courts identify and justify each disallowed hour." Id. at 1250 (internal quotations omitted). "Nor is their any requirement that district courts announce what hours are permitted for each legal task." Id. As the Tenth Circuit instructs in Case: in these circumstances, where the parties generated thousands of pages of written work product and the applicant submitted over fifty pages of billing statements with fifteen plus entries per page, "[i]t is neither practical nor desirable to expect the trial court judge to have reviewed each paper in th[e] massive casefile to decide, for example, whether a particular motion could have been done in 9.6 hours instead of 14.3 hours." Id. (quoting Copeland, 641 F.2d at 903). Instead, "[a] general reduction of hours claimed in order to achieve what the court determines to be a reasonable number is not an erroneous method, so long as there is sufficient reason for its use." Id. (quoting Mares, 801 F.2d at 1203).
In plaintiff's papers, he submitted a billing statement purporting to track the number of hours plaintiff's counsel invested in this case. The billing statement includes a very brief description of the work performed, the rate charged, the time it took to perform the task, and the date on which the task was performed. According to the court's calculation, plaintiff counsel's hours total 2097.32.5 Plaintiff also includes an affidavit from James E. Kunce, a local attorney, who testified at the hearing that plaintiff counsel's attorney fees were reasonable.
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