Stores v. Developers Diversified Realty Corp.
| Decision Date | 04 April 2011 |
| Docket Number | Civil No. 05-2310(DSD/JJG) |
| Parties | Best Buy Stores, L.P., Plaintiff, v. Developers Diversified Realty Corporation, Benderson-Wainberg Associates, LP, DDR MDT Cool Springs Point LLC, DDRA Ahwatukee Foothills, LLC, DDR Flatiron LLC, DDRA Community Centers Four, LP, DDR MDT Lakepointe Crossing, LP, DDR MDT Great Northern, LLC, DDR MDT Shoppers World, LLC, DDR MDT Riverdale Village Outer Ring, LLC, DDR Hendon Nassau Park II, LP, DDRC PDK Salisbury LLC, DDR MDT Fayetteville Spring Creek, LLC, DDR MDT Turner Hill Marketplace, LLC, JDN Realty Corporation, JDN Development Company, Inc.,BG Boulevard III, LLC and John Doe #1, Defendants. |
| Court | U.S. District Court — District of Minnesota |
OPINION TEXT STARTS HERE
ORDERThomas C. Mahlum, Esq., Joel A. Mintzer, Esq. and Robins, Kaplan, Miller & Ciresi, 2800 LaSalle Plaza, 800 LaSalle Avenue, Minneapolis, MN 55402 and Robert A. Machson, Esq., 7 White Birch Ridge, Weston, CT 06883, counsel for plaintiff.
James L. DeFeo, Esq., Jennifer A. Fleming, Esq., Steven S. Kaufman, Esq., Thomas L. Feher, Esq. and Thompson Hine, LLP., 3900 Key Center, 127 Public Square, Cleveland OH 44114; D. Charles Macdonald, Esq., Martin S. Chester, Esq. and Faegre & Benson, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402, counsel for defendants.
This matter is before the court upon the objections to the February 1, 2011, report and recommendation of United States Magistrate Judge Jeanne G. Graham. The magistrate judge recommends granting the motions for costs and attorneys' fees and granting in part the motion for review of the cost judgment by plaintiff Best Buy Stores, L.P. (Best Buy). The parties timely objected. Following de novo review of the report and recommendation, and review of the file, record and proceedings herein, the court adopts the well-reasoned and thorough report and recommendation as modified in accordance with this order.
BACKGROUND
This attorneys' fees and costs dispute arises out of fee- and cost-shifting provisions in contracts between Best Buy and defendants DDRA Ahwatukee Foothills, L.L.C. (Ahwatukee); DDR MDT Fayetteville Spring Creek, L.L.C. (Spring Creek); DDR Flatiron, L.L.C. (Flatiron); JDN Realty Corp. (JDN Douglasville and JDN Overlook);1 DDR MDT Turner Hill Marketplace, L.L.C. (Turner Hill); DDR PDK Salisbury, L.L.C. (Salisbury); DDR MDT Shoppers World, L.L.C. (Shoppers World); DDR MDT Riverdale Village Outer Ring, L.L.C. (Riverdale); DDR Hendon Nassau Park II, L.P. (Nassau Park); Benderson-Wainberg Associates, L.P. (Wrangleboro); BG Boulevard III, L.L.C. (Boulevard); DDR MDT Great Northern, L.L.C. (Great Northern); DDR MDT Cool Springs Pointe, L.L.C. (Cool Springs); and DDR MDT Lakepointe Crossing, L.P. (Lakepointe) (the landlord defendants). The history of this litigation is set out in previous orders, and the court only recites the background necessary to resolve the present objections.
The underlying action began on September 30, 2005, when Best Buy claimed breach of contract against defendant Developers Diversified Realty Corporation (DDR) and the landlords of the Wrangleboro store. Following several amended complaints, discovery disputes and imposition of sanctions, the action included claims of breach of contract, breach of fiduciary duty, fraud and a request for declaratory judgment against the landlord defendants and DDR. Cf. ECF No. 357. On December 8, 2006, the court granted summary judgment against Best Buy on its breach of contract and declaratory judgment claims against DDR. See ECF No. 177. On November 16, 2007, the court denied Best Buy's motion to amend its complaint a sixth time to add punitive damages. See ECF Nos. 528, 592. On November 21, 2007, the court dismissed the fraud claims against ten of the sixteen landlord defendants.2 See ECF No. 530, at 27. On June 12 and October 2, 2008, the court ordered Best Buy to make witnesses available and awarded $70,000 in expenses as sanctions against Best Buy. See ECF. No. 648, at 2; ECF No. 622, at 12. On July 14, 2009, the court granted summary judgment in favor of Best Buy and against the landlord defendants on its breach of contract claims and request for declaratory judgment. In that same order, the court granted summary judgment in favor of defendants on all of Best Buy's breach of fiduciary duty claims, its fraud claims against two more landlord defendants, and all remaining fraud claims for lease years 2004 and 2005.
Following summary judgment, Best Buy moved for entry of judgment on its breach of contract claims and to dismiss the remaining claims. On May 25, 2010, the court dismissed Best Buy's remaining claims with prejudice. In that same order, the court awarded at total of $495,145.97 in damages for breach of contract for lease years 1999 to 2005. See ECF No. 729, at 19. The court also awarded $215,739.61 in statutory and contractual interest. See ECF No. 738, 1-2. On November 4, 2010, the court awarded $413,864.06 in damages and interest for breach of contract from 2006 to 2009. Damages and interest were apportioned to each landlord defendant individually.
On July 9, 2010, Best Buy moved for costs in the amount of $196,088.47, attorneys' fees in the amount of $1,920,801.33 and
requested the Clerk of Court to tax $61,254.42 in costs against defendants under 28 U.S.C. § 1920. See ECF Nos. 745, 746. The Clerk of Court taxed $50,730.72 and denied $10,523.70 in costs. See ECF Nos. 790, 792. Best Buy timely moved the court to review the Clerk's cost judgment. See ECF No. 793. The court withheld consideration of the motions due to the then-pending motion for additional declaratory relief for lease years 2006 to 2009. Following disposition of that motion, Best Buy sought an additional $100,205 in attorneys' fees. The court referred the costs and fees motions to the magistrate judge for consideration.
The magistrate judge determined that 2500 hours was a reasonable amount of time for Best Buy to have spent in this litigation, and multiplied that number by a prevailing market rate of $325 per hour to determine a possible fee award of $812,500. The magistrate judge then determined that the leases do not create joint and several liability and allocated the fees and costs proportionally, according to each lease. The magistrate judge determined that costs of $93,761.51 are reasonable, and allocated those costs to the five leases that allowed costs. Lastly, the magistrate judge determined that, with one exception, the Clerk properly denied the costs of expedited transcripts. Best Buy objects to the reduction in fees and costs and to allocation of the fees and costs under the various lease agreements. A subset of defendants3 object to the determination that their leases allow recovery of attorneys' fees for tort claims, that five of the leases allow for costs in addition to those allowed by 18 U.S.C. § 1920 and that section 13-1-11 of the Official Code of Georgia does not apply. The court now addresses the objections.
DISCUSSION
The court reviews the report and recommendation of the magistrate judge de novo. 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b)(3); D. Minn. LR 72.2(b). The availability of attorneys' fees is a matter of substantive law for purposes of Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). See Burlington N. R. Co. V. Farmers Union Oil Co. of Rolla, 207 F.3d 526, 534 (8th Cir. 2000). Here, Arizona, Arkansas, Colorado, Georgia, Massachusetts, Minnesota, Tennessee, and Texas law respectively govern the lease agreements. See Milliken & Co. v. Eagle Packaging Co., 295 N.W.2d 377, 380 n.1 (Minn. 1980). The courts in each relevant jurisdiction uphold contract provisions allowing the shift of reasonable fees.4
Under the American system, a party pays its own fees and may spend whatever it chooses in pursuit of litigation. When allowed by statute or contract, a party may seek to shift expenses to its opponent. In so doing, it may only shift those costs and fees which are reasonable. The extensive contact with the parties and familiarity with the issues make determination of the reasonable amount of attorney fees peculiarly within the discretion of the district court. See Greater Kansas City Laborers Pension Fund v. Thummel, 738 F.2d 926, 931 (8th Cir. 1984).
Courts in the relevant jurisdictions apply a similar analysis to assess reasonableness. The considerations include the nature and difficulty of the action; the time required; the amount involved and the results obtained; the fees customarily charged for similar legal services; the experience, reputation, and ability of counsel; and fee arrangements. See, e.g., Northfield Care Center, Inc. v. Anderson, 707 N.W.2d 731, 736 (Minn. Ct. App. 2006). The moving party bears the burden to establish the reasonableness of the costs and fees requested. See Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).
Best Buy makes several objections to the recommendation that 2500 hours is a reasonable amount of time to have spent on this litigation. In support, Best Buy argues that the magistrate judge committed four errors: incorrectly interpreting of the intent of the parties, considering the results obtained, finding $1.9 million in fees unreasonable and failing to explain her reasoning.
Best Buy argues that the magistrate judge misinterpreted the intent of the parties as expressed in the expense-shifting provisions of the leases. The language of these provisions is clear: the parties intended that a losing party would pay the reasonable fees (and costs in five leases) of the prevailing party. The court rejects the interpretation of Best Buy that the intent of the language is "to make [the prevailing party] whole" by allowing it to "recover all enforcement expenses." ECF No. 828, at 5-6. The leases do not say that, nor does the language support such an interpretation. The leases only allow recovery of reasonable...
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