Team Sys. Int'l, LLC v. Haozous
| Decision Date | 23 August 2017 |
| Docket Number | No. 16-6277,16-6277 |
| Parties | TEAM SYSTEMS INTERNATIONAL, LLC, Plaintiff - Appellant, v. JEFF HAOZOUS, a/k/a Jeff Houser, individually and as President of Fort Sill Apache Industries and Chief Executive Officer of Fort Sill Apache Industries Board of Directors; FORT SILL APACHE INDUSTRIES; FORT SILL APACHE INDUSTRIES BOARD OF DIRECTORS, as Managers of Fort Sill Apache Industries, Defendants - Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (10th Circuit) |
(W.D. Okla.)
ORDER AND JUDGMENT*Before MATHESON, PHILLIPS, and McHUGH, Circuit Judges.
Plaintiff Team Systems International, LLC (TSI), sued Fort Sill Apache Industries (FSAI), the FSAI Board of Directors, and its President and CEO, Jeff Haozous (the Defendants) for breach of contract and related claims. The districtcourt dismissed its complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim (the Dismissal), and we affirmed. Team Sys. Int'l, LLC v. Haozous, 656 F. App'x 907, 913 (10th Cir. 2016). The district court awarded attorney fees in favor of the Defendants, and TSI now appeals that award.1
TSI sued the Defendants alleging they breached the parties' Engagement Agreement. Under the Agreement, FSAI promised to compensate TSI if it obtained "financing" or a "strategic partner" for FSAI's construction contracts with the federal government. Id. at 909 (internal quotation marks omitted). TSI arranged for payment and performance bonds relating to an FSAI construction project and introduced FSAI to a company that became the primary subcontractor for the project. When FSAI refused to compensate TSI, TSI filed this suit. The district court ruled that TSI failed to state a breach of contract claim against FSAI or Mr. Haozous because the performance bond did not constitute "financing" and the subcontractor was not a "strategic partner," and because the FSAI Board was not subject to suit. Id.
The Defendants then moved for an attorney fees award of $32,530.25 under Okla. Stat. tit. 12, § 936(A), which permits an award of reasonable attorney fees for the prevailing party in a civil suit for "services rendered." In support of their motion,they submitted affidavits and partially-redacted billing records from the two law firms that represented them on the Dismissal. The Defendants stated the billing records were redacted to preserve attorney-client and work-product privilege and offered to provide unredacted records to the court for in camera review.
TSI conceded that the Defendants were entitled to an award under § 936. But it argued the Defendants' submissions were insufficient to enable the district court to determine if the fee request was reasonable because their redacted billing statements omitted detailed descriptions of tasks and used block-billing entries, which show only an attorney's total daily time rather than itemizing each task. TSI also objected that Defendants' offer to provide unredacted records for in camera review would deprive it of "the opportunity to formulate a reasoned response to the un-redacted billing records." Aplt. App. at 126. TSI requested copies of the unredacted copies and an opportunity to respond to the reasonableness of the request.
The district court concluded it was unable to assess the reasonableness of the requested award because of the redactions in the attorneys' billing records and the use of block-billing entries. It directed the Defendants to submit to the court for in camera review unredacted billing statements and contemporaneous time records showing the services rendered and the time spent on specific tasks. TSI did not object to this order. Several months later, after this court affirmed the Dismissal, the district court granted the Defendants' fee award.
The district court stated it reviewed the unredacted billing statements and contemporaneous time records of most of the Defendants' attorneys, though someattorneys did not have contemporaneous time-records other than the billing statements. It found "that, for the most part, the amount of attorney fees requested by the [Defendants] represents a reasonable sum for the legal services provided by their counsel in the successful defense of [the] action." Id. at 248. The court noted that not all time spent on the Dismissal was billed to TSI or was included in the fee request. It found that the time billed was reasonable and appropriate, and that the billing statements reflected a proper exercise of billing judgment. It concluded there were some unsupported block-billing entries and some duplication of services by multiple attorneys. After performing a lodestar calculation, it ruled that a ten percent reduction in the requested award would yield a reasonable fee award of $29,234.47.
On appeal, TSI argues the district court abused its discretion by conducting the in camera review of the unredacted records.
"We review the district court's award of attorney fees for abuse of discretion." Chieftain Royalty Co. v. Enervest Energy Institutional Fund XIII-A, L.P., 861 F.3d 1182, 1187 (10th Cir. 2017). "A district court abuses its discretion where it commits a legal error or relies on clearly erroneous factual findings, or where there is no rational basis in the evidence for its ruling." Clark v. State Farm Mut. Auto. Ins. Co., 433 F.3d 703, 709 (10th Cir. 2005) (internal quotation marks omitted). A district court's decision to review certain documents in camera or ex parte is reviewed for abuse of discretion." Estate of Trentadue ex rel. Aguilar v. United States, 397 F.3d 840, 860 (10th Cir. 2005) (emphasis added).
In this diversity case, the law of the forum state, Oklahoma, controls the award of attorney fees. Chieftain Royalty Co., 861 F.3d at 1188. Under Oklahoma law, an award of fees under § 936 is mandatory, but "[t]he determination of reasonableness and the amount of the fee award are generally left to the sound discretion of the district court." JLEE Co. v. Reneau Seed Co., 332 P.3d 297, 300 (Okla. Civ. App. 2014) (internal quotation marks omitted).
TSI asserts three reasons why the district court abused its discretion in conducting an in camera review of the unredacted billing records: (1) courts may only review a document in camera for the limited purpose of determining whether a privilege was validly asserted; (2) FSAI waived any attorney-client privilege by virtue of requesting attorney fees—thus, there was legal no basis for Defendants to redact any portion of their records; and (3) the in camera review violated its due process rights. TSI did not present these arguments to the district court—neither in response to the Defendants' original fee request, in response to the district court's ruling that it would review the unredacted records in camera, nor even in a post-judgment motion.
TSI's failure to raise these arguments in district court resulted in a forfeiture. See Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1128 (10th Cir. 2011) (). Forfeited arguments are ordinarily reviewable under the plain-error standard. Id. But TSI did not argue for the application of plain error on appeal in its opening brief. Its arguments are, therefore, waived. See McKissick v. Yuen, 618 F.3d 1177, 1189(10th Cir. 2010) ().2
We are left with TSI's broad assertion that the district court abused its discretion in conducting an in camera review of the unredacted records because TSI could not meaningfully challenge the reasonableness of the fee request. Because billing records and time sheets might reveal attorney-client communications, aspects of these records may be protected by privilege. E.g., United States v. Anderson (In re Grand Jury Subpoenas), 906 F.2d 1485, 1492-93 (10th Cir. 1990) (); Chaudhry v. Gallerizzo, 174 F.3d 394, 403 (4th Cir. 1999) (...
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