Vanderbilt Mortg. and Finance, Inc. v. Flores

• Decision Date: 27 May 2011
• Docket Number: CIVIL ACTION NO. C-09-312
• Parties: VANDERBILT MORTGAGE AND FINANCE, INC., Plaintiff, v. CESAR FLORES, et al, Defendants.
• Court: U.S. District Court — Southern District of Texas

VANDERBILT MORTGAGE AND FINANCE, INC.,
Plaintiff,
v.
CESAR FLORES, et al, Defendants.

CIVIL ACTION NO. C-09-312

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION

Signed: May 27, 2011

ORDER

Pending before the Court are Maria and Arturo Trevinos' Motion for Attorney's Fees (D.E. 285) and Motion to Enter Bill of Costs (D.E. 286), and Cesar Flores and Alvin King's Motion for Attorney's Fees (D.E. 290) and Motion to Enter Bill of Costs (D.E. 291). For the reasons stated herein, the motions are GRANTED IN PART as detailed below.¹

I. Maria and Arturo Trevinos' Motions for Attorney's Fees and Costs

On November 18, 2010, after a trial in the above styled action, the jury found in favor of Intervenors Maria and Arturo Trevino on their claim under the fraudulent lien statute under Tex. Civ. Prac. & Rem. Code § 12.002. The Court has entered an Amended Final Judgment awarding the Trevinos $60,000 each plus prejudgment interest. (D.E. 284.) Pursuant to §12.002(b), the Trevinos are entitled to attorney's fees and "court costs." See §12.002(b).

A. The Trevinos' Attorney's Fees

In their Motion for Attorney's Fees, the Trevinos seek $1,683,650.28 in attorney's fees and related "nontaxable expenses." They reach this number from an initial total of

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$2,115,592.62, consisting of $1,922,560 in attorney's fees and $193,032.62 in related nontaxable expenses. They then apply a reduction of 54.7% for "exercise of billing judgment," leading to a total of $1,157,392.78, consisting of $1,052,515.00 in attorney's fees and $104,877.78 in related nontaxable expenses. They then apply a fee enhancement of 150% to the $1,052,515.00 in attorney's fees, leading to the requested total of $1,683,650.28 in fees and expenses.

The Clayton parties raise the following objections to the proposed attorney's fees award: (1) the Trevinos have failed to segregate the time spent on successful versus unsuccessful claims and have failed to eliminate time spent in litigating against dismissed parties; (2) the Trevinos' request is unreasonable in light of the applicable factors, especially in light of the extreme difference between the Trevinos' final judgment ($120,000 plus prejudgment interest) and the requested fee award of over 1.5 million dollars. (D.E. 294 at 2.)

The Court addresses each objection in turn.

1. Failure to Segregate

As an initial matter, the Court finds the Trevinos' fee application is not defective due to their failure to segregate the fees expended on their distinct claims.

The Clayton parties point to the general rule that under both Texas and federal law, the party seeking an attorney's fee award bears the burden of proving that legal work relating to claims for which fees may be recoverable has been properly segregated from legal work relating to claims for which fees are not recoverable. (D.E. 295 at 5-6) (citing, e.g., Hensley, 461 U.S. at 435 (when a plaintiff achieves only partial success, attorneys' fees should not be awarded for hours not "expended in pursuit of the ultimate result achieved"); Lear Siegler Services v. Ensil Int'l Corp., CIVA SA05-CV-679-XR, 2009 WL 5195884 (W.D. Tex. Dec. 18, 2009)(applying

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Texas law)("The Fifth Circuit follows the general rule that successful and unsuccessful claims should be segregated when calculating attorney's fees."))

However, all of Flores and King's claims — including the fraudulent lien claim, the RICO claim, the money had and received claim, and the request for mental anguish damages — arise out of the same transaction: namely, the purchase of the mobile home and the attendant production and filing of the fraudulent Deed of Trust ("DOT") and Builder's and Mechanic's Lien ("BML"). Thus, the Trevinos' claims are too intertwined to differentiate effectively, and the duty to segregate, in general, does not apply. See Snook v. Popiel (In re Snook), 168 Fed. Appx. 577, 580 (5th Cir. 2006) ("In Texas, where two or more claims are advanced and only some of the claims entitle a litigant to attorney fees, Texas courts have awarded fees for all claims that are too intertwined to differentiate effectively those that allow fees and those that do not.")

Likewise, the Trevinos need not segregate fees claimed for time spent on dismissed parties. The various defendants were all related to Clayton Homes, Inc. and the business operations of CMH Homes or Vanderbilt, and the claims against them involved a common core of facts. See Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 327 (5th Cir.), cert denied, 516 U.S. 862, 116 S.Ct. 173, 133 L.Ed.2d 113 (1995). ("We are here satisfied that LP & L's claims against the other defendants involved a common core of facts, and that LP & L was thus entitled to claim the hours it spent litigating against the other defendants. Consequently, we conclude that the district court did not err in refusing to sift through LP & L's hours and eliminate those spent in litigation against the other defendants."); see also Hensley, 461 U.S. at 434-35, 103 S.Ct. at 1940 (when claims against multiple parties share a "common core of facts" or "related legal theories," a fee applicant may claim all hours reasonably necessary to litigate

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those issues); Abell v. Potomac Ins. Co., 946 F.2d 1160, 1169 (5th Cir.1991) ("[W]here time spent on unsuccessful issues is difficult to segregate, no reduction of fees is required."), cert. denied, 504 U.S. 911, 112 S.Ct. 1944, 118 L.Ed.2d 549 (1992); Nash v. Chandler, 848 F.2d 567, 572 (5th Cir.1988) (finding no clear error where unsuccessful claims "highly relevant" to successful claim); Cobb v. Miller, 818 F.2d 1227, 1233 (5th Cir.1987) (holding claims against multiple defendants compensable because interrelated).

Accordingly, the Court need not dismiss the attorney's fee application due to failure to segregate and need not sift through the thousands of hours of records to eliminate hours spent in litigation of dismissed claims or against dismissed defendants. Louisiana Power & Light Co., 50 F.3d at 327.

2. Reasonableness of Attorney's Fees.

That being said, after performing the appropriate analysis, the Court agrees with the Clayton parties that the Trevinos' proposed attorney's fees award is excessive and unreasonable and must be reduced accordingly.

The Fifth Circuit uses the "lodestar" method to determine attorney's fee awards. Heidtman v. County of El Paso, 171 F.3d 1038, 1043 (5th Cir. 1999). A lodestar is calculated by multiplying "the number of hours reasonably expended" by the attorney by "an appropriate hourly rate in the community for such work." Id. After making this calculation, the Court may decrease or enhance the lodestar based on the relative weights of the factors set forth in Johnson v. Georgia Highway Express, Inc., including: the time and labor required, novelty and difficulty of the issues, skill required, preclusion of other employment, time limitations, results obtained,

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experience, reputation and skill of attorneys, "undesirability" of the case, and awards in similar cases. 488 F.2d 714, 117-719 (5th Cir. 1974).²

a. Reasonable Hourly Rate

In order to determine an appropriate attorney's fee award, the Court must first determine reasonable hourly rates for the Trevinos' attorneys. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The prevailing market rate for similar services by similarly trained and experienced lawyers in the relevant legal community is the established basis for determining a reasonable hourly rate. Tollett v. City of Kemah, 285 F.3d 357, 368 (5th Cir. 2002).

The movants seek fees only for the work done by David Rumley, who charges $800 an hour, and Elaine Brown, who charges $200 an hour.³ The rate charged by Mr. Rumley is above the prevailing market rates. See Memon v. Pinnacle Credit Services, LLC, 2009 WL 6825243 at *3 (S.D. Tex. May 21, 2009) (finding prevailing market rate in the Southern District of Texas for

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debt collection cases to be $300-$350 per hour for experienced attorneys.)⁴ A reduction to $350 per hour for the fees charged by Mr. Rumley is warranted.

b. Number of Hours Reasonably Expended

A fee application should include "contemporaneously created time records that specify, for each attorney, the date, the hours expended, and the nature of the work done." Kirsch v. Fleet St., Ltd., 148 F.3d 149, 173 (2d Cir. 1998). "Hours that are excessive, redundant, or otherwise unnecessary" are to be excluded, and in dealing with such surplusage, the court has discretion simply to deduct a reasonable percentage of the number of hours claimed as a practical means of trimming fat from a fee application. Hensley, 461 U.S. at 433-34 (internal quotations and citations omitted). The court may also exclude hours from the lodestar calculation that were not properly documented. See id. " [W]here the documentation of hours is inadequate, the district court may reduce the award accordingly." See Hensley, 461 U.S. at 433, 103 S.Ct. at 1939.

The Court finds that counsel for the Trevinos did not consistently and adequately document the hours expended on the case and did not always exercise sound billing judgment. Mr. Rumley exhibits many of the same errors as counsel for Counter-Plaintiffs Cesar Flores and Alvin King, discussed below, including frequent...