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Centrella v. Ritzcraft Corp. of Pennsylvania

United States District Court, D. Vermont

February 12, 2018

Carmine Centrella and Mary Brennan-Centrella, Plaintiffs,
Ritz-Craft Corporation of Pennsylvania, Inc., and Mountain View Modular Homes, Inc., Defendants.

          OPINION AND ORDER (DOCS. 139, 141)

          John M. Conroy United States Magistrate Judge

         In June 2014, Plaintiffs Carmine Centrella and Mary Brennan-Centrella commenced this action against Defendants Ritz-Craft Corporation of Pennsylvania, Inc., and Mountain View Modular Homes, Inc., alleging violations of the Vermont Consumer Protection Act (VCPA) and breaches of express and implied warranties in relation to Plaintiffs' purchase of a modular home that was manufactured by Ritz-Craft and installed on Plaintiffs' land by Mountain View. (Doc. 1.) About a year after the suit was filed, in June 2015, the Clerk of Court entered default against Mountain View pursuant to Federal Rule of Civil Procedure 55(a), leaving Ritz-Craft as the only active defendant in the case. (Doc. 55.) For the next two years, Plaintiffs and Ritz-Craft engaged in litigation activity including but not limited to: exchanging written discovery; conducting depositions; preparing and filing motions including Plaintiffs' Motion to Amend the Complaint and Ritz-Craft's Motion for Summary Judgment; and attending two failed mediations.

         In August 2017, a five-day jury trial was held. Plaintiffs sought to prove that Ritz-Craft committed unfair or deceptive acts or omissions that were likely to mislead Plaintiffs into purchasing the modular home, in violation of the VCPA; and that the home did not comply with Vermont's energy code, was not energy efficient, was not constructed with good workmanship, and was not fit for the purposes for which Plaintiffs purchased it, in violation of certain express and implied warranties made by Ritz-Craft to Plaintiffs before or at the time of purchase. Ritz-Craft denied these allegations, asserting that, at the time the modular home was delivered to Mountain View, it was in compliance with all representations and warranties issued by Ritz-Craft and with Vermont's energy code and standards of energy efficiency. Ritz-Craft further attempted to show that it had no control or involvement in Plaintiffs' purchase of the modular home from Mountain View and no responsibility for the work performed on the home by Mountain View or its subcontractors at the home site.

         At the close of Plaintiffs' evidence, the Court granted in part Ritz-Craft's oral motion under Rule 50 of the Federal Rules of Civil Procedure and dismissed Plaintiffs' claim for exemplary damages. On August 14, 2017, the jury found in favor of Plaintiffs on the VCPA claim but rejected Plaintiffs' warranty claims against Ritz-Craft. (Doc. 134.) On the VCPA claim, the jury awarded Plaintiffs their consideration paid to Ritz-Craft for the modular home, in the stipulated amount of $94, 262. (Id. at 2.)

         Pending before the Court is Plaintiffs' Application for Costs and Attorney Fees, wherein Plaintiffs seek an award of $165, 418.50 in attorney fees adjusted upward based on a .4 multiplier for a total fee award of $231, 585.90, plus $7, 567.03 in costs. (Doc. 141 at 5, 11.) Ritz-Craft filed an Opposition to the Application (Doc. 151); and thereafter, Plaintiffs filed a Reply (Doc. 153), and Ritz-Craft filed a Sur-Reply (Doc. 161). Also pending before the Court is Plaintiffs' Motion for Prejudgment Interest, wherein Plaintiffs request that the Court award them prejudgment interest at a rate of 12% per annum from the date of the Complaint's filing through the date of entry of judgment. (Doc. 139 at 3-4.) Ritz-Craft again filed an Opposition (Doc. 150), and Plaintiffs filed a Reply (Doc. 154). Ritz-Craft's Supplemental Motion for Post-Trial Relief pursuant to Rules 50 and 59 of the Federal Rules of Civil Procedure is also pending. (Doc. 169; see Docs. 140, 147.) Therein, Ritz-Craft seeks judgment as a matter of law or, in the alternative, a new trial. (Id.) Plaintiffs filed an Opposition to that Motion (Doc. 162), and Ritz-Craft filed a Reply (Doc. 163). This Opinion and Order addresses Plaintiffs' Application for Costs and Attorney Fees (Doc. 141) and Plaintiffs' Motion for Prejudgment Interest (Doc. 139). Ritz-Craft's Supplemental Motion for Post-Trial Relief (Doc. 169) is addressed in a separate Opinion and Order which is filed simultaneously with this ruling.

         Before analyzing the substance of Plaintiffs' Application for Costs and Attorney Fees, the parties' discovery dispute related to the Application must be addressed. On September 18, 2017, the Court granted Ritz-Craft's unopposed Motion for Extension of Time to Respond to Plaintiffs' Post-Trial Motions--including the pending Application for Costs and Attorney Fees and Motion for Prejudgment Interest--setting the new due date at October 19, 2017. (Docs. 143, 144.) On October 17, two days before Ritz-Craft's responses to Plaintiffs' Application for Costs and Attorney Fees and Motion for Prejudgment Interest were due, Ritz-Craft filed an “Expedited Motion for Additional Extension of Time to Respond to Plaintiffs' Post-Trial Motions.” (Doc. 148.) Therein, Ritz-Craft requested an additional extension of time, until November 13, to respond to Plaintiffs' Application for Costs and Attorney Fees and Motion for Prejudgment Interest, asserting that: (1) this would “put all pending post-trial motions on the same track, thereby eliminating potential confusion and promoting efficiency and judicial economy”; and (2) Plaintiffs' post-trial motions “are lengthy and raise a number of factual and legal issues that must be addressed” with respect to Plaintiffs' request for attorney fees and costs, requiring additional time for Ritz-Craft to respond. (Id. at 1. (footnote omitted)) Ritz-Craft further explained:

Ritz-Craft has determined that additional information is needed from Plaintiffs so that Ritz-Craft can fairly oppose Plaintiffs' post-trial motions, including but not limited to the fee agreement between Plaintiffs and their counsel (which Plaintiffs reference several times in support of their fee application) and the information (e.g., invoices) from which the billing summaries submitted by Plaintiffs were prepared (particularly because the summaries themselves do not add up in all respects).

(Id. at 2.) Plaintiffs promptly filed a Response in Opposition to Ritz-Craft's “Expedited Motion, ” pointing out that Ritz-Craft waited until “[m]ore than five weeks after receiving [Plaintiffs'] post-trial motions” to begin to request additional documents from Plaintiffs. (Doc. 149 at 1.) On October 19, despite its October 17 filing seeking an extension of time to file responses to Plaintiffs' post-trial motions, Ritz-Craft filed Oppositions to each of Plaintiffs' post-trial motions. (See Docs. 150, 151.) Therefore, on October 23, the Court issued a text order stating that Ritz-Craft's “Expedited Motion for Extension of Time to File Response” was moot, in light of Ritz-Craft's October 19 filings. (Doc. 152.)

         For the reasons stated below, Plaintiffs' Application for Costs and Attorney Fees (Doc. 141) is GRANTED in part and DENIED in part, and the Court awards Plaintiffs $127, 273.50 in attorney fees and $7, 567.03 in costs, to total $134, 840.53. The Court DENIES Plaintiffs' Motion for Prejudgment Interest (Doc. 139).

         Application for Costs and Attorney Fees

         Plaintiffs make the following arguments in support of their request for an award of attorney fees totaling $231, 585.90 and costs totaling $7, 567.03: (1) because the jury returned a verdict declaring that Ritz-Craft violated the VCPA, Ritz-Craft is required to pay Plaintiffs' legal fees (Doc. 141 at 5-6); (2) to calculate those fees, the Court should use the lodestar formula of reasonable time multiplied by reasonable hourly rate (id. at 6); (3) the amount of time Plaintiffs' counsel spent on this case--as documented in their billing records and explained in their affidavits--was necessary, appropriate, and reasonable (Doc. 141-5 at 15-19); (4) the hourly rates sought by Plaintiffs' counsel are usual, customary, and reasonable (id. at 19); (4) applying a modifier of .4 to upwardly adjust the fees is reasonable and warranted, considering the skill and experience of Plaintiffs' counsel, the excellent results obtained, and the contingent nature of the fee arrangement (id. at 19-23; Doc. 141 at 9-10); and (5) the costs incurred by Plaintiffs' counsel were necessary, appropriate, and reasonable (Doc. 141 at 10; Doc. 141-5 at 23-24). For support, Plaintiffs submit the Affidavit of attorney expert Gregory Mertz (Doc. 141-5), as well as the Affidavit of Plaintiffs' counsel Joshua Simonds (Doc. 141-1), the billing sheets of Plaintiffs' counsel Kathryn Kent and Joshua Simonds (Docs. 141-2 and 141-3), respectively, and a record of “Reimbursable Expenses” incurred by Plaintiffs during the litigation (Doc. 141-4).

         In response, Ritz-Craft makes the following arguments: (1) the hourly rates and number of hours claimed are unsubstantiated, unreasonable, and inconsistent (Doc. 151 at 2-7); (2) the amount of fees sought is “more than double” the amount awarded by the jury and is thus unreasonable “on its face” (id. at 5)[1]; (3) Plaintiffs are not entitled to an upward modifier because the case involved a straightforward VCPA claim, Mountain View's default made it easier for Plaintiffs to succeed, Plaintiffs succeeded on only one of three claims, and this was a purely private dispute with no public purpose (id. at 7-10); (4) the fees should be reduced by at least 5% due to the limited experience of Plaintiffs' counsel particularly Attorney Kent, the limited information supplied by Plaintiffs in support of their Application, and “applicable Vermont law” (id. at 11); and (5) the fees and costs awarded must exclude amounts incurred for the purpose of establishing damages for Ritz-Craft's alleged breach of warranties because Plaintiffs did not succeed on those claims and they did not share a common core of facts with the VCPA claims (id. at 11-14).[2] For support, Ritz-Craft submits the Declaration of attorney expert Ian Carleton (Doc. 151-1) and additional evidence (see Docs. 151-2-151-8).

         In their Reply to Ritz-Craft's Opposition, Plaintiffs provide more detailed information regarding the relevant attorney fee agreement, counsels' hourly rates, counsels' experience, and counsels' billing practices generally and in this particular case.[3] (Doc. 153.) In addition, Plaintiffs submitted supplemental affidavits of counsel and from attorney expert Mertz to provide further explanation to support their Application. (See Docs. 153-1 and 153-2.) Moreover, for the first time, Plaintiffs cite to the “United States Consumer Law Attorney Fee Survey Report 2015-2016” in support of the hourly rates sought. (Doc. 153 at 9.) Plaintiffs reiterate that they are entitled to an upward modifier, this time focusing on the Johnson factors, including: the time and labor required in the case, the novelty and difficulty of the questions at issue, the skill requisite to perform the legal services properly, the preclusion of other employment by the attorneys due to their acceptance of the case, the customary fee in Vermont, the fact that the fees were not fixed and counsel assumed a financial risk in taking the case, the results obtained not only for Plaintiffs but also for consumers generally, and awards in similar cases. (Id. at 10-15.) Plaintiffs also refute Ritz-Craft's contention that there was not a common core of facts shared by all three claims, arguing that the establishment of the modular home's failure to meet energy code standards was directly relevant to the warranty claims and the VCPA claim. (Id. at 15-17.)

         Approximately two weeks after Plaintiffs filed their Reply, Ritz-Craft filed a Motion for Leave to File Sur-Reply Brief in Response to Plaintiffs' Application for Costs and Attorney Fees. (Doc. 158.) The Court granted the Motion in a text order, reasoning that Plaintiffs' Reply “raised new arguments and new evidence, including affidavits of counsel, and was in excess of the ten-page limit provided in Local Rule 7(a)(5)(B).” (Doc. 160.) The next day, Ritz-Craft filed its Sur-Reply, with attached Supplemental Declaration of attorney expert Carleton. (Docs. 161, 161-1.) Therein, Ritz-Craft reiterates its arguments that the Application for Costs and Attorney Fees is unsubstantiated and unsupported, particularly due to Plaintiffs' failure to produce Attorney Kent's fee agreement with Plaintiffs, and that the hourly rates and number of hours claimed are unreasonable. (Doc. 161 at 3-7.) Moreover, Ritz-Craft argues that, despite Plaintiffs' request, the Court should join other courts in declining to rely on the “United States Consumer Law Attorney Fee Survey Report 2015-2016, ” as there is no evidence of its reliability and it does not provide reliable support for counsels' rates in this case.[4] (Id. at 7.) Finally, Ritz-Craft responds to the Johnson-factor analysis contained in Plaintiffs' Reply. (Id. at 8-9.)

         I. Legal Standard

         In Vermont, parties are ordinarily responsible for their own legal fees and costs of litigation. See Perez v. Travelers Ins. ex rel. Ames Dep't Stores, Inc., 2006 VT 123, ¶ 8, 181 Vt. 45, 915 A.2d 750; L'Esperance v. Benware, 2003 VT 43, ¶ 21, 175 Vt. 292, 830 A.2d 675. The burden of bearing one's individual costs, however, may be relieved by statute or contract. Gramatan Home Inv'rs Corp. v. Starling, 143 Vt. 527, 535, 470 A.2d 1157 (1983). Here, the VCPA provides for an award of “reasonable attorney's fees” to plaintiffs who demonstrate a violation of the statute. 9 V.S.A. § 2461(b). Thus, the Vermont Supreme Court has held: “Where a court finds that the Consumer Fraud Act has been violated, it is not within the court's discretion to determine whether to award such fees, but rather its task is to determine what constitutes reasonable fees in each instance.” L'Esperance, 2003 VT 43, ¶ 21 (citation omitted); see McKinstry v. Fecteau Residential Homes, Inc., 2015 VT 125, ¶ 13, 200 Vt. 392, 131 A.3d 1123. In determining an award of attorney fees under Vermont law, the touchstone is reasonableness. See Human Rights Comm'n v. LaBrie, Inc., 164 Vt. 237, 250, 668 A.2d 659 (1995) (“Fee awards are to be reasonable, reasonable as to billing rates and reasonable as to the number of hours spent in advancing the successful claims.” (internal quotation marks omitted)).

         Trial courts have “substantial discretion” in deciding what constitutes a reasonable fee amount under the circumstances of a particular case. Estate of DeVoyd v. Lanoue, No. 2008-465, 2009 WL 2411897, at *2 (Vt. Apr. 14, 2009) (citing Perez, 2006 VT 123, ¶¶ 8, 13). The first step in making that decision is calculating the “lodestar, ” which is “the product of a reasonable hourly rate and the reasonable number of hours required by the case.” Millea v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011) (citing Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 552 (2010); Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of Albany, 522 F.3d 182, 183 (2d Cir. 2008)); see Perez, 2006 VT 123, ¶ 10; L'Esperance, 2003 VT 43, ¶ 22. Calculation of the lodestar creates a “presumptively reasonable fee.” Millea, 658 F.3d at 166; Arbor Hill, 522 F.3d at 183. After the lodestar has been determined, the court may then adjust the fee amount upward or downward based on various factors, including but not limited to, the novelty of the legal issues, the experience of the attorneys, and the results obtained in the litigation. Hensley v. Eckerhart, 461 U.S. 424, 430 n.3, 433 (1983); see L'Esperance, 2003 VT 43, ¶ 22.

         A request for attorney fees should not result in a “second major litigation”; “[i]deally, . . . litigants will settle the amount of a fee.” Hensley, 461 U.S. at 437. Where settlement is not possible, however, the fee applicant--Plaintiffs here--“bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.” Id.

         II. Reasonableness of Hourly Rates

         The standard for calculating a reasonable hourly rate is “relatively flexible.” Perez, 915 A.2d at 755-56. “The reasonable hourly rate is the rate a paying client would be willing to pay.” Arbor Hill, 522 F.3d at 190. In determining what this amount is, the Second Circuit has instructed district courts to consider the 12 factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 92-93 (1989). See Arbor Hill, 522 F.3d at 190. Those factors are:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the attorney's customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

Id. at 186 n.3 (citing Johnson, 488 F.2d at 717-19).

         The court should also consider that “a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively, ” and that “such an individual might be able to negotiate with his or her attorneys, using their desire to obtain the reputational benefits that might accrue from being associated with the case.” Id. at 190. Additionally, in determining what a reasonable hourly rate is, the court should consider the “prevailing market rate” in the district where the court sits, i.e., “the rate ‘prevailing in the [relevant] community for similar services by lawyers of reasonably comparable skill, experience, and reputation.'” Farbotko v. Clinton County of New York, 433 F.3d 204, 208 (2d Cir. 2005) (alteration in original) (quoting Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984) and citing Cohen v. W. Haven Bd. of Police Comm'rs, 638 F.2d 496, 506 (2d Cir. 1980) (“[F]ees that would be charged for similar work by attorneys of like skill in the area” are the “starting point for determination of a reasonable award.”)); see Arbor Hill, 522 F.3d at 183 (“district court should generally use the prevailing hourly rate in the district where it sits to calculate . . . the ‘lodestar'”); Cabrera v. Jakabovitz, 24 F.3d 372, 393 (2d Cir. 1994) (court must consider “the prevailing marketplace rates for the type of work performed and the experience of the attorneys”); Cruz v. Local Union No. 3 of Int'l Bhd. of Elec. Workers, 34 F.3d 1148, 1159 (2d Cir. 1994) (“‘prevailing community' the district court should consider to determine the ‘lodestar' figure is the district in which the court sits” (internal quotation marks omitted)). Because a client who may recover attorney fees through a fee-shifting statute may have little incentive to negotiate rates prior to litigation, “the district court must act later to ensure that the attorney does not recoup fees that the market would not otherwise bear.” Arbor Hill, 522 F.3d at 184. The district court “bears the burden of disciplining the market” and setting a “reasonable hourly rate” for the services of counsel. Id.; see also McDaniel v. County of Schenectady, 595 F.3d 411, 420 (2d Cir. 2010) (a presumptively reasonable fee represents an approximation of what “a competitive market would bear”).

         The burden rests with the attorney seeking a fee award to establish his or her hourly rate “with satisfactory evidence-in addition to the attorney's own affidavits.” Hugee v. Kimso Apartments, LLC, 852 F.Supp.2d 281, 298 (E.D.N.Y. 2012) (internal quotation marks omitted). Here, Plaintiffs request an hourly rate of $250 per hour for Attorney Kent and $325 per hour for Attorney Simonds. (See Doc. 141-5 at 19.) In support, as noted above, Plaintiffs submit affidavits of Attorneys Kent and Simonds and the Affidavit of attorney expert Mertz, who states: “Having practiced in the greater Burlington area for more than 25 years, I can attest . . . that these rates are within the range of rates charged by local attorneys with comparable levels of skill and experience.” (Id.) Ritz-Craft claims that both Kent's and Simonds's rates are excessive and suggests that rates of $200 and $300 per hour (or less), respectively, are more appropriate. (See Doc. 151 at 6-7; Doc. 151-1 at 5.) This claim is supported by the Affidavit of attorney expert Carleton, who states: “Counsel's proposed hourly rates either lack substantiation (in the case of Kent) or are inconsistent with other publicly available information (in the case of Simonds).” (Doc. 151-1 at 5.)

         A. Attorney Kent's Hourly Rate

         Attorney Kent was primarily responsible for discovery and motion practice in this case, and she was second chair at the trial. (Doc. 141-1 at 2-3.) Kent graduated from Vermont Law School in 2006 and started Kent Law Practice, PLLC in Montpelier in 2007. (Id. at 1-2.) In 2010, she relocated her practice to Burlington, focusing on intellectual property, trademark litigation, and consumer protection. (Id. at 2.) Because she practices mostly in federal law, Kent has clients located throughout the United States. (Doc. 153-2 at 2.) She is a Fellow of the American Bar Foundation and received an award for outstanding leadership contributions to the Intellectual Property Section of the American Bar. (Id.) Kent recently joined a “trademark colleague” in establishing Lewis Kent, LLP, an intellectual property “boutique partnership” with offices in Vermont and California. (Id. at 3.) She also serves as “Of Counsel” for the law firm Merritt & Merritt. (Id. at 4.) Kent does not typically work on contingency and admittedly “do[es] not have a long history of fee awards.” (Id. at 5.) Her “usual and customary” billing rate during this litigation was $250 per hour. (Id. at 1.)

         The Court does not question the veracity of the statements made by Kent in her Affidavit, with respect to her affiliations with several law firms and other professional groups. However, Kent has failed to support a rate of $250 per hour in this case. Much of her Affidavit discusses her specialization in intellectual property and trademark litigation, presumably because this type of legal work usually commands a higher hourly rate than a more generalized practice. (Id. at 2-5.) But Kent's work in this case did not involve any intellectual property or trademark issues. Rather, this case involved relatively ...

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