K.V. Mechanical Contractors, Inc. v. TWG (2010)

MEMORANDUM OF DECISION RE ATTORNEYS FEES

The court filed its memorandum of decision in this matter on August 12, 2010, finding in favor of the defendant/counterclaim plaintiff, TWG Construction Company, Inc., a/k/a, f/k/a Widewaters Construction (Widewaters) on its breach of contract claim.¹  The parties agreed to handle the issue of any award of attorneys fees postjudgment.   On September 14, 2010, Widewaters filed its motion and memorandum of law in support of its claim for attorneys fees, seeking an award of legal fees in the amount of $162,310.21.²  On September 21, 2010, the plaintiff/counterclaim defendant, K.V. Mechanical Contractors, Inc., (KV), filed an objection to the motion.   A hearing on the issue was scheduled and heard on October 18, 2010.

Widewaters is seeking attorneys fee relating to (1) defending itself in the New York state courts after being sued on account of KV's nonpayment of sales tax;  (2) negotiation of a resolution of sales tax liability with the Connecticut Department of Revenue Services;  (3) litigation involving the mechanic's lien filed by KV;  and (4) litigation attributable to this lawsuit brought by KV, including claims by KV and counterclaims by Widewaters.   Widewaters submitted invoices relating to the attorneys fees incurred in the above noted matters, involving several different law firms.   In fact, the litigation attributable to this lawsuit was handled by several law firms:  Elliott, Stanek & Taylor P.C., (Elliott and Stanek), initially engaged to defend this lawsuit;  Thelen, Reid, Brown, Raysman & Steiner, LLC, (Thelen), a more experienced law firm handling complex construction disputes;  and finally Robinson & Cole, LLP, who handled the KV dispute for the majority of the discovery, through trial and up to the present date.³  Widewaters is seeking the following in attorneys fees:

Mechanic's Lien:  $ 1,000.00

Sales tax dispute:

Peters & Hoggan:  $ 6,147.81

Thelen:  $ 3,203.58

KV Litigation:

Elliot and Stanek:  $ 11,156.00

Thelen:  $ 16,321.00

Robinson & Cole:  $124,481.82

Total:  $162,310.21 ⁴

“The general rule of law known as the ‘American rule’ is that attorneys fees and ordinary expenses and burdens of litigation are not allowed to the successful party absent a contractual or statutory exception ․ Connecticut adheres to the American rule.”  (Internal quotation marks omitted.)  Massad v. Greaves, 116 Conn.App. 672, 680, 977 A.2d 662, cert. denied, 293 Conn. 938, 981 A.2d 1079 (2009).  “[W]hen a court is presented with a claim of attorneys fees, the proponent must present to the court ․ a statement of the fees requested and a description of services rendered ․ Parties must supply the court with a description of the nature and extent of the fees sought, to which the court may apply its knowledge and experience in determining the reasonableness of the fees requested.”  (Citations omitted.)  Smith v. Snyde r, 267 Conn. 456, 479-80, 839 A.2d 589 (2004).

In its memorandum of decision, the court found that KV had failed to comply with the terms of its contracts with Widewaters.   Each of the four underlying contracts provided, in pertinent part:

33.  INDEMNITY. To the extent permitted by law, [KV] shall indemnify, hold harmless and fully protect and defend [Widewaters] and their respective affiliates, consultants, agents, and employees, from and against all liability, judgments, claims, damages, losses, costs and expenses (including but not limited to court costs and attorneys fees) caused in whole or in part by any act or omission of [KV] or anyone directly or indirectly employed by it or anyone for whose acts it may be liable, arising out of or relating to the performance of [KV's] work under this Contract.

34. ENFORCEMENT OF AGREEMENT.   In the event that [Widewaters] is required to enforce the provisions of this Contract, including, but not limited to, the recovery of any funds overpaid under this Contract, [KV] agrees to pay the costs, expenses, and reasonable attorneys fees incurred by [Widewaters].

Because the court found that KV failed to properly perform its contractual obligations to Widewaters, Widewaters is entitled to an award of its reasonable attorneys fees in accordance with KV's contractual obligations, pursuant to paragraphs 33 and 34 of the parties' contracts.⁵

KV objects to an award of attorneys fees, arguing that they have filed a timely appeal of the court's decision, and the disposition of said appeal could significantly impact any claims made by the defendant.   KV also requested and was granted an evidentiary hearing on the issue of legal fees.   At the hearing, KV supplemented its objection by arguing the reasonableness of the attorneys fees claimed due to the potential overlapping and redundancy in the billing, as well as arguing that the percentage of attorneys fees attributable to KV as to the sales tax issue is incorrect.

“In determining the number of hours reasonably expended, the court must exclude hours that are excessive, redundant or otherwise unecessary ․ The task of determining a fair fee requires a conscientious and detailed inquiry into the validity of the representations that a certain number of hours were usefully and reasonably expended ․ The court must examine the hours expended by counsel and the value of the work product of the particular expenditures to the client's case.   Efforts put into research, briefing and the preparation of a case can expand to fill the time available, and some judgment must be made in the awarding of fees as to diminishing returns from such further efforts ․ In making this examination, the ․ court does not play the role of an uninformed arbiter but may look to its own familiarity with the case and its experience generally as well as to the evidentiary submissions of the parties ․” (Internal quotation marks omitted and citations omitted.)   Ham v. Greene, Superior Court, judicial district of New Haven, Docket No. 322775 (June 12, 2000) (27 Conn. L. Rptr. 512).

“Cases may be overstaffed, and the skill and experience of lawyers vary widely.   Counsel for the prevailing party should make a good-faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission.   In the private sector, ‘billing judgment’ is an important component in fee setting.   It is no less important here.   Hours that are not properly billed to one's client also are not billed to one's adversary ․” (Internal quotation marks omitted.)  Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983).

“Courts have recognized that in many cases in which prevailing parties seek an award of attorneys fees, it is unrealistic to expect a trial judge to evaluate and rule on every entry in an application ․ For that reason, many courts have endorsed percentage cuts as a practical means of trimming ․ a fee application.”  (Internal quotation marks omitted' and citations omitted.)   Sabatini v. Corning-Painted Post Area School District, 190 F.Sup.2d 509, 522 (W.D.N.Y.2001).   See, for example, Arnone v. Town of Enfield, Superior Court, judicial district of Hartford, Docket No. 96-0558333 (September 13, 2001), affirmed in part and reversed in part on other grounds, 79 Conn.App. 501, 831 A.2d 260, cert. denied, 266 Conn. 932 (2003) (applying factors to the lodestar, fee request of $84,125 would have been reduced by approximately forty percent to $50,000;  trial court instead awarded the contingency fee of $42,333 based a retainer agreement).

The court has reviewed the time entries claimed in Widewaters' supporting documentation.   As noted, several law firms were involved in three separate aspects of the litigation.   KV did not demonstrate any specific examples of duplication or redundancy at the evidentiary hearing other than to point out that several firms worked on the some of the same issues.   The court has thoroughly reviewed all of the billing statements and invoices from Peters & Hoggan, Thelen, Elliot and Stanek, and Robinson & Cole. Any possible duplication of efforts would be related to the actual litigation of the present matter between the initial firm of Elliot and Stanek, when the lawsuit was first initiated, and subsequently when the matter was transferred to Thelen.   From then on, although the law firms may have changed, the attorneys who performed the work on the file were the same:  Attorney Martin Onorato and Attorney Keane Aures.⁶

Widewaters' preference was to avoid litigation altogether due to the complexities and expense of construction litigation, but when KV instituted the lawsuit in 2006, Widewaters then had no option but to protect its interests and incur legal fees.   Litigation relating to this suit involved extensive motion practice as well as numerous discovery hearings, with Widewaters repeatedly seeking responses to interrogatories and documents pursuant to production requests, and eventually seeking the court's intervention for strong directives that KV be precluded from introducing documents at trial that had not been produced in discovery.   Due to the multiple and diverse issues involved in the parties' claims, the lack of documentation of KV's claims, Widewaters found that trial preparation was necessarily extensive, including the review and analysis of its own voluminous files, accounting records, sales tax audit records, and other litigation documentation, both in the context of the defense against KV's claims and support of its counterclaims.   In addition to trial preparation itself, i.e., exhibit preparation, meetings with witnesses, damages calculations, etc., the trial itself took four days, followed by preparation and submission of Proposed Findings of Fact as ordered by the court.

The court has reviewed the affidavits and billing statements submitted to support Widewaters' claim for attorneys fees.   Widewaters has supplied the court with an affidavit of a vice president of Widewaters, attesting to the engagement of each firm to handle the various legal issues relating to the contract disputes between Widewaters and KV as well as the payment of the legal fees.   The parties were given a full opportunity at an evidentiary hearing to present the court with testimony, itemized bills, and the like.   Widewaters' lawyers thoroughly and effectively represented their client in this lawsuit initiated by KV, and, to some extent, prolonged by KV. The court will not punish Widewaters or its lawyers for the “good lawyering” they were required to engage in.

The court finds that the hourly rates and the requested hours are reasonable, but that some duplication of efforts may have taken place between the first firm of Elliot and Stanek and the second firm, Thelen, which took over the representation of Widewaters.   In light of all these factors, the court reduces the total fee of Elliot and Stanek by fifty percent.

In accordance with the terms of the contracts, Widewaters is entitled to an award of attorneys fees.   Taking into account the adjustment discussed above, the court finds that $155,833.28 is a fair and reasonable attorneys fee.   The court orders attorneys fees to be paid by KV to Widewaters of $155,833.28.⁷

Swienton, J.

FOOTNOTES

FN1. The court also found in favor of K.V. Mechanical Contractors, Inc., on its claim that they were owed retainage amounts.   All other issues were found in favor of Widewaters on both the complaint and the counterclaims..  FN1. The court also found in favor of K.V. Mechanical Contractors, Inc., on its claim that they were owed retainage amounts.   All other issues were found in favor of Widewaters on both the complaint and the counterclaims.

FN2. Exhibit A attached to Widewaters' memorandum indicated a total of $156,122.71.   Widewaters supplied the court with an additional billing statement for legal work performed after the preparation of the initial memorandum to date of $6,187.50..  FN2. Exhibit A attached to Widewaters' memorandum indicated a total of $156,122.71.   Widewaters supplied the court with an additional billing statement for legal work performed after the preparation of the initial memorandum to date of $6,187.50.

FN3. The matter was handled by Attorney Martin Onorato, originally with Thelen, Reid, Brown, Raysman & Steiner, LLP, which firm became Thelen, LLP. After that firm dissolved, Attorney Onorato joined Robinson and Cole, as did his associate, Attorney Keane E. Aures..  FN3. The matter was handled by Attorney Martin Onorato, originally with Thelen, Reid, Brown, Raysman & Steiner, LLP, which firm became Thelen, LLP. After that firm dissolved, Attorney Onorato joined Robinson and Cole, as did his associate, Attorney Keane E. Aures.

FN4. Widewaters is also seeking a postjudgment interest award on any attorneys fees awarded..  FN4. Widewaters is also seeking a postjudgment interest award on any attorneys fees awarded.

FN5. Although the “sales tax issue” arose prior to the initial institution of the lawsuit, and therefore legal fees were incurred relating to its resolution, one of the counterclaims brought by Widewaters involved the nonpayment of sales tax by KV. The court found in favor of Widewaters on this issue..  FN5. Although the “sales tax issue” arose prior to the initial institution of the lawsuit, and therefore legal fees were incurred relating to its resolution, one of the counterclaims brought by Widewaters involved the nonpayment of sales tax by KV. The court found in favor of Widewaters on this issue.

FN6. The court is aware that the sales tax issue was initially handled by Peters & Hoggan, with consultation with Thelen.   Resolution of the tax liability with the Department of Revenue Services and the litigation involved to collect the sales tax from KV were two separate matters..  FN6. The court is aware that the sales tax issue was initially handled by Peters & Hoggan, with consultation with Thelen.   Resolution of the tax liability with the Department of Revenue Services and the litigation involved to collect the sales tax from KV were two separate matters.

FN7. The court did not allow the costs for copies, Westlaw time, parking fees, etc., and reduced the award by those amounts.   The court is also aware that there is an appeal pending, and fully expects that the court's ruling on this issue will be made a part of that appeal..  FN7. The court did not allow the costs for copies, Westlaw time, parking fees, etc., and reduced the award by those amounts.   The court is also aware that there is an appeal pending, and fully expects that the court's ruling on this issue will be made a part of that appeal.

Swienton, Cynthia K., J.