Total Recycling Services of Connecticut, Inc. et al. v. LLC (2013)

RULING ON MOTION FOR ATTORNEYS FEES # 161

This motion for attorneys fees, filed by the defendant, Connecticut Oil Recycling Services, LLC, is in connection with a jury trial, which concluded in 2007.   The case has given rise to three appellate cases.  Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 308 Conn. 312, 63 A.3d 896 (2013);  Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 129 Conn.App. 296, 20 A.3d 716 (2011);  Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 114 Conn.App. 671, 970 A.2d 807 (2009).   The hearing on this motion is conducted pursuant a remand in Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 308 Conn. 312.   In that case, the following facts and procedural history were stated:

“The defendant contracted with the plaintiffs to purchase their oil recycling business, which the parties carried out using three contracts.   These contracts, which were entered into on or about March 1, 2004, included (1) a contract between Total Recycling and the defendant for the purchase of certain equipment (equipment contract), (2) a contract between Total Recycling and the defendant for the purchase of goodwill (goodwill contract), and (3) an agreement not to compete between Whitewing and the defendant (noncompete agreement).   Of these, all but the equipment contract contained provisions entitling the defendant to attorneys fees in the event that the plaintiffs breached the agreements ․

“In April 2006, the plaintiffs commenced the present action, seeking damages for the defendant's alleged breach of the three contracts at issue and for unjust enrichment.   The defendant denied the allegations in the plaintiffs' four count complaint and responded with a five count counterclaim, alleging, inter alia, breach of contract and seeking attorneys fees under the relevant provisions of the goodwill contract and the noncompete agreement.   The jury found in favor of the plaintiffs with respect to their unjust enrichment claims but rejected the plaintiffs' contract claims, finding that the plaintiffs' failure to perform under the contracts barred their recovery.   With respect to the counterclaim, the jury likewise concluded that the plaintiffs had breached the contracts with the defendant but awarded damages to the defendant only with respect to the plaintiffs' breach of the equipment contract.”  (Citations omitted;  footnote omitted.)  Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 308 Conn. 315–16.

The holding of the case, and the direction for remand, is as follows:  “[W]hen certain claims provide for a party's recovery of contractual attorneys fees but others do not, a party is nevertheless entitled to a full recovery of reasonable attorneys fees if an apportionment is impracticable because the claims arise from a common factual nucleus and are intertwined.   On remand, the trial court, in applying this standard, must determine the appropriate award of attorneys fees to which the defendant is entitled.”  Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 308 Conn. 333.

The Supreme Court also considered the issue of whether an attorneys fees provision encompasses appellate attorneys fees.   The holding and remand on this issue is as follows:  “[We] will construe an attorneys fees provision that is silent with respect to appellate attorneys fees as encompassing such fees in the absence of contractual language to the contrary ․ As with attorneys fees incurred at the trial level, however, such fees can be awarded only when there is a contractual or statutory basis for doing so.   On remand, because only two of the three contracts provided for an award of attorneys fees, the trial court should therefore consider whether, and to what extent, an award of appellate attorneys fees is appropriate under the standard announced in ․ this opinion.”  (Citation omitted.)  Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 308 Conn. 337.   Further facts will be stated as necessary.

In its motion, the defendant has requested trial level and appellate attorneys fees and expenses in the total amount of $112,675.02.   The defendant maintains that all of the fees, including appellate fees, were incurred in connection with claims that were intertwined and cannot be apportioned.   The plaintiffs maintain that the defendant is not entitled to appellate attorneys fees and that, at most, the defendant is entitled to $3042.07 for trial level fees.

Apportionment of Trial Level Fees

The first task for the court to determine is whether attorneys fees at the trial level can be apportioned.   This centers on the issue of whether apportionment is impracticable because the claims arose from a common nucleus and are intertwined.   The court has carefully reviewed the court file and the pleadings and finds apportionment impracticable for the following reasons.   As noted earlier, the parties entered into three separate contracts referred to as an equipment contract, a goodwill contract, and a noncompete agreement.   All three of these agreements were the subject of the plaintiffs' complaint and the defendant's counterclaim.   The claims made by both parties revolved around the relatively short period of time from the signing of the contracts in March 2004, to the filing of the action in March 2006.   The jury was given special verdict interrogatories that included questions related to all three agreements.   In their brief in opposition, the plaintiffs do not argue that the claims made by the parties were not intertwined, but instead focus on the fact that the jury did not award damages to the defendant on the contracts that provided for attorneys fees.   Regardless of which contract the jury awarded damages, because all three contracts were the subject of the plaintiffs' original claim and the defendant's counterclaim, the court finds the issues were factually intertwined.

Based upon a review of the proceedings, and the court's general knowledge of how cases are prepared and tried, the court concludes that an apportionment of the fees requested among the contracts is impracticable because the claims made at trial are intertwined and arise from a common factual nucleus.

Appellate Fees

The Supreme Court in Total Recycling determined that in a situation in which an attorneys fees provision is silent as to whether it includes appellate fees, the provision encompasses such fees.   As seen above, the Supreme Court stated:  “[We] will construe an attorneys fees provision that is silent with respect to appellate attorneys fees as encompassing such fees in the absence of contractual language to the contrary.”   In this case, the contract provisions as to attorneys fees is silent on appellate fees, consequently they are allowable.¹

Pursuant to the remand, the court must determine if the claimed appellate fees can be apportioned between the contracts that provide for attorneys fees and the one that does not.   In addition to the aforementioned review of the file and the pleadings, the court has also analyzed the three subsequent appellate cases.   The court concludes that the appellate fees are intertwined and arise out of the same factual nucleus of issues which arose from the trial of the case, and involved all three contracts.   As such, the fees cannot be apportioned.

In the first appeal, Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 114 Conn.App. 671, the defendant claimed that the trial court improperly denied its motion to set aside the verdict against it based upon unjust enrichment.   The defendant maintained that because the plaintiff had the right to pursue damages for breach of contract and because the jury expressly found the plaintiff had breached the contract, damages for unjust enrichment were barred.   The defendant also appealed the trial court's denial of its motion for attorneys fees, relying upon the finding that the plaintiffs breached their contract with the defendant.

The Appellate Court did not agree with the defendant on the issue regarding unjust enrichment, but did agree that the trial court improperly denied its motion for attorneys fees.  Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 114 Conn.App. 681.   The trial court based its decision on the fact that the jury only awarded damages to the defendant for the plaintiffs' breach of the contract that did not provide for attorneys fees.   The Appellate Court noted that the jury found, by way of their interrogatory responses, that the plaintiffs had breached an agreement regarding transfer of a customer list and an agreement not to compete.   The court went on to state:  “The attorneys fee clauses in these contracts did not require the defendant to prove more than breach.   As our Supreme Court held in Storm Associates, Inc. v. Baumgold, 186 Conn. 237, 245, 440 A.2d 306 (1982), in the absence of an applicable statute, a litigant derives its right to recover an attorneys fee ․ from its contract and not from a claim for damages.   We hold, therefore, that the trial court improperly held that the jury's verdict with respect to the equipment purchase agreement precluded the defendant's recovery of reasonable attorneys fees under the other two contracts between the parties.”  (Emphasis added;  internal quotation marks omitted.)   Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 114 Conn.App. 680–81.

Upon the first remand, the defendant claimed that the fees could not be apportioned because they were intertwined.   The trial court disagreed and ultimately issued an order denying the defendant's motion for attorneys fees.   The defendant appealed and the Appellate Court affirmed the trial court.   Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 129 Conn.App. 296.   Thereafter, the defendant sought and was granted certification from the Supreme Court.   Ultimately, the Supreme Court reversed the decision of the Appellate Court and issued the aforementioned remands that are before this court.

It is apparent that the first appeal was related to the plaintiffs' breach of two of the three contracts.   The issues raised in the appeal involved the contracts that provided for attorneys fees.   Essentially, all three appeals pertained to the defendant's claim for attorneys fees, which arise from the original contract provisions and the plaintiffs' breach of two of the three contracts.   Furthermore, to the extent the issues may have involved the contract which did not provide for attorneys fees, the issues were factually intertwined making apportionment here impossible.   As noted earlier, the claims involving these contracts, which were presented at trial, arose from a common nucleus of facts and are intertwined.   The fees incurred in the defendant's diligent appellate quest to obtain attorneys fees are directly related to the original contracts, which were litigated at trial.   The court concludes the defendant's attorneys fees claim encompasses appellate fees, without apportionment.

Reasonable Attorneys Fees

The court now turns to the issue of whether the requested attorneys fees are “reasonable.”   Attached to the motion for attorneys fees was an affidavit signed by Attorney Sweeney.   Included with the motion were the invoices and billing records for Polivy & Taschner, prior trial counsel, and for Attorney Sweeney's firm.   A review of the billing invoices shows that defendant's counsel attended a prejudgment remedy hearing, conducted at least four depositions, and prepared for, and attended, a five and one-half-day trial.   In his affidavit, Attorney Sweeney represented that Polivy & Taschner's fees totaled $29,812.84, however, at the hearing he acknowledged that a portion of the fees predated the litigation.   In the affidavit, Attorney Sweeney did not separate his trial level fees from his appellate fees, however, at argument he stated the fees and expenses for the trial level were $36,819.94 and the appellate fees and expenses were $46,042.24, for a total of $82,862.18.   At the hearing on this motion, the defendant presented testimony from Attorney William Gallagher, regarding the reasonableness of the requested fees.   The plaintiffs did not call any witnesses.

The plaintiffs do not vigorously contest the actual amounts charged for the services rendered to the defendant.   They have acknowledged that the hourly rates charged are reasonable.   They have not argued, or produced evidence to show, that the total number of hours spent is unreasonable.   Instead, the thrust of their argument is that it is not reasonable to award the requested fees in light of the overall outcome of the trial, which was essentially in favor of the plaintiffs.   Although the jury awarded the defendants $42,916.50 on their counterclaim, the jury awarded the plaintiffs a net judgment against the defendants in the amount of $95,971.04.   This prompts the plaintiffs to state in their brief:  “The issue before the trial court now, put succinctly and brutally honestly, is how much should [the defendant's] attorney be awarded for a job which resulted in a loss to his client of $95,971.04.” ²

The plaintiffs' argument rests upon the difference in the amount of damages awarded to each party at trial.   This argument ignores the holding of Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 114 Conn.App. 671, 970 A.2d 807 (2009), which specifically held that “the attorneys fee clauses in these contracts did not require the defendant to prove more than breach.”  (Emphasis added.)  Id., 680.   Therefore, as long as the defendant proved that the plaintiffs breached the contract, the defendant is entitled to its attorneys fees.   The amount of damages the defendant must pay to the plaintiffs does not affect the issue of whether the defendant is entitled to attorneys fees, nor does it require a reduction in the defendant's attorneys fees.

Nevertheless, the plaintiffs refer the court to the adage, “hard cases make bad law,” and imply that an award of the requested fees would be “bad law.”   This is not a “hard” case, it is a contract case, and the court is guided by the following public policy principles:

“[I]n private disputes, a court must enforce the contract as drafted by the parties and may not relieve a contracting party from anticipated or actual difficulties undertaken pursuant to the contract ․ The defendants are knowledgeable and commercially sophisticated parties ․ In the absence of any other countervailing policy reason, they are bound by the express terms of the [contract] that they themselves drafted and executed.   It is axiomatic that courts do not rewrite contracts for the parties.”  (Citations omitted;  internal quotation marks omitted.)  Herbert S. Newman and Partners, P.C. v. CFC Const.   Ltd. Partnership, 236 Conn. 750, 759–60 674 A.2d 1313 (1996).

Furthermore, “[t]here is a strong public policy in Connecticut favoring freedom of contract:  It is established well beyond the need for citation that parties are free to contract for whatever terms on which they may agree.   This freedom includes the right to contract for the assumption of known or unknown hazards and risks that may arise as a consequence of the execution of the contract.   Accordingly, in private disputes, a court must enforce the contract as drafted by the parties and may not relieve a contracting party from anticipated or actual difficulties undertaken pursuant to the contract, unless the contract is voidable on grounds such as mistake, fraud or unconscionability ․ Holly Hill Holdings v. Lowman, 226 Conn. 748, 755–56, 628 A.2d 1298 (1993).”  (Internal quotation marks omitted.)  Schwartz v. Family Dental Group, P.C., 106 Conn.App. 765, 772–73, 943 A.2d 1122 (2008).

Lastly, “courts do not unmake bargains unwisely made.   Absent other infirmities, bargains moved on calculated considerations, and whether provident or improvident, are entitled nevertheless to sanctions of the law ․ Although parties might prefer to have the court decide the plain effect of their contract contrary to the agreement, it is not within its power to make a new and different agreement, contracts voluntarily and fairly made should be held valid and enforced in the courts.”  (Emphasis in original;  internal quotation marks omitted.)  Schwartz v. Family Dental Group, P.C., supra, 106 Conn.App. 773.

Thus, given these strong public policy considerations, the court here will not “unmake” the bargain regarding the attorneys fees provision set forth in the contractual agreement between the plaintiffs and the defendant.   The court is merely left with the task of determining the reasonableness of the attorneys fees to which the defendant is entitled.

“The amount of attorneys fees to be awarded rests in the sound discretion of the trial court ․ Sound discretion, by definition, means a discretion that is not exercised arbitrarily or willfully, but with regard to what is right and equitable under the circumstances and the law ․ Judicial discretion is always a legal discretion, exercised according to the recognized principles of equity.   The trial court's discretion imports something more than leeway in decision making and should be exercised in conformity with the spirit of the law and should not impede or defeat the ends of substantial justice.”   (Citations omitted;  internal quotation marks omitted.)  Rodriguez v. Ancona, 88 Conn.App. 193, 201–02, 868 A.2d 807 (2005).

Furthermore, our Supreme Court has “long held that there is an undisputed requirement that the reasonableness of attorneys fees and costs must be proven by an appropriate evidentiary showing ․ We also have noted that courts have a general knowledge of what would be reasonable compensation for services which are fairly stated and described ․ and that courts may rely on their general knowledge of what has occurred at the proceedings before them to supply evidence in support of an award of attorneys fees.”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Smith v. Snyder, 267 Conn. 456, 471, 839 A.2d 589 (2004).

In determining the amount of an award or reasonable attorneys fees, the recent case of Electrical Wholesalers v. V.P. Electric, 132 Conn.App. 843, 33 A.3d 828, cert. denied, 303 Conn. 939, 37 A.3d 155 (2012) is instructive.   After a six-day trial, the court awarded damages to the plaintiff in the amount of $51,284.75.   The agreement between the parties allowed for the recovery of the plaintiff's attorneys fees.   After a review of the billing and time records submitted by the plaintiff's attorney, the court awarded the plaintiff $43,640 in attorneys fees.   On appeal, the defendant argued that the trial court abused its discretion by not utilizing the Johnson test for attorneys fees.   See Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), abrogated on other grounds, Blanchard v. Bergeron, 489 U.S. 87, 92–93, 109 S.Ct. 939, 103 L.Ed.2d. 67 (1989).   The court disagreed stating:  “In Connecticut, the Johnson test has been applied exclusively in awarding attorneys fees for individuals filing actions under the Connecticut Unfair Trade Practices Act.” Electrical Wholesalers v. V.P. Electric, supra, 849.   The court then observed:  “The present case involves a contract dispute between two similarly situated businesses, not an action brought pursuant to a statute specifically enacted to assist private litigants who might otherwise be unable to enforce their rights.   We fail to see how this is an appropriate case in which to apply the Johnson guidelines as envisioned by the United States Court of Appeals for the Fifth Circuit or by Connecticut courts.   Therefore, we conclude that the court did not abuse its discretion.”  (Emphasis added.)   Id., 849–50.

In this case, the plaintiffs' Johnson guidelines analysis is not helpful given that the underlying case involves a contract dispute.   Furthermore, similar to the parties in Electrical Wholesalers, the parties here are similarly situated businesses who entered into a contract.   Courts have found that “a contract clause providing for reimbursement of incurred fees permit[s] recovery upon the presentation of an attorney's bill, so long as that bill is not unreasonable upon its face and has not been shown to be unreasonable by countervailing evidence or by the exercise of the trier's own expert judgment.”  (Internal quotation marks omitted.)  N.E. Leasing, LLC v. Paoletta, 89 Conn.App. 766, 778, 877 A.2d 840 (2005).

The defendant here has provided detailed billing records regarding services rendered by their attorneys.   The court has carefully reviewed these records.   The firm of Polivy & Taschner charged $200 per hour, which the court finds to be a reasonable rate.   Fees and expenses charged from April 3, 2006, when suit brought, through April 30, 2007, when Attorney Sweeney became trial counsel, are $19,138.88.   Considering the work performed, and the time expended, the court finds that $19,138.88 is a reasonable fee for the services performed by Polivy & Taschner.

The court has carefully reviewed the invoices submitted by Attorney Sweeney.   His hourly rate is $300, and in light of Attorney Sweeney's experience and skill as a trial and appellate attorney, the court finds this hourly rate reasonable.   The total amount of hourly attorneys fees incurred from July 11, 2007 to Jan 2, 2013, which includes trial level and appellate fees, is $72,887.   The court finds credible Attorney Gallagher's testimony that the appellate fees charged by Attorney Sweeney for the three appeals were reasonable.   The court finds this total amount attorneys fees to be reasonable.

Attorney Sweeney's invoices show total expenses of $9975.18.   Included in these expenses are photocopying expenses of $5741.80.   The invoices do not show the number of copies, or the price per copy.   The invoices for November 2010, December 2010, and January 2011, show total photocopying costs of $780.20, however, there are no charges for legal work performed during those months.   The court finds the photocopying costs claimed to be unreasonable and will reduce them by 75 percent, or $4306.35.   The defendant is allowed reasonable expenses of $5668.83.   This results in total fees and expenses for Attorney Sweeney in the amount of $78,555.83.

In their brief, the plaintiffs caution the court that an award of the requested attorneys fees will have dire consequences to our system of justice.   In the style of Cassandra they predict:  “If that is a precedent which this Court is prepared to set, it will have a chilling effect on valid causes of action which ought to be prosecuted.   The world of litigation as we know it will be turned on its head ․ Litigants with meritorious claims will hesitate to go to court and risk having their damages awards wiped out by the attorneys fees claims of the losing side.”   The court is not persuaded.

In the event this decision comes to the attention of potential litigants, they are referred to the policy regarding litigation expressed by our Supreme Court in Bartlett v. Travelers Ins. Co. 117 Conn. 147, 154, 167 A. 180 (1933):  “The avoidance of litigation by compromise adjustments of controversies is always to be favored.   Courts exist to furnish remedies where they cannot be obtained by peaceable means.   The policy of the law is rather to discourage, than to encourage, a resort to litigation ․ Especially in view of the present and increasing volume of litigated actions, practical necessity requires that settlements be effected in all cases where permissible and which are fairly susceptible to disposal in that manner ․ The advantages of compromise to all parties concerned are manifest.   The injured party obtains acceptable compensation without the delay, expense, inconvenience, anxiety and uncertainty of result attendant upon the pursuit of litigation ․” (Citation omitted;  internal quotation marks omitted.)

Conclusion

For the foregoing reasons, the motion is granted.   The defendant is awarded attorneys fees and expenses in the amount of $19,138.88 for Polivy & Taschner, and $78,555.83 for Attorney Sweeney, for a total award of $97,694.71.

Domnarski, J.

FOOTNOTES

FN1. “Paragraph 14.2 of the goodwill contract provides:  ‘[Total Recycling] agrees to indemnify and hold [the defendant] harmless from any costs or damages, including reasonable attorney fees, resulting from any breach of any representation, warranty or covenant contained in this [a]greement.’ ““Paragraph 1.2 of the noncompete agreement provides:  ‘[Whitewing] agree[s] to indemnify and hold [the defendant] harmless for any costs or damages, including reasonable attorney fees, resulting from any breach of any representation, warranty or covenant contained in this [a]greement.’   “ Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 308 Conn. 312 n.1..  FN1. “Paragraph 14.2 of the goodwill contract provides:  ‘[Total Recycling] agrees to indemnify and hold [the defendant] harmless from any costs or damages, including reasonable attorney fees, resulting from any breach of any representation, warranty or covenant contained in this [a]greement.’ ““Paragraph 1.2 of the noncompete agreement provides:  ‘[Whitewing] agree[s] to indemnify and hold [the defendant] harmless for any costs or damages, including reasonable attorney fees, resulting from any breach of any representation, warranty or covenant contained in this [a]greement.’   “ Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, supra, 308 Conn. 312 n.1.

FN2. In support of their position, the defendants analyzed the claim for attorneys fees using the guidelines contained in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), abrogated on other grounds, Blanchard v. Bergeron, 489 U.S. 87, 92–93, 109 S.Ct. 939, 103 L.Ed.2d. 67 (1989).   The Johnson guidelines will be addressed below..  FN2. In support of their position, the defendants analyzed the claim for attorneys fees using the guidelines contained in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), abrogated on other grounds, Blanchard v. Bergeron, 489 U.S. 87, 92–93, 109 S.Ct. 939, 103 L.Ed.2d. 67 (1989).   The Johnson guidelines will be addressed below.

Domnarski, Edward S., J.