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Odyssey Reinsurance Co. v. Nagby

United States District Court, S.D. California

December 27, 2019

ODYSSEY REINSURANCE COMPANY, a Connecticut corporation, Plaintiff,
v.
RICHARD KEITH NAGBY, et al., Defendants. Date Description Time Keeper Time Billed Rate Amount Billed Date Description Amount Billed

          ORDER GRANTING IN PART, DENYING IN PART PLAINTIFF'S MOTION FOR ATTORNEY'S FEES AND LITIGATION EXPENSES [ECF NOS. 295]

          Honorable Barry Ted Moskowitz United States District Judge.

         Before the Court is Plaintiff Odyssey Reinsurance Company's (“Plaintiff”) motion for attorney's fees. (ECF No. 295.) By way of its instant motion, Plaintiff seeks to quantify the Court's grant of attorney's fees and litigation expenses to Plaintiff as a remedial sanction in the Order (the “Contempt Order”) holding Defendant Diane Dostalik (f/k/a Diane Nagby) (“Defendant”) in civil contempt for violations of the preliminary injunction entered October 4, 2017 (the “Preliminary Injunction”) and the temporary restraining order entered August 8, 2018 (the “TRO”). (Id.; see also ECF Nos. 69, 172, 287.) In support of its motion, Plaintiff provided an affidavit of its counsel attesting to the reasonableness of the requested fees and expenses, including the relevant timekeepers' rates, qualifications, experience, and billing practices, as well as copies of the attorney's resumes, the copies of relevant attorney's fees and expenses invoices submitted to Plaintiff for payment, and a narrative summarizing the fees and expenses incurred by Plaintiff in connection with its attempts to discover and remedy Defendant's contemptuous conduct. (ECF No. 295-2.) In total, Plaintiff seeks to recover $212, 821.00 in attorney's fees and $23, 163.00 in expenses as incurred in discovering and prosecuting Defendant's contemptuous conduct.[1] (ECF Nos. 295, 315.) In her response in opposition, Defendant concedes that “an award of fees is proper” but argues that any such award must be “remedial and reasonable” and that Plaintiff has improperly requested recovery of “unrelated or unnecessary fees and costs” totaling $116, 519.30.[2] (ECF No. 314, at 2-3.)

         “Civil contempt sanctions . . . are employed for two purposes: to coerce the defendant into compliance with the court's order, and to compensate the complainant for losses sustained.” Whittaker Corp. v. Execuair Corp., 953 F.2d 510, 517 (9th Cir. 1992) (citations omitted). Because attorney's fees and expenses “frequently must be expended to bring a violation of an order to the court's attention, ” trial courts have the discretion to award “fees and expenses . . . as a remedial measure.”[3] Perry v. O'Donnell, 759 F.2d 702, 706 (9th Cir. 1985); see also Id. at 704 (“[C]ivil contempt need not be willful to justify a discretionary award of fees and expenses as a remedial measure.”).

         The Ninth Circuit “requires a district court to calculate an award of attorneys' fees by first calculating the ‘lodestar.'” Caudle v. Bristow Optical Co., 224 F.3d 1014, 1028 (9th Cir. 2000) (citations omitted). “The ‘lodestar' is calculated by multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate.” Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir. 1996), opinion amended on denial of reh'g, 108 F.3d 981 (9th Cir. 1997) (internal quotations and citations omitted). “[H]ours that are excessive, redundant, or otherwise unnecessary” should be excluded from the initial lodestar calculation.[4] Hensley v. Eckerhart, 461 U.S. 424, 434 (1983) (“Hours that are not properly billed to one's client also are not properly billed to one's adversary . . . .” (citations and emphasis omitted)); but see Stetson v. Grissom, 821 F.3d 1157, 1166 (9th Cir. 2016) “[T]he district court should take into account the reality that some amount of duplicative work is inherent in the process of litigating over time.” (internal quotations and citations omitted)). The “reasonable hourly rate is the rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation.” Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008) (internal quotations and citations omitted) (“[T]he relevant community is the forum in which the district court sits.” (citations omitted)); see also Id. at 980 (“[A]ffidavits of the plaintiffs' attorneys and other attorneys regarding prevailing fees in the community, and rate determinations in other cases are satisfactory evidence of the prevailing market rate.” (internal quotations, citations, and alterations omitted)). “After making [the lodestar] computation, the district court then assesses whether it is necessary to adjust the presumptively reasonable lodestar figure on the basis of the Kerr factors that are not already subsumed in the initial lodestar calculation.”[5] Morales, 96 F.3d at 363-64 (internal footnote and citations omitted); see also Perry, 759 F.2d at 706 (“Ordinarily, the failure to follow the Kerr guidelines constitutes an abuse of discretion.” (citations omitted)).

         Plaintiff is represented by Kirby & McGuinn, P.C., and its attorneys Dean T. Kirby, Jr. and Kimberley V. Deede, with the assistance of paralegals Constantina “Tina” Wright and Jacquelyn Wilson. (See ECF No. 295-2.) Mr. Kirby, who has “practiced law for almost forty years” in the fields of bankruptcy and creditor rights and is “certified as a specialist in the field of creditor rights by the American Board of Certification, ” seeks an hourly rate of $440. (Id. at 3, 135-36.) Ms. Deede, who has practiced law in California since 2011 and appears to have focused on bankruptcy and creditor rights since joining Kirby & McGuinn in 2014, seeks an hourly rate of $350. (Id. at 3, 137-38.) Ms. Wright and Ms. Wilson, each of whom claim hourly rates of $125, have seventeen and ten years of experience as certified paralegals, respectively. (Id. at 3.) Notably, Defendant has not challenged the hourly rates claimed by Plaintiff's counsel and has failed to introduce any evidence in support of her opposition, let alone any evidence that demonstrates the aforementioned hourly rates claimed are unreasonable in San Diego, California for similar work performed by attorneys of comparable skill, experience, and reputation. See Camacho, 523 F.3d at 980 (“The party opposing the fee application has a burden of rebuttal that requires submission of evidence to the district court challenging the accuracy and reasonableness of the facts asserted by the prevailing party in its submitted affidavits.” (internal quotations, citations, and alterations omitted)).

         Based upon a review of the evidence submitted by the parties, the Court's familiarity with the rates charged in the San Diego legal community, and recent prior attorney's fees awards in this district, the Court concludes that the hourly rates claimed by Plaintiff's counsel (and paralegals) are in line with the customary rates prevailing in the San Diego legal community for similar work performed by attorneys (and paralegals) of comparable skill, experience, and reputation.[6] See, e.g., Lewis v. Cty. of San Diego, 2017 WL 6326972, at *13 (S.D. Cal. Dec. 11, 2017) (“In this District, $90 to $210 per hour is generally reasonable for paralegal work . . . .”); Chamberlin v. Charat, 2017 WL 3783773, at *2 (S.D. Cal. Aug. 31, 2017) (hourly rates ranging between $250 and $500 for work performed by associates and partners reasonable in debt-collection action); Nuvasive, Inc. v. Madsen Med., Inc., 2016 WL 5118325, at *4 (S.D. Cal. 2016) ($500 hourly rate for attorney with over ten years' experience reasonable in breach of contract action); Nguyen v. HOVG, LLC, 2015 WL 5476254, at *3 (S.D. Cal. 2015) ($450, $350, and $125 were reasonable hourly rates for FDCPA-related litigation by senior partner, senior associate, and paralegal, respectively).

         Having reviewed the hours billed by Plaintiff's counsel for which recovery is presently sought (ECF No. 295-2, at 12-125), the Court finds that some of the work completed was excessive, redundant, or otherwise unnecessary to discovering and litigating Defendant's contemptuous conduct. The Court therefore excludes from its award of attorney's fees the following hours billed:

Date
Description
Time Keeper
Time Billed
Rate
Amount Billed

11/23/18

Communicate (other outside counsel) Analysis/Strategy Respond to Inquiry from Counsel for Knight

DTK

0.20

$440/hr

$88

11/07/18

Appear for/attend Attend Hearings on Order to Show Causes and Ex Partes

KVD

2.60 hr

$350/hr

$910

11/28/18

Appear for/attend Trial and Hearing Attendance Attend Evidentiary Hearing

KVD

2.00 hr

$350/hr

$700

12/19/18

Appear for/attend Attend Evidentiary Hearing. Remaining Portion

KVD

8.00 hr

$350/hr

$2, 800[7]

01/14/19

Plan and prepare for Expert Witness Review Goshong [sic] CV and Prepare Supplemental Witness List

KVD

0.10

$350/hr

$35

01/21/19

Research Research Case Law and Treatise on Cryptocurrency Expert Admission

KVD

2.00

$350/hr

$700

01/27/19

Draft/Revise Expert Witnesses Edit and Revise Cryptocurrency Expert Outline

KVD

1.00

$350/hr

$350

01/28/19

Plan and prepare for Review Documents for Preparation as a Witness in Contempt Motion Hearing

TW

2.00

$125/hr

$250

01/29/19

Appear for/attend First Day Contempt Hearing

DTK

1.50

$440/hr

$660[8]

01/29/19

Appear for/attend Appear for Hearing on Contempt Motion

TW

4.50

$125/hr

$562.50

01/30/19

Draft/Revise Continue Opposition to Knight Motion to Intervene - Additional Legal Research on Jurisdiction Issue

DTK

3.00

$440/hr

$1, 320

01/30/19

Appear for/attend Appear for Continued Hearing on Contempt Motion

TW

3.00

$125/hr

$375

04/01/19

Review/Analyze Review Chris Groshong Outline and Revise

KVD

1.00

$350/hr

$350

05/14/19

Plan and prepare for Expert Outline Review and Prep. Meet with Chris Groshong for Final Review

KVD

1.70

$350/hr

$595

05/15/19

Review/analyze Review Objection to Use of Expert. Prepare Oral Argument in Response.

KVD

2.00

$350/hr

$700

05/19/19

Plan and prepare for Draft Direct of Tina Wright for Chain of Custody Testimony as to Citibank Records

KVD

0.30

$350/hr

$105

05/20/19

Appear for/attend Attend Continued Contempt Hearing

KVD

6.00

$350/hr

$2, 100

05/20/19

Appear for/attend Trial and Hearing Attendance - Attend Hearing on Order to Show Cause re: Diane Nagby

TW

2.00

$125/hr

$250

05/21/19

Appear for/attend Trial and Hearing Attendance - Attend hearing on Order to Show Cause re: Diane Nagby

TW

4.00

$125/hr

$500

05/22/19

Communicate (other external) Phone Call with Groshong

KVD

0.50

$350/hr

$175

Total Fees Reduction:

$13, 525.50

         The aforementioned excluded hours include work spent on matters that were irrelevant to the contempt proceedings, including work related to a third-party's attempts to intervene in this action. They also include redundant billing for appearances at hearings, which Mr. Kirby attested are not appropriately billed to Plaintiff under counsel's billing policies. (See ECF No. 295-2, at 3.) They also include hours related to preparing the testimony of Mr. Chris Groshong, who was retained by Plaintiff to serve as an expert in the area of cryptocurrency but was not admitted as an expert in this matter. While the Court considers the time spent by counsel consulting with Mr. Groshong regarding the nature of cryptocurrency and its relation to Defendant's contemptuous conduct to be reasonable, his testimony was held by the Court not to be admissible and the Court finds counsel's hours spent preparing for such testimony therefore not compensable. Except as set forth above, the Court finds the other attorney's fees hours requested to be reasonable. (See ECF No. 295-2, at 12-125.) Indeed, contrary to Defendant's arguments, all such remaining hours were related to investigating, exposing, halting, or minimizing the damage of Defendant's contempt rather than “ordinary litigation and discovery expenses, ” as they were necessitated by Defendant's (and/or her agents) attempts to transfer, conceal, dissipate, or squander assets and failure to provide documents for Plaintiff's review in violation of the Preliminary Injunction and TRO, rather than the prosecution of Plaintiff's underlying claims under California's Uniform Fraudulent Transfer Act (the “UFTA”).[9] And while Defendant objects to the number of hours expended by Plaintiff's counsel in drafting relevant filings and preparing for relevant hearings, Defendant has provided no evidence in support of her objections and the Court concludes that the hours spent on such matters were not excessive in light of the convoluted nature of Defendant's contemptuous conduct and her vehement defense thereof. Moreover, after considering the Kerr factors, the Court concludes that no upward or downward adjustment to the lodestar amount is warranted and that such amount constitutes reasonable fees in this matter.

         Further, having reviewed the litigation expenses billed by Plaintiff's counsel for which recovery is presently sought (ECF No. 295-2, at 12-134), the Court finds that some of the expenses sought were excessive or unnecessary to discovering and litigating Defendant's contempt. The Court therefore excludes from its award of litigation expenses the following expenses billed:

Date
Description
Amount Billed

01/22/19

Experts Retainer for Expert Witness

$2, 000

04/16/19

Expert Witness Fees

$1, 212.50[10]

07/08/19

Experts Expert testimony regardin[g] cryptocurrency

$1, 000

Total Expenses Reduction:

$4, 212.50

         All of the disallowed expenses relate to Mr. Groshong's service as an expert witness on behalf of Plaintiff. (See ECF No. 295-2, at 2 (“Expenses total $23, 355.00 and include the fees of experts Brian Bergmark and Chris Groshong . . . . The expenses requested in the Motion are reflected in the invoices themselves with only one exception. The fees of expert witness Brian Bergmark, are billed to Kirby & McGuinn and were paid directly by [Plaintiff].”).) Because Mr. Groshong was not admitted as an expert in this matter, the Court declines to award Plaintiff the expenses associated therewith. Nevertheless, as previously stated, the Court considers the consultations between Plaintiff's counsel and Mr. Groshong regarding the nature of cryptocurrency and its relation to Defendant's contemptuous conduct to be reasonably necessary and a review of counsel's billing records reflects four (4) hours spent by Mr. Groshong on such consultations. (See Id. at 98, 105.) Further, while Plaintiff has failed to provide Mr. Groshong's hourly rate for his services as a cryptocurrency consultant, the Court concludes that a reasonable hourly rate for such services in the San Diego area would be $150.00 per hour.[11] Accordingly, the Court will award Plaintiff $600.00 in expenses (i.e., four (4) hours at an hourly rate of $150.00) in connection with Mr. Groshong's consulting services. The Court finds the other expenses requested to be reasonable. (See ECF No. 295-2, at 12-134.) Further, while Defendant argues that “the claimed expert fees would have been incurred even in the absence of the contempt proceedings” because “Plaintiff would still be required to prove the tracing of funds by expert examination and testimony” (ECF No. 314, at 8), the Court disagrees that such a showing would have been necessary, at least to the extent necessitated by Defendant's contemptuous conduct, to Plaintiff's successful prosecution of its underlying claims. (See, e.g., ECF No. 289 (granting summary judgment to Plaintiff against Defendant on its claims under the UFTA).)

         Based upon the foregoing and due consideration, Plaintiffs motion for attorney's fees and litigation expenses (ECF No. 295) is GRANTED IN PART, DENIED IN PART. As a remedial sanction for Defendant's contemptuous conduct as set forth in the Contempt Order (ECF No. 287), the Court awards Plaintiff Odyssey Reinsurance Company its attorney's fees in the amount of $199, 295.50 and its expenses in the amount of $18, 950.50, for a total of $218, 246.00. The Clerk shall enter judgment accordingly against Defendant Diane Dostalik (f/k/a Diane Nagby) in the above amounts.

         IT ...


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