Lawyers practicing in the Commercial Division are keenly aware of issues related to attorneys’ fee awards in commercial cases. Commercial agreements commonly contain a provision awarding attorneys’ fees to a prevailing party in a manner sufficient to satisfy entitlement to an award under the contractual exception to “American Rule.” However, entitlement to a fee award is only the beginning of the battle. Fee applications are oftentimes met with ardent objection, attacking both the reasonableness of services and the reasonable value of those services in various ways.
One such application was recently decided by the Commercial Division in Core Group Marketing LLC v. MIP One Wall Street Acquisition LLC, where Manhattan Commercial Division Justice Reed granted both motions for an award of attorneys’ fees.
The Dispute and Litigation
The genesis of the dispute in Core Group concerns the termination by MIP One Wall Street Acquisition LLC (“MIP”) of Core Group Marketing LLC (“CGM”) as its broker in selling units of MIP’s Wall Street property. CGM initiated the suit seeking a $750,000 “Termination Fee” it alleges was owed under the Co-Exclusive Sales and Marketing Agreement (the “Agreement”) between the parties. Included in the Agreement was an attorneys’ fee provision that permitted the prevailing party in enforcement litigation to be awarded “reasonable attorneys’ fees and costs, including any fees and costs incurred in enforcing any judgment.”
On July 25, 2022, MIP was granted summary judgment dismissing CGM’s complaint in its entirety. MIP was also granted summary judgment on its attorneys’ fees counterclaim. MIP thereafter filed two motions seeking a total award of attorneys’ fees and costs in the sum of $268,569.62.
The Parties Positions
In support of the fee application, MIP submitted an affirmation from its attorney that affirmed that the fees were (1) reasonable; (2) in line with rates commonly charged; and that (3) the time spent was reasonable given CGM’s insistence on proceeding with discovery. MIP included detailed invoices issued by its counsel in further support of the application.
CGM opposed the application. CGM argued that the amount sought was unreasonable on its face, contending in sum that a substantial amount of the fees sought for the first motion included time for unnecessary discovery ($36,000), including the retention of an ESI vendor ($30,000). Specifically, CGM argued that it was MIP’s delay in bringing its summary judgment motion that caused the referenced discovery costs, and that those costs therefore were not reasonable. As to the second motion, CGM argued that MIP’s fees incurred on appeal ($80,000) in successfully defending its grant of summary judgment were excessive because the issue involved was not novel, and that additional appellate staff therefore was not required.
The Court Holds that the Fees Are Reasonable in Their Entirety
Over CGM’s objections, the Court determined that given “‘(1) the time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented; (2) the lawyer’s experience, ability, and reputation; (3) the amount involved and benefit resulting to the client from the services; (4) the customary fee charged for similar services; (5) the contingency or certainty of compensation; (6) the results obtained; and (7) the responsibility involved’” that all of MIP’s fees for litigation expenses ($157,026.51) were reasonable. In doing so, the Court made a couple of observations that are noteworthy for Commercial Division litigators.
First, the Court upheld the fees sought for discovery-related services and costs incurred for retaining an ESI vendor, even though the ESI results were never sent to CGM. MIP’s affirmation set forth with some specificity the various discovery-related services provided, and the Court was not persuaded that those services were unnecessary or unreasonable. In fact, the Court held that the fact that CGM was not provided the ESI documents was immaterial, as CGM did not dispute that the costs were incurred in gathering the documents.
Second, the Court did not adopt CGM’s reasoning that MIP should not be awarded the fees incurred for discovery because it delayed in brining a motion for summary judgment insofar as CGM failed to show how the costs were caused by any delay. Notably, the Court did not take CGM up on its attempt to shift the cost for routine discovery-related services on its opponent.
Lastly, the Court noted that the fees incurred in bringing a fee application are properly recoverable if encompassed by the applicable attorney-fee provision or statute. The Court also granted MIP’s second motion for fees incurred post-summary judgment, including the fees incurred in successfully defending its award of summary judgment on appeal. While CGM contended that the fees incurred ($80,000) were unreasonable because the issues involved were not novel, the Court held that CGM provided “no authority for arguing that, depending on the types of issues involved, the involvement of certain attorneys in the appellate process is inherently unreasonable.” The Court therefore found $80,000 to be a reasonable amount of fees for litigating an appeal.
The Takeaway
While entitlement to attorneys’ fees under agreement or statute is usually straightforward, a party seeking an award of fees would do well to provide the detail MIP provided in Core Group to assist the Court in determining that the fees sought are reasonable. Parties opposing such an award should be similarly on notice, as the Commercial Division will require specificity and authority to uphold any objection.