PNL Phoenix, LLC v. Janton Industries Inc., Index No. 506225/2014, 4/13/14 (Demarest, J.)

Reasonableness of attorneys’ fees in connection with forbearance agreement.

By Jessica Rottkamp | Staff Writer

 Plaintiff acquired two loans by assignment. Defendants were in default of both when plaintiff acquired them. Negotiations with the defendants resulted in a Forbearance Agreement, which stated that the defendants would refinance their property and pay all of their obligations to plaintiff. The Forbearance Agreement also provided that defendants would pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and costs. Plaintiff commenced a replevin action and a foreclosure action against the defendants. Plaintiff now seeks attorneys’ fees in connection with those actions. The amount of attorneys’ fees is in dispute. Plaintiff seeks to recover a total of $90,969.75. The hourly rate charged by plaintiff’s attorney is $620. Plaintiff received a twenty percent discount for an hourly rate of $496 for the attorney who served as lead counsel. Plaintiff was also charged for work done by other attorneys at the firm charging hourly rates of $504 and $395. Records indicated that a total of 75.5 hours were billed on the replevin action totaling $38,494.39, and 78.9 hours on the foreclosure action totaling $39,136.80. Plaintiff also seeks attorneys’ fees in connection with the instant case for 19.15 hours totaling $9,498.40. Defendants argue that the amount of fees plaintiff seeks is unreasonable and inflated, and that the litigation was frivolous and unnecessary.

Reasonable attorneys’ fees are calculated by multiplying the reasonable hours expended on the action by the reasonable hourly rate. Defendants argue that because plaintiff commenced two separate actions, replevin and foreclosure, after defendants made a good faith assurance of refinance, the litigation was frivolous and its only purpose was to inflate the legal bill. Defendants request that the related attorneys’ fees should be disallowed because the hourly rate charged was unreasonable and at least $150 per hour in excess of the standard and customary rates charged for similar legal work in that community.

The court found that the hourly rate charged by plaintiff’s attorney was consistent with rates charged in similar matters. Defendants argue that the fees were inflated by having the senior partners perform the work rather than associates who would charge significantly less per hour for the same work. The court reasoned that a less senior attorney could have been employed in the matter to handle certain basic tasks associated with the case at a cheaper rate, and so the court held that the time charged should be reduced by five percent totaling a $3,665.72 reduction in fees for both actions. The court also found that some of the time charges were excessive, and that plaintiff could have recovered through only the foreclosure action rather than commencing two separate actions. The court held for a ten percent reduction in attorneys’ fees based on this finding. The court awarded plaintiff attorneys’ fees of $29,221.94 for the replevin action, and $33,461.96 for the foreclosure action. As for the fees in connection with the instant case, the court found that some of the hours were excessive and duplicative, and allowed 10.3 billable hours, resulting in $5,108.80 to be awarded to the plaintiff.

Defendants also argue that the invoices from plaintiff’s attorney are insufficient and unreliable to show the time spent on the matter because the invoices comingled the time spent on the separate actions, and plaintiff separated the entries ex post facto in order to differentiate the time spent on the replevin action from the time spent on the foreclosure action. The court held that defendants’ argument regarding reliability of time records was without merit because plaintiffs provided contemporaneous time records of the work done on both actions and provided the court with segregated records. However, it was not necessary to separate out the time spent because the two actions were interrelated and primarily one attorney performed all of the work.

PNL Phoenix, LLC v. Janton Industries Inc., Index No. 506225/2014, 4/13/14 (Demarest, J.).

 

 

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