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Beck v. Sullivan

United States District Court, Fourth Circuit

October 4, 2013

JAMES M. BECK, Plaintiff,
v.
PATRICK SULLIVAN and SANDRA PEIFFER, Defendants.

MEMORANDUM ORDER

Richard D. Bennett United States District Judge

The Plaintiff James M. Beck (“Plaintiff” or “Beck”) filed this action against the Defendants Patrick Sullivan (“Sullivan”) and Sandra Peiffer (“Peiffer”), and Arbotek Associates, Inc. (“Arbotek”), [1] alleging breach of contract, tortious interference with contract, intentional misrepresentations, and conversion. These allegations relate to the sale of the Plaintiff’s company, Avtek Associates, Inc. (“Avtek”), to the Defendants on October 29, 2007. An Order and Final Judgment has been entered against the Defendants, pursuant to Rule 58 of the Federal Rules of Civil Procedure, specifically providing that they shall be liable to the Plaintiff for reasonable attorneys’ fees and court costs. (ECF No. 56.) Pending before this Court is Plaintiff’s Motion for Reasonable Attorneys’ Fees and Expenses (ECF No. 57) (“Motion”). This Court has reviewed the parties’ submissions[2] and finds that no hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the reasons stated below, Plaintiff’s Motion (ECF No. 57) is GRANTED in the amounts of $64, 269.25 for attorneys’ fees, $5, 000.00 for expert fees, and $2015.17 for expenses, for a total of $71, 284.42.

BACKGROUND

The facts of this case were set forth in detail in this Court’s Memorandum Opinion of July 1, 2013. (ECF No. 55.) For present purposes, a brief summary will suffice.

The Plaintiff formed Avtek in 1988. The company represented manufacturers serving the technology market (referred to as “principals”) by designing, marketing, and selling their products in specific territories. Avtek, which maintained an office in Columbia, Maryland, grew to be a profitable firm. In 1998, the Plaintiff hired Peiffer as a sales engineer. The Plaintiff was considering retirement and saw Peiffer as a candidate to buy Avtek and replace him. Because Peiffer’s interest and talent lay in sales, the Plaintiff emphasized that any sale of the company would need to involve not only Peiffer, but someone with organizational skills and an administrative background.

The Plaintiff promoted Peiffer to Vice President of Sales in 2000, and in 2004 or 2005 Peiffer was named President of Avtek. In 2000, the Plaintiff moved to Wyoming and in 2004 moved to Montana. He maintained his position as owner and chief executive officer of Avtek by communicating remotely with staff and principals.

While serving as Avtek President, Peiffer began dating Sullivan sometime in late 2006 or early 2007. While the two were dating, Peiffer recommended that Plaintiff hire Sullivan based on his management background and his work with companies such as McDonnell Douglas, Airbus, and Boeing. The Plaintiff hired Sullivan in March 2007. At that time, the Plaintiff was unaware that Sullivan was in Chapter 13 bankruptcy. The record also reflects that at some point Peiffer and Sullivan were married.

The Plaintiff continued to consider selling Avtek, now discussing the sale with both Peiffer and Sullivan (the “Defendants”). The parties initially valued the firm at $1, 000, 000, but shortly before the sale, one of Avtek’s major principals terminated the firm. The parties then agreed that based on recent revenues and the remaining principals, Avtek was worth $900, 000.

On October 29, 2007, the Plaintiff sold Avtek to the Defendants through a Stock Purchase Agreement and a Management Agreement. Specifically, the Defendants purchased 100% of the stock of Avtek through Avtek Acquisition, Inc., a company wholly owned by the Defendants, in exchange for a Promissory Note for $900, 000. The Defendants, through Avtek Acquisition and in their individual capacities, agreed to manage Avtek, fulfill specific payment obligations, provide financial statements to the Plaintiff, and not to compete with Avtek until the Promissory Note had been satisfied. In particular, the Management Agreement created a “lockbox” whereby all Avtek revenue was to be placed in a separate holding account in order to prioritize payment of monthly installments on the Promissory Note. By agreeing to the terms of the sale, Sullivan represented that no bankruptcy proceeding was pending against him. Avtek Acquisition served as the guarantor, and the Defendants pledged 100% of their stock to the Plaintiff in the event of a default to secure the transaction. In addition, the Promissory Note dictated that upon default, the Plaintiff could accelerate the debt and recover the costs and expenses of enforcing the Note, including court costs, costs of appeal, and reasonable attorneys’ fees. See also Stock Purchase Agreement § 13.11.

From November 2007 through August 2008, the first ten monthly payments were made on time and in full. Thereafter, the payments became sporadic and fluctuated greatly in their amounts. The Plaintiff confronted the Defendants regarding Note payments after the first two instances of irregularity in September and October of 2008. Around the same time, Peiffer informed the Plaintiff that Sullivan was considering taking another job with SuperJet, an Italian company. The Plaintiff flew monthly to Maryland in late 2008 to meet with the Defendants and explained that if Sullivan wished to leave Avtek, the Plaintiff would return so that someone with managerial and administrative skills would be able to lead the company. The Defendants assured the Plaintiff that Sullivan was not leaving and that they were working to make Avtek a success.

In early 2009, without waiving his rights under the various contracts, the Plaintiff allowed the Defendants to sign an agreement to make modified payments on the Note. The payments continued to be inconsistent. Later in 2009, the Defendants failed to inform the Plaintiff of the losses of major principals, and failed to otherwise provide financial information in accordance with the Management Agreement.

In a March 2010 meeting with Peiffer, the Plaintiff discovered that, as early as 2008, Sullivan had left Avtek for SuperJet. Sullivan did not receive a salary from Avtek at any point after 2008 and had transferred his ownership interest in the firm to Peiffer. Avtek was left solely in the hands of Peiffer, who had no managerial skills. Also in that March 2010 meeting, the Plaintiff learned from Peiffer that Sullivan had been in bankruptcy when he entered the contract. At this time, the Plaintiff expressed a desire to re-involve himself with Avtek, but ultimately remained in Montana and did not return to an active role with the firm. Then, in February 2011, Peiffer told the Plaintiff that Avtek was considering a merger with Arbotek, another manufacturers’ representative firm. Agents of Arbotek represented to the Plaintiff that no such merger was planned.

As to the installments on the Note, the Defendants made some payments in 2010 and early 2011, but made no further payments after June 2011. On August 1, 2011, the Plaintiff notified the Defendants that they were in default. The Plaintiff declared all outstanding principal and interest due immediately, demanded repayment, and notified the Defendants that he was exercising his right to retake 100% of Avtek Acquisition’s stock. By October 2011, the Plaintiff discovered that Avtek had in fact entered a joint venture with Arbotek, creating a new company named ReSpin Sales and diverting business away from Avtek itself. Finally, it came to light that the Defendants improperly diverted funds that should have been deposited in the holding account for payment on the Note in the amount of $129, 557.92, and that Peiffer cashed checks for her own use, totaling $13, 950.00. When the Plaintiff reacquired the Defendants’ stock pursuant to the Stock Purchase Agreement, the value of Avtek was virtually zero.

The Plaintiff filed a Complaint against the Defendants and Arbotek on October 27, 2011. See Compl., ECF No. 1. This Court’s jurisdiction was based on diversity of citizenship pursuant to 28 U.S.C. § 1332, as the Plaintiff is a resident of Montana, and Defendants Sullivan and Peiffer are residents of Maryland, and the amount in controversy exceeds $75, 000. See First Am. Compl. ¶¶ 1-3. On November 17, 2011, the Plaintiff filed a Motion for Temporary Restraining Order and Preliminary Injunction. See TRO & PI Mot., ECF No. 5. The Court entered an Order granting the Plaintiff’s Motion after Defendants Peiffer and Sullivan stipulated and agreed to the preliminary injunctive relief requested. See Joint Stip., ECF No. 11; TRO & PI Order, ECF No. 12. After Defendants Peiffer and Sullivan answered the Plaintiff’s original Complaint, the Plaintiff filed an Amended Complaint on December 12, 2011. Am. Compl., ECF No. 14. Thereafter, Defendant Arbotek filed a Motion to Dismiss the Plaintiff’s First Amended Complaint, ECF No. 16, for failure to state a claim. That motion was denied by this Court on July 6, 2012. See Order, ECF No. 21.

During discovery, the Plaintiff encountered very little cooperation from the Defendants Peiffer and Sullivan. Peiffer ignored discovery requests and refused to communicate with counsel. As a result, the Plaintiff filed Motions for Sanctions and Motions to Compel against the two Defendants. See Mot. for Sanctions & to Compel, ECF No. 25; Show Cause Order, ECF No. 32. When Defendant Peiffer failed to show cause regarding her lack of response to discovery requests, this Court ordered that Default Judgment, only as to liability, be entered against her pursuant to Rule 37(b)(2) and (d) of the Federal Rules of Civil Procedure. See Entry of Default J., ECF No. 31. Defendant Sullivan was directed to pay $1, 020.00 as sanction for his discovery violation. See Order, ECF No. 45. While Sullivan eventually submitted some documents, he never produced e-mail messages pertaining to his work at Avtek.

On April 5, 2013, the claims against Arbotek were dismissed with prejudice, after the parties reached a settlement. See Order Granting Stip. of Voluntary Partial Dismissal, ECF No. 43. As to the remaining Defendants Sullivan and Peiffer, the Plaintiff alleged breach of contract, several counts of intentional misrepresentations, and conversion. See First Am. Compl. Accordingly, on June 17 and 18, 2013, this Court held a two-day bench trial, proceeding on the issues of liability and damages as to Defendant Sullivan and the issues of damages as to Defendant Peiffer, who was found liable by entry of Default Judgment. The Plaintiff and Defendant Sullivan called the same two witnesses in their cases-in-chief: the Plaintiff James M. Beck and Defendant Patrick Sullivan. Based on the exhibits introduced into evidence, the testimony of those two witnesses, the written submissions of the parties, and the oral arguments of counsel, this Court made findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

First as to the claim for breach of contract in Count One, this Court concluded that both Defendants breached provisions of the Stock Purchase Agreement and Management Agreement. Specifically, both Defendants breached the clause requiring disclosure if one of them was in bankruptcy at the time of signing, violated the non-compete clause by forming a joint venture, failed to provide financial information as required by various provisions of the Management Agreement, improperly deposited Avtek revenue in accounts other than the “lockbox” account, and breached their obligations to pay on the Promissory Note. This Court rejected Defendant Sullivan’s argument that the Management Agreement was void as against public policy. As to Count Three, Intentional Misrepresentation Regarding Joint Venture with Arbotek against Peiffer, this Court found in favor of Peiffer. The Plaintiff failed to prove at trial that Peiffer made any false statement in connection with the joint venture; any false statements were made by agents of Arbotek, who settled. This Court found in the Plaintiff’s favor as to Count Four, Intentional Misrepresentation Regarding Sullivan’s Bankruptcy, concluding that both Sullivan and Peiffer committed fraud by signing the Stock Purchase Agreement and Management Agreement with the knowledge of Sullivan’s bankruptcy. This Court also found in favor of the Plaintiff as to the claim for Intentional Misrepresentation Regarding Sullivan’s Employment at SuperJet in Count Five. The Plaintiff proved by clear and convincing evidence that both Peiffer and Sullivan falsely stated that Sullivan would not be seeking another job when they knew that he was accepting an offer with the Italian company and relinquishing his ownership interest in Avtek. Finally, this Court found that the Plaintiff proved his claim for Conversion against Peiffer in Count Six, on the basis that when Peiffer cashed checks for herself out of Avtek funds, she exerted ownership over those amounts in denial of the Plaintiff’s right to them.[3]

The Plaintiff claimed that, as a result of this Court’s findings that the Defendants Peiffer and Sullivan were liable for breach of contract and intentional misrepresentations, he was entitled to damages in the amount of the benefit of the bargain, totaling $900, 000. This Court concluded that the Plaintiff was entitled to a lesser amount because he failed to mitigate damages. Specifically, the Plaintiff had the right to take back all shares of stock pledged by Avtek and by the Defendants at the first moment of default in September 2008. Based on the Defendants’ conduct and the Plaintiff’s knowledge, the Plaintiff should have mitigated his losses by exercising his contractual rights, at the latest, in March 2010. Accordingly, based on the amount that the Plaintiff should have received if the Defendants met their obligations through March 2010, this Court concluded that Defendants Sullivan and Peiffer are jointly and severally liable for $125, 564.33. This Court also awarded $13, 950.00 to the Plaintiff against Peiffer for the amount she converted. Finally, the Plaintiff sought punitive damages from both Defendants. This Court determined that Defendant Sullivan’s conduct did not warrant the imposition of punitive damages. As to Defendant Peiffer, however, this Court concluded that an award of punitive damages was warranted in the amount of $129, 557.92, which is equal to the total amount of unauthorized deposits of Avtek funds into accounts other than the “lockbox” account. In sum, this Court awarded $269, 072.95 to the Plaintiff. In so concluding, this Court also noted that the Plaintiff is the prevailing party in this action and is therefore entitled to reasonable attorneys’ fees pursuant to the Stock Purchase Agreement.

The Plaintiff filed a Motion for Reasonable Attorneys’ Fees and Expenses (ECF No. 57).

STANDARD OF REVIEW

In this diversity case, Maryland law governs a party’s right to recover attorneys’ fees. Roger E. Herst Revocable Trust v. Blinds to Go (U.S.) Inc., No. ELH-10-3226, 2011 WL 6444980, at *1 (D. Md. Dec. 20, 2011). Section 13.11 of the Stock Purchase Agreement states that:

In the event that any party brings suit to interpret or enforce any provision of this Agreement or otherwise with respect to any matter arising, directly or indirectly, from the Acquisition Transactions, then the party who substantially prevails in such action, including any appeal therefrom, in addition to all other remedies provided by law, shall be entitled to the costs of suit and any appeal, including reasonable attorneys’ fees, experts’ fees and court costs.

Pl.’s Mem., ECF No. 57-1 at 2. The Stock Purchase Agreement defines the term “Acquisition Transactions” as “collectively, (a) the purchase by Purchaser from Seller of all the AVTEK Shares, as provided herein, (b) the loan or extension of credit evidenced by the Note, and (c) all other transactions contemplated in this Agreement and in the other Transaction Documents.” Id. at 3. Contractual provisions that allow for an award of reasonable attorneys’ fees are generally valid and enforceable under Maryland law. Myers v. Kayhoe, 892 A.2d 520, 532 (Md. 2006). The burden is on the party seeking recovery to demonstrate through “detailed records” that the fees are reasonable. Roger E. Herst Revocable Trust, 2011 WL 6444980, at *2 (citation omitted).

Although courts generally use the “lodestar” approach when determining attorneys’ fees under fee-shifting statutes, the lodestar method does not apply to contractual fee-shifting provisions under Maryland law. Roger E. Herst Revocable Trust, 2011 WL 6444980, at *2. Rather than using the lodestar approach, a court “should use the factors set forth in Rule 1.5 [of the Maryland Rules of Professional Conduct (“MRPC”)] as the foundation for analysis of what constitutes a reasonable fee when the court awards fees based on a contract entered by the parties authorizing an award of fees.” Id. (citing Monmouth Meadows Homeowners Ass’n, Inc. v. Hamilton, 7 A.3d 1, 5 (Md. 2010)).[4] Those factors are:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment of the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.[5]

Md. Rules 16-812 Rules of Professional Conduct, Rule 1.5(a). However, this Court “does not need to evaluate each factor separately, ” and need not “make explicit findings with respect to Rule 1.5 at all, or even mention Rule 1.5 as long as it utilizes the rule as its guiding principle in determining reasonableness.” Nautical Girl LLC v. Polaris Investments Ltd., No. ELH-10-3564, 2011 WL 6411082, at *2 (D. Md. Dec. 19, 2011) (quoting SunTrust Bank v. Goldman, 29 A.3d 724, 730 (Md.App. 2011) and Monmouth Meadows, 7 A.3d at 10 n.3).

ANALYSIS

The Plaintiff requests an award of $76, 829.42 for fees and expenses expended by Joseph Mack of Mack & Mack, LLP and Rebecca Bryant of Rebecca A. Bryant, P.A, expert fees, and expenses. This Court finds that the hourly rates charged by Mack and Bryant are reasonable. However, this Court determines that certain fees are excessive in light of the legal work that was required at certain phases of the litigation. In addition, this Court concludes that the requested expert fees and expenses are reasonable.

I. Joint and Several Liability

As an initial matter, this Court must address Sullivan’s argument that he is only liable for fees incurred by the Plaintiff in pressing the particular claims that were successful against Sullivan. Specifically, Sullivan claims that the Plaintiff is not entitled to recover fees incurred for any efforts expended by the Plaintiff’s attorneys that arose out of claims against Peiffer or Arbotek. Like the award of fees itself, the trial court has wide discretion to allocate the fee award among defendants. See Thompson v. United States Dep’t of Housing & Urban Dev., No. Civ. MJG-95-0309, 2002 WL 31777631, at *14 (D. Md. Nov. 21, 2002) (emphasizing that “district courts should make every effort to achieve the most fair and sensible solution that is possible without encouraging a complex mini-litigation on attorney’s fees”) (citations and internal quotation marks omitted). Other Judges of this District have concluded that joint and several liability was appropriate after considering: (1) the nature of the injury and who caused it; (2) the amount of time the plaintiffs spent litigating against each defendant; and (3) of the least importance, the defendants’ ability to pay.” See, e.g., Essex v. Randall, No. DKC-03-3276, 2006 WL 83424, at *6-7 (D. Md. Jan. 11, 2006) (citing Thompson, 2002 WL 31777631, at *15).

Consideration of these factors leads this Court to the conclusion that joint and several liability is appropriate. All claims in this case arise from the Acquisition Transactions, to which Peiffer and Sullivan were both signatories. Sullivan committed several breaches of the various contracts and intentional misrepresentations. This Court held that Sullivan and Peiffer are jointly and severally liable for damages in the amount of $125, 564.33. However, Sullivan was found not to be liable for conversion or punitive damages. Nevertheless, the fact that Sullivan is not jointly and severally liable for the total damages award does not prevent this Court from making both Sullivan and Peiffer jointly and severally liable for the fee award. Given that both Defendants’ concerted conduct contributed significantly to the circumstances giving rise to the Plaintiff’s claims, it is unreasonable to attribute certain portions of the requested fees only to one and not to the other. See Essex, 2006 WL 83424, at *7 (“[T]here does not appear to have been a substantial imbalance in the hours expended as to each Defendant, and the award will be joint and several.”).

In his Opposition, Sullivan argues that because he was no longer associated with Avtek after 2008, he should not be liable for fees related to the Plaintiff’s conversion claim. This specious argument rings particularly hollow considering that it was Sullivan’s own intentional misrepresentation that concealed the fact that he left Avtek from the Plaintiff. In addition, only a small portion of the total fees requested are attributable only to claims against Arbotek, and in any event those claims also arose out of the Defendants’ breaches of the contracts between the parties. For the foregoing reasons, Sullivan and Peiffer are jointly and severally liable for attorneys’ fees, expert fees, and costs as detailed in Sections II and III of this Memorandum Order.[6]

II. Hourly Rates Proposed by the Plaintiff

Although the Defendants do not specifically argue that the hourly rates charged by the Plaintiff’s attorneys are excessive, MRPC Rule 1.5 requires a court to consider “the fee customarily charged in the locality for similar legal services.” In analyzing this factor, a court compares the fee charged to the prevailing market rate by looking to affidavits from other counsel or relying on its own knowledge. CoStar Group, Inc. v. LoopNet, Inc., 106 F.Supp.2d 780, 788 (D. Md. 2000). A court may “narrow[] the debate over the range of a reasonable hourly rate” by using the “Guidelines for Determining Attorneys’ Fees in Certain Cases” (“Guidelines”), which are a component of the Local Rules for the United States District Court of Maryland. D. Md. Loc. R. App’x B § 3 & n.6 (D. Md. 2011). See Gonzales v. Caron, No. CBD-10-2188, 2011 WL 3886979, at *2 (D. Md. Sept. 2, 2011) (“In the District of Maryland, this market knowledge is embedded in the Guidelines.”). The Guidelines, however, are not binding on this Court. Id.

In this case, Mack, who has been a member of the Maryland Bar since 2005, charged $200 per hour. Bryant, who has been admitted in Maryland since 1980, charged $325 per hour.[7] The suggested range for attorneys admitted for five to eight years is $165 to $250 per hour; for attorneys admitted for fifteen years or longer, the suggested range is $275 to $400 per hour.[8] Guidelines § 3.b & 3.d. The rates charged by both counsel are within the Guidelines, and are therefore presumed to be reasonable. Gonzales, 2011 WL 3886979, at *2. Although the Defendant argues that the affidavit in support of the Plaintiff’s fee petition submitted by local attorney Ali Kalarestaghi is deficient, it is unnecessary to consider it. Given this Court’s knowledge of the local market and the fact that the charged rates are within the Guideline ranges, this Court finds that the rates charged by Mack and Bryant are reasonable.

III. Time and Labor Required

Sullivan also argues that the amount of attorneys’ fees requested by the Plaintiff is excessive because this matter did not require the services of two attorneys and excessive time was expended on the case. Although the Plaintiff’s attorneys’ requested hourly rates are reasonable, the total number of hours that the Plaintiff’s lawyers have billed in this case reflects some excessive time expended, as well as some unnecessary duplication of efforts. Accordingly, in order to calculate a reasonable attorneys’ fee award, certain adjustments must be made to the hours billed as follows.

A. Case Development

The Plaintiff requests a total of $19, 590.75 for legal services performed during the case development phase of litigation. See Pl.’s Mem. 6. During this phase of litigation, on August 22, 2011, Mack spent 2.3 hours performing research and drafting a memorandum to the Plaintiff. The next day, August 23, 2011, Mack expended an additional 2.4 hours on the same task. This Court finds the additional 2.4 hours billed on August 23, 2011 to be excessive for the task in question. Therefore, this Court has reduced the hours billed by Mack for case development by 2.4 hours, from 24.0 hours to 21.6 hours. Bryant’s billing of 45.51 hours will remain unchanged. Under this adjusted calculation, the Plaintiff is entitled to $19, 110.75 for case development.

B. Pleadings

To compensate counsel for legal services provided at the pleading stage, the Plaintiff requests $4, 957.50. See Pl.’s Mem. 6. During this stage of the case, counsel developed their complaint and related service papers. Id. While the Plaintiff’s attorneys were required to spend considerable time researching and drafting pleadings, this Court notes that a few billing entries are excessive or duplicative. In particular, as to the drafting of the complaint, this Court concludes that a reduction of 2.0 hours of Mack’s time and 1.0 hours of Bryant’s time is warranted. In sum, this Court has reduced the hours billed for pleadings to 9.3 hours of Mack’s time and 7.3 hours of Bryant’s time. Under this adjusted calculation, the Plaintiff is entitled to $4, 232.50 for legal work expended during the pleadings stage.

C. Discovery

The Plaintiff seeks $17, 887.50 to compensate counsel for various activities in discovery, including written discovery and depositions. See Pl.’s Mem. 6-7. At this stage, the Plaintiff’s attorneys also filed motions to compel and for sanctions. Based on those motions, this Court sanctioned Peiffer by entering judgment against her as to liability, and imposed a monetary sanction on Sullivan. The Plaintiff’s lawyers request that the Defendants be credited $1, 024.00 for the amount of the discovery sanction already paid by Sullivan.[9] Given the Defendants’ conduct during discovery, this Court concludes that the sum requested by the Plaintiff for this stage is reasonable. Accounting for the discovery sanction paid by Sullivan, this Court awards $16, 867.50 for time expended in discovery.

D. Motions Practice

The Plaintiff seeks $14, 087.50 to compensate counsel for various activities in their motions practice. See Pl.’s Mem. 7. At this stage of the proceedings, the Plaintiff’s attorneys’ activities included responding to Arbotek’s motion to dismiss, and preparing a motion for temporary restraining order. Id. As to the motion for temporary restraining order, Mack’s time billed on November 10 and 14, 2011 is reduced by 3.8 hours, and his time billed on November 16 and 17, 2011 is reduced by 4.8 hours. In addition, a reduction of 4.0 hours of Bryant’s time is warranted for hours billed for the motion for temporary restraining order. Accordingly, Mack’s time is reduced to 37.3 hours and Bryant’s time is reduced to 11.1 hours. The Plaintiff is therefore entitled to an award of $11, 067.50 for motions practice.

E. Attending Hearings

The Plaintiff requests $420.00 for time spent by Mack attending hearings. See Pl.’s Mem. 7. Finding this billing reasonable, this Court awards $420.00 to the Plaintiff for Mack’s time spent attending hearings.

F. Alternative Dispute Resolution

For legal services performed in the category of alternative dispute resolution, the Plaintiff requests $635.00 for 2.2 hours of Mack’s time and 0.6 hours of Bryant’s time. See Pl.’s Mem. 7. This Court concludes that no adjustment is necessary and awards the Plaintiff $635.00 for time expended by his attorneys in efforts to settle the case.

G. Trial Preparation and Trial

The Plaintiff requests $9, 540.00 for 47.7 hours spent by Mack preparing for the trial of this case and $2, 460.00 for 12.3 hours of Mack’s time attending the trial.[10] See Pl.’s Mem. 7. The records reflect that during the trial preparation phase of the case, excessive time was spent on preparing the pretrial order on May 27 and 28, 2013, and the motion in limine regarding spoliation on June 9 and 10, 2013. Accordingly, this Court has reduced the time spent by Mack on the pretrial order by 4.0 hours, and his time spent on the motion in limine by 2.6 hours. Thus, the Plaintiff is entitled to recover fees for 41.1 hours expended by Mack in the trial preparation phase and for 12.3 hours Mack spent attending trial for an award of $10, 680.00.

H. Fee Petition

Finally, Plaintiff requests $1, 260.00 for 6.3 hours billed in the preparation of the fee petition now pending before this Court. See Pl.’s Mem. 7. The Guidelines provide that fees incurred in connection with a fee petition are compensable. Guidelines § 1.b.x. Plaintiff’s attorney devoted a reasonable amount of time to drafting the petition, reviewing time entries, updating billing rates, and preparing supporting affidavits and exhibits. Id. Accordingly, the Plaintiff is entitled to an award of $1, 260.00

I. Total Attorneys’ Fees

For the reasons articulated above, this Court has made adjustments to the fees requested in several phases of litigation. Accordingly, this Court awards the Plaintiff $65, 293.25 in attorneys’ fees. The table included below reflects the total attorneys’ fees awarded in each phase of litigation.

Litigation Phase

Mack Hours

Bryant Hours

Fees

Case Development

21.6

45.51

$19, 110.75

Pleadings

9.3

7.3

$4, 232.50

Discovery

64.9

15.1

$16, 863.5011 [11]

Motions Practice

37.3

11.1

$11, 067.50

Attending Hearings

2.1

0.0

$420.00

ADR

2.2

0.6

$635.00

Trial Prep and Trial

53.4

0.0

$10, 680.00

Fee Petition

6.3

0.0

$1, 260.00

Total Fees

197.1

79.61

$64, 269.25

IV. The Total Fee Award is Not Grossly Disproportionate

Defendant Sullivan argues that the amount of fees requested by the Plaintiff is unreasonable because it is “grossly disproportionate” to the amount of the judgment obtained against Defendant Sullivan. In support of this contention, Sullivan notes that the total fee award requested by the Plaintiff is more than 60% of the judgment entered against Sullivan. ECF No. 58 at 5. When determining whether a fee award is reasonable, this Court considers the amount involved and the results obtained. MRPC Rule 1.5(a)(4). Under Rule 1.5, the size of a fee award relative to the amount of damages sought is a factor to be considered. Monmouth Meadows, 7 A.3d at 8 (noting that a proper fee award may approach or even exceed the amount at issue). This Court has previously held, however, that a mechanical approach is inappropriate to determine the results obtained. See Roger E. Herst Revocable Trust, 2011 WL 6444980, at *8-12 (rejecting use of percentage of ad damnum clause amount as proxy for degree of success). As noted above in Section I of this Memorandum Order, Defendants Sullivan and Peiffer are jointly and severally liable for the total fee award based on their concerted misconduct. Although Peiffer is personally liable for a higher damage amount than Sullivan, that amount alone is only one factor in this Court’s analysis. Given the nature of the facts from which this case arose, as well as Sullivan’s conduct during this litigation, this Court finds that the Plaintiff’s attorneys obtained a successful result against Sullivan. Especially in light of the reduced fee award, the relative amount of the Plaintiff’s recovery of damages is not grossly disproportionate. This Court concludes that a further downward adjustment of the amount of fees is unwarranted.

V. Expert Fees

The Plaintiff requests an award of $5, 000.00 for the fee paid to Andrew Runge, who was retained as an expert. Section 13.11 of the Stock Purchase Agreement provides that the prevailing party is entitled to reasonable expert fees. Runge provided opinions to a reasonable degree of accounting certainty regarding economic damages as a result of nonpayment on the Note, as well as present and future losses due to transference of Avtek principals to other firms. The alleged damages to which Runge opined are the results of the Defendants’ conduct. Defendant Sullivan argues that the Plaintiff cannot recover fees paid to Runge because the lost revenue calculations were based on Arbotek’s actions and Runge was not called at trial. These arguments have no merit. First, as discussed, the actions of Arbotek in this case relate directly to the Defendants’ breaches of various contractual provisions. This factor mitliates in favor of holding Sullivan jointly and severally liable for all reasonable fees and expenses incurred. Essex, 2006 WL 83424, at *6-7. Second, the tactical decision not to call Runge at trial does not bear on whether retaining him in earlier stages was reasonable. If anything, this Court interprets the decision not to call Runge as a reasonable cost-saving measure by the Plaintiff. This Court also notes that although Runge billed the Plaintiff for $8, 664.70, the Plaintiff only paid $5, 000.00 and is only seeking that amount as an award. For these reasons, this Court concludes that the requested expert fee is reasonable and that the Plaintiff is entitled to $5, 000.00.

VI. Costs and Expenses

In addition to fees, the Plaintiff requests expenses in the amount of $2, 015.17. In general, plaintiffs who are entitled to receive reasonable attorneys’ fees are also entitled to the expenses they reasonably incurred in preparation of their case. See, e.g., Gionfriddo v. Jason Zink, LLC, No. RDB-09-1733, 2013 WL 1222350, at *8 (D. Md. Mar. 25, 2013) (citing Daly v. Hill, 790 F.2d 1071, 1084 (4th Cir. 1986); Wheeler v. Durham City Bd. of Educ., 585 F.2d 618, 623-24 (4th Cir. 1978)). These expenses include “supplemental secretarial costs, copying, telephone costs and necessary travel.” Wheeler, 585 F.2d at 623. The expenses requested by the Plaintiff are the type normally incurred in preparing a case for litigation and taking the matter to a verdict. For this reason, this Court grants an award of the Plaintiff’s total expenses in the amount of $2, 015.17

CONCLUSION AND ORDER

For the reasons stated above, Plaintiff’s Motion for Award of Reasonable Attorneys’ Fees and Expenses (ECF No. 57) is GRANTED in the amounts of $64, 269.25 for attorneys’ fees, $5, 000.00 for expert fees, and $2, 015.17 for expenses. Fees and expenses totaling $71, 284.42. SHALL BE AWARDED to the Plaintiff. Finally, it is HEREBY ORDERED that the Clerk of the Court shall CLOSE THIS CASE.


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