Opinion ID: 441755
Heading Depth: 2
Heading Rank: 1

Heading: Attorney's Fees Related to the Tenant Actions

Text: 33 Eureka seeks $67,656.38 in legal fees it paid to Fried, Frank for services rendered in connection with the tenant actions. Section 3 of the title insurance policy requires CTI, at its own cost and without undue delay, ... [to] provide for the defense of an insured in all litigation consisting of actions or proceedings commenced against such insured ... involving matters covered by the policy. 34 When Eureka informed CTI on May 23, 1979 of the tenants' section 602(b) actions filed on May 9th of that year, CTI undertook to fulfill its defense obligations under the policy by agreeing to pay Fried, Frank, then Eureka's attorney, for work performed in defense of the tenants' claims. CTI was billed directly by Fried, Frank for all such work until February 4, 1980. 21 At that point, disagreements concerning the advisability of settling with the tenants and CTI's liability for delay damages had caused such deterioration in relations between Eureka and CTI that litigation between the parties appeared imminent. As a result, Fried, Frank informed CTI that it could no longer represent both parties and that CTI should no longer pay Fried, Frank's fees. 22 35 Because of its holding that CTI's failure to confess liability for delay damages caused by the tenant actions breached the contract of insurance and justified Eureka's decision to proceed on its own toward a resolution of the tenant actions, 23 the district court ruled correctly that CTI was liable for the costs, if proven, of services performed by independent counsel in connection with Eureka's efforts to resolve the tenants' challenge to title. 24 However, the district court found that Eureka's evidence was insufficient to support an award of $67,656.38 in unreimbursed attorney's fees and rejected the entire claim. We find that this ruling was clearly erroneous and remand to the district court for further proceedings to assess the amount of attorney's fees to which Eureka is entitled. 36 The district court relied on two factors in concluding that Eureka's evidence was insufficient. First, Eureka submitted only Fried, Frank's unitemized bills stating that the work related to tenant 602 claims. Daniel Singer, Eureka's principal legal adviser at Fried, Frank, testified at length at trial on other matters without providing any detailed information in support of the invoices. 25 Second, the tenant settlement was signed on February 5, 1980, and [t]he bulk of the services performed by Fried, Frank ... [thereafter] related to various government approvals that would have been required even in the absence of the tenant actions. 26 According to the court, one of the invoices was for work performed between May 1 and August 5, 1980, long after the tenant dispute had been resolved. Since it was implausible that Fried, Frank performed any services during this period relating to tenants' efforts to enforce section 602, 27 and no evidence had been introduced to show what portion of the $67,656.38 was related to the tenant actions, the court could not apportion the fees claimed between services that were covered by the policy and those that were not. 37 However, in a private action for damages an itemized bill is not necessary to establish a prima facie case on the amount of attorney's fees. It is most important to note the distinction between claims for attorney's fees brought in the context of private damages actions and those made under a statute authorizing recovery of attorney's fees by prevailing parties in suits against the government or in civil rights cases. In the latter category of cases, the court must establish a reasonable fee for the legal services involved in the action. 28 38 The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer's services. The party seeking an award of fees should submit evidence supporting the hours worked and rates claimed. Where the documentation of hours is inadequate, the district court may reduce the award accordingly. 29 39 Time recordkeeping must be relatively detailed in such cases for several reasons not applicable to private damages actions. For instance, when fees are awarded to a prevailing party under a statute, hours may have to be allocated between time expended on claims on which the party in fact prevailed and hours spent on unsuccessful issues. 30 Moreover, the desire to maintain a continuing relationship with a client, the usual incentive for a law firm to charge only reasonable attorney's fees, is absent when fees are charged to the government or to another nonprevailing party. Attorneys in such cases need fear no future loss of business to the firm if the fees they seek ... are unreasonable. 31 Consequently, [s]pecial caution is required because of the incentive which the [federal agency's] 'deep pocket' offers to attorneys to inflate their billing charges and to claim far more as reimbursement then would be sought or could reasonably be recovered from most private parties. 32 40 In contrast, in a private damages action, the court is not asked to set the attorney's fees. Rather, once a finding of liability for attorney's fees has been made, the role of the trier of fact is the same as in any other case involving a claim for expenses as consequential damages--to determine whether the expense has in fact been paid or incurred, whether the expense is related to the wrong upon which liability has been based, and whether the expense was reasonable. 33 District of Columbia law has firmly established that submission of a paid bill, supported by testimony of the claimant or claimant's agent that the expense was occasioned by defendant's wrong, is sufficient prima facie evidence of the amount of damages. 34 Once a prima facie case of damages has been established by the claimant, the burden of production shifts to the opponent to go forward with evidence tending to mitigate or abate the damages or to undermine the credibility of the claimant's case. 35 41 The facts adduced at trial were clearly sufficient to meet Eureka's burden of establishing a prima facie showing of the amount of attorney's fees. The district court had before it Schedule V of Eureka Exhibit No. 125, prepared by Price Waterhouse, Eureka's expert accounting witness. 36 Exhibit 125 represented Price Waterhouse's expert opinion, based upon examination of Fried, Frank's invoices and Eureka's checks paying those invoices, that Eureka had paid Fried, Frank $67,656.38 for services rendered in connection with tenant actions not reimbursed by Chicago Title Insurance Company. 37 John Leyes, a Price Waterhouse partner and certified Public Accountant, also testified at trial that the accounting firm had excluded from the invoices actions which were not associated with the legal services, for things other than tenants' actions .... 38 Eureka's managing director also testified that the bills were paid for legal services performed in resolving the tenant actions. 39 42 Moreover, there was, contrary to the district court's holding, ample evidence in the record to support the conclusion that a substantial number of hours were expended by Fried, Frank in litigation and settlement of the tenant actions during the time period covered by the invoices. To begin with, the district court erroneously concluded that the invoices covered only services performed after February 4, 1980, when Daniel Singer wrote to CTI to indicate that they would no longer be billed directly for defense of the tenants' claims. Since the tenant settlement agreement was signed on February 5, 1980, the judge reasoned that Fried, Frank could not have performed much work in connection with the tenant claims thereafter. 40 However, the parties stipulated that Fried, Frank did not send CTI statements for legal services performed from January 1, through midnight February 4, 1980. 41 Moreover, the May 1, 1980 invoice itself states that it covers services rendered on the tenant claims from January 1, 1980 through March 31, 1980. 42 The record shows that substantial amounts of legal work were performed by Fried, Frank on the tenant settlement and related tenant matters between the beginning of January and February 4, 1980. 43 43 Second, the district court erroneously concluded that the record does not suggest that Fried, Frank performed work in connection with the settlement [after February 5, 1980]. 44 To the contrary, the record shows that Fried, Frank continued to perform substantial legal services for Eureka in connection with the tenant actions throughout the first half of 1980. These services included arranging for the formal dismissal of the tenant actions, 45 finalizing the escrow arrangements required by the tenant settlement agreements, 46 and opposing attempts by holdout tenants to assert section 602(b) claims before the Department of Housing and Community Development. 47 44 Third, the court concluded that one of the invoices was for work apparently performed between May 1 and August 5, 1980, a time so long after the resolution of the tenant dispute that it is implausible that Fried, Frank performed any services during this period relating to tenants' efforts to enforce section 602. 48 However, as Eureka's accounting expert indicated at trial, the date on the invoice did not necessarily mean that the services covered by that invoice were performed between that date and the date of the preceding invoice. 49 Rather, as the invoice itself indicated, the August 5 bill covered services performed between April 1, 1980 and June 30, 1980, 50 a period during which Fried, Frank was still involved in defending claims brought by hold out tenants. 51 Finally, the court held that 45 [t]he bulk of the services performed by Fried, Frank after February 4, 1980, related to obtaining various governmental approvals that would have been required even in the absence of the tenant actions. Eureka presented no evidence that these services were paid for separately, or, if not, what portion of the $67,656.38 represented fees for these services. 52 46 To the contrary, as has been noted above, both the Price Waterhouse exhibit and the testimony of John Leyes, Eureka's accounting expert, suggested that fees for services other than those involving the tenant actions had been excluded in calculating the fees claimed. 53 Leyes also specifically testified that the amount claimed in this action comprised only that portion identified as relating to the tenant actions out of total fees in excess of $110,000 paid by Eureka to Fried, Frank during the period in question. 54 47 This evidence by itself would have been sufficient to meet Eureka's burden of proving a prima facie case on the amount of attorney's fees. However, the court also had before it CTI Exhibit No. 179, providing additional proof that Fried, Frank had billed services relating to the tenant actions separately from time spent in pursuit of Eureka's other interests. 55 The exhibit demonstrates that Fried, Frank established separate accounts for the various matters handled by the firm for Eureka. Work concerning the condominium conversion as such, including the pursuit of required government approvals, purchase of the fee, and financing matters, were billed to one account. Services concerning the tenant actions, as well as early negotiations with CTI concerning the form and substance of, and CTI's possible contributions to, the tenant settlement, were billed to a separate account, and a third account was established to cover services rendered in connection with the litigation between Eureka and CTI. 56 Separate invoices were provided for each of these accounts. 57 Time sheets indicate that attorneys adhered to these billing distinctions in submitting their time charges. 58 48 In sum, it cannot be said that Eureka failed to meet its burden of producing evidence sufficient to establish a prima facie case on the amount of attorney's fees paid by Eureka in connection with the tenant actions. We therefore remand this issue to the district court for entry of an appropriate award of attorney's fees. 49