Opinion ID: 482811
Heading Depth: 3
Heading Rank: 1

Heading: The Amount Involved in the Case

Text: 71 Although the district judge found that the services of its attorneys secured a substantial benefit for Krear, it does not appear that she gave appropriate consideration to what is apparently the general rule in New York, i.e., that it is rarely proper to award fees in an amount that exceeds the amount involved in the litigation. 72 New York courts have stated that, as a general rule, they will rarely find reasonable an award to a plaintiff that exceeds the amount involved in the litigation. See Colon v. Automatic Retailers Association Service, Inc., 74 Misc.2d 478, 486, 343 N.Y.S.2d 874, 883 (Civ.Ct.1972) (award of fees in excess of the amount involved in a litigation would normally appear to be unreasonable). Exceptions to this general rule may be made where the court finds that the benefits of the litigation reached far beyond the amount sought in the immediate suit, such as in cases where there are transcending principles involved which make it economically feasible and reasonable. Id. at 487, 343 N.Y.S.2d at 883 (giving as one example an action to recover rent or other payment under a lease, where the action would be determinative of the validity of the lease); see also Simmons v. Government Employees Insurance Co., 59 A.D.2d 468, 472-73, 400 N.Y.S.2d 99, 101 (2d Dep't 1977). 73 In the present case, the benefit secured for Krear on its own claim was no more than $363,183, i.e., the $269,400 awarded by the jury plus the prejudgment interest awarded by the court. The court did not make any finding that an important matter of principle was involved, or that there was any other applicable exception to New York's general rule, that would justify a fee associated with this claim in excess of the $363,183 recovered. Further, a contract provision for a reasonable attorneys' fee does not suggest that the parties envisioned that a prevailing plaintiff would be entitled to fees exceeding or even approaching the amount of its recovery. We note that the New York Court of Appeals in Equitable Lumber Corp. v. IPA Land Development Corp., 38 N.Y.2d at 524, 381 N.Y.S.2d at 465, 344 N.E.2d at 397, did not consider even a 30% fee to be per se reasonable and remanded for consideration of what arrangement that plaintiff would have made absent a fee-shifting agreement. In the present case, in light of the one-third contingent fee arrangement this plaintiff in fact made with Baden for other litigation involving the Contracts at issue here, we find it surpassingly difficult to justify an award, in connection with Krear's claim against the Trustees, of more than one-third of the $363,183 recovered, or $121,061. 74 This is not the extent of the fees that could properly be awarded to Krear, however, since Krear was also the prevailing party on the Trustees' counterclaims. These counterclaims sought $158,476 in compensatory damages plus three times that amount in punitive damages. In light of the emphasis by both Krear and the district court on the counterclaims' frivolity, however, it is appropriate to disregard the request for punitive damages in determining the monetary value of the benefit secured by counsel by defeating the counterclaims. In analyzing what might be a reasonable fee for defending the counterclaims, we note that it is rare that a party defendant is able to retain counsel on a contingent fee basis, and ordinarily such a party is billed for time spent. Nonetheless, it is not reasonable to assume, unless significant matters of principle were involved, that a defendant would ordinarily be willing, in the absence of a fee-shifting provision, to incur liability for attorneys' fees in excess of the amount of its exposure in the lawsuit. Since there was no finding here that principle was involved, we conclude that a reasonable fee for the defense of the counterclaims could not exceed the amount the Trustees sought in compensatory damages, i.e., $158,476. 75 Having determined the maximum amounts that could properly have been awarded with respect to Krear's claim and its defense against the counterclaims, we turn to questions of whether the number of hours reflected in counsel's records, multiplied by the appropriate billing rates, rose to those maxima. We conclude that the fee award credited counsel with excessive amounts of time, at inflated hourly rates, and that less than the maximum should have been awarded with respect to the counterclaims.