Opinion 2019 Nevada Attorney_Fees 2019MorganStanleyNevadaOpinionVoidableTransactionsFraudulentTransfersAttorneyFees
United States District Court, D. Nevada.
MORGAN STANLEY HIGH YIELD SECURITIES INC. et al., Plaintiffs,
v.
Hans JECKLIN et al., Defendants.
Case No. 2:05-cv-01364-RFB-PAL
Signed 05/27/2020
Filed 05/28/2020
Attorneys and Law Firms
Alan J. Lefebvre, Kolesar & Leatham, Las Vegas, NV, Jason Israel Kirschner, Jean-Marie L. Atamian, Christopher Joseph Mikesh, John M. Conlon, Pro Hac Vice, Mayer Brown LLP, New York, NY, for Plaintiffs Morgan Stanley High Yield Securities Inc., Morgan Stanley Dean Witter High Income Advantage Trust II.
Alan J. Lefebvre, Kolesar & Leatham, Las Vegas, NV, Jason Israel Kirschner, Christopher Joseph Mikesh, John M. Conlon, Pro Hac Vice, Mayer Brown LLP, New York, NY, for Plaintiffs Morgan Stanley Dean Witter High Income Advantage Trust, Morgan Stanley Dean Witter High Income Advantage Trust III, Morgan Stanley Diversified Income Trust, Morgan Stanley Select Dimensions Investment Series.
Alan J. Lefebvre, Kolesar & Leatham, Las Vegas, NV, Jason Israel Kirschner, John M. Conlon, Pro Hac Vice, Mayer Brown LLP, New York, NY, for Plaintiff Morgan Stanley Variable Investment Series.
Eric D. Hone, H1 Law Group, Las Vegas, NV, Ann Marie Hansen, Ankcorn Law Firm, PC, Orlando, FL, Jamie L. Zimmerman, H1 Law Group, Henderson, NV, for Defendant George Haeberling.
Tamara Beatty Peterson, Peterson Baker, PLLC, Eric D. Hone, H1 Law Group, Las Vegas, NV, for Defendants Christiane Jecklin, Hans Jecklin, JPC Holding AG, Swiss Leisure Group AG.
Eric Schreiner, Steven Engelmyer, Kleinbard Bell & Brecker, Philadelphia, PA, Jeffrey A. Silvestri, Amanda M. Perach, Craig A. Newby, McDonald Carano Wilson, LLP, Las Vegas, NV, for Defendant John Tipton.
ORDER
RICHARD F. BOULWARE, II, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
PAGE_1 Before the Court are Plaintiffs’ Motion to Amend/Correct Judgment (ECF No. 621), Plaintiffs’ Motion for Attorneys’ Fees (ECF No. 622), Defendants’ Motion for Re-Taxation of Costs (ECF No. 637), and Plaintiffs’ Motion to Compel (ECF No. 640).
II. PROCEDURAL BACKGROUND
The Court filed its order entering judgment on March 31, 2019. ECF No. 613. The judgment was entered on April 2, 2019. ECF No. 614.
The Notice of Appeal as to, inter alia, the Court’s order and judgment was filed April 30, 2019. ECF No. 618. On May 8, 2019, the Ninth Circuit issued an order holding appellate proceedings in abeyance pending the Court’s resolution of the pending motions. ECF No. 625.
The instant Motion to Amend/Correct 614 Judgment was filed April 30, 2019. ECF No. 621. Defendants JPC Holding AG, Hans Jecklin, and Swiss Leisure Group AG responded on May 14, 2019. ECF No. 627. Defendant Tipton responded on May 14, 2019. ECF No. 629. Plaintiffs replied on May 21, 2019. ECF No. 631.
The instant Motion for Attorney Fees was filed April 30, 2019. ECF No. 622. Defendants JPC Holding AG, Hans Jecklin, and Swiss Leisure Group AG responded on May 14, 2019. ECF No. 628. Plaintiffs replied on May 21, 2019. ECF No. 632.
The instant Motion for Re-Taxation of Costs was filed on July 8, 2019. ECF No. 637. Plaintiffs responded on July 22, 2019 and Defendants replied on July 29, 2019. ECF Nos. 638, 639.
Plaintiffs filed the instant Motion to Compel on August 19, 2019. ECF No. 640. Defendants responded on September 3, 2019 and Plaintiffs replied on September 10, 2019. ECF Nos. 641, 642.
A hearing on the motions was held on March 5, 2020. ECF No. 645.
III. FACTUAL BACKGROUND
This case is a veil-piercing action in which Plaintiffs sought to enforce a judgment against Defendants that was entered against Seven Circle Gaming Corporation (“SCGC”) on December 18, 2003, in the United States District Court for the Southern District of New York. After an eight-day bench trial from April 30, 2018 to May 10, 2018, the Court entered judgment in favor of Plaintiffs on their fraudulent conveyance claims as to Defendants Hans Jecklin, Swiss Leisure Group AG (“SLG”), and JPC Holding AG (“JPC”). ECF No. 613 at 26. The Court issued declaratory judgment holding that Hans Jecklin, SLG, and JPC are legally alter egos of SCGC and can be held financially liable to Plaintiffs for debts incurred by SCGC, and awarded Plaintiffs “the full amount of the SDNY judgment, plus post-judgment interest, costs, and attorney’s fees.” Id. The Court also directed the Court to enter judgment in favor of Defendants Christiane Jecklin, John Tipton, and George Haeberling. Id.
The Court also granted Plaintiffs’ Motion to Substitute Parties (ECF No. 529), holding that Plaintiffs Morgan Stanley Dean Witter High Income Advantage Trust, Morgan Stanley Dean Witter High Income Advantage Trust II, and Morgan Stanley Dean Witter High Income Advantage Trust III were stricken from the action, and Plaintiff Morgan Stanley High Yield Securities Inc. was replaced by Invesco High Yield Fund, Plaintiff Morgan Stanley Variable Investment Series was replaced by Invesco V.I. High Yield Fund, and Plaintiff Morgan Stanley Select Dimensions Investment Series was replaced by Morgan Stanley Variable Insurance Fund, Inc. Core Plus Fixed Income Portfolio. Id. at 17, 26.
IV. LEGAL STANDARD
_ [Omitted for brevity.]
V. DISCUSSION
A. Motion to Amend/Correct Judgment (ECF No. 621)
Plaintiffs seek to amend the judgment in three ways. First, they seek to find Defendant Tipton liable to Plaintiffs for the full amount of the fraudulent transfers. Second, they seek to amend the judgment to reflect the substitution of the parties as ordered by the Court. Third, they seek to amend the judgment to expressly state the amount of the SDNY judgment and accrued interest.
i. Tipton’s Liability
_ [Omitted for brevity.]
ii. Party Substitution
_ [Omitted for brevity.]
iii. Post-Judgment Interest
_ [Omitted for brevity.]
B. Plaintiffs’ Motion for Attorneys’ Fees (ECF No. 622)
Plaintiffs move for attorneys’ fees pursuant to Rule 54 of the Federal Rules of Civil Procedure.
Although state law governs whether a party is entitled to attorney’s fees, federal law dictates the procedure for requesting attorney’s fees. Carnes v. Zamani, 488 F.3d 1057, 1059 (9th Cir. 2007). The Ninth Circuit has found that, “for Erie Railroad Co. v. Tompkins purposes, state law on attorney’s fees is substantive, so state law applies in diversity cases. ‘[I]n an ordinary diversity case where the state law does not run counter to a valid federal statute or rule of court, and usually it will not, state law denying the right to attorney’s fees or giving a right thereto, which reflects a substantial policy of the state, should be followed.’ ” Alaska Rent–A–Car, Inc. v. Avis Budget Grp., Inc., 709 F.3d 872, 886 (9th Cir. 2013) (alterations in original) (citation omitted). The Nevada Supreme Court has held that “In general, ‘attorney’s fees are not recoverable absent a statute, rule or contractual provision to the contrary.’ ” Bobby Berosini, Ltd. v. People for the Ethical Treatment of Animals, 971 P.2d 383, 388 (Nev. 1998) (quoting Rowland v. Lepire, 662 P.2d 1332, 1336 (1983)). Further, “[t]he decision to award attorney’s fees is within the sound discretion of the trial court, whose decision will not be disturbed on appeal absent a manifest abuse of that discretion.” Id.
Nevada’s Uniform Fraudulent Transfer Act states that “In an action for relief against a transfer or obligation under this chapter, a creditor, subject to the limitations in NRS 112.220, may obtain ... [s]ubject to applicable principles of equity and in accordance with applicable rules of civil procedure ... [a]ny other relief the circumstances may require.” Nev. Rev. Stat. § 112.210.
PAGE_6 Plaintiffs argue the Court’s order and judgment explicitly awarded Plaintiffs attorneys’ fees, and the award was authorized by NRS § 112.210. ECF No. 622 at 4 (citing NRS § 112.210). Plaintiffs argue an award is especially appropriate because of Defendants’ conduct, which rendered this action necessary when it otherwise should not have been. Id. at 4-5. Plaintiffs’ counsel spent over 30,000 hours on the case over thirteen years due in part to the complexity of the issues, requiring a high degree of legal skill. Id. at 5. The time required was also a result of Defendants’ litigious and obstructive behavior. Id. at 5-6. Plaintiffs’ counsel were foreclosed from other opportunities during the course of litigation, which was particularly impactful because they offered Plaintiffs a thirty percent discount on their billing rates. Id. at 7.
Defendants argue the American Rule applies and Plaintiffs have failed to demonstrate they are entitled to fees. ECF No. 628 at 4. There is no agreement that allows for recovery, and no statute; NRS 78.747 does not allow attorneys’ fees and NRS 112.210 does not expressly award fees. Id. at 5. Nevada law does not award fees when the text of a statute does not expressly authorize them. Id. (citing Bobby Berosini, Ltd., 971 P.2d at 388). Defendants further argue that other courts have declined to read the Uniform Fraudulent Transfer Act as awarding fees. Id. at 5-6 (citing cases). Defendants also argue Plaintiffs cannot recover fees for litigating their alter ego claims or unsuccessful claims because they are non-UFTA claims. Id. at 6. Plaintiffs have failed to meet their burden of apportioning fees accordingly. Id.
Additionally, Defendants argue Plaintiffs have failed to meet their burden of establishing the fees as reasonable under the method of calculating fees established by the Ninth Circuit. Id. at 7-10. There is no evidence of the qualities of the advocates, no actual billing records since the summary does not detail the actual hours spent and fees incurred, no information about the work performed and how fees were incurred, no evidence that the requested rates are in line with prevailing market rates, no rationale for the duplicative use of New York and Nevada counsel and whether travel time was included, and it would be inequitable and unreasonable for the Jecklin Defendants to shoulder the entire burden of fees. Id. Defendants also argue Plaintiffs have failed to establish that fees were incurred, id. at 10-11, and the motion failed to comply with Local Rule 54-14, id. at 11-12.
In reply, Plaintiffs state that whether the Uniform Fraudulent Transfer Act authorizes an award of attorneys’ fees is a matter of first impression in Nevada and ask the Court to find that it does. ECF No. 632 at 3-4. Plaintiffs further argue the work on the claims is highly interconnected with no practical way to separate out the fees incurred on any one claim or against any one defendant. Id. at 4-5. Furthermore, because the Court has awarded substantially all of the relief sought, Plaintiffs should be permitted to receive all of their fees. Id. at 5. Plaintiffs further argue the fees are reasonable and that they will make their billing entries available if ordered, though it would be unreasonable to require, given how long it would take. Id. at 5-7. Plaintiffs also say the fees were incurred as evidenced by the declaration attached to their motion. Id. at 7. Plaintiffs also argue their motion complies with Local Rule 54-14 because fees were billed at negotiated hourly rates, not on a fixed or contingent rate, and they could not provide a brief summary of similar awards because this is a matter of first impression. Id. at 8. Finally, they did submit a reasonable description of counsel qualifications but will provide more if necessary. Id.
PAGE_7 The Court finds that Plaintiffs are entitled to attorneys’ fees. NRS 112.210(1)(c)(3) permits courts to enter “any other relief the circumstances may require.” This language was taken from the Uniform Fraudulent Transfer Act, and while the Act does not provide explicitly for the award of attorneys’ fees, this provision “invites courts to consider themselves empowered to award attorney’s fees, punitive damages, or both. Courts in some states have accepted this invitation; courts in other states have declined it.” Kenneth C. Kettering, The Uniform Voidable Transactions Act; or, the 2014 Amendments to the Uniform Fraudulent Transfer Act, 70 Bus. Law. 777, 788 (2015) (citing cases). This Court chooses to accept the invitation. As evidenced by the Court’s order, the circumstances in the instant action require an award of attorneys’ fees, and the Court therefore utilizes its authority provided by NRS 112.210(1)(c)(3) to grant the required relief. The Court does not find that such fees are available in all cases under the Uniform Fraudulent Transfer Act. Rather, the Court finds based upon the facts of this case, including but not limited to the fact that Defendants forced this extensive litigation, that attorneys’ fees represent “other relief” that the “circumstances” require here under NRS 112.210.
Further, Defendants insistence that Plaintiffs are only entitled to fees for the claims upon which they were successful is based on an inaccurate reading of the case law. In a case in which a party is entitled to attorneys’ fees as a prevailing party on a particular claim, the law permits recovery of only those attorneys’ fees incurred in developing that claim. Entm’t Research Grp., Inc. v. Genesis Creative Grp., Inc., 122 F.3d 1211, 1230 (9th Cir. 1997) (citing Hensley v. Eckerhart, 461 U.S. 424, 434–35 (1983)). Here, NRS 112.210 does not explicitly confer an award of attorneys’ fees; rather the Court has ordered that relief pursuant to its provision allowing “any other relief the circumstances may require.” Therefore, Defendants’ argument that Plaintiffs may only obtain fees incurred while litigating the Uniform Fraudulent Transfer Act claim is inapposite, since the statute does not tie an entitlement to fees to the requirement that the party have prevailed on a particular claim.
Yet even if the standard were to apply as Defendants assert, the Court finds that all of the claims were so highly interconnected that distinguishing fees incurred as a result of work on the prevailing claims, versus those claims upon which the Court ruled in Defendants’ favor, is nearly impossible. However, the fees incurred as a consequence of the time spent actually briefing the separate claims are distinguishable. The Court will therefore require Plaintiffs to discount the time spent briefing the alter ago claims by fifteen percent.
The Court therefore grants the Motion for Attorneys’ Fees.
C. Defendants’ Motion for Re-Taxation of Costs (ECF No. 637)
_ [Omitted for brevity.]
D. Plaintiffs Motion to Compel (ECF No. 640)
_ [Omitted for brevity.]
Therefore, the Court grants the Motion to Compel. The Court denies without prejudice the accompanying Motion for Attorney’s Fees. Plaintiffs may renew the motion if Defendants continue to engage in obstructive conduct.
VI. CONCLUSION
IT IS THEREFORE ORDERED that the Motion to Amend/Alter the Judgment (ECF No. 621) is GRANTED in part and DENIED in part. The Motion is DENIED as it pertains to altering the judgment to find Defendant Tipton liable to Plaintiffs. The Motion is GRANTED as to amending the judgment to reflect the substitution of the parties and the express amount of the SDNY judgment and accrued interest. The Court will issue an amended judgment.
IT IS FURTHER ORDERED that the Motion for Attorneys’ Fees (ECF No. 622) is GRANTED. Plaintiffs shall file within thirty (30) days a proposed order that calculates the amount of fees based on the Court’s instructions regarding the fifteen percent discount for fees incurred while briefing the alter ego claims.
IT IS FURTHER ORDERED that the Motion for Re-Taxation of Costs (ECF No. 637) is GRANTED in part and DENIED in part. Plaintiffs’ exemplification and copies cost are re-taxed to $507 and total costs are taxed in the amount of $57,325.16. The Motion is DENIED as to Defendants’ remaining objections.
IT IS FURTHER ORDERED that the Motion to Compel (ECF No. 640) is GRANTED. The Court DENIES without prejudice the Motion for Attorneys’ Fees.
IT IS FURTHER ORDERED that a Status Conference to assess discovery progress is set for July 1, 2020 at 10:30 a.m. by videoconference. The parties shall contact the Court Deputy to obtain connection details.