United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 3, 1997 Decided November 7, 1997
No. 96-7169
Ideal Electronic Security Co., Inc., et al.,
Appellants/Cross-Appellees
v.
International Fidelity Insurance Company,
Appellee/Cross-Appellant
Consolidated with
No. 96-7186
Appeals from the United States District Court
for the District of Columbia
(No. 94cv00385)
John W. Karr argued the cause and filed the briefs for
appellants/cross-appellees.
Neil L. Henrichsen argued the cause and filed the briefs
for appellee/cross-appellant.
Before: Edwards, Chief Judge, Sentelle and Randolph,
Circuit Judges.
Opinion for the Court filed by Chief Judge Edwards.
Edwards, Chief Judge: This case involves a claim under an
indemnity agreement by a surety company, appellee Interna-
tional Fidelity Insurance Co. ("IFIC" or "surety"), against
the holders of a payment bond, appellants Ideal Electronic
Security Co., Inc., et al. ("Ideal"). Upon securing the pay-
ment bond, Ideal agreed to indemnify IFIC against any
losses or expenses, including attorney's fees incurred to de-
fend against claims arising under the bond. In this case,
IFIC seeks recovery of attorney's fees incurred by the surety
in defending a claim brought by Modern Electric, Inc. ("Mod-
ern") against appellants for an alleged underpayment on
subcontracted work. The appellants claim (1) that because
the surety failed to justify the hiring of counsel, no attorney's
fees should be awarded and (2) that even if a claim for
attorney's fees is warranted, the surety failed to demonstrate
that the amount sought in this case is reasonable.
The District Court found that IFIC is entitled to fees for
its defense of appellants on the claim brought by Modern;
however, because IFIC asserted that certain billing state-
ments supporting the claim for fees were protected by the
attorney-client privilege (and redacted portions of some bill-
ing statements), the District Court reduced the award of fees
for the amounts covered by the purportedly privileged mate-
rials. Ideal contends that it was entitled to review all billing
statements, so that it would be in a position to show that the
surety's arrangements with counsel were both unnecessary
and unreasonable. The surety cross-appeals, claiming that
the District Court erred in reducing the award of attorney's
fees by the amounts covered by privileged documents.
The contract claims arising under the disputed indemnity
agreement are governed by the law of the District of Colum-
bia. Under D.C. law, once a party's contractual entitlement
to attorney's fees has been ascertained, it is within the trial
court's sound discretion to determine a reasonable fee award.
In the instant case, we find that the District Court was
correct in holding that the surety was entitled to claim
attorney's fees, but abused its discretion in assessing the
amount due to IFIC.
Appellants are entitled to full discovery of information
underlying the claim for fees; only after obtaining such
discovery will the appellants be in a position to assess the
reasonableness of IFIC's position and then present to the
court any legitimate challenges to the surety's claim. The
reasonableness of any portion of the billing statements can
only be determined by examining all billing statements per-
taining to the legal services provided as a whole. Appellee
effectively waived its attorney-client privilege with regard to
all communications going to the reasonableness of the fees
claimed when it placed the purportedly privileged matters in
dispute by claiming indemnification for the attorney's fees.
Accordingly, we remand the case to allow appellants an
opportunity to challenge the reasonableness of IFIC's claim
for fees following full disclosure of the redacted portions of
the billing statements. If IFIC declines to disclose the
redacted portions of the billing statements, then the entire
claim for fees must be denied by the District Court.
I. Background
The Miller Act requires payment bonding to assure pay-
ments to subcontractors on construction work undertaken for
the United States. 40 U.S.C. ss 270a-270f (1994). Ideal and
its principals, Cora Williams and Kenneth Rogers, entered
into a contract with the United States to replace or repair
electrical transformers at the Walter Reed Army Medical
Center in Washington, D.C. Since the contract was of a type
governed by the Miller Act, Ideal was required to obtain a
payment bond to secure the contract. IFIC provided bond-
ing for the base year, July 29, 1991 to July 28, 1992. In order
to induce IFIC to provide the payment bond, Ideal entered
into an indemnity agreement in which it agreed, under certain
conditions, to indemnify IFIC against any losses or expenses
arising from the payment bond, including attorney's fees
incurred in defending against claims arising under the bond
and costs incurred in enforcing the terms of the indemnity
agreement itself. See Agreements of Indemnity at p 2, re-
printed in Appendix of Appellee/Cross-Appellant at 21, 25
(hereinafter "Indemnity Agreement").
This litigation commenced when a subcontractor on the
Walter Reed project, Modern, sued both Ideal and IFIC,
claiming that Ideal had underpaid Modern for subcontracted
work. Modern brought this suit in the United States District
Court for the District of Maryland, invoking that court's
jurisdiction under the Miller Act, 40 U.S.C. s 270b, which
provides a federal cause of action for persons supplying labor
and materials on federal construction projects to collect pay-
ment under the bonds required by 40 U.S.C. s 270a. The
suit was subsequently transferred to the District Court for
the District of Columbia.
IFIC formally tendered its defense to Ideal, upon the
condition that Ideal first deposit with IFIC cash or collateral
in the amount of $300,000 to cover its potential liability as
surety, including its attorney's fees. See Memorandum Opin-
ion at 4-5 (May 3, 1996) (hereinafter "Mem. Op."). Ideal
declined to provide the requested reserve payment; as a
consequence, IFIC mounted its own defense against Modern's
claims. Id. at 5. After discovery proceedings and two hear-
ings, the District Court granted IFIC's motion for summary
judgment dismissing Modern's claims against IFIC. Id. at 5-
6.
IFIC asserted the indemnification claim at issue in this
appeal in a cross-claim against Ideal and a third-party com-
plaint against Ideal's principals. On October 13, 1995, the
District Court denied a motion by IFIC for summary judg-
ment on its indemnification claim. A jury trial was held on
April 25 and 26, 1996. At the conclusion of the trial, the
District Court granted IFIC's motion for judgment as a
matter of law pursuant to Fed. R. Civ. P. 50(a)(1). See Mem.
Op.; Order Awarding Attorney's Fees (July 1, 1996). In
supporting its claim for attorney's fees, IFIC submitted bill-
ing statements from counsel. However, over the objection of
Ideal, IFIC redacted portions of the billing statements, con-
tending that the undisclosed materials were protected by the
attorney-client privilege. The District Court resolved this
dispute by awarding fees only for the unredacted portions of
the billing statements. Mem. Op. at 11-12. Subsequently,
IFIC filed a motion for additional fees incurred in prosecut-
ing the indemnity action. The District Court summarily
denied this motion, stating simply that "the judgment already
awarded to IFIC is reasonable compensation for legal work
that was necessary to protect IFIC's position." Order Deny-
ing Additional Attorney's Fees (July 18, 1996).
Ideal appeals the District Court's judgment as a matter of
law on the question of liability and on the reasonableness of
the amount of fees awarded. IFIC cross-appeals the District
Court's denial of fees based on redacted billing statements
and also the court's denial of fees incurred in prosecuting the
indemnity action.
II. Analysis
A. Choice of Law
Before turning to the merits of the parties' appeals, we
must first determine which law governs the case. This
appeal involves a state contract claim which is in federal court
under supplemental jurisdiction. The Miller Act provides a
federal cause of action for subcontractors and suppliers on
construction projects governed by the Act to collect on pay-
ment bonds required by the Act. 40 U.S.C. s 270b (1994);
F.D. Rich Co. v. United States ex rel. Indus. Lumber Co., 417
U.S. 116, 127 (1974). Accordingly, Modern's suit against
Ideal and IFIC was properly brought in federal district court
under the court's federal question jurisdiction. Although
contract claims between the various parties to a case brought
under the Miller Act may be heard by the federal court
hearing the Miller Act claim, the appended contract claims
are governed by state, not federal, law. See, e.g., United
States ex rel. J.W. Briggs v. Grubb, 358 F.2d 508, 515 (9th
Cir. 1966) (local law rather than federal law is applicable to
cross-complaint under a Miller Act bond); Western Casualty
& Surety Co. v. Biggs, 217 F.2d 163, 165 (7th Cir. 1954) (suit
by surety against general contractors as principals on pay-
ment bond was not an action under the Miller Act, since the
Act provides only for an action on the payment bond by one
who has furnished labor and material and has not been paid).
When deciding state-law claims under diversity or supple-
mental jurisdiction, federal courts apply the choice-of-law
rules of the jurisdiction in which they sit. See Lee v. Flint-
kote Co., 593 F.2d 1275, 1278-79 n.14 (D.C. Cir. 1979). The
District of Columbia has adopted the Restatement (Second) of
Conflict of Laws s 188. Finance America Corp. v. Moyler,
494 A.2d 926, 929 & n.7 (D.C. 1985). Where, as here, the
parties to a contract have not specified which law governs
their agreement, the Restatement approach requires the
court to weigh various jurisdictions' contacts with the transac-
tion at issue and to determine which has the most substantial
interest in the matter. According to the record, IFIC is
domiciled in New Jersey, Appellants Williams and Rogers are
domiciled in Virginia, Ideal is domiciled in the District of
Columbia, the indemnity agreement was entered into in the
District of Columbia, and the subject matter of the contract
(the bond) secures construction taking place in the District of
Columbia. On balance, and in the absence of any arguments
by the parties to the contrary, we hold that interpretation of
the indemnity agreement is controlled by D.C. law.
B. Judgment as a Matter of Law in Favor of IFIC
We review de novo the District Court's order granting
IFIC's motion for judgment as a matter of law. Hendry v.
Pelland, 73 F.3d 397, 400 (D.C. Cir. 1996). We can affirm the
District Court's judgment only if we find "no legally sufficient
evidentiary basis for a reasonable jury to find for" Ideal
under applicable D.C. law, "considering the evidence in the
light most favorable to [Ideal] and making all reasonable
inferences in [its] favor." Id. at 400; Fed. R. Civ. P. 50(a)(1).
Under D.C. law, contractual provisions providing for the
indemnification of attorney's fees are generally enforceable in
accordance with the intentions of the contracting parties,
unless enforcement would be contrary to public policy. Wis-
consin Ave. Assocs. v. 2720 Wisconsin Ave. Coop. Ass'n, 441
A.2d 956, 964-65 (D.C. 1982); FDIC v. Bender, 1997 WL
582901, *3 (D.C. Cir. Sept. 23, 1997). "Whether an attorneys
fees award is available is a matter of contract interpretation
by the trial judge, unless there is an ambiguity that needs to
be resolved to determine the intention of the parties. In that
case, the entitlement question must be resolved by the fact-
finder." Urban Masonry Corp. v. N&N Contractors, Inc.,
676 A.2d 26, 33 (D.C. 1996) (citations omitted).
The parties' indemnity agreement provides a "good faith"
standard for determining whether Ideal is obligated to indem-
nify IFIC for attorney's fees:
the Surety shall be entitled to charge for any and all
disbursements made by it in good faith in or about the
matters herein contemplated by this Agreement under
the belief that it is or was liable for the sums and
amounts so disbursed, or that it was necessary or expedi-
ent to make such disbursements, whether or not such
liability, necessity or expediency existed; and [ ] vouch-
ers or other evidence of any such payments made by the
Surety shall be prima facie evidence of the fact and
amount of the liability to the Surety.
Indemnity Agreement at p 2. However, the parties dispute
exactly what this good faith standard requires. IFIC con-
tends that it is entitled to attorney's fees absent any showing
of fraud or bad faith. Brief of Appellee/Cross-Appellant at
12. Ideal argues that the agreement's good faith standard
requires something more than the mere absence of fraud.
Rather, Ideal asserts that, in order to be entitled to indemni-
ty for any resulting attorney's fees under the parties' agree-
ment, IFIC must show (1) that its decision to retain separate
counsel to defend against Modern's claims was reasonable
and (2) that the services rendered by counsel were reason-
able. Brief of Appellants/Cross-Appellees at 7-8.
There is no clear precedent under District of Columbia law
defining the scope of a contractual "good faith" standard of
the sort at issue here. However, courts in other jurisdictions
have indicated that, as a general matter, a surety must show
something akin to reasonable necessity when seeking attor-
ney's fees under an indemnity agreement. For example, the
Fifth Circuit, applying Mississippi law, has held that
[A]n indemnity agreement is not a blank check; it does
not entitle the surety [ ] to reimbursement for legal fees
which are unreasonable or unnecessary. To hold other-
wise would allow [a surety] to retain counsel and to
charge attorneys' fees against the indemnitor even when
the surety [ ] does not require a separate legal defense to
protect its interests. The indemnity contract cannot
reasonably be construed as requiring the indemnitee to
bear the cost of such redundant representation.
Jackson v. Hollowell, 685 F.2d 961, 966 (5th Cir. 1982). See
also Sentry Ins. Co. v. Davison Fuel & Dock Co., 396 N.E.2d
1071, 1074 (Ohio Ct. App. 1978) (rejecting all claims for
recovery of fees under indemnity agreement's good faith
standard for services which were simultaneously being ren-
dered competently by the principal's counsel); Central Tow-
ers Apts. v. Martin, 453 S.W.2d 789, 799-800 (Tenn. Ct. App.
1969) (probing the reasonableness and necessity of a surety's
incurred attorney's fees, given the identity of interests be-
tween principal and surety in the indemnity context). But
see Wilson & Co. v. Walsenburg Sand & Gravel Co., 779 P.2d
1386, 1387 (Colo. Ct. App. 1989) (interpreting plain meaning
of similar good faith standard in similar indemnity agreement
as limiting defenses against liability to bad faith or fraud).
In any case, we need not resolve the contract interpretation
issue because, even if the District of Columbia Court of
Appeals were to interpret the agreement's good faith stan-
dard to require a showing of reasonableness, or if a jury were
to find that the good faith standard was intended by the
parties to include a showing of reasonableness, no reasonable
fact-finder could find that IFIC's decision to hire counsel to
defend against Modern's suit was unreasonable under the
uncontested facts of this case. Accordingly, we hold that
judgment in favor of IFIC is appropriate pursuant to Rule
50(a)(1) with regard to the liability question of whether Ideal
is required, under the parties' indemnity agreement, to in-
demnify IFIC for attorneys' fees incurred by IFIC to defend
itself against Modern's claims.
Ideal alleges that IFIC's decision to mount its own defense
against Modern's claims was unreasonable because Modern's
claims against IFIC were obviously without merit and, more-
over, Ideal had offered to defend IFIC against these claims.
In essence, Ideal contends that IFIC did not need to hire
counsel to mount a defense against Modern's claims because
it could have relied on Ideal to defend these claims, even
though Ideal was unwilling or unable to meet IFIC's demand
for a reserve payment to cover IFIC's alleged liability to
Modern.
This court resolved a similar claim in Carroll v. National
Surety Co., 24 F.2d 268 (D.C. Cir. 1928). In that case, as
here, a construction contractor entered into an indemnity
agreement in order to induce a surety to provide a payment
bond for a construction project. Id. at 269. The relevant
language in the indemnity agreement in Carroll was virtually
identical to the relevant contract language at issue here. Id.
at 269-70. In Carroll, the surety was sued for payment
under the bond. The surety, believing that it had no defense
to the claims, settled the claims and then sought indemnifica-
tion for the settlement costs from the contractor pursuant to
their indemnity agreement. Id. The contractor disputed the
surety's indemnification claim, alleging, among other things,
that the surety was mistaken in its belief that it had no
defense to the subcontractors' claims and that, in fact, it had
a complete defense. Id. at 270. The contractor further
argued that, since it had notified the surety that it was willing
and able to mount a complete defense to the subcontractors'
claims, the surety's settlement of the claims was voluntary
and thus the contractor should not be required to indemnify
the settlement costs. Id. This court rejected the contrac-
tor's arguments, holding that the contractor's notification to
the surety that it was ready to furnish a complete defense to
the claims against the surety did not deprive the surety of the
right to compromise the claims where the indemnity agree-
ment authorized such a compromise. Under the parties'
indemnity agreement, the surety waived this right only on the
condition that the contractor deposit with the surety satisfac-
tory collateral for the payment of any judgment which might
be entered against it. Since the contractor had not tendered
such a deposit, the surety had acted within its rights under
the indemnity agreement to settle the claims brought against
it under the bond and to seek indemnity from its principal for
the same. Id. at 270-71. Similarly, Ideal's offer to mount a
complete defense to Modern's claims against IFIC did not
deprive IFIC of its right to mount its own defense against
these claims and then look to Ideal to indemnify its litigation
costs.
Ideal does not offer any persuasive arguments that IFIC's
decision to retain counsel to defend against Modern's suit was
unreasonable. Regardless of the purported strength or
weakness of Modern's claims against IFIC, no reasonable
fact-finder could find that IFIC's decision to hire separate
counsel to defend against Modern's claims was unreasonable,
in light of Ideal's inability or unwillingness to post satisfacto-
ry collateral to cover the amount for which Modern sought to
hold IFIC liable.
C. Reasonableness of the Fee Award
Although it was not unreasonable for IFIC to retain coun-
sel to defend against Modern's claims, that is not the end of
our inquiry. The second question at issue concerns the
reasonableness of the fee amount claimed by IFIC.
The District of Columbia Court of Appeals has long held,
and this court has acknowledged, that once a contractual
entitlement to attorney's fees has been ascertained, the deter-
mination of a reasonable fee award is for the trial court in
light of the relevant circumstances. Bender, 1997 WL 582901
at *3 (applying D.C. law). Where a claim for attorney's fees
arises from a private contract provision, such a claim does not
embody a right to trial by jury. McGuire v. Russell Miller,
Inc., 1 F.3d 1306, 1313-15 (2d Cir. 1993); Kudon v. f.m.e.
Corp., 547 A.2d 976, 978-80 (D.C. 1988). Rather, the reason-
ableness of an attorney's fees award is within the sound
discretion of the trial court and is reviewed only for abuse of
discretion. Singer v. Shannon & Luchs Co., 779 F.2d 69, 70
(D.C. Cir. 1985).
Even when attorney's fees are stipulated in an agreement,
the trial court may still inquire into the reasonableness of the
fees claimed under an indemnity agreement if those fees are
challenged. Columbia Plaza Corp. v. Security Nat'l Bank,
676 F.2d 780, 791 (D.C. Cir. 1982) (applying D.C. law). A
contractual provision stipulating how the amount of the attor-
ney's fees award shall be calculated "creates a rebuttable
presumption that the stipulated amount is reasonable."
Bender, 1997 WL 582901 at *5. However, if a stipulated fee
is properly challenged, "the district court [is] obliged under
District law to award only reasonable fees, with reasonable-
ness a determination to be made by the judge." Id. at *6.
IFIC points to two provisions of the parties' agreement
which, in its view, limits the standard of reasonableness.
First, IFIC notes that the agreement provides that the surety
may sometimes recover disbursements even when there is no
showing of "liability, necessity or expediency." See Indemni-
ty Agreement at p 2. The parties' agreement allows charges
only for "disbursements made ... in good faith," however.
Id. As for attorney's fees (as distinguished from disburse-
ments to settle claims), the parties agreed at oral argument
that disbursements for attorney's fees can only be found to be
in good faith if the legal work for which the charges are made
was reasonable and necessary to the surety's defense. Al-
though IFIC obviously has some discretion under the parties'
agreement to decide about the scope of the legal work for
which it contracts, any decisions to pay counsel must pass a
test of reasonableness in order to be in good faith. Indeed, if
good faith in this context did not include reasonableness, the
indemnitee would have no incentive to police its attorneys'
activities and charges, since it could simply dump any and all
charges billed onto the indemnitor. Such a result would
make no sense.
Second, IFIC argues that the indemnity agreement's provi-
sion that "vouchers or other evidence of any payments made
by the Surety shall be prima facie evidence of the fact and
amount of the liability to the Surety," Indemnity Agreement
at p 2, requires Ideal to indemnify it for the full amount of the
attorney billing statements submitted. This argument fails
upon assertion, for the contract provision relied on by IFIC
says only that "vouchers" shall be "prima facie evidence of
the fact and amount of liability to the Surety." This confirms
that something more than evidence of mere payment will be
required if a charge is challenged. Thus, this provision is
hardly conclusive with regard to the amount of a reasonable
fee award, but rather simply shifts to Ideal the burden of
proving that the fees claimed are excessive.
IFIC's redaction of portions of the billing statements with-
holds from Ideal information essential to Ideal's efforts to
meet this burden. The District Court attempted to resolve
this issue by awarding attorney's fees only for the unredacted
portions of the billing statements. This is not an adequate
solution. As a practical matter, the reasonableness of any
portion of the billing statement can only be determined by
examining all billing statements pertaining to the legal ser-
vices provided as a whole. The reasonableness of any one
entry on an attorney's billing statement is likely to be in-
formed by other charges incurred for the same general
service. For example, the court needs to determine: Has the
attorney over-charged for its services by expending a ridicu-
lous amount of total time on a simple research task? Did the
work undertaken encompass issues and tasks outside the
scope of the question being litigated? Was each task under-
taken a necessary and reasonable component of a reasonable
litigation strategy? In this case, the general service at issue
is IFIC's defense against Modern's claims and its related
cross-claim against Ideal. Ideal has the right to challenge
whether IFIC's disbursements for attorney's fees pertaining
to this general service as a whole were reasonable.
Ideal is entitled to discover the information it requires to
appraise the reasonableness of the amount of fees requested
by IFIC, including the nature and extent of the work done by
IFIC's counsel on various phases of the case, so that it may
present to the court any legitimate challenges to IFIC's
claim. See National Ass'n of Concerned Veterans v. Secre-
tary of Defense, 675 F.2d 1319, 1329 (D.C. Cir. 1982). IFIC
may opt to withhold billing statements under a claim of
attorney-client privilege; however, where IFIC's assertion of
a privilege results in the withholding of information necessary
to Ideal's defense to IFIC's claim against it, the privilege
must give way to Ideal's right to mount a defense. Under
the common-law doctrine of implied waiver, the attorney-
client privilege is waived when the client places otherwise
privileged matters in controversy. See 6 James W. Moore, et
al., Moore's Federal Practice s 26.49[5] (3d ed. 1997). This
court explained the rationale underlying the implied waiver
doctrine in In re Sealed Case, 676 F.2d 793 (D.C. Cir. 1982):
Implied waiver deals with an abuse of a privilege....
Where society has subordinated its interest in the search
for truth in favor of allowing certain information to
remain confidential, it need not allow that confidentiality
to be used as a tool for manipulation of the truth-seeking
process.... [A party asserting attorney-client privilege]
cannot be allowed, after disclosing as much as he pleases,
to withhold the remainder.
Id. at 807 (quotation omitted). This is particularly true
where, as here, a party partially discloses the allegedly
privileged information in support of its claim against another,
but then asserts the privilege as a basis for withholding from
its opponent the remainder of the information which is neces-
sary to defend against the claim. Accord United States v.
Western Elec. Co., 132 F.R.D. 1, 3 (D.D.C. 1990) (where client
placed counsel's actions at issue, client was precluded from
asserting work-product privilege as to any documents that
undermined client's position while at the same time producing
work-product that supported position); Byers v. Burleson,
100 F.R.D. 436, 440 (D.D.C. 1983) (attorney-client privilege
impliedly waived where privileged information is necessary to
resolve precise issue which party asserting privilege interject-
ed into the case); Wender v. United Services Auto. Ass'n, 434
A.2d 1372, 1374 (D.C. 1981) (by asserting its reliance on
advice of counsel as a material element of its defense, party
waived the attorney-client privilege with respect to all com-
munications to or from counsel concerning the transaction).
By claiming indemnification of attorney's fees from Ideal
and offering the billing statements as evidence of the same,
IFIC waived its attorney-client privilege with respect to the
redacted portions of the billing statements and any other
communications going to the reasonableness of the amount of
the fee award. See In re Sealed Case, 877 F.2d 976, 980-81
(D.C. Cir. 1989) ("[A] waiver of the privilege in an attorney-
client communication extends to all other communications
relating to the same subject matter.") (quotations omitted).
If IFIC opts to claim indemnity for attorney's fees from
Ideal, it must disclose the billing statements itemizing those
fees in its entirety, notwithstanding its claim that portions of
the billing statements are privileged. If IFIC's claim of
attorney-client privilege would otherwise have been valid, the
information could perhaps be examined by Ideal under seal,
but in camera review by the court alone is insufficient. Thus,
although "the nature and amount of proof necessary to deter-
mine reasonableness" is included within the trial court's scope
of discretion in determining a reasonable fee award, Bender,
1997 WL 582901 at *4, we hold that the District Court abused
this discretion in failing to require IFIC to disclose the
unredacted portions of the billing statements.
III. Conclusion
We affirm the District Court's judgment finding Ideal
liable, under the parties' indemnity agreement, for attorney's
fees incurred by IFIC in defending against Modern's claims,
but reverse and remand for determination of a reasonable fee
award. Although the reasonableness of the fee award is
ultimately within the District Court's discretion, Ideal must
first be allowed an opportunity to challenge the reasonable-
ness of the fees following full disclosure of the billing state-
ments. If IFIC continues to withhold the information, then
its claim for attorney's fees should be dismissed in its entire-
ty.
On remand, the fees denied by the District Court's July 18,
1996 order should be considered together with the fees at
issue in the July 1, 1996 order, since all of these fees were
allegedly incurred in pursuit of the same case. In addition,
the court must provide reasons to justify its determination of
a reasonable award so that a reviewing court can evaluate
whether it acted within its discretion. Singer, 779 F.2d at
70-71. Computation of a reasonable attorney's fee award
requires more than simply a report of the number of hours
spent and the hourly rate. It also requires the court's
assessment of, among other things, the time and labor rea-
sonably required by the case, the skill demanded by the
novelty or complexity of the issues, and the incentive effects
on future cases. Thus, for example, the court should exclude
charges billed for services which were unnecessary to IFIC's
defense against Modern's claims or its related indemnity
claim. See id. at 71 (district court must justify awarding fees
for work on issues that appellants argue are ineligible for
compensation).
So ordered.