Executive Risk Indemnity, Inc. v. Fieldbridge Associates LLC

15-1808 Exec. Risk Indem., Inc. v. Fieldbridge Assocs. LLC UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 1 At a stated term of the United States Court of Appeals 2 for the Second Circuit, held at the Thurgood Marshall United 3 States Courthouse, 40 Foley Square, in the City of New York, 4 on the 14th day of March, two thousand sixteen. 5 6 PRESENT: DENNIS JACOBS, 7 DENNY CHIN, 8 CHRISTOPHER F. DRONEY, 9 Circuit Judges. 10 11 - - - - - - - - - - - - - - - - - - - -X 12 EXECUTIVE RISK INDEMNITY, INC., as 13 subrogee of Andrews International, 14 Inc. and Copstat Security, LLC, 15 Plaintiffs-Appellants, 16 17 -v.- 15-1808 18 19 FIELDBRIDGE ASSOCIATES LLC, 20 Defendant-Appellee.1 21 - - - - - - - - - - - - - - - - - - - -X 22 1 The Clerk of the Court is directed to amend the caption as above. 1 1 FOR APPELLANTS: Andrew I. Hamelsky, White and 2 Williams LLP, New York, New York. 3 4 FOR APPELLEE: Dara L. Rosenbaum, Rosenbaum & 5 Taylor, P.C., White Plains, New 6 York. 7 8 Appeal from two orders of the United States District 9 Court for the Southern District of New York (Fox, M.J.). 10 11 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED 12 AND DECREED that the May 29, 2015, final order of the 13 district court be AFFIRMED. 14 15 Executive Risk Indemnity Inc. (“Executive Risk”) as 16 subrogee of its insureds Andrews International, Inc. and 17 Copstat Security, LLC appeals from two orders of the United 18 States District Court for the Southern District of New York 19 (Fox, M.J.).2 At issue are the amount of attorneys’ fees 20 expended by Executive Risk in the defense of the underlying 21 tort litigation, and whether Executive Risk can recover fees 22 incurred in this subrogation action. We assume the parties’ 23 familiarity with the underlying facts, the procedural 24 history, and the issues presented for review. 25 26 1. The district court declined to award attorneys’ 27 fees for work performed in the underlying tort action by any 28 person other than the main partner, Barry Jacobs. Under New 29 York law, “[a]n award of attorneys’ fees pursuant to [] a 30 contractual provision may only be enforced to the extent 31 that the amount is reasonable and warranted for the services 32 actually rendered.” Kamco Supply Corp. v. Annex Contracting 33 Inc., 689 N.Y.S.2d 189, 190 (App. Div. 1999) (citing, e.g., 34 In re First Nat’l Bank of E. Islip v. Brower, 368 N.E.2d 35 1240 (N.Y. 1977)); see also F.H. Krear & Co. v. Nineteen 36 Named Trustees, 810 F.2d 1250, 1263 (2d Cir. 1987) (fees 37 awarded pursuant to contract must be “not unreasonable”). 38 “A variety of factors informs the court’s determination of 39 whether a requested amount of attorneys’ fees is reasonable 2 We have appellate jurisdiction even though the district court did not enter a separate final judgment because the May 29, 2015, order “clearly represents a final decision and the appellees do not object to the taking of an appeal.” Selletti v. Carey, 173 F.3d 104, 109-10 (2d Cir. 1999). 2 1 or unreasonable, including ‘the difficulty of the questions 2 involved; the skill required to handle the problem; the time 3 and labor required; the lawyer’s experience, ability and 4 reputation; the customary fee charged by the Bar for similar 5 services; and the amount involved.’” F.H. Krear, 810 F.2d 6 at 1263 (quoting In re Estate of Schaich, 391 N.Y.S.2d 135, 7 136 (App. Div. 1977)). With the exception of Mr. Jacobs, 8 Executive Risk failed to provide the district court with 9 sufficient information as to one factor that bears on 10 reasonableness: the lawyer’s experience, ability and 11 reputation. New York courts put the burden of establishing 12 fees’ reasonableness on the party seeking fees. See, e.g., 13 Potts v. Hines, 534 N.Y.S.2d 507, 508 (App. Div. 1988); 14 Marine Midland Bank v. Roberts, 424 N.Y.S.2d 671, 673 (Civ. 15 Ct. 1980). Since Executive Risk did not carry that burden, 16 the court did not abuse its discretion in determining that 17 it could not find the requested fees of lawyers (and 18 paralegals) other than Mr. Jacobs to be reasonable and 19 declining to award any fees for their services. See 20 SO/Bluestar, LLC v. Canarsie Hotel Corp., 825 N.Y.S.2d 80, 21 82 (App. Div. 2006) (reversing award of attorneys’ fees 22 where the trial court did not “possess sufficient 23 information upon which to make an informed assessment of the 24 reasonable value of the legal services rendered” (quoting 25 Bankers Fed. Sav. Bank FSB v. Off W. Broadway Developers, 26 638 N.Y.S.2d 72, 74 (App. Div. 1996))); Potts, 534 N.Y.S.2d 27 at 508 (affirming denial of fees because former attorney 28 “failed to satisfy his burden of establishing the value of 29 the legal services performed”). 30 31 When a New York State trial court lacks sufficient 32 information from which to determine whether fees requested 33 pursuant to a contractual provision are reasonable, the 34 court must hold a hearing (or otherwise obtain additional 35 information), rather than rejecting that portion of the 36 request outright. See SO/Bluestar, 825 N.Y.S.2d at 82; 37 Bankers Fed., 638 N.Y.S.2d at 74-75; Cmty. Sav. Bank v. 38 Shaad, 482 N.Y.S.2d 162, 163 (App. Div. 1984). However, 39 that procedural rule does not apply in this diversity 40 action. See Gasperini v. Ctr. for Humanities, 518 U.S. 415, 41 427 (1996) (“Under the Erie doctrine, federal courts sitting 42 in diversity apply state substantive law and federal 43 procedural law.”); Pls.-Appellants’ Br. at 25 (“[U]nder New 44 York law, if the district court could not ascertain the 45 reasonable fees to be awarded after receiving Executive 46 Risk’s submission, the proper procedure was to set the 47 matter down for a hearing.” (emphasis added)). Since this 3 1 state procedural rule does not apply, acceptance of 2 additional evidentiary submissions in connection with 3 Executive Risk’s motion for reconsideration was a matter 4 within the district court’s discretion. Williams v. 5 Citigroup, Inc., 659 F.3d 208, 214 n.3 (2d Cir. 2011) (per 6 curiam). It did not abuse discretion in declining to accept 7 and consider these materials. 8 9 2. Executive Risk argues that the district court 10 erred in declining to award attorneys’ fees incurred in 11 prosecuting this subrogation action, because contemporaneous 12 time records are not required under New York law. We need 13 not decide whether Executive Risk’s submission was 14 sufficient in this respect because New York law does not 15 authorize an award of attorneys’ fees incurred in an action 16 to recover on a contract, unless provided for by the 17 contract. See Doyle v. Allstate Ins., 136 N.E.2d 484, 487 18 (N.Y. 1956); Swiss Credit Bank v. Int’l Bank, Ltd., 200 19 N.Y.S.2d 828, 830-31 (Sup. Ct. 1960).3 And “[u]nder New 20 York law, ‘the court should not infer a party’s intention’ 21 to provide counsel fees as damages for a breach of contract 22 ‘unless the intention to do so is unmistakably clear’ from 23 the language of the contract.” Oscar Gruss & Sons, Inc. v. 24 Hollander, 337 F.3d 186, 199 (2d Cir. 2003) (quoting Hooper 25 Assocs., Ltd. v. AGS Computs., Inc., 548 N.E.2d 903, 905 26 (N.Y. 1989)); see also Swiss Credit Bank, 200 N.Y.S.2d at 27 830-31 (“A general agreement for the payment of counsel fees 28 does not generally include counsel fees in the suit to 29 collect those fees.” (citing Doyle, 136 N.E.2d 484)). The 30 contract between Fieldbridge and Executive Risk’s insureds 31 does not clearly provide for recovery of attorneys’ fees 32 incurred in an action to collect on a breach of the 33 contract. 34 35 36 37 38 3 Executive Risk attempts to read Johnson v. General Mutual Insurance Co., 246 N.E.2d 713 (N.Y. 1969), to hold otherwise. However, the New York Court of Appeals has been exceedingly clear that legal fees incurred in an action to recover legal fees are noncompensable. See Chapel v. Mitchell, 642 N.E.2d 1082, 1083-84 (N.Y. 1994) (discussing Johnson, 246 N.E.2d 713, and Doyle, 136 N.E.2d 484). 4 1 For the foregoing reasons, and finding no merit in 2 Executive Risk’s other arguments, we hereby AFFIRM the May 3 29, 2015, final order of the district court. 4 5 FOR THE COURT: 6 CATHERINE O’HAGAN WOLFE, CLERK 7 5