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GEOMC Co., Ltd. v. Competitive Technologies, Inc.

United States District Court, D. Connecticut

May 25, 2018

GEOMC CO., LTD., Plaintiff,
v.
CALMARE THERAPEUTICS, INC., Defendant.

          RULING AND ORDER ON MOTION FOR ATTORNEYS' FEES AND COSTS

          VICTOR A. BOLDEN, UNITED STATES DISTRICT JUDGE

         GEOMC Co., Ltd. (“Plaintiff”), has moved for attorneys' fees and costs against Calmare Therapeutics, Inc. (“Defendant” or “CTI”). Mot. for Fees, ECF No 219.

         For the reasons set forth below, the Court GRANTS the motion for attorneys' fees and costs and awards GEOMC $836, 442.05 in attorneys' fees and $5, 231.80 in costs.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         The Court assumes the parties' familiarity with the facts and procedural posture of this case, and reiterates the facts and procedural history to the extent necessary for this ruling. See Sept. 29 Ruling, ECF No. 212; Dec. 29 Ruling, ECF No. 238; Ruling on GEOMC's Mot. Summ. J. (“MSJ Ruling”), ECF No. 187.

         This case arises out of a dispute over payment of pain management devices (“devices”) that GEOMC provided to CTI. Sept. 29 Ruling at 2. The parties entered into several agreements that governed the payment plans for the devices. Id. at 3-4. CTI, however, fell behind on its payments and, by 2011, owed GEOMC $3, 858, 402. Id. at 4-5. CTI committed to a payment plan that required the company to pay monthly installments of $200, 000 in the remaining months of 2011 and $300, 000 beginning in 2012, but CTI again failed to pay those bills. Id. at 5.

         In May 2012, the parties entered into a Security Agreement that granted GEOMC a security interest in 273 devices located at CTI's warehouse in Stamford, Connecticut, and 120 devices located in CTI's warehouse in Charlotte, North Carolina, in consideration for the delivery of the devices. Sec. Agmt., ECF No. 171-5; see also Dec. 29 Ruling at 3; MSJ Ruling at 4-5. The Security Agreement also stated that, if CTI defaulted on its payments, CTI would be required to:

pay on demand all costs and expenses, including without limitation, reasonable attorneys' fees and expenses, incurred by or on behalf of [GEOMC], (a) in enforcing the Obligations and (b) in connection with the taking, holding, preparing for sale or other disposition, selling, managing, collecting or otherwise disposing of the Collateral.

Sec. Agmt. ¶ 9. The agreement also provided that CTI would pay:

any and all expenses incurred or paid by [GEOMC] in establishing, defending, protecting or enforcing its security interest or rights upon or under the Obligations or with respect to the Collateral or in collecting all amounts due, including, without limitation, all of [GEOMC's] reasonable attorneys' fees . . . .

Sec. Agmt. ¶ 13.

         In August 2014, GEOMC sued CTI for failing to pay for the devices. Compl., ECF No. 1; Dec. 29 Ruling at 3; Second Am. Compl., ECF No. 137 at 13-18. After the parties engaged in discovery and filed dispositive motions, the Court issued an Order granting summary judgment on GEOMC's breach of contract claim with respect to CTI's liability for failing to pay GEOMC for the devices sold after 2011, and denying summary judgment with respect to CTI's liability for any devices that had not yet been sold. MSJ Ruling at 1. The Court also granted GEOMC's motion on its claims for replevin, wrongful detention, conversion, and unjust enrichment. Id. Finally, the Court denied the motion with respect to the claim under the Connecticut Unfair Trade Practices Act. Id. The Court also left for trial any disputes as to the amount of damages owed under the contracts. Id.

         On September 25 and 26, 2017, the Court held a bench trial, after which the Court entered judgment in favor of GEOMC and against CTI. Dec. 29 Ruling at 5 (citing ECF Nos. 206-07, 212-13). On September 29, 2017, the Court awarded a judgment of $4, 673, 406.00 with interest amounting to $5, 678, 764.41, together totaling $10, 352, 170.41. Judgment at 2, ECF No. 213. The Court also ruled that, if by December 31, 2017, CTI had failed to satisfy the judgment GEOMC would be authorized to take possession of the devices. Id.; Dec. 29 Ruling at 5. The judgment also directed GEOMC to submit any application for fees and costs within thirty days. Judgment at 3.

         On October 30, 2017, GEOMC applied for attorneys' fees and expenses, claiming an entitlement to recover attorneys' fees under the parties' Security Agreement. Memo. in Support of Mot. for Fees (“Memo. for Fees”) at 1, ECF No. 219-1. GEOMC seeks $1, 264, 704.30, based on fees and costs paid to two sets of lawyers-Cohen & Gresser LLP, which represented GEOMC from the case's inception until September 2015, and Dentons U.S. LLP, which represented GEOMC during the latter part of the case. Id.

         On December 22, 2017, CTI filed an emergency motion to approve alternative security or, in the alternative, a motion to stay the judgment pending appeal. Dec. 29 Ruling at 6 (citing ECF Nos. 231-32). The Court ordered an expedited briefing schedule and, on December 29, 2017, denied CTI's motion to approve alternative security or, in the alternative, to stay the judgment pending appeal. Dec. 29 Ruling at 21. The Court also, however, granted a temporary stay until January 5, 2018, and instructed that if CTI moved with the Second Circuit to stay the judgment pending appeal, a temporary stay would remain in effect until the Second Circuit resolved the motion to stay. Id.

         On April 18, 2018, the Second Circuit granted CTI's request for a stay. ECF No. 239. The Court now addresses the pending motion for attorneys' fees.

         II. STANDARD OF REVIEW

         In a lawsuit based on diversity, “[s]tate law creates the substantive right to attorney's fees[.]” Banker v. Nighswander, Martin & Mitchell, 37 F.3d 866, 873 (2d Cir. 1994) (quoting Riordan v. Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 53 (2d Cir. 1992)). Connecticut's substantive law on attorneys' fees therefore will apply because GEOMC asserted state law contract claims against CTI. See Am. Compl. at 13-18 (asserting claims based on replevin, wrongful detention, conversion, the Connecticut Unfair Trade Practices Act, and unjust enrichment, each stemming from CTI's breach of the parties' contract).

         “Connecticut adheres to the ‘American rule' regarding attorney's fees”-that is, “in the absence of statutory or contractual authority to the contrary, a successful party is not entitled to recover attorney's fees or other ‘ordinary expenses and burdens of litigation . . . .'” Total Recycling Servs. of CT., Inc. v. Connecticut Oil Recycling Servs., LLC, 308 Conn. 213, 326 (2013) (quoting TES Franchising, LLC v. Feldman, 286 Conn. 132, 148 (2008)). A specific contract, however, may entitle a party to recover attorney's fees and costs. Id. at 327. In that case, the court must “apply the well established principle that ‘[a] contract must be construed to effectuate the intent of the parties, which is determined from [its] language . . . interpreted in the light of the situation of the parties and the circumstances connected with the transaction.'” Id. (quoting FCM Group, Inc. v. Miller, 300 Conn. 774, 811 (2011)).

         Even when a prevailing party is entitled to fees and costs under a contract, that party still must make an evidentiary showing that the application is reasonable. Id. at 327-28. To determine whether an application for attorneys' fees is reasonable, the court may consider its “general knowledge” of the proceedings held before it and of reasonable compensation rates, but that general knowledge may be defeated by countervailing evidence that the amount is unreasonable. Id. (citing Smith v. Snyder, 267 Conn. 456, 472 (2004) (“Even though a court may employ its own general knowledge in assessing the reasonableness of a claim for attorney's fees, we also have emphasized that ‘no award for an attorney's fee may be made when the evidence is insufficient.'”) (quoting Appliances, Inc. v. Yost, 186 Conn. 673, 680 (1982)).

         The Court will calculate a reasonable fee award by determining a reasonable hourly rate and multiplying that rate by the reasonable number of hours required for the litigation. See Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551 (2010)[1]; see also Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of Albany and Albany Bd. of Elections, 522 F.3d 182, 186 (2d Cir. 2008) (abandoning the term “lodestar” and instead instructing the court, “in exercising its considerable discretion, to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney's fees in setting a reasonable hourly rate” and then “use that reasonable hourly rate to calculate what can properly be termed the ‘presumptively reasonable fee'”).[2] The result of multiplying reasonable hours by reasonable fees “is ‘only presumptively reasonable'; it is still within the court's discretion to adjust the amount upward or downward based on the case-specific factors.” Tyco Healthcare Grp. LP v. Ethicon Endo-Surgery, Inc., No. 3:10-cv-60 (JBA), 2012 WL 4092515, at *2 (D. Conn. Sept. 17, 2012) (quoting Robinson v. City of New York, No. 05-cv-9545 (GEL), 2009 WL 3109846, at *3 (S.D.N.Y. Sept. 29, 2009)).

         III. DISCUSSION

         A. Entitlement to Fees

         GEOMC, having prevailed at trial, seeks to recover attorneys' fees and costs under paragraphs nine and thirteen of the Security Agreement governing the parties' relationship and under Federal Rule of Civil Procedure 54(d). Memo. for Fees at 3; Fed.R.Civ.P. 54(d). CTI argues that GEOMC is not entitled to recover attorneys' fees, first because the Security Agreement is invalid, and second because GEOMC was required to establish the amount of its fees at trial rather than in a post-trial motion. Opp. to Mot. for Fees at 1, ECF No. 230. The Court agrees with GEOMC.

         The Court has already determined that the Security Agreement is valid. MSJ Order at 25 (“[T]he undisputed facts demonstrate that the 2012 Security Agreement was valid and binding as to both GEOMC and CTI.”); see also Reply to Opp. to Mot. for Fees at 2 (“By executing the Security Agreement, CTI agreed to pay GEOMC's attorneys fees.”); Opp. to Mot. for Fees at 3 (acknowledging that “this Court has already concluded that GEOMC is entitled to an award of attorney's fees in this action, ” but arguing that the Court should reconsider that conclusion). Moreover, the Court instructed GEOMC to file a motion for fees and costs within thirty days of the entry of judgment. Judgment ¶ 6. And the valid Security Agreement requires CTI, in the event of default, to pay “all costs and expenses, ” including reasonable attorneys' fees. See Sec. Agmt. ¶¶ 9, 13.

         The Court's instructions and the law of the case therefore will apply, and the Court will consider GEOMC's application for fees and costs. See United States v. Carr, 557 F.3d 93, 102 (2d Cir. 2009) (“[W]hen a court has ruled on an issue that decision should generally be adhered to by that court in subsequent stages in the same ...


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