The Reserves v. Crystal Properties.
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SUPERIOR COURT OF THE STATE OF DELAWARE RICHARD F. STOKES 1 THE CIRCLE, SUITE 2 SUSSEX COU NTY CO URTHOU SE GEORGET OWN, DE 19947 JUDGE March 25, 2008 Edward M . McNally, Esquire Morris James LLP 500 Delaware Avenue, Suite 1500 P.O. Box 2306 Wilmington, DE 19899-2306 Richard E. Berl, Jr., Esquire Smith O Donnell Feinberg & Berl LLP 406 South Bedford Street P.O. Box 588 Georgetown, DE 19947 Re: The Reserves v. Crystal Properties C.A. No. 05C-11-011-RFS Dear C ounsel: I have r eview ed the le tters on th e attorne y s fees re quest b y Plaintiff s coun sel. Plaintiffs seek $183,32 5.00 in fees and $1 ,597 in costs. Defend ants concede the ho urs and wo rk done o n the case a s outlined in th e affidav it submitted b y Mr. Mc Nally in support of an award. The objections focus on two points: (1) should the fees be reduced by the lack of success on certain of p laintiffs claim s, and (2) are the fees lim ited to twenty percent (20%) of the amount adjudged for principal and interest by 10 Del.C. § 3902? Independently, I have reviewed the factors which govern fee applications.1 In this regard, the litigation was not open and shut. The underlying purchase and sale agreement was com plex, and th e issues w ere conten tious. The situ ation called f or skilled cou nsel to devote a signif icant am ount of time an d to brin g the Su perior C ourt acti on to a c lose. Plaintiffs successfully obtained a Declaratory Judgment concerning Defendants respon sibilities f or addi tional in frastruc ture exp enses to gether w ith a dam ages aw ard. The legal issues were more challenging than usual given the interplay with the parallel Court of Chance ry suit. Durin g the tim e befo re and a fter suit, th e real es tate ma rket dec lined sig nifican tly. With this pressure, Plaintiffs counsel had to pursue the case diligently which precluded other fee g enerating w ork. The f ee rate is not c ontested, an d it is within the rate customarily charged for similar cases. The amount involved is significant both by establishing Defendants legal responsibility to be at forty-two and one quarter percent (42.25% ) and by enterin g a $603 ,959.12 jud gment. Although Plaintiffs achieved overall success, the results were mixed. Plaintiffs sought $1,198,130 in damages. 2 The award of $603,959.12 is fifty and four tenths percent (50.4%) of the total demand. A substantial part of the difference represents the worth of the la nd exc hange d by Plain tiffs inst ead of cash to reduce infrastru cture co sts. The value of the lots was determined to be one half of what Plaintiffs asserted, $750,000 rather than $1,500,000 . However, Plaintif fs time was n ot largel y occupi ed in this point. Also, it is difficult to distinguish pretrial efforts from later successful and unsuccessful 2 claims. All arise from the proverbial ball of wax and are intertwined. Plaintiffs did not succeed in their fraud claims, and offsets reduced the demand. These are discussed in the bench ruling of January 3, 2008. Upon consideration, the fee award will be reduced by thirty-five percen t (35%) ra ther than fif ty and four ten ths percent (5 0.4%) to $119,161.25.3 As require d, I have co nsidered th e reputation of Plaintiff s counsel w hich is excellent. The fee arrangement called for a lower than usual hourly rate. Plaintiffs reserved th e right to seek additional fe es from th e Court. T he client paid $93,155 .44 in fees, an d Plain tiffs co unsel is e ntitled to a prem ium giv en the ris ks of litig ation. Defendants do not challenge the basic arrangement which is reasonable under the circumstances. Concern ing Defe ndants ab ility to pay, it is uncertain if the limited liability compan ies will acqu ire this capac ity. They have no independ ent value b eyond the eq uity in the property. Certainly, the principals have personal assets which can satisfy the award. Presently, the property is subject to a mortgage foreclosure sale instituted by Defendants lender, Severn Savings Bank, FSB. While personal liability was not imposed, if the principals decide to avoid a Sheriff s Sale or to buy it back, then their personal assets would be pledged to secure the money for their limited liability companies and thereby save their investment. This would be so for either the Severn foreclosure or should Pla intiffs exec ute on their ju dgment. 3 The second question concerns whether or not 10 Del.C. § 3902 se ts a twenty percent (20%) limitation. Given my decision, that point is moot as the fee award is in a lesser amo unt. 4 Considering the foregoing, Plaintiffs are awarded $119,161.25 in fees, plus $1,597 in costs for a total amount of $120,758 for fees and costs.5 IT IS SO ORDERED. Very truly yours, Richard F. Stokes 4 ENDNOTES 1. The award of reasonable attorney s fees involves the exercise of judicial discretion, after consideration of the following factors: (1) time and labor required, the novelty and difficulty of questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment would preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the experience, reputation and the ability of the lawyers or lawyers performing the services; (8) whether the fee is fixed or contingent; (9) the ability to pay; and (10) whether counsel has received or expects to receive compensation from any other source. General Motors Corp. v. Cox, 304 A.2d 55, 57 (Del. 1973). 2. $2,835,810.70 was claimed as total expenses relating to Defendants property. Their 42.5% share would be $1,198,130. 3. The calculations are 183,325 x .35 = $64,163.75; $183,325 - $64,163.75 = $119,161.25. 4. The calculations are $603,959.12 x .20 = $120,792 in fees under the statute. 5. The costs would not be reduced as they are incurred fully in filing suit. 5
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