Bluecore, Inc. v NY & Co EComm LLC
Annotate this CaseDecided on June 6, 2023
Supreme Court, New York County
Bluecore, Inc., Plaintiff,
against
NY and Co EComm LLC and RTW RETAIL WINDS INC, Defendants.
Index No. 653977/2022
Kasowitz Benson Torres LLP, New York, NY (David H. Kupfer and Veronika Alayeva of counsel), for plaintiff.
Shapiro and Associates, PLLC, New York, NY (Rong Zhang of counsel), for defendants.
Gerald Lebovits, J.
This is an action on a contract for marketing-technology services. Plaintiff, Bluecore, Inc., alleges that defendant NY & Co. EComm LLC, agreed to pay plaintiff $1.125 million for nine months of marketing services, with payments to be made in three installments; and that defendant failed to make the final payment, for $407,689.58. Plaintiff brought this action in October 2022 to collect that sum, plus interest and attorney fees.
After plaintiff sued, the parties reached a settlement in December 2022. Under the settlement, if defendant paid plaintiff $200,000 by January 31, 2023, plaintiff would discontinue the action, and both parties would provide general releases. (See NYSCEF No. 9 at 1 ¶¶ 1-3.) The settlement also provided that if defendant did not timely pay that sum, plaintiff would be free to continue the action and seek the full amount of its claim. (Id. at ¶ 4 [c].) In that event, [*2]defendant would waive all defenses and the right to assert any counterclaims.[FN1] (Id. at ¶ 4 [d].) Following execution of the settlement in mid-December, counsel for plaintiff told in-house counsel for defendant that, "[f]or the record, you have an extension of all litigation deadlines until January 31, 2023." (NYSCEF No. 10.)
Despite defendant's awareness and acknowledgement of its obligation to pay the settlement amount by the deadline of January 31, 2023 (see NYSCEF No. 11 [emails between in-house counsel for defendant and counsel for plaintiff]), defendant did not pay. Nor did defendant then file an answer or a pre-answer motion to dismiss.
On February 24, 2023, plaintiff brought this motion, seeking a default judgment for the $407,689.58 contract balance (plus interest), along with $40,102.40 in attorney fees. Plaintiff made its motion returnable on March 17, 2023, and included a seven-day demand pursuant to CPLR 2214 (b). (See NYSCEF No. 4 at 1.) Defendant was therefore required to file opposition papers by March 10, 2023. Defendant did not do so. Instead, on March 16, the day before the return date, defendant moved under CPLR 2004 and CPLR 3012 (d) to compel plaintiff to accept its late-filed answer. (See NYSCEF No. 18.)
Plaintiff's default-judgment motion is granted in part and denied in part. Defendant's CPLR 3012 (d) cross-motion is denied.
DISCUSSION
A court considering a CPLR 3012 (d) application should weigh factors such as "the length of the delay, the excuse offered, the extent to which the delay was willful, the possibility of prejudice to adverse parties, and the potential merits of any defense." (Emigrant Bank v Rosabianca, 156 AD3d 468, 472-473 [1st Dept 2017]; accord Gordon Law Firm, P.C. v Premier DNA Corp., 205 AD3d 416, 417 [1st Dept 2022] [same].)
The delay here (the three weeks from the settlement-payment deadline to plaintiff's filing of the default-judgment motion) is not long. But this court is skeptical of defendant's proffered excuse for its default, namely that upon "execution of the Settlement Agreement, defendant believed the matter was resolved and therefore did not file any responsive papers." (NYSCEF No. 19 at ¶ 8.) The settlement expressly provides that if defendant does not pay the settlement by the deadline, plaintiff "may continue the Litigation against Defendant and seek the full amount of its claim (including Plaintiff's request for pre- and post-judgment interest, and attorney's fees)." (NYSCEF No. 9 at ¶ 4 [c].) Defendant does not explain how it nevertheless concluded that execution of the settlement agreement resolved the litigation whether or not defendant paid plaintiff the amount required by that agreement.
Even if this court were to accept that excuse defendant has no potentially meritorious defense. To the contrary, under the terms of the settlement agreement, defendant has "knowingly and expressly waive[d], release[d], and discharge[d] any and all defenses it has or may have against the Plaintiff's claims in the litigation." (Id. at ¶ 4 [d].) Given that waiver—which defendant's motion papers do not address—this court sees no basis on which to grant defendant's CPLR 3012 (d) cross-motion. And plaintiff's motion papers, including the affidavit of its [*3]controller (see NYSCEF No. 13), sufficiently establish proper service and the facts constituting the claim. Plaintiff is therefore entitled to a default judgment for the principal amount claimed of $407,689.58, plus interest.
As the prevailing party, plaintiff is entitled under the original contract and the settlement agreement to reasonable attorney fees. (See NYSCEF No. 14 at 11 § 16.3 [master services agreement]; NYSCEF No. 9 at ¶ 4 [c] [settlement agreement].) Although plaintiff has not contested the fees sought, defendant nevertheless bears the initial burden to establish that its claimed attorney fees are reasonable. (See e.g. MacMarty, Inc. v Scheller, 201 AD2d 706, 706 [2d Dept 1994].) Plaintiff claims a total of $49,586.40, based on 68.2 hours of time billed by three attorneys and a managing clerk—an average hourly rate of $727 an hour.[FN2] (See NYSCEF No. 12 [billing chart]; NYSCEF No. 28 at ¶ 41 [supplemental billing chart].) Plaintiff has not shown that it is entitled to the full amount claimed in fees.
A party seeking an attorney-fee award must support its claimed hourly rate (or rates) with evidence of the "customary fee charged for similar services by lawyers in the community with like experience and of comparable reputation to those by whom the prevailing party was represented." (Gamache v Steinhaus, 7 AD3d 525, 527 [2d Dept 2004] [emphasis added; internal quotation marks omitted].) In considering whether a given set of rates is reasonable, a court must take into account that a reasonable party typically "wishes to spend the minimum necessary to litigate the case effectively." (Simmons v New York City Transit Auth., 575 F3d 170, 174 [2d Cir 2009] [internal quotation marks omitted].)
Plaintiff's motion papers do not establish that its counsel's rates, as articulated in plaintiff's fee request, are the minimum necessary given the customary fee charged in New York City by comparable attorneys for similar services. Plaintiff states that it is requesting "the customary rates its counsel charges for complex commercial litigation in New York." (NYSCEF No. 5 at ¶ 36.) And it supports those rates by reference to examples of similar rates "charged by comparable law firms in the community." (Id. at ¶ 44.) This case, however, is not an example of complex commercial litigation. Rather, as alleged in an amended complaint that is only four double-spaced pages long (NYSCEF No. 3), plaintiff brought this action to collect a single unpaid installment owed under a single agreement that was 12 pages long with six pages of appendices. (See NYSCEF No. 14 [master services agreement]; NYSCEF No. 15 [scope of work agreement].) True, the amount of the installment payment ($407,689.58) is substantial. But the legal and factual issues implicated by plaintiff's efforts to collect that payment are simple and straightforward.
Plaintiff does not provide a basis to conclude that the customary fee charged by excellent New York lawyers in this type of action is at least $727/hour. This court concludes instead that plaintiff's reasonable attorney fee, for which defendant is responsible, is no more than $34,100, reflecting an average hourly rate of $500 an hour.
Accordingly, it is
ORDERED that plaintiff's motion for default judgment is granted in part and denied in part as set forth above, and plaintiff is awarded a judgment against defendant for (i) $407,689.58, [*4]with interest running from June 3, 2022; plus (ii) $34,100 in attorney fees; plus (iii) costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that defendant's cross-motion to compel plaintiff to accept defendant's untimely answer is denied; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on defendant and on the office of the County Clerk, which shall enter judgment accordingly.
DATE 6/6/2023 Footnotes
Footnote 1:The agreement also provided that it could be introduced in this action as evidence of defendant's waiver of defenses and counterclaims. (NYSCEF No. 9 at ¶ 4 [d].)
Footnote 2:That rate itself reflects a 20% discount by each biller of their typical hourly rates. (See NYSCEF No. 5 at ¶ 46 [affirmation of counsel].) Absent that 20% discount, the average rate across all billers on the matter would have been $908 an hour.
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