Opinion
3:22-cv-01251-YY
03-28-2023
DALE BARBA, Plaintiff, v. LAWRENCE BRIMFIELD, Defendant.
FINDINGS AND RECOMMENDATIONS
Youlee Yim You United States Magistrate Judge
FINDINGS
Plaintiff Dale Barba has brought suit against defendant Lawrence Brimfield, alleging claims for breach of contract, unjust enrichment, breach of fiduciary duty, fraud/negligent misrepresentation, and accounting. Compl., ECF 1. Defendant has not filed an Answer or otherwise appeared in this matter. On November 29, 2022, plaintiff filed a motion for entry of default against defendant (ECF 7), and the Clerk of the Court entered default on December 14, 2022. ECF 9. Plaintiff has now filed a motion for default judgment (ECF 11), which should be GRANTED, and a motion for attorney's fees and costs (ECF 16), which should be GRANTED IN PART for the reasons explained below.
I. Subject Matter Jurisdiction
Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. ofAm., 511 U.S. 375, 377 (1994). “It is to be presumed that a cause lies outside this limited jurisdiction, . . . and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Id. “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” FED. R. CIV. P. 12(H)(3); see also Fiedler v. Clark, 714 F.2d 77, 78-79 (9th Cir. 1983) (recognizing that the court may sua sponte dismiss an action if it finds that subject matter jurisdiction is lacking).
This court has subject-matter jurisdiction over this case under 28 U.S.C. § 1332(a) because there is complete diversity of citizenship among the parties-plaintiff is a citizen of California and defendant is a citizen of Oregon-and the amount in controversy exceeds $75,000, exclusive of interest and costs.
II. Personal Jurisdiction
A district court “has an affirmative duty” to determine whether it has personal jurisdiction over a defendant before entering a default judgment. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). “A judgment entered without personal jurisdiction over the parties is void.” Id.
“Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.” Picot, 780 F.3d at 1211 (quoting Daimler AG v. Bauman, 571 U.S. 117, 125 (2014)); see FED. R. CIV. P. 4(k)(1)(A). Oregon Rule of Civil Procedure (“ORCP”) 4 L confers jurisdiction “in any action where prosecution of the action against a defendant in this state is not inconsistent with the Constitution of this state or the Constitution of the United States.” Thus, Oregon extends jurisdiction to the limits of due process under the United States Constitution. Swank v. Terex Utilities, Inc., 274 Or.App. 47, 57 (2015).
Constitutional due process requires that the defendant “have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (citations omitted). “In giving content to that formulation, the Court has long focused on the nature and extent of ‘the defendant's relationship to the forum State.'” Ford Motor Co. v. Montana EighthJud. Dist. Ct., 141 S.Ct. 1017, 1024 (2021) (quoting Bristol-Myers Squibb Co. v. Superior Ct. ofCalifornia, San Francisco Cty., 137 S.Ct. 1773, 1779 (2017)). That focus led to the recognition of two kinds of personal jurisdiction: general jurisdiction and specific jurisdiction. Id. (citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). General jurisdiction extends to “any and all claims” brought against a defendant, but a court may exercise general jurisdiction only when a defendant is “essentially at home” in the forum state. FordMotor, 141 S.Ct. at 1024 (citation omitted). Individuals are subject to general jurisdiction in their place of domicile. Id. (citing Daimler, 571 U.S. at 137); Milliken v. Meyer, 311 U.S. 457, 463 (1940) (“The state which accords him privileges and affords protection to him and his property by virtue of his domicile may also exact reciprocal duties.”).
Defendant resides in Oregon; therefore, this court has personal jurisdiction over defendant. For the same reason, venue is also proper in this district. 28 U.S.C.A. § 1391(b)(1) (“A civil action may be brought in . . . a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located[.]”).
III. Service of Process
Before entering a default judgment, the court must “assess the adequacy of the service of process on the party against whom default is requested.” Bank of the West v. RMA Lumber Inc., No. C 07-06469 JSW, 2008 WL 2474650, at *2 (N.D. Cal. June 17, 2008). “[I]n the absence of proper service of process, the district court has no power to render any judgment against the defendant's person or property unless the defendant has . . . waived the lack of process.” S.E.C.v. Ross, 504 F.3d 1130, 1138-39 (9th Cir. 2007).
Under Federal Rule of Civil Procedure 4(e), service on an individual within this judicial district may be accomplished by following state law or “(A) delivering a copy of the summons and of the complaint to the individual personally; (B) leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there; or (C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.”
Plaintiff made seven attempts to serve defendant at his residence, 3798 N Melrose Drive, where a visitor confirmed plaintiff lived. Cody Decl. ¶ 3, ECF 5. Plaintiff also attempted to serve defendant at another business that defendant owns at 4525 SE Division Street. Id., ¶¶ 4-5. Additionally, pursuant to ORCP 7 D(3)(a)(i), plaintiff sent a summons and copy of the complaint via certified mail, return receipt requested, to both plaintiff's residence and business addresses, but it was unclear whether defendant was the person who had signed for them. Id. ¶ 6. Therefore, the court granted plaintiff's request for alternative service by email, to be sent in conjunction with certified mail, return receipt requested, to defendant's last-known mailing address. Order, ECF 6.
Pursuant to the court's order, plaintiff's counsel served defendant via email on November 1, 2022, including the summons and complaint as attachments, as well as the pretrial scheduling order and order granting alternative service. Cody Decl ¶ 4, ECF 8. Defendant responded to the email later that same date, confirming that his address was 3798 N Melrose Drive. Id. ¶ 5, id., Ex. B, ECF 8-2. The following day, plaintiff's counsel mailed copies of the documents described above, via certified mail, return receipt requested, to the Melrose Drive address, as well as the Division Street address.
Under these circumstances, plaintiff has established that the service of process in this case is adequate.
IV. Damages
Upon entry of default, the factual allegations in the complaint are taken as true, except for the allegations relating to damages. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). A plaintiff must provide proof for the damages sought. See TWC Int'l, Inc. v. Greene, 889 F.2d 1096 (9th Cir. 1989) (affirming district court's determination of damages based on written affidavit and oral testimony).
Plaintiff moves for default judgment only on his breach of contract claim. Mot. 1, ECF 11. Thus, it is not necessary to assess damages for plaintiff's other claims, such as fraud/negligent misrepresentation.
“To state a claim for breach of contract, plaintiff must allege the existence of a contract, its relevant terms, plaintiff's full performance and lack of breach and defendant's breach resulting in damage to plaintiff.” Slover v. Oregon State Bd. of Clinical Soc. Workers, 144 Or.App. 565, 570 (1996) (citation and quotation marks omitted). Plaintiff alleges his breach of contract claim as follows:
30. By his agreement to become a co-owner of Lines of Man, Brimfield entered a binding and enforceable contract with Barba to, among other things:
a. Contribute to the business in equal measure with Barba;
b. Fairly and honestly account for his dealings with the business, including the value of his contributions to it, as well as the nature and extent of his use of its assets;
c. Devote his best efforts to promoting the success of the business; and,
d. Deal fairly, honestly, and transparently with Barba in all matters associated with the business.
31. Brimfield has materially breached these obligations by his refusal to honestly account for his dealings with Lines of Man; his improper use of company resources for his personal gain; his failure to contribute goods in equal measure with Barba's contribution; and his refusal to provide Barba with even basic information about Lines of Man or its affairs.
32. Barba has fully performed all of his material obligations under the parties' contract, including by contributing more than $100,000 in capital.
33. Brimfield's breach of the parties' contract has directly and proximately caused Barba injury, and he is consequently liable to Barba for damages in an amount to be proven at trial.Compl. ¶¶ 30-33, ECF 1.
Plaintiff has sufficiently established that he is entitled to $100,000 in damages on his breach of contract claim. In 2019, plaintiff and defendant agreed to be “equal, 50% owners” in Lines of Man, LLC, a business created for purposes of opening a wine bar in Portland. Compl. ¶¶ 9-10, ECF 1; see also Barba Decl., Ex. A, ECF 18-1 (“Operating Agreement of Lines of Man LLC”). Plaintiff agreed to contribute $100,000 in cash, and defendant-who claimed to be a well-connected expert in the wine industry-agreed to match plaintiff's capital contribution with an equivalent value of his labor and wine inventory. Barba Decl. ¶ 3, ECF 12. Plaintiff performed under the contract by making the $100,000 capital contribution, as evidenced by bank statements he has produced in support of his motion for default judgment. Id., Exs. A & B, ECF 12-1, 12-2. Defendant, however, did not perform as he had promised. Defendant claimed he had contributed $50,000 in wine to the company, but the wine he contributed was worth less than $7,000. Compl. ¶¶ 11, 15, ECF 1. Defendant also made unauthorized “guaranteed payments” to himself for personal expenses, used the company's assets for his separate business, which was a competing wine bar, and concealed from plaintiff records necessary to conduct a complete accounting of the company's finances and the value of the parties' respective contributions to the business. Barba Decl. ¶ 8, ECF 12. Plaintiff has sufficiently proven that defendant's breach of the contract resulted in $100,000 in damages.
Plaintiff also seeks prejudgment interest at 9%. Mot. Default J. 5, ECF 11. The purpose of prejudgment interest is to compensate a party for its loss. Wilson v. Smurfit Newsprint Corp., 197 Or.App. 648, 674 n.9 (2005); Osterneck v. Ernst & Whinney, 489 U.S. 169, 175 (1989) (observing that prejudgment interest is an element of the plaintiff's “complete compensation”). “State law generally governs awards of prejudgment interest in diversity actions[.]” Oak HarborFreight Lines, Inc. v. Sears Roebuck, & Co., 513 F.3d 949, 961 (9th Cir. 2008). Oregon law authorizes an award of prejudgment interest on “all moneys after they become due.” O.R.S. 82.010(1)(a). “Whether a court can award prejudgment interest ‘usually reduces to whether the amount due was readily ascertainable.'” Patton v. Mut. of Enumclaw Ins. Co., 296 Or.App. 266, 272 (2019) (quoting Strawn v. Farmers Ins. Co. of Oregon, 353 Or. 210, 240 (2013)). “That generally means that prejudgment interest is only awarded when ‘the exact amount is ascertainable or easily ascertainable by simple computation or by reference to generally recognized standards . . . and where the time from which interest should run is also easily ascertainable.'” Id. (quoting Strader v. Grange Mutual Ins. Co., 179 Or.App. 329, 338, rev. den., 334 Or. 190 (2002)) (alteration in original). “[I]t is well settled that, even though damages are not ascertainable until issues of fact have been decided by the jury, prejudgment interest is proper.” Strader, 179 Or.App. at 339 (simplified).
Here, the exact amount due to plaintiff-$100,000-is readily ascertainable from the terms of the contract that defendant breached. See Strader, 179 Or.App. at 340 (upholding prejudgment award in breach of contract case). The date on which the interest began to accrue is also readily ascertainable. Plaintiff made a $10,000 contribution on September 12, 2019, and a $90,000 contribution on September 20, 2019. Therefore, plaintiff is entitled to prejudgment interest from those dates.
As for the applicable interest rate, a federal court sitting in a diversity case applies the interest rate pursuant state law. E.J. Bartells Co. v. Sw. Marine Inc., 70 F.3d 1277 (9th Cir. 1995). Under O.R.S. 82.010(2), plaintiff is entitled to prejudgment interest at 9%. The daily interest rate for the $10,000 that plaintiff paid on September 12, 2019, is $2.47 (($10,000 x .09)/365). See Cody Decl., ECF 15. The daily interest rate for the $90,000 that plaintiff paid on September 20, 2019, is $22.19 (($90,000 x .09)/365). Id. Thus, if calculated from the date of these findings and recommendations, for example, the prejudgment interest it would be $31,042.02 ((1266 days x $2.47) + (1258 days x $22.19)).
V. Eitel Analysis
Even where a plaintiff has established damages, the district court's decision whether to enter a default judgment remains a discretionary one. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In exercising its discretion, the court considers the following factors under Eitelv. McCool, 782 F.2d 1470 (9th Cir. 1986):
(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.Id. at 1471-72. The Eitel factors weigh heavily in favor of default judgment, as discussed below.
A. Factor One: Possibility of Prejudice to Plaintiff
In assessing the possibility of prejudice, courts have considered whether a plaintiff would be without recourse for recovery if the motion for default judgment is not granted. See, e.g., J &J Sports Prods., Inc. v. Cardoze, No. C 09-05683 WHA, 2010 WL 2757106, at *5 (N.D. Cal. July 9, 2010); PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). Here, plaintiff has no recourse for recovery other than to file this action.
B. Factors Two and Three: Merits of Claims and Sufficiency of Complaint
Again, upon entry of default, this court must take the well-pleaded factual allegations of the complaint as true. See Geddes, 559 F.2d at 560 (“The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.”); Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (“In reviewing a default judgment, this court must take the well-pleaded factual allegations of [the complaint] as true.”).
Plaintiff's well-pleaded complaint and uncontested declaration allege facts establishing the merits of his claim for breach of contract, as discussed above.
C. Fourth Factor: Sum of Money at Stake
Under the fourth Eitel factor, “the court must consider the amount of money at stake in relation to the seriousness of [d]efendant's conduct.” PepsiCo, 238 F.Supp.2d at 1176-77; see also J & J Sports, 2010 WL 2757106, at *5 (“a large sum of money at stake would disfavor default damages,” such as a request for $114,200 in damages); Board of Trustees of the SheetMetal Workers v. Vigil, No. C 07-01508 WHA, 2007 WL 3239281, at *2 (N.D. Cal. Nov. 1, 2007) (“[D]efault judgment is disfavored if there were a large sum of money involved.”).
Here, while the sum of money sought is not small, the amount of damages is well supported by the evidence that plaintiff has presented.
D. Fifth Factor: Possibility of Dispute Over Material Facts
In addressing the fifth factor, the court considers the possibility that there is a dispute concerning material facts. “The fifth factor . . . weighs in favor of default judgment when the claims in the complaint are well-pleaded.” Joe Hand Prods. v. Holmes, No. 2:12-cv-00535-SU, 2015 WL 5144297, at *7 (D. Or. Aug. 31, 2015). “Because all allegations in a well-pleaded complaint are taken as true after the court clerk enters default judgment, there is no likelihood that any genuine issue of material fact exists.” Elektra Entm't Grp., Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005).
As noted, plaintiff's complaint is well-pleaded. Additionally, plaintiff has submitted exhibits showing he made the $100,000 capital contribution. Thus, while it is possible there is a dispute regarding material facts, the possibility is low.
E. Sixth Factor: Excusable Neglect
The sixth factor pertains to the possibility that the default resulted from excusable neglect. “This factor favors default judgment where the defendant has been properly served or the plaintiff demonstrates that the defendant is aware of the action.” Wecosign, Inc. v. IFG Holdings, Inc., 845 F.Supp.2d 1072, 1082 (C.D. Cal. Jan. 23, 2012). As noted, defendant was properly served and even responded to plaintiff's counsel's email by confirming his address. Nevertheless, he failed to appear. There is no indication of excusable neglect.
F. Policy Favoring Decision on the Merits
Factor seven is “the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits,” specifically the policy that “[c]ases should be decided upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, “this policy, standing alone, is not dispositive, especially where a defendant fails to appear or defend itself in an action.” Joe Hand Promotions, Inc. v. Machuca, No. 2:13-cv-1228 GEB KJN, 2014 WL 1330749, at *6 (E.D. Cal. Mar. 31, 2014). Where a defendant has failed to answer a complaint, this “makes a decision on the merits impractical, if not impossible.” PepsiCo, 238 F.Supp.2d at 1177. “[T]he mere existence of Fed.R.Civ.P. 55(b) indicates that ‘this preference, standing alone, is not dispositive.'” Id. “Thus, the preference to decide cases on the merits does not preclude a court from granting default judgment.” Id. (internal quotation omitted).
Here, a decision on the merits is impossible because defendant has failed to appear, plead, or defend this action. But, as noted, that factor is not dispositive. All of the other Eitel factors support the court's exercise of discretion in entering a default judgment.
VI. Motion for Attorney's Fees and Costs
A. Relevant Law Regarding Attorney's Fees and Plaintiff's Burden
“The customary method of determining fees . . . is known as the lodestar method.” Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir. 1996), opinion amended on denial of reh'g, 108 F.3d 981 (9th Cir. 1997); see also Perdue v. Kenny A., 559 U.S. 542, 551 (2010) (holding “the lodestar approach” is “the guiding light” when determining reasonable fees). The “lodestar” is calculated by multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate. McGrath v. Cnty. of Nevada, 67 F.3d 248, 252 (9th Cir. 1995). The court excludes hours “that are excessive, redundant, or otherwise unnecessary.” McCown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009) (quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)).
“[T]here is a strong presumption that the lodestar is sufficient.” Perdue, 559 U.S. at 556.
The court may “assess whether the presumptively reasonable lodestar figure should be adjusted on the basis of Kerr factors not already subsumed in the initial calculation.” McGrath, 67 F.3d 248 at 252: The Kerr factors are:
(1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) any time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975), abrogated on other grounds, City of Burlington v. Dague, 505 U.S. 557 (1992).
Plaintiff, as the party seeking fees, bears “the burden of documenting the appropriate hours expended in the litigation, and [is] required to submit evidence in support of those hours worked.” United Steelworkers of Am. v. Ret. Income Plan For Hourly-rated Emps. Of Asarco,Inc., 512 F.3d 555, 565 (9th Cir. 2008) (quotations omitted). In determining the “reasonable hourly rate,” the court looks to the “prevailing market rates in the relevant community.” Gonzalez v. City of Maywood, 729 F.3d 1196, 1205 (9th Cir. 2013) (citations and internal quotation marks omitted). The relevant community “is one in which the district court sits.” Davis v. Mason County, 927 F.2d 1473, 1488 (9th Cir. 1991). This court uses the most recent Oregon State Bar Economic Survey as a benchmark for comparing an attorney's billable rate with the fee customarily charged in the locality. Precision Seed Cleaners v. Country Mut. Ins.Co., 976 F.Supp.2d 1228, 1244 (D. Or. 2013); see also Copeland-Turner v. Wells Fargo Bank,N.A., No. 11-cv-37-HZ, 2012 WL 92957, at *2 (D. Or. Jan. 11, 2012) (same). The Economic Survey sets forth rates charged by Oregon attorneys in the relevant year, including rates specific to communities such as the Portland area.
B. Requested Attorney's Fees
Plaintiff has established he is entitled to attorney's fees under Section 31.12 of the Operating Agreement of Lines of Man that he and defendant signed. See Barba Decl. ¶¶ 3-4, ECF 18; Id. Ex. A, ECF 18-1. Section 31.12 provides:
If any arbitration, action, suit, or proceeding is instituted to interpret, enforce, or rescind this Agreement, or otherwise in connection with the subject matter of this Agreement, including but not limited to any proceeding brought under the United States Bankruptcy Code, the prevailing party on a claim will be entitled to recover with respect to the claim, in addition to any other relief awarded, the prevailing party's reasonable attorney's fees and other fees, costs, and expenses of every kind, including but not limited to the costs and disbursements specified in ORCP 68 A(2), incurred in connection with the arbitration, action, suit, or proceeding, any appeal or petition for review, the collection of any award, or the enforcement of any order, as determined by the arbitrator or court.Barba Decl., Ex. A, ECF 18-1, at 35.
Plaintiff is unable to produce a signed copy of the Operating Agreement and believes it is in defendant's possession. Barba Decl. ¶ 3, ECF 18. However, he attests that the copy he has submitted with his motion comports in all material respects to the document he and defendant signed. Id. ¶ 4.
Plaintiff has brought this suit to interpret and enforce the terms of the Operating Agreement. In his breach of contract claim, plaintiff alleges, among other things, that defendant failed to contribute equally to the business as promised, took “guaranteed payments” from the company, used company assets for personal gain, and failed to honestly account for his contributions to the business and the nature and extent of the use of its assets. These allegations relate to the terms of the Operating Agreement, which provides that majority consent is required for the compensation of a member (Section 4.4(e)) and the consent of all members is required to sell or dispose of substantially all of the company's property (Section 4.3(d)). The Operating Agreement also has a fiduciary duties clause, which requires a member to account to the company (Section 4.13(b)(1)), refrain from dealing in a manner adverse to the company (Section 4.13(b)(2)), refrain from competing with the company (Section 4.13(b)(3)), and refrain from engaging in intentional misconduct in conducting and winding up the business (Section 4.13(c)). Because plaintiff is the prevailing party in this suit, which he has brought to interpret and enforce the terms of the Operating Agreement, he is entitled to reasonable attorney's fees “incurred in connection with the . . . suit.”
In support of the motion, plaintiff has submitted detailed billing records showing attorneys Phillip Haberthur and Nicholas Cody billed the following hours at the following rates:
Professional
Hours
Race
Total
Phillip Habertluir. Attorney
25.9
$395.00(2022)
$10,230.50
Phillip Habertluir. Aitoray
.4
$425.00 (2023)
$170.00
Nicholas Cody. Attorney
15.4
$280.00(2022)
$4,312.00
Nicholas Cody. Attorney
2.2
$325.00 (2023)
$715.00
Plaintiff also claims these attorneys spent the following time preparing the motion for attorney's fees:
Professional
Hours
Rate
Total
Phillip Habertluir. Attorney
0.2
$425.00 (2023)
$85.00
Nicholas Cody, Attorney
6.4
$325 00(2023)
$2,080.00
Haberthur is admitted in Oregon and Washington and practices out of a Vancouver law firm whose attorneys regularly appear in this district. He has been a licensed attorney for 17 years. His requested rates fall within the range for Portland-area attorneys with his years of experience and area of practice (business/corporate litigation), as reflected in the 2017 Economic Survey. OREGON STATE BAR, 2017 ECONOMIC SURVEY 39 tbl. 36, 40 tbl. 37 (2017).
https://www.osbar.org/docs/resources/Econsurveys/17EconomicSurvey.pdf.
Cody is a third-year associate at Haberthur's firm. His $280 rate for 2022 falls within the range for attorneys with his level of experience. Id., 38 tbl. 36. His new $325 rate does not fall within that range; however, it is important to observe that the 2017 Economic Survey was published in December 2017, over five years ago. Thus, while the $325 rate is $20 higher than the top of the range, it is nevertheless reasonable, considering rates have undoubtedly increased since 2017.
Plaintiff also seeks attorney's fees for services performed by Michael Gottlieb, an attorney in Lake Oswego. Barba Decl. ¶ 6, ECF 18. Gottlieb was admitted to practice in 2003, and has a practice that “focuses on business law, corporate counsel, business start-ups, business purchases and sales, entrepreneur's issues, and real estate transactions.” His rate of $325-$350 per hour falls within the range for Portland-area attorneys with 20 years of experience in business/corporate transactional law. 2017 ECONOMIC SURVEY 39 tbl. 36, 40 tbl. 37.
https://gottlieb-law.com/.
Although Gottlieb is not one of the named attorneys representing plaintiff in this suit, plaintiff is entitled to Gottlieb's fees under the Operating Agreement. Section 31.12 allows for “reasonable attorney's fees . . . incurred in connection with the . . . suit” where a “suit . . . is instituted to interpret [or] enforce . . . this Agreement, or otherwise in connection with the subject matter of this Agreement.” Barba Decl., Ex. A, 18-1, at 35. Gottlieb's billing entries begin in September 2020, when defendant told plaintiff that he wanted to close the business and sell the remaining wine inventory, which he had fictitiously claimed was worth $50,000, through his own private label at a price only he would control. Compl. ¶ 18, ECF 1. Because defendant was being erratic, uncooperative, and evasive, and plaintiff could not get information from either defendant, defendant's attorney, or the CPA defendant had hired, plaintiff retained Gottlieb to “help him get answers about what was happening with Lines of Man.” Id. ¶ 19. The parties thereafter reached a tentative agreement about selling the remaining inventory where plaintiff would receive half of the proceeds; however, plaintiff discovered defendant was selling the inventory and using the proceeds to buy the company's non-wine assets for his personal benefit. Id. ¶ 20. Defendant thereafter attempted to hide evidence that he had wrongfully taken and disposed of company assets for his own gain. Id. ¶ 23.
In sum, plaintiff hired Gottlieb to assist him in enforcing the terms of Operating Agreement. Gottlieb's billing entries, for example, discuss legal recourse regarding the company's assets, correspondence regarding accounting, communications with defendant and defendant's attorney, and settlement negotiations. When these efforts ultimately proved fruitless, plaintiff filed this suit. Therefore, Gottlieb's fees were “incurred in connection” with this suit.
Finally, the billing records for all three attorneys show that reasonable amounts of time were spent performing services such as reviewing and researching legal issues, conferring with their client, conducting discovery, pursuing settlement and arbitration, and filing the complaint and motions. The entries are not duplicative and the time spent is not excessive.
See Barba Decl. ¶ 5, ECF 18 (describing defendant's unwillingness to proceed with arbitration, leaving plaintiff no option but to file suit).
Therefore, plaintiff is entitled to an award for the following attorney's fees:
Attorney
Hours
Rate
Total
Haberthur
25.9
$395
$10,230.50
0.4
$425
$170.00
0.2
$425
$85.00
Cody
15.4
$280
$4,312.00
2.2
$325
$715.00
6.4
$325
$2,080.00
Gottlieb
7.9
$325
$2,567.50
25.20
$350
$8,820.00
Total
$28,980.00
C. Requested Paralegal and Legal Assistant Fees
To determine the reasonable hourly rate for paralegal services, the court again looks to the prevailing market rate. Gonzalez, 729 F.3d at 1205. In other cases, this court has relied on the National Utilization and Compensation Survey Report (“NALA Report”) published by the National Association of Legal Assistants and Paralegals. See, e.g., Anderson v. Ross Island Sand& Gravel Co., No. 3:18-CV-00898-SB, 2018 WL 5993581, at *4 (D. Or. Oct. 24, 2018), report and recommendation adopted, 2018 WL 5985671 (D. Or. Nov. 12, 2018) (citing Aichele v. BlueElephant Holding, LLC, No. 3:16-CV-2204-BR, 2018 WL 2357533, at *4 (D. Or. May 24, 2018)). Judges in this district also have held that a reasonable hourly rate for a paralegal should not exceed that of a first-year associate. See Precision Seed Cleaners, 976 F.Supp.2d at 1248. The average hourly rate for a Portland lawyer with one- to three-years' experience is $236. 2017 ECONOMIC SURVEY 38 tbl. 36.
Plaintiff seeks fees for Amanda Beatson, a paralegal, at $180 per hour. In response to the court's inquiry, plaintiff's counsel has advised the court that Beatson has 3.5 years of experience. According to the 2022 NALA Report, the average hourly billable rate for a paralegal with one to five years of experience is $114. NALA REPORT, 41 FIG. 34 (2022).
The average 2022 hourly billable rate for a paralegal in the Far West region, which includes Oregon, is $122 per hour. NALA REPORT 40 fig. 32 (2022).
Beatson's work on this case is described in the billing records and is related primarily to discovery. The entries are reasonable and not excessive or duplicative. Therefore, plaintiff is entitled to fees for 3.4 hours of paralegal services performed by Beatson at $114 per hour.
Plaintiff also seeks fees for Heather Dumont, a legal assistant, at $100 per hour. Cases in this district are divided as to whether fees should be awarded for work performed by legal assistants. Poticny v. Movers and Packers Relocation Specialists LLC, No. 3:22-cv-01243-IM, 2022 WL 18024218, at *9 (2022) (collecting cases). In any event, plaintiff has offered no details regarding Dumont's qualifications, and the work Dumont performed consisted of finalizing and filing the notice of non-service upon defendant. Haberthur Decl., Ex. A, ECF 17-1, at 8. Where no further explanation has been provided, it appears these are clerical tasks that should be “subsumed in firm overhead” Nadarajah v. Holder, 569 F.3d 906, 921 (9th Cir. 2009) (“filing, transcript, and document organization time was clerical in nature and should have been subsumed in firm overhead rather than billed at paralegal rates”). Plaintiff has thus failed to meet his burden of showing entitlement to legal assistant fees.
D. Requested Costs
Plaintiff seeks the following costs:
(Image Omitted)
The Operating Agreement allows for the prevailing party to receive costs and “expenses of every kind . . . incurred in connection with the arbitration, action, suit, or proceeding Barba Decl., Ex. A, ECF 18-1, at 35. Thus, even though some of these costs would not be allowed under 28 U.S.C. § 1920, as the prevailing party, plaintiff is entitled to them under the Operating Agreement.
RECOMMENDATIONS
Plaintiff's Motion for Default Judgment (ECF 11) should be GRANTED and judgment should be entered for plaintiff on his breach of contract claim. Moreover, plaintiff's Motion for Attorney's Fees (ECF 16) should be GRANTED IN PART and fees and costs should be awarded as follows:
(1) Damages of $100,000;
(2) Prejudgment interest at 9% for a daily rate of $2.47 beginning on September 12, 2019, and $22.19 beginning on September 20, 2019;
(3) Attorney's fees of $28,980.00;
(4) Paralegal fees of $399; and
(4) Costs of $1,175.62.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Monday, March 20, 2023. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.