Opinion
No. C06-2032 SBA (BZ).
November 16, 2006
REPORT AND RECOMMENDATION ON DAMAGES
By Order dated October 3, 2006, the Honorable Saundra Brown Armstrong referred this case to a Magistrate Judge for a report and recommendation on the proper amount of damages. Having been assigned the matter, I recommend that plaintiff Pride of San Juan, Inc. be awarded legal fees in the amount of $21,886.74 plus prejudgment interest on the $10,005.50 principal outstanding balance calculated at a rate of 1.5% per month.
This case came before Judge Armstrong as an enforcement action under the Perishable Agricultural Commodities Act (PACA). 7 U.S.C. § 499a, et seq. As described in Judge Armstrong's Order, plaintiff is a seller of wholesale produce, SunAgra is a buyer or seller of wholesale produce, and Charles Dible is the principal of SunAgra. See Order at 1. Between October and December 2005, plaintiff sold defendants on credit produce valued at $10,005.50. The controlling credit agreement signed by Dible provides that a 1.5% monthly service charge would be assessed on unpaid balances. In addition, the agreement provided for the assessment of reasonable legal fees in the event that an enforcement action is brought to collect payment.
The total principal amount due derives from eleven separate transactions ranging in amount from $600.00 to $2,365.00.
Plaintiff filed its March 16 Complaint seeking payment of the principal, interest on the principal, and attorneys' fees and costs. See id. Plaintiff thereafter sought summary judgment against defendants. Judge Armstrong granted plaintiff summary judgment against Dible. Judge Armstrong concluded that Dible is liable to plaintiff for the $10,005.50 principal, and for an amount of interest and attorneys' fees and costs to be determined.
Default had, at the time of the Order, been entered against SunAgra. Thus, Judge Armstrong denied summary judgment as against SunAgra, noting that the proper procedure would be for plaintiff to file a motion for default judgment.
Although PACA does not expressly provide for attorneys' fees or interest, losses under the statute encompass related expenses including contractual rights to attorneys' fees and interest. See Middle Mt. Land and Produce Inc. v. Sound Commodities Inc., 307 F.3d 1220, 1225-26 (9th Cir. 2002) (interpreting 7 U.S.C. § 499e(c)(2)); Rey Rey Produce SFO, Inc. v. M M Produce and Food Service Supplies, Inc., 2006 WL 1867633, at *3-*4 (N.D. Cal. July 5, 2006). As discussed in Judge Armstrong's Order, the credit agreement is binding and provides a contractual basis for plaintiff's requests for fees and interest.
By its terms, the credit agreement provides for the assessment of reasonable legal fees. Plaintiff requests fees and costs totaling $26,537.74 but does not explain how it calculates this amount. Dible filed an Opposition pro per arguing that the amount requested is excessive and exorbitant. The documentation provided, however, does justify a substantial portion of the fees requested.
Plaintiff is represented by two law firms: Borton, Petrini Conron, and Keaton Associates. David Bremer, of the Borton firm, served as plaintiff's local counsel and submitted a declaration in support of the request for fees. The declaration identifies Bremer's hourly rate ($290.00 per hour), time spent on the matter (16.20 hours), and related costs incurred ($683.76), totaling $5,381.76. Bremer declares that he has reviewed all billing statements but does not provide them. His declaration in no way describes the tasks or services performed on behalf of plaintiff. Bremer wholly fails to explain the $683.76 in costs. His claims are therefore difficult to assess.
On the other hand, Bremer declares under penalty of perjury that his rates are reasonable and competitive in the field; that the bills submitted to plaintiff were accurate; and that the work time he billed was reasonable and necessary. In addition, billing records from plaintiff's other firm, Keaton, refer to work accomplished by "Local Counsel". Thus, although Bremer's showing lacks detail, see Local Civil Rule 54-6, some amount of compensation is reasonable. I recommend that the court invoke its discretion and 1) deny the request for $683.76 in costs, and 2) reduce by 50% the $4698.00 fee request, for a total of $2,349.00, to reflect Bremer's inadequate documentation.
The Keaton firm, in contrast, provided a detailed declaration and copies of all billing statements through September 2006. Michael Keaton, the attorney primarily responsible for handling the litigation, sets forth in his declaration the various hourly rates billed by his firm and explains how the firm charges clients for associated costs. Both Keaton's declaration and the billing records provide detailed descriptions of the legal tasks performed. The records account for the hours spent on each task and state the applicable billing rates. Keaton states that his firm's billing rates are competitive in the field of PACA enforcement, and that all work was reasonable and necessary. Moreover, Keaton declares that plaintiff made repeated attempts to settle the matter and that defendants' opposition necessitated filing of the summary judgment motion.
Defendant Dible attacks the Keaton request on numerous grounds. Defendant claims to be familiar with litigation in the PACA field, and states that the Keaton fees are excessive. As proof, defendant proffers documents relating to two separate actions against SunAgra and Dible in which the prevailing parties requested $1,540.00 and $2,764.00 respectively in attorneys' fees and costs. Both actions, however, were decided by way of default judgment. As explained by Mr. Keaton, and as documented by the billing records, moving for summary judgment entailed further expense.
Additionally, defendant Dible asserts that he retained an attorney to settle the matter and that plaintiff frivolously refused to accept settlement. Dible, however, offered just over half of the amount for which Judge Armstrong found defendants liable, claiming that plaintiff owed money to SunAgra. Simply put, Dible's averments suggest that he knew he owed plaintiff money and confirm Keaton's explanation of the need for a summary judgment motion.
Finally, Dible claims to have previously hired Keaton Associates to represent him and SunAgra in unrelated PACA litigation. Dible does not explain why he did not raise this issue earlier or how the firm's previous work could effect the reasonableness of the legal fees requested in this matter.
The tasks and costs documented appear reasonable and necessary to the litigation. I therefore recommend that the court grant plaintiff the $19,537.74 in legal fees documented by Keaton in his declaration and billing records. Adding the $2,349.00 and $19,537.74 figures, I recommend that the court award plaintiff a total of $21,886.74 in legal fees.
In his declaration, Keaton estimates that an additional $6,500 were incurred in fees and costs in the month of October. As Keaton states, however, his estimate is "subject to submission of actual figures once they become available." I therefore recommend that the court deny this request until counsel provides documentation.
In his Opposition, defendant Dible argues that the legal costs plaintiff requests are out of proportion to the principal owed. While it is true that the $21,886.74 award I recommend is more than double the principal amount at issue, the evidence demonstrates the reasonableness of plaintiff's handling of the case.
Plaintiff also seeks pre-judgment interest on the principal balance at a rate of 1.5% per month. As noted, Judge Armstrong determined that plaintiff possesses a contractual right to this interest. The only question is the amount owed.
Plaintiff submitted a calculation table demonstrating the interest accrued through November 1. The table calculates the monthly interest on each of the eleven separate transactions, beginning from the date each was due. The interest is then added, for a total of $1,693.69. The calculation appears to conform to the terms of the credit application. The interest, however, continues to accrue. Therefore, I recommend that the court award plaintiff the $10,005.50 principal balance plus prejudgment interest at the rate of 1.5% per month, to be calculated from the dates on which each of the eleven transaction balances first came due. I further recommend that the plaintiffs update their calculations as the court may direct.
In its Motion for Summary Judgment, plaintiff submitted a version of the table calculating accrued interest through July 26, 2006. See Pl. Mot. for Summ. J., Exh. A. According to a declaration by Peter Trenz in support of the motion, "[t]he rate is set forth at the statutory rate of .00075% per month." It is not at all clear what statute Trenz refers to, or to what extent the rate is used to calculate the interest. Indeed, the table itself explicitly references the 1.5% contractual rate. What is clear is that the rate of interest here is dictated by the contractual terms binding the parties. See Rey Rey Produce SFO, Inc., 2006 WL 1867633, at *4. There is no mention of a .00075% rate in the credit agreement. Thus, I recommend that the court limit plaintiff's interest calculations to the 1.5% contractual rate.
For the reasons discussed, I recommend that the court award plaintiff 1) $21,886.74 in legal fees, and 2) the $10,005.50 principal balance plus prejudgment interest at the rate of 1.5% per month to be calculated from the dates the balances were first due.