Carlos Eduardo Lorefice Lynch v. R. Angel Gonzalez Gonzalez ( 2020 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS J USTICE CENTER
VICE CHANCELLOR 500 N. KING STREET , SUITE 11400
WILMINGTON, DELAWARE 19801-3734
September 18, 2020
Theodore A. Kittila, Esquire William E. Gamgort, Esquire
James G. McMillan, III, Esquire Jennifer M. Kinkus, Esquire
Halloran Farkas & Kittila LLP Young Conaway Stargatt & Taylor, LLP
5803 Kennett Pike, Suite C 1000 North King Street
Wilmington, DE 19807 Wilmington, DE 19801
RE: Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
Dear Counsel,
On July 31, 2020, I issued a post-trial memorandum opinion that determined
Defendants prevailed in this matter. 1 I found that “Lynch, individually and
purportedly speaking for Belleville, initiated this action to complete his grab at . . .
Belleville,”2 and that “[c]lear evidence supports a finding that Lynch initiated this
action, brought his claims, and ultimately litigated those claims in bad faith.” 3 As a
result, I ordered that Lynch bear Defendants’ attorneys’ fees and costs under the bad
1
See Lynch v. Gonzalez, 2020 WL 4381604 (Del. Ch. July 31, 2020).
2
Id. at *48.
3
Id. at *49.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 2 of 22
faith exception to the American Rule and contemplated entry of a final order and
judgment establishing the amount of the award.4
Accordingly, on August 20, Defendants submitted their Motion for Costs in
Accordance with Court of Chancery Rule 54(d) (the “Motion”), 5 as well as their
Memorandum Detailing Defendants’ Attorneys’ Fees and Expenses (the
“Application”).6 Defendants seek $16,500.25 in the Motion, and $2,306,450.65 plus
fees on fees in the Application as briefed. 7 After briefing the Application and
Motion, the parties “are not particularly far apart:”8 Lynch disputed no more than
$173,137.16 of Defendants’ requests.9 For the following reasons, the Motion is
GRANTED, and the Application is GRANTED with certain exceptions.
4
Id. at *47–49. In pursuit of absolute clarity, I note that the fee award was against Lynch,
not the Company.
5
Docket Item (“D.I.”) 250.
6
D.I. 254.
7
See D.I. 250, 254, 268.
8
D.I. 268 at 4.
9
D.I. 261 at 16. Lynch’s response identified $106,527.66 in fees and expenses that they
concluded to be unreasonable, but maintained that the award should be reduced by at least
$173,137.16. Id.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 3 of 22
I. Fees
Defendants’ Application, supported by the necessary Court of Chancery Rule
88 affidavit (the “Affidavit”),10 requests at least $2,306,450.65 in fees and expenses
incurred by Dorta & Ortega, P.A. (“Dorta & Ortega”), as lead counsel, and Young
Conaway Stargatt & Taylor, LLP (“Young Conaway”), as Delaware counsel.11
“Delaware law dictates that, in fee shifting cases, a judge determine whether
the fees requested are reasonable.”12 The Court “has broad discretion in determining
the amount of fees and expenses to award.”13 The Court reviews a fee application
pursuant to the factors set forth in Rule 1.5(a) of the Delaware Lawyers’ Rules of
Professional Conduct (“DLPRC”):14
10
See Ct. Ch. R. 88; D.I. 254, Affidavit of William E. Gamgort in Accordance with Court
of Chancery Rule 88 [hereinafter “Aff.”]; see also D.I. 253 (collecting materials supporting
the Application and Affidavit), 254 (same), 255 (same), 256 (same), 257 (same), 258
(same), 268 (collecting additional supporting materials).
11
See D.I. 268 at 15 (decreasing requested award from $2,328,006.05 to $2,306,450.65).
12
Mahani v. Edix Media Gp., Inc., 935 A.2d 242, 245 (Del. 2007); see also Aveta v.
Bengoa, 2010 WL 3221823, at *4 (Del. Ch. Aug. 13, 2010) (noting that the Court assess
fee awards for reasonableness).
13
Black v. Staffieri, 2014 WL 814122, at *4 (Del. Feb. 27, 2014) (TABLE) (citing Kaung
v. Cole Nat’l Corp., 884 A.2d 500, 506 (Del. 2005)).
14
See Mahani, 935 A.2d at 245–46.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 4 of 22
(1) the time and labor required, the novelty and difficulty of the
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 will 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 client or by the circumstances;
(6) the nature and length of the professional relationship with the
client;
(7) the experience, reputation, and ability of the lawyer or lawyers
performing the services; and
(8) whether the fee is fixed or contingent.
“Determining reasonableness does not require that this Court examine
individually each time entry and disbursement.”15 Nor does it “require the Court to
assess independently whether counsel appropriately pursued and charged for a
15
Aveta, 2010 WL 3221823, at *6 (citing, among other cases, M & G Polymers USA, LLC
v. Carestream Health, Inc., 2010 WL 1611042, at *76 (Del. Super. Apr. 21, 2010) (finding
no authority that “requires this Court to engage in a line-by-line analysis of the components
of an attorneys’ fee application when an award of fees is based upon the bad faith exception
to the American Rule”)).
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 5 of 22
particular motion, line of argument, area of discovery, or other litigation tactic.” 16
“A party’s expenses are reasonable if they were ‘actually paid or incurred[,] . . . were
. . . thought prudent and appropriate in the good faith professional judgment of
competent counsel[,] and were charge[d] . . . at rates, or on a basis, charged to others
for the same or comparable services under comparable circumstances.’”17 “For a
Court to second-guess, on a hindsight basis, an attorney’s judgment” as to whether
work was necessary or appropriate “is hazardous and should whenever possible be
avoided.”18
16
Weil v. VEREIT Operating P’ship, L.P., 2018 WL 834428, at *12 (Del. Ch.
Feb. 13, 2018) (quoting Danenberg v. Fitracks, Inc., 58 A.3d 991, 997 (Del. Ch. 2012)).
17
Id. (alterations and omissions in original) (quoting Delphi Easter P’rs Ltd. P’ship v.
Spectacular P’rs, Inc., 1993 WL 328079, at *9 (Del. Ch. Aug. 6, 1993)).
18
Arbitrium (Cayman Is.) Handels AG v. Johnston, 1998 WL 155550, at *4 (Del. Ch.
Mar. 30, 1998)), aff’d, 720 A.2d 542 (Del. 1998); accord Sparton Corp. v. O’Neil, 2018
WL 3025470, at *6 (Del. Ch. June 18, 2018) (noting that “the hourly rates charged by
Defendants’ counsel are not excessive, and the staffing of attorneys appears appropriate”
and should not be second-guessed); Weil, 2018 WL 834428, at *12 (stating that “whether
counsel appropriately pursued and charged for a particular . . . litigation tactic” should not
be second-guessed); Aveta, 2010 WL 3221823, at *8 (expanding the rationale and noting
where “staffing appears appropriate” it “need not be second-guessed”). Still, the Court
may consider “whether the number of hours devoted to litigation was excessive, redundant,
duplicative or otherwise unnecessary,” Fitracks, 58 A.3d at 996 (quoting Mahani, 935
A.2d at 247–48), and may decrease an award where the applicant’s “own litigation efforts
have in some ways been less than ideal in terms of timeliness or prudent focus,” Auriga
Capital Corp. v. Gatz Props., 40 A.3d 839, 882 (Del. Ch. 2012), aff’d, 59 A.3d 1206 (Del.
2012).
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 6 of 22
One “indication” of reasonableness is the “reality” that when the fee-seeking
party litigated the matter and “paid the expenses it now seeks to recover, [it] did not
know that it would be able to shift those expenses to [the other party].” 19 This
evidences that the fee-seeking party “had sufficient incentive to monitor its counsel’s
work and ensure that counsel did not engage in excessive or unnecessary efforts.” 20
In addition, “[w]hen awarding expenses as a contempt sanction or for bad faith
litigation tactics, this Court takes into account the remedial nature of the award.” 21
In those cases, the fee award “is designed to make whole the party who was injured
by the other side’s contumely. The remedial nature the award commends putting
primary emphasis on reimbursing the injured party. The results achieved are of
secondary importance.” 22 And when assessing the aggregate fees requested in
situations involving contempt or bad faith, this Court considers whether they “are
within the range of what a party reasonably could incur over the course of . . .
19
Aveta, 2010 WL 3221823, at *6.
20
Id.
21
Id. (citing In re SS & C Techs., Inc. S’holders Litig., 2008 WL 3271242, at *3 n.14 (Del.
Ch. Aug. 8, 2008) (noting that because fees were awarded as a sanction, the Court did not
focus narrowly on the Rule 1.5(a) factors), and also citing Arbitrium, 1998 WL 155550, at
*3 (taking into account that fees were shifted because of bad faith litigation tactics when
evaluating award)).
22
Id. (citation omitted).
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 7 of 22
pursuing an adversary engaged in a mix of open defiance, evasion and
obstruction.”23
As an initial matter, Lynch asserts Defendants’ submission is vague. In
assessing the reasonableness of Defendants’ requested fees, “[t]he Court of
Chancery has discretion in determining the level of submission required.” 24 I am
satisfied that Defendants’ Affidavit and accompanying exhibits sufficiently apprise
the Court of the fees and expenses Defendants incurred in this litigation and the
underlying reasons for those amounts.
Lynch does not dispute the staffing or rates charged by Dorta & Ortega and
Young Conaway.25 Both appear reasonable to me: the rates charged are on par with
or below similarly situated firms; Dorta & Ortega discounted 20% of their fees
charged; and both firms enjoy excellent reputations and prudently staffed the matter
23
Id. (internal quotation marks omitted).
24
Id. at *3 (citing Cohen v. Cohen, 269 A.2d 205, 207 (Del. 1970)).
25
Dorta & Ortega billed 4,213.6 hours, resulting in $1,337,631.41 in fees and $237,992.87
in expenses. The firm charged $330 per hour for associates and $500 per hour for the lead
partner, which is less than the average partner rate at a similar boutique litigation firm in
Miami. Young Conaway billed 1,442 hours, resulting in $704,204.00 in fees and $8,177.77
in expenses. The firm permanently staffed two attorneys on the matter, charging a
maximum of $570 per hour for the lead partner (lower than the average partner rate at peer
Delaware firms), and $475 per hour for the senior associate (an average rate for a Delaware
associate with similar experience). See Aff. ¶ 6; D.I. 254 at 10–13.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 8 of 22
with experienced attorneys. 26 Defendants’ substantial affidavits support the
conclusion that the time spent, number of attorneys involved, and resulting dollar
amounts are reasonable for the nature of the dispute and the types of submissions
that were prepared in this litigation.
This litigation was complex, contentious, and time-consuming. It was also
expedited; such litigation incurs more substantial attorneys’ fees than litigation
proceeding at the customary pace. 27 Between May 2019 and April 2020,
Defendants’ counsel devoted over 5,000 hours to this matter. Undoubtedly, this
litigation consumed a substantial percentage of counsel’s time from pleading
through trial. The early stages of these proceedings presented expedition, a motion
for a temporary restraining order, and entry of a status quo order.
Thereafter, counsel—and the Court—endured combative, motion-laden
discovery. The parties exchanged over 300,000 pages of documents, most of which
appeared in Spanish and needed to be translated for review, production, and use in
26
See Aveta, 2010 WL 3221823, at *8.
27
See, e.g., Brandt v. CNS Response, Inc., 2009 WL 2425757, at *1 (Del. Ch. Aug. 3, 2009)
(recognizing that the risk of “unnecessary confusion and expenditure of time and
attorneys’ fees in an expedited matter”); In re First Interstate Bancorp Consol. S’holder
Litig., 756 A.2d 353, 364 n.6 (Del. Ch. 1999) (considering, on a fee application, whether
fees were incurred “in litigation conducted on a non-expedited schedule”), aff’d sub
nom. First Interstate Bancorp v. Williamson, 755 A.2d 388 (Del. 2000).
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 9 of 22
this litigation. Defendants took four depositions and defended six, many of which
were also translated. Both sides propounded numerous discovery requests.
Discovery motions were frequent and relatively complex. Finally, counsel endured
the friction of a three-day trial, which included preparation of 163 joint exhibits and
testimony of ten live witnesses, predominantly in Spanish.
This legwork proved complicated and, unsurprisingly, time-consuming,
especially in view of what was at stake: ownership and management of a media
conglomerate worth at least $27.345 million, based on its 2007 acquisition value.
To prevail, Defendants had to prove Plaintiff Lynch’s carefully laid trap was a
fallacy, over Lynch’s obstinate efforts to convince the Court it was reality. Doing
so required numerous motions, many in the discovery context. I found in favor of
Defendants on all viable counts, determining that Defendants Gonzalez and
Televideo own a majority stake in the Company and that Lynch had no rightful claim
to its ownership or management.
In Arbitrium (Cayman Islands) Handels AG v. Johnston, then-Vice
Chancellor Jacobs faced very similar circumstances and made observations that are
applicable here:
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 10 of 22
This case was, to say the least, highly unusual. The [plaintiff] w[as] [a]
determined adversar[y] who, it ultimately became clear, would stop at
very little to retain [his] control of [the Company]. . . . As this Court
found [previously], the [plaintiff] defrauded [defendants] and attempted
to defraud this Court by giving false testimony and manufacturing
evidence. [The plaintiff] w[as] found to have misled another court and
perhaps the governmental [] authorities as well. . . . [Defendants’]
counsel, however, were able to penetrate the obfuscation. But, only by
a combination of perseverance and highly skilled legal [] detective
work were they able to put the pieces together and determine the
essential facts that the defendants had successfully been able to conceal.
Those efforts, including particularly that required to rebut the false
testimony and manufactured evidence, was not without its cost.
Manifestly, those efforts required additional legal time and . . .
expense[s] that in an “ordinary” case (one not involving bad faith)
would not have been incurred. 28
The result achieved soundly supports a determination that Defendants’ requested
fees are reasonable. “[I]ndeed, the Court is surprised that it was not more. That
amount must be borne by [Lynch] whose conduct necessitated the services that fee
represents.”29
Evidencing the reasonableness of the fees sought, Defendants have paid all
the fees they ask to be shifted. They did so when they “did not know that it would
be able to shift those expenses to [Lynch].”30 Defendants “had sufficient incentive
28
Arbitrium, 1998 WL 155550, at *3.
29
Id.
30
Aveta, 2010 WL 3221823, at *6.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 11 of 22
to monitor [counsels’] work and ensure that counsel did not engage in excessive or
unnecessary efforts.” 31 Based on Defendants’ submissions, I conclude that
Defendants’ requested fee award is prima facie reasonable in view of the factors set
forth in DLRPC Rule 1.5(a) and the “remedial nature” of the award that “put[s]
primary emphasis on reimbursing the injured party.”32
Lynch objects to one category of fees: those incurred in motion practice. 33
When an award is disputed as unreasonable, the fee-seeking party bears the burden
“to justify a challenged litigation decision by showing that the services that were
rendered [were] thought prudent and appropriate in the good faith professional
judgment of competent counsel.” 34 But this Court does not permit an objecting party
to “litigate the particular details of individual expenses,” 35 as “[d]iscussing specific
invoices typically would neither be useful nor practicable.” 36
31
Id.
32
Id.
33
This letter does not address Lynch’s objections to pre-suit fees or unrelated fees that
were mistakenly billed, as those objections were resolved in briefing. See D.I. 268 at 5–6.
34
Fitracks, 58 A.3d at 997 (alteration in original) (internal quotation marks omitted)
(quoting Delphi Easter P’rs Ltd. P’ship, 1993 WL 328079, at *9).
35
White v. Curo Texas Hldgs., LLC, 2017 WL 1369332, at *6 (Del. Ch. Feb. 21, 2017)
(collecting cases).
36
Fitracks, 58 A.3d at 997 (internal quotation marks omitted) (quoting Weichert Co. of Pa.
v. Young, 2008 WL 1914309, at *2 (Del. Ch. May 1, 2008)).
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 12 of 22
Lynch contends Defendants “over-litigat[ed]” this matter and incurred
“unnecessary”37 fees for “wasteful motion practice,” 38 particularly in the context of
the Albavision emails 39 and the status quo order.40 Lynch argues that Defendants
are not entitled to fees on those motions because Plaintiffs, not Defendants, prevailed
on some of Defendants’ motions. And Lynch contends that Defendants’ fees
incurred from those motions are too low, which they believe supports a finding that
the fees were unnecessary and unreasonable.41
I reject Lynch’s position. The fee award is based on Defendants’ having
prevailed in the war over Lynch’s bad faith litigation: Lynch’s attempt to excise
fees for victories in smaller battles over motions is not supported by Delaware law.42
37
D.I. 261 at 7.
38
Id. at 12.
39
See, e.g., Lynch v. Gonzalez, 2019 WL 6125223, at *5 (Del. Ch. Nov. 18, 2019).
40
See, e.g., Lynch v. Gonzalez, 2020 WL 3422399, at *1 (Del. Ch. June 22, 2020). Lynch
claims Defendants burdened the Court with frivolous motions in an attempt to derail trial.
See D.I. 261 at 7–13. To the extent Lynch blames Defendants for the lion’s share of these
allegedly “unnecessary” motions, Lynch mischaracterizes this litigation. In my view, the
parties share that burden equally: both filed, pursued, and sometimes lost motions that
perplexed opposing counsel and, occasionally, the Court.
41
D.I. 261 at 10, 12.
42
See Weil, 2018 WL 834428, at *12. Lynch cites Preferred Investment Services, Inc. v.
T & H Bail Bonds, Inc., 2013 WL 3934992 (Del. Ch. July 24, 2013), aff’d sub nom. 108
A.3d 1225 (Del. 2015), for the proposition that “[a] fee award may be decreased when the
non-prevailing party nevertheless prevailed on some of the procedural disputes during the
course of the litigation.” D.I. 261 at 7. This case is inapposite and does not support the
motion-by-motion approach Lynch advocates. In Preferred Investment Services, the Court
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 13 of 22
This Court does not relitigate motions in hindsight, 43 or place substantial weight on
motion-by-motion outcomes in view of the “remedial nature” of the award that
“put[s] primary emphasis on reimbursing the injured party.” 44 Where the fee-
seeking party has demonstrated that counsel’s time was “devoted generally to the
litigation as a whole,” the prevailing party may recover all attorneys’ fees “related
to the issues in this lawsuit,” even fees for unsuccessful motions and other
proceedings. 45 Defendants have met that burden. While Defendants’ efforts were
not always fruitful, and while at times Defendants pulled the trigger too readily on a
determined that the plaintiff “knew or should have known from very early in this litigation,
if not before it filed suit, that its principal claims were frivolous, yet it persisted.” 2013
WL 3934992, at *27. However, the Court reduced the defendant’s award to “only 80% of
their fees and expenses, rather than 100%, because [the plaintiff] prevailed on the merits
of certain secondary aspects of its claims,” and recognized that the plaintiff “also prevailed
on some, but far less than a majority, of the procedural disputes that arose during the pretrial
phase of this case.” Id. The reduction was primarily driven by the plaintiff’s success on
the merits of certain claims. Here, Lynch has not secured a similar victory.
43
See Weil, 2018 WL 834428, at *12; Staffieri v. Black, 2013 WL 4038110, at *5 (Del.
Ch. Aug. 8, 2013) (ORDER).
44
Aveta, 2010 WL 3221823, at *6 (citation omitted); see also id. at *9 (stating that “[t]he
denial of [a] motion does not foreclose [the applicant’s] ability to recover its expenses”
because “the primary consideration is to make [the applicant] whole for the expenses that
[the other party’s] contumacious conduct caused [the applicant] to incur”).
45
Liqwd, Inc. v. L’Oreal USA, Inc., 2019 WL 6840353, at *30–31 (D. Del. Dec. 16, 2019)
(awarding fees for matters “generally related to the issues in [that] lawsuit” because
counsel’s time was devoted to the matter “as a whole” (quoting Hensley v. Eckerhart, 461
U.S. 424, 434–35 (1983))); see also, e.g., Aveta, 2010 WL 3221823, at *9 (awarding fees
despite lost motion).
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 14 of 22
motion, their motions were not frivolous and were brought in good faith. And
Lynch’s observation that Defendants’ motion practice fees are surprisingly low—
which was a result of Defendants’ efficient billing—supports the conclusion that
Defendants’ fees were reasonable.
II. Costs
Defendants also pursue costs. The Motion requests prevailing party costs
under Rule 54(d). The Application requests costs under the bad faith exception.
Defendants are entitled to their requested costs under Rule 54(d) and are also entitled
to additional costs with certain exceptions.
A. The Motion
Defendants’ Motion requests $16,500.25 in costs under Court of Chancery
Rule 54(d). 46 Under that Rule, “costs shall be allowed as of course to the prevailing
party unless the Court otherwise directs.” 47 Permitted costs are “those expenses
necessarily incurred in the assertion of a right in court, such as court filing fees, fees
associated with service of process or costs covered by statute.” 48 This properly
46
D.I. 250 ¶ 6.
47
Ct. Ch. R. 54(d).
48
Adams v. Calvarese Farms Maint. Corp., 2011 WL 383862, at *6 (Del. Ch.
Jan. 11, 2011) (alteration and internal quotation marks omitted) (quoting FGC Hldgs. Ltd.
v. Teltronics, Inc., 2007 WL 241384, at *17 (Del. Ch. Jan. 22, 2007)); see also Dewey
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 15 of 22
includes “fees remitted to the Court of Chancery,” including those pursuant to Court
of Chancery Rule 3(bb), “and those fees paid to LexisNexis for” use of File &
ServeXpress.49 The specific definition of “costs” under the Rule means that “[a]n
allowance of court costs does not amount to an attempt by the court to fully
compensate a litigant for all the expenses the litigant incurred[.]”50
Defendants prevailed in this matter.51 They incurred $4,492.25 in electronic
filing fees and $11,908.50 in Court fees and charges pursuant to Court of Chancery
Rule 3(bb), as supported by Defendants’ affidavit and exhibit (“Exhibit 1”).52 On
their face, the supporting affidavit and Exhibit 1 confirm that the amounts requested
in the Motion are for costs routinely awarded under Rule 54(d), including court
costs, filing fees, and File & ServeXpress charges.53 Defendants’ Motion requests
costs within the scope of the Rule; they are “allowances in the nature of incidental
Beach Lions Club v. Longacre, 2006 WL 2987052, at *1 (Del. Ch. Oct. 11, 2006) (noting
that Rule 54(d) encompasses costs that “[a] party cannot litigate a case without incurring”).
49
Longacre, 2006 WL 2987052, at *1.
50
Id. (internal quotation marks omitted) (quoting Sliwinski v. Duncan, 1992 WL 21132, at
*3 (Del. Jan. 15, 1992) (TABLE)).
51
See Teltronics, Inc., 2007 WL 241384, at *17 (stating the prevailing party is entitled to
costs under Rule 54(d)); see also Graham v. Keene Corp., 616 A.2d 827, 828 (Del. 1992)
(“[T]he term ‘prevailing party’ as used in Rule 54(d) refers to the party for whom final
judgment has been entered in any civil action.”).
52
See D.I. 250 (including an affidavit and accompanying exhibit).
53
See D.I. 250, Ex. 1.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 16 of 22
damages awarded by law to reimburse the prevailing party for expenses necessarily
incurred in the assertion of his rights in court.”54
Lynch objects, noting that it is in the Court’s discretion to determine whether
the prevailing party is entitled to the full extent of costs requested under Rule 54(d)
and that a “significant factor for the court to consider is whether the costs could have
reasonably been avoided.” 55 Lynch argues that the costs associated with the motions
discussed above “could reasonably have been avoided,” without identifying the
corresponding charges and amounts in Exhibit 1 that are beyond those recoverable
under Rule 54(d).56
“[T]his Court does not pour over counsel’s individual litigation decisions
with the benefit of hindsight.” 57 As stated above, I will not “assess independently
whether counsel appropriately pursued and charged for a particular motion, line of
argument, area of discovery, or other litigation tactic.” 58 I decline to exercise my
54
Longacre, 2006 WL 2987052, at *1 (quoting Comrie v. Enterasys Networks, Inc., 2004
WL 936505, at *4 (Del. Ch. Apr. 27, 2004)).
55
D.I. 261 at 15–16 (quoting Kuratle Contracting, Inc. v. Linden Green Condo., Ass’n,
2014 WL 5391291, at *7 (Del. Super. Ct. Oct. 22, 2014)).
56
Id. at 16.
57
Staffieri, 2013 WL 4038110, at *5 (citing Arbitrium, 1998 WL 155550, at *4).
58
Weil, 2018 WL 834428, at *12.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 17 of 22
discretion to reduce the amounts Defendants are entitled to under Rule 54(d), and
conclude Defendants are entitled to the full amount of costs requested.
B. The Application
The Application requests additional costs and expenses shifted under the bad
faith exception totaling $246,170.64.59 “[T]his is an award of fees and expenses
pursuant to the bad faith exception to the American Rule. When such an award is
granted, it typically includes reasonable litigation expenses.” 60 Distinct from the
expenses sought in Defendants’ Motion, “[t]he more limited interpretation of
‘costs’ under Rule 54 and the cost statute does not apply to the equitable shifting
of fees and expenses.” 61
59
See D.I. 254 at 13–14. Those include charges for hearing, deposition, and trial transcripts
and video; translation services for documents, depositions, and trial; trial technology
support and services; technology support for document collection and
production; photocopying charges; courier services and process services for
subpoenas; computerized legal research; travel and meal expenses for attorneys and
witnesses for hearings, depositions, and trial; and teleconference services.
60
Staffieri, 2013 WL 4038110, at *6 (distinguishing expenses awarded under the bad
faith exception from expenses awarded as a matter of course under Rule 54(d) and
collecting cases); see also Kuratle Contracting, Inc., 2014 WL 5391291, at *8 (noting that
the fee-seeking party may recover costs and expenses under the bad faith exception beyond
those recoverable under Rule 54(d)).
61
Staffieri, 2013 WL 4038110, at *6 (citing Scion Breckenridge Managing Member,
LLC v. ASB Allegiance Real Estate Fund, 2013 WL 1914714, at *12 (Del. May 9, 2013)).
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 18 of 22
The Affidavit and accompanying submissions identify reasonable expenses,
including standard items like photocopying, legal research, and court costs. 62
Lynch disputes only some travel expenses; 63 Defendants bear the burden of
justifying those expenses.64 Lynch does not challenge the remaining expenses, and
none appears unreasonable.
Lynch objects first to Gonzalez’s $5,749 in hotel expenses for the three-day
trial. Defendants explained that Gonzalez stayed at the Hotel DuPont, and he chose
a larger room because he conducted business during his trip. I agree with Lynch that
this expense is unreasonable in view of less expensive accommodations within equal
or similar proximity to counsel’s offices and the courthouse. And expenses incurred
to conduct business as usual, rather than litigation, should not be shifted. To remedy
this issue, I adopt Defendants’ proposed solution: they are awarded only the cost of
62
See, e.g., D.I. 254, Compendium A, Tabs 1–6; D.I. 257, App. A, B.
63
See D.I. 261 at 13–15 (collecting citations to objectionable expenses). Lynch’s objection
to these expenses was based, in part, on their contention that Defendants did not provide
invoices. Defendants rectified this issue, providing substantiating details and booking
confirmations. See D.I. 268, Ex. B. In addition, briefing resolved Lynch’s objection to
nonrefundable airfare costs for Miami counsel’s travel to Delaware for post-trial argument
on April 8, 2020. See D.I. 268 at 14.
64
See Fitracks, 58 A.3d at 997.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 19 of 22
Morelia Gonzalez’s accommodations for trial, totaling $1,995.50, which Lynch did
not object to as unreasonable.65
Next, Lynch objects to $1,910.30 in travel expenses for Juan Salvador
Gonzalez, who was not a party or deponent in this matter and who did not testify at
trial. This objection is overruled. Defendants listed Juan Salvador as a witness on
the pre-trial order and reserved the right to call him to testify at trial. Defendants
represented to the Court that they had the intention of doing so, but ultimately choose
not to because of time constraints at trial. I do not second-guess counsel’s decision
to identify Juan Salvador as a witness or to forego calling him to the stand.66 An
award including his travel expenses is reasonable.
Lynch also objects to two airline tickets worth $5,393 each for witnesses
Liliana Silvia Casaleggio and Silvia Susana Curuchet to travel from Argentina to
Wilmington to testify at trial. Defendants concede that the airfare was first class for
the nine-hour leg of their flights between Argentina and Philadelphia.67 This Court
has recognized that first class airline tickets are “an expense generally considered
65
See D.I. 257, App. A at A-111.
66
See O’Neil, 2018 WL 3025470, at *6; Weil, 2018 WL 834428, at *12; Aveta, 2010 WL
3221823, at *8; Arbitrium, 1998 WL 155550, at *4.
67
See D.I. 268, Ex. B at B-27 to B-29.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 20 of 22
unreasonable.”68 However, I agree with Defendants that this upgraded seating was
a reasonable accommodation in this instance given the length of these flights, which
totaled nearly twenty-four hours, and given the fact that these were third-party
witnesses called to testify in a foreign court under penalty of perjury. This expense
is reasonable under the circumstances, and Lynch’s objection is overruled.
Next, Lynch objects to an “unsupported” spreadsheet of $7,789.30 in
expenses surrounding Fernando Guido Contreras Lopez’s deposition, 69 which
includes at least $463.38 in travel expenses between November 2 and 3, 2019, when
depositions concluded on October 31. 70 Defendants, who bear the burden of
justifying this expense and demonstrating that it is reasonable, do not respond to this
objection. 71 From my review of this spreadsheet, I cannot conclude that these
expenses are reasonable on their face, as many of the expenses were distant in time
or location from Lopez’s deposition. 72 The fee award shall therefore be reduced in
the amount of $7,789.30.
68
Underbrink v. Warrior Energy Servs. Corp., 2009 WL 536904, at *5 (Del. Ch.
Feb. 24, 2009).
69
See D.I. 261 at 14.
70
See D.I. 257, App. A at A-112.
71
See D.I. 268 at 12–15.
72
See D.I. 257, App. A at A-112.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 21 of 22
Finally, Lynch objects to $1,348.60 in business class airfare for Delaware
counsel’s travel to Miami for depositions, citing the proposition that first-class
airfare is “generally considered unreasonable.” 73 As with the other fees and
expenses in this matter, Defendants paid this expense at the time it was incurred and
when they had no knowledge that the expense may be shifted to Lynch.74 Under
these circumstances, noting that the cited airfare rule is not completely apposite, I
find that this travel expense is reasonable.
III. Conclusion
Subject to the specific deductions identified herein, the Application is
GRANTED. The Motion is also GRANTED in total. Plaintiffs’ fee application
remains outstanding, as they have yet to submit more detailed statements as
requested.75 If the parties are not able to resolve Plaintiffs’ application within five
days and submit an order for a final fee award implementing this decision and that
resolution, Plaintiffs shall submit the requested materials. Once the fee applications
are resolved, the Court will enter a final order and judgment.
73
Underbrink, 2009 WL 536904, at *5.
74
Aveta, 2010 WL 3221823, at *6.
75
See D.I. 245.
Carlos Eduardo Lorefice Lynch, et al., v. R. Angel Gonzalez Gonzalez, et al.,
Civil Action No. 2019-0356-MTZ
September 18, 2020
Page 22 of 22
Sincerely,
/s/Morgan T. Zurn
Vice Chancellor
MTZ/ms
cc: All Counsel of Record via File & ServeXpress