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MASH ENTERPRISES, INC. v. PROLEASE ATLANTIC CORPORATION

July 19, 2004.

MASH ENTERPRISES, INC. f/k/a HUMAN RESOURCE OPTIONS, INC. and PROFESSIONAL LEASING CONCEPTS, INC., Plaintiffs,
v.
PROLEASE ATLANTIC CORPORATION, et al., Defendants.



The opinion of the court was delivered by: ROBERT KELLY, Senior District Judge

MEMORANDUM

Presently pending before this Court is the Motion for Attorneys' Fees and Costs filed by Defendant, Prolease Atlantic Corporation ("Prolease Atlantic"), and the Response and Rely thereto. For the following reasons, Defendant's Motion will be granted in part and denied in part.

I. BACKGROUND*fn1

  This action arises out of the purchase of substantially all of the assets of Human Resource Options, Inc. ("HRO"), the predecessor in interest of Plaintiff MASH Enterprises, Inc. ("MASH"), by Prolease Atlantic pursuant to a Purchase Agreement ("Agreement"). As a result of this purchase, Plaintiffs and Defendants sued each other alleging, among other things, breach of contract and fraud. A non-jury trial was held regarding this matter from November 3, 2003 through November 5, 2003. On March 4, 2004, this Court issued Findings of Fact and Conclusions of Law wherein the following judgments were rendered: judgment was entered in favor of Prolease Atlantic in connection with Plaintiffs' breach of contract claim; Prolease Atlantic was granted a set off in the amount of $2,066,875.00; judgment was entered in favor of Prolease Atlantic against Plaintiffs in the amount of $2,540.00 on the counterclaims for breach of contract, fraud and negligent misrepresentation; and Prolease Atlantic was awarded attorneys' fees and costs.*fn2 Pursuant to Paragraph 28 of the Purchase Agreement, "the prevailing party in any legal proceeding between the parties would be entitled to attorneys fees and costs." (See Doc. No. 189). This Court awarded Prolease Atlantic its attorneys' fees and costs finding that it was the prevailing party in the action. On March 26, 2004, Plaintiffs filed a Notice of Appeal pertaining to this Court's judgment.*fn3 Defendant's Motion for Attorneys' Fees and Costs is currently being addressed because it is the sole remaining issue in this case that is within this Court's jurisdiction.*fn4

  II. DISCUSSION

  Defendant seeks a total award of $316,149.25 in attorneys' fees and costs. Plaintiffs argue that Defendant is not entitled to a judgment in the full amount of its attorneys' fees and costs claimed in its Motion for Attorneys' Fees and Costs. Specifically, Plaintiffs argue that Defendant is not entitled to an award of attorneys' fees and costs: (1) incurred prior to the commencement of the lawsuit; (2) incurred in connection with its Motion to Dismiss for Lack of Subject Matter Jurisdiction; or (3) billed by local counsel McKenna, Walker & Capriotti, P.C.*fn5 Each of Plaintiffs' arguments will be addressed seriatim.

  A. Attorneys' Fees and Costs

  "In Maryland . . . a prevailing party ordinarily is not entitled to recover attorneys' fees as part of compensatory damages."*fn6 Atl. Contracting & Material Co., Inc. v. Ulico Cas. Co., 380 Md. 285, 315, 844 A.2d 460, 477 (2004) (citation omitted). However, "[l]itigation expenses . . . may be awarded where the parties' contract provides for fees and costs." Id. (citation omitted). "A contractual obligation to pay attorneys' fees generally is valid and enforceable in Maryland" Id. (citations omitted); see also Canusa Corp. v. A&R Lobosco, Inc., 986 F. Supp. 723, 734 (E.D.N.Y. 1997) ("Under Maryland law, attorney's fees may be awarded to the prevailing litigant when they are provided for in a contract."). "Absent misconduct or fraud, overreaching, misrepresentation, or other grounds for voiding the contract, a contractual provision for awarding attorneys' fees may be enforced." Id. (citation omitted).

  "Where an award of attorneys' fees is called for by the contract in question, the trial court will examine the fee request for reasonableness, even in the absence of a contractual term specifying that the fees be reasonable." Id. (citation omitted). Generally, "[t]he reasonableness of attorneys' fees is . . . a factual determination within the `sound discretion of the trial judge and will not be overturned unless clearly erroneous.'" Id. (quoting Reisterstown Plaza Assocs. v. Gem. Nutrition Ctr., Inc., 89 Md. App. 232, 248, 597 A.2d 1049, 1057 (1991)). The party seeking recovery carries the burden to provide the evidence necessary for the fact finder to evaluate the reasonableness of the fees. Id. (quoting Maxima Corp. v. 6933 Arlington Dev. Ltd. P'ship, 100 Md. App. 441, 454, 641 A.2d 977, 983 (1994)).

  According to Maryland case law, the quality and amount of information that a claimant is required to provide is as follows:
(a) the party seeking the fees, whether for him/herself or on behalf of a client, always bears the burden of presenting evidence sufficient for a trial court to render a judgment as to their reasonableness; (b) an appropriate fee is always reasonable charges for the services rendered; (c) a fee is not justified by a mere compilation of hours multiplied by fixed hourly rates or bills issued to the client; (d) a request for fees must specify the services performed, by whom they were performed, the time expended thereon, and the hourly rates charged; (e) it is incumbent upon the party seeking recovery to present detailed records that contain the relevant facts and computations undergirding the computation of charges; (f) without such records, the reasonableness, vel non, of the fees can be determined only by conjecture or opinion of the attorney seeking the fees and would therefore not be supported by competent evidence.*fn7
B&P Enters. v. Overland Equip. Co., 133 Md. App. 583, 625, 758 A.2d 1026, 1048 (2000) (quoting Maxima, 100 Md. App. at 453-54, 641 A.2d at 977). After the claimant has presented the necessary evidence in support of an award of attorneys' fees, the trial court is required to evaluate the reasonableness of the fees. Id. (citing Holzman v. Fiola Blum, Inc., 125 Md. App. 602, 726 A.2d 818 (1999)). In order to evaluate the reasonableness of the fees, the factors to be considered are as follows:
(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.
Id. (citations omitted). "The claimant bears the burden `to provide the evidence necessary for the fact finder to evaluate the reasonableness of the fees.'" Id. (quoting Maxima, 100 Md. App. at 454, 641 A.2d at 977).

  B. Evaluation of the Disputed Attorneys' Fees and Costs

  1. Attorneys' Fees and Costs Incurred Prior to the Commencement of the Lawsuit

  Plaintiffs argue that Defendant is not entitled to an award of fees and costs in the amount of $9,715.39 incurred prior to the filing of the original Complaint. Plaintiffs state that this action was initiated on May 17, 2001, the date of the filing of the original Complaint. In light of the commencement of suit on May 17, 2001, Plaintiffs contend that Defendant's request for an award of fees and costs for invoices dated December 5, 2000, January 9, 2001, February 5, 2001, March 5, 2001, April 4, 2001 and May 4, 2001 should be denied. Defendant asserts that the attorneys' fees and costs incurred prior to the inception of the litigation are properly chargeable to Plaintiffs because they are related to the engagement of counsel by Prolease Atlantic to represent its interests with respect to Plaintiffs' breach of warranties and representations contained in the Purchase Agreement.

  Paragraph 28 of the Purchase Agreement, entitled "Attorneys' Fees," provides that "[t]he prevailing party in any legal proceeding between the parties to this Agreement shall be entitled to its attorneys' fees and costs." (Purchase Agreement, ¶ 28). Moreover, Paragraph 11 of the Purchase Agreement, entitled "Indemnification," provides, in pertinent part, as follows:
[b]etween the date of Closing and the date which is four (4) years after the date of Closing, Seller and the Shareholders shall jointly and severally indemnify Buyer, its successors and assigns, and hold it harmless from and against any and all costs, losses and damages (including reasonable expenses and reasonable legal fees), resulting from or arising out of: (1) Any breach of any representation, warranty or covenant set forth in this Agreement, or the untruth or [sic] material inaccuracy thereof, including, but not limited to, all statements or information contained in any of the Exhibits to this Agreement or any document delivered in connection herewith.
(Id., ¶ 11) (emphasis added). A reading of these two paragraphs of the Purchase Agreement negotiated in the instant case reveals that the parties clearly envisioned that the prevailing party in any lawsuit pertaining to the Agreement would be entitled ...

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