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Toshiba America Medical Systems, Inc. v. Valley Open MRI

United States District Court, M.D. Pennsylvania

April 26, 2017

TOSHIBA AMERICA MEDICAL SYSTEMS INC., Plaintiff
v.
VALLEY OPEN MRI and, DIAGNOSTIC CENTER, INC., et al., Defendants

          MEMORANDUM

          MALACHY E. MANNION United States District Judge

         Pending before the court is the plaintiff's request for attorneys' fees and costs after its motion for summary judgment, (Doc. 25), was granted and judgment was entered in plaintiff's favor with respect to Counts I and II of its amended complaint, breach of contract claims pertaining to defendants' failure to pay for leased medical equipment, including an MRI machine. Since Toshiba has not demonstrated its entitlement to all of its claimed attorneys' fees and costs, and since the court has conducted a calculation of the lodestar after determining reasonable rates and hours, its request will be granted in part and denied in part.

         I. BACKGROUND

         On November 20, 2015, the court issued Order, (Doc. 36), based on the reasons set forth in an accompanying Memorandum, (Doc. 35), which directed as follows:

1. Toshiba's motion for summary judgment, (Doc. 25), is GRANTED with respect to the breach of contract claims, Counts I and II of the amended complaint, (Doc. 6).
2. Toshiba's motion for summary judgment is DENIED AS MOOT with respect to the replevin claim, Count III.
3. Defendants' request for oral argument, (Doc. 34), is DENIED, as unnecessary.
4. Judgment is entered in favor of Toshiba and against all defendants in the amount of $1, 289, 413.72.
5. The Clerk of Court is directed to CLOSE this case.

See 2015 WL 7351579 (M.D.Pa. Nov. 20, 2015).

         On December 18, 2015, defendants Valley Open MRI and Diagnostic Center, Inc., Juan D. Gaia, M.D., and I & G Realty Company (“defendants”) timely filed a notice of appeal regarding the November 20, 2015 Memorandum and Order. (Doc. 38). Defendants claimed that the granting of summary judgment for plaintiff Toshiba America Medical Systems, Inc. (“Toshiba”) was improper regarding the scope of damages and attorneys' fee awarded.

         On December 28, 2016, the Third Circuit filed an Opinion affirming this court's finding that Toshiba did not have a duty to mitigate damages. However, the Third Circuit vacated this court's judgment with respect to the award of attorneys' fees and remanded the case to analyze the reasonableness of the claimed fees. See Toshiba, -Fed.Appx.----, 2016 WL 7467982 (3d Cir. Dec. 28, 2016).

         The Third Circuit also issued a Judgment on December 28, 2016 reversing in part and affirming in part this court's November 20, 2015 Order. (Doc. 45). The Third Circuit vacated only the portion of this court's Judgment that awarded attorneys' fees to Toshiba and remanded the case to this court “for an analysis of the reasonableness of the claimed fees.” Toshiba, __ Fed.Appx. ___, 2016 WL 7467982, *1.

         On February 9, 2017, this court issued an Order establishing a briefing schedule regarding Toshiba's request for attorneys' fees and costs. (Doc. 46). The court indicated that after the matter was briefed, it would decide if a hearing was necessary to determine the reasonableness of the attorneys' fees requested.[1] As directed, Toshiba filed its brief in support of its attorneys' fee request on February 27, 2017, with documentation specifying the number of hours spent by each attorney involved with the case and the rates charged, as well as other relevant billing information supporting its requested fees pursuant to McMullen v. Kutz, 603 Pa. 602, 985 A.2d 769, 774 (2009). On March 13, 2017, defendants filed their brief in opposition to the requested attorneys' fees. (Doc. 48). They did not submit any documentation with their brief. On March 20, 2017, Toshiba filed its reply brief with additional documentation. (Doc. 49).

         II. DISCUSSION

         The portion of the original Judgment in the total amount of $1, 289, 413.72 that was attributable to attorneys' fees was $87, 604.64, as of September 11, 2015, based on the Declaration of Trish Malone, financial Director of Toshiba. (Doc. 25-4, at 47-48). As such, defendants are presently obligated to pay the remaining undisturbed portion of the Judgment awarded to Toshiba in the amount of $1, 201, 809.08. The court must now make findings as to the reasonableness of the attorneys' fees and costs requested by Toshiba and provide a statement as to the standard governing its award. See Sec. Mut. Life Ins. Co. of N.Y., 979 F.2d at 332.

         Initially, there is no dispute that the lease agreement between Toshiba and defendants allowed for an award of “reasonable attorneys' fees” and costs. In fact, the Third Circuit held that the Lease Agreement “unambiguously states” that defendants “shall also be liable for and shall pay to Lessor [Toshiba] . . . Lessor's reasonable attorneys' fees.” Toshiba, -Fed.Appx.-, 2016 WL 7467982, *5. Specifically, Section 14 of the Lease Agreement, (Doc. 47, Ex. A), provided, in part, that in the event of a default:

Lessee shall also be liable for and shall pay to Lessor: (I) all expenses incurred by Lessor in connection with the enforcement of any of Lessor's remedies, including all expenses of repossessing, storing, shipping, repairing and selling the System; and (iii) Lessor's reasonable attorney's fees.

         Thus, defendants are obliged to pay all expenses incurred regarding the enforcement of any of Toshiba's remedies as well as Toshiba's reasonable attorneys' fees incurred while enforcing its remedies since there was a clear agreement by the parties regarding these costs. See De Hart v. HomEq Servicing Corp., 47 .Supp.3d 246, 255 (E.D.Pa. 2014) (“Pennsylvania courts have ‘consistently followed the general, American rule that there can be no recovery of attorneys' fees from an adverse party, absent an express statutory authorization, a clear agreement by the parties or some other established exception.'”) (citation omitted).

         Nor is there any dispute that the court must analyze the reasonableness of Toshiba's requested attorneys' fees pursuant to Pennsylvania law.[2] Under Pennsylvania law, the reasonableness of the requested attorneys' fees is within the sound discretion of the trial court. In re LaRocca's Tr. Estate, 431 Pa. 542, 246 A.2d 337, 339 (1968). However, “Pennsylvania courts have found an abuse of discretion when the trial court fails to provide ‘an explanation ... of the basis for the award [of attorneys' fees].'” Toshiba, __ Fed.Appx.__, 2016 WL 7467982, at *2 (citing Sec. Mut. Life Ins. ...


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