Plaintiff Wins Fees After Default Set-Aside

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Although an award of attorney’s fees was not an explicit condition of a Norfolk U.S. District Court’s decision to set aside a default judgment for plaintiff in this IT contract dispute, the magistrate judge recommends an award of fees and costs, with slight reductions in the amount of hours requested; however, the magistrate judge recommends against a fee award under 28 U.S.C. § 1927, as alleged misconduct by defense counsel happened in a different federal court.

Pinpoint has moved for reimbursement of attorney’s fees and costs incurred in preparing its motion for default judgment, its response to Atlas’s motion to set aside entry of default and its motion to strike Atlas’s untimely brief in opposition to the motion for default judgment. Altogether, Pinpoint seeks reimbursement of $55,731.50 in attorney’s fees and $136.09 in costs. In the absence of bad faith conduct, the court finds no basis for imposing sanctions on defense counsel personally with respect to Atlas’s failure to respond to the complaint.

Pinpoint’s reliance on Lolatchy v. Arthur Murray Inc., 816 F.2d 951 (4th Cir. 1987), and Wilcox v. Triple D Corp., 78 F.R.D. 5 (E.D. Va. 1978), however, is well taken. These cases recognize the court’s inherent power and the discretion granted to it by Fed. R. Civ. P. 55(c) permit the court to impose conditions on an order vacating a default, such as reimbursement of fees and costs incurred by a non-defaulting party.

While the court did not expressly condition granting the Rule 55(c) motion on payment of attorney’s fees and costs, the court now finds that reimbursement of plaintiff’s costs associated with plaintiff’s motion to strike and plaintiff’s response to defendant’s motion to asset aside default was an implicit condition to the granting of the Rule 55(c) motion to set aside default.

The court recommends that plaintiff’s motion for attorney’s fees and costs be granted to the extent it seeks reimbursement from defendant Atlas of reasonable attorney’s fees and costs incurred by Pinpoint in connection with plaintiff’s response to defendant’s motion to set aside default and to change venue and plaintiff’s motion to strike defendant’s memorandum in opposition to motion to certify entry of default, and that it be denied with respect to reimbursement of attorney’s fees and costs incurred by Pinpoint in connection with the motion for default judgment and for certification of default judgment as final as to counts I and II and denied with respect to reimbursement from defense counsel personally.

The court has reviewed the billing records and finds the hours expended to be reasonable, subject to the following exceptions. In review of the motion to set aside default, the court finds “formulate response” and the entirely redacted entry for a task to be too vague and insufficient and will reduce the reimbursable time from 5.3 hours to 2.0 hours at $380 per hour. Likewise, in a billing for review of the motion to set aside, conferencing with other attorneys, legal research, research and drafting the motion to strike, the court finds various redacted tasks to be too vague and insufficient to support an award of fees for those particular tasks, and the court will further discount total hours for overconferencing and reduce the reimbursable time from 28.9 hours to 25.4 hours at a rate of $310 per hour. For similar tasks, the court reduces a third attorney’s reimbursable time from 61.8 hours to 57.2 hours at a rate of $295 per hour.

The court finds that an award of attorney’s fees in the amount of $25,508 is a reasonable award and recommends that award be granted to plaintiff, as against defendant.

However, the court recommends denying an award of attorney’s fees and costs against defendant as a sanction pursuant to 28 U.S.C. § 1927, as the misconduct alleged in this case occurred before another federal district court in Puerto Rico, and should be punished by that court, rather than this one.

Pinpoint IT Services LLC v. Atlas IT Export Corp. (Stillman) No. 2:10cv516, Sept. 27, 2012; USDC at Norfolk, Va.; George H. Bowles for plaintiff; Jane A.B. Whitaker for defendants. VLW 012-3-478, 21 pp.