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Land Sale Help Boosts Lawyer Fees

In this litigation over dissolution of a partnership and distribution of its assets, counsels’ assistance to a Special Master in the sale of certain properties at a handsome price prompts the Alexandria U.S. District Magistrate Judge to recommend a fee to one law firm of $67,696.50 and $176,614.49 to a second law firm, both awards to be paid from the gross proceeds of sale prior to division into shares and distribution to the parties.

Counsels’ efforts

As recommended in the report and recommendation of Feb. 15, 2017, since Jennings Motor Company Inc. was only a tenant and not a partner, the court found that its fees related to the breach of lease should not be deducted from the gross sale proceeds, but be borne by Jennings Motor Co. Counsel for Michael Jennings appropriately deducted the fees allocable to Jennings Motor Company from the total billings for Michael Jennings in his statement of attorney’s fees. Jennings also, pursuant to court orders, removed additional billing entries that highlighted entries attributable to work performed for the Special Master. The total fees after revision amounted to $67,696.50.

Defendants Louis Jennings and Beverly Hennager object to paying attorney’s fees for Michael Jennings out of partnership funds and believe the parties should bear their own costs and fees. The magistrate judge finds that counsel for Michael Jennings spent substantial time and effort assisting and performing tasks for the Special Master which benefitted the partnership. These tasks included providing a source of income for the partnership and assisting in the sale to Leckner. The court heard evidence on the zoning and environmental issues and although defendants disagree with the results, counsel’s efforts were necessary to effectuate the settlement agreement. The magistrate judge recommends a finding that these remaining fees were incurred in furtherance of work for the Special Master and should be deduced from partnership funds.

Fee requests

Plaintiff Katherine Dauphin seeks attorney’s fees in two categories: those incurred in pursuit of plaintiff’s derivative claim against Louis Jennings and those incurred after the Aug. 10, 2015, partial settlement. By order dated May 3, 2017, the district judge denied plaintiff’s request for fee shifting to Louis Jennings. Thus, the total amount sought by plaintiff for post-settlement fees is $188,805, with costs of $3,209.49. The magistrate judge recommends allowing fees incurred as a result of the substantial time and effort counsel spent assisting and performing tasks for the Special Master, and preparing for the hearings before the Special Master and this court relating to the claims against the partners, all of which were in furtherance of the settlement agreement and which benefitted the partnership.

All the attorneys involved in the instant case are either at the lower end of the rates allowed in Vienna Metro LLC v. Pulte Home Corp. cited in numerous other cases involving fees in Northern Virginia. It is difficult to compare the attorney fees in this case to other cases given the unique nature of this case as a disposition of property rather than litigation. It was only due to their efforts, and that of other counsel and the Special Master, that the properties sold for many millions above what would have been expected from a forced sale. Mr. Jennings and Ms. Dauphin each are entitled to receive 40 percent and 20 percent, respectively, from the completed sale of the properties for $11.25 million and the leasehold sale proposed for $2.4 million. Thus, the fees charged by counsel for Michael Jennings and plaintiff, amounting to approximately 1.8 percent of the gross proceeds, are quite reasonable.

Dauphin v. Jennings (Buchanan) No. 1:15cv149, May 5, 2017; USDC at Alexandria, Va.; Stephen G. Cochran for plaintiff; William H. Hurd for defendant. VLW 017-3-393, 34 pp.

VLW 017-3-393