Free Motion for New Trial - District Court of Colorado - Colorado

Case 1:04-cv-01258-LTB-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 04-cv-1258-LTB-BNB STUDENT MARKETING GROUP, INC., Plaintiff, v. COLLEGE PARTNERSHIP, INC., f/k/a COLLEGE BOUND STUDENT ALLIANCE, INC., Defendant. ______________________________________________________________________________ MOTION FOR NEW TRIAL OR TO ALTER OR AMEND JUDGMENT AWARDING ATTORNEY FEES AND TO STAY ENFORCEMENT OF JUDGMENT ______________________________________________________________________________ Defendant College Partnership, Inc. ("College Partnership"), by and through its counsel, Rosemary Orsini and Brian K. Matise of Burg Simpson Eldredge Hersh & Jardine, P.C., pursuant to Fed. R. Civ. P. 59 and 62(b), hereby moves the Court for a new trial or to alter or amend the judgment awarding attorney fees and costs, entered January 3, 2006, and to stay execution of judgment pending the Court's decision on whether to re-open the judgment. As grounds therefor, Defendant states as follows: LOCAL RULE 7.1 CERTIFICATE OF COMPLIANCE Pursuant to D.C.COLO.LCivR. 7.1, Rosemary Orsini, counsel for Defendant, conferred on January 18, 2006 with Patrick McElhinny, counsel for Plaintiff regarding this request. Plaintiff opposes this motion.

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INTRODUCTION College Partnership moves the Court to alter or amend the Judgment Awarding Attorney Fees and Costs entered by the Clerk on January 3, 2006 [Doc. 167], ("Judgment"), pursuant to the Court's Order of December 28, 2005 [Doc. 166] ("Order"). The Court tried the matter of attorney fees on the affidavits submitted rather than permitting an evidentiary hearing, which College Partnership specifically requested. As a preliminary matter, the Judgment must be vacated because the Court appears to have committed clear error by failing to subtract $5,169.32 in costs that the Court previously included in the Judgment for Costs entered on September 28, 2005. Plaintiff, in its Reply Brief filed October 19, 2005 [Doc. 151] requested only $279,547.06 in fees and costs, after subtracting $5,169.32 for the costs already awarded. Plaintiff admitted that this amount should be subtracted. The Court's order awarded $284,716.30 in fees and costs, which apparently did not subtract the costs previously taxed. College Partnership also requests that the Court vacate the Judgment and permit an evidentiary hearing on the reasonableness of the attorney fees and costs. College Partnership respectfully submits that an evidentiary hearing is required in this matter where there are serious factual disputes regarding the reasonableness of fees and costs, requiring the Court to weigh the credibility of expert opinions, or where the record is insufficiently developed by either party to permit the Court to make such a determination, a hearing is required. An evidentiary hearing would be required under the law of the State of Colorado in this diversity action if this matter -2-

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were before the Colorado state courts. Similarly, if Plaintiff had submitted the amount of attorney fees to the Court together as an element of contractual damages with its Motion for Summary Judgment pursuant to Fed. R. Civ. P. 54(d)(2), disputed facts would preclude a judgment. The procedural differences of submitting the request for attorney fees by motion in federal court should not alter the requirement of a hearing, nor shift the burden of proof so far in favor of the Plaintiff. Because of the clear error in the Judgment which must be corrected, College Partnership also requests pursuant to Fed. R. Civ. P. 62(b) that the Court exercise its discretion to stay execution of the judgment for attorney fees pending disposition of this Motion.

I.

STANDARDS FOR GRANTING MOTION FOR NEW TRIAL OR TO ALTER OR AMEND JUDGMENT. A district court has broad discretion to grant a new trial. Whitely v. OKC Corp., 719 F.2d

1051, 1059 (10th Cir. 1983). Grounds for a new trial to the Court are broad, and include any grounds for which rehearing could be granted. Fed. R. Civ. P. 59(a). A court should exercise its discretion to grant a new trial where necessary to prevent injustice. Plaut v. Estate of Rogers, 959 F. Supp. 1302, 1304-05 (Colo. 1997). Similarly, a district court has broad discretion to grant a motion to alter or amend a judgment that has been timely filed. Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997). The Motion for Attorney Fees and Costs was tried to the Court without a jury; accordingly, the Court may open the judgment if one has been entered, take additional testimony, amend findings

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of fact and conclusions of law or make new findings of fact and conclusions of law, and direct entry of a new judgment. Fed. R. Civ. P. 59(a). In the present case, the Court should order a new trial of the attorney fee motion by evidentiary hearing rather than the trial on the affidavits to prevent injustice. The Court based its decision on the Motion for Attorney Fees by finding the Affidavit of College Partnership's expert witness to be non-persuasive because the expert's opinion was that the hourly rates of certain attorneys were out of line with "Colorado" rates as opposed to "Denver" rates. This issue of "Colorado" rates versus "Denver" rates was not raised by opposing counsel prior to the Court issuing its ruling, and College Partnership's expert could not address this issue. A new trial by evidentiary hearing is also required to fully develop the record, based on the Court's findings that College Partnership had not submitted affidavits on certain issues (for which Plaintiff did not submit affidavits, either). The Court should alter or amend the judgment by vacating the judgment and conducting an evidentiary hearing to avoid error. Allowing College Partnership an evidentiary hearing on the attorney fee issue prevents error that would result from impermissibly shifting the burden of proof on a breach of contract claim to the defendant. Furthermore, altering or amending the judgment would allow the Court to consider whether it has misapprehended College Partnership's argument. II. COLLEGE PARTNERSHIP'S MOTION IS TIMELY FILED As a prerequisite to this Motion, College Partnership notes that the Court has jurisdiction to grant either a Motion for New Trial or a Motion to Alter or Amend Judgment pursuant to Fed. -4-

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R. Civ. P. 59. Motions for a new trial must be filed no later than 10 days after entry of the judgment. Fed. R. Civ. P. 59(b). Similarly, motions to alter or amend judgment must also be filed within 10 days after entry of judgment. Fed. R. Civ. P. 59(e). The Judgment was entered January 3, 2006. See Judgment Awarding Attorney Fees and Costs, entered January 3, 2006 [Doc. 167]. This Motion is filed on the tenth day after entry, excluding Saturdays, Sundays, and legal holidays as provided in Fed. R. Civ. P. 6(a).

III.

THE JUDGMENT MUST BE ALTERED OR AMENDED TO CORRECT CLEAR ERROR IN THE CALCULATION OF COSTS AND FEES. The Court's December 28, 2005 Order directs entry of judgment for fees and additional

costs in the amount of $284,716.30. The Clerk complied with this Order by entering judgment in that precise amount on January 3, 2006. However, Plaintiff only sought $279,547.06 in costs and fees in its Reply Brief, noting that $5,169.32 in costs already had been taxed by the Clerk and reduced to judgment as part of the Bill of Costs. See Reply Brief [Doc. 151] at 8. The Judgment entered on January 3, 2006 exceeds the amount sought by Plaintiff by $5,169.24 - almost exactly the same as the costs previously taxed that all parties agree should be subtracted. The $0.08 difference appears to be a minor calculation error that resulted when the attorney fees sought by Pittsburgh counsel ($263,018.85) was added to the attorney fees sought by Denver counsel ($21,697.53). Plaintiffs are not entitled to recover the same costs twice, as both part of the Judgment for Costs and the Judgment for Attorney Fees and Costs. The Court, therefore, should alter or amend the judgment to correct this mistake. -5-

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IV.

THE COURT SHOULD GRANT A NEW TRIAL BY EVIDENTIARY HEARING AS OPPOSED TO THE TRIAL BY AFFIDAVIT.

A.

An Evidentiary Hearing is Required Where The Court Must Resolve Serious Factual Disputes.

An evidentiary hearing is generally preferred, if not required, when factual disputes exist in connection with a request for attorney fees. Gamble v. Kerr McGee Corp., 175 F.3d, 762, 774(10th Cir. 1999); Michael A. Cramer, MAI, SRPA, Inc. v. United States, 47 F.3d 379, 383 (10th Cir. 1995). An "evidentiary hearing, complete with cross-examination, is imperative" where there are many"vigorous disputes of fact over the elements that [comprise a] fee award." City of Detroit v. Grinnell Corp., 495 F.2d 448, 473 (2d Cir. 1974). Similarly, the failure to hold an evidentiary hearing is "inconsistent with the exercise of sound judicial discretion" if the record is inadequate for the Court to make factual findings; the parties should be permitted to supplement the testimony in their Affidavits through such a hearing. Cramer v. United States, 47 F.3d 379, 385 (10th Cir. 1995); King v. McCord, 621 F.2d 205, 206-07 (5th Cir. 1980). The Court denied College Partnership's request for an evidentiary hearing and proceeded to rule on the Motion for Attorney Fees based on the affidavits and other evidence before the Court. See Order at 11-12. However, the Court also recognized that the parties had presented conflicting affidavits on the prevailing rates of both senior partners and senior paralegals. Id. at 7. The Court weighed affidavit testimony from Bennet Aisenberg that the rates charged by KLNG's partner and senior paralegal were "well in excess of the prevailing rates charged by Colorado attorneys," evidence that Plaintiff's local counsel, Lewis & Scheid, charged rates far less than -6-

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Plaintiff's Pennsylvania counsel ($250 per hour for a partner versus $377.20 to $404.80), and evidence from a 2004 survey of the National Association of Legal Assistants that indicate the hourly rates of $162 to $165 per hour were far in excess of any statistical range of typical paralegal hourly rates ($79/hour average in the Rocky Mountain region, $102 to $116 per hour for paralegals with more than 30 years of experience, and $120 per hour for large law firms nationally). The Court found this evidence to be unpersuasive, and particularly noted that Mr. Aisenberg's affidavit was lacking because it was too conclusory and that Mr. Aisenberg referred to "Colorado" rates as opposed to "Denver" rates. Id. at 8-9. The Court also found that it was "unclear" as to whether Mr. Aisenberg incorrectly considered an associate to be a paralegal despite the fact that Mr. Aisenberg specifically referred to "senior paralegal rates." The Court's opinion indicates that it had discounted Mr. Aisenberg's affidavit based on questions the Court had, such as whether Mr. Aisenberg meant "Denver" rates when he referred to "Colorado" rates, whether he incorrectly considered Ms. Karg's rate as a "paralegal" rate, and what was the basis of his opinion that the Court found to be too conclusory. These type of questions that the Court raised could have been answered had there been an evidentiary hearing in which Mr. Aisenberg could have testified. In particular, College Partnership had no opportunity to address the deficiencies in Mr. Aisenberg's affidavit that the Court raised sua sponte. Opposing counsel did not raise the issues of whether Mr. Aisenberg incorrectly considered Ms. Karg's rate as a "paralegal" rate, or whether Mr. Aisenberg's reference to "Colorado" rates meant his opinion was not specific to "Denver" rates. An evidentiary hearing would have permitted College Partnership to address these issues. -7-

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B.

An Evidentiary Hearing Is Required to Fully Develop the Record that the Court Found Deficient.

Neither party submitted affidavits on whether certain costs claimed by Plaintiff and lumped into categories such as "employee overtime," "overtime expenses," "word processing" without explanation were appropriate. The Court determined that the lack of evidence meant that Plaintiff was automatically entitled to recover these amounts. The Court did not request any explanation from Plaintiff as to what these amounts were for, or how they were calculated. An evidentiary hearing would have been appropriate for resolving these issues. Without even knowing what these amounts were for, College Partnership was required to present evidence to refute the appropriateness of these amounts. The burden of proof effectively was shifted so far in favor of the Plaintiff and against College Partnership as to make the Court's review meaningless. An evidentiary hearing is appropriate where the record requires supplementation to resolve a dispute. Cramer v. United States, 47 F.3d 379, 385 (10th Cir. 1995); King v. McCord, 621 F.2d 205, 206-07 (5th Cir. 1980); Lindy Bros. Builders, Inc. v. American Radiator & Std. Sanitary Corp., 487 F.2d 161, 169. C. An Evidentiary Hearing Promotes Consistency With Colorado Law, Avoiding Forum Shopping in Diversity Cases Such as This.

This is a diversity case, brought under Colorado state law. Colorado substantive law therefore applies. Plaintiff seeks attorney fees under Colorado contract law, as an element of damages. The authority granted a trial court to award attorney fees in such cases cannot contravene state law. -8-

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Shelak v. White Motor Co., 636 F.2d 1069, 1071 (5th Cir. 1981). Where a party seeks attorney fees as damages under a state's substantive law, the party may prove those damages at trial. Fed. R. Civ. P. 54(d)(2). As the party seeking attorney fees, the Plaintiff would have the burden of proving its damages (including attorney fees) by a preponderance of the evidence. If this action had been brought in state court, an evidentiary hearing would be mandatory in this case pursuant to C.R.C.P. 121 § 1-22, notwithstanding the discretionary language. Roberts v. Adams, 47 P.3d 690, 700 (Colo. App. 2002). If the attorney fees had been awarded as an element of damages at a trial, evidence similarly would be presented. The Court, by acknowledging the need to weigh competing expert witness testimony, has recognized a factual dispute that certainly would survive a summary judgment motion. Under these circumstances, the procedural posture of this case should not shift the burden of proof and preclude College Partnership an evidentiary hearing. In the interest of maintaining a consistent result regardless of whether this case were brought in federal court or state court, an evidentiary hearing should be granted. This will avoid "forum shopping" in diversity cases such as this. D. The Court Should Stay Execution Pursuant to Fed. R. Civ. P. 62(b).

Fed. R. Civ. P. 62(b) permits the Court to stay execution on a judgment while a motion pursuant to Fed. R. Civ. P. 59 is pending. Because the Judgement must be vacated to correct clear error, the Court should grant the stay pending briefing of this Motion. WHEREFORE, College Partnership respectfully requests that the Court alter or amend the Judgment entered January 3, 2006 to correct the double award of costs, vacate the Judgment -9-

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and Order, grant College Partnership a new trial in the form of an evidentiary hearing to resolve factual disputes, and stay execution of the Judgment pending resolution of this Motion. DATED this 18th day of January, 2006. Respectfully submitted, BURG SIMPSON ELDREDGE HERSH & JARDINE, P.C.

/s Brian K. Matise Brian K. Matise 40 Inverness Drive East Englewood, Colorado 80112 Telephone: (303) 792-5595 Facsimile: (303) 708-0527 ATTORNEYS FOR DEFENDANT COLLEGE PARTNERSHIP, INC.

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CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 18th day of January, 2006, I electronically filed the foregoing with the Clerk of Court using the CM/ECF System which will send notification of such filing to the following at their email address on file with the Court: Gary Parish, Esq. R. Daniel Scheid, Esq. Sander, Scheid, Ingebretsen, Miller & Parish P.C. 700 17th St., Suite 2200 Denver, CO 80202 [email protected] Patrick J. McElhinny, Esq. Dianna S. Karg, Esq. Kirkpatrick & Lockhart LLP 535 Smithfield St. Henry W. Oliver Building Pittsburgh, PA 15222 [email protected]

/s Sharla Sheeks Sharla Sheeks, Legal Assistant

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