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Fallen v. Grep Southwest, LLC

United States District Court, D. New Mexico

March 30, 2017

KENTH FALLEN and LAURA FALLEN, Plaintiffs,
v.
GREP SOUTHWEST, LLC; SCI CAMINO REAL FUND, LLC, d/b/a CAMINO REAL APARTMENTS; NATIONAL CREDIT SYSTEMS, INC.; INSURECO AGENCY & INSURANCE SERVICES, INC. d/b/a SUREDEPOSIT; EQUIFAX INFORMATION SERVICES, LLC; EXPERIAN INFORMATION SOLUTIONS, INC. and TRANSUNION, LLC., Defendants.

          Kristina Martinez Coberly and Martinez, LLP Santa Fe, New Mexico and Marc M. Lowry Alicia C. Lopez Rothstein Donatelli LLP Albuquerque, New Mexico Attorneys for the Plaintiffs.

          Claud E. Vance Vance, Chavez & Associates Albuquerque, New Mexico Attorneys for Defendants GREP Southwest, LLC, and SCI Camino Real Fund, LLC.

          Charity Olson Olson Law Group Ann Arbor, Michigan Attorneys for Defendant National Credit Systems, Inc.

          MEMORANDUM OPINION AND ORDER

         THIS MATTER comes before the Court on the Plaintiffs' Motion for Attorneys' Fees, filed March 16, 2016 (Doc. 104)(“Motion”). The Court held a hearing on September 13, 2016. The primary issues are: (i) whether the Court should award the Plaintiffs, Kenth and Laura Fallen, reasonable attorneys' fees against Defendant GREP Southwest, LLC, and Defendant SCI Camino Real Fund, LLC d/b/a Camino Real Apartments (“Camino Real”); and (ii) whether the Court should award the Fallens reasonable attorneys' fees against Defendant National Credit Systems, Inc. (“National Credit”). The Court will grant in part and deny in part the Motion. The Court will not award the Fallens all the attorneys' fees that they request. The Court will, however, award the Fallens: (i) $17, 427.28 in reasonable attorneys' fees against GREP Southwest; (ii) $17, 427.28 in reasonable attorneys' fees against Camino Real; and (iii) $8, 803.47 in reasonable attorneys' fees against National Credit.

         FACTUAL BACKGROUND

         The Court takes its recitation of the facts from the Plaintiffs' Second Amended Complaint for Damages and Declaratory and Injunctive Relief, filed September 22, 2015 (Doc. 48)(“Second Amended Complaint”). The Plaintiffs, Kenth and Laura Fallen, are residents of Albuquerque, New Mexico. See Second Amended Complaint ¶ 1, at 2. On September 19, 2012, the Fallens entered into an agreement to rent an apartment at the Camino Real Apartments in Albuquerque, New Mexico, for a period of ten months and ten days, beginning September 21, 2012, and ending July 31, 2013. See Second Amended Complaint ¶ 12, at 4. The Fallens Dated this rental agreement with Camino Real, which owns the Camino Real Apartments, and GREP Southwest, which manages the apartments. See Second Amended Complaint ¶ 12, at 4. Under the agreement's terms, the Fallens had the right to terminate the agreement with sixty days written notice. See Second Amended Complaint ¶ 12, at 4. The apartment had sewer problems and was uninhabitable: sewage had overflowed from the kitchen sink, spilling over the countertop and onto the floor. See Second Amended Complaint ¶¶ 17-23, at 4-5. Hence, on April 1, 2013, the Fallens gave the Camino Real manager, Teri Shaffer, notice of their intent to vacate the apartment. See Second Amended Complaint ¶¶ 25-30, at 5. On that day, Shaffer completed a “Notice of Intent to Vacate” form, designating May 31, 2013, as the move-out date, and the Fallens initialed the form. Second Amended Complaint ¶¶ 27-30, at 5. Later, on April 16, 2013, Shaffer completed another “Notice of Intent to Vacate” form, but this time without the Fallens' knowledge or cooperation. Second Amended Complaint ¶¶ 47-52, at 7-8. This form altered the Fallens' move-out date to June 16, 2013, and purported to obligate the Fallens for sixteen days of pro-rated rent for the month of June 2013. See Second Amended Complaint ¶¶ 47-50, at 7-8.

         The Fallens vacated the apartment on May 24, 2013, and paid May's rent in full. See Second Amended Complaint ¶¶ 54-55, at 8. On June 19, 2013, Camino Real and GREP Southwest issued the Fallens a move-out statement, which billed the Fallens for $412.00 in unpaid rent for the period of June 1, 2013, to June 16, 2013. See Second Amended Complaint ¶ 59, at 9. This bill was based upon the April 16, 2013, “Notice of Intent to Vacate” form, which Shaffer completed without the Fallens' knowledge or cooperation. Second Amended Complaint ¶ 60, at 9. The Fallens refused to pay the $412.00 bill. See Second Amended Complaint ¶ 62, at 9.

         On August 13, 2013, Camino Real and GREP Southwest opened a claim with Defendant Assurant Payment Services, Inc. d/b/a Assurant Solutions d/b/a SureDeposit (“SureDeposit”), a debt collector. See Second Amended Complaint ¶¶ 5, 64, at 2, 9. SureDeposit then assigned the debt to National Credit, a national debt collection agency. See Second Amended Complaint ¶¶ 4, 65, at 2, 9. National Credit contacted the Fallens and pursued collection of the $412.00 debt. See Second Amended Complaint ¶¶ 66-79, at 9-11. The Fallens contacted Camino Real, GREP Southwest, and National Credit, making them aware that it did not owe the $412.00 debt, because the April 6, 2013, “Notice of Intent to Vacate” form was operative, and the April 16, 2013, form was fraudulent. See Second Amended Complaint ¶¶ 81-85, at 11. Nevertheless, National Credit reported the debt to three national credit agencies -- Equifax Information Services, LLC, Experian Information Solutions Inc., and TransUnion LLC -- detrimentally impacting the Fallens' credit scores. See Second Amended Complaint ¶¶ 93-98, at 12-13. The Fallens, through counsel, sought to remedy the injury by contacting the three credit agencies, but they refused to adjust the Fallens' credit scores. See Second Amended Complaint ¶¶ 99-155, at 13-21.

         PROCEDURAL BACKGROUND

         On February 19, 2015, the Fallens, injured and deeply frustrated, filed suit in federal court. See Complaint for Damages and Declaratory and Injunctive Relief at 1, filed February 19, 2015 (Doc. 1)(“Complaint”). In the Second Amended Complaint, the Fallens assert: (i) a claim against National Credit for violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681-1681x, see Second Amended Complaint ¶¶ 156-161, 189-202 at 21-22, 25-26; (ii) a claim against National Credit and SureDeposit for violations of the Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p, Second Amended Complaint ¶¶ 162-166, at 22; (iii) a claim against GREP Southwest, Camino Real, SureDeposit, Equifax Information Services, LLC, Experian Information Solutions Inc., and TransUnion LLC for violations of the New Mexico Unfair Practices Act (“UPA”), N.M. Stat. Ann. §§ 57-12-1 to 57-12-26, Second Amended Complaint ¶¶ 167-71, at 22-23; (iv) a tortious-debt-collection claim against GREP Southwest, Camino Real, and SureDeposit, see Second Amended Complaint ¶¶ 172-76, at 23; (v) a breach-of-contract claim against GREP Southwest and Camino Real, Second Amended Complaint ¶¶ 177-82, at 23-24; (vi) a claim against GREP Southwest and Camino Real for violations of the New Mexico Uniform Owner-Resident Relations Act (“UORRA”), N.M. Stat. Ann. §§ 47-8-1 to 47-8-52, Second Amended Complaint ¶¶ 183-88, at 24-25; and (vii) a claim against Equifax Information Services, LLC, Experian Information Solutions Inc., and TransUnion LLC for violations of the FCRA, 15 U.S.C. §§ 1681-1681x, see Second Amended Complaint ¶¶ 189-202 at 25-26.

         On October 22, 2015, National Credit made an offer of judgment in the amount of $4, 001.00, plus reasonable attorneys' fees and costs. See Defendant National Credit Systems, Inc.'s Response to Plaintiffs' Motion for Attorney's Fees at 1, filed April 18, 2016 (Doc. 112)(“National Credit Response”); National Credit Systems, Inc.'s Offer of Judgment at 1-2 (dated October 22, 2015), filed September 13, 2016 (Doc. 126)(“National Credit Offer of Judgment”). The Fallens rejected this offer. See National Credit Response at 1. The litigation continued. See National Credit Response at 1.

         On January 13, 2016, the Honorable Steven Yarbrough, United States Magistrate Judge for the United States District Court for the District of New Mexico, held a settlement conference at which the Fallens reached a settlement agreement with Camino Real, GREP Southwest, and National Credit on all issues except attorneys' fees. See Order at 1, filed January 15, 2016 (Doc. 90)(“Settlement Order”).[1] GREP Southwest and Camino Real agreed to pay the Fallens $2, 000.00 to settle the Fallens' claims against them. See Transcript of Rule 16 Settlement Conference at 3:8-10, taken January 13, 2016 (Doc. 129)(“Settlement Conference Tr.”)(Court). National Credit agreed to pay $1, 000.00 to settle the Fallens' claims against it. See Settlement Conference Tr. at 10:20-22 (Court).

         At the settlement conference, the Fallens and Camino Real, GREP Southwest, and National Credit agreed that the Court shall decide the issue of reasonable attorneys' fees. See Settlement Order at 1. In addition, the Fallens and National Credit agreed to cap any attorneys' fee award at a maximum of $16, 500.00. See National Credit Response at 2, 4. Unlike National Credit, however, GREP Southwest and Camino Real and the Fallens did not reach an agreement regarding a maximum attorney-fee award. See Response to Plaintiffs' Motion for Attorney's Fees at 2, filed April 8, 2016 (Doc. 108)(“Camino Real Response”). The Fallens and GREP Southwest and Camino Real agreed that the Court's determination regarding attorneys' fees would be “binding, ” such that neither side would appeal the Court's decision. See Settlement Conference Tr. at 4:16-5:20 (Lowry, Vance, Court). Magistrate Judge Yarbrough instructed the parties to discuss the issue of attorneys' fees and directed the Fallens' counsel to file a motion with the Court if the parties were unable to resolve the amount of reasonable attorneys' fees. See Order at 1.

         1. The Motion.

         The Fallens filed their Motion on March 16, 2016. See Motion at 16. The Fallens move for attorneys' fees against GREP Southwest, Camino Real, and National Credit. See Motion at 1. This litigation has not developed far beyond the pleadings, and the Fallens explain that “much of the attorney time devoted to [GREP Southwest, Camino Real, and National Credit] was accrued before the Complaint was even filed.” Motion at 4. The Fallens also state that

much time was spent by Plaintiffs' counsel in making multiple attempts to forestall [National Credit] from rubber-stamping a fraudulent debt, and then, when that proved futile, in writing multiple, methodically-detailed letters to the [credit reporting agencies] debunking the validity of the so-called debt with exhibits showing that GREP Southwest and Camino Real relied on a fraudulent ‘Notice of Intent to Vacate' form, never signed by Plaintiffs and created without their participation, in devising and reporting the debt.

         Motion at 4 (alterations added). The Fallens consequently seek a fee award against National Credit in the amount of $16, 500.00 and a fee award in the amount of $41, 324.06 from GREP Southwest and Camino Real collectively.[2] The Fallens confirm that they and National Credit “negotiated a cap limiting [National Credit's] exposure to $16, 500 in fees, ” but state that GREP Southwest and Camino Real are not subject to “any such cap.” Motion at 1.

         The Fallens argue, as a threshold matter, that the only issue before the Court is the amount of their attorneys' fees through the January 13, 2016, settlement conference. See Motion at 6. The Fallens state that they are entitled to attorneys' fees, noting that the claims that they asserted against GREP Southwest, Camino Real, and National Credit allow for an award of attorneys' fees to the prevailing party. See Motion at 5. The Fallens note that they asserted New Mexico UPA and UORRA claims against GREP Southwest and Camino Real, and that the UPA and URORRA include fee-shifting provisions. See Motion at 5 (citing N.M. Stat. Ann. §§ 47-8-48(A) and 57-12-10(C)). The Fallens also note that they settled the FDCPA and FCRA claims against National Credit and that each federal statute includes a costs-and-fee-shifting provision. See Motion at 5-6 (citing 15 U.S.C. §§ 1692k(a)(3) and 1681s-2b). The Fallens concede that they are pursuing neither costs nor fees accrued after the January 13, 2016, settlement conference. See Motion at 6.

         Turning to their argument regarding the fee amount, the Fallens state that, because they seek fees under fee-shifting statutes, the Court should determine their fee request “‘by calculating the so-called lodestar amount of a fee.'” Motion at 6 (quoting Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998)). The Fallens also maintain that “fee-shifting statutes provide for the recovery of out-of-pocket expenses” as part of reasonable attorneys' fees, so long as the expenses are normally charged to fee-paying clients and are not part of office overhead already incorporated into the attorneys' billing rates. Motion at 7 (citing Ramos v. Lamm, 713 F.2d 546, 549 (10th Cir. 1983)). The Fallens further state that a reasonable fee The Fallens' counsel, therefore, billed for time related to “GREP Southwest/Camino Real.” Motion at 2 n.1. award includes “applicable gross receipts tax, ” because “[i]t is customary for gross receipts tax to be added to any fee for attorneys' services rendered, whether on an hourly fee basis or a contingency fee basis.” Motion at 7 (citing Ramah Navajo Chapter v. Babbit, 50 F.Supp.2d 1091, 1109 (D.N.M. 1999)(Hansen, J.)). Consequently, the Fallens explain that, under a lodestar calculation, the amount of reasonable attorneys' fees and costs includes the hours reasonably expended, multiplied by reasonable hourly rates, plus gross receipt taxes, plus out of pocket expenses. See Motion at 7.

         The Fallens calculate their lodestar amount for this entire case at $151, 650.48. See Motion at 13. This sum includes the time billed and devoted to the claims against all seven Defendants in this case. See Motion at 12. This sum is based on the hours that the Fallens' attorneys, paralegals, law clerks, and assistants worked, multiplied by their respective rates, plus a 7.1875% gross receipts tax on the total fee amount. See Motion at 13.

         The Fallens stress that the Court should award their requested fees against National Credit in the amount of $16, 500.00, because the requested amount represents a “[s]ubstantial [d]iscount” from their actual fees and costs under a lodestar calculation. Motion at 13. The Fallens advert to the actual share of fees attributable to National Credit up through the January 16, 2016, settlement conference, which they calculate to be $17, 874.94, including the gross receipts tax adjustment. See Motion at 13-14. The Fallens argue that the Court should not award an amount less than the $16, 500.00 fee cap that they negotiated with National Credit, because the cap is less than that portion of their lodestar amount which is attributable to National Credit. See Motion at 14.

         Next, the Fallens argue that the Court should not award less than their requested $41, 324.06 fee against GREP Southwest and Camino Real collectively, because “those Defendants were the original wrongdoers in this case . . . .” Motion at 14. The Fallens argue that their claims against GREP Southwest and Camino Real figured prominently in their pre-filing contacts with other Defendants, and in their research and drafting. See Motion at 14. The Fallens additionally emphasize that they do not seek their costs or any fees incurred after the January 13, 2016, settlement conference. See Motion at 14.

         Last, the Fallens argue that “the fact that the requested fees exceed monetary recovery is not a valid basis for reduction of the fees, ” because they seek fees “in a consumer protection lawsuit under a fee-shifting statute . . . .” Motion at 15 (internal citations omitted). The Fallens assert, therefore, that a proportionality analysis does not apply to the determination of a reasonable fee award. See Motion at 15. The Fallens point to City of Riverside v. Rivera, 477 U.S. 561 (1986), in which the Supreme Court of the United States of America stated that “[a] rule of proportionality would make it difficult, if not impossible, for individuals with meritorious civil rights claims but relatively small potential damages to obtain redress from the courts.” Motion at 15 (citing City of Riverside v. Rivera, 477 U.S. at 578). Accordingly, the Fallens request the Court to award “fees against National Credit in the amount of $16, 500 and an award of $41, 324.06 from GREP Southwest/Camino Real.” Motion at 15.

         The Fallens attach to their motion two exhibits which demonstrate how they calculate a $41, 324.06 fee award from GREP Southwest and Camino Real collectively. See Time Common to All Defendants at 1-75, filed March 16, 2016 (Doc. 104-3)(“Common Time”); Time Attributable to Defendants GREP Southwest, LLC And SCI Camino Real Fund, LLC d/b/a Camino Real Apartments at 1-75, filed March 16, 2016 (Doc. 104-5)(“Camino Real Time”). The Fallens attribute $28, 058.76 of time to GREP Southwest and Camino Real collectively and two-sevenths of the $36, 730.08 of time common to all the Defendants -- i.e., $ 10, 494.30 -- for a sum of $38, 553.06. See Camino Real Time at 75. This sum, plus the gross receipt tax of $2, 771.00, equals the fee that they seek from GREP Southwest and Camino Real collectively --i.e., $41, 324.06. See Motion at 2.

         2. GREP Southwest and Camino Real's Response.

         GREP Southwest and Camino Real responded to the Motion on April 8, 2016. See Camino Real Response at 16. GREP Southwest and Camino Real begin by relating, in their view, a basic fact about this litigation: the Fallens' suit is a nuisance, and GREP Southwest and Camino Real settled the Fallens' claims at a small fraction of the demand to avoid the costs of litigation. See Camino Real Response at 1-5. GREP Southwest and Camino Real state that the case's central issue is whether the Fallens delivered their written notice of termination on April 1, 2013, or April 16, 2013. See Camino Real Response at 2. GREP Southwest and Camino Real aver that this is an issue that state small-claims courts frequently resolve, often without attorneys. See Camino Real Response at 2. GREP Southwest and Camino Real rehearse that the case's limited procedural history includes only a complaint, an answer, a joint status report, and a settlement conference. See Camino Real Response at 2. Before the settlement conference, GREP Southwest and Camino Real offered $1, 500.00 to settle the Fallens' claims, after the Fallens made a demand of $60, 629.33, reduced from a global demand of $175, 000.00. See Camino Real Response at 2, 5. At the settlement conference, the GREP Southwest and Camino Real settled the Fallens' claims for $2, 000.00. See Camino Real Response at 2.

         GREP Southwest and Camino Real make three basic arguments that the Fallens' counsel are not entitled to the amount of attorneys' fees they seek. See Camino Real Response at 6-15. First, GREP Southwest and Camino Real argue that the Fallens are not prevailing parties. See Camino Real Response at 6-7. GREP Southwest and Camino Real state that “a plaintiff who receives only nominal damages is not a prevailing party entitled to attorneys fees.” Camino Real Response at 6-7 (citing Farrar v. Hobby, 506 U.S. 103 (1992)). They press that the Court “should determine that the settlement involved here does not merit an award of attorney fees, ” because “[s]ettling a case for $2, 000 after demands of $175, 000 and $60, 629.33 cannot be considered an indication of having prevailed in any significant way.” Camino Real Response at 7.

         Second, GREP Southwest and Camino Real argue that the fees the Fallens seek are unreasonable. See Camino Real Response at 8. GREP Southwest and Camino Real state that whether “a resident provided notice to terminate a lease on a particular day, ” resulting in a $412.00 dispute, is not a complex question of landlord-tenant law. Camino Real Response at 8. GREP Southwest and Camino Real then allege that the market will bear a maximum of $240.00 per hour for legal work related to residential rental property. See Camino Real Response at 8. GREP Southwest and Camino Real concede that the Fallens' counsel, Marc Lowry, might be worth “every penny” of his hourly fee in a criminal case, but assert that, in light of his “stated lack of experience in landlord-tenant or consumer law, ” the fees he seeks in this case are unreasonable. Camino Real Response at 8. GREP Southwest and Camino Real argue that “the Plaintiffs' rates should be multiplied by 0.64 to reduce them to a reasonable range.” Camino Real Response at 9.

         Third, GREP Southwest and Camino Real argue that the vast majority of the time that the Fallens' counsel billed did not advance the Fallens' claims against GREP Southwest and Camino Real. See Camino Real Response at 9-15. Accordingly, GREP Southwest and Camino Real also take issue with how the Fallens' counsel arrive at their requested fee. See Camino Real Response at 9-15. GREP Southwest and Camino Real take aim at the time “allegedly attributable to [GREP Southwest and] Camino Real, which, in Camino Real Time, the Fallens calculate to be $28, 058.76.” See Camino Real Response at 9-13. GREP Southwest and Camino Real state that the Fallens have the burden to establish that billed hours are reasonable and necessary, and they argue the Fallens cannot carry that burden. See Camino Real Response at 9.

         GREP Southwest and Camino Real assert that “the time and records of counsel do not support the award of compensation for the vast majority of the efforts for which Plaintiffs seek compensation.” Camino Real Response at 10. Further, GREP Southwest and Camino Real challenge the “mistaken idea that Camino Real is responsible for everything that happened, ” Camino Real Response at 11, and therefore argue that the pre-litigation billing of the Fallens' counsel attributed to Camino Real is arbitrary and unreasonable, see Camino Real Response at 10-11. On this point, GREP Southwest and Camino Real assert:

If the costs of dealing with credit bureaus were asserted against Camino Real, it should have been asserted as a special damage, and it should have been pled specifically, itemized in the initial disclosures and considered as such in settlement negotiations with full knowledge of what was being claimed. [But a]ll items of general and special damage were settled when the parties accepted a settlement of $2, 000 for Plaintiffs' other than the attorney fees in this action.

         Camino Real Response at 11. GREP Southwest and Camino Real press that the Fallens do not assert an FDCPA claim against them, and thus contend that any billed time addressed to credit bureaus “should be excluded . . . in its entirety.” Camino Real Response at 11. GREP Southwest and Camino Real also argue that it is unreasonable to bill time for “contract interpretation, ” which really amounts to nothing more than training a law student summer intern. Camino Real Response at 11-12. Relatedly, GREP Southwest and Camino Real press that the Fallens' counsel overstaffed the case, maintaining that they “should not be charged twice and three times for services on this minimal claim.” Camino Real Response at 12. GREP Southwest and Camino Real suggest that Camino Real Time contains “128 entries of block billing with arbitrary allocations after the fact, ” and complain that numerous instances of block billing render it “very difficult to subtract unnecessary hours and come to a result.” Camino Real Response at 13. See Camino Real Time at 1-75. GREP Southwest and Camino Real assert that, under controlling case law, “the Court will need to make a determination of just what is reasonable time to spend on a case worth $2, 000, from which counsel has also received compensation from 5 other parties.” Camino Real Response at 13 (citing Jane L. v. Bangerter, 61 F.3d 1505, 1511 (10th Cir. 1995)).

         Further, GREP Southwest and Camino Real take issue with how the Fallens' counsel calculate the time which they attribute as common to all the Defendants. See Camino Real Response at 13-14. GREP Southwest and Camino Real contend:

As part of the documentation for the fees requested, Plaintiffs have submitted [Common Time], which takes the time common to all Defendants multiplied by the requested (albeit excessive) rates and divided by 7. Dividing by 7 and multiplying that amount by two, as Plaintiffs do on the last page of [Camino Real Time], makes no sense at all. The fact that Camino Real are technically two parties does not add a thing to the effort in conducting a case with them. . . .

         Camino Real Response at 14. Setting aside quibbles about overstaffing and duplicate billing, GREP Southwest and Camino Real also suggest an estimate of what, in their view, would be a reasonable fee award:

A more appropriate divisor would be 6. Division of the amounts claimed against all parties by 6 results in a total of $6, 121.68 attributable to each Defendant represented separately. . . . When the rates are multiplied by 64% to bring them to a reasonable rate such as that of defense counsel, the total fee for these efforts is $3, 917.87. . . . Assuming any attorney fees are due at all, these fees are in the ball park.

         Camino Real Response at 13-14. See id. at 9 (asserting that “the Plaintiffs' rates should be multiplied by 0.64 to reduce them to a reasonable range” commensurate with what the market will bear for residential lease work).

         Next, GREP Southwest and Camino Real propose that the Court, instead of “[w]ading through 128 block entries in [Camino Real Time] . . . and deleting unnecessary research and pervasive double teaming, ” should divide the amount that the Fallens attribute to GREP Southwest and Camino Real by 6, “leav[ing] a charge at Plaintiffs' requested rate of $4, 676.46” and, then, apply a 64% multiplier to adjust the rate. Camino Real Response at 14. According to GREP Southwest and Camino Real, this sum amounts to $2, 992.93, which, in addition to the $3, 917.87 sum that GREP Southwest and Camino Real calculate as the reasonable fees of the Fallens' counsel common to all the Defendants, apportioned to GREP Southwest and Camino Real, totals to $6, 910.80. See Camino Real Response at 14.

         GREP Southwest and Camino Real argue that this methodology reflects a more sound starting point to calculate a reasonable fee in this case, contending that, “[i]f Plaintiffs are entitled to any fees at all, a fee of a little more than three times the no-fault settlement makes sense.” Camino Real Response at 14. GREP Southwest and Camino Real then argue:

Given the small amount in question, lack of success on the merits, the simple nature of the claims against Camino Real, the stage of litigation when settled and the lack of any overarching public purpose served by this action, the loadstar should reduce this amount [i.e., $6, 910.80] rather than increase it.

         Camino Real Response at 15. GREP Southwest and Camino Real conclude that “[a] nuisance settlement should not justify attorney fees to a prevailing party, ” but contend that, if the Court awards attorneys' fees, “a calculation between $0 and $6, 910.80 as set out above, is appropriate.” Camino Real Response at 15.

         3. National Credit Response.

         National Credit responded to the Motion on April 18, 2016. See National Credit Response at 14. National Credit acknowledges that both the FDCPA and the FCRA allow a prevailing party to recover costs and reasonable attorneys' fees. National Credit Response at 4 (citing 15 U.S.C. § 1692k(a)(3); 15 U.S.C. §§ 1681n & 1681o). National Credit asserts that “the amounts allegedly spent by Plaintiffs to secure the nominal recovery obtained from National Credit are far from reasonable.” National Credit Response at 1. National Credit makes two main arguments that the $16, 500.00 fee award that the Fallens seek against National Credit is unreasonable. See National Credit Response at 5-13.

         First, National Credit relies on rule 68 of the Federal Rules of Civil Procedure to argue that, because the Fallens rejected an offer of judgment and then failed to obtain a more-favorable settlement, the Court should not award the Fallens attorneys' fees incurred after National Credit made its offer of judgment. See National Credit Response at 5-8. National Credit alleges that it served an offer of judgment shortly after filing its answer to the Fallens' Second Amended Complaint. See National Credit Response at 5; Defendant National Credit Systems, Inc.'s Answer to Second Amended Complaint, filed September 23, 2015 (Doc. 50)(“National Credit's Answer”); National Credit Offer of Judgment at 1-2. According to National Credit, “[s]uch answer was filed because Plaintiffs refused to provide National Credit or its undersigned counsel with a settlement demand despite being asked to do so multiple times after the suit was filed.” National Credit Response at 5. National Credit emphasizes that, on October 22, 2015, it made, under rule 68, an offer of judgment in the amount of $4000.01, plus reasonable attorneys' fees and costs. See National Credit Response at 1; National Credit Offer of Judgment at 1-2. National Credit argues that the Fallens should not be able to collect any fees incurred after National Credit's October 22, 2015, offer of judgment, because “the failure to accept a Rule 68 Offer cuts-off a plaintiff's ability to recover post-offer fees under a fee-shifting statute when attorney's fees are considered costs.” Response at 5 (citing Marek v. Chesny, 473 U.S. 1, 11-12 (1985)). National Credit further states that, “[a]lthough the FDCPA and FCRA do not define costs to include attorney's fees, the same reasoning [in rule 68] applies.” Response at 5-6 (alterations added)(citing French v. Corporate Receivables, Inc., 489 F.3d 402, 404 (1st Cir. 2007); Lee v. Thomas & Thomas, 109 F.3d 302, 305-07 (6th Cir. 1997)). National Credit presses that the Fallens, after rejecting the offer of judgment, “failed to improve their position in any meaningful way, wasting both the Court and National Credit's resources in the process.” National Credit Response at 7. Accordingly, National Credit concludes that the Fallens cannot recover fees incurred after National Credit's offer of judgment. See National Credit Response at 8 (citing Haworth v. State of Nevada, 56 F.3d 1048 (9th Cir. 1995)).

         National Credit additionally argues that, “[i]f Rule 68 does not cut off a plaintiff's rights to fees, a defendant has no way to rid itself of litigation aside from completely capitulating to [an] unreasonable settlement demand.” National Credit Response at 7 (alteration added). National Credit further asserts that “[t]he fact that FDCPA and FCRA are consumer protection statutes makes no difference” to its rule 68 argument, and adverts to Marek v. Chesny, 473 U.S. at 10-11, for the proposition that “the polic[ies] behind Rule 68[, ] including the desire to encourage settlement and conserve judicial resources applied equally to civil rights statutes.” National Credit Response at 7 (alterations added)(internal quotation marks omitted).

         National Credit then argues that, because the Fallens cannot recover fees incurred after National Credit's October 22, 2015, offer of judgment, the Fallens at most incurred eight hours of fees before the offer of judgment which are fairly attributable to National Credit. See National Credit Response at 8. National Credit asserts that the Fallens' attorneys' billing records “demonstrate that with the exception of time spent drafting the complaint and appearing at the initial conference -- tasks which pertain to all defendants -- the amount of time incurred handling specific tasks to National Credit . . . prior to service of the [offer of judgment] was at most 5 hours.” National Credit Response at 8. National Credit further asserts that, “[i]nclusive of time spent preparing the pleadings (and apportioned amongst the other defendants), Plaintiffs reasonably incurred no more than 8 hours of time with regard to the claims against National Credit through October 22, 2015 . . . .” National Credit Response at 8. National Credit concludes, therefore, that “eight (8) hours should be the maximum [amount] of time that plaintiffs can claim in this case.” National Credit Response at 8.

         National Credit's second main argument is that the Fallens' claimed lodestar amount is unreasonable and excessive with respect to both the Fallens' attorneys' hourly rate and the number of billed hours. See National Credit Response at 9-14. National Credit states that “[t]he court determines an attorney's reasonable hourly rate by looking to the ‘prevailing market rate in the relevant community' for ‘similar services by lawyers of reasonably comparable skill, experience and reputation.'” National Credit Response at 9 (emphasis in Response)(quoting Guides, Ltd. v. Yarmouth Grp. Prop. Mgmt., Inc., 295 F.3d 1065, 1078 (10th Cir. 2002)). National Credit also states that the burden is on the Fallens to establish that the requested fee is reasonable and appropriate. See National Credit Response at 9 (citing Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)). National Credit argues that the Fallens cannot carry that burden. See National Credit Response at 9-14.

         National Credit challenges the basis for the hourly rates of the Fallens' counsel. See National Credit Response at 9-11. National Credit asserts that the Fallens' counsel -- Mr. Lowry and Alicia Lopez -- “fail to identify how their respective hourly rates were arrived at and completely fail to present any evidence whatsoever that such rates are reasonable market rate[s] for this type of case.” National Credit Response at 10 (alteration added). Further, National Credit alleges that the Fallens' counsel did not establish experience with cases involving FDCPA or FCRA claims. See National Credit Response at 10. National Credit then challenges the relevance of the affidavits of Bradford Berge of Santa Fe, New Mexico and Joseph Goldberg of Albuquerque, New Mexico, which Fallens' counsel filed in support of their hourly rate. See National Credit Response at 10. See also Affidavit of Bradford C. Berge ¶¶ 1-4, at 11-12, filed March 16, 2016 (Doc 104-1)(“Berge Aff.”); Affidavit of Joseph Goldberg ¶¶ 1-4, at 13-17, filed March 16, 2016 (Doc 104-1)(“Goldberg Aff.”). National Credit argues that the Berge Aff. and the Goldberg Aff. are inapposite and “do not establish the market hourly rate for similar services performed by attorneys of comparable skill, ” because they were submitted in different cases and do not speak to the standard hourly rate for New Mexico attorneys handling analogous consumer finance cases. National Credit Response at 10 (citing Berge Affidavit ¶¶ 1-4, at 11-12; Goldberg Affidavit ¶¶ 1-4, at 13-17).[3]

         National Credit next targets the number of hours that the Fallens' counsel billed. See National Credit Response at 11-14. National Credit states that the district court should “‘exclude from [the] initial fee calculation hours that were not reasonable expended.” National Credit Response at 11 (alteration in Response)(quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983))(internal quotation marks omitted). National Credit states that the Court may exclude from the Fallens' initial fee calculation “duplication of work by counsel, impermissible block billing, grossly inflated time entries, vague time entries, and impermissible billing for clerical tasks . . . .” National Credit Response at 11 (citing Hensley v. Eckerhart, 461 U.S. at 434). National Credit alleges that the time records of the Fallens' attorneys include all of these deficiencies, see National Credit Response at 12-13, and further challenges the time records of the Fallens' counsel as “a mess, ” National Credit Response at 12. National Credit argues that the Court should “reduce the amount awarded to Plaintiff as a matter of course, ” because “[i]t is neither the Court, nor the National Credit's job to sift through Plaintiffs' exhibits to make sense of Plaintiffs' Fee Petition.” National Credit Response at 12. National Credit particularly objects to the block billing of the Fallens' counsel, arguing that they are “per se objectionable in the fee petition context.” National Credit Response at 13. National Credit presses that the Court should disregard the block-billing entries of the Fallens' counsel, because “there is no way for National Credit or this Court to determine with any level of accuracy how much time was reasonably spent on each task and attributable to [National Credit].” National Credit Response at 13 (alteration added). National Credit further presses that the Court need not undertake a line-item veto of the time entries of the Fallens' counsel and may instead “exclude excessive and unreasonable hours . . . by making an across-the-board reduction the amount of hours.” National Credit Response at 14 (citations omitted). Pulling together its rule 68 offer-of-judgment argument and its challenges to the hourly rates, billed hours, and imprecise time entries of the Fallens' counsel, National Credit concludes that the Court should award “no more than $2000.00 in fees and costs from National Credit representing eight (8) hours of compensable attorney time at a blended rate of no more than $250 per hour.” National Credit Response at 14.

         4. The Reply.

         The Fallens' counsel replied to both the Camino Real Response and the National Credit Response on May 17, 2016. See Joint Reply to Defendants' Responses to Plaintiffs' Motion for Attorneys' Fees at 21, filed May 17, 2016 (Doc. 119)(“Reply”). The Fallens concede nothing, stating that “not a single one of Defendants' arguments can stand up to scrutiny . . . .” Reply at 1. Accordingly, they maintain that the Court should grant the Motion and award $16, 500.00 from National Credit and $41, 324.06 from GREP Southwest [and] Camino Real.” Reply at 1.

         First, the Fallens maintain that they prevailed in a complex case, stating that it was not a simple dispute, but rather “combined seven federal-and state-law causes of action against seven different corporate Defendants, and raised enough evidence of misconduct . . . to form the basis of at least two potential class-action lawsuits.” Reply at 2. The Fallens also restate that the damages award to a plaintiff in a consumer credit action does not impose a ceiling on an attorneys' fee award and the law does not require that the attorneys' fee award be proportional to the plaintiff's recovery. See Reply at 2-3 (citing Purtle v. Eldridge Auto Sales, Inc., 91 F.3d 797 (6th Cir. 1996); Graham v. Vengroff, Williams & Assocs., Inc., No. CIV 02-369, 2004 U.S. Dist. LEXIS 31029, at *11 (D.N.M. Oct. 4, 2004)(Vazquez, J.); Jones v. General Motors Corp., 1998-NMCA-020, ¶ 24, 954 P.2d 1104, 1109).

         Second, the Fallens contest the Defendants' allegations that the Fallens, motivated to increase their attorneys' fees, thwarted the Defendants' expeditious efforts to settle. See Reply at 3-5. Rather, the Fallens allege that the Defendants evaded the Fallens' attempts to settle. See Reply at 3-4. The Fallens state that they “made six separate attempts to reach GREP Southwest and Camino Real” through their counsel in June and July 2014 to discuss settlement. Reply at 4 (citing Camino Real Time at 3-5). The Fallens further allege that “Camino Real and GREP Southwest were not meaningful participants in any settlement conversations with the other Defendants, ” having failed to appear at the October 27, 2015, status conference and to timely answer the Second Amended Complaint, and having “nearly defaulted” by filing an Answer at the eleventh hour. Reply at 4. The Fallens argue that GREP Southwest's and Camino Real's conduct “more than justified [the Fallens'] decision not to aggressively pursue a settlement with them . . . .” Reply at 4-5 (alteration added). Turning to National Credit, the Fallens state that they “felt it was fruitless to attempt to negotiate with National Credit until it retained legal counsel, ” because the Fallens had a unproductive conservation with National Credit's Vice President of Operations, Ron Sapp. Reply at 5. Once National Credit obtained counsel, the Fallens explain, the Fallens issued a global settlement demand to all Defendants for $175, 000.00, inclusive of all fees and costs. See Reply at 4-5.

         Third, the Fallens argue that National Credit waived its argument that the Fallens may not recover attorneys' fees that the Fallens incurred after National Credit's rule 68 offer of judgment. See Reply at 6-8. The Fallens state that National Credit waived this argument “when it agreed that the Court should determine a reasonable fee award for Plaintiffs' counsel -- with the maximum fee award limited to $16, 500, as the only provision.” Reply at 6 (internal citation omitted). The Fallens explain that, during settlement negotiations, National Credit did not insist that the Fallens could not recover attorneys' fees which they incurred after National Credit's October 22, 2015, offer of judgment. See Reply at 6-7. “Having negotiated away its Offer of Judgment, ” the Fallens press, “National Credit may not resurrect it now.” Reply at 6.

         The Fallens then argue that, even if National Credit did not waive its rule 68 argument, rule 68 “does not preclude Plaintiffs from collecting reasonable attorneys' fees incurred after the Offer was made.” Reply at 7. The Fallens quote the part of rule 68 that provides, “‘[i]f the judgment that offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.'” Reply at 7 (alteration added)(quoting Fed.R.Civ.P. 68(d)). The Fallens then argue that the FDCPA, 15 U.S.C. § 1692k(a)(3), distinguishes between “costs” and actual “attorneys' fees.” Reply at 7 (citing 15 U.S.C. § 1692k(a)(3)). Accordingly, the Fallens conclude that, “because the FDCPA distinguishes between costs and attorneys' fees, [the Fallens'] fee recovery should not be cut off as of the date [National Credit's] Offer was tendered.” Reply at 8 (alterations added).

         Fourth, the Fallens assert that the Defendants' challenges to the Fallens' lodestar calculation lack merit. See Reply at 8-20. The Fallens maintain that their attorneys' hourly rates are reasonable, stating that “[q]uality of performance is to be considered.” Reply at 8-9 (alteration in original)(quoting Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 663 F.Supp. 1360, 1453 (D. Kan. 1987)(Kelly, J.)). The Fallens also argue that a reduction of their hourly rates would disincentivize skilled lawyers from devoting attorney time to consumer-protection cases brought under fee-shifting statutes. See Reply at 8-9 (citing Barber v. T.D. Williamson, 254 F.3d 1223, 1231 (10th Cir. 2001); Graham v. Vengroff, Williams & Assocs., Inc., No. 2004 U.S. Dist. LEXIS 31029, at *11)).

         The Fallens also defend the number of hours that their attorneys devoted to this case. See Reply at 9-20. They “maintain that their bills were fairly and thoughtfully apportioned, ” and that, upon review, the Court will recognize “the effort put into the prosecution of this case by Plaintiffs' counsel.” Reply at 10. In support of their arguments, the Fallens attach to their Reply “an unredacted copy of all their time records generated in this case . . . .” Reply at 11 (citing Detail Fee Transaction File List at 1-40, filed May 17, 2016 (Doc. 119-10)(“Detail Fee List”). The Fallens also deny that they engaged in vague block billing, maintaining that they “kept detailed, contemporaneous billing entries.” Reply at 11.

         Furthermore, the Fallens challenge GREP Southwest's and Camino Real's argument that those two Defendants should be treated as a single Defendant for the purpose of calculating an attorney's fee award. See Reply at 12-14. The Fallens advert to the Second Amended Complaint, reciting the separate actions that GREP Southwest and Camino Real took, and which gave rise to the Fallens' claims. See Reply at 13 (citing Second Amended Complaint ¶¶ 2-3, 14- 64, at 2, 4-9). Moreover, the Fallens state that GREP Southwest's and Camino Real's attorney, Claud Vance, maintained that GREP Southwest and Camino Real are separate parties. See Reply at 13 (citing Camino Real's Response at 10). The Fallens conclude that GREP Southwest and Camino Real “are still separate Defendants and are each responsible for a separate share of Plaintiffs' attorneys' fees.” Reply at 14. The Fallens also challenge GREP Southwest's and Camino Real's special damages argument, and the Fallens maintain that they did not need to plead their fees as special damages to recover the fees as the prevailing party. See Reply at 15.

         The Fallens next contest the Defendants' argument that the Fallens' attorneys overbilled in this case. See Reply at 17-20. The Fallens portray their view of their attorneys' work:

Having thus agreed to undertake the representation, Plaintiffs' counsel then proceeded to act as good litigation firms will do -- thoroughly reviewing the relevant facts and law; exhausting Plaintiffs' administrative remedies (by way of submitting multiple detailed letters, with supporting documents, to each of the three national credit bureaus and [National Credit]) as a necessary precursor to filing federal suit; attempting in vain to interest Camino Real and GREP Southwest in correcting their report to the credit bureaus before suit needed to be filed; filing a Complaint and amending it extensively upon obtaining additional information about the parties; preparing the Joint Status Report; issuing a global settlement demand to all Defendants setting forth the bases of multiple class-action lawsuits that could be pursued against them based on their conduct in the instant case; and then achieving settlement with all seven Defendants and a full vindication of their clients' rights without resorting to further litigation.

Reply at 18 (alteration added)(footnote omitted). The Fallens argue that their preparatory work regarding two potential class actions against the Defendants “almost certainly affected the readiness with which Defendants moved to settle.” Reply at 8 (internal citation omitted). This preparatory work and the settlement it prompted, the Fallens argue, “could not have been obtained by a landlord-tenant attorney before one of the judges in Metropolitan Court.” Reply at 18 (internal quotation marks and citations omitted). The Fallens also defend their use of a law student summer associate as a cost-saving device, because the summer associate billed less than half of an associate's normal rate. See Reply at 19. In conclusion, the Fallens maintain that the Court should award attorneys' fees in the amount of $16, 500.00 from National Credit, and in the amount of $41, 324.06 from GREP Southwest and Camino Real collectively. See Reply at 20.

         5. The Hearing.

         On September 13, 2016, the Court held a hearing on the Motion. See Transcript at 1:1-2, taken September 13, 2016 (Court)(“Tr.”).[4] The Court began by providing its view of the case. See Tr. at 2:4-3:14 (Court). The Court stated that the Fallens are prevailing parties and that the settlement which they reached exceeded a nominal amount. See Tr. at 2:12-16 (Court). The Court stated its view that “the plaintiffs are entitled to their attorneys' fees.” Tr. at 2:17-18 (Court). The Court also stated that the hourly rates which the Fallens' counsel proposed “are appropriate.” Tr. at 2:25 (Court). The Court therefore stated that it did not find “a lot of problems with the claim against the GREP Southwest Defendants.” Tr. at 3:1-2 (Court). Turning to National Credit, the Court provided its view that the Fallens' counsel should not “get anything after a settlement offer was made.” Tr. at 3:5-6 (Court). The Court then invited argument from the Fallens. See Tr. at 3:12-13 (Court).

         The Fallens began by noting that the fee award has a statutory basis. See Tr. at 3:20-22 (Lowry). The Fallens then reiterated that they are prevailing parties, and that “this really wasn't a simple you know run-of-the-mill case as the Defendants have alleged.” Tr. at 4:6-8 (Lowry). The Fallens explained that they discovered that Camino Real had sold a tenant bond to the Fallens, and, hence, Camino Real had sold an insurance product ...


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