FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2008-1040

BANK OF THE FEDERATED STATES OF MICRONESIA,
Plaintiff/Counter-Defendant,

vs.

TRUK TRADING COMPANY, TRUK, and TRUK TRADING COMPANY, POHNPEI, INCORPORATED,
Defendants/Counter-claimants.

____________________________

ORDER AWARDING ATTORNEYS' FEES

Ready E. Johnny
Associate Justice

Decided: June 3, 2009

APPEARANCES:

For the Plaintiff: Marstella Jack, Esq.
P.O. Box 2210
Kolonia, Pohnpei FM 96941

Richard L. Johnson, Esq.
Blair Sterling Johnson Martinez & Leon Guerrero
Suite 1008 DNA Building
238 Archbishop F.C. Flores Street
Hagatna, Guam 96910-5205

For the Defendants: Joseph Phillip, Esq.
P.O. Box 464
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure  Motions
 Failure to oppose a motion is generally deemed a consent to the motion, but even if there is no opposition, the court still needs good grounds before it can grant the motion. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 469 (Chk. 2009).

Attorneys' Fees
 A summary of the total hours worked by the attorneys and their individual billing rates and a lawyer's affidavit that the summary was correct is inadequate to support an attorney fee award, and the party seeking an attorney's fees award always bears the burden of providing sufficient evidence to prove its claim. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 470 (Chk. 2009).

Attorneys' Fees
 The starting point of a reasonable attorney's fee calculation is done by multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate. To determine the number of hours reasonably spent, the court must first determine the number of hours actually spent and then subtract from that figure hours which were duplicative, unproductive, excessive, or otherwise unnecessary. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 470 (Chk. 2009).

Attorneys' Fees
 Redundant, or otherwise unnecessary hours must be excluded from the amount of attorneys' fees claimed because courts are charged with deducting redundant hours, which generally occur when more than one attorney represents a client. Time devoted to intra-office consultations between attorneys, which duplicated the other's time will be reduced. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 470 (Chk. 2009).

Attorneys' Fees
 Since the test for attorney fee compensation is whether a given step was necessary to attain the relief afforded, the court will disallow the hours spent negotiating a lien release with an attorney who did not represent any party in the litigation, concerning a matter unrelated to obtaining a money judgment against the defendants in the case. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 470 (Chk. 2009).

Attorneys' Fees
 File maintenance and reorganization and an intra-office conference with staff about it is administrative work. Administrative work is considered part of overhead and attorney time devoted to administrative, instead of legal, tasks will be disallowed. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 470 (Chk. 2009).

Attorneys' Fees
 Going to the airport to find a passenger to hand-carry a package to Chuuk or running to find someone to hand-carry documents to Chuuk for filing and the like is courier or delivery work, and delivery work is valued at delivery service rates, not attorney rates, regardless of whether an attorney performs the task. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 470 (Chk. 2009).

Attorneys' Fees
 Unexplained time that does not appear to be related to the relief sought or attained by the litigation will be disallowed from an attorney fee request. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 470-71 (Chk. 2009).

Attorneys' Fees
 An award of reasonable attorney's fees to the prevailing party is based on the customary fee in the locality in which the case is tried. Thus when the case was filed in and decided in Chuuk and the customary fee in Chuuk currently ranges from $100 to $125 an hour, the court will award attorneys' fees at $125 per hour. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 471 (Chk. 2009).

Costs
 Westlaw electronic research charges are properly reflected as a part of a law firm's overhead, and as such, are included in the attorney's fees as opposed to ordinary costs and will be disallowed as costs. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 471 (Chk. 2009).

Costs
 Expenditures for toll phone calls, postage, and courier services are disallowed as costs. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 471 (Chk. 2009).

Costs
 Costs may be allowed for copying costs which represent payments to others for that service, but not the cost of copying within the law office. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 471 (Chk. 2009).

Attorneys' Fees; Costs
 A "business privilege tax" that is part of the cost of being in business on Guam and is either part of a law firm's overhead, which cannot be taxed as a cost, or an increase in or part of the attorney's hourly rate and thus already considered under the reasonable attorney fee award. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 471 (Chk. 2009).

Attorneys' Fees; Costs
 Even if a law firm client has agreed to compensate the law firm for its gross receipts tax liability on income received from the client, the court will not award it because what the client has agreed to pay is not relevant to the court's determination of a reasonable fee. The court makes its reasonableness determination without reference to any prior fee agreement between the attorney and client since the entitlement to a reasonable attorneys' fees award is the client's, not his attorney's, and the amount the client actually pays his attorney is irrelevant. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 471 (Chk. 2009).

Costs
 Service of process expenses are always allowable as costs to the prevailing party. Bank of the FSM v. Truk Trading Co., 16 FSM Intrm. 467, 471 (Chk. 2009).

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COURT'S OPINION

READY E. JOHNNY, Associate Justice:

 On April 16, 2009, plaintiff Bank of the Federated States of Micronesia filed its motion for reconsideration of its attorneys' fees and costs request, with supporting affidavits and exhibits. No opposition was filed. Failure to oppose a motion is generally deemed a consent to the motion, FSM Civ. R. 6(d), but even if there is no opposition, the court still needs good grounds before it can grant the motion. Senda v. Mid-Pacific Constr. Co., 6 FSM Intrm. 440, 442 (App. 1994).

 As explained below, attorneys' fees in the amount of $13,593.75 are granted, and the costs previously sought were denied except for the $135 service of process expense.

I.

 On March 6, 2009, the bank filed its request for attorneys fees and costs with supporting affidavit. It asked for $16,706.25 in attorney's fees incurred with Richard L. Johnson of Blair Sterling Johnson Martinez & Leon Guerrero and $7,281.25 for attorney's fees incurred with by Marstella Jack. Attorney Johnson's affidavit stated that the $16,706.25 consists of 57.9 partner attorney hours at $250 an hour and 12.75 associate hours at $175 an hour and he also states that he believes that the fees charged were fair and reasonable. No other details were provided. Marstella Jack's affidavit exhibited a similar lack of detail. It just stated that she billed 58.25 hours at $125 an hour.

 A summary of the total hours worked by the attorneys and their individual billing rates and a lawyer's affidavit that the summary was correct is inadequate to support an attorney fee award, and the party seeking an attorney's fees award always bears the burden of providing sufficient evidence to prove its claim. People of Rull ex rel. Ruepong v. M/V Kyowa Violet, 15 FSM Intrm. 53, 63 (Yap 2007), rev'd on other grounds, 16 FSM Intrm. 49, 64-65 (App. 2008). The court, on March 24, 2009, denied the bank's attorneys' fees request because a court will not approve any attorney fee claims without itemization. Id. at 64. The fee request did not specify the services performed, by whom they were performed, the time expended thereon.

 The bank's April 16, 2009 renewed motion for attorney's fees includes billing invoices, with descriptions of the services performed, by whom performed and the time spent. Attorney Johnson's billings represent time spent by four different attorneys in his firm, totaling 71 hours of billed attorney time.

 The starting point of a reasonable attorney's fee calculation is done by multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate. Herman v. Municipality of Patta, 12 FSM Intrm. 130, 137 (Chk. 2003). To determine the number of hours reasonably spent, the court must first determine the number of hours actually spent and then subtract from that figure hours which were duplicative, unproductive, excessive, or otherwise unnecessary. People of Rull, 15 FSM Intrm. at 66. Redundant, or otherwise unnecessary hours must be excluded from the amount claimed because courts are charged with deducting redundant hours. Id. Redundant hours generally occur when more than one attorney represented a client. Id. Time devoted to intra-office consultations between attorneys, which duplicated the other's time will be reduced. Bank of Guam v. O'Sonis, 9 FSM Intrm. 106, 110 (Chk. 1999) (time of one attorney which duplicated another attorney's will be reduced). The court will thus reduce Attorney Johnson's request by 1.75 hours for various intra-office consultations with other attorneys.

 Attorney Johnson billed 3.5 hours for interactions with a Pohnpei attorney, who does not represent any party in this litigation, concerning a matter unrelated to obtaining a money judgment against the defendants in this case. The test for attorney fee compensation is whether a given step was necessary to attain the relief afforded. People of Rull, 15 FSM Intrm. at 66. Negotiating a lien release with Attorney Ramp was not. These 3.5 hours will therefore be disallowed.

 Attorney Johnson billed for "file maintenance and reorganization; interoffice [sic] conference with staff re same." This is administrative work and administrative work is considered part of overhead. The court will therefore disallow one hour as devoted to administrative, instead of legal, tasks. People of Rull, 15 FSM Intrm. at 70.

 Thus, 6.25 of the hours billed by Blair Sterling Johnson Martinez & Leon Guerrero are disallowed. This leaves 54.75 hours allowed.

 Attorney Jack's invoices and billing statements totaled 56.75 hours of attorney work. Her billed time included going "to airport to find passenger to handcarry package to Chuuk" and for running to find someone "to hand-carry docs to Chuuk for filing" and the like. This is courier or delivery work, "and delivery work is valued at delivery service rates, not attorney rates, regardless of whether an attorney performs the task." People of Rull, 15 FSM Intrm. at 69 (time reduced so lower amount awarded) (citing Browning v. Peyton, 123 F.R.D. 75, 79 (S.D.N.Y. 1988)). Accordingly, the court will reduce Attorney Jack's time by 1.75 hours. Time spent "regarding payment from 2020.com" is unexplained and does not appear to be related to the relief sought or attained by this litigation. One hour attributed to this will be disallowed. With these reductions, 54 hours are allowed.

 An award of reasonable attorney's fees to the prevailing party is based on the customary fee in the locality in which the case is tried. Tolenoa v. Kosrae, 3 FSM Intrm. 167, 173 (App. 1987). Although this case was not tried, it was filed in and decided in Chuuk. The customary fee in Chuuk currently ranges from $100 to $125 an hour. The 108.75 allowed hours billed by the various attorneys were invoiced at rates from $125 per hour to $250 an hour. The court will therefore award the bank attorneys' fees for 108.75 hours at $125 an hour  $13,593.75.

II.

 The bank, in its March 6, 2009 motion, also sought $1,011.07 as its costs incurred by Attorney Johnson and $452.14 as costs incurred by Attorney Jack. With the exception of the $135 in service charges. These were denied by the court's March 24, 2009 order. The bank does not seek a reconsideration of that denial, which is only repeated below so that the clerk may enter an accurate amended judgment.

 Johnson's costs included a surcharge of $668.25 was billed to the bank "to partially offset the impact of Guam's 4% business privilege tax," $165 in copier charges, $95.07 in long distance telephone charges, $53.85 in postage and courier costs, and $95.07 for using the Westlaw database. Jack's costs consist of $277.20 in copier charges, $20 in long distance telephone charges, $135 in service of process charges, and $19.94 in postage charges.

 Westlaw electronic research charges are properly reflected as a part of a law firm's overhead, and as such, are included in the attorney's fees as opposed to ordinary costs and will be disallowed as costs. People of Rull, 15 FSM Intrm. at 74. Expenditures for toll phone calls, postage, and courier services are disallowed as costs. Bank of Guam v. O'Sonis, 9 FSM Intrm. 106, 111 (Chk. 1999); Salik v. U Corp., 4 FSM Intrm. 48, 49 (Pon. 1989). Costs may be allowed for copying costs which represent payments to others for that service, but not the cost of copying within the law office. Damarlane v. United States, 7 FSM Intrm. 468, 470 (Pon. 1996). There is no indication that the copying costs sought represent payments to others.

 The $668.25 surcharge to offset a "business privilege tax" is part of the cost of being in business on Guam and is either overhead, which cannot be taxed as a cost, or an increase in or part of the attorney's hourly rate and thus already considered under the reasonable attorney fee award. Furthermore, it appears from the detailed invoices that the "business privilege tax" is the Guam gross receipts tax. The Guam gross receipts tax "differs from a sales tax insofar as it is levied on the seller rather than the consumer." Quichocho v. Macy's Dep't Stores, Inc., 2008 Guam 9, ¶ 2. It may be possible that the consumer [law firm client] agreed to compensate the seller [law firm] for its tax liability on income received from the client. But what the client has agreed to pay is not relevant to the court's determination of a reasonable fee. The court makes its reasonableness determination without reference to any prior fee agreement between the attorney and client. FSM Dev. Bank v. Kaminanga, 12 FSM Intrm. 454, 455 (Chk. 2004); see also People of Rull, 15 FSM Intrm. at 63; Adams v. Island Homes Constr., Inc., 12 FSM Intrm. 644, 647 (Pon. 2004). This is because "the entitlement to [a] reasonable attorneys' fees [award] is that of the [client], not of his attorney. The amount [the client] actually pays his attorney is irrelevant . . . ." Illinois v. Sangamo Constr. Co., 657 F.2d 855, 861 (7th Cir. 1981) (citation omitted).

 Service of process expenses are always allowable as costs to the prevailing party. Lippwe v. Weno Municipality, 14 FSM Intrm. 347, 354 (Chk. 2006). The $135 in service costs was therefore allowed. Thus, the court's March 24, 2009 order awarded $135 in costs to be added to the plaintiffs' judgment.

III.

 Accordingly, $135 costs previously awarded and $13,593.75 shall be added to the judgment. The clerk shall enter an amended judgment herewith.

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