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Babcock Power Inc. v. Kapsalis

United States District Court, W.D. Kentucky, Louisville Division

April 24, 2018

BABCOCK POWER, INC., et al., Plaintiffs,
v.
STEPHEN T. KAPSALIS, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          COLIN LINDSAY, MAGISTRATE JUDGE.

         This matter has a long and contentious history. The Court will only repeat as much as is necessary to deal with the issue at hand, specifically the award of attorney's fees to defendant Stephen T. Kapsalis (“Kapsalis”) as a result of the June 30, 2017 memorandum opinion and order (DN 450).

         I. BACKGROUND

         On February 7, 2017, Kapsalis[1] filed a “Motion for Discovery” (DN 398) and “Supplemental Memorandum in Support of his Written Objections and Motion for Protective Order and to Quash the January 23, 2017 Subpoena and Motion for Discovery” (“Supplemental Memorandum”) (DN 398-1). On February 22, 2017, plaintiffs Babcock Power, Inc. and Vogt Power International, Inc. (“plaintiffs”) filed a response (DN 405). On February 22, 2017, non-party Sterling Group, LP (“Sterling”) filed a brief (DN 410) addressing the issues raised in the Motion for Discovery and Supplemental Memorandum. On March 1, 2017, Kapsalis filed a reply (DN 417), and plaintiffs filed a response (DN 418) to Sterling's brief. On March 8, 2017, the Court held an evidentiary hearing on the issues raised in these filings. On April 10, 2017, plaintiffs, Kapsalis, and counsel for plaintiffs, Kelly Gallagher (“Gallagher”), filed proposed findings of fact and conclusions of law. (See DNs 437-39.)

         On June 30, 2017, the undersigned issued a memorandum opinion order finding that plaintiffs had issued the January 23, 2017 subpoena to the Express bankruptcy trustee in violation of a scheduling order. In the June 30 memorandum opinion and order, the undersigned denied the Motion for Discovery, but sanctioned plaintiffs sua sponte. In particular, the undersigned awarded Kapsalis “reasonable attorneys' fees and expenses incurred in (1) preparing the Motion for Discovery (DN 398) and Supplemental Memorandum (DN 398-1) as well as the reply in support of same; (2) preparing for and attending the March 8, 2017 evidentiary hearing; and (3) preparing the proposed findings of fact and conclusions of law.” (DN 450 at 56.) The June 30 memorandum opinion and order also directed Kapsalis to file an itemization of attorneys' fees and expenses incurred in conjunction with (1) through (3), including why the fees and expenses included therein were reasonable. Thereafter, plaintiffs were directed to file any objections to the requested fees and expenses, limited to the reasonableness of the amounts claimed.[2]

         A.Notice of Stephen Kapsalis' Compliance with the Court's Memorandum Opinion and Order Dated June 30, 2017 [DN 450]” (“Notice of Compliance”) (DN 451)

         On July 6, 2017, Kapsalis filed the Notice of Compliance (DN 451) in response to the June 30 memorandum opinion and order. Included with the Notice of Compliance are several exhibits: (1) an affidavit of counsel for Kapsalis, Dennis Murrell (DN 451-1), which includes a request for a total fee award of $74, 582.42; (2) the itemization of fees and expenses specifically requested by the Court in its June 30 memorandum opinion and order (DN 451-2), totaling $60, 129.42 ($55, 685.00 in fees and $4, 444.42 in expenses); (3) the itemization of additional fees and expenses associated with two motions to quash the January 23 subpoena issued by plaintiffs, one filed in this Court and one in the Northern District of Oklahoma (DN 451-3), totaling $14, 453.00; and (4) various biographies of counsel or other people working for or with counsel for Kapsalis (DNs 451-4 through 451-10).

         B. Plaintiffs' Objections (DN 457) to the Notice of Compliance

         On July 20, 2017, plaintiffs filed objections (DN 457) to the attorneys' fees award and itemization of attorneys' fees and expenses. Plaintiffs appears to object to the following specific items:[3] (1) the inclusion of attorneys' fees and expenses associated with the motions to quash; (2) the inclusion for time entries related to communications with counsel for Sterling; (3) the inclusion of fees for items that are purely clerical in nature; (4) bills for expert, One Source Discovery, in December 2016 in the amount of $675.00 before the subject subpoena was issued; and (5) bills for One Source Discovery in preparation for the evidentiary hearing.

         C. Kapalis's Response (DN 460) to the Objections

         On July 28, 2017, Kapsalis filed a response (DN 460). Kapsalis asserts that he is entitled to the total amount of fees and expenses requested, minus $675.00, for a total of $73, 907.42. The Court notes that, while not pointed out by Kapsalis in his response, the $73, 907.42 includes the fees and expenses associated with the motions to quash, in addition to those fees and expenses specifically awarded in the June 30 memorandum opinion and order.

         II.DISCUSSION

         A. The Request for Additional Fees and Expenses Totaling $14, 453.00 is Denied.

         The Court will first address the fees and expenses totaling $14, 453.00 sought by Kapsalis in conjunction with the motions to quash as described in I.A. Included in Murrell's affidavit is a request, as reflected in (3), for “additional fees and expenses that were incurred by Kapsalis in conjunction with the Motion to Quash filed in this Court, as well as in Oklahoma.” (Id. at 1.)

         With respect to (3), Mr. Murrell states,

Although not specified in the Court's Opinion by docket number, because the Court stated its intent to make Kapsalis whole for Plaintiffs' violations of this Court's Order (see, e.g., Opinion, DN 450, p., 43, stating that “[s]uch an award is not unjust as it directly correlates to time spent by Kapsalis's attorneys in response to the actions of plaintiffs in causing the January 23, 2017 subpoena to be issued in violation of the March 2, 2016 order”), Kapsalis believes that these fees and expenses were also incurred in conjunction with the Motion for Discovery and Evidentiary Hearing. However, in an effort to be transparent, I have segregated these costs and expenses at Exhibit 2.

(Id. at 1-2.) The total amount of the fees and expenses requested by Kapsalis with respect to the motions to ...


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