February 21, 2002
Appeal of
KARCHER ENVIRONMENTAL, INC.
Under Contract No. 052571-96-B-0108
PSBCA Nos. 4085, 4093 and 4282
APPEARANCE FOR APPELLANT:
George F. Vogt, Jr., Esq.
Herrig, Vogt & Stoll, LLP
2724 Kilgore Road
Rancho Cordova, CA 95670-6104
APPEARANCE FOR RESPONDENT:
Robert E. O’Connell, Esq.
San Francisco Law Office
United States Postal Service
390 Main Street, Suite 740
San Francisco, CA 94105-5001
OPINION OF THE BOARD ON EAJA APPLICATION
Appellant, Karcher Environmental, Inc., has filed a timely application under the Equal Access to Justice Act (“EAJA”), 5 U.S.C. §504, for fees and other expenses totaling $152,417.95 incurred in connection with its prosecution of the captioned appeals.
Appellant has demonstrated that its net worth is below the eligibility limits (Application Exhibit A), and Respondent has conceded that Appellant meets the applicable size requirements. 39 C.F.R. §960.4.
In the Board’s Opinion, Appellant obtained relief from Respondent’s liquidated damages claim and gained some minor adjustments to some back charges although it did not otherwise succeed on the issues taken to hearing. Karcher Environmental, Inc., PSBCA Nos. 4085, 4093, 4282, 00-1 BCA ¶ 30,843.[1] Appellant also achieved significant benefits associated with its litigation efforts in a July 31, 1998 final decision of the contracting officer issued shortly before the hearing. In that final decision, Respondent reversed its denial of recovery for asbestos overspray on previously-insulated ductwork and pipes and dropped its claim based on the quantities of asbestos removed and certain inspection costs. Achieving all of these benefits makes Appellant a “prevailing party” for purposes of an EAJA award, as conceded by Respondent. See The Little Susitna Co., PSBCA Nos. 2216, 2333, 2511, 93-1 BCA ¶ 25,497, citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).
In support of its EAJA claim, Appellant submitted copies of counsel’s detailed client ledger and, in response to Respondent’s objection regarding lack of identification, submitted detailed billing information describing briefly the nature of each task, identifying the person who performed the task, stating the date the task was performed and the number of hours spent. In counsel’s declaration, the capacity and billing rates of each individual are described. The expenses claimed are identified by date incurred, nature of the expense and the amount. This submission is adequate for the Board to assess entitlement to fees and expenses. See Community Heating & Plumbing Co. v. Garrett, 2 F.3d 1143, 1146 (Fed. Cir. 1993).
Appellant seeks attorney fees and expenses commencing in March of 1997. Respondent argues that the contracting officer did not issue the first final decision in these appeals until May 2, 1997 (Finding 40) and that Appellant may not recover attorney fees incurred before that date. Appellant argues that fees incurred after the contracting officer’s letter of March 21, 1997, in which he rejected Appellant’s request for an equitable adjustment and asserted Respondent’s claim for liquidated damages (Findings 38, 39), should be recoverable as well.
It was not until the May 2, 1997 final decision that the contracting officer formally asserted Respondent’s claim against Appellant (Finding 40), and Levernier Construction, Inc. v. United States, 947 F.2d 497 (Fed. Cir. 1991), makes it clear that “at its earliest, EAJA coverage may begin after the decision of and in pursuit of an appeal from the decision of a contracting officer.” Levernier Constr., Inc. v. United States, 947 F.2d at 502. Thus, attorney fees and expenses incurred before the May 2, 1997 final decision were not expended in connection with these appeals and are not recoverable. See Id.; The Little Susitna Co., PSBCA Nos. 2216, 2333,
2511, 93-1 BCA ¶ 25,497; William G. Barnes & Son Co., PSBCA No. 2432, 96-1 BCA ¶ 28,066; 5 U.S.C. §504(a)(1) and (b)(1)(C)(ii).[2]
An EAJA award will not be made if Respondent demonstrates that its overall position had a reasonable basis in law and fact. 39 C.F.R. §960.5 (a); see Pierce v. Underwood, 487 U.S. 552, 565 (1988); Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350. Respondent has not argued or shown that its position was substantially justified during the period May 2, 1997, through July 31, 1998. Accordingly, Appellant may recover allowable attorney fees and expenses incurred during that period. See Nello Constr. Co., PSBCA No. 3075, 93-1 BCA ¶ 25,495.
Respondent argues that after the contracting officer issued the final decision on July 31, 1998 (Finding 45), it was substantially justified in defending against Appellant’s remaining claims and prosecuting its own claims, given the limited success Appellant enjoyed thereafter. Appellant points to the relief it obtained in the Board’s decision from $30,000 in liquidated damages claimed by Respondent and argues that it should recover at least a portion of its attorney fees and expenses incurred after July 31, 1998, to reflect that success.
In the July 31, 1998 final decision, the contracting officer conceded that removing asbestos overspray from the previously-insulated duct and pipe was compensable extra work, but he concluded that the work, which he valued at $59,000, could have been performed without delaying the project (Finding 45). In pursuing its liquidated damages claim, Respondent met its burden of demonstrating that completion of the contract was delayed by 30 days (Finding 34). See Central Ohio Building Co., PSBCA No. 2742, 92-1 BCA ¶ 24,399. The burden then shifted to Appellant to demonstrate that all or part of the delay was excusable. Id. Although the Board found that the project was delayed by the extra asbestos removal work (Finding 36), the reason Appellant was relieved of the liquidated damages was not that it met its burden of demonstrating that it was entitled to an extension of a specific number of days. It was relieved of the liquidated damages assessment because its delays were intertwined with Respondent's, and the Board was not provided with sufficient evidence to allocate the delay between the parties. Although it did not recover its claimed liquidated damages, Respondent’s position had a reasonable basis in fact and law, and, therefore, its position in this regard was
substantially justified. Montgomery Ross Fisher, Inc., H.A. Lewis, Inc., J.V., PSBCA
No. 3261, 93-3 BCA ¶ 26,106. Accordingly, Appellant may not recover its post-July 31, 1998 attorney fees and expenses.[3]
Apportionment
With few exceptions, the attorney fees and expenses itemized by Appellant in its application cannot be identified to particular claims that were addressed in these appeals. To the extent entries can be associated with unsuccessful claims, the award of fees and expenses should be reduced by that amount. For claimed fees and expenses that cannot be associated with particular claims, it is appropriate to apply a percentage reduction to reflect the ratio of unsuccessful to total claims. See Hensley v. Eckerhart, 461 U.S. 424, 440, 103 S. Ct. 1933, 1943, 76 L.Ed.2d 40, 54-55 (1983); C & C Plumbing & Heating, ASBCA No. 44270, 95-2 BCA ¶ 27,806.
Much of Appellant’s success in these appeals was achieved in the contracting officer’s July 31, 1998 reversal of his earlier final decisions (Finding 45), but the record does not provide a basis for determining Appellant’s effort in obtaining such relief. We can, however, provide a rough measure for a discount for unsuccessful effort by comparing the claims on which Appellant was not successful with the amount at issue in the appeals. Appellant claimed $74,955 for the girders differing site condition ($64,641 for itself, $8,969 for its applicator subcontractor and Appellant’s $1,345 markup on the subcontractor’s work), $370,448 for the overspray claim and $18,432 for home office overhead (Findings 38, 41). Respondent asserted a claim against Appellant for (1) return of $73,575 in payments because the quantities of asbestos abated were, according to Respondent, less than the quantities estimated in the contract; (2) $14,810 for additional clearance testing by Respondent’s asbestos consultant; (3) $1,773 for additional inspections of the work by Respondent’s architect; (4) $1,162 for monitoring cleanup after a breach in the containment during the project; (5) a credit of $4,563 for Appellant’s failure to perform certain encapsulation work; (6) $1,334 for repair of a sewer line blocked by Appellant’s subcontractor; (7) $2,461 for carpet damage resulting from the sewer blockage and (8) $30,000 in liquidated damages for delay in finishing the project. (Findings 39, 40). Totaling the claims of each side reflects $569,183 at issue in the appeals. Appellant was ultimately unsuccessful on the girder claims and the claim for extended overhead—claims totaling $93,387, or approximately 16% of the total amount in issue.[4] Accordingly, any recovery for the period May 2, 1997, through July 31, 1998, will be limited to 84% of the incurred fees and expenses.
From May 2, 1997, through July 31, 1998, Appellant’s counsel billed Appellant for 204.4 hours of attorney time, all by attorneys billing at rates in excess of $125 per hour.[5] The maximum rate allowable under EAJA and Postal Service regulations is $125. 39 C.F.R. §960.6. Accordingly, for that period, Appellant may recover $21,462 (204.4 x $125 x .84).
Appellant has included in its claim hours expended on these appeals by non-attorney employees of the law firm representing Appellant. Appellant was billed for the work of each of these employees at an hourly rate. Work of a staff construction engineer was billed to Appellant at $110-120 per hour. Paralegal time was billed to Appellant at $45 per hour, and the time of a document clerk was billed at $25 per hour.
From a review of the descriptions of the activities included in the attorney’s billing records, it appears that the work of the construction engineer was similar to that of a paralegal. He prepared documents and exhibits for the hearing, attended the hearing and depositions and did some work on post trial briefs. According to Appellant’s counsel’s declaration, the employee is a forensic engineer for the firm, and his work is similar to that of a paralegal. (Declaration of George F. Vogt, Jr.).
Paralegal fees are recoverable under EAJA, see Levernier Constr., Inc. v. United States, 947 F.2d 497, 503 (Fed. Cir. 1991); Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350; Coastal, Inc., PSBCA No. 1728, 89-2 BCA ¶ 21,876 recon. denied, 89-3 BCA ¶ 22,159, but we have allowed paralegal fees only at the
actual cost of the paralegal services to the attorney, even if the rate billed to the client is higher. Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350; Coastal, Inc., PSBCA No. 1728, 89-2 BCA ¶ 21,876 recon. denied, 89-3 BCA ¶ 22,159. This same approach will be applicable to the staff forensic engineer in this case as well as to the paralegal time included in the billings. See Keno & Sons Constr. Co., ENGBCA No. 5837-F, 99-1 BCA ¶ 30,273.
Consequently, Appellant may recover the cost to the attorney of the time spent by the paralegal and the staff engineer on its appeal, not to exceed the billing rate. Benefits paid to or on behalf of the staff engineer and paralegal as well as demonstrated attributable indirect costs in addition to the salary paid are costs to the attorney that may be recovered. See Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350; M. Bianchi of California, ASBCA Nos. 26362, et al., 91-1 BCA ¶ 23,445 at 117,639.
For the period from May 2, 1997, through July 31, 1998, Appellant was billed for 91.2 hours of the forensic engineer’s time and 1.66 hours of paralegal time. Appellant may recover for 84% of these hours.
There is no evidence in the record that would allow us to determine, even on a jury verdict basis (see Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350), the cost of the paralegal and forensic engineer to the law firm. Accordingly, we remand to the parties the calculation of the costs for the hours allowed.
The work performed by the document clerk appears to be clerical in nature and more akin to secretarial work that we have found typically to be included in the overhead rate included within the attorney’s per–hour rate rather than billed separately on an hourly basis. We have not allowed a separate recovery of such charges. Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350. Accordingly, we deny any recovery for the 14 hours of document clerk time.
Appellant included in the number of hours for which it claims reimbursement 5.5 hours expended by attorneys for which Appellant was not charged. See note 5, above. In Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350 and American Federal Contractors, Inc., PSBCA No. 1359, 88-2 BCA ¶ 20,526, we excluded from the calculation of fees allowable under EAJA, attorney hours for which the client was not billed, citing Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). Hensley noted that attorneys must exclude from their fee requests hours that were excessive, redundant or otherwise unnecessary and concluded that hours not billed because they were not “reasonably expended” in connection with prosecution of the appeal could not be recovered. Hensley v. Eckerhart, 461 U.S. at 434. Without an explanation of the decision not to charge for these hours, we cannot determine that the hours were “reasonably expended” in connection with these appeals. See Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350. Accordingly, Appellant may not recover for attorney hours not billed to Appellant.
Respondent has not challenged the miscellaneous expenses claimed by Appellant except as to the period for which they may be recovered. Appellant has demonstrated that counsel incurred expenses totaling $8,447.72 from May 2, 1997, to July 31, 1998, associated with prosecution of these appeals (Supplemental Declaration of George F. Vogt, Jr., Exhibit F). Those expenses were documented in the detailed billing records explaining the nature of each expense incurred. Respondent has not challenged any of the expenses, and we find them to be reasonable in amount, necessary to prosecution of these appeals and chargeable to Appellant. See Oliveira v. United States, 827 F.2d 735, 744 (Fed. Cir. 1987). They are consistent in scope and amount with legal expenses typically charged in furnishing legal services of this type. See Keno & Sons Constr. Co., ENGBCA No. 5837-F, 99-1 BCA ¶ 30,273; Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350.
The $575 expense to GK Industries for construction of the girder exhibits was solely for the girder claim on which Appellant was unsuccessful, and that expense may not be recovered. Of the remaining $7,872.72 ($8,447.72 - $575), it is not possible to separate the expenses associated with successful portions of the appeal from those related to unsuccessful parts of the appeal. Accordingly, under the formula adopted above, Appellant may recover 84% of those expenses, $6,613.08, based on the success rate for this period of time.
After completion of this project, Respondent’s project engineer, an employee of Respondent’s contract consultant, took a job in England. The parties agreed to split his travel costs to return to the United States for his deposition. Appellant seeks to recover its share of that cost, $1,975.84, as an expense (Application Exhibit D). The project engineer testified at the hearing as a fact witness, not as an expert. Expenses related to the attendance of a lay witness at a deposition are not recoverable under EAJA. Walsky Constr. Co., ASBCA No. 41541, 95-2 BCA ¶ 27,889 at 139,137; contra Adams Constr. Co., VABCA 4669E, 4900E, 98-1 BCA ¶ 29,479. Expenses related to the project engineer’s travel are not recoverable.
Appellant may recover the following amounts:
1. Attorney fees for May 2, 1997, through July 31, 1998 $21,462.00
2. Expenses for May 2, 1997, through July 31, 1998 6,613.08
Total $28,075.08
Calculation of the amount for staff engineer and paralegal hours is remanded to the parties. The application is granted to the extent described above and is otherwise denied.
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Vice Chairman
[1] Familiarity with that decision is presumed, and the facts found therein will be addressed only as necessary to explain this decision. References to “Findings” are to the findings of fact from that decision.
[2] In Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350, the period of recoverable attorney fees began before the final decision, but in that case, the contracting officer orally terminated the contract for default in advance of the written final decision confirming the termination. We allowed attorney fees from the oral termination, which was the action appealed. In the parties’ correspondence in these appeals, it is apparent that neither Appellant nor Respondent considered Appellant’s request for an equitable adjustment to be a claim or the contracting officer’s response to be a final decision (See Appeal File Tabs 84, 88, 90, 91). It was not until the contracting officer’s May 2, 1997 letter, specifically styled as a final decision under the Contract Disputes Act, that the adversary process entitling Appellant to attorney fees began.
[3] Appellant also obtained through the Board’s decision, a slight reduction in the amount claimed by Respondent for reinspections (Findings 30, 31), but the reduction was small and was based on information apparently presented for the first time in the hearing. Until presented with the information regarding the price for high volume pumps, Respondent had no reason to question its consultant’s charge for the reinspections, and, consequently, it was substantially justified in continuing through trial to claim the full amount it was charged. See Staff, Inc., AGBCA No. 98-152-10, 99-1 BCA ¶ 30,260 at 149,644. Therefore, Appellant is not entitled to its fees and costs associated with this success.
[4] Appellant also was unsuccessful in overturning Respondent’s charges for extra inspections, failure to perform encapsulation work, and sewer-related damages totaling $24,330 (items (2), (4)-(7), above), but those items were either conceded or only lightly defended by Appellant at the hearing. This suggests little effort was necessary on Appellant’s part to litigate these issues. Accordingly, they are not included in the total of claims for purposes of apportioning fees and expenses.
[5] The claim is for 209.9 hours shown as expended, but the law firm’s ledger reflects that Appellant was not charged for 5.5 hours expended on July 6, 1998.