December 30, 2005
Appeals of
OVERFLO PUBLIC WAREHOUSE, INC.
PSBCA Nos. 4531, 4550 and 4649
Under Contract No. 363199-97-B-0114
APPEARANCE
FOR RESPONDENT:
Mark E. Dennett, Esq.
OPINION OF
THE BOARD ON EAJA APPLICATION
Appellant, Overflo Public Warehouse, Inc., filed a timely application under the Equal Access to Justice Act (“EAJA”), 5 U.S.C. §504, for fees and other expenses totaling $278,604.93 incurred in connection with its litigation of the captioned appeals and prosecution of its EAJA application. Familiarity with the Board’s entitlement Opinion in Overflo Public Warehouse, Inc., PSBCA Nos. 4531, 4550, 4649, 04-1 BCA ¶ 32,488, is presumed, and the facts found therein, summarized below, will be addressed only as necessary to explain this decision. References to “Findings” are to the findings of fact from the above Opinion.
Appellant held a two-year contract to provide warehouse storage for Respondent’s mail transportation equipment. Respondent renewed the contract for two additional years but invoked an early-termination provision in the contract that allowed it to vacate after the first year of the option period. Disputes arose regarding the pace of Respondent’s removal of its equipment and the extent of Appellant’s cooperation. About a month after all Respondent’s equipment had been removed, the contracting officer retroactively terminated the contract for default (Finding 55). The Board overturned Respondent’s termination of the contract (PSBCA No. 4531). Additionally, the Board determined that Appellant was entitled to payment for a portion of the final months Respondent occupied space in Appellant’s warehouses but denied Appellant’s claims for rent through the end of the full two-year renewal period and for certain legal and consulting fees. We also found Appellant entitled to an economic price adjustment for the renewal term as provided in the contract. (PSBCA No. 4550). Finally, the Board allowed Respondent to recover costs resulting from Appellant’s delay of the equipment removal but rejected Respondent’s claim for the retroactive recovery of $1.8 million paid to Appellant over the entire course of the contract, which payments the contracting officer believed were not authorized (PSBCA No. 4649).
Appellant was a “prevailing party” for purposes of an EAJA award in each of the appeals. It prevailed entirely in PSBCA No. 4531, and, although it did not obtain all the relief it sought in the other two appeals, it succeeded on significant issues in each which achieved some of the benefits it sought in the appeals. 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). Furthermore, Appellant has demonstrated that its net worth and number of employees were below the eligibility limits at the relevant times (Declaration of Gary Timme and attachments thereto). Accordingly, Appellant meets the applicable eligibility requirements. See 39 C.F.R. §§960.4, 960.5.
Special Circumstances
Respondent argues that its presentation of creative, credible, although ultimately unsuccessful, legal arguments in these appeals constituted “special circumstances” that would make an award of attorney fees and expenses unjust. See 5 U.S.C. §504 (a)(1); The Washington Consulting Group, Inc., HUDBCA No. 89-4489-EA1, 92-1 BCA ¶ 24,477. However, as Appellant points out, although the appeals were factually complicated, the basic legal premises that governed the outcome were not unusual. Accordingly, we do not find special circumstances that would make an award unjust.
Respondent argues that Appellant is not entitled to an EAJA award because Respondent’s position before and during the litigation was substantially justified, i.e., that it had a reasonable basis in law and fact. See 39 C.F.R. §960.5 (a); Pierce v. Underwood, 487 U.S. 552, 565 (1988); Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350. As discussed below, Respondent’s position was not substantially justified with respect to two substantial elements of the litigation—Respondent’s default termination of the Contract and Respondent’s claim for repayment of Appellant’s repackaging labor charges (and refusal to pay the then-outstanding invoices for such charges)—but we find that otherwise its position was substantially justified.
Respondent argues that the termination for default was substantially justified because although the Board did not find the termination to be warranted, it was only the timing of the termination, coming as it did a month after all required performance had been completed, that troubled the Board. We disagree. Although Respondent correctly notes that the Board agreed with Respondent that Appellant breached its duty under the contract by failing to cooperate in the removal of Respondent’s equipment from the warehouses, by the time the contracting officer terminated the contract in January 2000, all performance under the contract had been completed, and there was no practical reason or legal justification for the action.
Additionally, there was no reasonable basis for the contracting officer’s refusal to pay and attempt to recoup repackaging labor charges, by far the largest portion of Respondent’s affirmative claim. The contracting officer’s representatives were empowered to authorize such work (Findings 7, 8, 12, 14, 16, 22, 25), and the contracting officer knew they had done so. The contract provided no standard for recording labor hours and by long agreement between the parties Appellant had done so using its Platform Receiving Reports, well known to Respondent’s officials. Thus, there was no basis in the contract for the contracting officer to reject all labor for repackaging based on his dissatisfaction with the method of documentation.
Respondent’s refusal to pay Appellant’s invoices for strapping materials and dumpsters and its attempt to recover such past payments, however, were reasonable even though not upheld by the Board. The Board found in Appellant’s favor on this issue because through a course of conduct Respondent had acquiesced in an interpretation of the contract that required it to pay for shrink wrap, strapping materials and dumpsters, contrary to the contract’s express language that required Appellant to “furnish the necessary personnel, material, equipment, services and facilities” to perform the work (Finding 23). The contracting officer’s reliance on and enforcement of the express, unequivocal terms of the contract signed by the parties lends justification to Respondent’s position, even where, as here, the Board denied enforcement of that language, see Great Western Utility Corp., ENG BCA Nos. 4866-F, 4899-F, 4934-F, 4935-F, 86-3 BCA ¶ 19,011 at 96,015; see also Digital Services Group, Inc., DOT BCA No. 1817E, 92-2 BCA ¶ 24,786 at 123,648, recon. denied, 93-1 BCA ¶ 25,358, and Respondent’s position was substantially justified.
Also, even though the Board found Appellant entitled to an economic price adjustment under the contract, Respondent was reasonable to resist Appellant’s adjustment claim. The information supporting the claim submitted to the contracting officer in 1998 was sparse (Findings 51, 52). Based in part on the testimony of Appellant’s expert at the hearing, the Board found sufficient support for an entitlement finding in Appellant’s favor, but until that time, Appellant had done an inadequate job of supporting its claim for an adjustment. In fact, although Appellant’s expert testified that Appellant had timecard and payroll records from which he could determine that Appellant’s labor costs had increased over the first two years of the contract (Hearing Transcript, page 1133), when seeking the economic price adjustment in 1998 Appellant professed not to have payroll records (although the contract was subject to the Service Contract Act (Findings 59-61)) and submitted only an unsupported listing of alleged hourly rate increases given to a number of named employees (Finding 52).
In its claim to the contracting officer, Appellant made no effort to link specific labor increases or increases to overhead expenses it allegedly incurred to the amount of contract increase it sought for the labor and square foot storage rates. In submitting its economic price adjustment claim, Appellant failed to meet its obligation to set out and support its claim with sufficient information to allow for a reasoned decision by the contracting officer. See Alta Constr. Co., PSBCA Nos. 1334, 1487, 87-3 BCA ¶ 20,165; Lionsgate Corp., ENG BCA Nos. 5425-F, 5426-F, 5432-F, 91-3 BCA ¶ 24,148; MJW Enterprises, Inc., ENG BCA No. 5813-F, 93‑3 BCA ¶ 26,045 at 129,476. As Appellant’s entitlement to an economic price adjustment only became clear through evidence presented at the hearing, Respondent’s denial of the claim and subsequent resistance of the claim in this litigation, although not sustained by the Board based on all the evidence presented, was, nevertheless, reasonable and, thus, substantially justified. See Karcher Environmental, Inc., PSBCA Nos. 4085, 4093, 4282, 02-1 BCA 31,787 at 156,964, n. 3; American Federal Contractors, Inc., PSBCA No. 1359, 88-2 BCA ¶ 20,526 at 103,766; Hurlen Constr. Co., ASBCA No. 31069, 86-3 BCA ¶ 19,153, recon. denied, 1986 ASBCA LEXIS 597.
Respondent’s position on the remaining claim elements, which the Board decided in its favor, was reasonable. These are Respondent’s assertion of its claim for damages related to Appellant’s failure to cooperate in the removal of its equipment and its resistance of Appellant’s claims (1) that Respondent’s failure to vacate by November 1, 1999, waived its early termination right and committed Respondent to continue paying rent through October 2000, the end of the two-year renewal; (2) that Respondent’s failure to vacate by November 1, 1999, damaged Appellant by causing it to lose a customer for the space; (3) that Appellant was entitled to a minimum guaranteed rent for October through December 1999; and (4) that Appellant was entitled to recover certain legal and consulting fees.
Apportionment
These appeals were consolidated for hearing and decision. From the records presented, with few exceptions, it is not possible to identify the attorney fees and expenses listed by Appellant to particular claims or appeals. It is not possible to identify (and deny) the attorney fees and expenses Appellant incurred in addressing claims in which Respondent’s position was substantially justified. Accordingly, Appellant’s EAJA recovery should be apportioned to reflect Appellant’s relative success. See Hensley v. Eckerhart, 461 U.S. 424, 440, 103 S. Ct. 1933, 1943, 76 L.Ed.2d 40, 54-55 (1983); Community Heating & Plumbing Co. v. Garrett, 2 F.3d 1143, 1146 (Fed. Cir. 1993); Karcher Environmental, Inc., PSBCA Nos. 4085, 4093, 4282, 02-1 BCA ¶ 31,787; The Little Susitna Co., PSBCA Nos. 2216, 2333, 2511, 93-1 BCA ¶ 25,497.
After reviewing the record as a whole and estimating as best we can the effort associated with the issues upon which Appellant did not prevail or on which Respondent was substantially justified and Appellant’s relative success overall, we exercise our discretion on a jury-verdict basis and find Appellant entitled to 55% of the EAJA attorney fees and expenses it reasonably incurred.
In support of its EAJA claim, Appellant submitted a spreadsheet reflecting information imported from its attorneys’ contemporaneously-recorded time sheets. (Declaration of David P. Hendel, ¶¶ 5, 6, 13). The individual spreadsheet entries show the date work was performed, the identity of the attorney or paralegal who performed the work, the number of hours spent on each task and a description of the work performed.
The expenses claimed are identified by date incurred, nature of the expense and the amount. The expenses are shown on a printout from the law firm’s billing system that shows entries either automatically recorded when incurred (photocopies, outgoing facsimile transmissions, long-distance telephone calls and computer legal research) or manually entered into the billing system once the expense was paid by the firm. (Declaration of David P. Hendel, ¶ 8).
Appellant’s 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).
Pre-Final
Decision Fees
Appellant seeks attorney fees it incurred beginning in February 2000, after the contracting officer issued his January 21, 2000 final decision terminating the contract for default. It is the issuance of the final decision triggering the litigation that begins the period during which Appellant may recover appropriate litigation fees and expenses under EAJA, see Levernier Constr., Inc. v. United States, 947 F.2d 497, 502 (Fed. Cir. 1991); The Little Susitna Co., PSBCA Nos. 2216, 2333, 2511, 93-1 BCA ¶ 25,497, but the recoverable fees and expenses are those that are incurred exclusively in connection with the appeal from that specific final decision. See Oliveira v. United States, 827 F.2d 735, 744 (Fed. Cir. 1987). Thus, attorney fees and expenses incurred after the January 21, 2000 final decision are recoverable under EAJA so long as they were expended in connection with the adversary adjudication of the termination for default. See 5 U.S.C. §504(a)(1) and (b)(1)(C)(ii).
Attorney fees incurred to obtain legal advice as to how to deal with Respondent’s failure to vacate by November 1, 1999, that were incurred before issuance of the April 17, 2000 final decision considering that issue and those fees incurred in preparation and support of Appellant’s February 23, 2000 claim, which was rejected in the contracting officer’s April 17 decision, are not recoverable. Based on the descriptions of the work in the individual entries, this results in a reduction of allowable attorney hours by 22.3 and hours of paralegal SJM by 2.5 and of paralegal YAC by 8.7 hours before April 17, 2000. These hours were not shown to relate to the termination.
Fees
Unrelated to This Litigation
Applying the requirement that to be recoverable fees and expenses must be incurred exclusively in connection with these appeals, see Oliveira v. United States, 827 F.2d 735, 744 (Fed. Cir. 1987); 5 U.S.C. §504(a)(1), we also exclude 16.3 attorney hours expended addressing Appellant’s Service Contract Act negotiations with Department of Labor, see E. W. Eldridge, Inc., ENG BCA No. 5801-F, 92-3 BCA ¶ 25,077 at 125,003; Building Services Unlimited, Inc., ASBCA No. 33283, 88‑2 BCA ¶ 20,611 at 104,153, 3.2 attorney hours addressing a potential false claims action by the Government, see Hardrives, Inc., IBCA No. 3283-F, 96-1 BCA ¶ 27,935 at 139,520; E. W. Eldridge, Inc., ENG BCA No. 5269-F, 92-1 BCA ¶ 24,626 at 122,844-845, and 2 attorney hours spent negotiating a contingency fee arrangement between Appellant and its attorneys.
Motion for Summary Judgment
Respondent argues that the time Appellant’s attorneys spent preparing its Motion for Summary Judgment filed May 21, 2001, must be eliminated from the fee award, citing American Federal Contractors, Inc., PSBCA No. 1359, 88-2 BCA ¶ 20,526. The cited case disallowed attorney fees associated with the appellant’s unsuccessful motion for summary judgment, but in this case the Board did not deny Appellant’s Motion but reserved ruling on it until after the facts were developed through the hearing. See Order dated May 24, 2001. The Motion addressed the validity of Respondent’s termination of the contract for default, and the Board in its Opinion found the termination to be invalid. Although the Board found for Appellant on grounds different from those raised in the Motion, the time spent on preparing the Motion was reasonable and will not be excluded from any recovery of attorney fees and expenses.
Request for Supplementation, Clarification, and
Reconsideration
Respondent also contends the time spent preparing Appellant’s Request for Supplementation, Clarification, and Reconsideration after the Board issued its Decision should be excluded from any recovery under EAJA because it was unmerited and added nothing to the resolution of the appeals. The parties settled the quantum portion of the appeals, and Appellant withdrew the Request before the Board ruled on it, but Appellant argues that the Request contributed to the parties’ settlement of quantum and thus the hours spent on it should be recoverable. We are not persuaded. The Request mainly addressed the Board’s determination that Appellant was not entitled to receive a minimum rent based on 150,000 square feet even as the space occupied by Respondent’s equipment diminished below that amount, eventually to zero. The Request for Supplementation, Clarification, and Reconsideration urged the Board to look again at the same evidence and arguments Appellant previously presented to the Board, which is not a proper use of a motion for reconsideration. Accordingly, the number of attorney hours recoverable is reduced by the 22.9 hours spent preparing the Request (Application, Exhibit B-2.2).
Excessive
Attorney Hours
Respondent argues that the hours expended by Appellant’s attorneys and paralegals were in a number of instances excessive and redundant and, therefore, not recoverable. Many of the hours challenged as duplicative or excessive by Respondent in Exhibits 2 and 5 of its Opposition to the fee application involve strategy meetings or other conferences attended by an attorney and paralegal or by two or three attorneys and depositions attended by more than one attorney. Respondent has not shown that more than one attorney or paralegal attending these conferences and depositions in a case such as this being litigated by several attorneys and paralegals was unreasonable. See F & F Laboratories, Inc., ASBCA No. 33007, 89-2 BCA ¶ 21,846. However, we find that 4 hours by SBH observing the first morning of the hearing and the 20.9 attorney hours spent simply monitoring the status of the appeals after final briefing (Application, Declaration of David P. Hendel, ¶ 22, and Exhibit B-2.1) were not shown to be necessary.
Except as noted, we are not persuaded that overall the time spent on these appeals by Appellant’s attorneys was excessive. Appellant’s presentation at the hearing reflected thorough preparation, including the use of depositions, assembly and use of voluminous documentary files, and an apparent leading role in the parties’ preparation of a comprehensive stipulation of facts that contributed substantially to an efficient hearing.
Appellant has included in its claim hours expended on these appeals by paralegals of the law firm representing Appellant. Paralegal fees are recoverable under EAJA, see Levernier Constr., Inc. v. United States, 947 F.2d 497, 503 (Fed. Cir. 1991), at the actual cost of the paralegal services to the attorney, 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.
Appellant has demonstrated the hourly cost (including salary, benefits and overhead) to the firm for the paralegal services (as it changed over the course of this litigation) (Application, Exhibit B-3). Respondent has not challenged Appellant’s calculation of its attorney’s costs for paralegals, and we accept it.
Respondent
seems to argue that much of the work done by paralegals in these appeals
appears to be clerical in nature and should be included in the attorney’s
office overhead rather than stated separately.
We found in Banks Trucking, PSBCA No. 3528, 96-2 BCA
¶ 28,350 at 141,577, that the cost of secretarial work is typically
included in the overhead rate that is part of the attorney’s per-hour fee and
that the applicant could not recover separately for such services. However, the work done by paralegals, as
reflected in Appellant’s application, includes such work as organizing files
and documents, creating spreadsheets to reflect evidence, and reviewing
documents pursuant to discovery requests.
Such work by a paralegal is not secretarial in nature and is not
excludable from the application on that basis.
Appellant claims expenses totaling $22,276.77. Respondent has challenged certain of the expenses claimed by Appellant, arguing that they are not recoverable in this proceeding as they would be considered costs within the meaning of 28 U.S.C. §1920, which addresses taxable costs in a court proceeding, relying on Bennett v. Department of the Navy, 699 F.2d 1140, 1144 (Fed. Cir. 1983). Respondent argues that the Board’s allowance in past EAJA cases of such expenses was in error. However, the fee-granting statute at issue in Bennett authorized award of attorney fees and made no mention of expenses while EAJA specifically provides for the award, in appropriate cases, of “attorney fees and expenses.” 5 U.S.C. §504; 39 C.F.R. §960.6 (b). “There are no taxable costs in administrative proceedings. Expenditures which would be covered by 28 U.S.C. §1920 in a court proceeding are ‘expenses’ in our proceedings.” Benjamin S. Notkin & Associates, ASBCA No. 29336, 87-1 BCA ¶ 19,483; see Sterling Federal Systems, Inc. v. Goldin, 16 F.3d 1177, 1185 (Fed. Cir. 1994).
The claimed expenses were documented in the detailed billing records explaining the nature of each expense incurred and the date incurred. Except as noted above, Respondent has not challenged any of the expenses, and we find them to be reasonable in amount, incurred by Appellant’s attorneys and chargeable to Appellant. See Oliveira v. United States, 827 F.2d 735, 744 (Fed. Cir. 1987); Keno & Sons Constr. Co., ENG BCA No. 5837-F, 99-1 BCA ¶ 30,273; Banks Trucking, PSBCA No. 3528, 96-2 BCA ¶ 28,350.
Expert Fees
Appellant claims expert witness fees of $33,801.68, based on the hours spent by the expert who testified at the hearing, Mr. Bleiweis, and by other members of his firm at the rate of $125 per hour or the actual billing rate of the member if less than $125 per hour, plus expenses incurred by the firm and billed to Appellant. The expert’s report and testimony were offered to support Appellant’s claim for an economic price adjustment and to counter Respondent’s claim for recovery of “undocumented” labor charges over the course of the contract. Respondent does not challenge the hours expended and hourly fees charged by Mr. Bleiweis, but argues that the hours charged by other members of his firm, which hours in total exceed those charged by Mr. Bleiweis, were not justified. However, the declaration and attachments submitted by a member of Mr. Bleiweis’s consulting firm in support of Appellant’s application reflect that the hours of others in the firm were professional services for this litigation directed to obtaining and analyzing data and preparing the expert report that was admitted into the record. (See Declaration of Mark Malengo; SAF 192-194, 194a, 194b). Under these circumstances, that the behind-the-scenes efforts by members of the firm exceeded the hours billed by the testifying expert witness is not a basis for denying Appellant’s recovery.
We estimate 20% of the expert witness’s effort was directed to supporting Appellant’s economic price adjustment claim, and conclude that amount not to be recoverable because Respondent’s position thereon was substantially justified. The remaining 80% of the claimed expert witness fees and expenses is recoverable as that appears a reasonable estimate of the portion of the expert’s work on the issue of Appellant’s entitlement to be paid for its labor charges, an issue on which Respondent’s position was not substantially justified. This is not subject to further apportionment according to the general formula discussed above because the expert did not work on other issues in the appeals. See Keno & Sons Constr. Co., ENG BCA No. 5837-F, 99-1 BCA ¶ 30,273 at 149,711.
EAJA
Application Fees
Appellant is entitled to recover its reasonable fees and expenses associated with preparation and submission of its EAJA fee application and responding to Respondent’s opposition to the application. See C & C Plumbing and Heating, ASBCA No. 44270, 96-1 BCA ¶ 28,100; The Little Susitna Co., PSBCA Nos. 2216, 2333, 2511, 93‑1 BCA ¶ 25,497.
Respondent argues that the attorney hours expended on preparation of the application were excessive, pointing out that the number of attorney hours claimed for preparation of the fee application (229.7) approximates the total attorney hours spent on briefing the case (237.5) after a four and one half day hearing with many binders of documents in the record. It is Appellant’s burden to justify what appears to be an excessive number of hours spent on the fee application, see Ramos v. Lamm, 713 F.2d 546, 554 (10th Cir. 1983), and it has not done so. We find 100 hours to be a reasonable commitment of attorney time based on the record. The time claimed for paralegal hours is accepted, and the attorney and paralegal time necessary to address Respondent’s opposition to the application is reasonable and may be recovered. The same discount discussed above shall be applied to the fee application claim to reflect Appellant’s relative success in these appeals and the fee application.
Appellant may recover the following amounts:
1. Total attorney hours claimed through filing application: 1588.7
Less Pre-Final Decision hours: 22.3
Less Service Contract Act Hours: 16.3
Less False Claim Hours: 3.2
Less Contingent Fee Hours: 2.0
Less Request for Clarification Hours: 22.9
Less Excessive Hours: 24.9
Less Excessive EAJA Application Hours: 129.7
Total Allowed Hours: 1367.4
Times Rate per Hour $125
Base Allowed Fee $170,925
Times Apportionment Rate .55
Attorney Fee Award $94,008.75
2. Paralegal
Amount Claimed $16,443.41
Less Pre-Final Decision Hours (SJM)
Times applicable rate $156.53
Less Pre-Final Decision Hours (YAC)
Times applicable rate $529.92
Base Allowed Paralegal Cost $15,756.96
Times Apportionment Rate .55
Paralegal Cost Award $8,666.33
3. Expenses
Amount Claimed: $22,276.77
Times Apportionment Rate .55
Expenses Award $12,252.22
4. Expert Fee
Amount Claimed $33,801.68
Times Apportionment Rate .80
Expert Fee Award $27,041.34
5. EAJA Reply Claim
Amount Claimed $7,879.08
Times Apportionment Rate .55
EAJA Reply Award $4,333.49
TOTAL EAJA AWARD: $146,302.13
To the extent set forth above, the application is granted. It is otherwise denied.
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Vice
Chairman