Redbird Business Group, LLC et al v. Harrison

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA
REDBIRD BUSINESS GROUP, LLC; 	)
REDBIRD BIOSCIENCE OKLAHOMA, 	)
LLC; and RB REALTYCO, LLC, 	)
)
Plaintiffs and 	)
Counter-Defendants, 	)
)
v. 	) 	Case No. CIV-20-098-JAR
)
MATTHEW HARRISON, 	)
)
Defendant and 	)
Counter-Claimant. 	)
OPINION AND ORDER
This 	matter 	comes 	before 	the 	Court 	on
Defendant/Counterclaimant’s 	Motion 	for 	Award 	of 	Attorneys’ 	Fees
and Non-Taxable Expenses (Docket Entry #178). 	This Court conducted
a hearing to receive oral argument on this Motion.
As has been well-documented in the filings herein, the dispute
between the parties to this case arose from an Employment Agreement
authored 	by 	Plaintiffs 	Redbird 	Business 	Group, 	LLC, 	Redbird
Bioscience 	Oklahoma, 	LLC, 	and 	RB 	RealtyCo, 	LLC’s 	(hereinafter
referred 	to 	collectively 	as 	“Redbird”) 	attorney 	with 	input 	from
Defendant 	Matthew 	Harrison 	(“Harrison”) 	in 	an 	attempt 	to 	secure
Harrison’s 	employment 	with 	Redbird. 	Redbird 	asserted 	claims 	for
(1) 	a 	declaratory 	judgment 	that 	the 	Employment 	Agreement 	and
certain 	securities 	known 	as 	Restricted 	Unit 	Grant 	Agreements
(“RUGAs”) 	were 	procured 	by 	Harrison’s 	fraud 	and 	are, 	therefore,
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null and void; (2) a declaratory judgment the Agreement and RUGAs
were 	properly 	rescinded 	because 	Harrison 	breached 	the 	warranty
contained 	in 	the 	agreements 	that 	he 	was 	not 	under 	a 	contractual
limitation 	which 	would 	prevent 	his 	employment 	with 	Redbird; 	and
(3) unspecified damages. 	(Third Amended Complaint filed September
11, 2020 (Docket Entry #27)).
Harrison filed a counterclaim against Redbird for (1) breach
of 	contract; 	(2) 	breach 	of 	good 	faith 	and 	fair 	dealing; 	(3)
promissory 	estoppel; 	and 	(4) 	breach 	of 	guaranty. 	(Amended
Counterclaim 	filed 	September 	25, 	2020 	(Docket 	Entry 	#29)). 	As
reflected 	in 	the 	Amended 	Opinion 	and 	Order 	and 	Amended 	Judgment
entered on this date after a non-jury trial, this Court determined
Redbird would not prevail on any of its claims while Harrison would
prevail 	on 	his 	breach 	of 	contract 	and 	breach 	of 	guaranty 	claims.
Harrison 	was 	awarded 	damages 	in 	the 	amount 	of 	$437,500.00 	and
specific 	performance 	in 	the 	assignment 	of 	the 	unit 	grants 	in 	the
percentages 	set 	out 	in 	the 	Amended 	Opinion 	and 	Order. 	(Docket
Entry #198 and #199).
Among the provisions of the Employment Agreement was a section
pertaining to Harrison’s reimbursement for securing legal counsel.
Specifically, Section 20 of the Employment Agreement provides
20. 	Enforcing 	Compliance. 	If 	Executive
(Harrison) 	needs 	to 	retain 	legal 	counsel 	to
enforce 	any 	of 	the 	terms 	of 	this 	Agreement
either 	as 	a 	result 	of 	noncompliance 	by 	the
Company 	(Redbird) 	or 	a 	legitimate 	dispute 	as
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to 	the 	provisions 	of 	the 	Agreement, 	then 	any
fees 	incurred 	in 	such 	expense 	by 	Executive
shall 	be 	reimbursed 	wholly 	and 	completely 	by
the 	Company 	if 	Executive 	prevails 	in 	such
legal proceedings.
(Pl. 	Exh. 	No. 	1, 	¶20)(emphasis 	added 	by 	this
Court).
The evidence at trial indicated that the Employment Agreement
that was signed by all parties was strenuously negotiated between
sophisticated 	business 	people 	in 	an 	arms-length 	transaction.
Legal counsel was employed to draft the documents. 	No evidence of
subterfuge, 	misrepresentation, 	or 	fraud 	in 	the 	negotiations 	and
formulation 	of 	the 	terms 	of 	the 	Employment 	Agreement, 	generally,
or Paragraph 20, specifically, was presented at trial. 	Joe Byars,
the lawyer representing Redbird, drafted that Employment Agreement
with the knowledge that Paragraph 20 presented a one-way favorable
term 	to 	Harrison 	but 	included 	it 	in 	the 	final 	draft 	with 	that
knowledge. 	Although 	he 	believed 	Paragraph 	20 	is 	“tempered 	by
reasonableness,” 	he 	did 	not 	include 	a 	provision 	for 	a
“reasonableness” 	assessment 	in 	the 	express 	language 	of 	the 	fee
clause. 	Paragraph 20 may have given Byars “pause”, but not enough
to 	require 	its 	exclusion 	from 	the 	Employment 	Agreement. 	(Docket
Entry #152, Pt. 2, p. 544, l. 2 through p. 545 l. 17).
Through 	the 	pending 	Motion, 	Harrison 	requests 	an 	award 	of
legal fees incurred by him in this litigation in the total amount
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of $1,212,552.00 1 in fees and $22,529.07 in non-taxable expenses.
This 	request 	includes 	the 	time 	incurred 	by 	a 	partner, 	two
associates, 	a 	docket 	attorney, 	and 	a 	paralegal 	from 	Winston 	&
Strawn, LLP – counsel from New York as well as four shareholders
and 	a paralegal from 	GableGotwals – counsel from Tulsa. 	Some of
these counselors provided minimal work for the case – two 	of the
shareholders for GableGotwals provided some $612.50 in fees. 	The
hourly 	rates 	range 	from 	$1,020.00 	to 	$292.00 	from 	the 	New 	York
counsel 	and 	support 	staff 	and 	$515.00 	to 	$200.00 	per 	hour 	from
counsel and support staff from Tulsa. 	The case was litigated for
over three years through discovery, summary judgment, and a bench
trial 	involving 	interpretation 	of 	the 	laws 	in 	the 	State 	of 	New
York, 	which 	was 	specified 	as 	the 	controlling 	law 	under 	the
Employment Agreement.
The express language of Paragraph 20 contemplates no analysis
of 	the 	reasonableness 	of 	the 	fees 	requested 	– 	only 	that 	legal
counsel was retained by Harrison (1) to enforce any of 	the terms
of the Employment Agreement; (2) so that the enforcement was as a
result of noncompliance or a legitimate dispute over the terms of
the 	Employment 	Agreement; 	(3) 	and 	Harrison 	prevailed 	in 	the
resulting legal proceedings. 	Harrison retained counsel to enforce
Redbird’s noncompliance with the terms of the Employment Agreement
1 This 	modified 	amount 	is 	set 	forth 	in 	Counterclaimant’s 	reply 	after 	an
adjustment.
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and 	Harrison 	prevailed 	in 	the 	trial 	of 	this 	case. 	By 	the
negotiated terms of the Employment Agreement, Harrison is entitled
to be “wholly and completely” compensated for the totality of the
fees he incurred as a result of Redbird’s non-compliance with the
Employment Agreement.
The 	Tenth 	Circuit 	has 	addressed 	a 	strikingly 	similar
situation. 	In 	U.S. 	for 	Use 	of 	C.J.C., 	Inc. 	v. 	W. 	States 	Mech.
Contractors, 	Inc., 	834 	F.2d 	1533 	(10th 	Cir. 	1987), 	the 	agreement
between the parties did not include a provision for the assessment
of the “reasonableness” of the fees requested, but merely provided
that, 	“Should 	the 	account 	be 	referred 	to 	an 	attorney 	for
collection, 	the 	undersigned 	shall 	pay 	all 	attorney's 	fees 	and
collection expenses.” 	Id. at 1547.
The Tenth Circuit determined that
[W]here 	contracting 	parties 	have 	agreed 	that
a 	breaching 	party 	will 	be 	liable 	for
attorneys' 	fees, 	the 	purpose 	of 	the 	award 	is
to 	give 	the 	parties 	the 	benefit 	of 	that
bargain, and the court's responsibility is to
enforce 	that 	bargain. 	Normally, 	where 	the
court 	is 	merely 	enforcing 	a 	contractual
provision 	authorizing 	attorneys' 	fees, 	the
fees are routinely awarded and the contract is
enforced according to its terms.
Id. 	at 	1548 	citing 	Fortier 	v. 	Dona 	Ana 	Plaza
Partners, 	747 	F.2d 	1324, 	1337–38 	(10th 	Cir.
1984)(applying 	New 	Mexico 	law); 	Engel 	v.
Teleprompter 	Corp., 	732 	F.2d 	1238, 	1241 	(5th
Cir.1984); 	Austin 	v. 	Parker, 	672 	F.2d 	508,
518–20 	(5th 	Cir. 	Unit 	A 	1982); 	6 	Moore's
Federal Practice ¶ 54.78[2] (1987).
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The Court went on to acknowledge that
This 	does 	not 	mean, 	however, 	that 	the 	trial
court 	should 	simply 	award 	the 	full 	amount
billed by the prevailing party's attorneys. We
reject 	Hugg's 	argument 	that 	the 	contract
necessarily 	requires 	the 	recovery 	of 	all
attorneys' fees. Clearly, the trial court has
discretion 	to 	adjust 	or 	even 	deny 	a
contractual 	award 	of 	fees 	if 	such 	an 	award
would be inequitable or unreasonable.
Id. at 1548 citing United States ex rel DeBlasio Constr., Inc. v.
Mountain 	States 	Constr. 	Co., 	588 	F.2d 	259, 	263 	(9th 	Cir.1978)
(affirmed 	trial 	court's 	decision 	to 	deny 	fees 	where 	recovering
party 	was 	partly 	at 	fault); 	Gorman 	Pub. 	Co. 	v. 	Stillman, 	516
F.Supp. 98, 113 (N.D.Ill.1980) (court's power to deny contractual
award 	of 	attorneys' 	fees 	as 	inequitable 	or 	unreasonable 	is 	based
on 	“implied 	covenant 	of 	good 	faith 	and 	fair 	dealing”); 	United
States v. Hankins Constr. Co., 510 F.Supp. 933, 940 (E.D.Mo.1981)
(denied contract award of attorneys' fees to Miller Act defendant
where it would have been “inequitable”).
The Court also noted the Fifth Circuit’s position that
“Where 	attorney's 	fees 	are 	provided 	by
contract, 	a 	trial 	court 	does 	not 	possess 	the
same 	degree 	of 	equitable 	discretion 	to 	deny
such 	fees 	as 	it 	has 	when 	applying 	a 	statute
providing 	for 	a 	discretionary 	award.” 	Of
course, 	it 	may 	nevertheless, 	reduce 	the
contractual 	attorney's 	fees 	claimed 	if 	it
finds such an award “would be inequitable and
unreasonable.”
Id. at 1549 citing General Elec. Credit Corp. v. Oil Screw Triton,
VI, 	712 	F.2d 	991, 	995 	(5th 	Cir. 	1983) 	(quoting 	in 	part 	Cable
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Marine, 	Inc. 	v. 	M/V 	Trust 	Me 	II, 	632 	F.2d 	1344, 	1345 	(5th 	Cir.
Unit B 1980)).
The Court concluded that
We 	adopt 	this 	as 	the 	appropriate 	standard 	to
apply to Hugg's claim for attorneys' fees. In
other 	words, 	the 	trial 	court's 	role 	is 	to
determine if the claimed fees are inequitable
or 	unreasonable. 	If 	so, 	the 	trial 	court 	has
discretion 	to 	deny 	or 	reduce 	the 	fee 	award.
However, 	the 	trial 	court 	is 	not 	responsible
for 	independently 	calculating 	a 	“reasonable”
fee.
Id.
After reviewing the contemporaneous time and expense records
provided 	by 	Harrison’s 	counsel, 	this 	Court 	is 	hard 	pressed 	to
conclude 	that 	the 	fee 	requested 	is 	either 	inequitable 	or
unreasonable. 	The parties bargained for the payment of Harrison’s
legal 	fees 	“wholly 	and 	completely” 	without 	a 	requirement 	for
reasonableness 	and 	this 	Court 	has 	evaluated 	the 	request 	keeping
the parties bargain in mind. 	Both sides were compelled to procure
the 	services 	of counsel in both New York and Oklahoma since both
states’ 	laws 	were 	implicated. 	From 	the 	information 	presented 	in
the 	briefing, 	the 	hourly 	rates 	charged 	by 	counsel 	were 	in 	line
with those typical in both states for attorneys of like experience
and 	expertise 	as 	were 	present 	in 	this 	litigation. 	Harrison 	both
defeated the claims brought against him, including allegations of
fraud, 	and 	succeeded 	in 	prosecuting 	his 	claims 	for 	breach 	of
contract and guaranty. 	He was wholly and completely successful in
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the 	relief 	he 	obtained 	and, 	therefore, 	his 	counsel 	should 	be
compensated “wholly and completely” for their exemplary services.
The same reasoning does not apply to the non-taxable expenses
accrued by Harrison and requested in his Motion. 	Nothing in the
contractual 	language 	provides 	for 	the 	reimbursement 	of 	expenses,
outside of those statutorily permitted. 	As a result, the request
for expenses will be denied in toto.
IT 	IS 	THEREFORE 	ORDERED 	that 	Defendant/Counterclaimant’s
Motion 	for 	Award 	of 	Attorneys’ 	Fees 	and 	Non-Taxable 	Expenses
(Docket Entry #178) is hereby GRANTED, in part, in that attorneys’
fees are awarded in the total amount of $1,212,552.00. 	The request
for the reimbursement of non-taxable costs is hereby DENIED.
IT IS SO ORDERED this 28th day of March, 2024.
______________________________
JASON A. ROBERTSON
UNITED STATES MAGISTRATE JUDGE
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