Husenovski v. Absalom

Background

The court had entered a stipulation under Federal Rule of Civil Procedure 68 after Vaide Husenovski accepted an offer of judgment from the City of New York. The stipulation required the City to pay plaintiff’s counsel Jeffrey A. Rothman $9,226 and Jason Leventhal $11,774 in full satisfaction of claims for attorneys’ fees, expenses, and costs. The court later entered judgment for Husenovski against the City for $15,001, plus reasonable attorneys’ fees, expenses, and costs through the date of the offer.

Plaintiff’s counsel moved to compel the City to pay the full interest due on the late-paid fees and costs. They calculated the additional interest as $260.63 for Mr. Rothman and $332.73 for Mr. Leventhal. They also sought additional attorneys’ fees for 2.5 hours spent preparing the motion, at $750 per hour, relying on the court’s inherent authority and 28 U.S.C. § 1927.

The parties’ positions

The City did not object to paying the requested interest. It opposed the additional-fee request, arguing that the settlement stipulation and Rule 68 judgment barred those fees and that the request was an impermissible award of fees for seeking fees. The City alternatively argued that any additional fees should be calculated using the hourly rates previously agreed upon in resolving the case.

Plaintiff’s counsel argued that the requested fees were different from ordinary fees awarded under fee-shifting statutes and therefore were not impermissible “fees-on-fees.” They also argued that the rates used to settle the case should not control the new request.

Court’s analysis

The court explained that sanctions under § 1927 require clear evidence that an attorney’s claims were entirely without a reasonable basis and were brought in bad faith, such as for harassment or delay. The court stated that similar requirements apply when fees are imposed under its inherent equitable authority: the conduct must lack any reasonable basis and must be motivated by an improper purpose.

The court found that the City’s conduct did not meet that standard. The correspondence did not clearly explain why the City delayed paying the originally stipulated fees, but it suggested that the City worked to expedite payment. The City also had reasons for believing that a lower interest amount was proper, including its calculation of the interest period and its reliance on the federal interest statute, 28 U.S.C. § 1961. Although the City ultimately did not object to applying the state-law interest provision cited by plaintiff’s counsel, the court found that the City’s position was not so unreasonable that it showed an improper purpose. The court also found no evidence that the City acted in bad faith.

Ruling

The court granted in part and denied in part plaintiff’s counsel’s letter-motion. It granted the request to compel payment of the full outstanding interest on the late-paid attorneys’ fees and costs. The City was ordered to disburse that amount no later than January 9, 2023, and to file proof of payment on the docket.

The court denied the request for additional attorneys’ fees under § 1927 or its inherent authority. Because it denied that request on the bad-faith and improper-purpose grounds, the court did not decide the parties’ arguments about the proper hourly rate, whether the request was impermissible “fees-on-fees,” or whether the settlement stipulation and Rule 68 judgment barred it. The clerk was directed to close the motion, and the case was to remain closed.