In a May 27, 2011 decision by Justice Ramos, the court confirmed in part and rejected in part, pursuant to CPLR § 4003, a special referee’s report recommending that defendants be indemnified for certain legal fees. After the JHO held a two-day evidentiary hearing, at which he was presented with invoices showing block billing and testimony from defense counsel, the JHO issued a report recommending the payment of $121,299 in legal fees. While the court noted that the JHO’s recommendations as to the appropriateness of fees are entitled to deference where the JHO found the billing entries sufficiently informative and credited witness testimony, the court found that the JHO recommended certain fees that were incurred for time spent on the instant matter as well as related matters which the defense counsel sought to allocate entirely to the instant matter, representing that he would have performed the same work even if the other matters were not pending. The court rejected the recommendation and held that a 50-50 split allocation was warranted on the grounds that it is not equitable to charge all of the fees incurred with respect to non-idemnifiable matters to a single indemnifiable matters and because the time entries made it difficult for the court to identify the amount of time spent on tasks for which fees are recoverable.  

The court confirmed the JHO’s recommendations for a 40% reduction in fees sought in connection with a reargument motion stemming from the courts’ denial of the defendants’ motion to quash a subpoena and an untimely appeal, as well as a recommendation for a reduction in fees sought in connection with a motion to disqualify counsel, finding that they were reasonable, supported by the record, and clearly defined.

The defendants also sought prejudgment interest, pursuant to CPLR § 5001, because the plaintiffs challenged the entitlement to indemnification and delayed the resolution of the matter. The court denied that request, finding that interest is not a penalty and is not meant to punish a party for delaying the resolution of a matter.

546-552 W. 146th St. LLC v Arfa, Sup Ct, New York County, May 27, 2011, Ramos, J, Index No. 603041/06