Hsi Chang v. JPMorgan Chase Bank, N.A.

Citations: 138 F. Supp. 3d 1352; 2015 U.S. Dist. LEXIS 141571; 2015 WL 5934285Docket: CASE NO. 1:14-cv-20368-KMM

Court: District Court, S.D. Florida; September 25, 2015; Federal District Court

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The Court has adopted the Report and Recommendation issued by Magistrate Judge Barry L. Garber regarding JPMorgan Chase Bank, N.A.'s motions for taxable costs and attorney's fees. The plaintiff, Hsi 'Mark' Chang, filed objections to the Report, primarily contesting the timeliness of Chase's motions and the good faith of Chase's settlement offer. Chang argues that the thirty-day time limit in Section 768.79 of the Florida Statutes should be considered substantive law, impacting the timeliness assessment under the Erie doctrine. The Court, however, aligns with the Supreme Court of Florida's interpretation that this time frame is procedural, governed by Florida Rules of Civil Procedure and local rules. Consequently, as Chase’s motions were filed within sixty days of the dismissal of Chang’s claims, the Court deems them timely.

Chang also challenges the good faith of Chase's settlement offer, citing factors from precedent to demonstrate bad faith. However, the Court finds that Chang has not met the burden of proof required to show that Chase’s offer was made in bad faith. As a result, the Court adopts the Report and Recommendation, granting Chase's motions and ordering Chang to pay $48,702.80 in attorney's fees and $4,742.68 in costs. The background of the case involves a wire-fraud scheme where Charles C. Gordon misappropriated funds from Chang through fraudulent accounts opened at Chase.

Gordon was indicted by the federal government for wire fraud, pleading guilty to defrauding Chang of $750,000. Following this, Chang filed an amended complaint against Chase, alleging negligence, gross negligence, aiding and abetting fraud, and aiding and abetting conversion. Chase responded with a motion to dismiss, which was granted by Chief Judge Moore, and Chang’s subsequent motion for reconsideration was denied. Chase is now seeking attorneys’ fees and taxable costs under Florida Statutes section 768.79, citing that Chang’s objections to the fee request are unfounded. 

Chang argues that Chase's motion for fees is untimely since it was filed well after the 30-day period specified in the state statute following the dismissal order on December 8, 2014. Chase contends that the relevant timeline is dictated by Southern District of Florida Local Rule 7.3, which allows for a longer period to file the motion after serving a draft. Chang disputes the applicability of Local Rule 7.3, claiming it improperly extends the time to file a fees motion beyond what the state statute permits. He references a 2007 case where a federal court favored the state statute's timeframe over a local federal rule, but the current court finds that case inapplicable for multiple reasons, implying that the procedural nuances in the present case differ significantly.

The court refrained from examining the procedural aspects of a state statute and instead focused on the substantive rights it provides under Erie principles. It determined that a prevailing party should not be denied state-conferred rights due to non-compliance with a federal time limit when the party adhered to state timelines. While compliance with Local Rules is preferred, the court asserted it had discretion to not deny a motion for attorney's fees based on minor non-compliance. The court noted that the statute in question, section 768.79, contains both procedural and substantive elements, with the thirty-day requirement being strictly procedural. It concluded that these procedural time limits fall under the Florida Rules of Civil Procedure and can be extended by the court. The court emphasized that federal procedural rules apply in diversity cases and allowed for a sixty-day filing period, indicating the Essex Builders ruling, which limited filing times, was not binding or persuasive in this case. The court declined to comment on the correctness of the Essex Builders assumption regarding the entitlement to rights under the statute.

Chang cites Villano v. Boynton Beach to argue that local federal procedural rules cannot override Florida statutes. The Court agrees that state law applies to substantive issues in federal diversity cases but rejects Chang's claim that state law governs procedural matters. The Villano case, which involved attorneys’ fees in a civil rights action under 42 U.S.C. § 1983, did not address Erie concerns, and the Villano court affirmed that district courts can set local timeliness rules for fee claims. Therefore, federal procedural law governs the timeliness of Chase’s motion for fees, while Florida law applies to the substantive entitlement. The Court finds Chase’s motion to be timely under local rule 7.3.

Additionally, Chang has not demonstrated that Chase’s offer of judgment was made in bad faith. The burden is on Chang to prove bad faith, considering factors such as the offer amount, potential exposure, case complexity, and justification for the offer. Despite Chang’s characterization of the $5,000 offer as minimal and coercive, the Court notes that the case had not proceeded beyond the dismissal stage, unlike in Pickett, where multiple factors indicated bad faith. Thus, the offer's amount alone, in the context of Chang’s incurred costs and losses, does not necessitate a finding of bad faith.

A good faith offer does not need to match the total potential damages involved in a case. A lower nuisance-value offer can be valid if the offeror reasonably believes their liability exposure is minimal. In this case, Chase maintained that the claims against it were legally deficient and consistently asserted that it would not incur liability. Throughout the litigation, Chase emphasized the flaws in Chang’s claims, arguing that they were non-actionable and that the amendments did not remedy these issues. The court noted that Chang acknowledged the weak legal foundation of his claims, describing them as futile. Chase's settlement proposal aimed to avoid costly discovery and was justified given its view of the meritlessness of the claims. Ultimately, the court concluded that Chang failed to prove Chase's settlement offer lacked good faith and established Chase’s entitlement to attorneys' fees. Chase detailed its incurred fees totaling $48,578 for 216.35 hours of work, reflecting efforts related to extensive discovery and trial preparations up until the court's dismissal of Chang's claims.

Hourly rates for the attorneys involved are deemed reasonable, with partners charging approximately $300 per hour and associates $208 per hour. The Court reviewed the time sheets and found no excessive charges related to Chase’s request for $48,702.80 in fees, and Chang did not object to the reasonableness of these rates or hours worked. Chase plans to amend its fee motion to include additional bills incurred after November 30, 2014, and the Court encourages the parties to settle these remaining fees amicably.

Chase also seeks reimbursement for taxable costs, which it is entitled to as the prevailing party under 28 U.S.C. § 1920. Chang’s objection to these costs was based on an anticipated motion for reconsideration, which was not granted, rendering his objection moot. The Court will still review the cost requests to ensure they comply with the statute. Chase is claiming costs specifically for depositions, which are allowable even though the case did not go to trial. The total for these costs amounts to $4,742.68, covering deposition transcripts for Chang and others.

In conclusion, the Court recommends granting Chase's motion for fees of $48,702.80 and for taxable costs of $4,742.68. The parties have fourteen days to file objections to this recommendation with the Chief United States District Judge, as failure to do so may limit their ability to contest the findings on appeal.