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Cobell v. Jewell

United States District Court, District of Columbia

April 10, 2017

ELOUISE PEPION COBELL, by and through TURK R. COBELL, as the personal representative of her estate, et al., Plaintiffs,
v.
SALLY JEWELL, Secretary of the Interior, et al., Defendants.

          MEMORANDUM OPINION

          G. MICHAEL HARVEY UNITED STATES MAGISTRATE JUDGE.

         This matter was referred to the undersigned for adjudication of Mark Brown's fee petition. In January 2017, this Court granted that petition and awarded Brown $2.878 million in fees. Thereafter, Brown filed a motion seeking prejudgment interest on his fee award [Dkt. 4257]. That motion is fully briefed and ripe for adjudication.[1] Based on the entire record, the Court finds that Brown is entitled to prejudgment interest of $736, 293.88, an amount calculated based on the simple, annual interest rate of 6%.

         BACKGROUND

         This matter arises from a class action filed in 1996 alleging that the Department of the Interior had mismanaged Native American lands it had held in trust since the late nineteenth century. See Amended Complaint [Dkt. 3671] (Dec. 21, 2010), at ¶¶ 3-4, 17. The parties agreed to a settlement in 2009, the terms of which were approved by Congress in 2010, this Court in 2011, and the D.C. Circuit in 2012. See Plaintiffs' Motion for Preliminary Approval of the Settlement [Dkt. 3660] (Dec. 10, 2010), at 1; Final Order Approving Settlement [Dkt. 3850] (Jul. 27, 2011), at 4; Cobell v. Salazar, 679 F.3d 909, 913 (D.C. Cir. 2012). The settlement included an award to Plaintiffs' counsel of $99 million in attorney's fees. Final Order Approving Settlement, at 9-10.

         Plaintiffs' counsel's motion for the award of fees omitted all of the hours Mark Brown expended on the representation. See Plaintiffs' Motion for Attorney's Fees and Expenses of Class Counsel [Dkt. 3678] (Jan. 25, 2011). Brown subsequently intervened, seeking a fee award of $5.517 million for 11, 615 hours of work he incurred on behalf of the class. See Petitioner's Response to Plaintiffs' Motion for Attorney's Fees [Dkt. 3699] (Feb. 28, 2011). In 2011, Judge Hogan responded to Brown's fee petition by withholding the amount that Brown claimed he was due (and that claimed by another intervenor, the Native American Rights Fund) in the Settlement Account, and by releasing the balance of the $99 million fee award to Plaintiff's counsel. Final Order Approving Settlement [Dkt. 3850] (Jul. 27, 2011), at 9-10. Those fees not held in the Settlement Account were distributed to class counsel on November 24, 2012. Order [Dkt. 3923] (Dec. 11, 2012). After a series of unsuccessful mediations, Judge Hogan referred Brown's fee petition to the undersigned for resolution. Referral Order [Dkt. 4124] (May 12, 2015).

         On January 31, 2017, the undersigned awarded Brown $2, 878, 612.52 for 8, 224 hours of work. See Cobell v. Jewell, No. 96-CV-1285 (TFH/GMH), 2017 WL 421905, at *43 (D.D.C. Jan. 31, 2017). Plaintiffs paid the fee award on February 28, 2017. Plaintiffs' Notice of Payment to Mark Brown [Dkt. 4265] (Feb. 28, 2017).

         While Brown asserted a claim for fees based primarily on quantum meruit, the Court calculated his fee award based on the terms specified in his engagement letters with the Plaintiffs. See Cobell, 2017 WL 421905, at *34-35. The Court based Brown's hourly rate on the only rate included in those engagement letters - $350 an hour - rather than, as Brown had requested, hourly rates specified in the U.S. Attorney's Office's current Laffey matrix. Brown had requested present-day Laffey rates to account for the time-value of money and to compensate for the delay in him receiving his fee award. Id. at *34-35. The Court rejected that request but permitted Brown to file a motion seeking prejudgment interest on the fee award pursuant to District of Columbia law.[2]Id. at *35.

         Brown filed such a motion on February 18, 2017. He requests prejudgment interest on his fee award pursuant to § 15-108 and § 15-109 of the D.C. Code, at an interest rate of 6%, compounded annually, for a total amount of $819, 656.21. Brown Mot. at 10-11. Plaintiffs responded to Brown's motion by denying that he is entitled to any prejudgment interest under the law of the District of Columbia. Brown's reply followed. The issue is now ripe for adjudication.

         LEGAL STANDARD

         Under District of Columbia law, prejudgment interest is typically “an element of complete compensation.” Bragdon v. Twenty-Five Twelve Assocs. Ltd. Partnership, 856 A.2d 1165, 1172 (D.C. 2004). It should be awarded “absent some justification” for denying it. Washington Inv. Partners of Delaware, LLC v. Sec. House, K.S.C.C., 28 A.3d 566, 581 (D.C. 2011) (internal quotations omitted). In its most extended treatment of the subject, the District of Columbia Court of Appeals in District of Columbia v. Pierce Associates, Inc., 527 A.2d 306 (D.C. 1987), described a shift in the common law treatment of prejudgment interest. Under the older, “penalty theory” view, prejudgment interest is appropriate where a debtor, with full knowledge of the debt owed, refuses to pay the creditor. Id. at 310-11. Because of this refusal, the debtor is rightfully punished by the imposition of interest for the duration of debtor's refusal. Id. The penalty theory, therefore, places significant weight on whether the debt was liquidated, as a debtor should not be expected to pay a debt that is not easily ascertained. Id.

         More recent cases in the District of Columbia have adopted the “loss” or “unjust enrichment” theory of prejudgment interest. Under that theory, the inquiry concerning the liquidation of the debt is replaced with consideration of what will fairly make whole the party who has been deprived of the use of money. Id. at 311. The plaintiff has experienced a loss for which it must be made whole, while the party who has enjoyed the use of that money has thereby been unjustly enriched. Id. As the focus is on making the wronged party whole, the inquiry places less emphasis on whether the debtor could have known the amount it owed, which is to say whether the debt was liquidated. Id.

         The Court of Appeals in Pierce Associates, Inc., found both of these theories of prejudg-ment interest reflected in the District of Columbia Code: § 15-108 expresses the penalty theory of prejudgment interest, while § 15-109 endorses the loss/unjust enrichment theory. Id.; D.C. Code §§ 15-108, 15-109 (2016). Section 15-108 provides for prejudgment interest where a judgment is both a “liquidated debt” and occurs in circumstances where “interest is payable by contract or by law or usage.” D.C. Code § 15-108. If either of these requirements are not satisfied, an award of prejudgment interest is not authorized under § 15-108.

         Section 15-109 is more flexible. It permits an award of prejudgment interest as an “element [of] damages” in a breach of contract case “if necessary to fully compensate the plaintiff.” Id. § 15-109. It provides a trial court with a “wide range of discretion in awarding prejudgment interest.” House of Wines, Inc. v. Sumter, 510 A.2d 492, 499 (D.C. 1986); Edmund J. Flynn Co. v. LaVay, 431 A.2d 543, 550 n.6 (D.C. 1981); Noel v. O'Brien, 270 A.2d 350, 351 (D.C. 1970).

         DISCUSSION

         The Court considers below Brown's request for prejudgment interest ...


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