ResCap Liquidating Tr. v. Primary Residential Mortg., Inc.

ResCap Liquidating Trust, Plaintiff v. Primary Residential Mortgage, Inc., Defendant

Case No. 0:16-cv-4070 (SRN/HB)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

April 28, 2021

AMENDED ORDER ON ATTORNEY'S FEES, COSTS, AND PREJUDGMENT INTEREST^*

Temporarily Filed Under Seal

Isaac Nesser, Heather Christenson, Peter Calamari, and Jeffrey Carl Miller, Quinn Emanuel Urquhart & Sullivan, LLP, 51 Madison Ave., Floor 22, New York, NY 10001; Anthony Alden and Matthew R. Scheck, Quinn Emanuel Urquhart & Sullivan, LLP, 865 Figueroa St., Floor 10, Los Angeles, CA 90017; Donald Heeman, Jessica Nelson, Randi Winter, and Laurie Quinn, Spencer Fane, 100 S. 5th St., Ste. 2500, Minneapolis, MN 55402, for Plaintiff.

Matthew Johnson, Jesse T. Smallwood, Matthew Nicholson, and Krista Anderson, Williams & Connolly, LLP, 725 12th St. NW, Washington, DC 20005; Elizabeth Kniffen and Rory Zamansky, Zelle, LLP, 500 Washington Ave. S., Ste. 4000, Minneapolis, MN 55415, for Defendant.

TABLE OF CONTENTS

I. BACKGROUND ..................................................................................................... 1

A. RFC's Bankruptcy ........................................................................................ 1

B. Indemnification and Fee-Shifting Provisions ................................................ 2

C. Litigation in Minnesota ................................................................................ 3

D. Summary Judgment and Trial Between ResCap and PRMI ........................ 7

E. Plaintiff's Motion for Attorney's Fees, Costs, and Prejudgment Interest ..... 8

II. DISCUSSION ........................................................................................................ 13

A. Whether ResCap's Attorney's Fees are Reasonable ................................... 14

1. Supporting Evidence ....................................................................... 17

a. Expert Opinions of Messrs. Remele and Cambronne ........... 18

b. Redacted Invoices ................................................................. 21

2. Reasonable Hourly Rates ................................................................. 25

3. Reasonable Hours ............................................................................. 28

a. The Nature and Difficulty of the Responsibility Assumed ... 29

(1) PRMI Loan-Specific Work ........................................ 30

(2) PRMI's New Arguments ............................................ 31

(3) Comparable Litigation ............................................... 33

(4) Challenges to Work Performed .................................. 35

(a) Pre-Complaint Period Through Month Complaint Filed (December 1, 2014 to December 31, 2016) .......................................................................... 36

(b) Pre-Stay Period/Document Discovery (January 1, 2017 to July 31, 2018) ............................................ 36

(c) Stay Period (August 1, 2018 to January 31, 2019) .......................................................................... 39

(d) Fact Depositions and Opening Expert Reports (February 1, 2019 to May 31, 2019) .......................... 40(e) Expert Discovery/Opening Summary-Judgment and Daubert Briefs (June 1, 2019 to October 31, 2019) .................................................................................... 41

(f) Summary Judgment and Daubert Opposition, Replies, and Hearings (November 1, 2019 to December 11, 2019), and Pre-Trial Proceedings (December 12, 2019 to February 9, 2020) ................. 43

(g) Bench Trial (February 10, 2020 to March 13, 2020) .......................................................................... 45

(h) Post-Trial Submissions (March 14, 2020 to April 30, 2020) ........................................................... 48

(i) Months Following Post-Trial Submissions (May 1, 2020 to July 31, 2020) .................................. 49

(j) Fee Petition Litigation (November 2020 to December 2020) ......................................................... 49

b. Amount Involved and Results Obtained ............................... 50

(1) Prejudgment Interest Included in Damages Award ......... 52

(2) Amount of Plaintiff's Attorney's Fees ............................ 53

(3) Challenges to Components of Damages Claim ............... 54

(a) Countrywide Loan ................................................ 55

(b) Monoline Allocation ............................................. 56

(c) At-Issue Population and NDS Trusts ................... 58

(d) Assetwise Loans ................................................... 59

(4) Previously-Decided Issues .............................................. 60

(5) ResCap's Warnings ......................................................... 65

(6) Results Obtained .............................................................. 68

c. Fees Customarily Charged for Similar Legal Services ......... 72

(1) Comparison with Opposing Counsel's Billable Hours ... 72

(2) Comparison Between ResCap's Hours Billed in PRMI and HLC ................................................................................ 74

(3) Comparison of Hours Billed Among Plaintiff's Counsel .................................................................................. 75d. Remaining Milner Factors ..................................................... 79

e. Fees for Preparing the Fee Petition ...................................... 81

f. Adjustments to the Lodestar ................................................. 82

B. Whether ResCap's Costs are Reasonable ................................................... 83

1. Expert and Support Firms ...................................................................... 84

a. ResCap's Allocation Methodology .............................................. 84

b. ResCap's Request and Supporting Documentation for Expert Costs ..................................................................................... 87

2. Document Vendors ................................................................................. 93

3. Witnesses and Trial Vendors ................................................................... 93

C. Post-Award Prejudgment Interest .............................................................. 96

III. ORDER ................................................................................................................ 102

SUSAN RICHARD NELSON, United States District Judge

Before the Court is the Motion for Attorney's Fees, Costs, and Prejudgment Interest [Doc. No. 22] filed by Plaintiff ResCap Liquidating Trust ("ResCap"). For the reasons set forth below, Plaintiff's motion is granted in part and denied in part.

I. BACKGROUND

The Court has previously addressed the complex background and unique legal issues involved in this contractual indemnification lawsuit in numerous orders and opinions, most notably in its 210-page Findings of Fact and Conclusions of Law ("FOF & COL") following the parties' 13-day bench trial in this case. In re ResCap Liquidating Tr. Litig., No. 13-cv-3451 (SRN/HB), 2020 WL 4728109 (D. Minn. Aug. 14, 2020); (ResCap Consol. Liquid. Tr. Litig., 13-cv-3451 [Doc. No. 5527].) While the Court will not reiterate its past findings in detail here, to provide the necessary context for Plaintiff's motion, the Court will briefly describe the origins of this case, the underlying relationship between Plaintiff's predecessor, Residential Funding Corporation ("RFC"), and Defendant Primary Residential Mortgage, Inc. ("PRMI"), and the procedural history of this action, including the relationship of this case with similar cases filed in this District.

A. RFC's Bankruptcy

This lawsuit stems from the 2012 bankruptcy (the "Bankruptcy") of the Minnesota company known as RFC. (FOF & COL ¶ 1.) Following the 2008 collapse of the housing market, RFC was sued by various "Trusts" and "Monoline Insurers" for breaching the "representations" and "warranties" ("R&Ws") RFC had made to those entities, or their insureds, when selling them bundles of home mortgages pooled together into residentialmortgage-backed securities ("RMBS"). In re RFC & ResCap Liquid. Tr. Action, 399 F. Supp. 3d 827, 831 (D. Minn. 2019) ("HLC Fee Award"). Facing billions of dollars of liability, RFC filed for bankruptcy in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). (FOF & COL ¶ 2.) In the Bankruptcy Court, after much negotiation, RFC reached a series of settlements, totaling approximately $9 billion, with the RMBS Trusts and several of the Monoline Insurers. HLC Fee Award, 399 F. Supp. 3d at 831. In December 2013, the Bankruptcy Court Judge, the Honorable Martin Glenn, approved the settlements as "fair and reasonable" in a 134-page order. (FOF & COL ¶ 111); HLC Fee Award, 399 F. Supp. 3d at 831. At the hearing in which Judge Glenn approved the settlements, he further observed that "this case is certainly the most legally and factually complicated case that I've presided over in my seven years on the bench," and that "ResCap presented more unsettled legal issues than I've seen in one case before, whether during my seven years on the bench or thirty-four years in law practice before that." HLC Fee Award, 399 F. Supp. 3d at 831.

B. Indemnification and Fee-Shifting Provisions

As part of RFC's Bankruptcy, RFC's creditors formed ResCap, a trust authorized to sue the dozens of banks and mortgage lenders that had sold RFC the loans that were subsequently bundled into RMBS, on grounds that those lenders breached their (corresponding) R&Ws to RFC, and thus directly caused RFC to breach its R&Ws to the Trusts and Monoline Insurers, which, in turn, contributed to RFC's $9 billion in Bankruptcy liabilities. Id. ResCap's legal claims against the lenders were rooted in the "Client Contract" that those lenders had signed with RFC, which itself incorporated a lengthier agreement calledthe "Client Guide," or in PRMI's case, both the Client Guide and a similar agreement called the "AlterNet Guide" (collectively, "the...