Filed: Jan. 22, 2013
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 11-2089 BEST MEDICAL INTERNATIONAL, INC., a Virginia corporation; BEST VASCULAR, INC., a Delaware corporation, Plaintiffs - Appellants, v. ECKERT & ZIEGLER NUCLITEC GMBH, a German corporation, successor to QSA Global GmbH, Defendant - Appellee. No. 11-2141 BEST MEDICAL INTERNATIONAL, INC., a Virginia corporation; BEST VASCULAR, INC., a Delaware corporation, Plaintiffs - Appellees, v. ECKERT & ZIEGLER NUCLITEC GMBH, a German co
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 11-2089 BEST MEDICAL INTERNATIONAL, INC., a Virginia corporation; BEST VASCULAR, INC., a Delaware corporation, Plaintiffs - Appellants, v. ECKERT & ZIEGLER NUCLITEC GMBH, a German corporation, successor to QSA Global GmbH, Defendant - Appellee. No. 11-2141 BEST MEDICAL INTERNATIONAL, INC., a Virginia corporation; BEST VASCULAR, INC., a Delaware corporation, Plaintiffs - Appellees, v. ECKERT & ZIEGLER NUCLITEC GMBH, a German cor..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-2089
BEST MEDICAL INTERNATIONAL, INC., a Virginia corporation;
BEST VASCULAR, INC., a Delaware corporation,
Plaintiffs - Appellants,
v.
ECKERT & ZIEGLER NUCLITEC GMBH, a German corporation,
successor to QSA Global GmbH,
Defendant - Appellee.
No. 11-2141
BEST MEDICAL INTERNATIONAL, INC., a Virginia corporation;
BEST VASCULAR, INC., a Delaware corporation,
Plaintiffs - Appellees,
v.
ECKERT & ZIEGLER NUCLITEC GMBH, a German corporation,
successor to QSA Global GmbH,
Defendant - Appellant.
No. 12-1121
BEST MEDICAL INTERNATIONAL, INC., a Virginia corporation;
BEST VASCULAR, INC., a Delaware corporation,
Plaintiffs - Appellants,
v.
ECKERT & ZIEGLER NUCLITEC GMBH, a German corporation,
successor to QSA Global GmbH,
Defendant - Appellee.
Appeals from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (1:10-cv-00617-CMH-IDD)
Argued: October 23, 2012 Decided: January 22, 2013
Before NIEMEYER, KING, and AGEE, Circuit Judges.
Affirmed in part, vacated in part, and remanded for further
proceedings by unpublished per curiam opinion.
ARGUED: James Michael Brady, BEST MEDICAL INTERNATIONAL, INC.,
Springfield, Virginia, for appellants. Carl Dewayne Lonas,
MORAN, REEVES & CONN, PC, Richmond, Virginia, for appellee. ON
BRIEF: Matthew J. Hundley, MORAN, REEVES & CONN, PC, Richmond,
Virginia, for appellee.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
In 1999, a predecessor of Eckert & Ziegler Nuclitec
GmbH (referred to hereinafter, together with Eckert & Ziegler,
as “EZN”) entered into a Manufacturing Agreement with the
predecessor of Best Medical International, Inc. and Best
Vascular, Inc. (referred to hereinafter, together with Best
Medical and Best Vascular, as “Best”), under which EZN agreed to
manufacture for Best strontium 90 “sources.” Sources are
enclosed capsules of strontium 90 used -- individually or in a
“train” of sources welded together -- for medical radiation
therapy. Under the Manufacturing Agreement, EZN constructed a
production line at its facility in Braunschweig, Germany, with
which to manufacture sources. Best agreed to buy the sources
and, at the conclusion of the manufacturing contract, to pay to
dismantle and decommission the production line. Best also
agreed to purchase a specified amount of remaining inventory.
The Manufacturing Agreement, however, broke down and
ended up in litigation between the parties. The litigation was
ultimately resolved by a Settlement Agreement, entered into on
April 16, 2008, under which the parties agreed to decontaminate
and dismantle the production line and dispose of the inventory.
But again, the Settlement Agreement broke down, resulting in the
current litigation.
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Under the Settlement Agreement, Best agreed to
“decontaminate and decommission” the production line by April
16, 2009, and EZN agreed to fully cooperate in that effort.
Best also agreed to provide a performance bond in the amount of
€200,000. If Best were to become delayed in its performance
because of EZN’s “willful and intentional failure to cooperate,”
Best would be entitled to an extension of performance, provided
that it followed certain procedures. If, however, Best were
delayed for other reasons, it was entitled to cure, but only if
it paid an extension fee of €50,000 per month, for a maximum of
four months. If Best did not cure, then EZN would itself have
the right to decontaminate and decommission the production line,
using commercially reasonable efforts. In that event, it was
entitled to recover its costs from the performance bond and
excess costs from Best directly. The Settlement Agreement
provided that any disputes about EZN’s costs in decontaminating
and decommissioning the production line were to be submitted to
binding arbitration.
The Settlement Agreement also provided that Best would
pay €100,000 for the purchase of source trains containing 500
sources that EZN had produced under the Manufacturing Agreement,
and EZN agreed to accept from Best sources and source trains
that needed to be disposed of, so long as Best was not in
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default of its obligation to decontaminate and decommission the
production line.
Finally, the parties agreed that disputes not covered
by the arbitration clause would be governed by Virginia law and
that “the prevailing party [would] be entitled to recover, in
addition to any damages proven at trial, reasonable attorneys’
fees and costs incurred in any such action.”
After the parties executed the Settlement Agreement,
EZN agreed to allow Best to substitute a letter of credit for
the performance bond. The parties disagree, however, on whether
Best ever submitted the original letter of credit or even
whether the letter of credit that Best had obtained was in an
acceptable form.
In the performance of the Settlement Agreement, Best
paid for four extensions with respect to its obligation to
decontaminate and decommission the production line, but even
with the extensions, it never performed the task. In January
2010, EZN told Best that it was undertaking the task, as it was
authorized to do by the Settlement Agreement. In addition, even
though Best paid the required €100,000 for source trains and EZN
offered to ship Best the source trains it had in stock, Best
refused to accept those source trains, claiming that they did
not meet the specifications set forth in the original
Manufacturing Agreement.
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Best commenced this action in June 2010, relying on
diversity jurisdiction, for injunctive relief and damages. It
alleged: (1) that EZN was equitably estopped from conducting
the decontamination and decommission task and from disposing of
the production line in the course of decontaminating and
decommissioning the production line; (2) that EZN breached the
Settlement Agreement by not cooperating with Best; and (3) that
EZN breached the Settlement Agreement by not providing Best with
source trains and sources that met the specifications of the
original Manufacturing Agreement.
In addition to filing its answer to Best’s complaint,
EZN filed a counterclaim in which it alleged: (1) that Best
breached the Settlement Agreement by failing to post a
performance bond; (2) that Best breached the Settlement
Agreement by failing to decontaminate and decommission the
production line; (3) that Best fraudulently induced EZN to enter
into the Settlement Agreement; and (4) that EZN should be
awarded declaratory relief stating that Best had defaulted under
the Settlement Agreement and that its default relieved EZN from
any obligation to dispose of sources.
On the parties’ cross-motions for summary judgment,
the district court entered judgment on September 7, 2011,
dismissing all claims, as stated in both the complaint and the
counterclaim. Best Med. Int’l, Inc. v. Eckert & Ziegler
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Nuclitec GmbH, No. 1:10-cv-617, 2011 WL 3951675 (E.D. Va. Sept.
7, 2011). In dismissing Best’s complaint the court concluded,
among other things: (1) that Best did not make “the necessary
showing on the representation element of any possible equitable
estoppel claim”; (2) that Best did not demonstrate that EZN had
willfully and intentionally failed to cooperate; and (3) that
the Settlement Agreement only required EZN “to attempt to
satisfy the Source manufacturing requirements based on
availability of the current inventory.”
Id. at *2-5. In
dismissing EZN’s counterclaim the court concluded, among other
things: (1) that EZN did not establish that it had suffered
damages from Best’s failure to provide a performance bond; (2)
that “although Best did default on its [decontamination and
decommissioning] obligation, the arbitration provisions of the
contract [were] still in effect”; (3) that EZN had no evidence
that supported a claim of fraudulent inducement; and (4) that
the claim for a declaratory judgment requested in the fourth
count was moot.
Id. at *5-7.
EZN and Best then each moved for attorneys’ fees and
costs, claiming to be the “prevailing party” entitled to that
award under the Settlement Agreement. In an order dated January
6, 2012, the district court found EZN to be the prevailing party
and therefore entitled to its attorneys’ fees and costs. EZN
sought $584,735.08 in fees, $32,892.61 in nontaxable costs, and
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$14,845.70 in costs taxable under Federal Rule of Civil
Procedure 54(d)(1). EZN explained that its fee request
incorporated a 10% reduction to the lodestar to account for the
unsuccessful aspects of its counterclaim and that it had also
reduced its fees by $38,255.60 to account for prelitigation
activities, non-core timekeepers, the fraud claim, a motion to
compel that the court had denied as untimely, and duplicate
timekeepers. The district court awarded EZN its full claim,
concluding that the hours and rates were reasonable; that EZN’s
10% discount to its lodestar was reasonable; and that there was
no need to further discount because of EZN’s “failure to prevail
on its counterclaim as there was no duplication involved over
and above the effort to defend itself.”
This appeal followed, with both parties challenging
the district court’s rulings. *
After carefully considering the arguments presented by
the parties and reviewing the record, we affirm the district
court’s summary judgment on the merits, substantially for the
reasons given by the court in its opinion. We also affirm the
district court’s conclusion that EZN was the prevailing party.
But, as to the amount of EZN’s attorneys’ fees and costs, which
we conclude might be unreasonably excessive in the absence of an
*
The amount of the costs taxable under Rule 54(d)(1) has
not, however, been challenged on appeal.
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analysis based on the applicable factors identified in Johnson
v. City of Aiken, 278 F.3d 333 (4th Cir. 2002), we remand for a
further analysis that takes into account the applicable Johnson
factors. While the district court did generally recognize
the Johnson factors, it applied the factors in only the most
conclusory manner, stating, “Taking the Johnson factors into
account, the Court finds the hours expended and the rates billed
to be reasonable.”
Accordingly, we affirm the district court’s summary
judgment on the merits and its ruling that EZN was the
prevailing party; we vacate its award of attorneys’ fees and
costs; and we remand with respect to its award of attorneys’
fees and costs to allow the court to reevaluate EZN’s claim in
light of the Johnson factors.
AFFIRMED IN PART, VACATED
IN PART, AND REMANDED FOR
FURTHER PROCEEDINGS
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