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Lock Realty Corporat v. U.S. Health, LP, 11-3477 (2013)

Court: Court of Appeals for the Seventh Circuit Number: 11-3477 Visitors: 39
Filed: Feb. 12, 2013
Latest Update: Feb. 12, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit Nos. 11-3477, 11-3570 & 12-1334 L OCK R EALTY C ORP. IX, Plaintiff-Appellee/ Cross-Appellant, v. U.S. H EALTH, LP, et al., Defendants-Appellants/ Cross-Appellees. Appeals from the United States District Court for the Northern District of Indiana, South Bend Division. Nos. 3:06-CV-487 RM, 3:05-CV-715 RM—Robert L. Miller, Jr., Judge. A RGUED S EPTEMBER 17, 2012—D ECIDED F EBRUARY 12, 2013 Before E ASTERBROOK, Chief Judge, and B AUER and
More
                            In the

United States Court of Appeals
               For the Seventh Circuit

Nos. 11-3477, 11-3570 & 12-1334

L OCK R EALTY C ORP. IX,
                                                Plaintiff-Appellee/
                                                 Cross-Appellant,
                                v.



U.S. H EALTH, LP, et al.,
                                          Defendants-Appellants/
                                                Cross-Appellees.


            Appeals from the United States District Court
      for the Northern District of Indiana, South Bend Division.
 Nos. 3:06-CV-487 RM, 3:05-CV-715 RM—Robert L. Miller, Jr., Judge.


  A RGUED S EPTEMBER 17, 2012—D ECIDED F EBRUARY 12, 2013




 Before E ASTERBROOK, Chief Judge, and B AUER and
W OOD , Circuit Judges.
  W OOD , Circuit Judge. These appeals represent the end
of the line for a long-running dispute over a nursing-
home lease between Lock Realty Corporation IX (the
lessor) and U.S. Health (the lessee) and Americare
(the lessee’s assignee). For simplicity, we refer to the
2                          Nos. 11-3477, 11-3570 & 12-1334

defendants as Americare unless the context requires
otherwise. Between Americare’s appeal and Lock’s cross-
appeal, we are presented with a potpourri of issues
covering everything from the propriety of a partial sum-
mary judgment in Lock’s favor to the district court’s
attorneys’ fee decision. The most complex question,
however, relates to our appellate jurisdiction—a subject
on which we requested supplemental briefing after oral
argument. After reviewing the parties’ submissions, we
are satisfied that our jurisdiction is secure. On the
merits, we find no reversible error in the various rulings
of the district court that the parties have highlighted,
and so we affirm.


                             I
  In January 2002, U.S. Health entered into a 20-year
lease for a nursing home and adjacent property owned
by Lock in Goshen, Indiana. Defendants Larry New,
John Bartle, and Rebecca Bartle guaranteed the lease,
which was to run from April 2002 to March 2022. At
some point before mid-2006, U.S. Health assigned the
lease to defendant Americare Living Centers III, LLC. It
did so without obtaining Lock’s written consent, despite
a provision in the lease imposing that precondition to
assignment. Other concerns began to come to light, how-
ever, that did attract Lock’s attention. Two separate
lawsuits followed, to which we will refer as Lock I and
Lock II. We trace each one here, in the hope that this
detail will not only place the issues before us in context,
but will also show why we have appellate jurisdiction.
Nos. 11-3477, 11-3570 & 12-1334                           3

For the most part, facts relating to the merits of the argu-
ments on appeal will be presented as we discuss
each point.


                         A. Lock I
   On January 24, 2006, Lock filed suit in federal court,
invoking the diversity jurisdiction, against U.S. Health.
This lawsuit, No. 3:05-CV-715 in the district court,
charged that U.S. Health had violated a provision of the
lease under which it was required to fund a replace-
ment reserve. The parties reached a settlement relatively
quickly. On May 4, 2006, the district court entered an
order for a stipulated judgment in Lock’s favor of
$679,287.96, along with prejudgment interest of $1,471.13;
it set the interest rate for the post-judgment period at
4.94%. The next day, U.S. Health filed a motion to set
aside the May 4 judgment. On May 17, 2006, the
parties stipulated that the judgment would be set aside
and a new judgment for Lock in the amount of
$485,430.56 would be entered. The stipulation also
noted that an amount for attorneys’ fees would be
agreed by June 10, 2006, and a supplemental judg-
ment reflecting that agreement would be entered. On
May 30, 2006, the court entered an order reflecting the
May 17 stipulations.
  Although things had been going smoothly (more or
less) up to that point, it was not long before problems
began to crop up. The June 10 date for an agreement on
attorneys’ fees turned out to be unrealistic, and so there
were several extensions. On June 21, 2006, however, the
4                        Nos. 11-3477, 11-3570 & 12-1334

court entered a final judgment for Lock in the agreed
amount of $485,430.56, plus post-judgment interest at a
rate of 5.13%. On July 14, 2006, the court issued an
order granting Lock’s motion for fees and setting the
amount at $29,238.85. Six weeks later, on August 31,
2006, Lock filed a motion under Federal Rule of Civil
Procedure 60(b)(2) and (3) asking the court to modify
its judgment to include Americare as a judgment debtor.
Lock explained that it had only then learned that U.S.
Health, without the necessary authorization from Lock,
had assigned its lease to Americare. The court obliged
in an order entered September 25, 2006.
  On October 5, Americare filed a motion under Fed-
eral Rule of Civil Procedure 59(e) to amend the Septem-
ber 25 order by removing it as a judgment debtor. The
court denied this motion on November 28, 2006; this
appears to be its last word on the appropriateness of
including Americare in the case.
   In the meantime, Lock was having no luck collecting
its half-million dollars from either U.S. Health or
Americare. On January 16, 2007, Lock filed a motion for
supplemental attorneys’ fees and costs arising out of
its collection efforts. The court denied that motion on
February 27, 2007. At the same time, it resolved some
motions that raised issues about priority among the
parties for certain Medicare funds, which apparently
were being sought in connection with the judgment. It
set a hearing on that issue for March 7, and on March 9,
it entered an order disbursing the Medicare funds that
it previously had frozen. This order stated that the
Nos. 11-3477, 11-3570 & 12-1334                          5

June 21 judgment on the merits and the July 14 attor-
neys’ fee judgments were satisfied. This came tantalizingly
close to resolving the case, but one matter remained out-
standing: Lock’s effort to obtain additional fees and costs
related to the post-judgment phase.
  On March 16, 2007, Lock decided to pursue that
matter in a different way, by filing a motion to amend
the July 14, 2006, judgment for attorneys’ fees. Although
it is not clear, this motion seems to have relied on
Rule 60(b)(3), which permits relief from a final judgment
for reasons of fraud, misrepresentation, or misconduct
by an opposing party. The court denied that motion
more than a year later, on April 28, 2008, but it did so
“without prejudice to its renewal at the conclusion of
the companion case [Lock II], at which time Lock may
submit evidentiary support for the attorneys’ fees and
costs requested.” More than two years after that order,
on July 22, 2010, the court entered its final judgment
in Lock II, as we describe below. Lock followed up with
a renewed motion for supplemental attorneys’ fees, as
the court had said it could, on August 5, 2010. Another
year and a half elapsed before that motion was
resolved, but on January 10, 2012, the court issued an
order granting Lock an additional $86,675.50 in fees
and $1,206.02 in costs. In the same order, the court
denied Americare’s motion to strike the affidavit of
Timothy Maher, Lock’s lead counsel, in support of the
fee motion. With all of the loose ends finally tied up,
Americare and U.S. Health filed their notice of appeal
on February 9, 2012, from the January 10 award
of fees. That appeal was docketed as No. 12-1334 in
this court.
6                         Nos. 11-3477, 11-3570 & 12-1334

                        B. Lock II
  As we noted above, shortly after the district court
entered its judgment in June 2006 in Lock’s favor and
Lock began its collection efforts, Lock learned about
U.S. Health’s assignment of the lease to Americare. In
addition, Lock had not received the rental payments on
the lease for the months of June, July, and August 2006,
and Lock believed that U.S. Health had breached
the guarantees in the lease. In September 2006, therefore,
Lock filed suit against U.S. Health, Americare, and the
individual defendants for breach of contract and for
immediate possession of the premises. This case was
assigned No. 3:06-CV-487 in the district court. Within a
few days, the district court granted Lock’s motion for
immediate possession.
  The focus of the case then shifted to the damages ques-
tion. On February 6, 2007, the court denied Lock’s
motion for damages in the amount of $10,291,817.73,
which allegedly represented the future rent under the
lease. Instead, the court ruled, damages had to be calcu-
lated by offsetting the fair rental value of the property
against the future rents owed under the lease. Lock
also filed a motion seeking from the defendants the
$371,249.30 that represented the missed rental pay-
ments for June through September 2006. U.S. Health
and Americare responded—five months late, the court
thought—and asserted that this amount should be
reduced by the value of the assets and consumables
that Lock acquired when it took over the nursing home.
  On March 25, 2008, the court granted Lock’s motion
for partial summary judgment for the delinquent rents
Nos. 11-3477, 11-3570 & 12-1334                        7

in the full requested amount of $371,249.30. The court
explained that it was denying Americare’s setoff
defense because it had been waived by the tardy filing.
This left the question of the remaining damages for
the breach of the lease on the table.
  Matters lay quiet for a long time, but on September 14,
2009, the district court filed an order addressing a
number of matters that had accumulated. In that order, it
rejected the methodology for calculating the fair rental
value of the property that had been proposed by Lock’s
expert, Jean Tipton, as unreliable under Federal Rule of
Evidence 702. It criticized Tipton for relying on two
rejected offers from U.S. Health to pay lower rent and
for failing to use any of the three conventionally
accepted methods for property valuation. Next, the
court denied as untimely Lock’s motion to introduce
evidence of audit rates to supplement its showing of
fair rental value; Lock had filed the motion in Octo-
ber 2008, long after the discovery cutoff of April 2008.
The court also denied Lock’s motion for summary judg-
ment in the amount of $6,092,153, because there was no
support for this figure once Tipton’s testimony was
excluded. Finally, the court granted Americare’s motion
to limit Lock to its liquidated damages, because Lock
had the burden of proof on damages and it had failed
to submit any admissible evidence.
  After another long hiatus, on January 13, 2010, the
district court denied Lock’s motion to reconsider the
September 14, 2009, order. The spring of 2010 was ap-
parently consumed by trial preparation: on July 20, 2010,
8                           Nos. 11-3477, 11-3570 & 12-1334

after a one-day bench trial, the court reconsidered its
earlier ruling on Americare’s motion and found that
Americare was entitled to a total of $126,366.71 as a
setoff from the $371,249.30 in rent that it owed Lock, for
a net amount due to Lock of $244,883.13. (The dif-
ference seems actually to be $244,882.59, but we will not
quibble about less than a dollar.) It also awarded Lock
liquidated damages in the amount of $212,703.96 (the
security deposit) and $416,328.25 (the escrow account),
making the total due to Lock $873,915.34 before prejudg-
ment interest. On July 22, 2010, the court entered a final
judgment to this effect, but on August 8, Lock filed a
motion under Rule 59(e) asking the court to amend the
judgment to include prejudgment interest. On October 3,
2011, the court granted that motion, but only for the past-
due rent portion of the judgment ($244,883.13). Along
the way, Lock had filed a motion for attorneys’ fees;
the court also addressed that motion on October 3,
2011. Lock had wanted $804,614.50 in fees, but the court
cut that amount back to $696,390.50, and it awarded
$4,756.14 in costs. As it had done in Lock I, it denied
U.S. Health’s motion to strike the affidavit of Maher,
Lock’s lawyer.
   With the case at last over, on November 1, 2011, Lock
filed its notice of appeal, in which it identified the Septem-
ber 14, 2009, order rejecting its estimates of damages,
and the January 13, 2010, order denying reconsideration
of the same ruling. That appeal is No. 11-3477 in this
court. On November 14, 2011, U.S. Health and Americare
filed a cross-appeal from the district court’s decision
of September 29, 2007, denying their motion to dismiss
Nos. 11-3477, 11-3570 & 12-1334                             9

the amended complaint, the July 22, 2010, judgment in
Lock’s favor, the October 3, 2011, order refusing to
strike Maher’s affidavit, and the October 2, 2011, order
granting prejudgment interest for Lock. The cross-
appeal is No. 11-3570.


                              II
  The age of many of the critical rulings in these two
cases caused us to wonder whether the notices of appeal
had been filed within the time permitted by Federal
Rule of Appellate Procedure 4(a). At first (and second)
glance, the key rulings especially in Lock I seem to have
taken place more than half a decade ago. Even Lock II’s
final judgment has aged: it was entered on July 22,
2010. But, as we explain, for differing reasons both
appeals are properly here.
   Lock II is the more straightforward case, and so we
begin with that. The district court’s final judgment was
entered on July 22, 2010; Lock’s Rule 59(e) motion was
filed on August 8, 2010, well within 28 days after the
judgment, and so it had the effect of postponing the time
to file the notice of appeal until the district court resolved
the motion. See F ED. R. A PP. P. 4(a)(4)(A)(iv). The court
issued its ruling on the Rule 59(e) motion on October 3,
2011, and Lock’s notice of appeal was filed on Novem-
ber 1, 2011, 29 days later and thus within the 30 days
permitted by Appellate Rule 4(a)(1)(A). A properly filed
notice of appeal from a final judgment brings up
all earlier rulings in the same case, and so Lock is
now entitled to raise its points in No. 11-3477 about the
10                         Nos. 11-3477, 11-3570 & 12-1334

September 2009 and January 2010 rulings. See Carver v.
Condie, 
169 F.3d 469
, 472 (7th Cir. 1999). Finally, for
the sake of completeness, we note that U.S. Health
and Americare filed their cross-appeal within the
14-day period allowed by Appellate Rule 4(a)(3), and
so No. 11-3570 is properly here as well.
  The situation in No. 12-1334, the appeal in Lock I from
the district court’s decision to grant additional attorneys’
fees to Lock, is somewhat more complicated. At root, it
arises out of Lock’s March 16, 2007, motion under
Rule 60(b); more broadly, it is important to remember
that this part of the case arises out of post-judgment
collection efforts. See generally Charles Alan Wright et al.,
15B FEDERAL P RACTICE AND P ROCEDURE § 3916 (2d ed.
1992). In such circumstances, “we try to treat the
postjudgment proceeding as if it were a free-standing
lawsuit.” Bogard v. Wright, 
159 F.3d 1060
, 1062 (7th Cir.
1998). The only question in this appeal concerns the
disposition of Lock’s post-judgment motions to collect
attorneys’ fees related to its collection efforts. Lock re-
newed that motion on August 5, 2010, and on January 10,
2012, the court granted Lock’s motion by awarding it an
additional $86,675.50 in fees and $1,106.02 in costs and
denying U.S. Health and Americare’s motion to strike
Maher’s affidavit. On February 9, exactly 30 days after
that order, U.S. Health and Americare filed their notice
of appeal from the January 10 order. This too complied
with Appellate Rule 4(a)(1)(A). We are therefore free
to proceed to the merits of U.S. Health and Americare’s
appeal and cross-appeal, and Lock’s appeal.
Nos. 11-3477, 11-3570 & 12-1334                           11

                             III
   Although it is plain that this litigation has endured for
far too long, by this time issues have boiled down to a
relatively manageable number. We see no further value
in identifying which of two cases or which appeal corre-
sponds to each dispute, and so the remainder of our
discussion assumes that we have essentially one over-
arching controversy. Lock has presented three matters
for our consideration: (1) whether the district court
abused its discretion when it struck Tipton’s expert
opinion, denied Lock’s motion to strike the opinions of
Greg Jurgonski and Bonnie Mitchell, and denied Lock’s
motion to supplement its evidence of future damages;
(2) whether on the record that existed, Lock showed
that there were no genuine issues of material fact on
its claim for future rent damages, and thus was entitled
to summary judgment on that point; and (3) whether
the district court abused its discretion by allowing
Americare to assert its setoff defense and by refusing
to allow Lock to conduct discovery on that issue. For
its part, Americare (1) attacks the district court’s deci-
sion to permit Maher’s affidavit to be used in support
of attorneys’ fees in both Lock I and Lock II, and (2) argues
that the district court erred both in awarding fees to
Lock and in refusing to adjust the amount of fees
to reflect Americare’s success on its setoff argument.
We address these five points in turn.


                             A
  District courts enjoy considerable discretion in
evaluating the qualifications of an expert and the reli-
12                          Nos. 11-3477, 11-3570 & 12-1334

ability of the proffered testimony. Ortiz v. City of Chicago,
656 F.3d 523
, 536 (7th Cir. 2011). In this case, the court
stated that it agreed with the defendants that the lease
itself required the following three-step damages calcula-
tion:
     (1) the remaining net rent must be calculated by an
     expert qualified to testify on the consumer price
     index and present discount values; (2) an expert
     qualified to testify as to the lease’s fair market value
     for the period of net rent must be determined;
     (3) the second number must be deducted from the
     first to determine whether any damages were sus-
     tained.
With respect to the second step, the court observed that
three valuation methods are generally used to determine
the fair market value of real property, and each has its
analog for rental property. Those methods, it continued,
are (1) the comparable sales method, (2) the income
method, and (3) the cost method. See, e.g., State v. Bishop,
800 N.E.2d 918
, 923-24 (Ind. 2003) (describing these three
methods as widely used in eminent domain cases); Scott-
Reitz Ltd. v. Rein Warsaw Assoc., 
658 N.E.2d 98
, 105 (Ind. Ct.
App. 1995) (“All three have been approved by this Court
as a method of determining a property’s fair market
value.”). The court indicated that a combination of
those three methods might even be appropriate.
  Lock proposed to satisfy its burden of proving damages
with an expert report from Jean Tipton. The court found
that Tipton had satisfactory qualifications based on her
Nos. 11-3477, 11-3570 & 12-1334                        13

accounting and valuation experience, even though she
had no special expertise in the health-care industry.
Her methodology for determining the fair market value
of the lease, however, was another matter; it did not
follow any of the recognized approaches the court had
outlined, either separately or in combination. Instead,
Tipton relied on three items of evidence to help her
assess the value of the future rent for the Goshen facil-
ity. First, she consulted an email from defendant
John Bartle offering to renegotiate the lease by reducing
the monthly rent to $65,000; second, she took into
account an email from American Senior Communities
offering to lease the Goshen facility for $500,000 to
$600,000 annually; and finally, she applied a formula
found in an Indiana statute for use in compensating
Medicaid providers in nursing facilities, 405 Ind. Admin.
Code 1-14.6-12, to corroborate the first two numbers.
She concluded that the reasonable rental value of the
facility was $55,000 per month. Based on that information,
Tipton determined that the remaining net rent payable
(discounted to present value) was $14,937,182, the fair
rental value of the property for the remaining period of
the lease (again discounted) was $8,845,030, and thus
that the damages were $6,092,153. For their part, the
Americare defendants introduced valuation opinions
from two people: Louis Jackson and Bonnie Mitchell.
The district court did not, however, base any part of its
decision on either Jackson’s or Mitchell’s opinion, and
so we have no need to speculate whether the reports
of either or both would have been admissible.
14                        Nos. 11-3477, 11-3570 & 12-1334

  The court found that Tipton’s calculations failed the
standard of reliability required by Daubert v. Merrell
Dow Pharmaceuticals, Inc., 
509 U.S. 579
(1993); it might
also have cited Federal Rule of Evidence 702(c). Tipton
did not follow any of the recognized methodologies
accepted under Indiana law (and no one argued that a
law other than Indiana’s should apply in this diversity
case). Moreover, there was no evidence indicating that
Tipton had found a fourth valid approach. Against this
backdrop, the court found that the bases for Tipton’s
opinion were empirically questionable. Lock had re-
jected the offers that U.S. Health made in an attempt to
reduce the rent, and so those offers proved nothing.
Using the Medicaid compensation formula to determine
the private rental value was also unsupported. As the
court put it, “Tipton does not explain how the Medicaid
formula applies in deciding the fair market value for a
lease between private companies, nor does she provide
figures used to calculate the rate.”
  With Tipton’s evidence gone, Lock was left with
nothing else that would permit a jury to find the actual
damages it suffered from the breach of the lease. But
in October 2008, Lock had moved to submit additional
evidence on the fair rental value of the property. It had
in mind some Notices of Audit Rates issued by a
contractor for the Indiana Family and Social Services
Agency. The court recognized that it had discretion to
permit supplementary affidavits under Federal Rule of
Civil Procedure 56(e), but it declined to exercise that
discretion favorably to Lock for the simple reason that
Nos. 11-3477, 11-3570 & 12-1334                         15

the request came six months after the close of discovery.
The court pointed out that the defendants had had no
opportunity to depose or serve written discovery on the
Agency’s representative, nor had they been able to
explore the validity of the rates. Even though this
motion languished for 11 months before the district
court ruled—not something we endorse—we see no
abuse of discretion in the substance of the court’s ruling.
  Lock did, however, prevail to a degree on one
remaining point. At the same time as it moved for sum-
mary judgment based on Tipton’s testimony, Americare
responded with a motion for partial summary judg-
ment that would either limit Lock to its liquidated dam-
ages or rule as a matter of law that it was entitled to
no damages at all. The court took the former option, as
we explained in our account of the facts, and that is
why Lock was entitled to recover both the security
deposit and the escrowed funds in the judgment
resolving Lock II.


                            B
  Little needs to be said about Lock’s argument that
the court erred when it refused to grant summary judg-
ment awarding Lock $6,000,000 (or any other number)
representing future rental payments. Once the district
court rejected Tipton’s report and denied Lock’s motion
to supplement the record, Lock could not satisfy its
burden of proof on this issue. There are no additional
facts or legal issues that bear on this point. The
16                        Nos. 11-3477, 11-3570 & 12-1334

only choice the court had, therefore, was to deny
Lock’s motion.


                            C
   The setoff question relates to the amount Lock was
entitled to recover for the delinquent rental payments
for June through September 2006. Lock took the position
that it was entitled to the full amount of those pay-
ments ($371,249.30), while Americare argued that it
should be entitled to set off the value of the assets and
consumables that Lock acquired when it took over the
nursing home. Initially, the court ruled that Americare
could not present its setoff argument, because the court
thought that the defense had not been raised in a
timely manner and was thus waived. Later, the court
reconsidered that order. It recalled that Lock acknowl-
edged Americare’s intention to argue for a setoff in one
of Lock’s own 2006 summary judgment filings. Lock was
thus obviously aware of the defense well before the
February 2007 deadline that the court had earlier
thought barred the defense. That in turn meant that
Lock was not prejudiced when Americare raised the
setoff argument more formally. See Curtis v. Timberlake,
436 F.3d 709
, 711 (7th Cir. 2005) (“[A] delay in asserting
an affirmative defense waives the defense only if the
plaintiff was harmed as a result.”). Once again, the
district court enjoys considerable discretion to enforce
and administer the case-processing deadlines it sets, and
it is also in the best position to assess prejudice from
any missed deadline. We see no abuse of discretion
Nos. 11-3477, 11-3570 & 12-1334                         17

here, and we therefore reject Lock’s challenge to the
allowance of the setoff.


                            D
   In its capacity as appellant, Americare devotes a great
deal of time and energy to attacking the affidavit of
Timothy Maher, who is an attorney at the firm of Barnes
& Thornburg LLP and who has represented Lock through-
out this litigation. Maher’s affidavit was submitted on
the issue of attorneys’ fees, which the lease authorized.
Lock also submitted a 286-page billing statement that
showed hourly billing rates for attorneys ranging from
$165 to $375, and an hourly rate for paralegals ranging
from $135 to $150. Americare focuses its criticism on
paragraph seven of Maher’s affidavit on the ground
that it was based on a belief rather than on facts. Here
is what the paragraph said:
   Lock was charged standard rates for this litigation.
   Based on the legal experience, education, and training
   of the attorneys and paralegals involved and the
   nature of this case, I believe these standard billable
   rates are reasonable and customary rates to be
   charged for people in this area and for the work
   that was done.
The district court sensibly held that even if the phrasing
in paragraph seven could be understood in isolation as
a reference only to Maher’s beliefs, the affidavit taken as
a whole amply demonstrated that Maher had personal
knowledge of the facts presented in the affidavit and
18                         Nos. 11-3477, 11-3570 & 12-1334

was competent to testify to them. His affidavit sup-
ported a finding that the rates reflected in the billing
sheets were the actual rates charged by the attorneys
and paralegals who worked on the case, and that these
rates were consistent with market rates in the area. Al-
though the defendants would have been entitled to
present evidence to rebut that showing, they did not.
  Under these circumstances, the court did not err by
concluding that Maher’s affidavit was admissible
under Federal Rule of Evidence 602, as lay witness testi-
mony on matters about which he has personal knowledge.


                             E
   Finally, Americare urges that the district court abused
its discretion when it decided to award fees to Lock,
and when it refused to reduce the award in Lock II
because of Americare’s success on the setoff point. Our
review of an award of attorneys’ fees is deferential for
a number of reasons: the district court has a more com-
plete picture of the case as a whole; the issues tend to
be factual matters for which appellate review is limited;
the accuracy of the ultimate decision is not likely to be
enhanced by frequent and detailed appellate review;
and it would be wasteful to engage in a “second major
litigation” over attorneys’ fees. Pickett v. Sheridan Health
Care Ctr., 
664 F.3d 632
, 639 (7th Cir. 2011). Nevertheless,
we do rely on the district court to review both the en-
titlement to fees and the particulars of fee requests care-
fully and to justify its conclusions.
Nos. 11-3477, 11-3570 & 12-1334                           19

  The district court here did all that and more. It
reviewed Lock’s billing records for “objective evidence
of the nature of legal services and reasonableness of the
fee,” to ensure consistency with the Indiana Profes-
sional Conduct Rules and Indiana law. See Order for
Mandate of Funds Montgomery Cnty. Council v. Milligan,
873 N.E.2d 1043
, 1049 (Ind. 2007). The court then looked
at the “lodestar”—the rate charged and the hours
worked—and concluded that it was presumptively rea-
sonable. It was at this stage of the analysis that the
court took Maher’s affidavit into account.
  In assessing the need for the number of hours worked,
the court took into account Americare’s argument that
“[t]he use of block billing, inclusion of services that can’t
be identified as compensable in this case, the lack of
detail with respect to the type of services rendered, and
overlap between [Lock I and Lock II] make it impossible
to determine whether the amounts claimed . . . were rea-
sonable and necessary.” Recognizing these limita-
tions, the court combed through the billing records
and struck entries that could not be justified as
reasonable and necessary. The court listed nine problem-
atic entries, amounting to $3,103.50, as items that it
was disallowing. It then identified another group of
entries that added up to $9,917.50, and disallowed them
as well. Americare has not pointed to any specific
problem with the district court’s decisions, nor has it
identified any additional items that should have been
disallowed. The court had no obligation to respond
any further to Americare’s global objection to the
fee award.
20                         Nos. 11-3477, 11-3570 & 12-1334

  Americare did make one final set of objections,
however, all of which relate to the degree of success
Lock ultimately achieved. First, Americare asserted that
Lock’s fees should be reduced to 8% of the requested
level because Lock’s ultimate judgment was only
about 8% of its original claim for $10,000,000. The court
rightly noted that there is no authority for that approach
under Indiana law. Indeed, under Indiana law, “a trial
court abuses its discretion if it reduces an otherwise
reasonable fee request based on the amount of the judg-
ment.” Benaugh v. Garner, 
876 N.E.2d 344
, 348 (Ind. App.
2007). Americare tries to make it look as if Lock spent
some $700,000 in fees to collect a judgment of
$244,883.13. But that is not a fair representation of the
degree of success Lock had. In Lock I, Lock recovered
$485,430.56 in damages and secured $117,120.37 (the
initial $29,238.85 plus the supplemental $86,675.50 and
$1,206.02) in attorneys’ fees and costs. In Lock II,
before the offset Lock won $1,000,281.51 in damages
($371,249.30 + $212,703.96 + $416,328.25); after subtracting
the $126,366.71 offset, it still had $873,914.80 to show
for its efforts. The Lock II fees and costs came to
$701,146.64. Combining the amounts Lock won and the
cost and fee awards in both cases, we have $1,359,345.36
in damages and $818,267.01 in fees and costs. These
numbers do not compel a finding that the district court
abused its discretion either in its decision to award fees
or in the amount of the fees and costs it selected.
Nos. 11-3477, 11-3570 & 12-1334                         21

                            IV
  It is unfortunate that this litigation spun so far out of
control. The long delays that punctuated the course of
proceedings, even if motivated by hopes of reaching
settlement or at least an agreed way to move forward,
in the end helped no one. As we said at the outset,
the issues before us now represent the end of the line.
The district court did not abuse its discretion in the
rulings brought before us for review. We therefore
A FFIRM the judgments of the district court in all three
appeals. Costs are to be taxed against U.S. Health
and Americare.




                          2-12-13

Source:  CourtListener

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