Richards Layton & Finger
 

Judge Andrews Grants Motion for Damages, Fees, and Costs for Breach of Indemnification Agreement

November 3, 2016

In Seagate Technology (US) Holdings, Inc. v. Syntellect, Inc., C.A. No. 12-1686-RGA (D. Del. September 30, 2016), Judge Andrews awarded damages, fees, and costs to the plaintiff, Seagate Technology (US) Holdings, Inc. (“Seagate”), after granting summary judgment that the defendants were liable for breach of contract. Seagate brought this breach-of-contract action for the defendants’ alleged failure to defend and indemnify Seagate for its role as defendant in a patent infringement action.

Judge Andrews found that, under California law and the parties’ agreement, Seagate was entitled to recover the amount of settlement of the patent action, as well as the actual attorneys’ fees and costs incurred in that action. The Court also awarded, again under California law and the parties’ agreement, attorneys’ fees for enforcing the indemnification agreement in this Delaware action. Judge Andrews granted prejudgment interest and post-judgment interest at 10 percent per annum.

To determine the reasonableness of fees for enforcing the indemnification agreement, Judge Andrews, relying on California law, used the prevailing rate for Wilmington, Delaware commercial litigators—the rate in the “local community” for similar work—over Seagate’s objection that the “local community” should have been California. But Judge Andrews found that the hours spent litigating were top heavy (too many partner hours), too many hours were spent preparing and conducting depositions (an average of 120 hours per deposition), and too many hours were spent preparing for summary judgment (over 600 hours to prepare two briefs and one argument). Thus, Judge Andrews reduced the partner hours and hours associated with depositions and summary judgment by 10 percent each.

Key Points:  Although Judge Andrews found Seagate’s attorneys’ hours excessive, the Court did not find helpful opposing counsel’s submission of their hours as a comparison. Judge Andrews stated that the submission was “unpersuasive” as “[l]itigation budgets are client driven and can vary based on the client’s priorities.”