# Crain v. E & M Operating L L C

> District Court, W.D. Louisiana · December 11, 2019

URL: https://www.frixlaw.com/law-library/cases/10193390

## Case

- **Court:** District Court, W.D. Louisiana
- **Decided:** December 11, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10193390

## How later opinions describe it (automated extraction)

- explaining that billing records that lack explanatory details are unacceptable
- holding that the district court did not abuse its authority in denying costs for, among other things, postage and computerized legal research

## Opinion text

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION

DOUGLAS CRAIN, ET AL. CIVIL ACTION NO.: 18-CV-00548
VERSUS JUDGE ELIZABETH FOOTE
E&M OPERATING, L.L.C., MAGISTRATE JUDGE HORNSBY
ET AL.

MEMORANDUM RULING
Now before the Court is a Renewed Motion for Default Judgment filed by Douglas and
Catherine Crain (“Plaintiffs”) against E&M Operating, L.L.C. (““E&M”) and Coleman Matthew
Caldwell (“Caldwell”) (collectively, “Defendants”). [Record Document 20]. For the reasons
discussed below, Plaintiffs’ Renewed Motion for Default Judgment is GRANTED in part and
DENIED in part.
BACKGROUND
Plaintiffs are a married couple who claim to have invested a total of $25,750.00 with E&M,
an oil and gas company, after being induced to do so by Caldwell. Record Document 15-2, p. 4;
20-1, p. 11. According to Plaintiffs, Caldwell professed to be the owner of E&M and induced them
to purchase twenty-five notes issued by E&M by falsely claiming that this investment would result
in a return of 200% plus an additional 12% per annum for a three-year period. Record Document
1, Js 9-12. Plaintiffs purchased these notes, which they claim are securities under federal and state □

law, for $25,000.00 in May of 2016. Jd. at {s 11 & 14. Defendants advised Plaintiffs in June of
2016 that they would receive a 5% share membership in E&M and that their two adult children
would each receive a 1% share membership in E&M. Jd. at {s 16-17. These share memberships
were accompanied by “Membership Certificates,” which Plaintiffs claim were used to further

induce them to trust Defendants and to purchase additional notes for a sum of $750.00. Jd. at Js
18-20. Defendants told Plaintiffs that E&M’s remaining membership and shares were being
acquired by Striper Oil Company. /d. at J 21. Plaintiffs allege they have since spoken with Sam
Smith (“Smith”), the owner of Striper Oil Company, who stated that his company had no
relationship with Defendants and was not acquiring any interests in E&M. Id. at § 24. Plaintiffs
claim that Defendants told Smith that they do not intend to pay Plaintiffs’ notes upon maturity. Id.
Defendants allegedly ceased communications with Plaintiffs in late 2017 even though Plaintiffs
have tried repeatedly to reach them since that time. /d. at { 23. Plaintiffs assert that Defendants are
in anticipatory breach of their agreement because Defendants have failed to respond to their
attempts at contact or acknowledge that the maturity date on the notes is early May of 2019.' Id
Plaintiffs claim that Caldwell misrepresented the holdings and value of E&M and that he converted
the money they invested in E&M to his own personal use. Jd. at 25 & 30.
Plaintiffs state that Defendants committed ‘“‘a large number” of frauds and misdeeds in
connection with their investment monies, including false material misrepresentations as to the
issuance and sale of securities to Plaintiffs, material misrepresentations in the agreement and
memorandum with respect to the legitimacy and quality of the securities, issuing false statements
in connection with the issuance and sale of securities, mail fraud, conversion of securities and
investment monies, fraud, violations of federal securities laws, Louisiana Blue Sky Laws, and the
Texas Securities Act, and breaches of the duties of honesty, good faith, loyalty and trust, and
breach of fiduciary duties. Jd. at { 32. Plaintiffs claim that they have sustained a wide variety of
economic and non-economic damages. /d. at s 33 & 71.

' The instant motion was filed prior to May of 2019. Because the Court has not received any notice
from either party that Defendants ever paid Plaintiffs any amount of money, the Court assumes
that these claims are now for breach of contract rather than anticipatory breach of contract.

The Court denied Plaintiffs’ first motion for default judgment because Plaintiffs did not
present a clear legal basis for recovery. Record Document 17, pp. 10-11. Plaintiffs were granted
permission to re-urge their motion “by submitting additional evidence and more convincing
briefing.” /d. at 11. Plaintiffs then filed the instant renewed motion for default judgment.
DEFAULT JUDGMENT STANDARD
A default judgment involves three steps: (1) default, (2) entry of default, and (3) default
judgment. N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (Sth Cir. 1996) (citing Fed. R. Civ. P.
55(a)).
A default occurs when a defendant has failed to plead or otherwise respond to the
complaint within the time required by the Federal Rules. An entry of default is what
the clerk enters when the default is established by affidavit or otherwise. After
defendant's default has been entered, plaintiff may apply for a judgment based on
such default. This is a default judgment.
Id. (citations omitted). Here, Defendants failed to plead or otherwise defend against this lawsuit.
Additionally, Plaintiffs obtained an entry of default judgment from the clerk against both E&M
and Caldwell. [Record Documents 8 & 11]. Therefore, the first two requirements for a default
judgment have been met.
By defaulting, a defendant admits to the plaintiff's well-pleaded allegations of fact, at least
with respect to liability. Jackson v. FIE Corp., 302 F.3d 515, 525 (Sth Cir. 2002) (citing Nishimatsu
Constr. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (Sth Cir. 1975)). Even though the facts
are admitted, the plaintiff still has the burden of showing that those facts give rise to a viable cause
of action. See Nishimatsu, 515 F.2d at 1206 (“[A] defendant is not held to admit facts that are not
well-pleaded or to admit conclusions of law.”). In addition, a default judgment “must not differ in
kind from, or exceed in amount, what is demanded in the pleadings.” Fed. R. Civ. P. 54(c). No
party is entitled to a default judgment as a matter of right, even where the defendant is technically

at fault. Lewis v. Lynn, 236 F.3d 766, 767 (Sth Cir. 2001) (per curiam) (quoting Ganther v. Ingle,
75 F.3d 207, 212 (Sth Cir. 1996)). The disposition of a motion for default judgment ultimately
rests within the sound discretion of the district court. Mason v. Lister, 562 F.2d 343, 345 (Sth Cir.
1977).
ANALYSIS
“A default judgment is a judgment on the merits that conclusively establishes the
defendant's liability.” United States ex rel. M-CO Constr. v. Shipco Gen., Inc., 814 F.2d 1011,
1014 (Sth Cir. 1987). However, a default judgment does not establish the amount of damages. Jd.
Therefore, the Court must first determine (1) whether Defendants are liable to Plaintiffs, and then
(2) what amount of damages, if any, are owed to Plaintiffs.
I. Liability
In determining whether to enter a default judgment, the Court must consider whether such
a remedy is appropriate under the circumstances of the case. See Sun Bank of Ocala v. Pelican
Homestead and Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989) (“Default judgments are a drastic
remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.”).
Factors relevant to the entry of a default judgment include
whether material issues of fact are at issue, whether there has been substantial
prejudice, whether the grounds for default are clearly established, whether the
default was caused by a good faith mistake or excusable neglect, the harshness of a
default judgment, and whether the court would think itself obligated to set aside the
default on the defendant’s motion.
Lindsey v. Prive Corp., 161 F.3d 886, 893 (Sth Cir. 1998).
In this case, there can be no material issues of fact in dispute because Defendants admitted
to Plaintiffs’ well-pleaded allegations by failing to file any pleadings responsive to the complaint.
See Jackson, 302 F.3d at 525. This failure to respond creates a basis for default and resulted in

prejudice to Plaintiffs in the form of lost investment funds. Nothing in the record suggests that
Defendants’ failure to respond is the result of a good faith mistake or excusable neglect. In fact,
an individual named Nick Darden, E&M’s agent for service of process, attempted to file an answer
on behalf of E&M. Record Document 4.” Magistrate Judge Hornsby then ordered E&M to file an
answer signed by an authorized attorney, as required by Fifth Circuit precedent. Record Document
5, p. 1. The order warned E&M that a failure to do so would result in the answer being stricken
and expose E&M to a default judgment. Jd. at 2. No other answer was filed, and the answer was
stricken. Record Document 9. The Court views Darden’s attempt to file an answer on behalf of
E&M as further evidence’ that both Defendants had notice of the instant law suit. See Record
Document 1, § 9 (stating that Caldwell claimed to be the owner of E&M). Defendants’ failure to
respond to this lawsuit offsets the harshness of a default judgment. Finally, the Court knows of no
facts that would provide good reason to set aside a default judgment if Defendants were to
challenge it. Based on these reasons, the Court finds that the circumstances of this case warrant a
default judgment.
The Court must now determine whether Plaintiffs’ complaint establishes a cause of action
against Defendants. Nishimatsu, 515 F.2d at 1206.
A. Fraud Claims
In Louisiana,‘ fraud is defined as “a misrepresentation or a suppression of the truth made
with the intention to obtain an unjust advantage for one party or to cause a loss or inconvenience

* The Court finds it worth noting that this Answer included no substantive information, only
Darden’s contact information. See Record Document 4.
3 This evidence of notice is secondary to the fact that both Caldwell and E&M were served. Record
Documents 3 & 6.
4 Under the Evie doctrine, federal courts sitting in diversity apply the substantive law of the forum
state. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)

to the other... .” La. Civ. Code art. 1953. The elements of an action for fraud against a party to a
contract are: “(1) a misrepresentation, suppression, or omission of true information; (2) the intent
to obtain an unjust advantage or to cause damage or inconvenience to another; and (3) the error
induced by a fraudulent act must relate to a circumstance substantially influencing the victim’s
consent to (a cause of) the contract.” Jones v. Wells Fargo Bank, NA, 626 F. App’x 500, 504-05
(5th Cir. 2015) (per curiam) (quoting Shelton v. Standard/700 Assocs., 2001-0587 (La. 10/16/01);
798 So. 2d 60, 64)). Furthermore, “[f]raud need only be proved by a preponderance of the evidence
and may be established by circumstantial evidence.” La. Civ. Code art. 1957.
Each of the elements of a fraud claim are supported by the factual allegations in the
complaint and by the documents attached to the instant motion. The record reflects that Plaintiffs
and E&M, through Caldwell, entered into a contract for the sale of the notes. Record Documents
20-13-20-15. These documents show a wire transfer from a Regions Bank account in the amount
of $25,000.00, a check written by Douglas Crain (“Crain”) to Caldwell in the amount of $750.00,
and a subscription agreement showing that Crain purchased 25 notes at $1,000 a note from E&M.
See id. In an affidavit, Crain alleges that Caldwell made false, material misrepresentations that
were intended to induce Plaintiffs to contract with E&M. See Record Document 20-5, { 9. The
main misrepresentation made by Defendants was that Plaintiffs would be paid double their
investment, plus an additional 12% per annum simple interest on the principal investments, for a
total of 236% over the three-year period from the date of the purchase. Jd. at { 22. Plaintiffs also
claim that Caldwell made other statements indicating that E&M was profitable and sought-after
by investors. Jd. at §s 11, 14, &16. These statements allegedly induced Plaintiffs to invest money
with Defendants in exchange for what they thought were securities. Jd. at Js 8 & 18-20. However,
when Plaintiffs repeatedly asked Caldwell to produce the notes they purchased, he claimed that an

attorney and a CPA were drawing up the documents. /d. at 72. Plaintiffs state that they have
never been provided with any notes or any documentation substantiating their investments. Jd.
Neither have Plaintiffs received any money in return for their investments. /d. at { 67. Finally, and
most troubling, Plaintiffs allege that Caldwell ceased all communication with them in late 2017.
Id. at { 108.
The Court recognizes that an action for fraud cannot be based on statements relating to
future events or promises that went unfulfilled. Taylor v. Dowling Gosslee & Assocs., Inc., 44, 654
(La. App. 2 Cir. 10/7/09); 22 So. 3d 246, 255. “Failure to perform as promised or nonperformance
of an agreement to do something at a future time alone is not evidence of fraud.” Jd. However, an
action for fraud may be based on a promise that was made without the intention to perform at the
time the promise was made. /d. In this case, Plaintiffs explicitly allege that Defendants intended
to deceive them and steal their money. Record Document 20-5, Js 9, 24, & 106. Plaintiffs state
that the “Private Placement Subscription Agreement” [Record Document 20-11] and the “Private
Placement Memorandum” [Record Document 20-12] that Caldwell supplied them with contained
“nothing but lies which defendants, through Caldwell, fabricated to deceive [Plaintiffs] and to steal
[Plaintiffs’] monies.” /d. at { 24. Taking these allegations as true, as the Court must on a motion
for default judgment, Plaintiffs have established a prima facie case of fraud under Louisiana Civil
Code article 1953.
The Court finds that Caldwell fraudulently induced Plaintiffs to enter into a contract with
E&M for the sale of the notes through material misrepresentations. Additionally, fraud committed
by Caldwell vitiates Plaintiffs’ consent to the contract with E&M. La. Civ. Code art. 1956 (“Fraud
committed by a third person vitiates the consent of a contracting party if the other party knew or

should have known of the fraud.”).° Thus, Plaintiffs are entitled to a rescission of the contract. See
La. Civ. Code art. 1948 (“Consent may be vitiated by error, fraud, or duress.”). Accordingly,
Plaintiffs’ motion for default judgment [Record Document 20] is hereby GRANTED as to
Plaintiffs’ fraud claim against Defendants.
B. Claims Other than Fraud
In addition to their fraud claim, Plaintiffs bring twelve other causes of action against
Defendants, including violations of the Securities Acts of 1933 and 1934, violations of the Blue
Sky Laws of Texas and Louisiana, negligence, breach of trust and fiduciary duty,
misrepresentation, deceptive trade practices under Texas law, unjust enrichment, breach of
contract and anticipatory breach of contract, civil conspiracy, and vicarious liability. Record
Document 1, Js 34-69. Most of these causes of action are vague, overlapping, and not adequately
articulated. See id.
In its ruling on Plaintiffs’ first motion, the Court stated that it was “unable to determine
from the record whether any money is due the Plaintiffs and, if so, the appropriate amount.” Record
Document 17, p. 4. The Court noted that the record did not contain any securities or proof of
indebtedness, nor did it contain the promissory notes that were mentioned in other documents
submitted by Plaintiffs. Jd at 5 & 6. Without submitting any additional evidence, Plaintiffs now
contend that “the sale of notes and promise to provide the notes, coupled with the defendants’
communications and the signed Subscription Agreement and Private Placement Memo,
collectively show that the matters and transactions were ‘securities’ as defined by federal and

> Caldwell is alleged to be the owner of E&M. Record Document 1, J 9. Therefore, E&M would
certainly have known of any fraud committed by Caldwell.

states’ laws.” Record Document 20-1, p. 11. Specifically, Plaintiffs allege that these documents
combined to create a type of security known as an investment contract. Jd. at 4.
Despite Plaintiffs’ assertion, the Court finds that they have not demonstrated that an
investment contract existed between the parties. While Plaintiffs may have a valid argument on
this point, the claim has not been adequately briefed. In lieu of analysis, Plaintiffs’ brief provides
five pages of quotations on the topic of investment contracts. Record Document 20-1, pp. 5—9.
Plaintiffs do not apply the law regarding the elements of an investment contract to the facts of this
case or direct the Court’s attention to any case law where an investment contract was found to exist
under similar circumstances. This same lack of application and analysis persists throughout
Plaintiffs’ briefing on their other alleged causes of action. The Court holds that, other than fraud,
Plaintiffs have not applied the law or elements of their claims to the facts of this case and therefore
have not shown that their claims give rise to a viable cause of action other than fraud. Accordingly,
Plaintiffs’ motion for default judgment [Record Document 20] is hereby DENIED as to all claims
other than fraud.
I. Damages
Now that the Court has established that Defendants are liable to Plaintiffs, it must calculate
the proper amount of damages. Rule 55(b) gives a court the ability to conduct an evidentiary
hearing if one is needed to determine the amount of damages. Fed. R. Civ. P. 55(b). “As a general
proposition, in the context of a default judgment, unliquidated damages normally are not awarded
without an evidentiary hearing,” but the rule “is subject to an exception where the amount claimed
is a liquidated sum or one capable of mathematical calculation.” James v. Frame, 6 F.3d 307, 310
(Sth Cir. 1993). An evidentiary hearing is not warranted when damages can be calculated by
reference to the pleadings and the supporting documents only. Jd. at 311. “The court may rely on

detailed affidavits or documentary evidence, supplemented by the judge's personal knowledge, to
evaluate the proposed sum.” Richardson v. Salvation Army, Southern Territory, USA, 161 F.3d 7,
7 (5th Cir.1998) (per curiam). Here, the Court finds that the amount Defendants owe Plaintiffs is
capable of mathematical calculation and that no evidentiary hearing is needed to calculate the
award.
A. General Damages
In the instant motion, Plaintiffs clarify that they invested a total of $25,750.00 with
Defendants and state that any other amounts listed in their previous motion were typographical
errors. Record Document 20-1, p. 11. To prove this total amount, Plaintiffs point to two exhibits:
a customer receipt from Regions Bank showing a wire transfer in the amount of $25,000.00
[Record Document 20-13] and a copy of a check made out to Caldwell from Crain in the amount
of $750.00 [Record Document 20-14]. Jd. The $25,000.00 wire transfer is corroborated by the
Subscription Agreement, wherein Crain agrees to buy 25 notes from E&M at $1,000.00 a note.
Record Document 20-15. Because Plaintiffs are entitled to a rescission of their contract with
Defendants, the Court finds that they are entitled to a return of the funds they transferred to
Defendants in the amount of $25,750.00. La. Civ. Code art. 1958 (“The party against whom a
rescission is granted because of fraud is liable for damages and attorneys’ fees.”)
B. of Pocket Monies, Expected Returns, Non-economic Damages, and Punitive
Damages
Plaintiffs claim that they should be awarded $700.00 for “Out of Pocket Monies,”
$60,770.00 for expected returns, $65,000.00 for non-economic damages, and $303,850.00 for
punitive damages. Record Document 20-1, p. 19. The Court finds that nothing in the record or
briefing submitted by Plaintiffs provides a sufficient basis on which to award those amounts of
damages.
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1. “Qut of Pocket Monies”
Beginning with the claim for “Out of Pocket Monies,” Plaintiffs state that they expended
$700.00 “in dealing with various matters surrounding the investments and trying to recoup [their]
monies before hiring attorney.” Jd. at 27. Plaintiffs provide no evidence supporting their claim for
this amount, nor do they specify what they purchased with these funds. Therefore, Plaintiffs are
not entitled to $700.00 in “Out of Pocket Monies.”
2. Expected Returns
Next, Plaintiffs claim that they should be awarded $67,770 in expected returns. Jd. at 19.
Plaintiffs state that this amount “is derived by multiplying $25,750.00 by 12% simple interest then
multiplying that figure [$3,090.00] by three [3] for three years to equal $9,270.00. That figure is
added to twice [200%] the original sum of $25,750.00, for a total of $60,770.00.” /d. at 19 n.18.
In their first motion, Plaintiffs made a similar request for expected returns in the amount of
$67,260.00. Record Document 15-2, p. 4. In its ruling, the Court stated that it could not determine
how Plaintiffs calculated that amount. Record Document 17, p. 8. Particularly, the Court noted
that it was unclear when the three-year period began to run. Jd. at 8 n.3. Furthermore, the Court
observed that the subscription agreements did not contain a maturity date of the indebtedness. Jd.
at 9. The Court pointed out that the “Confidential Private Placement Memorandum, E&M
Operating LLC” explicitly states that the 12% interest would be paid monthly after the first well
was in production. Jd. at 9; see also Record Document 20-12, p. 3 (“12% Annual Rate of Interest
Paid monthly beginning the first month after first well in production for 36 months... .”). To date,
no information has been provided to the Court as to whether any wells were ever in production.
Id. at 10.

11

In the instant motion, Plaintiffs respond to the Court’s concerns by stating that “Plaintiffs
show that the 36 month term commenced from the date of the investments.” Record Document 20-
1, p. 14. In support of this conclusion, Plaintiffs cite to the several documents in the record, none
of which contain any guidance as to when interest began to accrue on the notes or whether E&M
ever had any wells in production. Because Plaintiffs have again failed to demonstrate that they are
entitled to $67,700.00 in expected returns, they cannot recover those damages.
3. Non-economic and Punitive Damages
Plaintiffs claim to be entitled to $65,000.00 in non-economic damages and $303,850.00 in
punitive damages. Record Document 20-1, p. 19. In their first motion, Plaintiffs claimed that they
were entitled to $65,000.00 in non-economic damages and $478,800.00 in punitive damages.
Record Document 15-2, p. 4. The Court found that Plaintiffs’ brief provided neither a basis in law
for the award of punitive and noneconomic damages nor a basis in fact for the measure of those
damages. Record Document 17, p. 10.
The Court can find no additional arguments or evidence regarding the factual or legal basis
for the amount of punitive or noneconomic damages requested in the instant motion. In fact, the
paragraphs that directly address those damages are nearly identical to the first motion filed. See
Record Documents 15-2, pp. 10-11; 20-1, pp. 26-27. Plaintiffs appear to have made no effort to
provide the Court with “additional evidence and more convincing briefing” as instructed.° See

The instant motion does include two new statements regarding punitive damages: (1) that Texas
law allows for punitive damages and (2) that Louisiana law on conflicts of laws permits a Louisiana
court to apply Texas law in this case. Record Document 20-1, p. 1 & 3. The Court does not credit
these conclusory statements as more convincing briefing. Plaintiffs do not apply Texas or
Louisiana law regarding punitive damages to the facts of this case. Even if the Court did find these
assertions to constitute a sufficient legal basis for awarding punitive damages, Plaintiffs have made
no effort to demonstrate why they are entitled to punitive and noneconomic damages in the
amounts that they request or to provide any legal basis for their requested amount of non-economic
damages.
12

Record Document 17, p. 10. Therefore, the Court has nothing upon which to base a deviation from
its previous holding that Plaintiffs have not shown any factual or legal basis for the award of non-
economic and punitive damages.
C. Attorney’s Fees
Plaintiffs also pray for attorney fees. Record Document 1, § 71. The Court finds that
Plaintiffs are entitled to attorney’s fees pursuant to Louisiana Civil Code article 1958, which states
that “[t]he party against whom rescission is granted because of fraud is liable for damages and
attorney fees.” In order to calculate the proper amount of attorney’s fees to be awarded, district
courts use the lodestar method. Migis v. Pearle Vision, Inc., 135 F.3d 1041, 1047 (5th Cir. 1998).
Under the lodestar method, the court determines the reasonable hourly rates for the participating
attorneys and the reasonable number of hours expended on the litigation. See id. These two figures
are multiplied together to arrive at the lodestar. See id. Reasonable fees “are to be calculated
according to the prevailing market rates in the relevant community.” Blum v. Stenson, 465 U.S.
886, 895 (1984). The Fifth Circuit has stressed that the lodestar is presumptively reasonable and
should be adjusted upward or downward only in exceptional circumstances, and only if an analysis
of the twelve factors set forth in Johnson v. Ga. Highway Express, 488 F.2d 714, 717-19 (Sth Cir.
1974), so warrants. See Watkins v. Fordice, 7 F.3d 453, 457 (Sth Cir. 1993).
1. Reasonable Hourly Rate
Plaintiffs seek $17,051.78 in costs and attorney’s fees. Record Document 20-21, p. 1. This
total includes fees for one attorney: David A. Szwak (“Szwak”). Jd. Plaintiffs submit the affidavit
of Szwak, as well as an itemized invoice, as evidence of the attorney’s fees and costs that they
incurred. These documents indicate that Szwak expended a total of 53.4 hours on this case, which,

13

multiplied by his hourly rate of $300 and added to $1,031.78 in costs,’ equals a total amount of
$17,051.78. Id. at 5 & 7.
Szwak’s affidavit states that $300.00 an hour is on the lowest end of his rates for consumer
cases and that he has previously been approved at rates of $225 and higher for years. Jd. at 2.
However, only one of the two citations provided by Szwak in support of these assertions shows
the hourly rate he was awarded and in that case he was awarded $225 an hour. Id; see Thompson
v. Equifax Credit Info. Servs., Inc., No. Civ. A. 00-A-1468-5, 2003 WL 1579757 at * 6 (M.D. Ala.
Mar. 3, 2003). Despite his claims, Szwak has not provided any evidence, such as rates awarded to
other attorneys or prevailing rates in the area, to support a rate of $300 an hour. Therefore, the
Court finds that a rate of $225 an hour should be applied to the number of hours Szwak spent on
this case. See Blum, 465 U.S. at 895 n.11 (“[t]he burden is on the fee applicant to produce
satisfactory evidence . . . that the requested rates are in line with those prevailing in the community
for similar services by lawyers of reasonably comparable skill, experience and reputation.”).
2. Reasonable Number of Hours
The party requesting an award of attorney’s fees bears the burden of demonstrating the
reasonableness of the hours billed and must prove that billing judgment was exercised. See Saizan
v. Delta Concrete Prods. Co., 448 F.3d 795, 799 (5th Cir. 2006). “Billing judgment requires
documentation of the hours charged and of the hours written off as unproductive, excessive, or
redundant.” Jd All “excessive, duplicative, or inadequately documented” time should be
eliminated from an attorney’s fee award. Watkins, 7 F.3d at 457. “The hours surviving this vetting
process are those reasonably expended on the litigation.” /d.; see also Alberti vy. Klevenhagen, 896
F.2d 927, 930 (Sth Cir. 1990) (“Ideally, billing judgment is reflected in the fee application, showing

The costs that Plaintiffs are entitled to recover are discussed in the next section.
14

not only hours claimed, but also hours written off.”); Leroy v. City of Houston, 831 F.2d 576, 585—
86 (Sth Cir. 1987) (explaining that billing records that lack explanatory details are unacceptable).
“The proper remedy when there is no evidence of billing judgment is to reduce the hours awarded
by a percentage intended to substitute for the exercise of billing judgment.” Walker v. U.S. Dep't
of Housing and Urban Dev., 99 F.3d 761, 770 (Sth Cir. 1996).
Nowhere in Szwak’s two-page affidavit does he address billing judgment. See Record
Document 20-21, pp. 1-2. Nor do his invoices reflect any hours that were written off. See id. at 4—
7. However, the Court has reviewed the invoices and found that the hours Szwak spent on this case
were not redundant, unproductive, or excessive. Furthermore, Szwak did not charge Plaintiffs for
whatever time he spent in preparing the instant motion after the Court denied Plaintiffs’ first
motion. Accordingly, the Court will not reduce the hours awarded to compensate for a lack of
billing judgment.
3. Adjustment to Lodestar
Szwak’s reported total of 53.4 hours of work performed multiplied by an hourly rate of
$225 equals $12,015.00.
As stated above, an adjustment to the lodestar amount is only warranted in exceptional
circumstances, and only in accordance with the factors set out in Johnson. Watkins, 7 F.3d at 457.
After calculating the lodestar at $11,414.25, the Court is reminded of the strong presumption that
the lodestar is reasonable. Jd. After a review of the Johnson factors,® the Court does not find that
either an upward or downward adjustment of the lodestar is warranted.

’ The twelve Johnson factors are as follows: 1) the time and labor required for the litigation; 2) the
novelty and complexity of the issues; 3) the skill required to properly litigate the issues; 4) whether
the attorneys had to refuse other work to litigate the case; 5) the attorneys’ customary fee; 6)
whether the fee is fixed or contingent; 7) whether the client or case circumstances imposed any
time constraints; 8) the amount involved and the results obtained; 9) the experience, reputation,
15

D. Costs
Plaintiffs also pray for the recovery of costs [Record Document 1, 71], to which they are
entitled. Federal Rule of Civil Procedure 54(d) states that “[uJnless a federal statute, these rules,
or a court order provides otherwise, costs—other than attorney’s fees—should be allowed to the
prevailing party.” Fed. R. Civ. P. 54(d)(1). In Szwak’s affidavit, he states that Plaintiffs incurred
costs in the amount of $1,031.78. Record Document 20-21, pp. 5 & 7. However, not all of the
items included in Szwak’s total amount of costs are recoverable under Rule 54(d).
“A district court may award certain taxable costs to a prevailing party.” U.S. ex rel King v.
Solvay Pharm., Inc., 871 F.3d 318, 334 (5th Cir. 2017). Taxable costs are limited to relatively
minor expenses and amount to “a fraction of the nontaxable expenses borne by litigants... .” Jd.
(quoting Taniguchi v. Kan. Pac. Saipan, Ltd, 556 US. 560, 573 (2012)).
Title 28 U.S.C. § 1920 sets forth the categories of expenses that a judge may tax as costs. These
categories are:
(1) Fees of the clerk and marshal;
(2) Fees for printed or electronically recorded transcripts necessarily obtained for
use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and the costs of making copies of any materials where
the copies are necessarily obtained for use in the case;
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and
salaries, fees, expenses, and costs of special interpretation services under
section 1828 of this title.
28 U.S.C. § 1920. Because Plaintiffs cannot recover for costs not included in § 1920, the Court
will evaluate whether each of Szwak’s claimed categories of costs fall into one of those six

and ability of the attorneys; 10) whether the case was “undesirable”; 11) the type of attorney-client
relationship and whether that relationship was long-standing; and 12) awards made in similar
cases. Johnson, 488 F.2d at 717-19.
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categories. See Coats v. Penrod Drilling Corp., 5 F.3d 877, 891 (Sth Cir. 1993) (“[A] district court
may decline to award the costs listed in [§ 1920] but may not award costs omitted from the list.”’).
i. Court Costs
Szwak claims $400.00 in court costs. Record Document 20-21, p. 5. Based on the amount
of the fee and the date it was paid, the Court assumes this $400.00 was for the initial filing fee. A
filing fee is a fee of the clerk or marshal and therefore included in § 1920(1). Therefore, the Court
will allow Plaintiffs to recover the $400.00 filing fee.
ii. Process Servers
Szwak claims $250.00 for process servers. Record Document 20-21, p. 5. Szwak paid
$100.00 to “Professional Civil Process #2713” and $150.00 to “RBC Process Sves.”
Id. The Fifth Circuit has held that, absent exceptional circumstances, fees for private process
servers are not recoverable as costs under Rule 54(d). Zastrow v. Houston Auto M. Imports
Greenway, Ltd., 695 F. App’x 774, 780 (Sth Cir. 2017) (per curiam) (citing Cypress-Fairbank
Indep. Sch. Dist. v. Michael F., 118 F.3d 245, 257 (Sth Cir. 1997)); see also Marmillion v. Am.
Intern Ins. Co., 381 F. App’x 421, 431 (Sth Cir. 2010) (per curiam). Plaintiffs have not argued that
exceptional circumstances exist; thus, their private process server costs are not recoverable under
§ 1920(1).
iii. Travel
Szwak claims a total of $35.50 for travel expenses. Record Document 20-21, pp. 5 & 7.
Travel expenses are not included in § 1920 and are therefore not recoverable as costs. Coats, 5
F.3d at 891.

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iv. Copies
Szwak claims a total of $131.00 for the cost of copies. Record Document 20-21, pp. 5 &
7. Pursuant to § 1920(4), copies are recoverable when they are necessarily obtained for use in the
case. Although Szwak’s affidavit does not specify how the copies were necessary for the case, the
Court will allow Plaintiffs to recover the costs for copies because they are reasonably low. See
Migis, 135 F.3d at 1049 (“The district court has broad discretion in taxing costs... .).
v. PACER
Szwak claims a total of $14.20 for PACER fees. Record Document 20-21, p. 5 & 7. The
Fifth Circuit has not ruled on whether PACER fees are recoverable as costs and district courts are
split on this matter. Zastrow, 695 F. App’x at 780. Moreover, Szwak’s affidavit does not state what
purpose was served by these fees. Therefore, Plaintiffs may not recover PACER fees as taxable
costs.
vi. Postage
Szwak claims a total of $33.52 for postage costs. Record Document 20-21, pp. 5 & 7. Postal
expenses are not included in § 1920 and are therefore not recoverable as costs. Migis, 135 F.3d at
1048 (holding that the district court did not abuse its authority in denying costs for, among other
things, postage and computerized legal research); Embotelladora Agral Regiomontana, S.A. de
CV. v. Sharp Capital, Inc., 952 F. Supp. 415, 418 (N.D. Tex. 1997). Accordingly, the Court will
not award Plaintiffs postage costs.
vii. Westlaw
Szwak claims a total of $161.25 in expenses for Westlaw/legal research. Record Document
20-21, pp. 5 & 7. Computer research expenses are not included in § 1920. In fact, “[c]ourts have
repeatedly clarified that computer research is not a separately taxable cost but ‘a substitute for an

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attorney’s time that is compensable under an application for attorneys’ fees.’” Sorbo v. United
Parcel Service, 432 F.3d 1169, 1180 n.10 (10th Cir. 2005) (quoting U.S. ex rel. Evergreen Pipeline
Constr. Co., Inc. v. Merrit Meridian Constr. Corp., 95 F.3d 153, 173 (2d Cir. 1996)); see also
Migis, 135 F.3d at 1048. Accordingly, Plaintiffs cannot recover costs incurred for Westlaw/legal
research under Rule 54(d) and § 1920.
vill. Long distance/fax/phone
Szwak claims a total of $6.31 for long distance/fax/phone. Record Document 20-21, p. 5.
Long distance phone and fax expenses are not included in § 1920 and therefore not recoverable as
costs. Embotelladora, 952 F. Supp. at 418.
Based on the above, Plaintiffs’ total recoverable costs are as follows:
Court Costs $ 400.00
Copies $ 131.00

Total $ 531.00
Accordingly, the Court awards Plaintiff a total of $531.00 in costs pursuant to Federal Rule of
Civil Procedure 54(d).
E. Pre- and Post-Judgment Interest
In their complaint, Plaintiffs pray for “legal interest thereon from date of judicial demand
until paid.” Record Document 1, § 71. The Court construes this statement as a request for pre-and
post-judgment interest. In a diversity case, pre-judgment interest is governed by applicable state
law. Hall v. White, Getgey, Meyer Co., LPA, 465 F.3d 587, 595 (Sth Cir. 2006). In this case,
Plaintiffs asserted federal question jurisdiction under federal securities statutes. Record Document
1-1, p. 1. However, the Court has found that only their allegation of fraud represented a viable
claim to relief. See supra, section I. The fraud claim arises out of state law and is before this Court

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based on supplemental jurisdiction pursuant to 28 U.S.C. § 1367. This Court could not locate any
Fifth Circuit jurisprudence directly addressing this situation, however, several other circuit courts
have explicitly held that the calculation of pre-judgment interest on supplemental state law claims
is also governed by state law. Marfia v. T.C. Ziraat Bankasi, 147 F.3d 83, 90 (2d Cir. 1998); Mills
v. River Terminal Ry. Co., 276 F.3d 222, 228 (6th Cir. 2002); Doty v. Sewaill, 908 F.2d 1053, 1063
(1st Cir. 1990); Ambromovage v. United Mine Workers of Am., 726 F.2d 972, 981 n.25 (3d Cir.
1984); see also Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) (“Except in matters governed
by the Federal Constitution or by acts of Congress, the law to be applied in any case is the law of
the state.”). Accordingly, pre-judgment interest in this case is governed by Louisiana law.
Pursuant to Louisiana Revised Statute § 13:4203, “[l]egal interest shall attach from date of
judicial demand, on all judgments, sounding in damages, “ex delicto”, which may be rendered by
any of the courts.”? Under this statute, Plaintiffs are entitled to receive pre-judgment interest “from
the date of judicial demand.” Ethyl Corp. v. Gulf States Utils., Inc., 2001-2230 (La. App. 1 Cir.
10/2/02); 836 So. 2d 172, 181.
While state law controls the award of pre-judgment interest, federal law controls the award
of post-judgment interest, “including decisions about when it began to accrue.” Art Midwest, Inc.
v. Clapper, 805 F.3d 611, 615 (Sth Cir. 2015) (citing Nissho-Iwai Co. v. Occidental Crude Sales,

° “Fraud is by its very nature ex delicto.” Camalo v. Courtois, 2019-15 (La. App. 3 Cir. 10/2/19);
280 So. 3d 956, 960. In this case Defendants did not breach a specific provision of the contract;
rather, the object of the contract never existed. Therefore, the Court finds that, by fraudulently
inducing Plaintiffs to enter into a contract with them, Defendants breached a general duty to the
public rather than a specific contractual obligation to Plaintiffs. See Trinity Universal Ins. Co. v.
Horton, 33, 157, (La. App. 2 Cir. 4/5/00); 756 So. 2d 637, 638) (quoting Harrison v. Gore, 27,254
(La. App. 2 Cir. 8/23/95); 660 So. 2d 563, writ denied, 95-2347 (La. 12/8/95); 664 So. 2d 426)
(“The classical distinction between ‘damages ex contractu’ and ‘damages ex delicto’ is that the
former flow from the breach of a special obligation contractually assumed by the obligor, whereas
the latter flow from the violation of a general duty to all persons.”).
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Inc., 848 F.2d 613, 622—24 (Sth Cir. 1988)). Title 28 U.S.C. § 1961(a) states that interest shall be
allowed on any money judgment in a civil case recovered in a district court, calculated from the
date of the entry of the judgment. Therefore, Plaintiffs are entitled to receive post-judgment interest
from the date of entry of the judgment in this case at the rate governed by 28 U.S.C. § 1961(a).
CONCLUSION
For the reasons stated above, Plaintiffs’ Renewed Motion for Default Judgment [Record
Document 20] is GRANTED in part and DENIED in part. The motion is GRANTED as to
Plaintiffs’ fraud claims but DENIED as to all other claims.
Plaintiffs are awarded general damages in the amount of $25,750.00, attorney’s fees in the
amount of $12,015.00, and costs in the amount of $531.00, along with pre-judgment interest from
the date of judicial demand as set forth in Louisiana Revised Statutes §§ 13:4202 and 4203 and
post-judgment interest from the date of entry of this Judgment at the federal rate specified in 28
U.S.C. § 1961 (a).
A judgment closing this case and awarding damages and costs will be issued separately.
THUS DONE AND SIGNED in Shreveport, Louisiana on this | | hy of December,
2019.
—
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10193390. Public record. Not legal advice.