Wachovia Bank, N.A. v. VCG Special Opportunities Master Fund, Ltd.
888 F. Supp. 2d 380
S.D.N.Y.2012Background
- Plaintiffs Wachovia Bank and Wachovia Capital Markets sued VCG to enjoin a FINRA arbitration initiated against WCM.
- The court previously granted then-denied relief; on appeal, the Second Circuit mandated judgment in favor of both Wachovia and WCM.
- The dispute arises from an ISDA Master Agreement 2 non-reliance clause stating parties rely on their own evaluation and not on the other’s advice.
- Section 11 of the ISDA Master Agreement provides recovery of out-of-pocket expenses and legal fees for enforcement of rights.
- Wachovia Bank represents it incurred 100% of the litigation fees and costs; no costs related to the FINRA arbitration are sought.
- The fee application seeks $723,142.69 for attorneys’ fees and costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to recover fees | Wachovia has standing to enforce the disclaimer. | Wachovia lacks standing since arbitration targeted WCM, not Wachovia. | Wachovia has standing; contract permits fee recovery |
| Allocation of fees to Wachovia | 100% of fees are attributable to Wachovia based on contract and target. | Allocation unclear; fees should reflect shared origin. | 100% allocation to Wachovia reasonable |
| Timeliness of fee application | Notice from Master Agreement, complaint, and disclosures suffices for fee claim. | Not pleaded as special damages; prejudice possible. | Application timely under Rule 54(c); no prejudice |
| Reasonableness of fees and costs | 1,360.70 hours reasonable; billing entries sufficient; budgeting costs supported. | Some entries vague; quarterly budget time may be disallowed; documentation lacking. | Fees and costs reasonable; entries adequate; budgeting allowed |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (standing requires injury, causation, and redressability)
- Denney v. Deutsche Bank AG, 443 F.3d 253 (2d Cir.2006) (standing analysis for contractual disputes)
- Klarman v. Santini, 503 F.2d 29 (2d Cir.1974) (fee recovery principles under contract interests)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (reasonableness of hours and billing entries)