Winklevoss Capital Fund, LLC v. Shrem
360 F. Supp. 3d 251
S.D. Ill.2019Background
- WCF obtained an ex parte order of attachment against Shrem on October 2, 2018; the attachment remained in place for over a month and attached some property (a de minimis amount before vacatur).
- Shrem opposed confirmation of the attachment; after full briefing and oral argument, the Court denied WCF’s motion to confirm and vacated the attachment on November 8, 2018.
- Shrem moved under N.Y. C.P.L.R. § 6212(e) for attorneys’ fees and costs incurred opposing confirmation of the attachment.
- Section 6212(e) makes a plaintiff strictly liable for costs and reasonable attorneys’ fees if an attachment is granted and later vacated as unwarranted.
- WCF argued fees were improper because (1) Shrem was not a “prevailing party,” (2) only a de minimis amount was actually attached, and (3) vacatur was merely “technical” because Shrem offered $61,000 into escrow.
- The Court rejected WCF’s arguments, found Shrem entitled to fees and costs, and calculated a reduced award based on reasonable rates and hours attributable to the attachment dispute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §6212(e) requires awarding fees when an attachment was granted and later vacated | §6212(e) should be read to require a prevailing-party showing; plaintiff also claimed partial victory due to escrow | §6212(e) mandates fees where an attachment was granted and later vacated; escrow unrelated to attachment | Court: §6212(e) mandates fees upon vacatur of an attachment; escrow did not negate entitlement |
| Whether a de minimis actual attachment defeats fee entitlement | Because only a trivial amount was attached (under $5), fees are unwarranted | Any actual attachment that is later vacated triggers §6212(e) liability | Court: Actual attachment, even if small, suffices; de minimis argument rejected |
| Whether vacatur was merely ‘technical’ (due to escrow) and not substantive | Vacatur resulted from escrow arrangement; thus fees should be denied | Vacatur was substantive—WCF failed to meet burden to justify attachment; escrow unrelated | Court: Vacatur was substantive; escrow did not substitute for attachment and fees granted |
| Reasonableness and scope of fee award | Objected to amount and certain rates/hours as excessive or unrelated to attachment | Requested fees and costs for work opposing attachment; reduced some rates and hours in lodestar | Court: Reduced paralegal rate and cut overall lodestar by 40% for non-attachment tasks; awarded $44,986.80 in fees and $1,053 in costs |
Key Cases Cited
- Roth v. Pritikin, 787 F.2d 54 (2d Cir.) (Section 6212(e) imposes strict liability for wrongful attachment)
- Luciano v. Olsten Corp., 109 F.3d 111 (2d Cir.) (lodestar method for reasonable attorneys’ fees)
- Bank of N.Y. v. Nickel, 14 A.D.3d 140 (N.Y. App. Div.) (§6212(e) requires fee awards without showing of fault)
- A.C. Israel Commodity Co. v. Banco Do Brasil, S.A., 50 Misc. 2d 362 (N.Y. Sup. Ct.) (attachment is an extraordinary remedy; costs of wrongful attachment are compensable)
- Salamanca Trust Co. v. McHugh, 156 A.D.2d 1007 (N.Y. App. Div.) (no §6212(e) relief where attachment order was never entered)
- Kidder, Peabody & Co. v. IAG Int’l Acceptance Group, N.V., 28 F. Supp. 2d 126 (S.D.N.Y.) (distinguishes cases where no property was actually attached)
- Provisional Protective Committee v. Williams, 121 A.D.2d 271 (N.Y. App. Div.) (distinguishes temporary restraining orders from attachments)