This Complaint (Dkt. No. 2) sounds in defamation and injurious falsehood causes of action wherein the individual plaintiff as the sole member and principal owner of the limited liability company plaintiff (hereinafter simply referred to jointly and collectively as "plaintiffs"), alleges that defendants published a series of false news articles in 2017 implicating the plaintiffs of alleged unlawful and illegal practices relative to their garnering a favorable contract from the State University of New York ("SUNY") for the construction and management of student housing units at Buffalo State College (now "SUNY-Buffalo State University"). The action falls under the category of being a SLAPP suit.^[FN1] This Decision is not going to devolve into reiterating and digressing into the panoply of alleged misdeeds that plaintiffs accuse the defendants of falsely misrepresenting in their stories. All of that has been tediously dissected and reviewed thoroughly by the courts (trial and appellate) over the course of a litany of motions and appeals that have [*2]engulfed this action since its filing in 2017.^[FN2] Having noted the foregoing it is nevertheless necessary to undertake a brief encapsulation of the type of litigation demands that were imposed throughout the course of the past seven years.

The motion filings began early on (to wit, September of 2017, see NYSCEF Dkt. Nos. 8 - 20, [plaintiffs' notice of motion pursuant to CPLR 3211(b) with supporting affirmations, exhibits, including video, and memorandum of law]), seeking dismissal of the ninth affirmative defense in defendants' Verified Answer with Affirmative Defenses and Counterclaims, to wit, that plaintiffs were not "public figures" for the purpose of defamation law. The motion was stridently opposed and met head-on with a cross-motion by defendants (Dkt. No. 21) seeking a determination as a matter of law that the plaintiffs indeed did qualify as "public figures" for defamation action purposes.^[FN3] The cross-motion was similarly supported by affirmations of counsel and defendant Telvock, numerous exhibits and a memorandum of law, in addition to a separate attorney affirmation with accompanying exhibits and a memorandum of law in opposition to plaintiffs' motion. Dkt. Nos. 22-45. Then assigned IAS Justice, the Honorable Mark A. Montour, granted defendants' motion and denied plaintiffs' motion by Decision filed on December 5, 2017 (Dkt. Nos. 46 and 47 and companion Orders filed on 12/21/2018 at Dkt. Nos. 48 and 49).

Within 30 days thereafter, on January 19, 2018, plaintiffs filed a notice of appeal (Dkt. No. 50). The appeal was never perfected and eventually dismissed, but while the appeal of this critical issue was pending it became a focal point of at least a preliminary inquiry by the Court to see if an early-stage settlement was something the parties, particularly the plaintiffs, might want to consider . . . see ¶ 23 of defendants' Attorney Affirmation, Dkt. No. 241, but contra plaintiffs' Attorney Affirmation, ¶¶ 38-40, Dkt. No. 270).^[FN4] Just 14 days after the filing of the notice of appeal, plaintiffs filed their next motion for a discovery protective order of confidentiality (Dkt. No. 52, with supporting affirmation and exhibits, Dkt. Nos. 53-67). Defendants opposed and confronted the motion in the full manner and context reasonably expected (Dkt. Nos. 68-71), and plaintiffs replied in kind (Dkt. Nos. 72-75). After the exchange of motion papers on the discovery confidentiality [*3]issue, a stipulated order was executed in August of 2018 (Dkt. No. 76) and the onslaught of discovery was on its way (none of which - as noted by plaintiffs' counsel in ¶ 39 of Dkt. No. 270 - had yet been conducted or completed even though the case had already been absorbed in 16 months of time-consuming motion practice.

The above recitation of the opening fusillade of motion ballistics that lifted this case off the ground is laid out as an illustrative primer for what the rest of the ground battle of the action looked like until it was finally concluded with the Appellate Division, Fourth Department's Decision on June 14, 2024 (Dkt. No. 255) which affirmed Justice Montour's order dated August 12, 2022, granting defendants' motion for summary judgment dismissing plaintiffs' complaint.^[FN5]

The remaining issue left to be addressed in this saga is fulfilling the penultimate sentence of the Fourth Department's Decision as follows, "Inasmuch as defendants established that this action was "continued without a substantial basis in fact and law and could not be supported by a substantial argument for the extension, modification or reversal of existing law (Civil Rights Law § 70-a [1] [a], they are entitled to an award of costs and attorney's fees from November 10, 2020, the effective date of the amendments" (citing Reeves v. Associated Newspapers, Ltd., 2024 NY Slip Op 01898, *6, *11). ^[FN6] See also, Gottwald v. Sebert, 40 NY3d 240 (2023). This Decision takes on that issue.

A concise statement and summary of the law on this issue was recently set forth in the case of Isaly v. Garde, 83 Misc 3d 379, 2024 WL 763923, 2024 Slip Op. 24056 (Sup. Ct., New York County, decided 2/13/2024), (and previously recited by this court in the case of Cimasi v. The Buffalo News, Inc. [Sup. Ct., Erie County, decided 7/10/2024 [Index No. 814088/2022]):

"It is well established that courts have broad discretion in determining an award of attorney fees and costs," and that "New York courts often use the lodestar method, which is based on a reasonable hourly rate times a reasonable number of hours expended." New York Times Co. [*4]v. New York Office of the Mayor, 2023 NY Slip Op. 32941(U), *3, 2023 WL 5502516 (Sup. Ct., New York Co. 2023) (citations omitted).9 Courts applying the lodestar method have varied in considering fee applications on papers alone or through evidentiary hearings. Compare, e.g., I.O. v. New York City Dept. of Educ., Dkt. No. 20-cv-5061, 2021 WL 2701449, *1, 2021 U.S. Dist. LEXIS 122346, *1 (S.D.NY Jun. 29, 2021) (determining reasonable attorney's fees in IDEA litigation after trial); and Matter of Infinity Q Diversified Alpha Fund Securities Litig., 2023 NY Slip Op. 34527(U), *19, 2023 WL 8846591 (declining to grant attorney's fees without hearing); with, R.S. v. New York City Dept. of Educ., Dkt. No. 21-cv-2257, 2023 WL 6389118, *1, 2023 U.S. Dist. LEXIS 176654, *1 (S.D.NY Sept. 29, 2023) (determining reasonable attorney's fees in IDEA litigation on papers); and New York Times Co., at *1. (determining fees in FOIL litigation on papers). If anything, New York courts have generally favored hearings rather than papers in determining fees, especially where there is sharp disagreement at the fore or on the horizon. See, e.g., Matter of Infinity Q Diversified Alpha Fund Securities Litig., supra., citing, Sheridan v. Police Pension Fund, 76 AD2d 800, 801-802, 429 N.Y.S.2d 204 (1st Dept. 1980)."

"The lodestar method is based upon a 12-factor test considering:

(1) the time and labor required (emphasis added)

(2) the novelty and difficulty of the questions;

(3) the skill requisite to perform the legal service properly;

(4) the preclusion of employment by the attorney due to acceptance of the case;

(5) the customary fee;

(6) whether the fee is fixed or contingent:

(7) time limitations imposed by the client or the circumstances;

(8) the amount involved, and the results obtained;

(9) the experience, reputation, and ability of the attorney;

(10) the "undesirability" of the case;

(11) the nature and length of the professional relationship with the client; and

(12) awards in similar cases.

There is also one non-lodestar factor in this matter that the Court raised during oral argument in Special Term on October 3, 2024. This is an application for an award of attorney's fees that have been substantially paid on the defendants' behalf directly to defense counsel by two liability insurance carriers. Those carriers are not parties to this action but through them defense counsel has been paid, at least partially, for the services rendered to the client/insured.

Based on a review of the law for an award of statutory-authorized attorney's fees (both state and federal), the award is uniformly described as being intended to benefit the "prevailing party" either by recouping the out-of-pocket fees paid by it to counsel, or alternatively, directly to counsel who has not yet been fully compensated for the time, labor, services and results provided and achieved on the client's behalf. The Court has not found a case on point in New York supporting the back-channel reimbursement/recoupment to an insurance carrier of legal fees contractually committed to be paid by the carrier under the terms of its policy with an insured, and thereafter negotiated separately between the carrier and counsel of its choosing to retain to represent the [*5]insured.

On the papers submitted in support of the motion and the colloquy with defendants' counsel during oral argument, the Court has determined that the award of attorney's fees in this case is constrained to assessing the unpaid portion of the full, fair and total sum of money that should be paid to compensate defendants' counsel under the lodestar factors after deducting the sums already paid to them by the carriers.

It is also the Court's opinion that the subrogation provisions of the policies do not apply to the recovery of attorney's fees. Those provisions are between the carrier(s) and their insured (the defendants) to recoup amounts, if any (none in this case), paid on the underlying claims. The subrogation claw-back is between those parties, the carrier and the insured pursuant to their policy contract . . . it has nothing to do with the attorney's fees negotiated to be paid to defense counsel who were independently selected and retained by the carrier(s). Thus, it is defense counsel, who took on the professional and ethical duties, services and responsibilities to protect the legal rights and interests of the client(s), who is entitled to receive the benefit of the attorney's fees to be awarded in this case above and beyond what they have already been paid by the carriers, and separate from reimbursement to the defendants/insureds of their out-of-pocket payment of the coverage deductible, if any.^[FN7]

Justice Montour's Order, as affirmed by the Fourth Department granted an award of fees and costs pursuant to New York's anti-SLAPP law (Civil Rights Law §§ 70-a and 76-a). For purposes of deciding the amount of the costs and fees to be awarded, this court proceeds on the grounds that such an award is to be made based on a quantum meruit assessment using the lodestar factors. The basic precepts for the consideration of a quantum meruit application for attorney's fees are summarized, inter alia, as follows:

"The amount to be allowed is not necessarily affected by the number of attorneys employed . . . the fee must be measured as though the services were performed by one attorney. While the determination of the reasonableness of an attorney's fees ordinarily requires a consideration of such factors as the professional reputation of the lawyer for ability and integrity, the difficulty and importance of the work and labor performed, the sum involved, the result achieved, and the pecuniary status of the client . . . "

While it is now firmly in place that costs and attorney's fees in anti-SLAPP actions are recoverable from November 10, 2020, onward (see 161 Ludlow Food, LLC v. L.E.S. Dwellers, Inc., 221 AD3d 517 [1st Dept. 2023]; Aristocrat Plastic Surgery, P.C. v. Silva, __A.D.3d__, Slip Op. 2024 WL 4628305, 1st Dept. 10/31/2024), the calculation modalities for awards of attorney's fees in anti-[*6]SLAPP suits in New York have not yet been widely discerned and reported ^[FN8] , there is a well-respected and established general rule on the scope of consideration that the courts generally apply to a statutory award of attorney's fees . . . it is rather tight to the vest. The Fourth Department Appellate Division put it succinctly, as follows:

"Inasmuch as fee-shifting provisions are an exception to the "American Rule," they must be strictly construed (see Baker v. Health Mgt. Sys., Inc., 98 NY2d 80, 88, 745 N.Y.S.2d 741, 772 N.E.2d 1099 [2002], rearg denied 98 NY2d 728, 749 N.Y.S.2d 478, 779 N.E.2d 189 [2002]; Fiala v. Metropolitan Life Ins. Co., 6 AD3d 320, 323-324, 776 N.Y.S.2d 29 [1st Dept. 2004]).

In thier moving papers, the plaintiffs cited two cases for reference and consideration by the Court on the award of anti-SLAPP costs and attorney's fees. One is out of the Southern District Court of New York, Knight First Amendment Institute at Columbia University, et al v. Biden, Jr. (No. 17-cv-5205 (NRB)^[FN9] (Dkt. No. 241, ¶ 46), and the other, is a case out of the state District Court from Dallas County, Texas (Mohamed v. The Blaze Inc., et al, Dkt. No. 241, ¶ 47), neither of which is viewed as persuasive by the Court.^[FN10]

In the present case, the lodestar criteria in support of defendants' fee application are set forth at length in paragraphs 28 through 50 of Mr. Finnerty's affidavit dated September 19, 2023 (Dkt. No. 241). Defendants' motion submission materials blend the basic elements that the Court is called upon to examine for equitable quantum meruit consideration and nearly all the factors of the lodestar method of evaluation. For purposes of the lodestar method of calculation the precedent established in Podhorecki v. Lauer's Furniture Stores, 201 AD2d 947 (4th Dept. 1994) guides the assessment to be made. The Podhorecki guidelines are clear and instructive:

1. In the absence of a request for a hearing, the fee award can be made on the submission of affidavits and documents. Neither party has requested a hearing, and none is necessary in the Court's view to be ordered sua sponte.

2. In making the determination, "the trial court should first calculate the lodestar fee by determining the reasonable number of hours that should have been expended on the legal task and multiplying that figure by what the court finds to be the reasonable hourly rate (Matter of Rahmey v. Blum, 95 AD2d 294, 300—303, 466 N.Y.S.2d 350). That fee may then be adjusted upward or downward by a consideration of several subjective factors (Matter of Rahmey v. Blum, supra, at 303—304, 466 N.Y.S.2d 350)." Id. at 948.

3. "Although the amount of a fee and its relationship to the amount at issue in the lawsuit is one of the subjective factors that may be considered, that factor is considered to reduce the award, not to eliminate it (cf., Giarrusso v. City of Albany, 174 AD2d 840, 841, 571 N.Y.S.2d 141)." Id. at 948.

4. "Further, "[w]henever the court augments or reduces the lodestar fee, it must state its reasons for doing so as specifically as possible" (Matter of Rahmey v. Blum, supra, 95 AD2d at 305, 466 N.Y.S.2d 350)." Id. at 948.

The above criteria expanded on the Fourth Department's earlier Decision in a prior Podhorecki appeal wherein the Court initially confirmed the use of "the lodestar method of computing a statutory allowance of reasonable fees (citation string omitted)." Podhorecki v. Lauer's Furniture Stores, 184 AD2d 1066 (4th Dept. 1992). In the present case, Podhorecki factor #2 is the most diagnostically relevant and decisive in making the assessment.

There are many elements of the lodestar analysis that are not seriously controverted or in dispute. The skill requisite to perform the highly specialized legal services properly and the experience, reputation, and ability of the attorney(s) (lodestar factors 3 and 9) are manifestly established on behalf of defendant's legal counsel in this action. Mr. Finnerty's 17-page resume' (Dkt. No. 246) accentuated by the "Highlights" recited as a notable expert in the field of First Amendment rights and Public Interest litigation ^[FN11] presents an array of achievement that is deserving [*7]of great recognition and respect. The "amount involved" in this action was a claim for damages in the sum of $3,000,000.00, an amount that was potentially back-breaking financially to the defendants and the "result obtained" by the successful achievement of the dismissal to avoid that catastrophic outcome is not in dispute (lodestar factor 8). Defendants prevailed and the result was achieved through the talent and laboriously thorough representation of their counsel. As for lodestar factor 10, the "undesirability" of the plaintiffs' cause of action, a reading of the complaint (which of course is a public record for all to see) clearly implicated the integrity and public reputation of the defendants, and therefore that factor is plainly in the analysis for consideration. Factor 6 is not in dispute, as this was a "fixed" hourly rate fee case (not a contingency fee). The hourly rate(s) charged (factor 5) . . . meaning the full, fair, and customary hourly rates of defendants' counsel (up to $350/hr. for Mr. Finnerty and $275/hr. for Mr. Abdulla rather than the reduced rates negotiated by the carriers), are reasonable for this field of practice in the geographic area of Western New York at the present time and certainly within the range of the legal expertise retained for the services provided by Mr. Finnerty and Mr. Abdulla and their firm. Factor 11, the nature and length of the professional relationship with the client, was also clearly established.

Many of the other lodestar factors are capable of being evaluated with a measure of reasonable factual interpretation as they relate to the liability claim that confronted the defendants. While anti-SLAPP suits are still somewhat in their early stages of litigation, the status of the First Amendment issues of free speech/press rights being protected in the absence of proof of falsity and malice have been litigated for decades (since the Supreme Court's ruling in New York Times v. Sullivan, 1964). This case did, however, present an issue of "novelty or difficulty" for defendants' counsel to address right off the bat, to wit, the public figure issue and the intertwining nature of the plaintiffs' recognizable role in the community as real property project developers and the alleged events and underlying circumstances that required in-depth litigation of difficult (time-consuming) discovery issues (lodestar factor 2). There is nothing explicitly included in the moving papers in support of lodestar factors 4, 7, or 12, but with respect to factor 4 it is reasonable to infer that entries totaling over 1300 hours of combined billable time on this case during the subject billing period(s) may have had the effect of "preclusion of employment by the attorney due to acceptance of the case," and factor 12, awards in similar cases, has been addressed above and is not yet measurably applicable.

Not nearly as susceptible to being established and determined as a matter of supportable fact for the whole amount sought by the defendants to be awarded is lodestar factor 1, to wit, the time and labor required to address the sum and substance of the case at hand.

A. The Essence of This Action That Gives Rise to This Attorney's Fee Application

With the professional background and experience possessed by defendants' counsel including the extensive amount of representation they regularly provide to multiple media clients, the threshold question in this case becomes: What was the cause of all this time, energy and exhaustive legal effort being required in the first place? The answer is, in great measure, that while the action may have been legitimately commenced under the shroud of understandable hurtfulness and great displeasure (even anger) that the plaintiffs apparently felt after seeing and reading the subject news publications, regrettably they did not fairly assess the defendants' constitutional and statutory immunization from legal liability for the content of the subject publication/broadcast in the absence [*8]of clear and convincing proof of falsity and actual malice. In short, the plaintiffs made the bed they now find themselves lying in.

The plaintiffs' claims and causes of action were found to lack actionable merit under the strict scrutiny analysis applicable under the First Amendment and statutory rights and protections granted to the defendants. The full nub and substance of all the judicial review and of this action is that plaintiffs were hard pressed from its inception and throughout its long and winding road up and down the trial and appellate court levels of court review, to get over the high bar of showing that the action did not lack "substantial basis in fact and law and could not be supported by a substantial argument for the extension, modification or reversal of existing law," Civil Rights Law § 70-a (1) (a), especially after the public figure ruling was made in 2018. Therefore, the totality of the time and labor required to address the case in its entirety was caused and created by the plaintiffs' commencement and exhausting and brutally time-consuming litigation without ever attempting to undertake, initiate or "tickle" the possibility of serious settlement efforts (not just after the first motion dismissing their "public figure" affirmative defense but throughout the course of the next 6+ years).

B. Review of the Invoice Billings

It is incumbent on the Court to examine the hourly rates and time expended for which the defendants seek an award of attorney's fees. This aspect of the process is not the most desirable nor palatable aspect of what is put before the Court, but the Legislature has imposed it to be done. Disregarding this exercise would be welcomed by the Court but is regrettably unavoidable. O'Malley v. Town of Vestal Police Department, 226 AD3d 1204 (3rd Dept 2024).

The periodic Invoices showing the post-November 10, 2020, time and billing entries up to the date for which defendants seek an award (to wit, up to June 21, 2024) are set forth in exhibits referenced in Mr. Abdulla's supporting affirmations (exhibits at Dkt. 251 and 266).

1. The Invoices under Dkt. No. 251 show a combined total of 977.8 hours of time between Messrs. Finnerty and Abdulla from November 10, 2020, through September 1, 2023. A vast majority of the time was chargeable to Mr. Finnerty's services (710.8 hours). Mr. Abdulla clocked-in at 267 hours during that time frame. Nearly all the time entries up to the end of August 2022 were laser-focused and consumed with defendants' preparation of their dispositive motion for summary judgment, including their review and response/reply to the opposition filed by plaintiffs. The Court sees much of the 850.7 hours through August of 2022 being mainly allocated to the summary judgment motion. The remaining 127.1 hours of these Invoices (with entries beginning in February 2023 and running through September 1, 2023), were focused on reviewing and studying the effects of recent Appellate Division rulings, and eventually the Court of Appeals' ruling in Gottwald, regarding the retroactivity application of attorney's fee awards in anti-SLAPP lawsuits. Reviewing the invoices in toto, it is the Court's view that the total time entries for this entire period of combined invoices should be reduced to 900 hours.

2. The Invoices under Dkt. No. 266 show a combined total of 363.3 hours of time between Messrs. Finnerty and Abdulla from September 8, 2023, through June 21, 2024. The vast majority of these time entries . . . roughly 310 hours, relate to the services rendered in connection with plaintiffs' appeal of Justice Montour's Order dismissing the complaint (including some post-argument submission material to the 4th Department), with the remainder being activities in the form of multiple contacts (phone calls and emails) to representatives of the insurance carriers regarding the status of the case and to other media [*9]outlet counsel (e.g., General Counsel for CBS) to discuss aspects of this case. Based on the depth and extensive composition of the motion papers, including the memoranda of law already fully developed and suitable for reiteration in the appellate brief, it is the Court's view that the total time entries for this period of invoiced time should be reduced to 250 hours.

C. The Calculation of the Fee

Blending the customary hourly rates charged by defendants' counsel ($350.00/hr. for Mr. Finnerty and $275.00/hr. for Mr. Abdulla) to a rounded-off, straight-edged rate of $325.00/hr. (acknowledging the significantly greater number of hours performed by Mr. Finnerty) and multiplying it by 1150 hours to reach a reasonably full and fair fee of $381,875.00, which is then offset and reduced by the sum of $341,123.84 ($249,466.74 + $91,657.10) previously paid by the insurance carriers, leaving a balance due of $40,751.16, to complement the amounts previously paid by the carriers.

In addition to the above, the Court also accepts and assesses the full sum of the defendants/insureds' deductible of $5,000.00 and the sum of $7,226.36, representing certain unilateral "mark-downs" of non-payment by one of the carriers of its portion of several billing invoices received from defendants' counsel, along with the disbursement of costs in the amount of $877.96 (paid to Counsel Press for appellate brief) as sums to be included and added to the total amount that will be awarded.^[FN12]

After careful review of all the submitted affirmations and documentary exhibits, and the argument of counsel made in support of and in opposition to the defendants' application for an award of attorney's fees and costs, the same is hereby and GRANTED in the total sum of $48,855.48 payable to the firm of Finnerty, Osterreicher & Abdulla, plus reimbursement to the defendants of the $5,000.00 deductible off their insurance policies, subject to and upon filing of proof in the form of an affidavit from the defendants that they paid the deductible and are entitled to recoup the same. Defendants' supplemental request for the imposition of any sanctions or fees pursuant to 22 NYCRR Part 130 is DENIED.

Submit order accordingly.