- Providing preferential treatment to Hasidic institutions when they attempted to lease and purchase two school buildings; and

- Buying religious books with public money and loaning the books to Hasidic schools.

The following month, the New York Schools Insurance Reciprocal ("NYSIR") disclaimed coverage with respect to the students' federal action.

After NYSIR disclaimed coverage, the district retained counsel to defend the individual board members in the students' federal action. Board members Yehuda Weissmandl, Moses Friedman, Moshe Hopstein, Eliya Solomon, Daniel Schwartz, Aron Wieder, Richard Stone, and Morris Kohn, Superintendent Joel Klein, and Assistant Superintendent Eliezer Wizman were represented by Bingham McCutchen LLP. Former board member Nathan Rothschild was represented by Proskauer Rose LLP.

In April 2013, the district sued NYSIR in a New York state court, seeking damages for breach of contract, namely, the cost to the district of defending the students' federal action, and a declaratory judgment that NYSIR owed the district a defense in the students' action and that it had to indemnify the district for legal fees.

An appellate court ordered the New York trial court to enter a judgment declaring that NYSIR was obligated to defend the district in the students' federal action through September 30, 2013.

By notice of motion dated October 11, 2017, the district moved for partial summary judgment on its cause of action for breach of contract in the amount of $1,710,118.27, plus interest. The district sought $1,208,457.40 in attorneys' fees and $45,443.33 in expenses for Bingham, $367,658.75 in attorneys' fees and $16,192.65 expenses for Proskauer, and electronic discovery outside vendor charges of $72,366.14. Counsel for Mr. Rothschild devoted 1,379.5 hours to the case through September 30, 2013; 4,822.2 hours were devoted by counsel for the other board members. The district argued that its counsels' hourly rates were reasonable, the number of hours devoted to the case was reasonable, and the issues were "unusually complex."

In opposition, NYSIR contended that the district's legal bills reflected over-staffing, duplication of services, and over-billing. Additionally, NYSIR argued that Proskauer's fees should be totally disallowed because the district had not established why Mr. Rothschild was represented by separate counsel.

The Court's Decision

First, the court explained that once NYSIR disclaimed as to Mr. Rothschild, his remedy was to pursue a declaratory judgment action, rather than immediately retaining counsel. Therefore, the court continued, the district had waived its claim as to separate counsel fees for Mr. Rothschild by failing to seek a declaratory judgment that Mr. Rothschild was entitled to a defense in the students' action.

The court then found that the "large disparity in hours" between Bingham McCutchen and Proskauer suggested that the hours billed by Bingham McCutchen were "excessive." It concluded that 1,250 was the reasonable amount of hours for an attorney to devote to the case through September 30, 2013, given the novelty and difficulty of the questions involved, the skill required to perform the services properly, the amount involved, and the results obtained.

The court further concluded that an hourly rate of $400 was reasonable, given the foregoing factors. Accordingly, the court granted the district's motion for summary judgment to the extent of $500,000 in attorneys' fees, plus interest from the date the result was obtained and the value of the services could be determined, plus disbursements of $83,194.61.

The case is East Ramapo Central School District v. New York Schools Insurance Reciprocal, No. 600963/13 (N.Y. Sup.Ct. N.Y. Co. Jan. 2, 2018).