NE Shore Technologies, INC v. Professional Credentials Exchange, LLC

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
NE SHORE TECHNOLOGIES, INC., §
Plaintiff, §
§
v. § CIVIL ACTION NO. 4:23-CV-03413
§
PROFESSIONAL CREDENTIALS §
EXCHANGE, INC., §
Defendant. §
MEMORANDUM AND RECOMMENDATION
The Court granted Defendant’s Motion for Summary Judgment and entered
Final Judgment dismissing this case on December 2, 2025. ECF 76 (adopting ECF
72); ECF 77. Now before the Court is Defendant Professional Credentials
Exchange, Inc.’s Motion for Attorney Fees and Costs in the amount of $174,030.1
ECF 78. The Motion is fully briefed and ripe for determination. ECF 78; ECF 86;
ECF 91. Having considered the parties’ positions and the law, the Court recommends
that Defendant’s Motion be GRANTED in part and attorney’s fees and costs be
incorporated into an Amended Final Judgment.
1 The District Judge referred this case to the undersigned Magistrate Judge pursuant to 28 U.S.C.
§ 636(b)(1)(A) and (B), the Cost and Delay Reduction Plan under the Civil Justice Reform Act,
and Federal Rule of Civil Procedure 72. ECF 16.
United States District Court
Southern District of Texas
ENTERED
April 30, 2026
Nathan Ochsner, Clerk
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I. Legal Standards.
A. Federal Rule of Civil Procedure 54
Federal Rule 54(d)(2) permits a prevailing party to file a motion for attorney’s
fees no later than 14 days after the entry of judgment. The Motion must “(ii) specify
the judgment and the statute, rule, or other grounds entitling the movant to the award;
(iii) state the amount sought or provide a fair estimate of it; and (iv) disclose, if the
court so orders, the terms of any agreement about fees for the services for which the
claim is made.” Id. Despite entry of a “final” judgment, the judgment is not “final”
as to a claim for costs and attorney's fees, which may be raised in a subsequent Rule
54 motion. Loeb-Defever v. Mako, L.L.C., No. 24-20410, 2026 WL 483894, at *4
(5th Cir. Feb. 20, 2026). In addition, district courts “retain[ ] jurisdiction to resolve
motions for ... attorneys' fees while a judgment on the merits is pending on appeal.
Id.
B. Texas Law
Texas law governs the award and reasonableness of attorney’s fees in this
diversity case. Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). Under
Texas law, a prevailing party “may recover reasonable attorney’s fees . . . in addition
to the amount of a valid claim and costs, if the claim is for . . . an oral or written
contract.” TEX. CIV. PRAC. & REM. CODE § 38.001. The Court has discretion to
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determine the amount of attorney’s fees. See World Help v. Leisure Lifestyles, Inc.,
977 S.W.2d 662, 683 (Tex.App.—Fort Worth 1998) (pet. denied).
Texas courts utilize the lodestar method as a starting point for determining
reasonable attorney’s fees. See Rohrmoos Venture v. UTSW DVA Healthcare, LLP,
578 S.W.3d 469, 498 (Tex. 2019). Under the lodestar method, the court determines
the reasonable rate and number of hours and multiplies the two to calculate a lodestar
amount. See El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012). The “fee
claimant bears the burden of providing sufficient evidence” of both the rate and the
hours worked. Rohrmoos, 578 S.W.3d at 498. Sufficient evidence requires a
showing of the services performed, who performed those services, approximately
when they performed the services, the reasonable amount of time required to
perform the services, and the reasonable hourly rate of those who performed the
services. Id.
Where the claimant meets this burden, the base figure is presumptively
reasonable, but it is “subject to adjustment if the presumption is overcome by other
factors not accounted for in the base lodestar figure.” Id. at 496. The Court looks
to the Arthur Andersen factors when adjusting the lodestar.2 Specific evidence must
support an adjustment. See Id. at 501.
2 The factors are:
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II. Analysis.
Plaintiff sued Defendant for breach of contract and tortious interference with
contract. ECF 37. The Court granted Defendant’s Motion for Summary Judgment
on both claims and dismissed Plaintiff’s claims with prejudice. ECF 72 (adopted by
ECF 76). The Court entered a Final Judgment on December 2, 2025, taxing costs
against Plaintiff. ECF 77. Defendant now seeks attorneys’ fees and expenses in the
amount of $174,030.00 in accordance with the Final Judgement and the fee-shifting
provision of the parties’ Master Software Development Agreement (MSDA). ECF
78. Plaintiff contends that the MSDA does not entitle Defendant to fees related to
its tortious interference claim and that Defendant has not bifurcated its fees or shown
that the fees it seeks are reasonable and necessary. ECF 86.
(1) the time and labor required, the novelty and difficulty of the questions
involved, and the skill required to perform the legal service properly;
(2) the likelihood ... that the acceptance of the particular employment will
preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers
performing the services; and
(8) whether the fee is fixed or contingent on results obtained or uncertainty
of collection before the legal services have been rendered.
Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997).
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A. Taxable costs will be included in an Amended Final Judgment.
Defendant timely filed a Bill of Costs seeking $1,962.60 in costs taxable under
28 U.S.C. § 1920. ECF 80. Plaintiff did not object to the Bill of Costs within 14
days and therefore on January 5, 2026 the clerk taxed costs in the amount of
$1,962.60. Plaintiff also did not object to the taxation of costs within 7 days after
taxation, nor did they object in their January 6, 2026 Response to Plaintiff’s Motion.
See ECF 86. Therefore, the taxable costs of $1,962.60 will be incorporated into an
Amended Final Judgment.
B. Defendant has demonstrated it is entitled to reasonable attorney’s
fees and expenses under the MSDA for defense of the breach of
contract claim.
Plaintiff sued Defendant for breach of the MSDA. The MSDA provides:
Attorneys’ Fees. In the event of any litigation or arbitration of any
quasi–judicial or administrative proceeding brought by either of the
parties hereto to enforce any covenant, condition, representation,
warranty or provision of this Agreement, to rescind this Agreement,
to enforce any remedy available upon default hereunder, to interpret
this Agreement, or seeking a declaration of the rights of the parties
hereto, the prevailing party shall be entitled to recover all costs and
expenses incurred in connection therewith, including reasonable
attorneys’ fees including the costs of reasonable investigation,
preparation and professional or expert consultation incurred by reason
of such litigation, arbitration or proceeding. Sums actually expended in
the prosecution or defense of any litigation, arbitration or proceeding
within the meaning of the foregoing sentence shall be prima facie
evidence of reasonable attorneys’ fees, costs and disbursements.
ECF 78-1 at 11-12 (emphasis added). The Court dismissed all of Plaintiff’s claims
against Defendant in this case with prejudice, making Defendant the prevailing
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party. Plaintiff’s unsuccessful breach of contract claim clearly falls within the scope
of the above MSDA provision.
However, Plaintiff’s tortious interference with contract claim did not seek “to
enforce any covenant, condition, representation, warranty or provision of this
Agreement, to rescind this Agreement, to enforce any remedy available upon
default hereunder, to interpret this Agreement, or seeking a declaration of the
rights of the parties hereto,” and thus is outside the scope of the MSDA fee-shifting
provision. Attorney’s fees generally are not recoverable on a tortious interference
claim under Texas law. DP Sols., Inc. v. Rollins, Inc., 353 F.3d 421, 430 (5th Cir.
2003) (stating the general rule and recognizing some equitable exceptions).
Defendant argues that Plaintiff’s tort and contract claims were so intertwined as to
not require segregation of fees. ECF 91. The Court disagrees.
The general rule in Texas is that a party seeking fees must segregate fees
incurred on unrecoverable claims from those incurred on recoverable claims.
Navigant Consulting, Inc. v. Wilkinson, 508 F.3d 277, 298 (5th Cir. 2007) (citing
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex.2006)). The Texas
Supreme Court has explained that “[i]ntertwined facts do not make tort [attorney's]
fees recoverable; it is only when discrete legal services advance both a recoverable
and unrecoverable claim that they are so intertwined that they need not be
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segregated.” Id. Certainly some of the facts on the two claims overlapped, but that
is not enough to avoid the need for segregation of hours.
Plaintiff argued in the lawsuit that Defendant gained access to its workers due
to the existence of the MSDA. However, Plaintiff’s breach of contract claim
centered on Defendant’s failure to provide notice of termination of the MSDA or an
opportunity to cure any default. ECF 37 at 13-14. Plaintiff’s tortious interference
claim centered on the factual allegation that Defendant enticed Plaintiff’s contract
workers to quit working for Plaintiff and work instead for another company engaged
by Defendant. Id. at 15-16. It is likely Counsel provided some discrete legal services
that advanced the defense of both claims. However, it is equally likely that counsel
provided legal services that advanced the defense of only the tort claim. The claims
did not overlap enough to eliminate the need to segregate the work performed for
the breach of contract claim from the work performed on the tortious interference
claim. For example, the initial motion to dismiss primarily addressed Plaintiff’s tort
claims and only briefly addressed the breach of contract claim. ECF 11. The tort
claim required discovery and briefing that would not have been necessary to resolve
the breach of contract claim, which involved a legal issue of contract interpretation.
See ECF 72 at 5-10 (analyzing breach of contract claim). While much of
Defendant’s summary judgment argument focused on Plaintiff’s lack of evidence of
an existing contract with its workers, Defendants also argued and presented evidence
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regarding their contacts, or lack thereof, with Plaintiff’s contract workers. See ECF
61 at 14-17 and exhibits cited therein.
As alternative to denying fees, Defendant asks the Court to allow it to
supplement its Motion with a declaration segregating its fees. ECF 91 at 5; see
Cypress Engine Accessories, LLC v. HDMS Ltd. Co., 283 F. Supp. 3d 580, 593 (S.D.
Tex. 2017) (ordering fee claimant to submit evidence segregating the fees it seeks
for defending the recoverable claim from the fees for nonrecoverable claims). The
Court recommends granting Defendant leave to file this supplemental evidence
within the 14-day objection period for this Memorandum and Recommendation.
Defendant should especially focus on the fees incurred for discovery and briefing on
issues relevant to the tortious interference claim. If Defendant fails to provide a
declaration and evidence segregating fees, the Court recommends imposing an
across-the-board 40% reduction in the number of hours claimed by each attorney as
means of compensating Defendant for reasonable and necessary attorney’s fees
incurred only on the breach of contract claim or incurred in advancing both claims
jointly.
1. Defendant’s claimed rates are reasonable.
As stated above, there is a strong presumption that lodestar amount is
reasonable. Black v. SettlePou, P.C., 732 F.3d 492, 502 (5th Cir. 2013). The Court
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has accounted in the section above for the need to reduce hours to eliminate work
not related to the breach of contract claim.
Defendant seeks recovery based on rates of $675.00 per hour for Nelson
Mullins partner Kathryn Skagerbert; $525.00-$665.00 for associate John Ackely;
and $475.00 for associate Julia Giordiano. ECF 79. The Court finds that John
Ackely’s time should be billed at the rate at which the case was initiated, $525.00
per hour, because it appears that some of the work he performed could have been
performed by an associate at a lower billing rate. Otherwise, the rates proffered by
Defendant are reasonable for this type of work in the Houston region. As with the
segregation of fees issue, Defendant must submit a supplemental declaration
demonstrating the amount of fees billed by John Ackely at his initial rate of $525.00
per hour within the fourteen-day objection period.
III. Conclusion.
For the reasons stated above, the Court finds that Defendant is entitled to an
award of costs and attorney’s fees. However, Defendant has failed to segregate fees
as required. The Court therefore RECOMMENDS that Defendant’s Motion (ECF
78) be GRANTED IN PART. The Court will make a further recommendation as to
the amount of the fees after Defendant files supplemental evidence within 14 days
of entry of this Memorandum and Recommendation. If Defendant fails to do so, the
Court will recommend reducing the requested hours by 40% and applying a rate of
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$525.00 to the entirety of John Ackely’s time to arrive at a reasonable attorney’s fee
judgment.
The Clerk of the Court shall send copies of the memorandum and
recommendation to the respective parties, who will then have fourteen days to file
written objections, pursuant to 28 U.S.C. § 636(b)(1)(C). Failure to file written
objections within the time period provided will bar an aggrieved party from attacking
the factual findings and legal conclusions on appeal. Douglass v. United Servs. Auto.
Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc), superseded by statute on
other grounds.
Christina A. Bryan
United States Magistrate Judge
Signed on April 30, 2026, at Houston, Texas.
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