Trustees of the Central States, Southeast & Southwest Areas Pension Fund v. Golden Nugget, Inc. (697 F. Supp. 1538, 1988)

OPINION AND ORDER RE: POST-TRIAL MOTIONS AND AMENDED AND SUPPLEMENTAL JUDGMENTS

HAUK, Senior District Judge.

INTRODUCTION

Plaintiffs Trustees of the Central States, Southeast & Southwest Areas Pension Fund (the “Fund”) brought suit against defendants Golden Nugget, Inc., Clyde T. Turner (collectively “Nugget”) and The Palmieri Company (“Palmieri”) to resolve a dispute arising out of the Fund’s sale of certain promissory notes, through its agent Palmieri, to the Nugget, and the subsequent prepayment of the notes. The Fund’s Second Amended Complaint alleged breach of contract, breach of the covenant of good faith and fair dealing, fraud, common counts, civil violation of the Racketeering Influenced and Corrupt Organizations Act (“RICO”), and related equitable claims for reformation or rescission and restitution against the Nugget and Turner, and violation of the Employee Retirement Income Security Act (“ERISA”) and related state law claims against Palmieri. Nugget filed a counterclaim against the Fund for attorney’s fees. Palmieri filed a cross-claim against Nugget for indemnity, contribution and declaratory relief.

The Court dismissed before trial the Fund’s common counts and RICO claims against Nugget, and Palmieri’s cross-claim. After a 47-day jury trial, the Court granted directed verdicts and dismissed the Fund’s fraud and breach of the covenant of good faith and fair dealing claims against Nugget, all claims against Turner, and the Fund’s breach of contract and negligence claims against Palmieri. The breach of contract claim against Nugget and ERISA claim against Palmieri were submitted to the jury. The jury returned verdicts in favor of the Fund and against Nugget in the amount of $6,874,599 plus pre-judgment interest on the contract claim, and in favor of defendant Palmieri on the Fund’s ERISA claim. The Court found in favor of Nugget and against the Fund on the Fund’s equitable claims. Judgments were entered on the verdicts and on the findings of the Court.

Before the Court are four post-trial motions. First, the Fund moves the Court to amend the judgment against Nugget to increase and conform the amount of contract damages to the amount stipulated by the parties. Second, the Fund moves the Court to amend the judgment on its ERISA claim against Palmieri, asserting that the Court erred in submitting the ERISA claim to the jury, and that the Fund is entitled to judgment on the merits. Third, the Fund moves for an award of attorney’s fees and costs against Nugget. Finally, Palmieri moves for an award of attorney’s fees and costs against the Fund.

FACTS

Plaintiffs are trustees of a pension fund with assets valued at approximately $8 billion. The Fund is an “employee benefit plan” pursuant to ERISA, 29 U.S.C. § 1002(3), based in Chicago, Illinois. Golden Nugget is the proprietor of hotel-casinos in Nevada and New Jersey. Palmieri is an asset management firm which became an independent investment manager of substantial assets of the Fund in 1977.

In 1978, the United States Department of Labor commenced an action in the United States District Court for the Northern District of Illinois against the Fund’s then trustees to divest them of the authority to manage and control the Fund’s assets. The suit was settled in 1982 when the Fund entered into a Consent Decree with the Department of Labor. Pursuant to that Consent Decree and effective January 20, 1984, Morgan Stanley & Co. (“Morgan Stanley”) was appointed “Named Fiduciary” of the Fund, with complete authority to manage the Fund’s assets for a minimum of ten years. Morgan Stanley selected Palmieri as an ongoing real estate asset manager and allocated to it for management certain of the Fund’s real estate-related assets.

Among the assets allocated to Palmieri for management was a series of variable rate promissory notes (the “Notes”) issued by Trans-Sterling, Inc. (“Trans-Sterling”) and secured by first trust deeds on Trans-Sterling's Stardust and Fremont Hotel-Casinos in Las Vegas, Nevada. In October of 1984, the prevailing interest rate on the Notes was 13.52% and the outstanding principal balance was approximately $74 million. Payments of $550,000 were due on the Notes on a twice monthly basis, with full payment of any remaining principal and interest due on October 31, 1991. The Notes also contained due on sale clauses, pursuant to which the full unpaid principal and interest of the Notes became due and owing upon the sale of the underlying hotel-casinos.

In April, 1984, Morgan Stanley established an overall investment policy for the Fund which required disposition of certain of the Fund’s assets, including the Notes. However, in 1983 Trans-Sterling had lost its gaming license and had been ordered by the Nevada gaming authorities to sell the Stardust and Fremont. As a result of these events, the value of the Notes was diminished. Throughout 1984, Palmieri met with and made proposals to several potential buyers of the Notes, some of whom were also interested in purchasing the underlying hotel-casinos.

In mid-October of 1984, Palmieri began negotiations with Nugget for sale of the Notes. Negotiations were conducted principally by Julian Burke, Executive Vice-President of Palmieri, from the company’s Los Angeles office, and Clyde T. Turner, Executive Vice-President, Chief Financial Officer and Treasurer of Nugget. The parties discussed terms during one meeting in Palmieri’s Los Angeles office and a series of telephone conversations, and exchanged written proposals. On November 2, 1984, Burke and Turner signed a four-page letter agreement (the “Contract”) dated October 31, 1984, for Nugget’s purchase of the Notes. The Contract was drafted by Nugget’s Vice-President and General Counsel, Bruce Levin, and was set forth on Nugget letterhead.

The Contract provided for a purchase price of $58.6 million, which represented the present value of the twice-monthly $550,000 payments at a minimum of 11.5% interest, discounted to produce a minimum return to Golden Nugget of 20%. In addition, the Contract provided that Nugget would pay to the Fund 50% of Nugget’s return in excess of a minimum return of 20% on the occurrence of any one of three contingencies: if interest on the Notes were paid in excess of 11.5% (Paragraph 2 of the Contract), if Nugget sold the Notes to an unaffiliated third party (Paragraph 4 of the Contract), or if Nugget foreclosed on the deeds of trust securing payment of the Notes (Paragraph 4).

2. The purchase price for the Notes shall be approximately $58,600,000 (the “Price"), which GNI shall pay by wire transfer or equivalent cash funds at the closing. The price assumes that interest will be payable on the Notes at the rate of 11.5% per annum and that principal and interest are payable in semi-monthly installments of $550,000, due on the first and fifteenth of each month, with full payment of the balance of the Notes to occur on October 31, 1991 (the "Payments"). Accordingly, the Price shall represent the present value of the Payments (at an assumed annual interest rate of 11.5%) discounted to produce an annual return to GNI of 20% (the "Minimum Return"). If in any quarterly period following the closing, interest on the Notes is paid at an annual rate in excess of 11.5% to thereby produce an annual return to GNI in excess of the Minimum Return, GNI shall, within ten days following the expiration of any such quarter, pay to the Fund 50% of the present value at Closing of such excess ("Excess Payment”).

The closing on the Contract took place on November 7, 1984 in Las Vegas. Pursuant to a written agreement made at the closing, the parties created a collection account at Valley Bank of Nevada for the deposit of principal and interest payments made on the Notes. Under this November 7 agreement, the Fund held a security interest in the account. Withdrawals from the account could be made only upon the certification of a Nugget officer to the bank and Palmieri setting forth the calculation by which the proceeds of the Notes were being shared between the Fund and Golden Nugget.

On or about February 28, 1985, the Stardust and Fremont Hotel-Casinos, which secured the Notes, were sold. As required by the due on sale clauses in the Notes, the Notes were fully prepaid in the approximate face amount of $73.3 million, producing an immediate profit to Golden Nugget, above the 20% minimum return, in excess of $14 million.

Within one or two days of the sale, Nugget informed Palmieri that the Fund’s share of such prepayment was $111,476, which represented 50% of the interest received in excess of 11.5%, pursuant to Paragraph 2 of the Contract. Nugget withdrew from the collection account all proceeds from the sale of the Notes except the $111,-476 before Palmieri could submit a claim to Valley Bank for 50% of the $14 million profit. Palmieri promptly and emphatically communicated to Nugget its claim that the Fund was entitled to 50% of all proceeds in excess of Nugget’s 20% minimum return under Paragraphs 2 and 4 of the Contract. Nugget took the position that the Contract did not provide for equal sharing of principal and interest in the event of prepayment of the Notes and refused payment.

The Fund filed suit against Nugget and Turner on April 9, 1985. In its complaint the Fund alleged that Nugget represented to the Fund that the Contract included sharing of principal and interest in the event of prepayment of the Notes. Accordingly, the Fund asserted claims for breach of contract for failure to pay to the Fund 50% of the prepayment principal purportedly due under the contract, breach of the covenant of good faith and fair dealing and fraud for Nugget’s misrepresentation of the term providing for prepayment sharing and subsequent renunciation of such term, equitable relief in the form of reformation or rescission and restitution (arising from mistake or breach of fiduciary duty), unjust enrichment and the imposition of a constructive trust.

After restating its claims in an Amended Complaint, the Fund filed a Second Amended Complaint (“Complaint”) on October 25, 1985. In this Complaint the Fund added claims against Nugget for violation of RICO, 18 U.S.C. § 1962(b), and introduced claims against Palmieri for breach of its contract with Morgan Stanley, negligence and breach of its fiduciary duty under ERISA, 29 U.S.C. § 1104(a)(1). The Fund alleged Palmieri breached its ERISA duty by failing to ensure that the Contract clearly set forth that Nugget agreed to share with the Fund 50% of interest and principal above the minimum return in the event the Notes were prepaid. Nugget filed a counterclaim against the Fund for attorney’s fees pursuant to an attorney’s fees provision in the November 7, 1984 agreement. Palmieri asserted a cross-claim against Nugget for indemnity, contribution and declaratory relief. The Court dismissed the Fund’s common counts, RICO claims and Palmieri’s cross-claim before trial.

Prior to trial, the Court determined that the Contract was ambiguous and, consequently, permitted the parties at trial to introduce extrinsic evidence of its meaning with regard to sharing in the event of prepayment of the Notes. The Fund and Palmieri introduced a significant amount of evidence which supported their common position that Nugget did agree to share equally with the Fund its profits above the 20% minimum return in the event the Notes were prepaid. Such evidence included Pal-mieri employees’ interpretation of the written Contract itself, statements made by Nugget to Palmieri during negotiations, Palmieri employees’ contemporaneous notes of such conversations, and various memorandum reports made by Palmieri to Morgan Stanley at the time the Contract was signed, and during the interval between execution of the Contract and prepayment of the Notes. Moreover, the Fund and Palmieri introduced evidence that Turner, and Nugget’s President and CEO, Stephen A. Wynn, made statements during this interval to third parties — including a reporter who published the statements in various newspaper and magazine articles— which were consistent with an agreement to share equally with the Fund in the event of prepayment. Turner and Wynn denied having made such statements.

At the close of the Fund’s case in chief, it introduced an oral stipulation made between the Fund and Nugget that the amount of contract damages representing one half of Nugget’s prepayment profits above the minimum return was $6,936,-601.50. That is, the Fund and Nugget agreed that if the jury determined that Nugget breached the Contract by failing to share in prepayment, the amount owing to the Fund would be $6,936,601.50. This amount was supported by trial testimony of Gordon S. Gray, a Managing Partner of Morgan Stanley, and Exhibit 723-A, previously admitted into evidence.

In the Fund’s claims against Palmieri, it charged that Palmieri was negligent, breached its contract with Morgan Stanley and violated its fiduciary duties under ERISA by failing to make an agreement which clearly set forth the term for sharing in the event of prepayment. The Fund also advanced the theory that Palmieri violated such duties by failing to retain a security interest in the Notes. Palmieri consented to the collection account at Valley Bank by which Nugget could unilaterally withdraw the proceeds of prepayment, as occurred on or about February 28, 1985.

Palmieri averred that the Contract did include sharing in the event of prepayment. Hence, the imposition of liability against Nugget for breach of contract and award of 50% of Nugget's prepayment profit in excess of the 20% minimum return would exonerate Palmieri and make the Fund whole. Alternatively, Palmieri claimed that even if the Contract did not provide for prepayment sharing, the company did not violate its ERISA duties. Palmieri argued that because of the devaluation of the Notes, which resulted from Trans-Sterling’s problems with the IRS and Nevada Gaming Commission, the Fund received a fair market price for the Notes without the contingency for prepayment sharing. Had Nugget not agreed to share in the event of prepayment, Palmieri would have proceeded to sell the Notes to Nugget at the $58.6 million price because of the unavailability of other buyers and Morgan Stanley’s policy that the Notes be sold expeditiously. Both the Fund and Palmieri introduced evidence as to the value of the Notes prior to and on or about the October 31, 1984 date of their sale to Golden Nugget.

After the close of trial, the Court granted Nugget’s motion for a directed verdict and dismissed the Fund’s claims for fraud and breach of the covenant of good faith and fair dealing, finding that there was insufficient evidence in support of these claims to submit them to the jury. Similarly, the Court directed a verdict for defendant Turner on the Fund’s causes of action against him individually, for fraud and breach of fiduciary duty. In addition, the Court, sua sponte, directed a verdict and dismissed the Fund’s state law claims against Palmieri for breach of contract and negligence because they were preempted by ERISA. 29 U.S.C. § 1144(a).

On July 21, 1988, the Court instructed the jury and submitted to it the Fund’s claims for breach of contract against Nugget and violation of ERISA against Palmi-eri. The Court reserved for its decision the Fund’s equitable claims against Nugget and Nugget’s counterclaim for attorney’s fees.

On July 22, the jury stated by Jury Note Number 1, dated 2:30 p.m., that it had reached a unanimous verdict. After the parties and their respective counsel were summoned, the Court convened at approximately 3:45 p.m. and the jury rendered its verdicts. On the contract claim the jury found for the Fund and against Nugget and assessed damages in the sum of “the maximum amount allowable by law as stated in court instructions # 44 & # 45.” Instruction number 44 states, in pertinent part, “The measure of damages for [Nugget’s breach of contract], if you so find, is the detriment caused by the breach of an obligation to pay money, which detriment is deemed by law to be the amount due by the terms of the obligation, with interest thereon.” Instruction number 45 provides that the legal rate of interest in California is 7%. On the ERISA claim, the jury found in favor of defendant Palmieri and against the Fund and, accordingly, assessed no damages.

With regard to the contract claim against Nugget, the Court instructed the jury to reconsider its verdict and to reach a verdict which included a specific dollar amount. The jury then retired to the jury room at about 3:55 p.m. At approximately 4:20 p.m. the jury returned to render a second verdict on the contract claim against Nugget, at which time the first was stricken by the Court. In its second verdict, the jury assessed damages for the Fund against the Nugget on the contract claim “in the sum of $6,874,559.00 plus 7% in prejudgement (sic) interest, per annum, from '2/28/85.” This verdict and the verdict in favor of Palmieri on the Fund’s ERISA claim were then duly filed, on July 22, 1988, and judgments were entered on the verdicts on July 25.

On July 26, the Court held a hearing to announce its findings on the Fund’s equitable claims against Nugget. The Court granted judgment in favor of Nugget and dismissed both the Fund’s reformation and rescission claims. In addition, the' Court amended the judgment on the contract claim to include the amount of prejudgment interest designated by the jury verdict and judgment, which provided for 7% interest on the contract damages of $6,874,559.00 from February 28, 1985. The Court found the amount of prejudgment interest to be $1,637,463.43, for a total judgment on the verdict against Nugget of $8,512,022.43. A written order so amending the judgment entered July 25 on the contract claim was filed August 10, 1988 and entered on August 15.

On July 29, 1988, the Fund filed an application to amend the judgment on the contract claim against Nugget. In this motion, the Fund asserts that the jury reached the verdict of $6,874,559.00 by innocent and unintentional mistake, because the stipulated amount of contract damages was the higher figure of $6,936,601.50, and in its first, stricken verdict, the jury stated its intention to award the maximum amount of contract damages available by law. On August 4, the Fund filed a motion to amend or alter the judgment in favor of Palmieri on the Fund’s ERISA claim. The Fund in this motion charges that the Court, not the jury, should have determined the Fund’s claim that Palmieri violated its ERISA duties. Moreover, the Court should find in favor of the Fund on this claim and assess damages. The Fund also moves for an award of attorney’s fees and costs against Nugget, and Palmieri moves for attorney’s fees and costs against the Fund.

DISCUSSION

A. The Fund’s Motion to Amend the Judgment of Damages Against Golden Nugget

The Fund moves the Court to amend the judgment on contract damages against Nugget to increase the principal award from $6,874,559.00 to $6,936,60-1.50, and to award prejudgment interest on the greater amount. This motion is premised upon two interrelated factors. First, the Fund argues that the jury’s verdict of $6,874,559.00 was an unintended and inadvertant mistake. This is assertedly true in light of two facts: a) the Fund and Nugget stipulated to the higher figure of $6,936,601.50, and b) the jury’s first verdict on the contract claim, later stricken by the Court, stated expressly that it wished to award the maximum amount of damages permissible by law against Nugget on this claim. The Fund points out that the figure of $6,874,559.00 was contained at the bottom of Exhibit 394-A. In the roughly half-hour time period in which the jury converted its verdict for “the maximum amount” to the specific figure of $6,874,559.00, it adopted this amount rather than the stipulated amount listed in Exhibit 723-A. Second, the Fund avers that the Court has the power to so amend the judgment, to impose damages in an amount different than that returned by the jury, under Fed.R.Civ.P. 59(e), and relevant case, law, Mumma v. Reading Co., 247 F.Supp. 252 (E.D.Pa. 1965); Rodgers v. Conemaugh & Black Lick Railroad Co., 137 F.Supp. 467 (W.D. Pa.1956); Bauman v. Choctaw-Chickasaw Nations, 333 F.2d 785 (10th Cir.1964).

In opposition, Golden Nugget makes three arguments. First, it asserts that the Mumma, Rodgers and Bauman cases, supra, do not support the Fund’s contention that a court may utilize Rule 59(e) to modify a judgment so as to alter the amount of damages awarded in a jury verdict. Second, Nugget claims the oral stipulation that the amount of contract damages would be $6,936,601.50 was not properly presented to the jury in the Fund’s case-in-chief. Lastly, Nugget claims that the Fund waived its objection to the lower verdict of $6,874,559.00 by its failure to request a jury instruction as to the stipulated figure or bring to the Court’s attention the stipulated figure at the time the jury returned its first verdict for “the maximum amount available by law....” Nugget cites Arkla Exploration Co. v. Boren, 411 F.2d 879 (8th Cir.1969) and McCarthy v. Manson, 714 F.2d 234 (2d Cir.1983) in support of this waiver argument.

For a Court to amend a judgment so as to set aside a jury verdict and substitute its own finding of the proper amount of damages, it must first identify the source of its power to do so. Preliminarily, this Court is extremely reluctant under Rule 59(e) to disregard a jury verdict and substitute its own judgment as to the proper amount of damages which should be awarded, and should do so only in extraordinary circumstances. The question presented is not one in the nature of remittitur, to reduce an amount of damages but, because the Fund seeks an amount greater than the judgment entered on the jury verdict, is the functional equivalent of an additur motion —unavailable in Federal court, Dimick v. Schiedt, 293 U.S. 474, 486-88, 55 S.Ct. 296, 300-301, 79 L.Ed. 603 (1935).

Fed.R.Civ.P. 59(e) states, “A motion to alter or amend the judgment shall be served not later than 10 days after entry of the judgment.” While this rule itself provides little guidance, the case law is equally unhelpful. The cases cited by the Fund do not consider the situation presented here —a jury’s asserted mistake in reaching a damages award, inconsistent with a prior statement of intent to award a maximum permissible amount of damages, and different from the higher, stipulated amount between the parties. In Mumma v. Reading Co., 247 F.Supp. 252, 259-260 (E.D.Pa. 1965) and Rodgers v. Conemaugh & Black Lick Railroad Co., 137 F.Supp. 467, 470 (W.D.Pa.1956), the respective courts amended judgments in accordance with their decisions to set aside findings of contributory negligence on the part of the plaintiffs. In Bauman v. Choctaw-Chickasaw Nations, 333 F.2d 785, 789-90 (10th Cir.1964), the Court of Appeals held that the District Court, after a non-jury trial, erred by not finding a certain tract of land was owned by the appellant pursuant to a stipulation between the parties.

Alternatively, Nugget has not presented authority foreclosing the relief requested under Rule 59(e); nor is the Court aware of any cases which have held that a District Court lacks the power to amend a judgment entered on a verdict in order to conform the judgment to the perceived true intent of the jury, in conjunction with a stipulation. Therefore, the Court holds that it does possess the power under Rule 59(e) to amend the judgment if the facts of this case and the interests of justice so warrant. If the Court, after considering the stipulated damages amount of $6,936,601.50, together with the jury’s first verdict awarding the “maximum amount allowable,” finds that the jury must have made an honest and inadvertent mistake by reaching a verdict of $6,874,-559.00, the Court may amend the judgment to comport with the jury’s express intentions.

The parties stipulated orally during trial on June 28, 1988 to the figure $6,936,-601.50, referred to by the Fund’s counsel in Exhibit 723-A, and presented this amount to the jury on that date as the proper amount of contract damages available against Nugget. The jury’s first verdict stated its intent to award “the maximum amount allowable by law as stated in court instructions #44 & #45.” The Court instructed the jury to retire to the jury room to reconsider its verdict and return with a verdict which included a specific dollar amount. The jury did so in less than one half hour, although it had for consideration several hundred document exhibits, admitted into evidence and taken to the jury room, from which to determine a specific dollar amount.

The jury returned a second verdict of $6,874,559.00, an amount contained on the bottom of Exhibit 394-A, next to the description “Amount due to the Fund.” This document was a calculation made by Allan Lipsky, an employee of Palmieri, after learning that Nugget intended to share only excess interest after the Notes were prepaid. This figure was not adopted or sponsored by either the plaintiffs or defendants as the correct sum owed to the Fund on prepayment. Moreover, the $6,874,559.00 figure is different than the stipulated amount of $6,936,601.50 in Exhibit 723-A and, because less that the stipulated amount, it is inconsistent with the jury’s stated intent in its first verdict to award in contract damages against Nugget “the maximum amount available by law.” The combination of these factors leads the Court to the - inescapable conclusion that the jury, in its apparent desire to make an expedient quantification of its prior verdict awarding the “maximum amount” of damages, mistakenly determined Exhibit 394-A, rather than Exhibit 723-A, contained the correct amount of contract damages. The Nugget makes no argument to the contrary. Accordingly, the Court finds that the jury’s verdict of $6,874,559.00 in contract damages against Nugget was reached in error.

The Court also finds Nugget’s remaining arguments to be unpersuasive. Nugget claims the jury was free to disregard the stipulated amount because it was not properly presented to the jury. However, Nugget’s opposition papers quote only a portion of the record in this respect. The following colloquy of June 28, 1988 between the Court, the Fund’s counsel (Mr. Smaltz) and Nugget’s counsel (Mr. Kuh), in the presence of the jury, provides the complete picture:

Mr. Smaltz: Judge, in view of the stipulation, we reached off the record, we now rest.

The Court: In view of what situation (sic)?

Mr. Smaltz: The stipulation that we discussed.

The Court: Thank you. Which is?

Mr. Smaltz: That particular document, 723-A, is in evidence.

The Court: All right.

Mr. Smaltz: And that number — the number of $6,936,601.50, which is the balance — is in evidence.

Mr. Kuh: No problem, your honor.

The Court: Well, no problem. That is the money that the plaintiff claims, as I understand it. And everybody stipulates to that.

All right. Plaintiff rests.

Mr. Smaltz: Yes, sir.

Reporter’s Transcript at 6100.

Thus, the stipulation itself, the amount of contract damages to which the Fund and Nugget had agreed, and the correct exhibit number in which that sum was contained, were presented to the jury by the Fund. Nugget’s argument to the contrary is without merit.

Finally, Nugget’s waiver argument is unavailing. The Fund did not propose a jury instruction stating the stipulated amount of contract damages or refer to the stipulated amount after the jury returned either of its verdicts against Nugget. Yet the Fund filed its formal motion, titled “Application to Amend Judgment,” on July 29,1988, just four days after judgment was entered on the second verdict against Nugget on July 25. The motion complies not only with the 10-day requirement of Rule 59(e), supra, but appears otherwise to have been filed in a reasonably timely fashion in light of all the circumstances of this case.

For the foregoing reasons and in the interests of justice, the Court finds that the extraordinary circumstances of this case provide ample grounds for granting the relief requested by the Fund under Rule 59(e). The Fund’s application to amend the judgment is hereby granted. The judgment shall be amended to reflect the true intent of the jury to award contract damages in favor of the Fund and against Golden Nugget in the amount of $6,936,-601.50, plus prejudgment interest from February 28, 1985 to July 25, 1988. Prejudgment interest for this time period is $1,652,241.44. Therefore, under the amended judgment, the total damages to be awarded on the Fund’s contract claim against Nugget shall be $8,588,842.94.

B. The Fund’s Motion to Amend the Judgment on its ERISA Claim Against Palmieri

The Fund moves the Court under Rule 59(e), supra, to “Amend or Alter the Judgment” on its ERISA claim against Palmieri to find Palmieri liable to the Fund in the amount of $3,064,548.05, contrary to the jury’s finding of no liability on this claim. The Fund first submits that the Court stated during trial that it, not the jury, would determine whether Palmieri violated ERISA and caused damage to the Fund. Next, the Fund asserts that the Court erred by submitting the ERISA claim to the jury under recent cases in this circuit. See Nevill v. Shell Oil Co., 835 F.2d 209 (9th Cir.1987); Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir.), cert. denied, 474 U.S. 865, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985). As in its motion to amend the judgment of contract damages against Nugget, the Fund contends that Rule 59(e) provides the Court with the power to amend the judgment on the ERISA claim.

Finally, the Fund charges that a preponderance of the evidence compels the Court to find Palmieri breached its ERISA duties, 29 U.S.C. § 1104(a)(1), and the breach resulted in damages to the Fund in the amount of $3,064,548.05. The Fund cites in support of Palmieri’s liability trial testimony of Julian Burke, Palmieri’s Executive Vice-President and signatory to the Contract for sale of the Trans-Sterling Notes. The testimony purports to be Burke’s admissions that: a) in violation of the duty of a prudent investment manager, Palmieri signed the Contract for the sale of the Notes, which was ambiguous as to sharing in the event of prepayment, and b) Palmi-eri’s failure to retain a security interest in the Notes or insist on double signatures in the collection account at Valley Bank allowed Nugget to withdraw unilaterally the disputed Funds from the collection account.

The Court instructed the jury that lost investment profits were an available measure of damages on the ERISA claim, 29 U.S.C. 1109(a), Donovan v. Bierwirth, 754 F.2d 1049, 1056 (2d Cir.1985). In its breach of contract claim, the Fund could recover only 7% prejudgment interest against Golden Nugget. The Fund introduced testimony that during the period in controversy, it earned a compounded rate of approximately 16.8% per annum on its investments. Hence, if both Nugget and Palmieri were found to be liable to the Fund, Palmieri’s liability would be the amount of interest on the contract damages in excess of the 7% statutory rate available against Nugget up to a maximum of 16.8% — the difference in the two rates applied to the amount of contract damages. The Fund contends that this amount of approximately 9.8% of the stipulated contract damages amount of $6,939,601.50 is $3,064,548.05.

Palmieri opposes the motion on several theories. First, it contends that the Court properly submitted the ERISA claim to the jury, and was not precluded by the Nevill and Blau cases, supra. Alternatively, the Fund manifested its consent to have the jury decide the ERISA claim and waived the objection it now raises. Next, Palmieri submits that Rule 59(e) does not give the Court power to, in effect, reverse a jury verdict. Rather, the Fund is assertedly making a disguised motion for a judgment notwithstanding the verdict (“JNOV”), Fed. R.Civ.P. 50(b), without having made the required motion for a directed verdict at the close of evidence. Id. Finally, Palmi-eri submits that even if the Court could properly revisit the ERISA claim, the record supports the finding that Palmieri did not violate ERISA with regard to the Contract for sale of the Trans-Sterling Notes or, if it did, the Fund suffered no damage because of the breach.

Again, the Court must first establish that it has the power to grant the Fund’s extraordinary request to amend the judgment on the ERISA claim in its favor notwithstanding a contrary jury verdict. The Fund relies on Rule 59(e) and, as above, the language of the rule provides little assistance. The Fund cites two cases in support, White v. New Hampshire Department of Employment Security, 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982), and Miller v. Transamerican Press, Inc., 709 F.2d 524, 527 (9th Cir.1983). However, neither case concerned a Court’s implementation of Rule 59(e) to amend a judgment contrary to a jury verdict. The White case involved a post-judgment motion for attorney’s fees, while Miller involved an order denying a motion to compel deposition testimony. In contrast, many courts have discussed the importance of the Rule 50(b) requirement that a directed verdict motion must preceed a motion for JNOV, e.g., Lifshitz v. Walter Drake & Sons, Inc., 806 F.2d 1426, 1429 (9th Cir. 1986), and the concommitant impropriety of the use of Rule 59(e) to undermine a jury’s fact-finding role, see Abeshouse v. Ultragraphics, Inc., 754 F.2d 467, 473 (2d Cir. 1985); Robinson v. Watts Detective Agency, 685 F.2d 729, 742 (1st Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 728, 74 L.Ed.2d 953 (1983). To hold otherwise would convolute Rule 59(e) into a procedural artifice which would make jury verdicts meaningless and judgments nullities. Consequently, the Court has no power under Rule 59(e) to reconsider the merits of the Fund’s ERISA claim against Palmieri, decided in favor of Palmieri by the jury.

Fundamentally, the Fund’s position is that an ERISA claim can never be determined by a jury, but must always be decided by the trial judge. The ERISA statute itself is silent on the issue of a private plaintiff’s right to a jury trial. 29 U.S.C. § 1132. In Blau v. Del Monte Corp., 748 F.2d 1348, 1357 (9th Cir.1985), this circuit stated that there is no statutory or constitutional right to a jury trial in ERISA cases. In Blau, the Court of Appeals affirmed the District Court’s refusal to submit an ERISA claim to a jury where the plaintiff had failed to make a timely jury trial demand. The appellate court applied an abuse of discretion standard and held that the trial court’s denial of a jury trial in light of the untimeliness of the jury trial demand, coupled with the lack of any right to a jury trial on an ERISA claim, did not constitute an abuse of discretion. Id. In Nevill v. Shell Oil Co., 835 F.2d 209 (9th Cir.1987), the Court of Appeals again affirmed the trial court’s denial of a jury trial on the plaintiff’s ERISA claim. The appellate court repeated that there is no statutory or constitutional right to a jury trial under ERISA, citing Blau, supra. With little discussion, the court held that in light of Blau, the trial court’s denial of a jury trial on the ERISA claim was not an abuse of discretion. Nevill, 835 F.2d at 212-13.

Although Blau and Nevill set forth the settled law in this circuit that there exists no statutory or constitutional right to a jury trial of an ERISA claim, these cases are not dispositive. First, while they state that a plaintiff has no right to a jury trial on an ERISA claim, they reject by implication the argument that the Fund makes here — that an ERISA claim may never be properly submitted to a jury. Nether case begins to fashion such a rule explicity. Rather, implementation of an abuse of discretion standard for determining the propriety of the denial of a jury trial demand for an ERISA claim in both Blau and Nevill indicates that a trial court may, by consent of the parties, or even by fiat of the trial court (Fed.R.Civ.P. 39(b); Blau, supra, 748 F.2d at 1357), exercise its discretion in favor of submitting an ERISA claim to a jury. That is to say, when the Court of Appeals held the trial courts in Blau and Nevill did not abuse their discretion by denying plaintiffs’ jury trial demands, the court implicitly recognized the trial courts’ option to grant the demands and submit the ERISA claim in each case to the jury. By application of fundamental rules of logic, the Fund’s rigid position fails; the denial of a right to pursue a certain procedure does not preclude the permissive use of the procedure.

In addition, Fed.R.Civ.P. 39(c) provides in pertinent part, “In all actions not triable of right by a jury ... the court, with the consent of both parties, may order a trial with a jury whose verdict has the same effect as if trial by jury had been a matter of right.” As discussed infra, both the Fund and Palmieri consented to have the ERISA claim decided by the jury. Hence, under Rule 39(c), the Court, with the consent of the parties, properly submitted the Fund’s ERISA claim to the jury notwithstanding the fact that absent such consent, the Court was not compelled to do so under Blau and Nevill, supra. See, e.g., Whiting v. Jackson State University, 616 F.2d 116, 123 (5th Cir.1980). Accordingly, the Court did not err in submitting the Fund’s ERISA claim to the jury by consent of the parties.

The Fund contends, however, that the Court’s own error and reversal of its prior ruling supports this motion. On the fourth day of trial, May 13, 1988, the Court, during argument outside the presence of the jury, stated that it would decide the Fund’s ERISA claim, and not submit it to the jury. Reporter’s Transcript at 573-78. The Court made these statements during a discussion of whether ERISA preempted the Fund’s state law claims against Palmieri for breach of contract and negligence. Yet, further excerpts from the record indicate that despite its earlier pronouncements, the Court had not made a definitive and unequivocal ruling on this point, as indicated by this dialogue between the Court and counsel for Palmieri (Mr. Sharer):

Mr. Sharer: ... I want to say in response to what Mr. Smaltz said, the one thing I don’t want to see happen and the one thing that I believed in light of the stipulated pretrial order and the signature would not happen is I don’t want to see happen that I try this case to the jury and get a defense verdict from the jury and then have Mr. Smaltz assert that despite the defense verdict the Court can nonetheless look at the ERISA and—

The Court: Not to worry.

Mr. Sharer: Not to worry? Very well, your honor.

The Court: Because if he gets a verdict, he’s not going to get double damages. If he you (sic) get the verdict, he gets nothing.

Mr. Sharer: But if I get a defense verdict completely and let’s assume Mr. Kuh gets a defense verdict as well, or does not, under those circumstances if we assume the jury comes in with a total defense verdict, I don’t want to see Mr. Smaltz urging the Court should then consider ERISA.

The Court: That is why you are going to get a chance for opposition to his motion and then put in your own thoughts and I’ll look it all over.

Mr. Sharer: Very well.

Reporter’s Transcript at 581-821

The Court invited the parties to file legal memoranda on the questions of whether ERISA preempted the state claims and whether the ERISA claim could properly be submitted to the jury. The parties did not, however, submit papers on these issues, and the Court determined, sua sponte, and only after the close of all evidence, that ERISA did preempt the Fund’s state law claims against Palmieri. Therefore, The Fund’s position receives paltry, if any, support based on the Court’s statements that the ERISA claim would not be submitted to the jury.

Palmieri next urges that even if the Fund’s ERISA claim should not have been submitted to the jury, the Fund consented to the procedure and waived any objection thereto. In support of this argument, Pal-mieri submits a list of instances in which the Fund either manifested its assent for the jury to determine its ERISA claim or was silent on the point when a timely objection could and should have been raised. These include the Fund’s memorandum of contentions of fact and law pursuant to Local Rule 9; the Pre-Trial Conference Order; colloquy with the Court on May 13, supra; the Fund’s proposed jury instructions, which included instructions pertaining solely to the ERISA claim; the Fund’s proposed special interrogatories for the jury, which contained interrogatories directed specifically to the ERISA claim; the Fund’s failure to object at the time the Court directed a verdict for Palmieri on the Fund’s state law claims and announced the ERISA claim would be submitted to the jury; and throughout hearings on jury instructions.

The Fund responds that it at no time consented to have the Court submit the ERISA claim to the jury. It relied on the Court’s statements that the ERISA issue would be reserved for determination by the Court. And, until the Court dismissed the state claims against Palmieri as preempted, the Court did not indicate it would submit the ERISA claim to the jury and gave the Fund no opportunity to object.

The record belies these arguments. The pre-trial pleadings are entirely consistent with the Fund’s manifold and manifest assents to the jury’s determination of the ERISA claim against Palmieri. The colloquy on May 13, as quoted here, is equivocal on the question of whether the ERISA claim would be decided by the Court or the jury. In light of the apparent uncertainty in" the record, the Fund was obligated to more assertively state its position that the ERISA claim be decided by the Court. Moreover, the Fund’s claim that it relied on the Court’s statements on May 13 — that ERISA would not go to the jury — is inconsistent with the Fund’s subsequent submission of jury instructions on its ERISA claim. Finally, in stark contrast to the many instances in which the Fund expressed its agreement that the jury should decide the ERISA claim, the Fund did not state any objection to this procedure at any time between the Court’s announced decision to direct a verdict on the state claims and submit the ERISA claim to the jury— on July 14, 1988 — and the Court’s submission of the claim to the jury — on July 21— despite ample opportunity to do so. Therefore, the Court finds that even if the ERISA claim was improperly submitted to the jury, the Fund consented to the procedure and waived any objection by its failure to timely state its objection prior to the submission of this claim to the jury.

Finally, even if the Court erred by submitting the Fund’s ERISA claim to the jury and could amend the judgment under Rule 59(e) to impose liability on Palmieri, the evidence weighs preponderantly to the contrary. The Fund argues that Palmieri violated its fiduciary to duty to the Fund — not acting with the requisite care, skill, prudence, and diligence required of ERISA fiduciaries, 29 U.S.C. § 1104(a)(1) — in two ways.

First, Palmieri allegedly had a duty to set forth its agreement for sale of the Notes in a clear and unambiguous manner. The Fund contends that this duty was breached in light of the ruling of the Court and testimony of Palmieri’s Julian Burke— signatory of the Contract on behalf of the Fund — that the Contract was ambiguous on the question of whether Nugget would share principal and interest with the Fund in the event the Notes were prepaid.

Second, because the Contract provided that the Fund would share in payments on the Notes upon the occurrence of other contingencies explicitly stated in the Contract, Palmieri had a duty to adequately protect such contingent interests. The Fund cites testimony of Burke that the Fund gave up “significant protection” by permitting Nugget to maintain possession of the Notes without Palmieri’s retention of a security interest in them. The Fund contends that “adequate protection” would have included Palmieri’s retention of a security interest or joint control of the Notes, or the requirement of double signatures— Nugget’s and Palmieri’s — for withdrawals of funds from the collection account at Valley Bank.

Third, the Fund asserts that the amount of damages caused by Palmieri to the Fund is the amount of $3,064,548.05. Although damages for the full amount of the Fund’s half-share of prepayment, profits were assessed against Nugget, the Fund contends that it can only be made completely whole if it is awarded the total amount that would have been generated had that half-share been invested by the Fund in accordance with the Fund’s investment practices. The Court instructed the jury that it could award against Palmieri the Fund’s lost in-, vestment profits on the amount of compensatory damages caused by Palmieri’s breach. The Fund introduced evidence its lost investment profits were 16.8%. The Court limited interest on the contract claim against Nugget to the statutory prejudgment interest rate of 7%. Cal. Const. Art. XV, § 1; Cal.Civ.Code § 3302. Thus, the Fund seeks an amount of damages against Palmieri which is approximatedly 9.8% of the contract damages amount of $6,936,-601.50, supra, assertedly $3,064,548.05.

Palmieri first responds that the evidence viewed as a whole supports the conclusion that Palmieri did not breach its fiduciary duties under ERISA, with regard to either the clarity of the Contract on prepayment sharing or Palmieri’s agreement to the single-signature loan collection account. Second, Palmieri states in a two-pronged argument that, whether Palmieri violated ERISA or not, the Fund suffered no harm because of Palmieri’s actions with respect to sale of the Notes. Because the jury found Nugget breached the Contract and awarded the Fund damages plus interest, Palmieri did not violate ERISA inasmuch as the jury determined the Contract did include sharing in the event of prepayment. Nor, Palmieri contends, was the additional “lost profits” income of 16.8%- sufficiently proven at trial. Alternatively, Palmieri contends that even if the jury had returned a verdict for Golden Nugget — thereby implying that the Contract did not include sharing in the event of prepayment — then Palmieri made the only deal to which Nugget or any other of the limited number of buyers would have agreed. Consequently, Palmieri did not breach its ERISA duties by failing to make an agreement for sale of the Notes with sharing in the event of prepayment because neither Nugget nor other buyers with which Palmieri had been negotiating would have agreed to such a provision.

After consideration of the record as a whole the Court finds, as did the jury, that Palmieri did not breach its fiduciary duties under ERISA. The Fund’s scanty and incomplete excerpts drawn from fourteen days of Burke’s trial testimony cannot be found by any reasonable trier of fact to satisfy the onerous burden of the Fund’s request that the Court, in effect, reverse the jury verdict. Burke testified that his position was that the Contract did sufficiently set forth the agreement to share in the event of prepayment, and that use of the term “prepayment” itself was not necessary. This view was shared by the Fund’s named fiduciary, Morgan Stanley, as stated in testimony by Lynn Thurber, who monitored and served as Morgan Stanley’s liaison to Palmieri. The Fund itself, throughout the pendency of the case asserted that the Contract included sharing in the event of prepayment. Evidence of Nugget employees’ statements, including those made by Wynn and Turner to independent third parties, conceded such. And the jury so agreed. The fact that the Fund was compelled to bring suit to enforce the agreement does not, ipso facto, prove Palmieri’s breach of its fidiciary duties under ERISA. There is certainly no guaranty that, had the Contract been drafted in a more precise manner, this dispute would not have arisen.

Nor can the Court conclude that Palmieri’s agreement to the note collection account at Valley Bank constituted a breach of its fiduciary duties under ERISA. Burke testified that the issue first arose at the November 7, 1984 closing on the Contract. Although the Fund had expected to retain possession of the Notes, Nugget refused to close the deal unless the Fund surrendered possession. The decision to set up the note collection account was a compromise made between the parties in an effort to prevent this dispute from thwarting consummation of the Contract for Nugget’s purchase of the Notes. The Fund presented no testimony, by Morgan Stanley or others, that the collection account mechanism was unsatisfactory. In consideration of this evidence, the Court should not second-guess Palmieri’s decision to agree to the collection account and speculate as to not only what would have been a better procedure but also as to what arrangement Nugget would have agreed to. Palmieri was not required to make the very best deal it could, but just a prudent one, in light of all the circumstances of the case. In particular, Palmieri’s long and unsuccessful efforts to sell the Notes, coupled with Morgan Stanley’s investment policy for their expedient sale, must provide some guidance as to what was reasonably prudent on November 7, 1984. In sum, the Court finds that Palmieri’s agreement to the note collection account did not constitute a violation of its fiduciary duties under ERISA.

For all of the foregoing reasons, the Fund’s motion to amend or alter the judgment, in order to impose liability and damages against Palmieri under ERISA, is hereby denied.

C. The Fund’s Motion for Attorney’s Fees and Costs Against Golden Nugget

As previously stated, the Fund will be awarded judgment against Golden Nugget in the total amount of $8,588,842.94 on its claim for breach of contract. The Fund now applies for attorney’s fees and costs in the amounts of $2,000,247.00 and $287,-081.82, respectively, pursuant to a provision in the agreement executed at the closing of the sale of the Notes on November 7, 1984. Nugget opposes the Fund’s entitlement to fees and costs, and also objects to the specific amounts requested.

1. Entitlement to Attorney’s Fees

Paragraph 8 of the November 7 Agreement, signed by Clyde T. Turner, on behalf of Nugget, and Julian Burke, for Palmieri, states:

Attorney’s Fees. In the event legal proceedings are commenced to enforce or declare the rights or obligations of either party hereunder, or under the October 31, 1984 Agreement, the prevailing party in such legal proceedings shall be entitled to an award of reasonable attorney’s fees and costs of suit.

Nugget submits that the Fund is not the “prevailing party” in this action because the Fund prevailed against Nugget on only one of eleven claims, the other ten having been dismissed before trial (common counts and RICO claims), during trial (directed verdict on breach of the covenant of good faith and fair dealing and fraud claims) or decided in favor of Nugget and against the Fund by the Court (equitable claims for reformation and rescission). Nugget also argues that the Fund is not the “prevailing party” because the Fund’s recovery of more than $8.5 million is too small a percentage of the total recovery sought by the Fund in its Second Amended Complaint. In support of this position, Nugget cites two California cases, Kytasty v. Godwin, 102 Cal.App.3d 762, 162 Cal.Rptr. 556 (1980), and Nasser v. Superior Court, 156 Cal.App.3d 52, 202 Cal.Rptr. 552 (1984). Nugget also contends that the attorney’s fees provision in the November 7, 1984 agreement pertained only to the written agreements between the parties. In Nugget’s view, the jury was instructed as to both written and oral contracts between itself and Palmieri, on behalf of the Fund, and returned a general verdict which, Nugget argues, may have been based on an implicit finding that Nugget breached an oral contract rather than the October 81, 1988 written contract.

Since this is a diversity case, recovery of attorney’s fees is determined under state law. Diamond v. John Martin Co., 753 F.2d 1465, 1467 (9th Cir.1985). Here we are governed by California law, which permits a prevailing party to a contract containing a clause for an award of attorney’s fees and costs to the prevailing party in a dispute under the contract to recover such fees and costs. Cal.Civ.Code § 1717(a). In re Sparkman, 703 F.2d 1097, 1100 (9th Cir.1983). Paragraph 8 of the November 7, 1984 agreement is a paradigm of the type of clause contemplated by section 1717(a) and provides the basis for an award of fees to the Fund, if it is determined to be the prevailing party in this action.

Analysis of this issue must begin with the basic rule that to be deemed a prevailing party, the Fund need not have obtained all the relief sought in its Complaint against Golden Nugget. E.g., Sparkman, supra, 703 F.2d at 1100. In this action, the Fund sought in eleven causes of action against Nugget equitable relief, compensatory damages in excess of $18,000,000 and punitive damages in excess of $20,000,000. The Fund obtained a judgment for $8,588,842.94 in compensatory damages on its contract claim against Nugget; the remaining ten counts were disposed of in favor of Nugget before, during or after trial. Yet, the essence of the Fund’s suit remaining against Nugget was a contract action — what were the terms of the October 31, 1984 contract? Did the parties agree that if the Notes were prepaid, Nugget was obligated to share equally with the Fund principal and interest in excess of the minimum return? The jury answered this last question in the affirmative and awarded the maximum amount of damages available for the contract claim, in excess of $8.5 million.

The Court rejects Nugget’s position that a party who recovers less than the total relief requested is not a “prevailing party” and, therefore, precluded from recovering attorney's fees. In Kytasty v. Godwin, 102 Cal.App.3d 762, 162 Cal.Rptr. 556, (1980), the Court of Appeal summarily denied an award of attorney’s fees where certain defendants established at trial their right to a 60-foot wide easement, but the width of which was ordered by the court to be narrowed on remand. Citing no authority, the court stated that it was unable to establish a prevailing party and could not “in good conscience” mandate an award of attorney’s fees. Id. at 774, 162 Cal.Rptr. at 563.

In Nasser v. Superior Court, 156 Cal. App.3d 52, 202 Cal.Rptr. 552 (1984), the Court of Appeal denied a petition for a writ of mandate to compel the trial court to vacate its denial of attorney’s fees where the petitioner lessee successfully obtained a judgment validating his lease in the trial court, but at a rental fee higher than that requested in the action. The appellate court held that under these facts the trial court did not abuse its discretion in finding that petitioner was not the prevailing party. Id. at 59-60, 202 Cal.Rptr. at 556. The court stated that the trial court “ ‘ “is given wide discretion in determining which party has prevailed on its cause(s) of action.” ’ ” Id. at 59, 202 Cal.Rptr. at 556 (quoting Smith v. Krueger, 150 Cal.App.3d 752, 756-57, 198 Cal.Rptr. 174, 176 (1983)).

As held in Nasser, the Court here has broad discretion to determine whether the Fund is the “prevailing party” in this case. Necessarily, trial courts must determine whether a party seeking attorney’s fees is a prevailing party on a case by case basis. Neither Kytasty nor Nasser are factually similar to this action, or controlling. In both, the party seeking attorney’s fees prevailed in what were, essentially, declaratory relief actions, but obtained relief less favorable than that sought. Here, the Fund obtained full recovery on its contract claim, even though it received no recovery on its remaining claims against Nugget.

Nugget’s argument that the jury may have found Nugget breached an oral contract — under which there exists no entitlement to attorney’s fees — is equally unavailing, because it is clearly undercut by the Court’s instructions to the jury. It is true that the November 7, 1984 agreement providing for attorney’s fees refers only to resolution of disputes under that written agreement and the October 31, 1984, written contract. But, Nugget is incorrect in its assertion that the jury instructions permitted the jury to find Nugget breached an oral contract. Nugget cites Instruction No. 39, which directed the jury to consider statements and conduct of the parties, and Instruction No. 43, which directed the jury to determine the terms of the Contract from all the evidence in the case, not just the written agreement alone.

Pursuant to the Court’s ruling that the Contract was ambiguous, parole evidence was admitted to determine the terms of the written Contract, not to establish any separate or distinct oral agreements. This is made clear by a fair reading of the instructions. For example, Instruction No. 39 states, in relevant part, “To resolve the ambiguity you may consider the statements and actions of the persons who made and signed the letter agreement in order to determine what they intended the written agreement to mean.” (emphasis added). Instruction No. 41 states, in part, “You must consider what [the parties] said and did when they made and signed the written agreement, and determine what a reasonable person at that time would have understood to be the terms of the agreement.” (emphasis added). Therefore, consistent with the Court’s prior rulings, the jury was instructed only to determine the terms of the October 31, 1984 written contract in light of parol evidence. The jury was not instructed that it could find the existence and breach by Nugget of a separate, oral agreement. Consequently, the jury verdict was a finding that Nugget breached the written contract, entitling the Fund to attorney’s fees under the attorney’s fees clause of the November 7, 1984 agreement.

In view of the Fund’s full recovery on the contract claim, and since it seeks attorney’s fees and costs only as incurred with respect to that claim and issues common thereto, infra, the Court finds that the Fund is the prevailing party in this action. Accordingly, the Fund should recover attorney’s fees pursuant to the November 7, 1984 agreement in the amount determined below.

2. Amount of Fees

The Fund seeks $2,000,247 in fees, representing 9,278 hours of attorney time and 4,620.25 hours expended by paralegals. The amount of $68,854.50, included in the total amount of fees sought, is attributable to charges for law clerks, summer associates and litigation support personnel. In addition to the Fund’s present counsel, Morgan, Lewis & Bockius, the law firms of Hughes, Hubbard and Reed; Smaltz & Neeley; and Hahn, Cazier & Smaltz represented the Fund during the pendency of this case. The Fund seeks fees for work performed by all four firms.

As the starting point for analysis of a prevailing party’s application for fees, the Court ordinarily must multiply the number of hours reasonably spent on the case by a reasonable hourly rate, to reach the so-called “lodestar” amount. Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air, 478 U.S. 546, 564-66, 106 S.Ct. 3088, 3097-98, 92 L.Ed.2d 439 (1986); Patton v. County of Kings, 857 F.2d 1379, 1382 (9th Cir.1988); Southerland v. International Longshoremen’s and Ware-housement’s Union, Local 8, 845 F.2d 796, 800-801 (9th Cir.1988); Miller v. Los Ange-les County Board of Education, 827 F.2d 617, 621 (9th Cir.1987). A strong presumption exists that the lodestar is a reasonable fee. Patton, supra, 857 F.2d at 1382; Miller, 827 F.2d at 621. The burden falls on the applicant for fees to show by satisfactory evidence “that the requested rates are in line with those prevailing in the community for similar services of lawyers of reas