FNB Bank v. Park National Corporation et al
ORDER denying 115 Motion for Partial Summary Judgment by SE Property Holdings, LLC. Signed by Chief Judge William H. Steele on 12/27/2013. copies to parties. (sdb)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
PARK NATIONAL CORPORATION, )
CIVIL ACTION 13-0064-WS-C
This matter is before the Court on the motion of defendant and
counterclaim plaintiff SE Property Holdings, LLC (“SEPH”) for partial summary
judgment on Count One of its counterclaim. (Doc. 115). The plaintiff and SEPH
have filed briefs and evidentiary materials in support of their respective positions,
(Docs. 115-16, 138-39, 152), and the motion is ripe for resolution.
The background of this litigation is set forth in other orders and will not be
repeated here. Suffice it to say that SEPH’s predecessor (“Vision”) sold the
plaintiff a 100% participation interest in a loan (“the Loan”) to Marine Park, LLC
(“Marine”), pursuant to a participation agreement (“the Agreement”). Marine
defaulted, and Vision filed suit against Marine and the guarantors. Count One of
SEPH’s counterclaim asserts that the plaintiff breached the Agreement by not
paying its share of expenses incurred in “foreclosing on the Collateral and
instituting and aggressively pursuing litigation against the Borrower and
Guarantors in connection with the Loan.” (Doc. 51 at 39). Count One identifies
the amount of legal fees and expenses that Vision and/or SEPH “incurred in the
litigation against the Borrower and the Guarantors through January 31, 2013 [as]
$272,797.20.” (Id.). The instant motion seeks partial summary judgment in this
Summary judgment should be granted only if “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). The party seeking summary judgment bears “the initial
burden to show the district court, by reference to materials on file, that there are no
genuine issues of material fact that should be decided at trial.” Clark v. Coats &
Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). The moving party may meet its
burden in either of two ways: (1) by “negating an element of the non-moving
party’s claim”; or (2) by “point[ing] to materials on file that demonstrate that the
party bearing the burden of proof at trial will not be able to meet that burden.” Id.
“Even after Celotex it is never enough simply to state that the non-moving party
cannot meet its burden at trial.” Id.; accord Mullins v. Crowell, 228 F.3d 1305,
1313 (11th Cir. 2000); Sammons v. Taylor, 967 F.2d 1533, 1538 (11th Cir. 1992).
“When the moving party has the burden of proof at trial, that party must
show affirmatively the absence of a genuine issue of material fact: it must support
its motion with credible evidence ... that would entitle it to a directed verdict if not
controverted at trial. [citation omitted] In other words, the moving party must
show that, on all the essential elements of its case on which it bears the burden of
proof, no reasonable jury could find for the nonmoving party.” United States v.
Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991) (en banc)
(emphasis in original); accord Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115
(11th Cir. 1993).
“If the party moving for summary judgment fails to discharge the initial
burden, then the motion must be denied and the court need not consider what, if
any, showing the non-movant has made.” Fitzpatrick, 2 F.3d at 1116; accord
Mullins, 228 F.3d at 1313; Clark, 929 F.2d at 608.
“If, however, the movant carries the initial summary judgment burden ...,
the responsibility then devolves upon the non-movant to show the existence of a
genuine issue of material fact.” Fitzpatrick, 2 F.3d at 1116. “If the nonmoving
party fails to make ‘a sufficient showing on an essential element of her case with
respect to which she has the burden of proof,’ the moving party is entitled to
summary judgment.” Clark, 929 F.2d at 608 (quoting Celotex Corp. v. Catrett,
477 U.S. 317 (1986)) (footnote omitted); see also Fed. R. Civ. P. 56(e)(2) (“If a
party fails to properly support an assertion of fact or fails to properly address
another party’s assertion of fact as required by Rule 56(c), the court may …
consider the fact undisputed for purposes of the motion ….”).
In deciding a motion for summary judgment, “[t]he evidence, and all
reasonable inferences, must be viewed in the light most favorable to the
nonmovant ….” McCormick v. City of Fort Lauderdale, 333 F.3d 1234, 1243
(11th Cir. 2003).
There is no burden on the Court to identify unreferenced evidence
supporting a party’s position.1 Accordingly, the Court limits its review to the
exhibits, and to the specific portions of the exhibits, to which the parties have
expressly cited. Likewise, “[t]here is no burden upon the district court to distill
every potential argument that could be made based upon the materials before it on
summary judgment,” Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599
(11th Cir. 1995), and the Court accordingly limits its review to those arguments the
parties have expressly advanced.
Section 9 of the Agreement provides in pertinent part as follows:
Participating Bank shall promptly remit to Originating Bank, upon
Fed. R. Civ. P. 56(c)(3) (“The court need consider only the cited materials, but it
may consider other materials in the record.”); accord Adler v. Wal-Mart Stores, Inc., 144
F.3d 664, 672 (10th Cir. 1998) (“The district court has discretion to go beyond the
referenced portions of these [summary judgment] materials, but is not required to do
request, its proportionate share of approved, commercially reasonable
expenses incurred by Originating Bank in connection with the Loan
which are not expenses of general overhead of Originating Bank, but
are the types of expenses which: (a) Participating Bank herein agrees
to pay, or (b) are a logical consequence of approved action taken by
Originating Bank, including, without limitation, approved action in
response to default under any one or more of the Loan Documents
and are not the result of Originating Bank’s negligence, willful
misconduct or material breach.
(Doc. 130, Exhibit A at 5, § 9.a (emphasis added)).
According to the plaintiff, (Doc. 138 at 7), there are four requirements for
an award of attorney’s fees and expenses2 under Section 9.a: (1) that the fees and
expenses are a “logical consequence of approved action taken … in response to
default”; (2) that they “are not the result of [Vision’s] negligence, willful
misconduct or material breach”; (3) that they are “commercially reasonable”; and
(4) that they are “approved,” which the plaintiff construes to mean, formally
approved by the plaintiff, after being incurred and presented to the plaintiff but
before being paid by Vision. (Id.).
SEPH accepts the first three elements but argues that the fourth does not
exist. Instead, it says, an expense that is a logical consequence of approved action
is thereby an “approved … expense” under Section 9.a. (Doc. 152 at 3).
Although SEPH’s construction seems more plausible, the Court need not
definitively resolve the issue, because it is clear that SEPH has not met its burden
as to the three elements it agrees must be satisfied.
Pursuant to the Agreement, Vision “shall, subject to the provisions of this
Agreement, retain all rights with respect to enforcement, collection, and
administration of the Loan and the security underlying the Loan therefore [sic] in
accordance with the terms of this Agreement.” (Doc. 130, Exhibit A at 8, § 16.c).
Because a post-default decision to sue the borrower and/or guarantors, as well as a
decision to proceed against the collateral, must be made or approved by the
The plaintiff does not dispute that “expenses” under Section 9.a include
plaintiff, (id. at 9, § 16.e), it can be assumed that the plaintiff approved Vision’s
action in suing Marine and the guarantors. Thus, the fees and expenses incurred in
connection with suing Marine and the guarantors presumably represent expenses
that are a “logical consequence of approved action.”
But these are not the only fees and expenses for which SEPH seeks
reimbursement. There is evidence: (1) that Vision also sued the borrower and
guarantors on various loans to Bama Bayou, LLC (“Bama Bayou”), in which loans
the plaintiff had no interest; (2) that the cases were consolidated; (3) that the
defendants in those actions filed counterclaims asserting that Vision’s alleged
misconduct – most of which occurred in connection with the Bama Bayou loans
and/or other Marine loans in which the plaintiff had no interest – had cost the
counterclaim plaintiffs over $21 million; (4) that the counterclaim plaintiffs sued
Vision’s parent (“Park”) as well; and (5) that the plaintiff herein was named a
counterclaim defendant in that action only because it was a necessary party to the
sixth counterclaim, which sought an order setting aside various foreclosure deeds,
including the one involving the collateral for the Loan. The plaintiff
understandably objects to being asked to pay fees and expenses incurred by Vision
and/or SEPH to recover on other loans and in defending counterclaims to protect
their own interests and those of Park.3
SEPH’s way of dealing with the interwoven nature of the fees and expenses
is to assign the plaintiff responsibility for 25% of those fees and expenses, on the
theory that its $5 million participation interest represents 25% of the total funds
that Vision loaned to Marine and Bama Bayou. (Baggett Affidavit, Exhibit B).4
But SEPH has done nothing to show that this crude device even remotely reflects
According to the plaintiff (which has seen the billing entries), SEPH is seeking
reimbursement of legal expenses incurred on behalf of Park. (Doc. 138 at 3 n.1).
SEPH’s barebones motion does not acknowledge the complicated nature of the
underlying litigation or explain SEPH’s rationale for the $272,797.20 figure. The Court
should not have had to rely on the plaintiff to bring these matters to light.
reality, much less that it does so with whatever degree of precision Section 9.a
requires. It has thus failed to meet its burden of showing that no reasonable jury
could find other than that the fees and expenses it seeks are, in full, a logical
consequence of the approved action of suing Marine and the guarantors to recover
the indebtedness on the single Loan in which the plaintiff is interested.
SEPH argues that its fees and expenses incurred in defending itself, and
Park, from eight-figure counterclaims are reimbursable – not just in part but in toto
– because Section 9.a provides for reimbursement of expenses “sustained in
connection with the Loan.”5 (Doc. 152 at 5-6). Of course, the counterclaims
focus in large part on Vision’s conduct independent of the Loan, conduct in
connection only with other loans to which the plaintiff is a stranger. But even as
to those counterclaims having some connection with the Loan, Section 9.a is not
nearly so broad as SEPH paints it. That provision defines expenses “in connection
with the Loan” as being limited to those expenses: (1) that the plaintiff, within the
Agreement itself, agreed to pay (which is not alleged); or (2) that are the logical
consequence of approved action. There has been no suggestion that the plaintiff
approved of Vision engaging in the misconduct of which the counterclaims accuse
it, no suggestion that the circumstances in any way fit the counterclaims within the
narrow bounds of Section 9.a.
SEPH argues that Alabama law (by which the Agreement is governed)
permits recovery of fees and expenses incurred to defend against claims asserted
by Marine and the guarantors to avoid their contractual obligations. (Doc. 152 at
6). The question would seem to be one of contract construction rather than
Alabama law but, in any event, the Court need not resolve the issue, since even a
resolution favorable to SEPH would not establish that the $272,797.20 it seeks to
recover is the appropriate figure.
SEPH appears to concede it cannot recover fees and expenses incurred in
pursuing its own claims on the other loans.
As noted, the plaintiff need not reimburse SEPH for fees and expenses
incurred as a result of Vision’s negligence, willful misconduct or material breach.
As SEPH concedes, (Doc. 152 at 7), the counterclaims in the underlying litigation
encompass allegations of this quality. However, SEPH suggests that, because
those allegations remain unproved, the plaintiff can avoid paying those expenses
only by proving that Vision’s conduct made the basis of the counterclaims was in
fact negligent. (Id.). SEPH has placed the shoe on the wrong foot; it is SEPH’s
burden to show that it is entitled to reimbursement, not on the plaintiff to show it
As to the commercial reasonableness of the requested fees and expenses,
SEPH relies exclusively on the unadorned affidavit of its vice-president that he is
“familiar with the rates, fees and expenses charged for and in connection with the
performance of legal services in Mobile and Baldwin Counties in the State of
Alabama” and that “[i]t is [his] opinion that the rates, fees and expenses incurred
were reasonable and necessary in response to default on the loan by Marine Park,
L.L.C.” (Baumeister Affidavit, ¶¶11-12). SEPH is an Ohio entity, and
Baumeister executed his affidavit in Ohio. SEPH has produced no evidence that
Baumeister is an attorney or that he has ever even been to south Alabama, much
less that he possesses the necessary degree of familiarity with area legal billing
rates and practices that would form a necessary predicate to his expression of a
legally relevant opinion.7 Indeed, there is no evidence that he has even reviewed
counsel’s billing statements – which have not been provided to the Court, either.
It appears that SEPH has taken a wrong turn within the Agreement, because it
quotes a portion of Section 9.a that addresses the distribution of “losses,” not the portion
at issue here, which addresses the distribution of “expenses.”
Baumeister professes familiarity only with rates, fees and expenses for “the
performance of legal services” generally, not for cases of this type. Nor has he shown
that his familiarity extends beyond the underlying litigation, which is far too small a
sample to support his opinion. And with no evidence he is an attorney, it is doubtful his
opinion could be considered even were he to overcome the other deficiencies in his
It is difficult to imagine a less satisfactory showing of the reasonableness of
requested fees and expenses.
The plaintiff points out all these problems and adds that SEPH has failed to
justify its requested fees by resort to the factor analysis employed by Alabama
courts in making awards under contractual fee provisions. (Doc. 138 at 11-12).8
SEPH’s remarkable response is that its only burden is to throw out a figure it
demands to be paid, with it then being the plaintiff’s burden to invoke these
factors and satisfy the Court that they justify a reduction in the proposed fees.
(Doc. 152 at 8). It is SEPH’s burden, however, to prove all the elements of its
claim, including the reasonableness of its requested fees and expenses, and it
cannot meet that burden by ignoring the law under which reasonableness must be
For the reasons set forth above, SEPH’s motion for partial summary
judgment is denied.
DONE and ORDERED this 27th day of December, 2013.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
See, e.g., Huntley v. Regions Bank, 807 So. 2d 512, 518 (Ala. 2001).
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