Custom Homes By Via LLC v. Bank of Oklahoma NA et al

Filing 172

ORDER granting Plaintiff's 134 Motion for Attorney Fees and Pre-Judgment Interest and awarding Plaintiff $304,739.00. ORDERED granting the 154 Motion for Leave to File Excess Pages. Signed by Senior Judge Frederick J Martone on 6/18/2014.(LFIG)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Custom Homes By Via LLC, et al.
Plaintiffs,

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vs.

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Bank of Oklahoma; Bank of Arizona,
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Defendants.
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No. CV-12-01017-PHX-FJM
ORDER

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The court has before it plaintiff’s motion for attorneys fees and prejudgment interest

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(doc. 134), the Bank’s response (doc. 143), and plaintiff’s reply (doc. 153). We also have

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before us plaintiff’s motion to exceed page limits (doc. 154), which is granted.

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This is an action arising out of a breach of a loan agreement between Defendant Bank

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of Oklahoma and plaintiff. We held on summary judgment that the Bank had breached its

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contract a first time by failing to fund a May 27, 2008 draw request. After trial to the court,

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we concluded that the Bank breached the loan agreement a second time by failing to extend

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the term of the loan as promised. We awarded plaintiff damages in the amount of

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$2,404,193.58. Plaintiff now moves for an award of attorney’s fees pursuant to A.R.S. § 12-

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341.01, and for prejudgment interest.

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Attorney’s Fees

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A court may award attorney’s fees under § 12-341.01(A) to the successful party in an

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action arising out of a contract. In deciding whether to award fees, we consider factors such

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as (1) whether the unsuccessful party's claim or defense was meritorious; (2) whether the

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litigation could have been avoided or settled; (3) whether assessing fees would cause extreme

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hardship; (4) whether the successful party prevailed with respect to all relief sought; (5)

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whether a novel legal question was raised; and (6) whether the award would discourage other

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parties from litigating tenable claims. Associated Indem. Corp. v. Warner, 143 Ariz. 567,

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570, 694 P.2d 1181, 1184 (1985). A court has wide discretion in awarding fees. A.R.S. §

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12-341.01. An award is made to "mitigate the burden of the expense of litigation" and "need

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not equal or relate to" the fees incurred. A.R.S. § 12-341.01(B).

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When litigation involves multiple claims we consider the “totality of the litigation”

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and the relative success of the parties. Schwartz v. Farmers Ins. Co., 166 Ariz. 33, 38, 800

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P.2d 20, 25 (Ct. App. 1990). It is clear that plaintiff is the prevailing party in this action. It

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was successful on its breach of contract and breach of the covenant of good faith and fair

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dealing claims–the primary causes of action in this litigation–and was awarded $2.4 million.

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Although the Bank challenges plaintiff’s prevailing party status because it was unsuccessful

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on its alternate tort theories of recovery and request for punitive damages, the claims in this

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case are not practicably severable. Each arose from the Bank’s promises and course of

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dealing with plaintiff. See Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 189, 673 P.2d

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927, 933 (Ct. App. 1983) (“Thus, where a party has accomplished the result sought in the

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litigation, fees should be awarded for time spent even on unsuccessful legal theories.”).

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Plaintiff was successful at both the motion and trial stages and was ultimately awarded $2.4

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million. Plaintiff is the prevailing party. The Bank’s argument that it is the prevailing party,

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Response at 6, is without merit and is but one example of the excessively adversarial nature

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of this case.

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Applying the Warner factors, the Bank had no meritorious defenses to the breach of

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contract claims. Many of the Bank’s other defenses lacked merit as well. It appears that,

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despite some effort by the parties, the litigation could not have been avoided. The Bank does

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not argue that an award of fees would cause any hardship. Plaintiff prevailed with respect

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to the majority of the relief sought. Although the legal questions presented were not novel,
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this was a complex contract dispute between a bank and a commercial borrower. An award

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in this case would not discourage other parties with tenable claims or defenses from

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litigating–in fact it would encourage borrowers to pursue meritorious claims. Each of the

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Warner factors falls in favor of an award of fees.

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Plaintiff’s counsel asserts that he worked 1,001.7 hours at an hourly rate of $300.00,

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for a total lodestar fee of $300,510.00. In addition, plaintiff’s counsel retained the services

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of Peter Greenfeld to assist in trial preparation and to serve as second chair during the trial.

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Plaintiff seeks fees for 160.6 hours incurred by Mr. Greenfeld at a rate of $225.00 per hour.

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Plaintiff requests a total fee award of $342,649.00, which includes 63.2 hours expended by

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a paralegal at $95.00 an hour.

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The Bank raises several challenges to the amount of requested fees, and plaintiff

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concedes that certain amounts were erroneously included in the fee request. First, plaintiff

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acknowledges that it should not be compensated for fees related to clerical tasks, particularly

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phone calls regarding deposition schedules. The fee request is accordingly reduced by

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$1,110.00. (See entries at 2/11, 2/13, 2/14, 2/18, and 3/10). Plaintiff also concedes that it

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incorrectly included fees charged for travel on 4/5/13. The fee request is reduced by

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$1,800.00.

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We reject the Bank’s argument that the fees incurred by Mr. Greenfeld’s attendance

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at trial were duplicative and excessive because he did not speak or enter an appearance. It

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is not unreasonable to have a second counsel at trial.

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Nevertheless, we agree with the Bank that other charges are excessive. For example,

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plaintiff’s counsel billed a total of 28.2 hours on 11/18/13. But there are only 24 hours in a

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day. Obviously this is excessive. He also billed 18.3 hours on 11/19/13 and 12/03/14.

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Billing 18 hours in a 24-hour period is not reasonable. Additionally, full-day block billing

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of 8 to 12.5 hours with a description of “prepare for trial” lacks sufficient detail and is

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excessive. Finally, 34 hours to prepare findings of fact and conclusions of law; 6.6 hours to

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prepare an unsuccessful motion to modify the scheduling order; and 62.5, 68.4 and 71.6

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hours to prepare its motion for summary judgment, response to the Bank’s motion for
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summary judgment, and reply, respectively, are excessive.

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accordingly reduced by $35,000.00 for excessiveness, duplication, and lack of detail.

The requested fees are

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We reject plaintiff’s request that we multiply its fees by a factor of 2.8. Plaintiff

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contends that it is entitled to an upward adjustment to the lodestar amount because of the risk

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counsel assumed in taking the case on a contingency basis, and the result and quality of

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services performed. There is no doubt that plaintiff obtained an excellent result and that

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counsel performed his services admirably.

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nonpayment should be reserved for exceptional cases.” Timmons v. City of Tucson, 171

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Ariz. 350, 357, 830 P.2d 871, 878 (Ct. App. 1991) (citing Pennsylvania v. Delaware Valley

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Citizens’ Council for Clear Air, 483 U.S. 711, 728, 107 S. Ct. 3078, 3088 (1987)). The risk

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of nonpayment in a contingency fee arrangement is not an exceptional circumstance. Geller

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v. Lesk, 230 Ariz. 624, 629, 285 P.3d 972, 977 (Ct. App. 2012); London v. Green Acres

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Trust, 159 Ariz. 136, 148, 765 P.2d 538, 550 (Ct. App. 1988) (citing Blum v. Stenson, 465

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U.S. 886, 899, 104 S. Ct. 1541, 1549 (1984)). The fee statute itself provides that, while the

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award need not equal or relate to the attorney fees actually paid or contracted, “the award

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may not exceed the amount paid or agreed to be paid.” A.R.S. § 12-341.01(B). The fee

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agreement between plaintiff and its lawyer provides that “[i]n the event of an award of

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attorney’s fees on Client’s behalf, [counsel] shall claim fees at the his customary rate of

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$300.00 per hour.” (doc. 134-1 at 3). By requesting a 2.8 multiplier, plaintiff seeks an award

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that would nearly triple its lawyer’s agreed hourly rate.

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However, “enhancement for the risk of

Prejudgment Interest

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We grant plaintiff’s claim for prejudgment interest. We are not persuaded by the

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Bank’s argument that the claim for prejudgment interest was waived. Plaintiff included a

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request for prejudgment interest in its Proposed Findings of Facts and Conclusions of Law

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(doc. 127 at 6). We construe the portion of the current motion seeking prejudgment interest

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as a timely Rule 59(e), Fed. R. Civ. P., motion to alter or amend the judgment. See

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Osterneck v. Ernst & Whinney, 489 U.S. 169, 175 & n.3, 109 S. Ct. 987, 992 & n.3 (1989)

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(holding that a postjudgment motion for discretionary prejudgment interest falls under Rule
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59(e) and suggesting in dicta the same is true for mandatory prejudgment interest) ; McCalla

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v. Royal MacCabees Life Ins., 369 F.3d 1128, 1130-32 (9th Cir. 2004) (applying Osterneck

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and Rule 59(e) to a postjudgment motion for mandatory prejudgment interest).

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Under Arizona law, prejudgment interest is awarded as a matter of right on liquidated

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claims. John C. Lincoln Hosp. & Health Corp. v. Maricopa County, 208 Ariz. 532, 542, 96

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P.3d 530, 540 (Ct. App. 2004). A claim is “liquidated” when “the evidence of damages

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furnished data which, if believed, makes it possible to compute the amount of damages with

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exactness, without reliance upon opinion or discretion.” Banner Realty, Inc. v. Turek, 113

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Ariz. 62, 64-65, 546 P.2d 798, 800-01 (1976).

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Here, the amount of damages was based upon the sale price of the collateral at

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foreclosure, plus the stipulated interest payments and loan fees. Each of these amounts was

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possible to compute with exactness, without reliance upon opinion or discretion.

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Accordingly, pursuant to A.R.S. § 44-1201(B) and (F), plaintiff is entitled to prejudgment

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interest at the rate of 4.25% from the date of foreclosure on the collateral–December 31,

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2009–until the date judgment was entered. See Motion, ex. D.
Conclusion

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IT IS ORDERED GRANTING plaintiff’s motion for attorney’s fees (doc. 134) and

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awarding fees to plaintiff in the amount of $304,739.00
IT IS ORDERED GRANTING plaintiff’s motion for pre-judgment interest (doc.

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134).

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IT IS ORDERED GRANTING plaintiff’s motion to exceed page limit (doc 154).

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DATED this 18th day of June, 2014.

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