Deloney et al v. Chase et al

Filing 36

ORDER granting Plaintiffs' request for default judgment as to damages; granting in part and denying in part 31 Motion for Attorney Fees; granting in part and denying in part 35 Supplemental Motion for Attorney Fees. Signed by Honorable Susan O. Hickey on September 11, 2017. (mll)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
TEXARKANA DIVISION

JERRY DELONEY and
PEGGY DELONEY

V.

PLAINTIFFS

CASE NO. 4:15-CV-4104

DENNIS CHASE and
CHASEMASTER CORPORATION

DEFENDANTS
ORDER

Before the Court is Plaintiffs’ request for damages made in Plaintiffs’ Supplemental
Motion for Default Judgment as to Defendants Dennis Chase and Chasemaster Corporation (ECF
No. 30). Also before the Court are Plaintiffs’ Motion for Attorney’s Fees and Costs (ECF No. 31)
and Plaintiffs’ Supplemental Motion for Attorney’s Fees and Costs (ECF No. 35). The Court finds
these matters ripe for consideration.
I. BACKGROUND
In their Complaint, Plaintiffs originally named as Defendants (1) Dennis Chase, (2)
Chasemaster Corporation, (3) William Hallack, Jr., (4) Ronald Novack, Jr., and (5) Juli Anne
Novack. ECF No. 1, p. 1. Plaintiffs are residents of Arkansas. ECF No. 1, ¶ 1. All of the originally
named Defendants are residents of Louisiana. ECF No. 1, ¶¶ 2-6, 24. Defendant Dennis Chase was
served on February 4, 2016, but failed to respond or enter an appearance. ECF No. 6. Defendant
Chasemaster Corporation was served through its registered agent on February 8, 2016, but failed
to respond or enter an appearance. ECF No. 7. On April 28, 2016, the Court granted Plaintiffs’
motion to voluntarily dismiss Defendants Ronald Novack, Jr., and Juli Anne Novack, as Plaintiffs
claimed they were unable to perfect service upon the Novacks. ECF No. 19. Likewise, on August

30, 2016, the Court dismissed Defendant William Hallack, Jr., for lack of personal jurisdiction.
ECF No. 28.
Plaintiffs subsequently moved for default judgment on their breach-of-contract claim and
the Court entered default judgment on that claim against Defendants Chase and Chasemaster
Corporation on February 1, 2017. ECF No. 32. However, the Court’s grant of default judgment
was to liability only, as the Court determined that a damages hearing was necessary because,
although Plaintiffs had plead a breach of contract claim, they had not “provided the Court with
evidence establishing the terms and provisions of the contract at issue” so that the Court could
determine damages. ECF No. 32. The Court held an evidentiary damages hearing on May 26, 2017
(“hearing”). Plaintiffs attended that hearing and provided the Court with various exhibits they
claim establish the terms of their “investment agreement” with Defendants and show the amount
of damages to which they are entitled. Defendants did not appear at the hearing.
The Court has previously outlined the factual background, as alleged in the unanswered
Complaint, that gave rise to this matter:
In Plaintiffs’ Complaint, they assert that they are African-American poultry
farmers. ECF No. 1. They [state] that the Farm Service Agency (“FSA”), “an arm
of the United States Department of Agriculture (“USDA”)” failed to timely process
their loan applications and later denied their applications because they are AfricanAmerican, in violation of the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691, et
seq. ECF No. 1, ¶ 12. “On July 24, 2008, and as a result of the FSA’s discrimination,
[Plaintiffs] filed a pro se civil rights complaint with the Office of Adjudication of
the USDA.” ECF No. 1, ¶ 13. Defendant Dennis Chase, holding himself out as an
expert on FSA procedure and protocol, subsequently contacted Plaintiffs and began
“advising them regarding the FSA and how to proceed before the Office of
Adjudication.” ECF No. 1, ¶ 14. Plaintiffs later hired Defendant Chase, acting both
individually and through Defendant Chasemaster Corporation, to represent them
before the USDA. ECF No. 1, ¶¶ 15, 16. The USDA subsequently ruled in
Plaintiffs’ favor and awarded them $460,738 in damages. ECF No. 1, ¶ 17.
Plaintiffs gave Defendants Chase and Chasemaster Corporation a 40% fee of
$184,295. ECF No. 1, ¶ 19.
Defendant Chase also convinced Plaintiffs to allow him to invest, on their
behalf, $110,000 of their award at 7.25% interest. ECF No. 1, ¶ 20. Defendant
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Chase “also indicated that he would assign [Plaintiffs] a $200,000 mortgage as
collateral to secure their investment.” ECF No. 1, ¶ 20. Plaintiffs and Defendant
Chase entered an agreement in August of 2011 whereby Defendant Chase would
invest Plaintiffs’ $110,000 at 7.25% interest on their behalf and would make
monthly payments to Plaintiffs of $1,000. 1 ECF No. 1, ¶ 20. From September of
2011 to August of 2012, Plaintiffs received monthly payments of $1,000. ECF No.
1, ¶ 22. Defendant Chase held a mortgage on property owned by his daughter and
son-in-law and assigned that mortgage to Plaintiffs as collateral. ECF No. 1, ¶ 24.
Plaintiffs state that they have never seen the property and do not know the value of
the property. ECF No. 1, ¶ 25.
After the agreed upon monthly payments stopped, Plaintiffs demanded the
return of their $110,000. ECF No. 1, ¶ 25. In lieu of returning the $110,000,
Defendant Chase offered to deed the property owned by his daughter and son-inlaw to Plaintiffs. ECF No. 1, ¶ 25. A Deed in Lieu of Foreclosure was drafted and
sent to Plaintiffs. ECF No. 1, ¶ 26.
Plaintiffs filed their Complaint on November 3, 2015. ECF No. 1. As to
Defendants Dennis Chase and Chasemaster Corporation, Plaintiffs alleged causes
of action for: (1) breach of contract; (2) promissory estoppel; (3) unjust
enrichment/assumpsit; (4) conversion; (5) breach of fiduciary duty; and (6) fraud.
ECF No. 1.
ECF No. 32.
In the Court’s previous order granting default judgment on the issue of liability, the Court
noted that “Plaintiffs [had] not provided the Court with evidence establishing the terms and
provisions of the contract at issue,” and that a hearing to determine damages would be necessary.
Accordingly, the Court instructed Plaintiffs “to provide the Court with all relevant documentation
concerning the contract at issue including (1) the contract itself; (2) promissory notes assigned to
Plaintiffs; (3) mortgages Plaintiffs may hold as collateral for their investment and information
about the mortgaged property such as location and value; and (4) any other documentation showing
the amount of Plaintiffs’ damages.” In accordance with this direction, Plaintiffs introduced various

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Although the Court initially thought Plaintiffs contention was that Defendants Chasemaster Corporation and/or
Dennis Chase would make these payments, the Court may have been mistaken. Plaintiffs’ allegations do not state
which person or party would make these payments, but simply that “[f]rom September of 2011 through August of
2012, the Deloneys received $1,000 per month as a part of the investment agreement with Defendant DENNIS
CHASE.” ECF No. 1, ¶ 22.

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exhibits in the course of the hearing on damages that Plaintiffs contend establish the terms of the
“investment agreement” and otherwise show their damages.
II. DISCUSSION
A. Damages
The Court has now had the opportunity to review and evaluate the exhibits Plaintiffs
submitted at the hearing and finds that Plaintiffs have proven their damages to a reasonable degree
of certainty. “When a default judgment is entered on a claim for an ‘indefinite or uncertain amount
of damages . . . facts relating to the amount of damages . . . must be proved in a supplemental
hearing or proceeding.’” Am. Red Cross v. Cmty. Blood Ctr., 257 F.3d 859, 864 (8th Cir. 2001)
(quoting Everyday Learning Corp. v. Larson, 242 F.3d 815, 818 (8th Cir. 2001)). Further, actual
damages must be proven “to a reasonable degree of certainty.” Id.; United States Sec. & Exch.
Comm'n v. Markusen, 143 F. Supp. 3d 877, 887 (D. Minn. 2015).
Throughout this litigation, Plaintiffs have contended that they “entered into an investment
agreement with Defendants Dennis Chase and Chasemaster Corporation in August 2011” and that
“[p]ursuant to that agreement, Plaintiffs were to provide $110,000.00 to Chase and Chasemaster
Corporation, which those Defendants would invest on Plaintiffs’ behalf for a rate of return based
on a 7.25% interest rate.” ECF No. 30, ¶ 12. Plaintiffs further state that “[f]rom September 2011
through August 2012, Plaintiffs received $12,000 in monthly payments pursuant to the agreement
($1,000.00 per month).” ECF No. 30, ¶ 13. Plaintiffs originally requested a damages award of
$137,875.00. 2 ECF No. 30, ¶ 14. Plaintiffs justified this amount by stating:
Defendants’ breach of the investment agreement has caused Plaintiffs injury, in that
Plaintiffs have lost $110,000 plus the 7.25% return on investment promised (other
than the $12,000.00 received . . . prior to the breach). Specifically, from the onset
of the investment agreement to the date of this Motion (September 2011 through
September 2016), Plaintiffs should have received $39,875.00 in interest payments
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At the hearing, Plaintiffs’ counsel stated that he calculated this amount using simple interest.

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over those five years. Adjusting for the amount the Plaintiffs did receive, Plaintiffs
have lost $137,875.00 total (the $110,000.00 principal, plus the $27,875.00 in
interest Plaintiffs did not receive).
ECF No. 30, ¶ 14. At the hearing, Plaintiffs updated the amount they seek in damages to
$142,527.00 to reflect the payments they were owed along with interest that accumulated between
the filing of Plaintiffs’ Supplemental Motion for Default Judgment as to Defendants Dennis Chase
and Chasemaster Corporation (ECF No. 30) and the date of the hearing.
Upon reviewing the exhibits Plaintiffs submitted to the Court, the Court is satisfied that
Plaintiffs have proven their damages to a reasonable degree of certainty. Plaintiffs’ Exhibit Three
was presented to the Court by Plaintiffs’ counsel as “the package [Plaintiffs] were presented with.”
This exhibit clearly shows that Plaintiffs directed Hallack Law Firm, who held their funds in
escrow, to transfer $110,000 to Defendant Chasemaster Corporation. Furthermore, Plaintiffs’
Exhibit Three contains a promissory note that, although unexecuted, reflects the 7.25% interest
rate Plaintiffs have claimed throughout the litigation of this matter. Accordingly, the Court finds
that Plaintiffs are entitled to damages in the amount of $142,527.00, accounting for the
$110,000.00 they initially transferred to Defendants and the $32,527.00 in accumulated interest,
having subtracted the $12,000.00 of payments Plaintiffs initially received.
B. Attorney’s Fees and Costs
Plaintiffs have also filed Plaintiffs’ Motion for Attorney’s Fees and Costs (ECF No. 31),
and Plaintiffs’ Supplemental Motion for Attorney’s Fees and Costs (ECF No. 35).
In the present case, Plaintiffs have recovered solely on their breach-of-contract cause of
action. Ark. Code Ann. § 16-22-308 provides that:
In any civil action to recover on an open account, statement of account, account
stated, promissory note, bill, negotiable instrument, or contract relating to the
purchase or sale of goods, wares, or merchandise, or for labor or services, or breach
of contract, unless otherwise provided by law or the contract which is the subject
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matter of the action, the prevailing party may be allowed a reasonable attorney's fee
to be assessed by the court and collected as costs.
Ark. Code Ann. § 16-22-308. When breach-of-contract claims are advanced along with other
claims, “an award of attorney’s fees to the prevailing party is proper only when the action is based
primarily in contract.” Reed v. Smith Steel, Inc., 78 S.W.3d 118, 126 (Ark. Ct. App. 2002).
In the present case, Plaintiffs have sought recovery against Defendants Chase and
Chasemaster Corporation for (1) breach of contract; (2) promissory estoppel; (3) unjust
enrichment/assumpsit; (4) conversion; (5) breach of fiduciary duty; and (6) fraud. ECF No. 1.
However, Plaintiffs sought recovery under theories of promissory estoppel, unjust
enrichment/assumpsit, conversion, breach of fiduciary duty, and fraud “in the alternative.” ECF
No. 1, ¶¶ 34, 39, 41, 44, 48. Accordingly, the Court finds that this matter is based primarily in
contract. Therefore, an award of attorney’s fees is proper.
In determining the reasonableness of an attorney’s fee award, a “district court [is] required
to first calculate a lodestar, by multiplying the number of hours reasonably expended on litigation
by a reasonable hourly rate, and to then consider whether the lodestar amount should be reduced,
based on appropriate considerations.” Jones v. RK Enters. of Blytheville, Inc., 632 Fed. App’x.
306, 307 (8th Cir. 2016) (citing Hensley v. Eckerhart, 461 U.S. 424, 433-34 (1983)).

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“reasonable” hourly rate is usually the ordinary rate for similar work in the community where the
case has been litigated. Fish v. St. Cloud State Univ., 295 F.3d 849, 851 (8th Cir. 2002). The
United States Supreme Court has set forth twelve factors to be considered when making a lodestar
determination: (1) time and labor required; (2) novelty and difficulty of the questions; (3) skill
requisite to perform the legal service properly; (4) preclusion of other employment, due to
acceptance of case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time
limitations imposed by the client or the circumstances; (8) the amount involved and the results
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obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the
case; (11) the nature and length of the professional relationship with the client; and (12) awards in
similar cases. Hensley, 461 U.S. at 430 n.3. Although Plaintiffs have not discussed the majority
of these factors, they have cited case law in support of their measure of attorney’s fees. Plaintiffs
cite this Court’s previous decision in J & J Sports Prods., Inc. v. Montes, 4:14-CV-4115, ECF No.
39 (W.D. Ark. Apr. 12, 2016), to support their request that they be awarded fees at a rate of $350.00
per hour for attorney time and $175.00 per hour for paralegal time. ECF No. 35, ¶ 6.
Furthermore, pursuant to Local Rule 54.1 Plaintiffs have included an affidavit setting out
the time spent on the litigation and factual matters pertinent to the petition for attorney’s fees.
Plaintiffs claim that Plaintiffs’ counsel “has spent 40.9 hours of attorney time and 2.3 hours of
paralegal time pursuing Plaintiffs’ claims against Defendants Chase and Chasemaster
Corporation.” ECF No. 35, ¶ 5. Based on these calculations and the above-cited rates, Plaintiffs
seek a total amount of $14,612.50 in attorney’s fees to be assessed against Defendants Chase and
Chasemaster Corporation. ECF No. 35, ¶ 7.
Although the Court has granted attorney’s fees at the above-cited rates, J & J Sports Prods.,
Inc. v. Montes dealt with a situation where the complaint alleged a violation of 47 U.S.C. § 605;
Plaintiff’s counsel had practiced law for twenty-two years; and his practice “specialized in the civil
prosecution of commercial signal piracy claims on behalf of promoters and closed-circuit
distributors of major televised sporting events.” J & J Sports Prods., Inc., 4:14-CV-4115, ECF No.
39, p. 2. The present case does not concern such a specialized area of the law and Plaintiffs’ counsel
has not practiced law as long as counsel in J & J Sports Prods., Inc. Accordingly, the Court finds
that Plaintiffs’ measure of damages, based on the time needed to litigate this matter, the complexity
of the legal issues presented, and other factors cited above, is unreasonable.

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Under the instant circumstances, where Plaintiffs have prevailed by default judgment on a
breach-of-contract claim, the Court finds that a reasonable hourly rate for attorney’s time is
$200.00 per hour and a reasonable rate for paralegal’s time is $100.00 per hour. Furthermore, upon
review, the Court finds that 2.3 hours of paralegal time spent on this matter is reasonable.
Accordingly, Plaintiffs should be awarded $230.00 for the time Plaintiffs’ counsel’s paralegal
spent on this matter.
However, the Court finds Plaintiffs’ claim that this case required 40.9 hours of attorney
time to be unreasonable. As noted above, this matter was based on a breach-of-contract; Plaintiffs
prevailed by default judgment; and only one hearing was conducted. Likewise, Plaintiffs request
for attorney’s fees is solely based on the breach-of-contract cause of action, whereas some of the
time Plaintiffs’ counsel spent on this matter related, in part, to Plaintiffs’ other causes of action.
That being said, the Court notes the difficulty Plaintiffs had in serving Defendants due to
Defendants’ actions. Likewise, the Court recognizes the extra time required to seek extensions of
the service period and to effect service. Accordingly, the Court finds that Plaintiffs should be
awarded an amount commensurate to 20.5 hours of attorney time. Therefore, Plaintiffs are entitled
to recover $4,330.00 in attorney’s fees based on 20.5 hours of attorney time at a rate of $200.00
per hour and 2.3 hours of paralegal time at a rate of $100.00 per hour.
In regard to costs, Plaintiffs request $1,190.00, which includes the filing fee for this lawsuit
as well as the costs incurred in having Defendants served. The Court finds these costs reasonable
and that Plaintiffs are entitled to recover $1,190.00 in costs.
Accordingly, Plaintiffs shall recover $5,520.00 in attorney’s fees and costs.

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III. CONCLUSION
For the foregoing reasons, Plaintiffs’ request for default judgment as to damages is hereby
GRANTED. Further, the Court finds that Plaintiffs’ Motion for Attorney’s Fees and Costs (ECF
No. 31) and Plaintiffs’ Supplemental Motion for Attorney’s Fees and Costs (ECF No. 35) should
be and hereby are GRANTED IN PART and DENIED IN PART. Accordingly, Plaintiffs are
hereby awarded $142,527.00 in damages and $5,520.00 in attorney’s fees and costs. The Court
will enter a Judgment of even date in favor of Plaintiffs Jerry Deloney and Peggy Deloney and
against Defendants Dennis Chase and Chasemaster Corporation.
IT IS SO ORDERED, this 11th day of September, 2017.
/s/ Susan O. Hickey
Susan O. Hickey
United States District Judge

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