Farmer v. Banco Popular of North America
Filing
222
ORDER granting in part and denying in part 215 Banco Popular North Americas Motion for Attorneys Fees and Costs. Pursuant to the 28 U.S.C. § 1927 and my inherent powers, Banco is awarded attorney fees in the amount of $41,461.76 and costs in the amount of $11,617.77. Denying as moot 203 the Renewed Motion for Rule to Show Cause, For Order Directing Parties Sign the Settlement Agreement, and for Attorneys Fees; It is FURTHER ORDERED that the Clerk of the Court shall issue a judgment forthwith and close this case, by Judge Wiley Y. Daniel on 9/16/2014.(evana, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 11-cv-01268-WYD-MEH
GEORGE FARMER (a/k/a GEORGE L. FARMER),
Plaintiff,
v.
BANCO POPULAR OF NORTH AMERICA;
JOHN DOES 1-100,
Defendants.
ORDER
I.
INTRODUCTION AND BACKGROUND
This matter is before me on Banco Popular North America’s Motion for Attorneys’
Fees and Costs (ECF No. 215). Defendant Banco Popular (“Banco”) moves for its
reasonable attorney fees and costs pursuant to 27 U.S.C. § 1927 and the Court’s
inherent authority to impose sanctions. On May 15, 2014, I held a hearing on the
motion. Banco seeks attorney fees in the amount of $56,944.38 and costs in the
amount of $11,617.77, representing amounts incurred from July 2, 2012, the date the
settlement agreement was emailed to Plaintiff Farmer, through May 15, 2014, the date
of the most recent hearing. For the reasons stated below, Banco’s motion is granted in
part and denied in part. Banco is awarded attorney fees and costs, but I reduce the
amount of requested fees.
This matter has a complicated and tortured history that has been set forth in
numerous prior orders. On February 21, 2014, the Tenth Circuit Court of Appeals
issued a written opinion affirming my judgment and denying all appellate relief sought by
Farmer. The following succinct yet complete background is taken from the Tenth
Circuit’s Order and Judgment:
In 2001, Farmer's father obtained a $150,000 home equity line of
credit (HELOC) secured by a house in New Jersey, one block from the
ocean. Farmer's father died in 2002, and Farmer was the sole heir and
executor of his father's estate. After his father died and until 2010, Farmer
wrote a series of checks to himself against the HELOC, allegedly in his
capacity as executor and to reimburse himself for maintenance costs he
paid on the property securing the HELOC. Farmer also made some
payments towards the HELOC, but at the time he filed the case
underlying this appeal, there was an outstanding balance of approximately
$144,000.
In 2010, Farmer wrote a $5,000 check to himself against the
HELOC and deposited it into his Wells Fargo account. Banco Popular
initially honored the check, but after an investigation into past-due
payments, the bank determined that Farmer was accessing his deceased
father's HELOC and allegedly threatened Farmer with charges of criminal
fraud if he did not pay off the full amount owed on the HELOC. Banco
Popular also closed the HELOC and returned the $5,000 check, allegedly
informing Wells Fargo that the check was counterfeit. This caused Wells
Fargo to close Farmer's account and his daughter's account.
Farmer then filed an action against Banco Popular in Colorado
state court, alleging twelve claims for relief. He sought damages and a
judgment that the HELOC be voided. Banco Popular removed the action
to federal court and initiated foreclosure proceedings on the New Jersey
property. The parties had multiple settlement conferences with Magistrate
Judge Hegarty, who held a hearing on June 15, 2012, and placed the
terms of a settlement agreement on the record. The relevant terms were
that Banco Popular would pay Farmer $30,000 and forgive some principal,
unpaid interest, and attorney's fees. Farmer would give Banco Popular a
deed in lieu of foreclosure that the bank would hold in escrow pending
Farmer's repayment of $137,380.94 to Banco Popular, which was to be
funded by either the sale of the New Jersey house or refinancing the
HELOC with another lender. Banco Popular would return the deed in lieu
if Farmer made the repayment by October 15, 2012, but could record it or
pursue foreclosure or other remedies if he did not. Farmer agreed to
waive defenses to the foreclosure action and give Banco Popular a
complete release, and the parties agreed to dismiss the federal action
without prejudice. In order to avoid tax consequences, Farmer wanted
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Banco Popular's $30,000 payment to him to be characterized as a loan
and he did not want the bank to issue an IRS Form 1099 showing
cancellation of debt. But the magistrate judge suggested that the parties
do whatever the tax laws require and make no representations in the
agreement about the tax consequences of the settlement. The parties
agreed with that suggestion.
The same day as the hearing, Banco Popular sent Farmer a draft
settlement agreement and IRS Form W-9, Request for Taxpayer
Identification Number and Certification. With regard to taxes, the
agreement stated that the bank was forgiving amounts due on the HELOC
and was making no representations regarding the tax consequences of
the settlement. The agreement did not include the deed in lieu of
foreclosure or a satisfaction of the mortgage, each of which required
review by a New Jersey title company. Farmer completed and signed the
W-9 the same day and returned it to Banco Popular, but he began to
negotiate a number of the other terms of the draft agreement, none of
which had to do with the tax issue. Banco Popular rejected most of those
changes. On July 2, Banco Popular sent Farmer the completed
settlement agreement, but Farmer sought changes to the exhibits. On
July 27, the parties filed a joint motion stating they had settled on June 15
and were awaiting further information from the title company regarding
Farmer's requested changes.
After Farmer received the revised exhibits, he again sought more
changes, including the amount, timing, and structure of the payment.
Apparently, due to the length of time it took for the title company to
complete its review, Farmer no longer needed the $30,000 upfront
payment, and he offered several options for paying Banco Popular either
$95,000 or $107,000. On August 7, Banco Popular declined
those requests, stating it would file a motion to enforce the settlement
agreement unless Farmer tendered the executed agreement before a
court hearing scheduled for the next day. In an August 8 email to Banco
Popular's counsel, Farmer stated that he was in agreement with the last
version of the Settlement Agreement. But Farmer challenged the request
that, because the estate had not been closed within one year, he had to
sign the attached real estate documents in his capacity as heir and
executor. The parties' further discussions proved fruitless, so Banco
Popular filed a motion to enforce. In a response filed August 20, Farmer
stated that "[t]he Settlement Agreement as drafted is fine," and in fact he
asked the court to "enforce the Settlement Agreement only (pursuant to
the terms that were placed on the record on June 15, 2012)" and extend
his repayment date by two months. But he again insisted that the real
estate documents be revised to show that he was signing them only in his
capacity as executor of his father's estate.
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The magistrate judge held a conference on August 29.
Correspondence from that same day shows that Farmer now sought to
reduce his net payment from $107,380.34 to $100,000 but pay it by
October 1 instead of October 15. Banco Popular declined that offer,
stating that it required payment by October 15 of the full net amount,
which had never changed since the June 15 hearing. The magistrate
judge held another hearing on September 10, at which Farmer stated that
"we all are in agreement to enforce the settlement," and "the only thing
that remains is . . . the date that [my payment is] due." None of the terms
of the agreement were read into the record, but the parties agreed that
Farmer would pay Banco Popular $107,380.34 by November 15, 2012.
Banco Popular sent Farmer an agreement reflecting the new amount and
due date, but instead of signing, Farmer asked for changes and additions.
Banco Popular refused most of those changes and asked Farmer to sign
the revised agreement, which he never did.
On November 13, two days before his payment was due, Farmer
sought to add a liquidated damages provision and a paragraph stating that
Banco Popular would not issue Form 1099. He also sought a six-week
extension on his due date because Hurricane Sandy, which struck the
New Jersey coast on October 29, had delayed an expected loan from a
cousin that would finance his payment. Banco Popular
responded that it would extend the deadline only if Farmer would sign the
agreement without his other proposed changes. He refused, and Banco
Popular filed a second motion to enforce and attached a written
agreement reflecting the parties' agreement as of the September 10
hearing (the "Revised Agreement"). Farmer responded that the parties
had agreed to a settlement on September 10, and he explained his
financing troubles. He sought a 45-day extension, the inclusion of a
provision that Banco Popular would not issue Form 1099, and a mutual
and immediately effective release (the Revised Agreement provided that
Farmer's release would be effective upon signing and Banco Popular's
release effective upon Farmer's payment).
On December 4, 2012, the magistrate judge held an evidentiary
hearing on the second motion to enforce and issued a recommendation
that it be granted. He rejected the notion that Farmer's obligation to pay
was contingent on obtaining financing, noting that there were several
hundred thousand dollars in equity in the New Jersey property. Farmer
objected to the recommendation. In response to an order for clarification
from the district judge, the magistrate judge issued a supplemental
recommendation stating that he recommended enforcing the Revised
Agreement. Farmer filed objections to the supplemental recommendation.
The district judge then held an evidentiary hearing at which the
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magistrate judge testified and the parties argued at length. The district
judge ruled that he would enforce the Exhibit K agreement, observing that
Farmer had twice indicated his agreement with Exhibit K. He ordered
Banco Popular to pay Farmer $30,000 within 30 days, Farmer to pay
Banco Popular $137,380.84 within 60 days, and the parties to file
dismissal documents within 75 days. He warned that he would impose the
most severe sanctions and penalties if the parties did not comply with his
order. At the hearing, the district judge declined Banco Popular's request
that he order the parties to sign the agreement absent some authority for
such an order. But he did rule that the terms of the settlement and release
would be in full force and effect by court
order.
Banco Popular timely made its $30,000 payment, but Farmer never
made his payment. Instead, he filed a post-judgment motion and then this
appeal. Banco Popular filed a motion asking the district court to (1) issue
a rule to show cause why Farmer should not be held in contempt for failing
to make his payment, (2) order the parties to sign the Exhibit K agreement
and its exhibits, and (3) order Farmer to pay attorney's fees. The district
court denied Farmer's post-judgment motion and Banco
Popular's motion, both without prejudice to refiling pending the outcome of
this appeal.
Farmer v. Banco Popular of North America, --- Fed. Appx. ---, No. 13-1252, 2014 WL
661476, at *1 (10th Cir. February 21, 2014).
II.
ATTORNEY FEES
A.
Whether an Award of Attorney Fees is Warranted
In general, prevailing litigants in American courts are not entitled to collect
attorney fees from their opponents. Alyeska Pipeline Svc. Co. v. Wilderness Soc’y, 421
U.S. 240, 247 (1980). However, Congress and the courts have made exceptions to this
“American Rule,” which allow for the recovery of attorney fees. Id. at 257-59. Banco
argues that this case falls under two exceptions to the rule. Under the first exception,
28 U.S.C. § 1927, a court may award attorney fees when, “an attorney . . . multiplies the
proceedings in any case unreasonably and vexatiously.” Id. Sanctions under § 1927
are appropriate when an attorney acts in an “objectively unreasonable” manner.
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Hamilton v. Boise Cascade Express, 519 F.3d 1197, 1202 (10th Cir. 2008). The goal of
§ 1927 is to ensure that attorneys “regularly re-evaluate the merits of their claims and to
avoid prolonging meritless claims.” Steinert v. Winn Group, Inc., 440 F.3d 1214, 1224
(10th Cir. 2006). Under the second exception, a court may exercise its inherent
authority to award fees against litigants who have acted in bad faith. See Righthaven
LLC v. Hill, No. 11-00211, 2011 WL 4018105, at *4 (D.Colo. Sept. 9, 2011).
For reasons stated on the record at the May 15, 2014 hearing and set forth in this
Order, I award Banco attorney fees under both § 1927 and my inherent powers.
Consistent with the findings of both Magistrate Judge Hegarty and the Tenth Circuit
Court of Appeals, I conclude that there is substantial evidence that Farmer, a licensed
attorney, multiplied proceedings unreasonably and vexatiously and engaged in bad
faith.1 After months of settlement negotiations with Magistrate Judge Hegarty where the
parties finally reached an agreement, Farmer refused to sign the settlement agreement
and instead filed frivolous pleadings and stalled the litigation in an attempt to gain a
more favorable settlement.2 Additionally, at the second evidentiary hearing held on May
1
While Farmer, a licensed attorney, appeared pro se throughout the majority of
this case, he remains subject to the requirements set forth in § 1927. See Marrese v.
Duncan, No. 08-cv-00143, 2008 WL 398862, *1 (D.Colo. Feb. 11, 2008). Farmer
represented himself until the most recent hearing on the issue of attorney fees held on
May 15, 2014, where he appeared with counsel. However, for purposes of § 1927, I
only consider Farmer’s conduct in this Order, not the conduct of his newly-retained
counsel.
2
For example, after agreeing to a settlement, Farmer: (1) objected to Banco’s
motion to enforce settlement, causing briefing and requiring judicial review by
Magistrate Judge Hegarty; (2) objected to Magistrate Judge Hegarty’s recommendation
enforcing the settlement, causing more briefing and an evidentiary hearing before me
requiring Magistrate Judge to testify and Banco’s counsel to travel to Denver, CO; and
(3) filed a motion to reconsider my ruling to enforce the settlement agreement, causing
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14, 2013, after carefully reviewing the voluminous record and considering the parties’
arguments, I determined that Farmer was engaging in “mischief” and that his arguments
were “nonsensical.” (ECF No. 181, Hr’g Tr. 70:6-71:2, May 14, 2013). When Farmer
failed to respond to my questions regarding when he would have funds available for the
settlement, I concluded that “what that illustrates to me is that [Farmer’s conduct] was a
sham . . . to avoid a trial on the merits.” (ECF No. 181, Hr’g Tr. 63:19-21).
Also at the May 14, 2013 hearing, Magistrate Judge Hegarty questioned whether
he believed Farmer acted in good faith during the settlement negotiations when he
testified as follows:
Q (By Mr. Farmer): And, Judge, I don’t mean to make that as a criticism.
I’m merely saying that all of the - - both the parties and the Court, at that
point in time, were working together, and putting forth a good-faith effort in
trying to come to some kind of a resolution, and at that point in time, we all
thought we had a resolution of the issues. Would you agree with that?
A [by Magistrate Judge Hegarty]: Would I agree with which part of that
question?
Q: If you disagree with anything in that question.
A: I have a potential disagreement on the good-faith part.
***
Q [By Mr. Shivpuri]: Just one quick question. At the end of your
discussion with Mr. Farmer, you said you did have a disagreement about
the good-faith part of your settlement on September 10th.
A [By Magistrate Judge Hegarty]: Well, good-faith is a - - it’s sort of in
the eyes of the beholder. Judges and lawyers interpret that differently.
What I was referring to was, one of the initial conversations I had with Mr.
Farmer, when he told me he was a lawyer and, in fact, he had mediated
cases, and he believed he was a good mediator, and that he could always
get a little more from you. And so I think at every point in this case, I have
more briefing and judicial review.
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seen Mr. Farmer act in accordance with that. He always wants just a little
more. Just a little bit better deal for him, and he thinks that if he stalls,
holds on, that he can get a little better each time. And so whether that’s
good faith or bad faith, it’s a question I have.
(ECF No. 181, Hr’g Tr. 45:16-25, 48:20-49:8).
Moreover, in its Order and Judgment affirming my order and denying Farmer’s
appeal, the Tenth Circuit Court of Appeals unequivocally stated that
[t]hough in receipt of $30,000 and having agreed to settle the case,
Farmer continues to use the New Jersey property (with a value far in
excess of the disputed amount) with no payment to Banco Popular, which
is prevented from foreclosing on the property. Rather than adhering to the
terms of the settlement agreement, Farmer has multiplied the
proceedings, causing the court to expend considerable effort,
Banco Popular to incur attorney’s fees, and delaying the ultimate
resolution. The judgment of the district court is affirmed. The district court
has all lawful authority to bring this matter to a prompt and just conclusion.
Farmer, 2014 WL 661476, at *7.
Given the Tenth Circuit’s holding that I have “all lawful authority to bring this
matter to a prompt and just conclusion” id., I find that Farmer’s bad-faith conduct in
refusing to sign the settlement agreement and unreasonably prolonging this litigation
caused both Banco to incur unnecessary expenses and waste the resources of this
Court. Thus, I find that the award of attorney fees under both § 1927 and my inherent
powers is warranted. Thus, I turn to the issue of the appropriate amount of attorney
fees.
B.
Amount of Fees Awarded
“The most useful starting point for determining the amount of a reasonable fee is
the number of hours reasonably expended on the litigation multiplied by a reasonable
hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). “This calculation
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provides an objective basis on which to make an initial estimate of the value of a
lawyer's services.” Id. In other words, “[t]o determine the reasonableness of a fee
request, a court must begin by calculating the so-called ‘lodestar amount’ of a fee, and a
claimant is entitled to the presumption that this lodestar amount reflects a ‘reasonable’
fee.” Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998) (quotations
omitted). “The lodestar calculation is the product of the number of attorney hours
‘reasonably expended’ and a ‘reasonable hourly rate.’” Id. (quotation omitted).
“The
party seeking an award of fees should submit evidence supporting the hours worked
and rates claimed.” Hensley, 461 U.S. at 433. The Tenth Circuit has noted that
“[c]ounsel for the party claiming the fees has the burden of proving hours to the district
court by submitting meticulous, contemporaneous time records that reveal, for each
lawyer for whom fees are sought, all hours for which compensation is requested and
how those hours were allotted to specific tasks.” Case v. Unified School Dist. No. 233,
Johnson County, Kan., 157 F.3d 1243, 1250 (10th Cir. 1998).
Once the court has adequate time records before it, “it must then ensure that the
winning attorneys have exercised ‘billing judgment.’” Case, 157 F.3d at 1250 (quoting
Ramos v. Lamm, 713 F.2d 545, 553 (10th Cir. 1983). “Billing judgment consists of
winnowing the hours actually expended down to the hours reasonably expended.” Id.
“Hours that an attorney would not properly bill to his or her client cannot reasonably be
billed to the adverse party, making certain time presumptively unreasonable.” Id. (citing
Ramos, 713 F.2d at 553-54) (giving as an example time spent doing background
research); Hensley, 461 U.S. at 434, 437 (expecting counsel to exercise their “billing
judgment”, “mak[ing] a good faith effort to exclude from a fee request hours that are
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excessive, redundant, or otherwise unnecessary”).
1.
Reasonable Hourly Rate
Turning to my analysis, I first consider the reasonableness of the hourly rates
charged by Banco’s counsel who worked on this case. As to the hourly rate, the Tenth
Circuit indicates that “the court must look to ‘what the evidence shows the market
commands for civil rights or analogous litigation.”’ Burch v. La Petite Academy, Inc.,
2001 WL 589461, at *2 (quoting Case, 157 F.3d at 1243). The “local market rate” is
usually the state or city in which counsel practices. Ellis v. Univ. of Kansas Medical
Center, 163 F.3d 1186, 1203 (10th Cir. 1998) (looking at “the prevailing market rates in
the relevant community”); Case, 157 F.3d at 1256 (looking at fees charged by lawyers
in the area in which the litigation occurs).
Here, it does not appear that Farmer disputes the reasonableness of the rates
charged by Banco’s counsel which range from $224.20-$275.20 per hour. Because
Banco provided evidence that $224.20-$275.20 per hour is a reasonable rate for
attorneys of similar background and experience as Banco’s counsel, I find the hourly
rates requested to be reasonable.
2.
Reasonable Number of Hours
Banco’s counsel assert that they spent a total of 231.35 hours working on this
case. (ECF No. 214-1). Farmer contends that these hours should be reduced for
duplicative, excessive, vague, and unnecessary billing. D.C.COLO.L.Civ.R 54.3.B.1
requires Banco to include "a detailed description of the services rendered . . . for each
person for whom fees are claimed." See Hensley, 461 U.S. at 433 (stating that the
party seeking an award of fees should submit evidence supporting the hours worked
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and rates claimed).
Though not required to do so, I conducted a painstaking review of Banco’s
counsel’s billing statement. See Am. Water Dev., 874 P.2d 352, 387 (Colo. 1994)
(recognizing that it is unrealistic to expect a trial judge to evaluate and rule on every
entry in an application). For reasons stated on the record at the May 15, 2014 hearing
and in this Order, I do find merit in Farmer’s argument that the fee request should be
reduced to exclude all billing entries related to the appellate proceedings.
Thus, based on my judicial experience and careful consideration of the evidence
and governing law, I find that Banco’s claimed number of hours expended (excluding
the hours billed for appellate work) are reasonable. Therefore, I find that a reduction of
5.3 hours is appropriate. (ECF No. 214-8). This results in a reduction of $15,482.62
from the requested amount of fees.
III.
COSTS
Banco also requests $11,617.77 in recoverable costs. After my careful review, I
find Banco’s requested costs to be reasonable and necessary litigation expenses. For
the reasons stated on the record at the May 15, 2014 hearing and set forth in this Order,
I find all of the expenses for which Banco’s counsel seeks reimbursement to be those
that would normally be billed to a private client. See Ramos, 713 F.2d at 559.
Accordingly, I award Banco $11,617.77 in recoverable costs.
IV.
CONCLUSION
Based on the foregoing and for reasons stated on the record at the May 15, 2014
hearing, it is
ORDERED that Banco Popular North America’s Motion for Attorneys’ Fees and
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Costs (ECF No. 215) is GRANTED IN PART AND DENIED IN PART. Pursuant to the
28 U.S.C. § 1927 and my inherent powers, Banco is awarded attorney fees in the
amount of $41,461.76 and costs in the amount of $11,617.77. It is
FURTHER ORDERED that based on my rulings in this Order and those made on
the record at the May 15, 2014 hearing, the Renewed Motion for Rule to Show Cause,
For Order Directing Parties Sign the Settlement Agreement, and for Attorneys’ Fees is
DENIED AS MOOT. It is
FURTHER ORDERED that the Clerk of the Court shall issue a judgment
forthwith and close this case.
Dated: September 16, 2014
BY THE COURT:
s/ Wiley Y. Daniel
Wiley Y. Daniel
Senior United States District Judge
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