Northern Trust, NA v. Wolfe

Filing 91

FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION FOR ATTORNEYS' FEES AND COSTS re: 79 . Signed by Judge BARRY M. KURREN on 4/30/2013. (afc)CERTIFICATE OF SERVICEPa rticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
NORTHERN TRUST, NA,

)
)
Plaintiff,
)
)
vs.
)
)
KENNETH I. WOLFE,
)
)
Defendant.
)
______________________________ )

Civ. No. 11-00531 LEK-BMK
FINDINGS AND
RECOMMENDATION TO GRANT
IN PART AND DENY IN PART
PLAINTIFF’S MOTION FOR
ATTORNEYS’ FEES AND COSTS

FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN
PART PLAINTIFF'S MOTION FOR ATTORNEYS' FEES AND COSTS
Before the Court is Plaintiff Northern Trust, NA’s Motion for
Attorneys’ Fees and Costs (Doc. 79). After careful consideration of the Motion
and the supporting and opposing memoranda, the Court finds and recommends that
Plaintiff’s Motion be GRANTED IN PART and DENIED IN PART.1 The Court
recommends a fee award of $54,637.67 and recommends that Plaintiff’s request for
costs be denied as moot.
FACTUAL BACKGROUND
On August 22, 2007, Defendant Kenneth I. Wolfe executed a
promissory note in favor of Plaintiff in the principal amount of $1,080,000. (Ex. D
at 3.) The note provides that Defendant shall pay “all principal and all accrued
1

The Court elects to decide this Motion without a hearing, pursuant to Local Rule 7.2(d).

interest not yet paid” on August 22, 2010. (Id. at 3-4.) The note is secured by a
mortgage on property in Kailua-Kona, Hawaii. (Id. at 4.) Defendant defaulted on
the note by failing to make full payment when it was due. (Id. at 4, 22.)
According to Defendant, Plaintiff had made oral promises to
Defendant that, at the termination of the loan, it would allow him to obtain
permanent financing without having to qualify and it would not foreclose on the
property. (Ex. C at 5.)
On August 30, 2011, Plaintiff filed this action, seeking foreclosure of
the property securing the loan. (Ex. D at 2.) Defendant filed a Counterclaim,
which was dismissed by the Court on May 31, 2012. On September 6, 2012,
Defendant filed his First Amended Counterclaim. The Counterclaims are based on
Plaintiff’s alleged oral promises regarding permanent financing and foreclosure.
(Ex. C.) On January 31, 2013, the Court dismissed the First Amended
Counterclaim and granted summary judgment in favor of Plaintiff. (Ex. D.)
Judgment was entered in Plaintiff’s favor on February 1, 2013. (Doc. 76.)
On February 15, 2013, Plaintiff filed the present Motion For
Attorneys’ Fees and Costs, seeking fees and costs incurred in defending against
Defendant’s Counterclaims.
DISCUSSION
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I.

Attorneys’ Fees
Plaintiff seeks an award of fees pursuant to Hawaii Revised Statutes

§ 607-14, “which provides that reasonable fees, as determined by the court, shall
be taxed against the losing party ‘in all actions in the nature of assumpsit.’” Blair
v. Ing, 31 P.3d 184, 186 (Haw. 2001) (quoting Haw. Rev. Stat. § 607-14).
Additionally, the amount of fees awarded “shall not exceed twenty-five per cent of
the judgment.” Haw. Rev. Stat. § 607-14. Therefore, Plaintiff is entitled to
attorneys’ fees under section 607-14 if it establishes that (1) this action is in the
nature of assumpsit, (2) Plaintiff is the prevailing party, (3) the requested fees are
reasonable, and (4) the fees do not exceed 25% of the judgment. Id.
A.

This Action is in the Nature of Assumpsit

“Under Hawaii case law, an action in the nature of assumpsit includes
‘all possible contract claims.’” Leslie v. Estate of Tavares, 994 P.2d 1047, 1051
(Haw. 2000) (citation omitted); see Blair, 31 P.3d at 189 ( “‘Assumpsit’ is ‘a
common law form of action which allows for the recovery of damages for
non-performance of a contract, either express or implied, written or verbal, as well
as quasi contractual obligations.’”). “The character of the action should be
determined from the facts and issues raised in the complaint, the nature of the
entire grievance, and the relief sought.” Blair, 31 P.3d at 189. “Where there is
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doubt as to whether an action is in assumpsit or in tort, there is a presumption that
the suit is in assumpsit.” Id.
The First Amended Counterclaim is premised on an alleged oral
promise by Plaintiff to Defendant. Defendant states that “Plaintiff told Defendant
that when his loan terminated, he would get permanent financing from Plaintiff
without his having to qualify again.” (Ex. C at 5.) Plaintiff also allegedly
promised not to foreclose on the property. (Id. at 13 (stating that Plaintiff
“promise[d] that it would refinance his loan when it came due and would not
institute foreclosure proceedings”).) According to the First Amended
Counterclaim, “Plaintiff broke those promises by foreclosing on Defendant’s
property.” (Id.)
Two of the counts in the First Amended Counterclaim are clearly in
the nature of assumpsit. Count 5 asserts a breach of good faith and fair dealing,
which alleges that Plaintiff violated its duty of good faith and fair dealing with
respect to “[e]ach contract.” (Ex. C at 12-13.) Count 6 asserts a claim for
promissory estoppel. (Id. at 13.) This Court has held that these claims are in the
nature of assumpsit. Au v. Funding Group, Inc., Civ. No. 11-00541 SOM-KSC,
2013 WL 1154211, at *4 (Feb. 19, 2013) (“The breach of contract and breach of
promissory estoppel claims are clearly in the nature of assumpsit.”); Skanning v.
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Sorensen, Civ. No. 09-00364 DAE-KSC, 2009 WL 5449149, at *5 (Dec. 10, 2009)
(“breach of implied covenant of good faith and fair dealing claim is in the nature of
assumpsit”).
The other counts in the First Amended Complaint are based on
Plaintiff’s alleged promises to refinance the loan and to not foreclose on the
property. District Judge Leslie E. Kobayashi noted that these counts are based on
those promises in the order dismissing the First Amended Counterclaim. As noted
in that order: Count 1 for unfair and deceptive acts or practices is “based upon
Wolfe’s attempt to modify the loan after the Note matured”; Count 2 for
unconscionability is based on Defendant’s allegations that Plaintiff “made
unreasonable demands when he tried to modify his loan”; Count 3 for fraud and
misrepresentation are based on the “representation that Wolfe would receive
permanent financing without having to re-qualify, and . . . it did not intend to
foreclose”; and Count 4 for negligence alleges that Plaintiff “was negligent in
making the previously described representations” including Plaintiff’s alleged
promises “that it would work out a new loan with Wolfe and that it did not intend
to foreclose.” (Ex. D at 30, 32-34.) Because each of these counts arise from
Plaintiff’s alleged breach of its promises to refinance the property and to not
foreclose, these counts are in the nature of assumpsit. Accordingly, the Court finds
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that all of the counts in the First Amended Complaint are in the nature of
assumpsit. See Blair, 31 P.3d at 189 ( “‘Assumpsit’ is ‘a common law form of
action which allows for the recovery of damages for non-performance of a
contract, either express or implied, written or verbal.’”).
B.

Plaintiff is the Prevailing Party

Hawaii Revised Statutes § 607-14 authorizes reasonable fees to be
paid “by the losing party” to the prevailing party. Defendant does not dispute that
Plaintiff is the prevailing party. Indeed, Plaintiff is the prevailing party, as it
obtained dismissal of the First Amended Counterclaim.
C.

The Requested Fees are Reasonable

In a diversity case like this, Hawaii law determines the reasonableness
of attorneys’ fees. Carnes v. Zamani, 488 F.3d 1057, 1059 (9th Cir. 2007). Hawaii
courts apply the “lodestar” method for determining reasonable fees. DFS Group
LP v. Paiea Props, 131 P.3d 500, 505 (Haw. 2006). The Hawaii Supreme Court
has defined the lodestar method as follows:
In essence, the initial inquiry is “how many hours
were spent in what manner by which attorneys.” The
determination of time spent in performing services
“within appropriately specific categories,” is followed by
an estimate of its worth. “The value of an attorney’s time
generally is reflected in his normal billing rate.” But it
may be “necessary to use several different rates for the
different attorneys” and the reasonable rate of
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compensation may differ “for different activities.” And
when the hourly rate reached through the foregoing
analysis is applied to the actual hours worked, a
“reasonably objective basis for valuing an attorney’s
services” is derived. The inquiry, however, does not end
here, for other factors must be considered. The product
of the first and second steps nevertheless serves as the
“lodestar” of the ultimate fee award.
The first of the factors to be considered for
possible adjustment of the “lodestar” determination is
“the contingent nature of success,” a factor which may be
of special significance where “the attorney has no private
agreement that guarantees payment even if no recovery is
obtained.” The second additional factor to be examined
“is the extent, if any, to which the quality of an attorney’s
work mandates increasing or decreasing” the “lodestar”
figure. If the court decides an adjustment is justified on
this basis, it “should set forth as specifically as possible
the facts that support its conclusion.”
Id. (citations, ellipses points, and brackets omitted).
1.

Reasonable Hourly Rate

A critical inquiry in determining a reasonable attorney’s fee is the
reasonable hourly rate. Jordan v. Multnomah County, 815 F.2d 1258, 1262
(9th Cir. 1987). “The prevailing market rate in the community is indicative of a
reasonable hourly rate.” Id.
In establishing a reasonable hourly rate, Plaintiff must provide
“satisfactory evidence, in addition to the affidavits of counsel, that the requested
rates are in line with those prevailing in the community for similar services of
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lawyers of reasonably comparable skill and reputation.” Jordan, 815 F.2d at 1263.
A description of each of attorney’s experience, qualifications, contributions, and
hourly rates is provided in the Affidavit of Michael C. Bird. (Bird Affidavit ¶ 13.)
Further, Exhibits H and I provide a comparison of the hourly rates of other
attorneys and firms in Honolulu. In light of evidence before the Court, the Court
finds that the following requested hourly rates are in accord with those rates
prevailing in the community for similar services of lawyers of comparable skill and
reputation: Michael C. Bird (partner) $305/hr; Jonathan W. Lai (partner) $300/hr,
Tracey L. Kubota (associate) $200/hr, and Summer H. Fergerstrom (associate)
$185. Jordan, 815 F.2d at 1263.
2.

Hours Reasonably Expended

“Beyond establishing a reasonable hourly rate, a prevailing party
seeking attorneys’ fees bears the burden of proving that the fees and costs taxed are
associated with the relief requested and are reasonably necessary to achieve the
results obtained.” Robinson v. Plourde, 717 F. Supp. 2d 1092, 1098 (D. Haw.
2010).
Local Rule 54.3(d)(1) requires Plaintiff to provide detailed description
of counsels’ work performed in this case. Exhibit G is an itemization and
description of all work performed by Watanabe Ing LLP in securing judgment of
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dismissal as to all of Defendant’s Counterclaims, organized according to the
categories specified in Local Rule 54.3(d)(1). (Bird Affidavit ¶ 14.) The
categories include: case development (4.7 hours), pleadings (5.6 hours), written
discovery (27.7 hours), depositions (0.6 hours), prepare and draft motions (104.4
hours), prepare for and attend court hearings and conferences (79.8 hours), and
trial preparation (2.6 hours). (Id.) According to Plaintiff, the time spent defending
against Defendant’s Counterclaims was necessary to protect Plaintiff’s interests.
(Id. at ¶ 15.)
Defendant does not challenge any particular time entry as duplicative,
excessive, redundant, or otherwise unnecessary. Rather, Defendant’s only
argument is that defense counsel spent less time working on this case than
Plaintiff’s counsel spent in defending against the Counterclaims. (Opp. at 7.)
However, after reviewing the detailed and categorized entries in Exhibit G, the
Court finds that the amount of time Plaintiff’s counsel spent in defending against
the Counterclaims is reasonable.
In sum, the Court finds that Plaintiff’s counsels’ hourly rates are
reasonable and that they spent a reasonable amount of time defending against the
Counterclaims. The lodestar amount, which multiplies the reasonable hourly rate
by the reasonable hours expended, is $54,637.67. Neither party argues that other
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factors should increase or decrease the lodestar amount. Consequently, the Court
finds that the lodestar amount constitutes Plaintiff’s reasonable attorneys’ fees.
D.

The Fees Do Not Exceed Twenty-five Percent of the Judgment

Lastly, section § 607-14 states that reasonable fees “shall not exceed
twenty-five per cent of the judgment.” Under Hawaii law, “[t]he amount on which
the fees are to be assessed is dependent on who obtains the judgment – the
judgment amount (exclusive of costs) if plaintiff or counterclaimant prevails, and
the amount sued for if the defendant or counterclaimee wins.” Rodrigues v. Chan,
705 P.2d 67, 71 (Haw. Ct. App. 1985). Thus, this Court’s award of attorneys’ fees
shall not exceed twenty-five percent of the amount Defendant sued for in his First
Amended Counterclaim.
Defendant does not dispute that the requested fees are less than
twenty-five perfect of the amount he sued for. In the First Amended Counterclaim,
Defendant alleges that he obtained a loan by Plaintiff in the principal amount of
$1,080,000. (Exhibit C at 4.) He also claims that Plaintiff promised it “would not
institute foreclosure proceedings” but that “Plaintiff broke those promises by
foreclosing on Defendant’s property.” (Id. at 13.) Defendant sought damages for
Plaintiff’s alleged breach of its promises regarding the loan. (Id. at 16.)

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Plaintiff seeks $52,179.00 in attorneys’ fees and $2,458.67 in general
excise tax, for a total amount of $54,637.67. This amount is 5.06% of $1,080,000,
which is well below the 25% maximum recoverable attorneys’ fees under Hawaii
Revised Statues § 607-14. Therefore, the Court finds that Plaintiff’s requested fees
do “not exceed twenty-five per cent of the judgment.” Haw. Rev. Stat. § 607-14.
In sum, Plaintiff has established that this action is in the nature of
assumpsit, that it is the prevailing party, that its requested fees are reasonable, and
that those fees do not exceed 25% of the judgment. Accordingly, the Court
recommends that Plaintiff is entitled to fees under Hawaii Revised Statutes
§ 607-14 in the amount of $54,637.67.2
II.

Costs
Plaintiff also seeks an award of costs pursuant to Federal Rule of Civil

Procedure 54(d)(1). Plaintiff seeks to recover $117.78 in costs, which are detailed
in the Bill of Costs that is attached as Exhibit F and was filed separately as
Document 80. Absent any objection to the Bill of Costs, the Clerk of Court taxed
those costs on March 5, 2013. (Doc. 85.) Because these costs have already been

2

Plaintiff alternatively seeks fees under Hawaii Revised Statutes § 607-14.5. However,
because this Court recommends a fee award under § 607-14, the Court does not address
Plaintiff’s request under § 607-14.5.
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taxed by the Clerk of Court, the Court recommends that Plaintiff’s request be
denied as moot.
CONCLUSION
For the foregoing reasons, the Court finds and recommends that
Plaintiff’s Motion for Attorneys’ Fees and Costs (Doc. 79) be GRANTED IN
PART AND DENIED IN PART. The Court recommends that Plaintiff be granted
an award of fees in the amount of $54,637.67 and that Plaintiff’s request for costs
be denied as moot.

Northern Trust, NA v. Wolfe, Civ. No. 11-00531 LEK-BMK; FINDINGS AND
RECOMMENDATION TO GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION
FOR ATTORNEYS' FEES AND COSTS.
12

DATED: Honolulu, Hawaii, April 30, 2013.
IT IS SO ORDERED.

/S/ Barry M. Kurren
Barry M. Kurren
United States Magistrate Judge

Northern Trust, NA v. Wolfe, Civ. No. 11-00531 LEK-BMK; FINDINGS AND
RECOMMENDATION TO GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION
FOR ATTORNEYS' FEES AND COSTS.
13