The Thomas D. Philipsborn Irrevocable Trust dated July 10, 2005 v. Avon Capital, et al.

Filing 264

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 9/28/2015:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

THE THOMAS D. PHILIPSBORN
IRREVOCABLE INSURANCE TRUST
dated July 20, 2005, and ANDREW
PHILIPSBORN, as TRUSTEE on
behalf of the THOMAS D.
PHILIPSBORN IRREVOCABLE
INSURANCE TRUST,
Plaintiffs,
v.
AVON CAPITAL, LLC and DONALD
TRUDEAU, BENISTAR, LTD., and
BENISTAR ADMIN SERVICES, INC.,
Defendants.
Case No. 11 C 3274
and
Judge Harry D. Leinenweber
AVON CAPITAL, LLC,
Third-Party Plaintiff,
v.
FINANCIAL LIFE SERVICES, INC.,
Third-Party Defendant,
and
FINANCIAL LIFE SERVICES, INC.,
Fourth-Party Plaintiff,
v.
AVON CAPITAL, LLC, THOMAS D.
PHILIPSBORN and ANDREW
PHILIPSBORN,
Fourth-Party Defendant.

MEMORANDUM OPINION AND ORDER
Before the Court are (1) Defendant Donald Trudeau’s Renewed
Motion

for

Judgment

as

a

Matter

of

Law

[ECF

No.

252];

(2)

Plaintiffs Thomas Philipsborn, Andrew Philipsborn, and the Thomas
D.

Philipsborn

Irrevocable

Insurance

Trust’s

(collectively

“Plaintiffs”) Motion for Prejudgment Interest [ECF No. 250]; and
(3) Petitions for Attorneys’ Fees from Plaintiffs [ECF No. 228]
and Financial Life Services, LLC [ECF No. 230].
stated

herein,

all

the

motions

are

denied

For the reasons

except

Plaintiffs’

Petition for Attorneys’ Fees, which is granted as modified.
I.

BACKGROUND

This case started off as a simple contract dispute between
Plaintiffs and Defendants Avon Capital, LLC and Avon’s corporate
representative,

Donald

Trudeau.

Since

the

case’s

inception,

however, the facts have become much more complicated.

Plaintiffs

amended their Complaint to include Defendants Benistar, Ltd. and
Benistar

Admin

Services,

Inc.

(“BASI”),

alleging

that

the

two

companies were liable as undisclosed principals to the contract.
Eventually, Avon filed a Third-Party Complaint against Financial
Life Services, LLC (“FLS”) alleging that FLS was liable to Avon
based on an agreement between them.

FLS then brought a Fourth-

Party Complaint against Plaintiffs and Avon.
Before trial, all parties moved for summary judgment.

The

Court granted Plaintiffs’ Motion against Avon and denied Avon’s

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Motion

against

Plaintiffs

Plaintiffs,

$4,500,000

for

finding
three

shorted Plaintiffs $819,609.

that

life

Avon

agreed

pay

policies,

insurance

to

yet

The parties ultimately agreed that

Benistar Ltd. was not liable, and the Court denied BASI’s Motion
against Plaintiffs, finding that a reasonable jury might conclude
that

BASI

was

an

undisclosed

principal

that

joined

purchasing the life insurance policies from Plaintiffs.

Avon

in

The Court

also denied Trudeau’s Motion for Summary Judgment, finding that a
jury

might

Plaintiffs

believe
in

part

that
because

Trudeau

was

Trudeau

personally

provided

his

liable

own,

to

personal

references to entice Plaintiffs into dealings with Avon.

As for

FLS, the Court denied its Motion against Plaintiffs and granted
Plaintiffs Motion against it.

The Court also granted FLS’s Motion

against Avon and denied Avon’s Motion against FLS.
The Court’s ruling on the various parties’ Motions left only
two

issues

unresolved:

whether

Trudeau

was

personally

liable

under the contract as a disclosed principal and whether BASI was
liable as an undisclosed principal.

The jury found in favor of

BASI but against Trudeau, finding that Trudeau owed Plaintiffs
$818,512.17.
Plaintiffs

Trudeau now moves for judgment as a matter of law,
move

for

prejudgment

interest,

Plaintiffs petition for attorneys’ fees.
each in turn.

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and

both

FLS

and

The Court will discuss

II.

TRUDEAU’S MOTION FOR JUDGMENT AS A MATTER OF LAW
A.

Legal Standard

Federal Rule of Civil Procedure 50(a) allows a court to grant
a party judgment as a matter of law if a “reasonable jury would
not have a legally sufficient evidentiary basis to find for” the
non-moving party.
motion

for

Rule 50(b) allows a party to renew a denied

judgment

as

adverse jury verdict.

a

matter

of

law

within

FED. R. CIV. P. 50(b).

28

days

of

an

The Rule also allows

a party to move, in the alternative, for a new trial.

Id.

The party seeking judgment as a matter of law after a jury verdict
faces a heavy burden.
obliged

to

construe

“Once a jury has spoken, [the Court] is
the

facts

prevailed under the verdict.”

in

favor

of

the

parties

who

Tate v. Exec. Mgmt. Servs., Inc.,

546 F.3d 528, 531 (7th Cir. 2008) (quoting
Co., 366 F.3d 461, 464 (7th Cir. 2004)).

Tart v. Ill. Power

The Court examines “all

of the evidence in the record to determine whether the evidence
presented was sufficient to support the jury’s verdict,” and the
Court

may

not

evidence.”
339,

343

“make

credibility

determinations

or

weigh

the

Id. at 532 (quoting Waite v. Bd. of Trs., 408 F.3d
(7th

Cir.

2005)).

The

Court

may

only

overturn

a

plaintiff’s verdict if “no rational jury could have found for the
plaintiff.”

Id. (quoting Waite, 408 F.3d at 343).

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B.

Analysis

Trudeau argues that there was insufficient evidence for the
jury to conclude that he personally contracted with Plaintiffs to
purchase

the

life

insurance

policies

at

issue.

Trudeau

first

raised this argument in his Motion for Summary Judgment, and again
at the close of Plaintiffs’ case.
rejected

it.

Although

it

was

In both instances, the Court
a

close

call,

the

evidence

Plaintiffs presented was just enough to send the question to the
jury.

The jury found in Plaintiffs’ favor, and the Court sees no

new reason to reverse its two prior rulings.
Moreover, Trudeau’s recitation of the evidence against him is
narrow and fails to account for the larger picture.

According to

Trudeau, the only evidence against him was an email in which he
provided

Plaintiffs

personal

concerned about the deal.

references

when

Plaintiffs

grew

Because that email does not, in itself,

reference an offer, acceptance, or consideration, Trudeau argues
that the evidence does not support the verdict.
This argument fails to appreciate the context in which the
jury decided the case, and it impermissibly takes a view of all
the evidence solely in Trudeau’s favor.

The jury was informed

that the Court had already determined that Avon and Plaintiffs
entered into a contract, and there is no dispute that Trudeau was
Avon’s agent negotiating the deal.

The jury therefore knew that

Avon entered into a binding contract through Trudeau offering to

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buy the life insurance policies and Plaintiffs accepted.
this

evidence,

providing

his

a

reasonable

own

personal

jury

could

references

have
as

Based on

inferred

a

means

that,

of

by

inducing

Plaintiffs to enter into the contract, Trudeau intended to join
the existing contract as a party himself.
sustain

the

jury’s

verdict,

and

the

Court

This is enough to
therefore

need

not

address Trudeau’s alternative arguments.
III.

PLAINTIFFS’ MOTION FOR PREJUDGMENT INTEREST
A.

Legal Standard

The Court, sitting in diversity, must “look to state law to
determine

the

prejudgment

availability

interest.”

of

Medcom

(and

Holding

rules
Co.

v.

for

computing)

Baxter

Labs., Inc., 106 F.3d 1388, 1405 (7th Cir. 1997).

Travenol

Unless the

parties expressly agree otherwise, Illinois’ Interest Act allows a
party to recover prejudgment interest, provided that “the amount
is a fixed amount or easily computed.”
The

Interest

Act

only

applies,

Id.
however,

in

a

handful

scenarios, only two of which possibly apply in this case.
it

allows

creditors

to

receive

prejudgment

interest

of

First,

for

“all

moneys after they become due on any bond, bill, promissory note,
or other instrument of writing.”

815 ILCS 205/2.

Second, it

allows interest on money a party owes but withholds — even if the
agreement was not reduced to writing — if the withholding amounts
to an “unreasonable and vexatious delay of payment.”

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Id.

B.
Plaintiffs’

Motion

Analysis

focuses

on

whether

the

amount

owed

is

fixed or easily computed, but the Motion does not explain which
provision of the Interest Act applies.

That analytical step is

crucial, because prejudgment interest is not available unless one
of the Interest Act’s provisions applies, even if the amount is
fixed or easily computed.

See, Oak Park Trust and Sav. Bank v.

Intercounty Title Co. of Ill., 678 N.E.2d 723, 728 (Ill. App. Ct.
1997)

(“It

is

well

established

that

an

insurance

policy

is

a

written instrument within the meaning of the statute authorizing
prejudgment interest.

Accordingly, prejudgment interest may be

recovered . . . .”) (internal citation omitted).

The agreement

between the parties in this case was never reduced to a written
instrument, and Plaintiffs have not cited any case law showing
that an amorphous agreement like the one in this case qualifies as
a written instrument similar to a promissory note or bond under
the statute.
The only other statutory provision that might apply states
that prejudgment interest may be awarded when one party withholds
payment in an unreasonable or vexatious manner.

This provision

does not apply, however, when the payment is withheld because of a
genuine and reasonable dispute.

Liu v. Price Waterhouse LLP, 302

F.3d 749, 757 (7th Cir. 2002).
enough.

Instead,

“the

debtor

Mere delay in payment is not
must

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in

some

way

have

thrown

obstacles in the way of the collection of the demand, or by some
circumvention . . . have induced the creditor to prolong the time
of proceeding against him.”
(1852).

Sammis v. Clark, 13 Ill. 544, 547

The parties’ dispute in this case was reasonable and

appears to be genuine, and Plaintiffs have not shown that Avon and
Trudeau acted in bad faith in disputing Plaintiffs’ claims.
Plaintiffs

have

not

shown

that

the

agreement

here

is

an

“instrument of writing” or that Avon’s and Trudeau’s withholding
of payment was unreasonable or vexatious.
does

not

apply

and

prejudgment

interest

Thus, the Interest Act
is

not

available

to

Plaintiffs.
IV. ATTORNEYS’ FEES
A.

Legal Standard

Both Plaintiffs and FLS petition for attorneys’ fees against
one another pursuant Section 10 of the Financial Life Services LLC
Life

Insurance

Policy

Purchase

and

Sale

Agreement

(the

“Agreement”) entered into by Plaintiffs and FLS, which provides:
Should any claim, arbitration, proceeding, contest or
litigation arise as a consequence of this Agreement, the
prevailing party shall be awarded all costs, expenses
and fees, including reasonable attorneys’ fees incurred
in the defense or settlement of such contest or
litigation.
Illinois law makes clear that when a contract calls for the
shifting

of

attorneys’

fees,

a

court

should

award

“all

commercially-reasonable fees no matter how the bills are stated.”
Medcom Holding Co. v. Baxter Travenol Labs., Inc., 200 F.3d 518,
- 8 -

520 (7th Cir. 1999).

Thus, the standard in a contractual fee-

shifting case is a “commercially reasonable” standard and does not
require courts to engage in a “detailed, hour-by-hour review” of a
prevailing party’s billing records.
To
court

determine
begins

by

a

Id. at 521.

commercially-reasonable

multiplying

the

hours

attorney’s

that

were

commonly referred to as the lodestar.

a

reasonably

expended on the litigation by a reasonable hourly rate.
v. Eckerhart, 461 U.S. 424, 433 (1983).

fee,

Hensley

The resulting figure is

The movant bears the burden

of demonstrating the reasonableness both of the time expended and
the hourly rate.

Id. at 437.

Courts may adjust the lodestar

based on any of the following factors:
(1) the time and labor required; (2) the novelty and
difficulty of the questions; (3) the skill requisite to
perform the legal service properly; (4) the preclusion
of employment by the attorney due to acceptance of the
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 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.
Id. at 430 n.3.

Of these factors, many “are subsumed within the

initial calculation of hours reasonably expended at a reasonable
hourly rate.”

Id. at 434 n.9.

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B.

Analysis

1. Plaintiffs’ Petition Against FLS
Plaintiffs
party

as

to

contend

the

that

claims

because

raised

by

they

FLS

were

against

the
them,

prevailing
they

are

entitled to reasonable attorneys’ fees in the amount of at least
$123,860.60 and at most $148,291.37.

FLS does not contest that

Plaintiffs

or

are

the

prevailing

party

Plaintiffs’ attorneys’ hourly rates.

the

reasonableness

of

Therefore, the Court accepts

Plaintiffs’ attorneys’ rates as reasonable and will only deduct
from the requested fees if it finds the hours incurred to be
commercially unreasonable.
Plaintiffs have requested 100% reimbursement for work that
relates solely to FLS’s claims.
Plaintiffs’

attorneys

did

on

FLS argues that all of the work
FLS’s

claims

was

necessary

for

Plaintiffs’ claims against the other parties and therefore FLS
should not be required to pay these fees.
argument is pure conjecture.

Without more, this

The Court has no reason to question

the veracity of Plaintiffs’ attorneys’ assertions that when 100%
of the work was billed to the FLS matter that work related solely
to Plaintiffs’ defense of claims and issues raised by FLS.
Ex. 2 ¶ 11.

See,

Although this work may have also been beneficial to

Plaintiffs’ claims against the other parties, it “a[rose] as a
consequence of” litigation resulting from the Agreement with FLS,
and therefore the fees are compensable.

- 10 -

The Court declines FLS’s invitation to engage in a “detailed,
hour-by-hour

review”

of

Plaintiffs’

attorneys’

billing

records,

Medcom, 200 F.3d 518, 521 (7th Cir. 1999), and will only review
the fees to which FLS has specifically objected.

FLS raises four

specific objections to the hours Plaintiffs’ attorneys’ claim to
have expended on FLS’s claims.

The Court addresses each objection

below.
a.

Work Done in Pursuit of Affirmative

Claims Against Avon, Trudeau and BASI
FLS

first

argues

that

it

should

not

be

required

to

pay

attorneys’ fees for work done by Plaintiffs’ attorneys in pursuit
of their affirmative claims against Avon, Trudeau and BASI.

FLS

bases

that

the

only

for

this

prevailing

argument
party’s

on

the

language

in

fees

shall

attorneys’

Section
be

10

paid

litigation “aris[ing] as a consequence of this Agreement.”

FLS

contends that any litigation between Plaintiffs and Avon, Trudeau,
and

BASI

did

not

“arise

as

a

consequence

of”

the

Agreement.

Plaintiffs have requested 80% reimbursement for work that related
to both FLS’s claims and the Plaintiffs’ claims against the other
parties (“mixed hours”) and 50% reimbursement for work done on
summary judgment motions where it is unclear for which motion the
work was done (“MSJ hours”).

FLS argues that these percentages

are too high.
The Court agrees with FLS that of the “mixed hours” billed,
the percentage Plaintiffs attribute to work done on FLS’s claims
- 11 -

is unreasonably high.

Plaintiffs were pursuing claims against

numerous parties in addition to defending against FLS’s claims.
Thus, the majority of the litigation in this case was not between
Plaintiffs and FLS.

It is hard to imagine how 80% of the “mixed

hours”

a

“a[rose]

as

Plaintiffs and FLS.

consequence

of”

the

Agreement

between

But, by the same token, it cannot be said —

as FLS suggests — that none of the “mixed hours” “a[rose] as a
consequence of” the Agreement.
hours”

work

Plaintiffs.

should

be

At least a portion the “mixed

attributed

to

FLS’s

claims

against

Therefore, the Court finds it reasonable to attribute

50% of the “mixed hours” to FLS.

Plaintiffs’ petition claims a

total of $51,769.97 in fees for “mixed hours.”

After reducing

this total by 50% FLS is responsible for $25,884.99.
Similarly,

Plaintiffs’

attorneys’

fees

summaries

include

numerous entries for work done on summary judgment motions without
indicating for which party’s motion the work was done.
associated with these “MSJ hours” total $29,025.00.
have requested that FLS pay 50% of these fees.

The fees
Plaintiffs

Plaintiffs were

involved in four of the motions for summary judgment filed in this
case, only two of which involved FLS.

Therefore, of the work

Plaintiffs did on summary judgment motions, it could reasonably be
said that half “a[rose] as a consequence of” the Agreement between
FLS and Plaintiffs.

As such, the Court finds Plaintiffs’ request

for $14,512.50 in fees for “MSJ hours” to be reasonable.

- 12 -

FLS also argues that any work done to prove that the Court
has subject matter jurisdiction over the case is not compensable
because the Plaintiffs had the burden of proving this even if FLS
were not involved in the suit.
Plaintiffs

burden

of

jurisdiction,

FLS

was

jurisdiction

in

this

matter
court’s

had

the

Although it is true that the

proving
the

the

only

case.

existence

party
By

of

subject

challenging

raising

the

continuous

challenges to the Court’s jurisdiction, FLS created the work for
which it is now being charged.
defeated

these

challenges

Court had jurisdiction.

and

Moreover, Plaintiffs successfully
met

their

burden

of

proving

the

Therefore, Plaintiffs are entitled to the

$21,075.00 in fees claimed for this work.
b.

Work Related to Unsuccessful Motion Practice

Next, FLS argues that Plaintiffs should not be awarded fees
for work done on unsuccessful motions, like Plaintiffs’ motion to
dismiss FLS’s claims.

FLS’s claims against Plaintiffs “a[rose] as

a consequence of” the Agreement between FLS and Plaintiffs, so
Plaintiffs’
well.

The

motion

to

Agreement

dismiss

those

provides

claims

that

attorneys’ fees shall be reimbursed.

the

necessarily

did

as

prevailing

party’s

It contains no limitation

regarding reimbursement for unsuccessful work done prior to the
prevailing party’s ultimate success in the suit.

Therefore, the

Court grants Plaintiffs’ request for $18,075.00 in fees for work
done on motions filed against FLS.

- 13 -

c.
FLS

argues

Work on Plaintiffs’ Fee Petition
further

that

Plaintiffs

are

not

entitled

to

recover fees incurred in preparing the fee petition because the
majority of the fees sought by Plaintiffs in their petition are
not compensable.

The Court disagrees.

A review of Plaintiffs’

fee petition shows that most of the fees they have requested are
commercially

reasonable

and

compensable.

Therefore,

Plaintiffs

are entitled to recover the fees incurred in preparing the fee
petition.

Phoenix Bond & Indem. Co. v. Bridge, No. 05 C 4095,

2014 WL 1688491, at *5 (N.D. Ill. Apr. 29, 2014).
The

total

amount

of

fees

requested

for

work

preparation of Plaintiffs’ fee petition is $7,775.00.

done

in

Of this

work, $5,075.00 has already been dealt with as part of the “mixed
hours” analysis above.

Plaintiffs are entitled to the remaining

$2,700.00 in full.
d.

Work Done on Behalf of Tom Philipsborn

Finally, FLS argues that Plaintiffs should not be awarded
fees for any work done on behalf of Tom Philipsborn because he is
not a party to the Agreement.

It is true that Tom Philipsborn is

not a party to the Agreement between FLS and the Trust.

As such,

he does not have a contractual right to recover attorneys’ fees.
Plaintiffs have requested $5,075.00 in fees for work that related
to both Tom Philipsborn and the Trust.

Because there is no way to

identify

the

the

compensable

work

from

- 14 -

non-compensable

work

associated with these fees, the Court finds it reasonable to award
Plaintiffs 50% of the amount claimed, or $2,537.50.
To

summarize,

Attorneys’

Fees

as

the

Court

modified.

grants

Plaintiffs’

Plaintiffs

are

Request

entitled

to

for
the

following amounts in attorneys’ fees:
1.

$23,250 for work that was 100% attributable to FLS’s claims

and only generally objected to as also necessary for Plaintiffs' claims
against the other parties;
2.

$25,884.99 for “mixed hours”;

3.

$14,512.50 for “MSJ hours”;

4.

$21,075.00 for Plaintiffs’ burden issues raised by FLS;

5.

$18,075.00 for motion practice against FLS;

6.

$2,700.00 for preparation of fee petition;

7.

$2,537.50

for

work

that

related

to

the

Trust

and

Tom

Philipsborn.

Therefore, Plaintiffs’ Request for Attorneys’ Fees is reduced
to a total of $108,034.99.
2.
The

Court

FLS’s Motion Against Plaintiffs

granted

Plaintiffs’

Motion

for

Summary

Judgment

against FLS and denied FLS’s Motion for Summary Judgment against
Plaintiffs.

Therefore, FLS did not prevail in its claims against

Plaintiffs and has no right under the plain language of Section 10
of

the

Agreement

to

recover

attorneys’

fees

from

Plaintiffs.

Nonetheless, FLS argues that Section 10 of the Agreement should be
construed as an indemnity clause entitling FLS to indemnification

- 15 -

by

Plaintiffs

Avon’s

for

claim.

the

fees

FLS’s

FLS

incurred

argument

in

this

in

defending

regard

fails

against
for

two

reasons.
First, FLS’s proposed construction of Section 10 goes against
Illinois law and the plain language of the Agreement.

Illinois

cases have established that indemnity contracts must be strictly
construed.

Downs

v.

1057, 1059 (2008).
makes

no

mention

face,

Section

10

Rosenthal

Group,

LLC,

895

N.E.2d

Section 10 is labeled “Attorneys’ Fees” and
of

“indemnity”

is

a

beyond

its

or

fee-shifting

parties to the contract.
provision

Collins

“indemnification.”
provision

On
the

between

its
two

The Court declines to construe this

terms

to

require

indemnification

for

attorneys’ fees incurred against third parties.
Second, even if the Court were to construe Section 10 as an
indemnity clause, the claim brought by Avon against FLS “is based,
at

least

in

part,

and

perhaps

in

its

undertaking of FLS directly with Avon.”

entirety,

on

(ECF No. 213).

a

second

As such,

Avon’s claims against FLS did not “arise as a consequence of” the
Agreement between FLS and Plaintiffs, and FLS does not have a
contractual

basis

by

which

to

claim

attorneys’

fees

from

Plaintiffs.
FLS does not have a contractual right to recover attorneys’
fees from Plaintiffs because it is not the “prevailing party” in

- 16 -

its

claims

against

Plaintiffs.

Therefore,

FLS’s

request

for

$362,186.40 in attorneys’ fees is denied.
V.

CONCLUSION

For the reasons stated herein, the Court rules as follows:
1.

Plaintiffs’ Petition for Attorneys’ Fees [ECF No. 228]

is granted as modified;
2.

Plaintiffs are awarded attorneys’ fees in the amount of

$108,034.99;
3.

Trudeau’s Renewed Motion for Judgment as a Matter of Law

[ECF No. 252] is denied;
4.

Plaintiffs’

Motion

for

Prejudgment

Interest

[ECF

No. 250] is denied; and
5.

FLS’s

Petition

for

Attorneys’

Fees

[ECF

No.

230]

denied.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated:September 28, 2015

- 17 -

is