1st Source Bank v. Neto et al

Filing 113

OPINION AND ORDER: GRANTING 112 MOTION for Attorney Fees by Plaintiff 1st Source Bank. This Court enters a final judgment in favor of 1st Source Bank and against Defendants in the updated amount of $2,537,362.52 (plus interest at a per diem rate of $575.25 from February 21, 2018 to the date of judgment), plus attorney fees, costs, and expenses in the amount of $149,784.43. Signed by Judge Jon E DeGuilio on 6/13/2018. (lhc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
1ST SOURCE BANK,
Plaintiff/Counter-defendant,
v.
JOAQUIM SALLES LEITE NETO, et
al.,
Defendants/Counter-plaintiffs.

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Case No. 3:15-CV-261-JD

OPINION AND ORDER
Now before the Court is Plaintiff 1st Source Bank’s (“1st Source”) Motion For
Attorneys’ Fees, Costs, and Expenses [DE 112] in response to the Court’s granting summary
judgment [DE 110] on its claim for breach of contract against Defendants Joaquim Salles Leite
Neto (“Neto”) and Wells Fargo Bank Northwest, National Association, in its capacity as Owner
Trustee (“Wells Fargo”) (collectively, “Defendants”). For the reasons that follow, the Court finds
that the attorney fees and costs sought by 1st Source in the amount of $149,784.43 are reasonable
and allowable, and that the principal, interest, late fees, and charges of $2,537,362.52 (plus
interest accruing until the entry of final judgment) are consistent with the terms of the documents
executed and breached by Defendants.
I. Background
In granting 1st Source’s motion for summary judgment on January 25, 2018 [DE 110 (as
incorporated herein)], the Court found that Wells Fargo admittedly executed and defaulted under
the terms of the Note [DE 79-7] and the Loan & Security Agreement [DE 79-8] which 1st
Source was entitled to enforce. The Court also determined that Neto had admittedly signed a
personal Guarantee for that loan which unconditionally guaranteed to 1st Source his payment of

the Note in full when due [DE 79-9]. Despite this personal liability, Neto did not pay the
obligations owed to 1st Source. Given the breach, the Court held that 1st Source was entitled to
receive the total amount of principal, interest, late fees, and other charges, pursuant to the terms
of the documents.1 Moreover, the Court concluded that 1st Source was entitled to an award of
attorney fees, expenses, and costs incurred in this litigation, consistent with section 1 of the Note,
section 5(b) of the Loan & Security Agreement, and section 2 of the Guarantee [DE 79-9]. As a
result, the Court provided 1st Source an opportunity to establish the amount of fees and expenses
owed.
In support of an award for such damages, 1st Source has filed (1) the affidavit of Alice J.
Springer (a named partner of the law firm Barnes & Thornburg LLP, who has represented 1st
Source throughout this matter), which explains the type of legal work performed and the
education/experience of those performing it [DE 112-1 at 1-7]; (2) Exhibits A and B to Ms.
Springer’s affidavit, which consist of itemized fees and expenses, accompanied by descriptions
of the work performed/expenses incurred, identification of the billing personnel, and disclosure
of the time billed/amounts charged [DE 112-1 at 8-69]; and (3) an affidavit of Richard
Rozenboom (1st Source’s Vice President and Senior Work-Out Officer, who has personal
knowledge of the amounts owed under the loan documents as of February 20, 2018) [DE 112-2].
Defendants have not filed any response to the motion.

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The Court determined that as of January 26, 2017, the total amount of principal, interest, late
fees, and other charges due was $2,306,807.20, with interest continuing to accrue at $529.32 per
day. 1st Source has provided undisputed updated figures and supporting documentation
reflecting that as of February 20, 2018, the following amounts are due (exclusive of attorney
fees): Principal: $2,057,600.52; Interest: $431,985.28; Late Fees: $37,127.28; and Non-Legal
Expenses: $10,649.44; with interest continuing to accrue at a per diem rate of $575.25 until final
judgment is entered [DE 112 at 4-6; DE 112-2].
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II. Discussion
It is uncontested that Indiana law provides the basis for deciding whether fees can be
awarded in a breach of contract action. Indiana adheres to the American rule, under which, in the
absence of a statutory provision or an agreement providing for fees, each party is required to pay
its own attorney fees. See Osler Inst., Inc. v. Forde, 386 F.3d 816, 818 (7th Cir. 2004) (citing
Willie’s Construction Co. v. Baker, 596 N.E.2d 958 (Ind. Ct. App. 1992)); see also Reuille v.
E.E. Brandenberger Const., Inc., 888 N.E.2d 770, 771 (Ind. 2008) (“Parties to litigation
generally pay their own attorney fees, but may certainly agree by contract to do otherwise.”)
(citation omitted). However, when a contract exists allowing for the recovery of attorney fees,
the provision will be enforced according to its terms unless it violates public policy. Id. (citing
Harrison v. Thomas, 761 N.E.2d 816 (Ind. 2002)). The overriding concern in determining
whether a fee-shifting provision should be upheld is whether enforcement makes the prevailing
party whole. Walton v. Claybridge Homeowners Ass’n, Inc., 825 N.E.2d 818, 825 (Ind. Ct. App.
2005).
In this case, the Note is subject to the terms of the Loan & Security Agreement [DE 79-7
at 1]; which, in turn, states:
Customer also shall pay to Bank . . . any fees, costs, expenses, penalties, or
interest incurred by Bank in connection with this Agreement, any Note or any of
the Collateral, including without limitation, fees, costs, or expense of . . . and (vi)
all attorneys’ and other professionals retained by Bank in connection with any of
the foregoing, or any exercise of other remedies upon occurrence of default . . . .
[DE 79-8 at 2].
The Guarantee also states that Neto unconditionally guarantees:
the payment in full when due . . . of all amounts payable by the Borrower to the
Lender, including, but not limited to, any and all reasonable counsel fees and
other expenses . . . under the Loan Agreement and the other operative documents.

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[DE 79-9 at 3].
Defendants have not asserted that the fees and expenses incurred by 1st Source, as
detailed in Ms. Springer’s affidavit and the itemized bills, are not allowable under the terms of
the loan documents and Guarantee. The fee-shifting provisions are broad and encompass the time
and expenses related to litigating this case and enforcing 1st Source’s rights under the terms of
the contracts executed by Defendants. Thus, in order to make 1st Source whole, its fees and
expenses incurred in connection with the breached contracts ought to be reimbursed by
Defendants.
However, as the fee applicant, 1st Source bears the burden of “produc[ing] satisfactory
evidence—in addition to the attorney’s own affidavit[]—that the requested rates are in line with
those prevailing in the community.” Pickett v. Sheridan Health Care Center, 664 F.3d 632, 640
(7th Cir. 2011) (citations omitted) (citing Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)). If the
fee applicant satisfies this burden, the burden shifts to the other party to offer evidence that sets
forth “a good reason why a lower rate is essential.” Id. (citations omitted). However, if the fee
applicant does not satisfy its burden, the district court has the authority to make its own
determination of a reasonable rate. Id. (citing Uphoff v. Elegant Bath, Ltd., 176 F.3d 399, 409
(7th Cir. 1999)). To then calculate reasonable fees, courts use the lodestar method, which 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); see also Hall v. Forest River, Inc., No. 3:04CV-259-RLM, 2008 WL 1774216, at *1 (N.D. Ind. Apr. 15, 2008); Barker v. City of W.
Lafayette, 878 N.E.2d 230, 232-33 (Ind. Ct. App. 2007). There is a strong presumption that the
lodestar calculation yields a reasonable attorney fee award. Pickett, 664 F.3d at 639. The fee
applicant must also document its hours and hourly rates. Hensley, 461 U.S. at 437. Counsel is,

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“not required to record in great detail how each minute of his time was expended. But at least
counsel should identify the general subject matter of his expenditures.” Id. at 437, n.12.
In the supporting affidavit and itemized accounting of fees [DE 112-1], counsel has
indicated that two partners primarily litigated this case, while an additional two attorneys assisted
with specific tasks. All four attorneys billed at a flat rate of $350.00 per hour. Because 1st Source
applied a portion of the insurance proceeds to legal fees incurred before November 30, 2015,
counsel seek only to recover fees incurred after December 1, 2015. Those attorney fees total
$145,145.00, or approximately 415 billable hours. In addition, 1st Source incurred $4,639.43 in
other litigation costs, as identified in Ms. Springer’s affidavit [DE 112-1 at 6].
The best evidence of an attorney’s market rate is his or her actual billing rate for similar
work. Pickett, 664 F.3d at 639–40. Here, counsel confirms that the rates billed were the
attorneys’ standard hourly rates for the services which were provided. In addition, 1st Source
paid the invoices submitted by Barnes & Thornburg LLP, which is further evidence of the
reasonableness of the fee request. See Broaddus v. Shields, 665 F.3d 846, 860 (7th Cir. 2011)
(holding “one of the best indicators of commercial reasonableness is a willingness to pay the fees
without guaranteed reimbursement.”) (citing Matthews v. Wis. Energy Corp., 642 F.3d 565, 573
(7th Cir. 2011)). Moreover, Defendants have not suggested that the hourly rate, the number of
hours billed, or the nature of the charges are unreasonable. Nor have Defendants contested the
manner in which the fees and expenses were calculated. And a challenger’s failure to present any
evidence challenging the fee applicant’s request “is essentially a concession that the attorney’s
billing rate is reasonable and should be awarded.” People Who Care v. Rockford Board of
Education, School District 205, 90 F.3d 1307, 1313 (7th Cir. 1996). Accordingly, the Court finds
that 1st Source has met its burden in proving that its rates and the amount of hours billed are

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reasonable for the services rendered in successfully litigating this contested action (complicated
by the collateral’s being confiscated by Brazilian authorities) and securing a judgment of over
two and a half million dollars.
III. Conclusion
For the reasons stated, the Court GRANTS 1st Source’s uncontested Motion For
Attorneys’ Fees, Costs, and Expenses [DE 112]. This Court enters a final judgment in favor of
1st Source Bank and against Defendants in the updated amount of $2,537,362.52 (plus interest at
a per diem rate of $575.25 from February 21, 2018 to the date of judgment), plus attorney fees,
costs, and expenses in the amount of $149,784.43.
SO ORDERED.
ENTERED: June 13, 2018
/s/ JON E. DEGUILIO
Judge
United States District Court

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