BELL v. MERCHANTS BANK OF INDIANA
Filing
160
ORDER DENYING PLAINTIFF'S MOTION FOR ATTORNEY'S FEES AND COSTS - The Trustee's Motion for Attorney's Fees and Costs is DENIED. Dkt. 152 (SEE ORDER FOR ADDITIONAL INFORMATION). Signed by Judge James Patrick Hanlon on 7/6/2022. (DWH)
Case 1:18-cv-00056-JPH-DLP Document 160 Filed 07/06/22 Page 1 of 8 PageID #: 993
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
MICHAEL J. HEBENSTREIT Trustee of
the Bankruptcy Estate for Richard N.
Mr. Bell,
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Plaintiff,
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v.
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MERCHANTS BANK OF INDIANA,
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Defendant.
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Bankruptcy Trustee Michael J
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Hebenstreit MICHAEL J. HEBENSTREIT, )
TRUSTEE OF THE BANKRUPTCY
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ESTATE OF RICHARD N. MR. BELL
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agent TRUSTEE OF THE
)
BANKRUPTCY ESTATE OF RICHARD N. )
MR. BELL,
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Trustee.
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No. 1:18-cv-00056-JPH-DLP
ORDER DENYING PLAINTIFF'S MOTION FOR
ATTORNEY’S FEES AND COSTS
Richard Bell sued Merchants Bank of Indiana for copyright infringement
after he saw one of his photographs on its website. He prevailed on that claim
and was awarded $200—the required statutory minimum—in damages. The
Trustee in Mr. Bell's bankruptcy proceeding, who was substituted as the
plaintiff in this case, has filed a motion seeking over $17,000 in attorney fees
and costs. Dkt. [152]. For the reasons that follow, the motion is DENIED.
I.
Facts and Background
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Richard Bell filed this lawsuit against Merchants Bank of Indiana and its
website developer, Sonar Studios Inc., alleging that they violated his copyright
by using his "Indianapolis Nighttime Photo" on a page of Merchants' website.
Dkt. 23. Mr. Bell settled the claims against Sonar for $2,000, dkts. 93, 114 at
4, while he and Merchants filed cross motions for summary judgment, dkts.
56, 74. The Court found that Mr. Bell owned the rights to the photo and that
Merchants infringed those rights by displaying it on its website, but that
Merchants’ infringement was not willful. Dkt. 98.
Before the damages hearing, Mr. Bell was substituted as plaintiff by
Michael J. Hebenstreit, who was appointed as Trustee in Mr. Bell's Chapter 7
bankruptcy proceeding. Dkt. 138. After the hearing, the Court concluded that
Merchants' infringement was "innocent" and that the need for deterrence was
minimal because Merchants "had no reason to believe that its acts constituted
copyright infringement." Dkt. 144 at 7. The Trustee was thus awarded the
statutory minimum amount of damages, $200, id. at 8, and the award was
credited against Mr. Bell's settlement with Sonar, id. at 9.
The Trustee has filed a motion under 17 U.S.C. § 505 seeking
$17,197.50 in attorney fees and costs. Dkt. 152. This includes $9,270 in
attorney's fees for Mr. Bell's former co-counsel, Maura Kennedy; $6,987.50 in
attorney's fees for Mr. Bell's own representation of the Trustee; and costs of
$940. Dkts. 153-1; 153-2. Mr. Bell is a licensed attorney and originally filed a
notice of appearance on his own behalf, dkt. 2. Ms. Kennedy initially served as
co-counsel with Mr. Bell, dkt. 20, but has not been active in the case for nearly
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two years. See dkt. 57; dkt. 153-2. Mr. Bell refiled his appearance as attorney
for the Trustee after he was substituted as Plaintiff. Dkt. 139.
II.
Applicable Law
Section 505 of the Copyright Act provides that, in civil actions for federal
copyright infringement, "the court in its discretion may allow the recovery of
full costs by or against any party . . . the court may also award a reasonable
attorney's fee to the prevailing party as part of the costs." 17 U.S.C. § 505.
However, "a district court may not 'award[] attorney's fees as a matter of
course'; rather, a court must make a more particularized, case-by-case
assessment." Kirtsaeng v. John Wiley & Sons, Inc., 579 U.S. 197, 202 (2016)
(quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 533 (1994)).
III.
Discussion
The Trustee argues that an award of attorney's fees and costs is
appropriate here because Merchants pursued legally frivolous defenses and
carelessly infringed on Mr. Bell’s copyright. Dkt. 153 at 6. Thus, denying
attorney's fees and costs would "unfairly shift the burden of Merchants' illegal
actions on to Plaintiff." Id. Merchants responds that the Court should not
award fees because Mr. Bell and Ms. Kennedy waived their rights to
compensation, dkt. 156 at 4-7, and regardless, the motion for fees does not
satisfy Section 505, dkt. 156 at 7–10.
A. Attorney's Fees
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In determining whether to award attorney's fees in copyright cases,
courts consider certain "nonexclusive factors" including "'frivolousness,
motivation, objective unreasonableness (both in the factual and in the legal
components of the case) and the need in particular circumstances to advance
considerations of compensation and deterrence.'" Timothy B. O'Brien LLC v.
Knott, 962 F.3d 348, 350 (7th Cir. 2020) (quoting Fogerty, 510 U.S. at 534).
The balancing of these factors should "give substantial weight to the objective
reasonableness of the losing party's position." Id. at 351 (citing Kirtsaeng, 579
U.S. at 199–200). But that factor is not determinative. Id.
1. Reasonableness, Frivolousness, & Motivation
Here, the losing party is Merchants, so the analysis begins by assessing
the reasonableness of its litigation position.
The Trustee argues that Merchants "has not and cannot advance" a
nonfrivolous or objectively reasonable justification for violating the Copyright
Act and that it "spent significant amounts of time arguing several 'affirmative
defenses' that [were] not supported by law or evidence." Dkt. 153 at 6.
Merchants responds that it pursued legally reasonable defenses to claims that
its infringement was willful and that Mr. Bell's "insistence" on seeking the
statutory maximum in damages "effectively held Merchants hostage." Dkt. 156
at 8–9.
The record in this case shows that Merchants defended its position by
advancing reasonable legal arguments in response to Mr. Bell's damage
demand. Upon seeing the photo on Merchants’ website, Mr. Bell demanded
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that Merchants take it down and pay him $5,000. Dkt. 144 at 4. Without
checking to see if Merchants had taken the photo down, Mr. Bell filed this
lawsuit. Id. Then, without conducting any discovery, Mr. Bell increased his
demand to $150,000 "because of Merchant’s 'obstinance'." Dkt. 144 at 4, 7.
After the Court found at summary judgment that Merchants had not willfully
infringed, Mr. Bell argued for the maximum statutory damages of $30,000.
Dkt. 112 at 6. But Mr. Bell also admitted his actual damages—for which he
had been compensated in the $2,000 settlement with Sonar—could not have
exceeded $200. Dkt. 144 at 7.
Considering that Mr. Bell would not reduce or dismiss his damages
claim, even after his related settlement with Sonar, Merchants' decision to
continue litigating this case was not unreasonable. Id. Furthermore, while Mr.
Bell is the prevailing party, the Court found that there was "no evidence that
Merchants intended to infringe on Mr. Bell's copyright" but rather that it had a
"credible, good faith belief" that Sonar had obtained permission to use the
photo. Dkt. 144 at 6.
As for motivation, the Court found that Merchants had no profit motive
for using the photo, instead using it on a blog post for attracting new
employees. Id. at 6–7. Mr. Bell, on the other hand, filed the copyright
infringement lawsuit without checking to see if Merchants had removed the
image after receiving his pre-suit demand—which it had done immediately.
See id. at 4. "[F]ee awards under § 505 should encourage the types of lawsuits
that promote" two goals of "encouraging and rewarding authors’ creations while
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also enabling others to build on that work." Kirtsaeng, 579 U.S. at 204. This
lawsuit did not promote either goal. 1
Therefore, the factors of frivolousness, motivation, and objective
reasonableness weigh against granting the Trustee attorney's fees.
2. Need for Compensation & Deterrence
The need for compensation and deterrence in this case also weigh
against the Trustee. Regarding compensation, Mr. Bell negotiated a settlement
with Sonar for substantially more money than he would have earned had he
sold the image to Merchants. See dkt. 144 at 7, 9 (compare the $200 Mr. Bell
could have received had Merchants bought the image, with the $2,000
settlement with Sonar). Moreover, the Court applied the $200 award that the
Trustee received from the hearing as a credit on that settlement—thus relieving
Merchants of all financial liability even though Mr. Bell had prevailed on his
infringement claim.
Finally, the record demonstrates that Merchants was not aware and had
no reason to believe that its acts constituted copyright infringement, dkt. 166
at 7, so the need for deterrence is low.
Mr. Bell has a history of filing similar actions regarding the same, or similar, images
as were in dispute here. See dkt. 144 at 4 (noting that Mr. Bell has "only earned $825
from legitimate[ ] sales of the Photo, [while extracting] $135,200 in settlements for
purported copyright infringement claims"); see also Bell v. Lantz, 825 F.3d 849, 850
(7th Cir. 2016) (where the Seventh Circuit discussed a fee award granted to a
defendant in another of Mr. Bell's copyright suits and reiterated the district court's
finding that "Bell's motivation in filing the action was questionable in that Bell had
filed a multiplicity of suits, each involving the same or similar infringement
allegations with quick settlements.").
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Therefore, the Trustee's motion is denied with respect to attorney's fees.
Having found that attorney’s fees are not warranted under § 505, the Court
does not address the merits of Merchants’ argument regarding Plaintiff’s
counsels’ waiver of their right to recover fees, dkt. 156 at 4-7.
2. Costs
The Trustee seeks $540 for costs of conducting depositions and
reimbursement of the $400 filing fee, for a total of $940. Dkt. 153-2. Like an
award for attorney's fees, the Court has discretion as to whether the Trustee is
entitled to the costs of this action. 17 U.S.C. § 505 ("the court in its discretion
may allow the recovery of full costs by or against any party."). Considering all
the aspects of this case that weigh against an award of attorney's fees, the
Trustee's request for costs is denied as well.
IV.
Conclusion
The Trustee's Motion for Attorney's Fees and Costs is DENIED. Dkt. [152].
SO ORDERED.
Date: 7/6/2022
Distribution:
Richard N. Bell
BELL LAW FIRM
richbell@comcast.net
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Case 1:18-cv-00056-JPH-DLP Document 160 Filed 07/06/22 Page 8 of 8 PageID #: 1000
Michael Joseph Hebenstreit
LEWIS & KAPPES PC
mhebenstreit@lewis-kappes.com
Maura K. Kennedy
THE LAW OFFICE OF MAURA K. KENNEDY, LLC
attorneymaurakennedy@gmail.com
David W. Patton
DINSMORE & SHOHL LLP (Indianapolis)
David.Patton@dinsmore.com
John D. Waller
WOODEN & MCLAUGHLIN LLP (Indianapolis)
john.waller@woodenlawyers.com
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