ORIX Capital Markets, LLC in its capacity as special servicer and attorney-in-fact for WELLS FARGO BANK, N.A., et al. v. Cadlerocks Centennial Drive, LLC et al

Filing 220

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER: "In accordance with the foregoing, 1) defendants' motion for reconsideration of order regarding ORIX's attorneys' fees and costs (Docket No. 174 ) is ALLOWED, in p art, and DENIED, in part; 2) the previous order awarding $50,000 in attorneys' fees and $5,609.75 in costs (Docket No. 148 ) is VACATED; and 3) plaintiff is awarded $20,000 in attorneys' fees and $2,272.05 in costs. So ordered."(Moore, Kellyann)

United States District Court
District of Massachusetts
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Plaintiff,
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v.
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CADLEROCKS CENTENNIAL DRIVE, LLC )
and DANIEL CADLE,
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Defendants.
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ORIX CAPITAL MARKETS, LLC, in
its capacity as special servicer
and attorney-in-fact for WELLS
FARGO BANK, N.A., formerly known
as Wells Fargo Bank Minnesota,
N.A., as Trustee for the
registered holders of Salomon
Brothers Mortgage Securities
VII, Inc., Commercial Mortgage
Pass-Through Certificates,
Series 2000 C-2,

Civil Action No.
10-12019-NMG

MEMORANDUM & ORDER
GORTON, J.
Defendants Cadlerocks Centennial Drive, LLC and Daniel
Cadle (“Cadle”) (collectively, “defendants”) move for
reconsideration of the award of $50,000 in attorneys’ fees and
$5,609.75 in costs to plaintiff ORIX Capital Markets
(“plaintiff”).

VFC Capital Partners 26, LLC (“VFC”), which

became the plaintiff-in-substitution in July, 2013, opposes the
motion.

For the reasons that follow, the motion will be

allowed, in part, and denied, in part, and the Court will award
plaintiff $20,000 in attorneys’ fees and $2,272.05 in costs.
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I.

Background
In 2010, plaintiff brought suit against defendants for

breach of a promissory note, a Guaranty and an Environmental
Indemnity Agreement.

In October, 2012, the Court entered

partial summary judgment for plaintiff on the grounds that
defendants had misappropriated rent payments worth $33,484.
Following a three-day bench trial in December, 2012, the Court
found defendants liable under the Guaranty and Environmental
Indemnity Agreement and awarded plaintiff $104,106 in damages.
Specifically, it awarded $102,536 for damages associated with
environmental testing and $1,570 to account for defendants’
failure to maintain the property.

Thus, the total judgment

against defendants amounted to $137,590.
Following the trial, plaintiff sought $85,095.50 in
attorneys’ fees and $6,187.79 in costs pursuant to defendants’
agreement to reimburse the holder of the Guaranty and Mortgage
for reasonable attorneys’ fees and costs incurred in enforcing
their contractual obligations.

The Court awarded $50,000 in

attorneys’ fees and $5,609.75 in costs.
Defendants appealed the finding of liability and award of
damages under the Environmental Indemnity Agreement.

The First

Circuit Court of Appeals agreed that defendants were not liable
for the costs of environmental testing under that agreement.
vacated the award of $102,536 in damages and remanded for
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It

reconsideration of the award of attorneys fees and costs in
light of that ruling.
II.

Defendants’ Motion for Reconsideration of Fees and Costs
Cadle is personally liable for attorneys' fees and costs

based upon two contractual provisions.

First, under the

Guaranty, he agreed to
pay all costs and out-of-pocket expenses, including
court costs and reasonable fees and disbursements of
legal counsel, incurred on behalf of Lender in
connection with the enforcement of Guarantors'
obligations under this Guaranty.
Additionally, the Mortgage renders Cadle liable for
all costs and expenses incurred in pursuing such
remedies [contained in the Loan Documents], including,
but not limited to reasonable attorneys' fees and
costs....
Defendants nevertheless contend that plaintiff is entitled
to only $1,068.22 in attorneys’ fees and $822 in costs.
Plaintiff argues that it is entitled to $31,103 in fees and does
not address the cost award.
A.

Attorneys’ Fees
1.

Legal Standard for Contract-Based Fee Awards

Where, as here, the parties agree ex ante about how to
allocate the costs of enforcing an agreement, “the question of
what fees are owed is ultimately one of contract
interpretation.” AccuSoft Corp. v. Palo, 237 F.3d 31, 61 (1st
Cir. 2001) (quoting MIF Realty, L.P. v. Fineberg, 989 F. Supp.

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400, 402 (D. Mass. 1998)).

The court's "primary obligation is

simply to honor the agreement struck by the parties." Id.

Its

discretion is more limited when the parties have agreed what
fees are appropriate than under a fee-shifting statute. Id.
(citations omitted).
Generally, when determining a fee pursuant to a contractual
provision the court considers the factors set forth in Cummings
v. National Shawmut Bank of Boston, which include
the ability and reputation of the attorney, the demand
for his services by others, the amount and importance
of the matter involved, the time spent, the prices
usually charged for similar services by other
attorneys in the same neighborhood, the amount of
money or the value of the property affected by
controversy, and the results secured.
188 N.E. 489, 492 (Mass. 1934).

No single factor is

dispositive. Id.
2.

Application

Defendants maintain that plaintiff is entitled to claim
only $1,068.22 in attorneys’ fees.

They first suggest that the

lodestar should be set at $15,849 because 1) plaintiff did not
prevail on any of the claims advanced at trial and therefore
should not be compensated for time its attorneys spent at trial
or preparing for trial and 2) the Court did not rely on any
material obtained through discovery in awarding damages for
misappropriation for rent on summary judgment.

Furthermore,

they argue that plaintiff is entitled to about 7% of that
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lodestar because it recovered only about 7% of its requested
damages.
The Court declines to adopt that lodestar calculation or to
limit recovery according to the ratio of damages obtained over
damages claimed.

Instead, the Court concludes that $20,000 in

attorneys’ fees is adequate under the aforementioned contractual
fee-shifting agreements.

First, it notes that plaintiff

succeeded only on its misappropriation of rent claim and that
result was obtained prior to trial.

As a result, any fees

incurred after October 10, 2012 are not compensable.

The Court

therefore bases the lodestar on the following calculations:
Attorney Batastini: 78.6 hours x $355/hour = $27,903
Paralegal Mahoney: 25.6 hours x $125/hour = $ 3,200
Total
$31,103
The Court will reduce that figure to $20,000, however, to
account for the fact that at least some of the time spent on the
summary judgment motion was allocated to its unsuccessful claim
under the Environmental Indemnity Agreement.

It declines

defendants’ invitation to limit fees to 7% of the lodestar
because a rigid formula based solely upon damages awarded as a
proportion of damages sought is at odds with the flexible and
multi-factored test for determining a reasonable fee. See
AccuSoft, 237 F.3d at 61; Cummings, 188 N.E. at 492.

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B.

Costs

The Court previously awarded $5,609.75 in costs pursuant to
Fed. R. Civ. P. 54(d)(1), which allows the Court to award the
“prevailing party” any costs incurred in litigating an action
beyond attorneys’ fees.

For the reasons stated above, plaintiff

was not the “prevailing party” at trial.

Although it

technically prevailed on its claim for property damage, it
recovered only a small fraction of the damages it sought.
Moreover, the First Circuit vacated this Court’s award of
damages under the Environmental Indemnity Agreement. Thus, while
plaintiff “prevailed on the merits of at least some of [its]
claims” asserted at trial, Spooner v. EEN, Inc., 664 F.3d 62, 66
(1st Cir. 2011) (citing Buckhannon Bd. & Care Home, Inc. v. W.
Va. Dep’t of Health & Hum. Resources, 532 U.S. 598, 603 (2001)),
defendants were ultimately more successful at trial and
therefore should not be required to bear plaintiff’s costs
during that phase of the litigation. See Estate of Hevia v.
Portrio Corp., 602 F.3d 34, 46-47 (1st Cir. 2010) (“In
situations where one party prevails on some claims and the other
party prevails on other claims, the litigants are commonly
ordered to bear their own costs.”).
Plaintiff is therefore not entitled to recover costs
incurred between November, 2012 and January, 2013. See Bill of
Costs, Docket No. 134.

It is, however, entitled to collect
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$2,272.05 in costs incurred prior to those dates because those
expenses are attributable, at least in part, to its successful
claim for misappropriation of rent.
ORDER
In accordance with the foregoing,
1)

defendants’ motion for reconsideration of order
regarding ORIX’s attorneys’ fees and costs (Docket No.
174) is ALLOWED, in part, and DENIED, in part;

2)

the previous order awarding $50,000 in attorneys’ fees
and $5,609.75 in costs (Docket No. 148) is VACATED;
and

3)

plaintiff is awarded $20,000 in attorneys’ fees and
$2,272.05 in costs.

So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated July 8, 2014

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