JPMorgan Chase Bank, N.A. v. Winget et al

Filing 671

MEMORANDUM AND ORDER GRANTING IN PART CHASES MOTION FOR COSTS AND EXPENSES OF COLLECTION PURSUANT TO ORDER OF FINAL JUDGMENT (Doc. 563). Signed by District Judge Avern Cohn. (MVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

JPMORGAN CHASE BANK, N.A.,
Plaintiff/
Counter-Defendant,
v.

Case No. 08-13845
HON. AVERN COHN

LARRY J. WINGET and the
LARRY J. WINGET LIVING TRUST,
Defendants/
Counter-Plaintiffs.
__________________________________/

MEMORANDUM AND ORDER
GRANTING IN PART CHASE’S MOTION FOR COSTS AND EXPENSES OF
COLLECTION PURSUANT TO ORDER OF FINAL JUDGMENT (Doc. 563)1

1

Although titled as a motion for “costs and expenses,” the Court prefers to use
the term expenses, which represents attorney and legal professional fees and out of
pocket expenses.

TABLE OF CONTENTS

I.

Introduction

1

II.

Background
A.
Prejudgment Proceedings
B.
The Amended Final Judgment
C.
Section 17

2
2
4
6

III.

Reasonableness

7

IV.

The 2005 and 2006 Actions

8

V.

This Action
A.
Apportionment
B.
Specific Objections
1.
Overstaffing and Ministerial Tasks
2.
Attorney Time Spent Preparing as a Witness
3.
Rule 11 Costs as Duplicative
4.
Data Storage

12
12
13
14
17
17
18

VI.

Conclusion

19

I. Introduction
This case involves a commercial dispute. J. P. Morgan Chase (Chase) is the
administrative agent for a group of lenders that extended credit to Venture Holdings
Company, LLC (Venture) under a credit agreement. In the complaint (Doc. 1), Chase
sued Larry J. Winget (Winget) and the Larry J. Winget Living Trust (Trust)2 to enforce a
Guaranty and two (2) Pledge Agreements entered into by Winget and signed by Winget
and the Winget Trust in 2002, guaranteeing the obligations of Venture. As will be
explained, the Court entered a judgment in favor of Chase that enforced the Guaranty
and Pledge Agreements against Winget and the Trust as co-extensive.
Now before the Court is Chase’s Motion for Expenses of Collection Pursuant to
Order of Final Judgment. (Doc. 563). Chase seeks total expenses in the amount of
$12,688,967.673 which Chase says is the amount of expenses outstanding as of May
31, 20154 for which Winget is liable under Section 17 of the Guaranty.

2

The Court will refer to Winget and the Trust collectively as “Winget” where
appropriate.
3

The motion requests $12,693,867.67. However, upon Winget’s initial response,
Chase conceded that an entry for attorney Washburn’s travel was mistakenly included
in Chase’s motion. In Chase’s reply brief, it withdrew this request. With the removal of
this cost for $4900.00, Chase seeks $12,688,967.67.
4

While the case was on appeal, Chase previously submitted a motion for
attorney’s fees from January 1, 2005 through February 28, 2014, and expenses from
January 1, 2005 through January 31, 2014. (Doc. 543.). The Court deferred
consideration of the motion pending the outcome of the appeal. The Court also directed
Chase to resubmit the documentation supporting its request for expenses, which it did.
See Doc. 543. Chase separated its documentation as follows: (1) expenses incurred in
JPMorgan Chase v. Winget, No. 05-74141 (E.D. Mich.) (the “2005 Action”) (Exhibit C);
(2) expenses incurred in Winget v. JPMorgan Chase, 06-13490 (E.D. Mich.) (the “2006
Action”) (Exhibit D); and (3) expenses incurred in this case, JPMorgan Chase v. Winget,
08-cv-13845 (E.D. Mich.) (attached as Exhibit E). Chase’s current motion also removed
some prior expense requests.
1

The motion papers are complete and voluminous. They comprise the following:
Chase’s motion, brief, and exhibits. Doc. 563.
Winget’s response, brief, and exhibits. Doc. 569.
Chase’s reply and exhibits. Doc. 573.
Winget’s surreply. Doc. 603.
Winget’s supplemental response following hearing. Doc. 665.
Chase’s supplemental brief following hearing. Doc. 669.
The matter is now ready for decision. For the reasons that follow, the motion is
GRANTED IN PART. The Court, in its discretion, will award Chase $11,154,874.65.
This amount represents (1) a reduction of $64,807.00 for attorney time in preparing to
be witnesses at trial, (2) a reduction of $229,855.50 for data storage and, (3) an across
the board overall reduction of ten (10) percent to account for excessiveness in the
manner in which the litigation has been prosecuted.5
II. Background
A. Prejudgment Proceedings
The Guaranty and Pledge Agreements were part of the Eighth Amendment To
Credit Agreement and form the basis for liability. Chase made three (3) claims:
Count I

Enforcement of Guaranty Against the Trust

Count II

Enforcement of Guaranty Against Winget

5

In addition to the multitude of decisions the Court has issued in this action and in
the prior actions between the parties, it is the subject of the following decisions by the
Court of Appeals for the Sixth Circuit: JP Morgan Chase v. Winget, 602 F. App’x 246
(6th Cir. 2015); Winget v. JP Morgan Chase, 537 F.3d 565 (6th Cir. 2008); JP Morgan
Chase v. Winget, 510 F.3d 577 (6th Cir. 2007).
2

Count III

Enforcement of Pledge Agreements Against Winget and
the Winget Trust

The parties disputed the amount of liability of the Trust under the Guaranty. The parties
have always agreed that Chase’s recourse against Winget was limited to $50 million.
However, Chase maintained that because Section 3 of the Guaranty only named
Winget, and not the Trust, only Winget’s liability was so limited, not the Winget Trust’s
liability. Winget and the Trust maintained that the $50 million limitation applied to both
of them and to the extent the language of the Guaranty said otherwise, it was a mistake.
The Court ruled that the plain language of the $50 million limitation in Section 3 of the
Guaranty applied only to Winget. (Doc. 18). Winget and the Trust sued for reformation
of the Guaranty. The Court, after a bench trial on reformation, found that the Trust’s
liability, i.e. Chase’s recourse, under the Guaranty was also capped at $50 million.
On October 2012, the Court entered a decision on reformation as to Count I
(Doc. 365). Count I (as reformed) and Count II were effectively the same, i.e. with the
$50 million limitation for both Winget and the Trust.
The parties then moved toward entry of a final judgment. They engaged in
extended and contentious discovery and disagreed over the issues for trial on Chase’s
complaint. This culminated in Chase filing a motion for summary judgment on Winget’s
enforceability and delay defenses. (Doc. 391). The Court granted the motion. (Doc.
450). Chase contended that the decision on reformation and the elimination of Winget’s
defenses resolved all outstanding issues of fact and law and therefore filed a motion for
entry of judgment. (Doc. 454). The Court agreed and granted Chase’s motion. (Doc.
470). This left open the matter as to the form of judgment. The Court gave Winget an
opportunity to propose changes to the text but not the substance of Chase’s proposed
3

judgment. Winget filed objections and proposed “corrections” to the proposed
judgment. (Doc. 474). Chase responded. (Doc. 480). Winget replied. (Doc. 484). The
Court eventually entered a Final Judgment in the form requested by Chase. (Doc. 487)
and a Memorandum stating the reasons for entry of the judgment. (Doc. 488).
Chase appealed the reformation decision. (Doc. 489). Winget cross appealed
the Final Judgment as well as several orders, including the orders denying Rule 11 and
§ 1927 sanctions and the rejection of their “enforceability” and “delay” defenses,
denying their motions for sanctions, and rejecting their challenges to entry of a final
judgment.
On February 20, 2015, the Sixth Circuit issued an opinion on the parties’ cross
appeals, affirming the rulings Winget and the Trust challenged and reversing the Court’s
reformation decision. The Sixth Circuit remanded the case to
this Court “with instructions to enter judgment in favor of Chase on Count I of Chase’s
complaint.” JPMorgan Chase v. Winget, 602 F. App’x 246, 266 (6th Cir. 2015). Simply
put, the Sixth Circuit took a divergent view of Michigan’s jurisprudence on reformation.
After a series of unsuccessful motions and petitions for rehearing by Winget and the
Trust in the Sixth Circuit, the mandate issued on June 18, 2015.
B. The Amended Final Judgment
Thereafter, following motion practice, the Court entered an Amended Final
Judgment which provides in pertinent part:
IT IS HEREBY ORDERED AND ADJUDGED that, for the reasons stated in the
Memorandum and Order Denying Defendants’ Motion to Judicially Estop Chase
from Seeking Damages under Count I that Exceed $50 Million (Doc. 566)
(Estoppel Order) and the Court’s Memorandum and Order Granting Chase’s
Motion for Entry of Amended Final Judgment (Doc. 567) (Final Judgment Order),
judgment is entered in favor of Chase and against the Larry J. Winget Living
4

Trust (the “Winget Trust”) on Count I of Chase’s Complaint. The Winget Trust is
liable to Chase in the amount of $425,113,115.59, which is the unpaid principal
amount owed by Venture Holdings Company LLC under the Credit Agreement
dated May 27, 1999, as amended (the “Credit Agreement”), plus all interest, fees,
and costs that are due under the Credit Agreement and the Guaranty, dated
October 21, 2002, executed by Winget and the Winget Trust in favor of Bank
One, N.A., for the benefit of itself and the Lenders under the Credit Agreement
(the “Guaranty”) in amounts to be determined at a later date.
Chase’s recourse for collection and payment of these amounts against the
Winget Trust is not limited by Section 3 of the Guaranty.
IT IS FURTHER ORDERED AND ADJUDGED that, for the reasons stated in the
Estoppel Order and the Final Judgment Order, judgment is entered in favor of
Chase and against Larry J. Winget (“Winget”) on Count II of Chase’s Complaint.
Winget is liable to Chase in the amount of $425,113,115.59, which is the unpaid
principal amount owed by Venture Holdings Company LLC under the Credit
Agreement, plus all interest, fees, and costs that are due under the Credit
Agreement and the Guaranty in amounts to be determined at a later date.
Chase’s recourse for collection and payment of these amounts against Winget is
subject to the terms of Section 3 of the Guaranty.
IT IS FURTHER ORDERED AND ADJUDGED that, for the reasons stated in the
Final Judgment Order, judgment is entered in favor of Chase and against Winget
and the Winget Trust on Count III of Chase’s Complaint. Chase has satisfied its
obligations under Section 5.2 of those certain pledges of interests in P.I.M.
Management Co. and in Venco #1, L.L.C. dated as of October 21, 2002 and
executed by Winget and the Winget Trust (“the Pledges”). Chase is entitled to
enforce all rights granted to it in the Pledges, subject to the Pledgors’ right under
Section 10 of the Pledges to terminate the Pledges.
IT IS FURTHER ORDERED AND ADJUDGED that, pursuant to Section 17 of
the Guaranty, Winget and the Winget Trust are liable to Chase for all costs
and expenses including, without limitation, all court costs and attorneys’
fees and expenses paid or incurred by Chase in endeavoring to collect the
Guaranteed Obligations from, or in prosecuting this and any related or
future actions against, Winget and the Winget Trust with respect to their
obligations under the Guaranty, such costs and expenses to be proven at a
later date. Notwithstanding anything elsewhere in this Order, Chase’s
recourse against Winget and the Winget Trust for collection and payment
of such costs and expenses is not limited by Section 3 of the Guaranty.
IT IS FURTHER ORDERED AND ADJUDGED that the Court will retain
jurisdiction for the purposes of supervising enforcement of this Judgment
pursuant to the terms of the Guaranty and Pledges, which are incorporated
herein and attached as Exhibit A, including without limitation any disposition of
5

the stock of P.I.M. Management Company and membership certificates of Venco
#1, L.L.C., and including the proof at a later date of certain above-referenced
amounts.
(Doc. 568) (emphasis added).
C. Section 17
Chase’s request for expenses is found in the language of the Amended Final
Judgment and Section 17 of the Guaranty. As noted above, the Amended Final
Judgment provides that Winget and the Winget Trust are liable to Chase for “all
costs and expenses including, without limitation, all court costs and attorneys’
fees and expenses paid or incurred by Chase in endeavoring to collect the
Guaranteed Obligations from, or in prosecuting this and any related or future
actions against, Winget and the Winget Trust with respect to their obligations
under the Guaranty. . . . Notwithstanding anything elsewhere in this Order,
Chase’s recourse against Winget and the Winget Trust for collection and payment
of such costs and expenses is not limited by Section 3 of the Guaranty.”
Section 17 of the Guaranty provides:
SECTION 17. Costs of Enforcement. The Guarantor
agrees to pay all costs and expenses including, without
limitation, all court costs and attorneys’ fees and
expenses paid or incurred by the Administrative Agent or
any Lender or any Affiliate of any Lender in endeavoring
to collect all or any part of the Guaranteed Obligations
from, or in prosecuting any action against, the Guarantor
with respect to his obligations hereunder.
(Guaranty, Doc. 487-1, at 8-9.) (emphasis added).
III. Reasonableness
Winget raises an overall objection to Chase’s motion, contending that Chase has

6

not met its burden of proving the reasonableness of its expenses. (See Doc. 569 at
5-7.) The Sixth Circuit has explained, in diversity cases, “the type and amount of
documentation needed to support a request for attorney’s fees” pursuant to a contract is
“procedural . . . and should be analyzed using Sixth Circuit law.” Gen. Elec. Co. v. Latin
Am. Import, 127 F. App’x 157, 159 (6th Cir. 2005) (provision for fees and costs in a
guaranty governed by federal law notwithstanding contractual choice-of-law clause.)
Thus, the Michigan cases cited discussing what evidence is required to support a fees
petition are inapposite. (See Doc. 569 at 6.)
Chase’s motion and supplemental filings satisfies the Sixth Circuit’s
requirements: it is supported by affidavits of litigation counsel from the two firms that
represented Chase. (See Doc. 563-2, 563-3.) These attorneys state that they reviewed
invoices sent to Chase containing itemized accounts of hours and expenses billed. The
documents attached to these affidavits comply with the Sixth Circuit’s requirements by
providing specific detail as to the date, the timekeeper, the hours billed, the hourly rate,
and the description of the task completed. See Imwalle v. Reliance Med. Prods., Inc.,
515 F.3d 531, 553-54 (6th Cir. 2008) (finding counsel had satisfied its burden by
providing billing records showing “the date that the time was billed, the individual who
billed the time, the fractional hours billed . . ., and the specific task completed”); Siddle
v. Crants, Nos. 3:09–cv–00175, 3:09–cv– 01137, 2013 WL 1245678, at *13 (M.D. Tenn.
Mar. 26, 2013) (collecting cases).

That said, it does not necessarily follow that Chase is entitled to all of the
expenses it seeks. Although the Court will not nit pick the literally thousands of billable

7

entries and documented expenses, it is possible to identify some categories of
expenses that requires further analysis to determine whether the amount requested is
reasonable. These categories will be discussed below.
IV. The 2005 and 2006 Actions
As noted above, see n. 4, supra, Chase seeks expenses incurred in this case but
also expenses incurred in two prior actions between the parties: (1) JP Morgan Chase
v. Winget, case no. 05-74141 (the 2005 action) and (2) Winget v. JP Morgan Chase, 0613490 (the 2006 action). Chase contends that the language of the Final Judgment and
Section 17 is broad enough to permit them to recover these monies because the
language plainly extends to all Guaranty-related litigation which includes the 2005 and
2006 action. Winget says Chase cannot recover expenses related to the 2005 and
2006 actions because judgments in these cases were entered long ago and res judicata
bars Chase from seeking monies at this time.
Chase has the better view. Chase’s Complaint and proposed form of final
judgment in this case made explicit that Chase intended to collect on all litigation
expenses related to enforcing Winget’s obligations under the Guaranty.
First, Winget contractually waived res judicata objection to Chase’s current
motion in the Guaranty and the Credit Agreement. In particular, Section 13 of the
Guaranty states:
No failure or delay by the Administrative Agent or any Lenders in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies provided in this Guaranty, the Credit
Agreement, any Note, any Rate Hedging Agreement and the other Loan
Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.
8

(Guaranty, Doc. 1-3.) Section 8.3 of the Credit Agreement similarly provides:
No delay or omission of the Lenders or the Administrative Agent to
exercise any right under the Loan documents shall impair such right
or be construed to be a waiver of any Default or an acquiescence
therein … Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other
right … All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available … until the
Obligations have been paid in full.
(Ex. B to Doc. 537, Credit Agreement Excerpts.) Winget’s argument that Chase had to
exercise its right to collect the expenses it incurred in the 2005 and 2006 actions at the
time of those actions plainly conflicts with these provisions.
Moreover, other provisions of the Guaranty further demonstrate that Winget
contractually agreed not to assert that Chase is barred by res judicata from enforcing its
right to payment of any expenses. (See, e.g. Doc.1-3, § 3 (stating that Defendants’
obligations are “absolute[] and unconditional[]”), § 4 (stating that the “unconditional and
absolute” obligations “shall not be released, discharged or otherwise affected by,” inter
alia, any action or omission by Chase that might otherwise prevent enforcement of the
obligations on any legal or equitable grounds), § 5 (providing that the obligations shall
be effective until the Venture debt is repaid in full), § 6 (waiving any requirement that
Chase take any particular action at any time in enforcing its rights), § 18 (allowing
Chase to enforce its rights in any order or any combination, as Chase chooses).) These
provisions preclude Winget’s res judicata arguments.
Additionally, the Court has previously recognized that Winget contractually
waived objections to enforcement of the Guaranty based on “any action or failure to act
by [Chase] … or any other circumstance whatsoever which might, but for the provisions
of [Section 4], constitute a legal or equitable discharge [of Winget’s obligations].” (Doc.
9

450 at 15, quoting Guaranty § 4.) The same reasoning applies to Winget and the
Trust’s current argument, which is likewise foreclosed by the Guaranty.
Finally, Winget’s argument regarding Chase’s right to collect the expenses
incurred in the 2005 and 2006 actions comes only after a final judgment awarding these
expenses to Chase. Chase’s Complaint plainly sought the expenses incurred in “any
action against [Defendants] with respect to [their] obligations under the Guaranty.” (Doc.
1 at ¶¶ 28, 34.) Likewise, the Amended Final Judgment awards Chase its “attorneys’
fees and expenses” incurred in “this and any related or future actions.” (Doc. 487 at 3.)
The language of the Amended Final Judgment extends to all Guaranty-related litigation.
Winget’s after-the-fact attempt to rewrite that judgment falls short.
Regarding to the 2006 action, Winget also argues that this action did not trigger
Chase’s rights under Section 17 of the Guaranty because Winget, rather than Chase,
initiated that action. (Doc. 535 at 11 n.9.) Winget contends that Chase cannot collect its
expenses in defending against the 2006 action because the action was not “against
Winget.” This argument lacks merit. Winget initiated the 2006 action in an effort to
avoid his obligations under the Guaranty and associated Pledges. Chase had to defend
against the action in order to protect its rights under the Guaranty, and is therefore
entitled to recover the expenses it incurred in the defense. See Graceland Fruit, Inc. v.
KIC Chems., Inc., 320 F. App’x 323, 327-28 (6th Cir. 2008). In the 2006 action, Winget
sought declarations “that the Agent breached the Guaranty, the Guaranty Documents
and the Guaranty-Related Pledge Agreements” and “that the Guaranty, the Guaranty
Documents and the Guaranty-Related Pledge Agreements are therefore not
enforceable.” (Ex. C to Doc. 537, Complaint from Winget, Case No. 06-cv-13490 (E.D.

10

Mich.) at ¶ 56.) Because Winget asserted that Chase had breached the Guaranty and
therefore could not enforce its rights under it, Chase had to defend that suit in order to
preserve its claim for enforcement of the Guaranty.
In Graceland, the Sixth Circuit recognized that where a party such as Chase
must defend against a suit in order to preserve its rights under a contract, the contract’s
attorney’s fees provision extends to that defense. Graceland, 320 F. App’x at 327-28.
In Graceland, the parties entered a contract that provided Graceland was liable to KIC
for all costs “arising out of [its] breach.” Id. at 327. Graceland initiated suit against KIC
alleging that KIC had provided Graceland with a defective product. KIC raised
affirmative defenses and filed a counterclaim for breach of contract. After KIC
prevailed, it sought reimbursement for expenses incurred on its breach of contract claim
as well as expenses incurred in defending against Graceland’s defective product claims.
Graceland argued that KIC should not be able to recover for its costs in defending
against the defective product suit. Id. at 326. The Sixth Circuit rejected the argument,
recognizing that if KIC had not prevailed on Graceland’s principal claims, it could not
have succeeded on its breach of contract claim against Graceland. Id. at 327-28.
Applying the “must prevail” test, the Sixth Circuit found that KIC was entitled to the costs
of defending against Graceland’s claims. As in Graceland, Chase had to prevail in the
2006 action in order to preserve its right to enforce the Guaranty.

In short, Chase is entitled to the expenses of defending against the 2005 and
2006 action, as limited below.
V. This Action

11

A. Apportionment
As an initial matter, in light of the Sixth Circuit’s decision, any argument that
Chase should not recover its expenses in defending against Winget’s counterclaim for
reformation is no longer viable.
Winget’s opposition to Chase recovering expenses related to this action is now
primarily based on the argument that because of the Sixth Circuit’s ruling on
reformation, Chase must separate and apportion expenses incurred in attempting to
enforce the Trust’s unlimited Guaranty from expenses incurred in seeking to enforce
Counts II and III against Winget. The premise of Winget’s argument is that the Sixth
Circuit “creates two separate and distinct guaranties” as between Winget and the Trust
and that as a consequence, there must be a “separation of obligations.” (Doc. 569 at 9.)
The argument lacks merit. First, it fails to recognize the distinction between
liability and recourse. (See, e.g., Doc. 469 at 7.) The Sixth Circuit’s decision addressed
whether Chase’s recourse against the Trust was limited by Section 3 of the Guaranty to
$50 million—it said nothing about Winget’s or the Trust’s ultimate liability to Chase and it
did not establish two “separate guarantees.” Winget claims that Chase is “operating
under the assumption that the liability of Winget and the Trust are ‘singular’ under the
Guaranty.” (Doc. 569 at 10.) This is not an “assumption;” it is what the documents
expressly provide and a fact that the Court has twice determined. (Doc. 487; Doc. 568.)

The Amended Final Judgment plainly states: “The Winget Trust is liable to
Chase in the amount of $425,113,115.59” and “Winget is liable to Chase in the amount
of $425,113,115.59.” (Doc. 568 at 2.) Winget’s liability is coextensive with that of the

12

Trust. Accordingly, there is no basis under the Guaranty—or anything else—to require
Chase to “segregate” the expenses of enforcing the contractual obligations of Winget
versus the expenses of enforcing the contractual obligations of the Trust.
Second, the Court’s original judgment held that Winget’s obligations for expenses
under Section 17 are independent of Chase’s recourse under Section 3. This aspect of
the Court’s judgment was affirmed by the Sixth Circuit. (App. Dkt. 50-2 at 31-32.) The
Sixth Circuit’s decision has no effect on either Winget’s or the Trust’s liability for
expenses, and certainly nothing in the Sixth Circuit’s decision requires apportioning the
expenses between them.
Finally, the Amended Final Judgment provides that “pursuant to Section 17 of the
guaranty, Winget and the Winget Trust are liable to Chase for all costs and
expenses . . . paid or incurred by Chase in endeavoring to collect the Guaranteed
Obligations.” (Doc. 568 at 3 (emphasis added).) The Amended Final Judgment further
states that “Chase’s recourse against Winget and the Trust for collection and payment
of such costs and expenses is not limited by Section 3 of the Guaranty.” (Id.).
B. Specific Objections
Winget also raises a host of objections to Chase’s requested expenses on the
grounds they are excessive and unreasonable. The objections can be divided into the
following categories:

1.

$2,212,458.00 - overstaffing

2.

$245,062.50 - ministerial tasks

3.

$64,807.00 - attorney time spent preparing as witnesses
13

4.

$92,112.25 - Rule 11 costs duplicative

5.

$229,855.50 - data storage

In sum, this represents $2,844,295.25 in alleged unreasonable or otherwise
unrecoverable expenses.
Each objection is addressed in turn below.
1. Overstaffing and Ministerial Tasks
Winget contends that significant attorney and legal professional time spent
litigating this case was the result of unnecessary overstaffing. Winget points out that
ninety-nine (99) different attorneys and paralegals billed over 21,000 in hours, totaling
over $9.6 million expenses. Winget says that at most only three (3) paralegals’ time
and ten (10) attorneys’ time is recoverable. Winget also contends that the billing
records show a multitude of tasks that are ministerial in nature, such as updating files,
reviewing boxes, and gathering materials.
Winget has identified specific attorneys and paralegals whose expenses he
agrees may be recoverable and contends that the expenses related to all other
attorneys and legal staff should be excluded wholesale. See Doc. 569 at 11-13.
However, Winget offers no support—in the case law or otherwise—for this arbitrary
identification of attorneys and paralegals to which it claims reimbursement should be
limited. (Doc. 569 at 13-14.) The cases relied on do not involve this sort of selective
reimbursement on an individual by individual basis. For example, in Auto Alliance Int’l v.
U.S. Customs Serv., 155 Fed. App’x 226 (6th Cir. 2005), the Court of Appeals for the
Sixth Circuit upheld the “across the board reduction” of 25% because there was
“unnecessary duplication of effort” and the case did not involve “any complex or novel

14

legal issues.” Id. at 228.
At the hearing on Chase’s motion, the Court indicated that a sampling of over
staffing in Chase’s records would be an appropriate way for Winget to support its
arguments as to overstaffing and ministerial tasks. The Court directed the parties, and
provided them with an excerpt from Awarding Attorneys’ Fees and Managing Fee
Litigation by Alan Hirsch and Diane Sheehey.
It appeared that the parties were going to work together on a sampling
methodology prior to submission of supplemental papers. Apparently, this did not
occur. Instead, Winget filed a supplemental paper (Doc. 655) in which he presented a
sampling method without prior discussion with Chase.6 Be that as it may, Winget
sampled “every twentieth page,” resulting in a total of randomly sampled pages from the
entire billing record for this action. Winget then examined those pages and pointed out
select entries which he says demonstrate overstaffing and charges for ministerial tasks.
Chase objects to this sampling method. Chase says that Winget should have
looked at every twentieth page, identified the total attorney and/or paralegal time listed
on these pages, and then argued as to what fraction of that time was—in Winget’s
view—from overstaffing or ministerial tasks. Winget could then argue that the total
attorney and/or paralegal expenses sought in the petition should be reduced by that
fraction. Winget did not do that. Instead, Winget pointed to a subset on the randomly
selected pages to argue that all of the entries its says represent overstaffing or
ministerial tasks warrant reduction.

6

This does not surprise the Court in light of the way this litigation has been
managed by the parties.
15

Under Winget’s methodology, Winget says that all of the entries previously
identified as representing overstaffing and ministerial tasks are again inappropriate
because every selection taken from the set that they previously claimed was part of the
set.
Putting aside any infirmities in Winget’s sampling, the Court is able to make an
overall determination as to the claimed excessiveness for alleged ministerial tasks and
overstaffing. While Chase may be correct that not all of the claimed entries are clearly
considered ministerial or reflect overstaffing but instead are necessary and reasonable
expenses, the Court does not have to accept Chase’s representations whole cloth.
Based on a review of Winget’s sampling as well as the Court’s review, there is a level of
excessiveness in the billing records, whether from time spent for ministerial tasks or
from overstaffing. Because it is not feasible to pour over the multitude of billing records
and subtract specific entries,7 the Court in its discretion finds that an across the board
ten (10) percentage reduction is appropriate. This reduction applies to the total amount
of Chase’s request, which includes the expenses incurred in the 2005 and 2006 actions.
This is appropriate because the parties themselves disagree on the total amount of
expenses incurred in the 2005 and 2006 actions and because the billing records from
the 2005 and 2006 actions reveal the same infirmities in terms of excessiveness.
2. Attorney Time Spent Preparing as a Witness
Winget argues that Chase is not entitled to recover expenses associated with
certain attorneys’ time spent preparing for and giving testimony at the trial on

7

The electronic nature of record keeping for expenses results in a level of detail
and preciseness in billable records that, if nothing else, generates literally hundreds of
pages of records.
16

reformation. (Doc. 569 at 14-15.) Winget calculates this amount as $64,807.00.
However, Chase argues that under Section 17 it is entitled to not just the
expenses of the attorneys who testified because these attorneys did so at the cost to
their respective law firms of the time they would otherwise have billed for legal work.
Winget has the better view. Although courts have recognized that fact witnesses
may even be directly compensated for the reasonable value of time lost in preparing for
and giving testimony, see, e.g., Consol. Rail Corp. v. CSX Transp., Inc., No.
09–cv–10179, 2012 WL 511572, at *8 (E.D. Mich. Feb. 16, 2012 (recognizing such
compensation is available under Michigan Rule of Professional Conduct 3.4(b)), the
Court does not find it appropriate for the attorney witnesses in this case–who testified in
the reformation action–to be entitled to be compensated for their time preparing for
testifying at trial, particularly in light of their testimony.
3. Rule 11 Costs as Duplicative
Winget also objects to Chase seeking any uncollected expenses related to the
Rule 11 motion which he says amounts to $92,112.25.
Resolution of this issue requires some background elaboration. Following the
trial on reformation, Winget filed a motion for sanctions against Chase under Rule 11.
(Doc. 355.) The Court denied the motion and granted Chase leave to seek its costs in
defending against the motion, as permitted under Rule 11. (Doc. 469 at 10; Doc. 477.)
Chase submitted a motion for expenses incurred in opposing the Rule 11 motion. (Doc.
473.) The Court eventually granted the motion and awarded Chase $33,037.50 in
expenses. (Doc. 511).
Winget now contends that Chase may not seek any expenses that it incurred

17

responding to Winget’s Rule 11 motion.
This objection does not carry the day. Winget does not cite any authority for the
proposition that a party who recovers expenses under the high standards of Rule 11
cannot also seek related non-duplicative expenses under a contract after prevailing on
the entire action. Chase has made clear that it is not seeking expenses it already
recovered. A review of Chase’s Rule 11 fee petition (Doc. 473-2 at 4) alongside Exhibit
6 of Winget’s opposition (Doc. 569-6) demonstrates that Chase is not seeking a double
recovery.
Moreover, Chase explains why the expenses Winget has argued are
inappropriate were not sought in the Rule 11 fee petition:
• Some were part of billing entries that covered matters other than the
Rule 11 brief (see, e.g. Doc. 569-6, M. Washburn Entry of 9/30/2013).
• Some were expenses that had not yet been billed as of the date the Rule 11
fee petition was filed with the Court in January 2014 (see, e.g. Doc. 569-6, M.
Washburn Entry of 12/11/2013).
• Some expenses were incurred by Chase’s local counsel, Dickinson
Wright, in responding to the motion. Chase opted not to seek expenses
incurred by local counsel until the matter was finalized.
4. Data Storage
Winget also objects to Chase recovering expenses related to “data storage” in
the amount of $229,855.50. Winget argues that Chase is not entitled to recover this
expense. Although the language regarding Chase’s right to recover “all” costs of
collection is broad, the Court concludes it is not so broad as to encompass the
expenses Chase incurred for data storage. Storing case files, data, and materials,
whether electronically or otherwise, is a generic expense of a law firm. Neither party
cites direct authority for the recovery, or non recovery, of such an expense in
18

connection with a contractual provision. Having considered the matter, and in light of
the magnitude of the overall award of expenses, the Court in its discretion finds that
Chase is not entitled to recover the expenses for data storage.
VI. Conclusion
For the reasons stated above, Chase’s motion is GRANTED IN PART. Chase’s
requested amount of $12,688,967.67 is reduced as follows:
$64,807.00 for attorney time in preparing to be a witness
$229,855.50 for data storage
This results in a sum of $12,394,305.17. Applying 10% across the board reduction of
$1,239,430.52, results in the amount of $11,154,874.65 in expenses recoverable by
Chase against Winget and the Winget Trust.
SO ORDERED.

S/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: January 13, 2016
Detroit, Michigan

19