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

Filing 773

MEMORANDUM AND ORDER GRANTING CHASE'S MOTION FOR COSTS AND EXPENSES re 709 MOTION for Costs And Expenses Of Collection Pursuannt To Final Judgment filed by JPMorgan Chase Bank, N.A.. 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,

Case No. 08-13845

v.
HON. AVERN COHN
LARRY J. WINGET and the
LARRY J. WINGET LIVING TRUST,
Defendants/Counter-Plaintiffs.
__________________________________/
MEMORANDUM AND ORDER GRANTING CHASE’S MOTION FOR COSTS AND
EXPENSES1 (Doc. 709)2
I. Introduction
This is 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 2008, Chase sued Larry J. Winget (Winget) and
the Larry J. Winget Living Trust (Winget Trust) to enforce a Guaranty and two Pledge
Agreements entered into by Winget and signed by Winget and the Winget Trust in 2002,
guaranteeing the obligations of Venture. After years of litigation and multiple appeals,
on July 28, 2015, the Court entered an Amended Judgment in favor of Chase and
against Winget and the Winget Trust that enforced the Guaranty and Pledge
Agreements against Winget and the Winget Trust. Specifically, the judgment against
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.
2

Upon review of the parties’ papers, the Court deems this matter appropriate for
decision without oral argument. See Fed. R. Civ. P. 78(b); E.D. Mich. LR 7.1(f)(2).

the Winget Trust was in the amount of $425,113.115.59. The judgment against against
Winget was limited to $50 million. (Doc. 568). The Court also issued an order awarding
Chase $11,154,874.65 in attorney fees and expenses (Fee Order) associated with its
efforts to enforce the Guaranty and Pledge Agreements through May 31, 2015. (Doc.
671). As will be explained, Winget and the Winget Trust appealed the Amended
Judgment and Fee Order. The appeals were resolved in Chase’s favor.
Before the Court is Chase’s second motion for expenses incurred since the
issuance of the Fee Order in the amount of $2,000,316.24. Chase says that this
amount represents the services of Sidley Austin LLP and Dickinson Wright PLLC
between June 1, 2015 and November 30, 2016. For the reasons that follow, the motion
is GRANTED.
II. Background
In the Amended Judgment, the Court determined that Winget and the Trust are
liable to Chase for the attorneys’ fees and related expenses incurred in pursuing
Chase’s rights under the Guaranty signed by Winget and the Trust. (Doc. 568 at 3; see
also Doc. 487-1 at 8–9 (Guaranty).)
Chase previously moved for an award of expenses under Section 17 of the
Guaranty incurred through May 31, 2015. (Doc. 563). The Court granted the motion in
part and awarded Chase $11,154,874.65 in expenses (Fee Order) associated with its
efforts to enforce the Guaranty and Pledge Agreements through May 31, 2015. (Doc.
671). Winget and the Winget Trust appealed the Fee Order.
Winget then moved for partial satisfaction of the Amended Judgment,
contending that his payment of $50 million satisfied the Fee Order (Doc. 672). The
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Court denied the motion (Satisfaction Order). (Doc. 683). Winget and the Winget Trust
appealed both the Satisfaction Order and the Fee Order. The Court stayed proceedings
on Chase’s motion for expenses pending the outcome of the appeal. (Doc. 732).
The Sixth Circuit affirmed, finding that the Court had properly interpreted the
language of the Guaranty to hold both Winget and the Winget Trust responsible for the
full payment of costs and expenses correctly held there had been no “partial
satisfaction” of the award of costs and expenses, and properly determined that the
doctrine of res judicata did not apply. Chase v. Winget, No. 16-2130 (6th Cir. Jul. 21,
2017) (Doc. 735) In light of the Sixth Circuit’s ruling and mandate, on Chase’s motion,
the Court lifted the stay. (Doc. 752).
III. Parties’ Arguments
Winget contends:
1. Chase should not be awarded expenses related to the prosecution of its
fraudulent transfer claim
2. Chase’s attorneys’ hourly rates grossly exceed the prevailing market rate and
should be significantly reduced
3. Chase’s attorneys’ hours are excessive and reflect duplicative work and
over-staffing
4. Chase’s attorney and paralegal rates are excessive and inappropriate to the
extent they charge professional rates for administrative tasks
5. Chase’s fees should further be reduced to exclude excessive, inappropriate
or otherwise unrecoverable “expenses,” including research fees, travel costs,
fees associated with inappropriate collection actions taken by Chase, vague
entries, redacted invoices
Chase contends:
1. It is entitled to expenses incurred in collecting the guaranteed obligations from
the Winget Trust, including the fraudulent transfer claim
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2. The Court has already determined that the rates incurred and paid by Chase
are reasonable
3. Winget and the Winget Trust’s argument that Chase’s attorneys’ hours reflect
duplicative work and overstaffing is unsupported
4. Chase is entitled to recover the time spent by paralegals
5. Winget’s other proposed reductions are without merit
IV. Discussion
A. Expenses Related to the Fraudulent Transfer Action
Section 17 of the Guaranty and the Amended Final Judgment entitle Chase to
recover the expenses it incurred in connection with the fraudulent conveyance
counterclaims Chase filed in response to Winget’s 2015 declaratory judgment action.
Winget claims that the fraudulent transfer action is “not an attempt to collect any part of
the ‘Guaranteed Obligations’ from Winget under the Guaranty.” (Doc. 713 at 4.) Winget
argues that because Larry Winget is purportedly a “non-debtor” in the context of
Chase’s fraudulent transfer claim, “Chase has no right under § 17 of the Guaranty to
recover from Winget personally.” Id.
This Court has already said that the fraudulent transfer action is “the functional
equivalent of post-judgment proceedings in the 2008 case,” and has consolidated the
proceedings. (Order Consolidating Cases at 2, Winget v. JPMorgan Chase Bank, No.
15-cv-13469 (E.D. Mich. Aug. 1, 2016), Doc. 24.). The Court reaffirmed this ruling when
it granted Chase’s motion to strike Winget’s jury demand on Chase’s counterclaims.
(Doc. 770). No further discussion is necessary.
To the extent Winget suggests that any award of expenses related to the
fraudulent transfer claims is “premature” because “Chase has not yet prevailed,” he is
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mistaken. Chase has prevailed in obtaining a $425 million judgment against the Winget
Trust, and Chase’s claims are the necessary consequence of Winget’s efforts to cause
the Winget Trust to evade its obligations under the Amended Judgment. Moreover,
Chase filed these claims as compulsory counterclaims in Larry Winget’s 2015
declaratory judgment action. (Answer and Counterclaims, Winget, 15-cv-13469, Doc.
11.) Winget cannot now balk at paying expenses that were necessitated by his own
filings.
B. The Court Has Already Determined that the Rates are Reasonable
Winget previously scrutinized every line of Chase’s initial petition for expenses
and put forward multiple objections over the course of extensive briefing. See
generally, Doc. 535; Doc. 540; Doc. 548; Doc. 569; Doc. 603; Doc. 665. Notably,
Winget made no mention of the reasonableness of the rates charged by Chase’s
attorneys. Indeed, more than a year before it awarded Chase its fees, the Court stated
on the record, “I don’t think [Winget] is challenging, or intends to challenge, the hourly
rates.” (Doc. 541, Tr. of Sept. 10, 2014 Hrg. at 32:21–22.) Winget’s counsel did not
dispute the Court’s statement at the time or anytime thereafter, and it raised no
challenge to the hourly rates in any of its four subsequent briefs in opposition to Chase’s
petition. See Docs. 548, 569, 603, 665. As such, the Court’s Fee Order was based on
hourly rates which the Court found reasonable. See Doc. 671 at 6–11 (discussing the
reasonableness of Chase’s expenses of collection). This holding is the law of the case.
Moreover, the Court has again reviewed the rates and continues to find them
reasonable as explained in Chase’s reply.
C. Chase’s Expenses Do Not Reflect Duplicative Work or Overstaffing
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In support of the argument that Chase’s expenses are excessive, Winget
provides only a single example of purported “excessive” billing in this case, and it
reveals nothing of the sort. Specifically, Winget points the expenses incurred in
preparing Chase’s initial motion for expenses and the supporting brief. (Doc. 713 at
11.) Winget complains that drafting this motion and brief took a total of 31.50 hours,
remarking that the motion was only three pages long and the brief was only five pages
long. Id. But Winget ignores the fact that the motion was accompanied by more than
700 pages of billing records that had to be reviewed and incorporated into Chase’s
written motion. See generally Doc. 593 and exhibits. Chase’s initial motion requested
more than $12 million in fees. Given the amount at issue, it was not unreasonable for
Chase to have expended 31.50 hours in preparing its initial motion.
D. Chase Is Entitled to Recover the Time Spent by Paralegals
It is well established that Chase may recover paralegal time. See, e.g.,
Fharmacy Records v. Nassar, 729 F. Supp. 2d 865, 884 (E.D. Mich. 2010) (“A
reasonable attorney fee also includes reasonable compensation for paralegals and law
clerks.”). Winget says that Chase billed for “purely clerical and secretarial tasks being
performed by paralegals and associates.” Winget’s examples primarily involve courtesy
copies. The Court’s standing orders require these copies include key cases with the
relevant portions highlighted and notes about their holdings. This is legal work.
E. Winget’s Other Proposed Reductions Are Without Merit
Winget also seeks a multitude of reductions to the expenses Chase incurred in
attempting to collect on the guaranteed obligations. None of the proposed reductions
are warranted. First, as to time spent on research, which Winget did not challenge
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before, Winget cites an unpublished decision issued more than a year before the
Court’s prior Fee Order, Smith v. Service Master Corp., 592 F. App’x 363 (6th Cir.
2014). In Smith, the panel considered whether a law firm seeking a statutory fee award
was entitled to fees for electronic research. The panel determined that in that context, a
court should consider whether the firm seeking statutory fees pays a bulk rate for
research or charges its client for the costs of research actually incurred. Here, Chase
explained that its research expenses were passed directly to Chase. As such, Chase is
entitled to recover them.
Winget next asks the Court to exclude modest travel and lodging expenses.
(Doc. 713 at p. 17) These expenses were for travel to and from four hearings total
approximately $5,500 of the more than $2 million in requested costs and expenses.
See Doc. 709-4 at 7–8, 13–14, 22, 25–27. Winget recognizes that travel time is
compensable, and does not suggest that the expense of the attorneys’ flights or lodging
was unreasonable. Instead, Winget says that Chase should not have sent lead counsel
to these hearings and instead relied on local counsel.
Winget’s argument lacks merit. The travel expenses of counsel are reasonable
and compensable. Chase is entitled to its choice of attorney. Robert Bosch LLC v.
A.B.S. Power Brake, Inc., 2011 WL 3758577, at *4 (E.D. Mich. Aug. 25, 2011) (citing
Hensley v. Eckerhart, 461 U.S. 424, 434 n.9 (1983)) (awarding travel expenses for
out-of-town counsel). Attorney Ducayet, who attended the hearings in question, is
primarily responsible for Chase’s litigation strategy, and Sidley has been involved in
Venture-related matters for more than fifteen years. Moreover, attorneys Ducayet and
Stead were responsible for drafting the papers at issue in the October 1, 2015 and July
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27, 2016 hearings. It was reasonable for Chase to send the attorneys who drafted key
briefs to argue before the Court.
Winget also argues that Chase is not entitled to seek expenses incurred in
connection with garnishments and judgment liens against the Winget Trust in August
2015. Winget objected to Chase’s garnishments and judgment liens, and filed motions
seeking to have them removed or retracted. Eventually, the objections were resolved
when agreed to send letters to each of the garnishee institutions restating that the
garnishments sought to garnish only accounts held in the name of the Winget Trust, and
not of Larry Winget. See Doc. 623. With respect to the judgment liens, Chase agreed
that it would have the last four digits of the taxpayer identification number on each
notice of judgment lien against the Winget Trust that has been recorded with each
register of deeds redacted so that no portion of the tax identification number appears on
each recorded instrument.
The fact that Chase agreed to these accommodations in order to allow the
parties and the Court to focus on other aspects of the litigation does not excuse Winget
from its obligations under Section 17 does not make the liens or garnishments
themselves improper or the expenses associated with them unrecoverable. Chase is
entitled to these expenses.
Finally, Winget identifies several entries that he says are insufficiently detailed.
As in its initial petition, Chase’s billing entries identify the date the time was billed, the
timekeeper, the hours billed, and the specific task completed. This is in accordance
with Sixth Circuit law. See Imwalle v. Reliance Med. Prods., Inc., 515 F.3d 531, 553–54
(6th Cir. 2008). Winget also says that Chase has waived attorney-client and
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work-product privilege over protected material in its billing records. As Winget
acknowledges, the Sixth Circuit has not addressed waiver of privilege in the context of
redacted fee petitions. Courts in this Circuit often allow redaction of privileged material
in fee petitions provided one is able assess the reasonableness of the requested fees.
See, e.g., Compass Homes, Inc. v. Heritage Custom Homes, LLC, 2015 WL 4639654,
at *9 (S.D. Ohio Aug. 3, 2015) (“Most of the redacted entries are still sufficiently detailed
and of probative value.”). Although Chase has redacted certain time entries to protect
privileged material, those redacted entries still provide a sufficient description of the
tasks completed.
V. Conclusion
In the end, Exhibit A to Chase’s motion is a sworn declaration with supporting
tables showing costs and expenses billed to Chase by the law firm of Sidley Austin LLP
related to efforts to collect the Guaranteed Obligations from Winget and the Winget
Trust and in prosecuting any action against Winget and the Winget Trust with respect to
their obligations under the Guaranty between June 1, 2015 and November 30, 2016.
(See Ex. A, Decl. of James W. Ducayet.) The total amount billed to Chase by Sidley
Austin LLP is $1,848,771.25 in attorney fees and $37,821.25 in expenses, for a total of
$1,886,592.50.
Exhibit B to Chase’s motion is a sworn declaration with supporting tables
showing expenses billed to Chase by the law firm of Dickinson Wright PLLC related to
efforts to collect the Guaranteed Obligations from Winget and the Winget Trust and in
prosecuting an action against Winget and the Winget Trust with respect to their
obligations under the Guaranty between June 1, 2015 and November 30, 2016. (See
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Ex. B, Decl. of William T. Burgess.) The total amount billed to Chase by Dickinson
Wright PLLC is $103,807.00 in attorney fees and $9,916.74 in expenses, for a total of
$113,723.74.
The total amount of recoverable expenses based on Exhibits A and B combined
is $2,000,316.24. Chase is awarded this amount.3
SO ORDERED.

S/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: January 9, 2018
Detroit, Michigan

3

The Court recognizes that Chase’s efforts to collect the Guaranteed Obligations
are ongoing.
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