The Huntington National Bank v. Big Sky Development Flint, LLC et al

Filing 65

MEMORANDUM and ORDER Awarding Attorney Fees Signed by District Judge Avern Cohn. (JOwe)

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION_
-.

-;

\

THE HUNTINGTON NATIONAL BANK,
Plaintiff,
Case NO.1 0-1 0346
HON. AVERN COHN

-vsBIG SKY DEVELOPMENT FLINT, LLC, et aI.,

"".'

Defendants,

~

and
BARRY COHEN,

~
-~

.. :

" ­

Intervenor.

---------------_./
MEMORANDUM AND ORDER AWARDING ATTORNEY FEES'-;­

I. INTRODUCTION
This case arises out of a mortgage foreclosure action on properties which have
since been sold. Now before the Court is Defendants Big Sky Development Flint, LLC; Big
Sky Development Grand Rapids, LLC; and Big Sky Development Saline, LLC's (collectively
Big Sky) statement of reasonable attorney fees. For the reasons that follow, Big Sky will
be awarded $14,002.80.
II. BACKGROUND
Big Sky is comprised of Micl"ligan limited liability companies. Plaintiff Huntington
National Bank (Huntington), not a party in the present matter, made loans to Big Sky, which
were secured by mortgages on real property located in Flint, Grand Rapids, Saline, and
Wixom, Michigan. After Big Sky defaulted on the loans, Huntington filed this action to
collect payment on the loans secured by the Flint, Grand Rapids, and Saline properties

(collectively property).
Later, the parties agreed to a stipulated order appointing a receiver and
memorializing a partial settlement agreement, which was entered by the Court. (Doc. 6).
However, Barry Cohen (Cohen), a disputed Big Sky member, filed a motion to intervene
to contest the receivership. (Doc. 11). The Court granted the motion, finding that Cohen
stated sufficient facts to allow him to assert membership rights. (Doc. 22).
-

-

-

Coherl then moved the Court to void the partial settlement and appointment of

,

-receiveron"the ground that the Big Sky members did not have the authority to approve the
,

,""

:

•

.

.

'

:-;agreements withoutmajority, i.e., Cohen's consent.. (Doc. 24). On September 16,2010,

.
••••
'

:~~~;_

.~'\

' ; " __

.:~"_;

L

•

':

_ _ . ' __

._,',..

_.:.

__

"

.__

_

_

;<

. . .

the Court denied Cohen's motion generally because his failure to pay member capital calls
diluted his membership voting rights to zero, effectively defeating his argument that Big
Sky's approval was invalid without his vote. (Doc. 38). At the same time, Huntington and
the Receiver moved for an order approving the property sale and transferring all liens,
mortgages, claims, security interests and other encumbrances to the net proceeds of sale,
(Doc. 32), which the Court granted. (Doc. 38). The property sale has since closed.
Next, arguing that his interest in the case had ceased, Cohen filed a motion for
voluntary dismissal. At the same time, Big Sky filed a motion for (1) leave to amend its
answer and to bring a counterclaim against Cohen, and (2) joinder of Big Sky Partners,
LLC and Big Sky Partners Two, LLC (collectively Big Sky Partners). (Doc. 50). The Court
granted Cohen's voluntary dismissal motion and denied Big Sky's motion for leave to
amend because the remaining proposed breach of contract counterclaims against Cohen
are better suited for state court. (Doc. 54). The Court also granted reasonable attorney
fees to Big Sky. (kl).
2

III. STANDARD OF REVIEW

A court may award attorney fees "to serve a particular purpose, whether it is
protecting the defendant from undue prejudice, sanctioning vexatious conduct, or other
reasons." Spar Gas, Inc. v. AP Propane, Inc., 972 F.2d 348,1992 WL 172129, *2 (6th Cir.
1992) (affirming district court's award of reasonable attorney fees, but reversing the
amount awarded because the district court did not state the reasons for the award on the
record). For example, in the case of a voluntary dismissal, a court "should award only
those fees representing legal work that could not be used in subsequent litigation on the
same' claims."
th'e

re'~sons

l!l In making its determination, a district court judge must "at least state

for his award of fees."

kl at *3 (citing DWG Corp. v. Granada Investments,

Inc., 962 F.2d 1201,1202 (6th Cir. 1992»; see also Farocean Marine v. Romans, 189 Fed.
App'x 382, 384 (6th Cir. 2006) (affirming district court's award of attorney fees: $11,000.00
in "fees and costs related to preparing [a third-party defendant's] motion to intervene"; and
$13,000.00 for fees and costs incurred in "opposing [plaintiff's] motion to voluntarily
dismiss").
IV. ANALYSIS
Big Sky asserts that it is entitled to $35,254.53 in reasonable attorney fees and
expenses incurred while litigating matters relating to Cohen. In support, Big Sky provided
the Court with a detailed breakdown of the work performed and corresponding fees.
(Docs. 58-1, 58-2). Generally, Big Sky claims work by two law firms, Taunt and Powell, for
time spent defending: (1) Cohen's motion to intervene; (2) Cohen's motion to void the
receivership appointment and settlement; and (3) Cohen's motion for voluntary dismissal.

3

Cohen responds that Big Sky is not entitled to attorney fees on the ground that the
requested fees are not warranted nor reasonable. Alternatively, Cohen says that Big Sky
should be compensated for work performed defending the motion to intervene, which he
says equals $900.00 based on Big Sky's fee breakdown.

He says that all other work

product may be used to litigate the pending state court action involving the same issues,
thus, Big Sky should not be compensated for it. Finally, Cohen says that only the Taunt
law firm is entitled to attorney fees because it was the only firm involved in the litigation
during the time that the motion to intervene was being litigated.
Here, Cohen's motion to intervene and for voluntary dismissal dealt with Cohen's
involvement in the case, i.e., whether he was a proper party in the case. On the other
hand, Cohen's motion to void the receivership appointment and settlement dealt with
Cohen's substantive rights as it related to his contractual relationship with Big Sky. Under
Spar Gas, supra, the latter is of the type of work product that may be used in the pending
state court litigation, which involves claims by Cohen against Big Sky as follows: (1)
intentional interference with Cohen's existing business relationships; (2) intentional
interference with Cohen's prospective business relationships; (3) civil conspiracy, and (4)
declaratory judgment against Big Sky's ability to collect unpaid capital calls. (Doc. 43-3).
Accordingly, Big Sky is entitled to compensation for work performed during the motions to
intervene and for voluntarily dismissal, and not the motion to void the receivership and
settlement. See Spar Gas, supra.
Particularly, using Big Sky's breakdown of fees, Big Sky is entitled to $4,545.80 for
work performed by the Taunt law firm defending Cohen's motion to intervene and voluntary

4

dismissal. 1 Big Sky is further entitled to $9,457.00 for work performed by the Powell law
firm defending only Cohen's motion for voluntary dismissal, due to the fact that the Powell
law firm was not a firm of record at the time that the motion to intervene was Iitigated. 2

v. CONCLUSION
Forthe above reasons, Big Sky is awarded a total sum of $14,002.80. Big Sky may
file objections to the amount including justification consistent with this decision within ten
(10) days. Cohen may respond within ten (10) days of Big Sky's objections.

SO ORDERED.

Dated:

AUG 15 2011

1See Doc. 58-1, p. 1, for line items describing work performed by the Taunt law
firm on the motion to intervene between March 1, 2010, and June 29, 2010; see also
pp. 4-5, for work performed on the motion for voluntary dismissal between 12/9/2010
and 21812011.
2See Doc. 58-2, pp. 3-5, for line items describing work performed by the Powell
law firm on the motion for voluntary dismissal between December 9, 2010, and January
30,2011.

5