Wolding v. Clark
Filing
81
OPINION AND ORDER denying 76 Motion for Attorney Fees. Signed by District Judge Patrick J. Duggan. (MOre)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JOHN WOLDING,
Plaintiff/Counter-Plaintiff,
v.
Case No. 10-10644
Honorable Patrick J. Duggan
RICHARD CLARK,
Defendant/Counter-Defendant.
______________________________/
OPINION AND ORDER DENYING DEFENDANT’S MOTION FOR ATTORNEY
FEES, INDEMNIFICATION, AND NON-TAXABLE COSTS
John Wolding (“Wolding”) brought this action against Richard Clark (“Clark”),
his partner in various “nonstandard auto insurance corporations,” alleging the following
claims: (1) violation of the federal Fair Credit Reporting Act, (2) breach of fiduciary
duties and oppression of minority shareholder by a controlling shareholder, and (3) fraud.
On July 12, 2011, pursuant to the parties’ stipulation, this Court allowed Clark to file a
counter-complaint against Wolding, which remains pending. Clark thereafter filed a
motion for summary judgment with respect to Wolding’s claims against him, which this
Court granted in an opinion and order entered June 28, 2012.
Presently before the Court is Clark’s motion for attorney fees, indemnification, and
non-taxable costs, filed pursuant to Federal Rule of Civil Procedure 54(d)(2) on July 12,
2012. Wolding filed a response to the motion on November 14, 2012.1 The Court does
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Wolding was granted extensions of time to file his response due to his counsel’s
inability to represent him in this matter and until he found replacement counsel.
not believe that oral argument will aid in its disposition of the motion and therefore
dispenses with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f).
For the reasons that follow, the Court denies Clark’s motion.
Michigan follows the “American rule” with respect to attorney fee awards.
Dessart v. Burak, 470 Mich. 37, 42, 678 N.W.2d 615, 618 (2004). Under this rule,
attorney fees generally are not recoverable “unless a statute, court rule, or common-law
exception provides the contrary.” Id. (quoting Nemeth v. Abonmarche Dev., Inc., 457
Mich. 16, 37-38, 576 N.W.2d 641, 651 (1998)). Clark cites the following rule and
statutes in his motion for an award of attorney fees and non-taxable costs: Federal Rule of
Civil Procedure 68, sections 561 and 563 of Michigan’s Business Corporation Act, Mich.
Comp. Laws §§ 450.1561, .1563, and 15 U.S.C. § 1681n(c). He acknowledges, however,
that Rule 68 is not applicable under the circumstances of this case. (See Def.’s Br. in
Supp. of Mot. at 3 n.1); see also Delta Airlines, Inc. v. August, 450 U.S. 346, 101 S. Ct.
1146 (1981).
It also is not clear from Clark’s pleading whether he in fact is seeking an award
based on Michigan’s Business Corporation Act or simply is providing notice to Wolding
that he intends to seek indemnification from Look! (the parties’ corporation). For Clark
states:
In this case, MCL § 450.1563 provides Defendant is entitled to
indemnification from Look!, which is owned equally by the parties for the
reasonable attorney fees and expenses incurred in this case. This [m]otion
provides notice to Plaintiff of the fees and expenses for which Defendant
seeks reimbursement and provides him with an opportunity to raise any
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objections he may have to same.”
(Id. at 4 (emphasis added).) To the extent Clark is relying on sections 561 and 563 for his
request for an award of his fees and non-taxable costs from Wolding, directly, this Court
believes that the statute does not provide such relief. Clark also cites no authority to lead
this Court to conclude that an award would be appropriate in a suit between shareholders.
Finally, Clark argues that an award of fees is appropriate under 15 U.S.C.
§ 1681n(c) based on Wolding’s inclusion of his Fair Credit Reporting Act claim in his
Complaint. Clark argues that, from the beginning, there was no evidence to support this
claim. He argues that Wolding nevertheless “initiated litigation and continued litigation
with respect to this claim through [s]ummary [j]udgment although access to Credit
Reports are easily varifiable [sic] by simply obtaining a copy of ones [sic] own Credit
Report.” (Def.’s Br. in Supp. of Mot. at 4.)
Section 1681n(c) provides:
Upon a finding by the court that an unsuccessful pleading, motion, or other
paper filed in connection with an action under this section was filed in bad
faith or for purposes of harassment, the court shall award to the prevailing
party attorney’s fees reasonable in relation to the work expended in
responding to the pleading, motion, or other paper.
15 U.S.C. § 1681n(c). The plain language of the statute requires a showing that the
pleading, motion, or other paper was filed in bad faith or for harassment purposes. See
Rogers v. Johnson-Norman, 514 F. Supp. 2d 50, 52 (D.D.C. 2007) (citing cases). “It is
not enough to show that the ‘pleading, motion, or other paper’ in question ‘later turned
out to be baseless.’” Id. (quoting Ryan v. Trans Union Corp., No. 99-216, 2001 WL
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185182, at *6 (N.D. Ill. Feb. 26, 2001)).
In response to Clark’s motion, Wolding provides an affidavit in which he attests
that he “strongly suspected” that Clark was trying to force him into a situation of financial
duress so that he would sell his interests in their companies at a distressed price. (Pl.’s
Resp. Ex. 2 ¶ 6.) Wolding further states that “Clark had a motive to investigate my
financial circumstances to further that scheme” and that one way to do so was “to procure
my credit report.” (Id. ¶ 7.) Wolding believed that a credit report could be procured
simply with an individual’s social security number and knew that Clark had access to his
number. (Id. ¶¶ 5, 8.) Supporting Wolding’s suspicion were notations in the billing
records of Clark’s law firm referring to Wolding’s credit report. (Id. ¶ 9.)
In light of the assertions in Wolding’s affidavit, and the lack of contrary evidence,
this Court cannot find that he filed his Fair Credit Reporting Act claim in bad faith or
intending to harass Clark. While it may have become clear early in the litigation that
there was no support for the claim, maintaining an action after being provided with
exculpatory information is insufficient to state a claim for attorney’s fees under
§ 1681n(c). See supra; see also Bagumyan v. Valero Energy Corp., No. 07–312ABC,
2007 WL 1500849, at *2 (C.D. Cal. Apr. 25, 2007).
For the above reasons, the Court concludes that Clark fails to demonstrate his
entitlement to an award of attorney fees or non-taxable costs or indemnification from
Wolding.
Accordingly,
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IT IS ORDERED, that Defendant’s Motion for Attorney Fees, Indemnification,
and Non-Taxable Costs is DENIED.
Dated:December 13, 2012
s/PATRICK J. DUGGAN
UNITED STATES DISTRICT JUDGE
Copies to:
Michael J. Lebow, Esq.
Charles J. Gerlach, Esq.
Sean M. Walsh, Esq.
Paula Johnson-Bacon, Esq.
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