Volunteer Energy Services, Inc. v. Option Energy, LLC at al

Filing 222

OPINION; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, sdb)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

VOLUNTEER ENERGY SERVICES INC.,
Plaintiff,
File No. 1:11-CV-554
v.
HON. ROBERT HOLMES BELL
OPTION ENERGY LLC, JONATHAN
ROCKWOOD, and IVAN PILLARS,
Defendants.
/
OPINION
This matter comes before the Court on Defendant Option Energy LLC’s motion for
attorney fees on appeal. (ECF No. 215.) For the reasons that follow, Option’s motion will
be granted in part and denied in part.
Following a bench trial in this matter, this Court entered judgment in favor of
Volunteer and against Option on Volunteer’s breach of contract claim in the amount of
$509,000, entered a judgment of no cause of action in favor of Jonathan Rockwood on
Volunteer’s tortious interference with business relationship claim, and entered judgment in
favor of Option and against Volunteer in the amount of $159,000, together with reasonable
attorney fees and costs, on Option’s claim under the Ohio Sales Commission Act (“OSCA”),
Ohio Rev. Code § 1335.11. (Am. Jgmt. ECF No. 154.) The parties subsequently stipulated
to the taxation of attorney fees in favor of Option in the amount of $8,194. (ECF No. 158,

Am. Bill of Costs.)
Option and Volunteer both appealed the judgment. Option argued that it was entitled
to summary judgment on the breach-of-contract claim because the non-solicitation clause
was unambiguous, and it argued that the district court erred in awarding Volunteer anything
other than nominal damages because Volunteer failed to prove lost profits with reasonable
certainty. In its cross-appeal, Volunteer argued that it adequately proved its
tortious-interference claims against Jonathan Rockwood, that Option was not entitled to
treble damages for the unpaid commissions, and that Option had forfeited or waived any
claim to ongoing commission payments. On August 5, 2014, the Sixth Circuit affirmed this
Court’s judgment in all respects. See Volunteer Energy Servs., Inc. v. Option Enery, LLC,
Case Nos. 13-1035/13-1087, slip op. (Aug. 5, 2014, 6th Cir.) (ECF No. 214). Option now
requests additional attorney fees in the amount of $24,680.31 for successfully defending its
attorney fee award on appeal.
Volunteer opposes an award of fees. Volunteer contends that because Option
stipulated to a bill of costs that included a “substantially inflated calculation” of attorney fees
after trial, and because Option did not reserve the right to supplement the stipulation based
on possible future events, Option’s request for additional attorney fees should be denied.
The judgment included an award of attorney fees and court costs “incurred in bringing
the counterclaim.” (ECF No. 154.) At the time the parties entered into the stipulated bill of
costs, Volunteer had not yet filed its notice of cross-appeal. There is no suggestion in the

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parties’ stipulated bill of costs that the settlement would bar Option from seeking additional
attorney fees should Volunteer appeal the OSCA award. The Court concludes that the
parties’ stipulation does not preclude Option from seeking additional attorney fees associated
with defending the OSCA award on appeal.
Volunteer also opposes Option’s request for attorney fees because it contends that all
fees are owed by Defendant Rockwood rather than by Option. In support of this contention,
Volunteer notes that the attorney fee invoices were mailed to Defendant Jonathan Rockwood
at an address that was not Option’s business address.
Option’s attorney has stated in his affidavit that the billing represents “[t]he total
attorney fees incurred by Option on appeal . . . .” (Roragen Aff. ¶ 3 (emphasis added).)
At trial, this Court found that Jonathan Rockwood was the sole owner, president, and Chief
Executive Officer of Option. Both Option and Rockwood were parties to the appeal. See
Volunteer Energy Servs., Inc. v. Option Energy, LLC, Case Nos. 13-1035/13-1087 (6th Cir.)
The fact that fee invoices were mailed to Rockwood’s address rather than to Option’s place
of business does not suggest that the fees were not incurred by Option.
Volunteer’s third argument in opposition to the motion for attorney fees – that the
amount of attorney fees is overstated – is more compelling. The prevailing party in an action
brought under OSCA is entitled to reasonable attorney fees and court costs incurred in
bringing the statutory claim. See Ohio Rev.Code § 1335.11(D); Kosta v. Ohio Outdoor
Adver. Corp., 659 N.E.2d 810, 811-12 (Ohio Ct. App. 1995) (“[A]n award of attorney fees

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should be limited to compensate for legal services the trial court finds on remand were
reasonable and necessary to defend the statutory claim, and not for services attributable to
the defense of the contract claim.”). Ohio courts apply the standard established by the
Supreme Court in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983), in determining an award
of reasonable attorney fees under OSCA. Corporate Commc’n Servs. of Dayton, LLC v. MCI
Commc’ns Servs., Inc., No. 3:08-CV-046, 2012 WL 2006642, at *2 (S.D. Ohio June 5,
2012). The starting point for a determination of an attorney’s fee award is a determination
of the number of hours reasonably expended multiplied by a reasonable hourly rate. Hensley,
461 U.S. at 433. Option, as the party seeking the attorney fee award, has the burden of
establishing entitlement to the award and documenting the appropriate hours expended and
hourly rates. Id. at 437.
Option contends that there were two heavily contested issues on appeal: whether
Volunteer proved its alleged damages with reasonable certainty, and whether the court
properly awarded Option exemplary damages for Volunteer’s violation of the OSCA.
(Roragen Aff. ¶ 2.) Option contends that the total attorney fees it incurred on appeal is
$49,360.63, and that half of that amount ($24,680.31) is reasonably attributable to Option’s
defense of the OSCA claim. (Roragen Aff. ¶ 3.) The attorney fee invoices attached to
Option’s motion document the hours of attorney time billed by two attorneys at $250 per
hour and $175 per hour.
Volunteer does not quarrel with the hourly rate charged by Option’s attorneys, but it

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does take issue with the number of hours Option claims were associated with the OSCA
claim. Volunteer contends that Option’s methodology of dividing the entire appellate billing
by two far exceeds the number of hours reasonably expended on the OSCA claim. Volunteer
has raised several arguments in support of this claim.
First, Volunteer contends that the Court should not consider any of the fees incurred
prior to July 31, 2013. The $49,360.63in attorney fees that Option has documented were
incurred between March 19, 2013, and February 25, 2014. Option filed its first brief on
appeal on June 28, 2013. The OSCA claim was not raised in that brief. The OSCA claim
was first raised in Volunteer’s brief, which was not filed until July 31, 2013. Accordingly,
Volunteer contends that Option has not met its burden of justifying the inclusion of any
attorney fees from March 19, 2013, to July 31, 2013.
The Court agrees that it is not proper to include billing entries between March 19 and
July 31 related to the preparation of Option’s first appellate brief, which did not include the
OSCA issue. However, the entries from March 19 to July 31 cannot be excluded in their
entirety because the entries during this time period also include preparation for mediation,
which presumably did include the OSCA issue, as Volunteer had presented this issue in its
April 25, 2013, civil appeal statement. Volunteer v. Option, Case No. 13-1035/13-1087 (6th
Cir. Apr. 25, 2013).
Second, Volunteer contends that the OSCA issue was only one of five issues raised
on appeal, and that the briefing on the OSCA issue amounted to approximately 16% of the

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fees incurred after Volunteer filed its appellate brief raising the OSCA issue, far less than the
50% requested by Option.
The parties filed four briefs on appeal. The first brief, filed by Option, contained 17
pages of argument, none of which addressed the OSCA issue. The second brief, filed by
Volunteer, contained 27 pages of argument,1 6 pages of which addressed the OSCA issue.
The third brief, filed by Option, contained 26 pages of argument, 8 pages of which addressed
OSCA violations. The fourth brief, filed by Volunteer, contained 16 pages of argument, 8 of
which addressed the OSCA issue. Based on the pages devoted to the OSCA argument, it
appears that the OSCA argument constituted approximately one quarter of the appellate
briefing.
Volunteer’s third argument is that Option’s invoices include not only entries related
to the appeal, but also entries related to Volunteer’s garnishment efforts and entries related
to Option’s bankruptcy filing.
The Court is satisfied that Option is entitled to attorney fees for its defense of its
OSCA claim on appeal. However, Option’s assertion that it is entitled to half of the attorney
fees it incurred on appeal is not well-taken. Attorney fees are the exception, not the rule.
They must be limited to time spent on the OSCA claim. A large potion of the time

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Volunteer measured the pages devoted to the OSCA argument against the entire
length of the brief, including the statement of the case, statement of the facts, and summary
of the argument. The Court finds that it makes more sense to compare the OSCA argument
against the total pages devoted to the arguments, rather than to the length of the entire brief.
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documented in the invoices Option has submitted was spent on matters unrelated to the
OSCA claim, including entries related to Volunteer’s garnishments, to Option’s financial
situation, to Option’s motion for a stay pending appeal, and to Option’s bankruptcy filing.
These actions related to Option’s financial situation were presumably triggered by the
$509,000 judgment against Option on Volunteer’s breach of contract claim rather than by
Volunteer’s appeal of the $159,000 judgment in favor of Option on the OSCA claim. There
were also entries related to research on the tortious interference claim against Rockwood.
After removing these extraneous claims, the Court has arrived at appellate billing of 35.85
hours by Attorney Roragen at $250 per hour and 68 hours by Attorney Krueger at $150 per
hour, for a total of $ 19,162.50. The Court has reduced this amount by 75% to account for
time spent on other issues on the appeal. This results in a fee award of $4,790.63 in favor
of Option as attorney fees associated with defending the OSCA claim on appeal.
Finally, the Court must determine how this award should be paid. Option has filed
for bankruptcy. Option’s attorneys have requested an order directing that the attorney fee
award be paid directly to the lawfirm of Loomis, Ewert, Parsely, Davis & Gotting, P.C., and
held in trust until such time as release of those funds is approved by the bankruptcy court.
Volunteer, on the other hand, contends that the funds should be deposited with the
Bankruptcy Court as an asset of the bankruptcy estate.
The Ohio Revised Code provides that “[t]he prevailing party in an action brought
under this section is entitled to reasonable attorney’s fees and court costs.” Ohio Rev. Code

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§ 1335.11(D) (emphasis added). The prevailing party as to the OSCA claim is Option.
Accordingly, the Court will order that the attorney fee award be paid to Option. This Court
will not presume to advise the Bankruptcy Court as to how the fee award should be handled.
An order consistent with this opinion will be entered.

Date: March 31, 2015

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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