Morgan Keegan & Company, Inc. v. Sturdivant et al

Filing 33

ORDER denying 29 Motion for Attorney Fees for the reasons stated in the order. Signed by District Judge Daniel P. Jordan III on October 26, 2012. (SP)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
MORGAN KEEGAN & COMPANY, INC.

PLAINTIFF

v.

CIVIL ACTION NO. 3:11cv638-DPJ-FKB

YGONDINE STURDIVANT, et al.

DEFENDANTS
ORDER

This proceeding is before the Court on Plaintiff Morgan Keegan’s Motion for Attorney
Fees [29]. Because the Court concludes that Morgan Keegan has not established its entitlement
to attorney’s fees, the motion will be denied.
I.

Facts and Procedural History
Pursuant to a binding arbitration agreement between the parties, Defendants Mike and

Ygondine Sturdivant filed an arbitration claim against Plaintiff Morgan Keegan with the
Financial Industry Regulatory Authority (“FINRA”) related to their investment in Morgan
Keegan bond funds. Following the arbitration hearing, a panel of three FINRA arbitrators
entered an award denying and dismissing with prejudice the Sturdivants’ claims and denying
Morgan Keegan’s request for attorney’s fees. One week later, Morgan Keegan filed this lawsuit,
seeking an order under 9 U.S.C. § 9 confirming the arbitration award. In response, the
Sturdivants counterclaimed, under 9 U.S.C. § 10, for an order vacating the arbitration award.
On August 24, 2012, the Court entered an order denying the Sturdivants’ motion to
vacate and granting Morgan Keegan’s petition to confirm the arbitration award. Within 14 days
of the entry of judgment in its favor, Morgan Keegan filed this motion for attorney’s fees
pursuant to Federal Rule of Civil Procedure 54(d)(2), asserting that it is entitled to an award of

more than $48,000 in fees under the contract between the parties. The Sturdivants responded in
opposition, Morgan Keegan filed a reply, and the Court is prepared to rule.
II.

Analysis
The contract between Morgan Keegan and the Sturdivants provides that the “agreement

and its enforcement shall be governed by the laws of the State of Tennessee.” Morgan Keegan
Client Agreement [29-1] ¶ 12. And Tennessee follows the American Rule regarding attorney’s
fees, under which “litigants pay their own attorney’s fees absent a statute or an agreement
providing otherwise.” State v. Brown & Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn.
2000) (citing John Kohl & Co. v. Dearborn & Ewing, 977 S.W.2d 528, 534 (Tenn. 1998)).
Morgan Keegan primarily relies on a contractual provision to support an award of attorney’s fees
but makes passing reference to a potentially applicable Tennessee statute. The Court will
consider each basis for a fee award in turn.
A.

The Contract

The contract provision on which Morgan Keegan relies provides, in pertinent part:
Any expense, including attorney’s fees (whether of outside or inside counsel),
incurred by Morgan Keegan in defense of an action brought by the undersigned
against Morgan Keegan or its agents or employees in connection with any account
of the undersigned shall be borne solely by the undersigned should Morgan
Keegan prevail.
Morgan Keegan Client Agreement [29-1] ¶ 22. Morgan Keegan argues that “when Defendants
moved to vacate the FINRA Arbitration Award,” they became subject to the attorney’s fee
provision of the contract. Pl.’s Mem. [30] at 3.
The problem with Morgan Keegan’s position is that the attorney’s fee provision, on its
face, applies only where Morgan Keegan prevails in “an action brought by” the Sturdivants. The
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current fee request makes no claim for fees associated with the defense of the underlying
arbitration—which were denied by the arbitrators. Instead, Morgan Keegan seeks all fees
associated with this civil action brought by Morgan Keegan, not the Sturdivants. Morgan
Keegan certainly had the right to avail itself of the procedure for confirmation of an arbitration
award provided by 9 U.S.C. § 9, but nothing required Morgan Keegan to have the award
confirmed. See Morgan Keegan Client Agreement [29-1] ¶ 5 (“The award of the arbitrators, or
of a majority of them, shall be final, and judgment upon the award rendered may be entered in
any court, state or federal, having jurisdiction.”) (emphasis added). It chose to bring this action
to confirm the award, and the fact that the Sturdivants, having been brought before the Court,
took a chance and moved to vacate the award does not make this “an action brought by” the
Sturdivants. If Morgan Keegan wanted to be entitled to attorney’s fees for bringing a successful
action to confirm an arbitration award in its favor, it could have drafted its agreement to so
provide. As it is, the contract provides for an award of fees only related to “an action brought
by” the Sturdivants. Morgan Keegan is not entitled to attorney’s fees under its contract.1
B.

Section 29-5-315 of the Tennessee Code

Morgan Keegan asserts, in the alternative, that the Court “ha[s] the authority to award
attorney’s fees when a party moves to confirm an award,” citing a Tennessee Court of Appeals
case interpreting a provision of the Tennessee Uniform Arbitration Act. Pl.’s Mem. [30] at 4
(citing Watchel v. Shoney’s Inc., 830 S.W.2d 905, 909–10 (Tenn. Ct. App. 1991)). The relevant
section of the TUAA provides:
1

None of the cases relied upon by Morgan Keegan involved a contract provision limiting
fees to those incurred “in defense of an action” and a claim for fees asserted by a prevailing
plaintiff.
3

Upon the granting of an order confirming, modifying or correcting an award, a
judgment or decree shall be entered in conformity therewith and be enforced as
any other judgment or decree. Costs of the application, and of the proceedings
subsequent thereto, and disbursements may be awarded by the court.
Tenn. Code Ann. § 29-5-315. Assuming this section of the TUAA applies in lieu of the standard
for awarding attorney’s fees under the FAA, the Court notes that an award of fees is discretionary
under the statute—not mandatory. See Watchel, 830 S.W.2d at 910 (holding that an award of
attorney’s fees under the TUAA “is within the discretion of the trial court”). Under the
circumstances before it, the Court exercises its discretion to deny the requested attorney’s fees.
III.

Conclusion
The Court has considered all the parties’ arguments. Those not addressed would not have

changed the outcome. For the foregoing reasons, Morgan Keegan’s Motion for Attorney’s Fees
[29] is denied.
SO ORDERED AND ADJUDGED this the 26th day of October, 2012.
s/ Daniel P. Jordan III
UNITED STATES DISTRICT JUDGE

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