Merchant et al v. Merchant

Filing 174

ORDER denying 168 Motion for Reconsideration ; denying 168 Motion to Vacate. Signed by District Judge Henry T. Wingate on 3/11/2025. (nd)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
FRANK MERCHANT and
DOROTHY MERCHANT

PLAINTIFFS

VS

CIVIL ACTION NO.: 3:16-cv-665-HTW-LGI

BILLY C. MERCHANT and
GEORGE HARKINS
DEFENDANTS
______________________________________________________________________________
ORDER
______________________________________________________________________________
BEFORE THIS COURT is Plaintiffs Frank and Dorothy Merchant’s (together,
“Plaintiffs”) Motion for Reconsideration and to Vacate Order Granting Attorney Fees [Doc. 168],
Having reviewed the submissions of the parties, the applicable law, and the record in this case, this
Court finds as follows 1.
I.

BACKGROUND

Plaintiffs initiated this action against Defendants Billy Merchant (“Billy”) 2 and George
Harkins(“Harkins”), asserting claims related to land ownership and proceeds from the sale of
property from Billy to Harkins. Plaintiffs’ Amended Complaint alleged the following claims
against Billy and Harkins: (1) civil conspiracy; (2) slander of title; (3) conversion; (4) breach of
fiduciary duties; and (5) constructive trust. Plaintiffs and each Defendant, thereafter, filed a motion
This Court previously determined that it has diversity subject matter jurisdiction pursuant to 28 U.S.C. §
1332, complete diversity of citizenship exists between the parties, and the amount in controversy exceeds $75,000.
Inasmuch as this court is exercising diversity of citizenship subject-matter jurisdiction, this court, sitting in
Mississippi, will apply Mississippi law to the substantive issues in accordance with the Erie Doctrine. Erie v.
Tompkins, 304 U.S. 64, 78-79, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).
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Plaintiffs and Defendant Billy Merchant share the same last name; therefore, for the sake of clarity, this Court shall
refer to Defendant as “Billy”.

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for summary judgment [Docs. 102, 104, and 107]. This court, after hearing oral arguments on all
three motions, determined that genuine issues of material fact existed in this matter, thus
precluding summary judgment for any party.
Following extensive litigation, on December 7, 2021, this court issued its Bench Opinion
and Order dismissing all claims in Plaintiffs’ Amended Complaint against Billy and Harkins with
prejudice. [Doc. 132]. This Court found that Plaintiffs initially deeded the property to Billy to
avoid creditors, including the United States. The court held, inter alia, that the “unclean hands
doctrine”, therefore, bars Plaintiffs’ recovery in this lawsuit. Further, said this court, Mississippi
case law dictates that even if this court were to conclude that Billy knew or should have known
that Plaintiffs were deeding him property to hide from creditors, Plaintiffs may not use this court
to recover the Subject Property.
This court, accordingly, held that Billy’s conveyance to Harkins was valid and binding,
and that Harkins was the rightful owner of the Subject Property. This court held further that
Defendants Billy and Harkins are entitled to costs and attorneys’ fees as allowed by Federal Rule
of Civil Procedure 54 3. [Doc 132].

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Fed. R. Civ. P. 54(d)(2) states:
(2) Attorney's Fees.
(A) Claim to Be by Motion. A claim for attorney's fees and related nontaxable expenses must be
made by motion unless the substantive law requires those fees to be proved at trial as an element
of damages.
(B) Timing and Contents of the Motion. Unless a statute or a court order provides otherwise, the
motion must:
(i) be filed no later than 14 days after the entry of judgment;
(ii) specify the judgment and the statute, rule, or other grounds entitling the movant to the
award;
(iii) state the amount sought or provide a fair estimate of it; and
(iv) disclose, if the court so orders, the terms of any agreement about fees for the services
for which the claim is made

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Billy, as the prevailing party in this lawsuit, sought an award of reasonable attorney’s fees
under the Mississippi Litigation Accountability Act, Miss. Code Ann. §§11-55-1, et seq. (Rev.
2012), (“MLAA”) 4 and “the inherent power of this Court to impose sanctions and attorney’s fees
for bad faith, vexatious, wanton or oppressive conduct.” [Doc.139]. During the interim, Plaintiffs
appealed the underlying judgment, which the Fifth Circuit affirmed in favor of Billy. [Doc. 157]
(Certified Copy of Fifth Circuit Judgment). Post-appeal, this Court entered its Order granting
Billy’s Motion for Attorney Fees, in which the Court found Plaintiffs liable for Billy’s attorney
fees. [Doc. 158]
Billy submitted itemized evidence in Support of Award of Attorney’s Fees [Doc. 162] and
Memorandum of Authorities in Support of Attorney’s Fees [Doc. 163] Billy sought a total award
of $165,635 (including the $25,000 fees incurred at the appellate level). Plaintiffs objected [ECF.
167].
Subsequently, Plaintiffs filed their Motion for Reconsideration and to Vacate the Order
Granting Attorney Fees [Doc. 168], arguing that their claims surviving summary judgment
preclude a finding of “frivolity” under the MLAA 5. Defendant Billy opposes the Plaintiffs filed

4 The Mississippi Litigation Accountability Act (MLAA) provides, in pertinent part:

… in any civil action commenced or appealed in any court of record in this state, the court shall award, as
part of its judgment and in addition to any other costs otherwise assessed, reasonable attorney's fees and costs
against any party or attorney if the court, upon the motion of any party or on its own motion, finds that an
attorney or party brought an action, or asserted any claim or defense, that is without substantial justification,
or that the action, or any claim or defense asserted, was interposed for delay or harassment, or if it finds that
an attorney or party unnecessarily expanded the proceedings by other improper conduct including, but not
limited to, abuse of discovery procedures available under the Mississippi Rules of Civil Procedure.
Miss. Code Ann. § 11-55-5 (Rev. 2012).
5 Plaintiffs request, alternatively, that this Court award Billy only a $100 nominal fee; or, limit the fee to the
amount in connection with the Plaintiff’s Motion to Remand ($5,562.50). Plaintiffs also ask this Court to reduce the
awarded amount by $77,908.01, the “windfall amount” Billy obtained in the sale of the disputed property. Because
this Court finds that Plaintiffs’ “frivolity” argument has no merit, it need not address any of these alternative proposed
remedies.

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objections and motion for reconsideration in toto, arguing that the award of attorney fees was
proper and that Plaintiffs’ claims lack merit.
II.

LEGAL STANDARD

A motion for reconsideration under Federal Rule of Civil Procedure 59(e) serves the
narrow purpose of correcting manifest errors of law or fact or presenting newly discovered
evidence. See Templet v. HydroChem Inc., 367 F.3d 473, 478-79 (5th Cir. 2004). A Rule 59(e)
motion is not an opportunity for a party to re-litigate issues that have already been decided. See
Simon v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990). Reconsideration, instead, is warranted
only when there is an intervening change has occurred in controlling law, newly discovered
evidence, or the need to correct a clear error or prevent manifest injustice. Schiller v. Physicians
Res. Grp. Inc., 342 F.3d 563, 567 (5th Cir. 2003).
III.
A.

DISCUSSION

Plaintiffs’ Frivolity Argument

Plaintiffs argue that, because their claims had survived the summary judgment phase, their
legal/factual position cannot be deemed frivolous under the MLAA. In support, they cite Garner
v. Smith, 277 So. 3d 536, 541 (Miss. 2019), which states that a claim is frivolous when “objectively
speaking, the pleader or movant has no hope of success” Id. (citation omitted). A claim surviving
summary judgment, say Plaintiffs, suggests it has some merit. Knights’ Piping, Inc. v. Knight, 123
So. 3d 451 (Miss. Ct. App. 2012).
The Mississippi Supreme Court, however, has not established a bright-line rule that a claim
surviving summary judgment can never be deemed frivolous. See Hampton v. Blackmon, 145 So.
3d 632, 635 (Miss. 2014) (holding that claims must be objectively frivolous, regardless of

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procedural posture). Furthermore, Plaintiffs fail to account for the “totality of circumstances”
under which a claim may be deemed frivolous. Simply surviving summary judgment does not
automatically validate a claim’s merit. Courts consider routinely whether claims were brought in
bad faith, lacked evidentiary support, or imposed unnecessary litigation costs on the opposing
party. See Browning v. Kramer, 931 F.2d 340 (5th Cir. 1991).
Courts in the United States Court of the Fifth Circuit, under the guidance of Mississippi
law, apply an objective standard for frivolity. See Browning, 931 F.2d 340 (holding that a claim
is frivolous if it lacks an arguable basis in law or fact). Additionally, in Smith v. Malouf, 722 So.
2d 490 (Miss. 1998), the Mississippi Supreme Court held that a claim may be deemed frivolous if
it is filed without substantial justification, meaning that a reasonable person would not believe it
had a chance of success. Similarly, in Mabus v. Mueller Indus., Inc., 2005 WL 1362988 (S.D.
Miss. 2005), the court reaffirmed that even when a claim survives initial motions, it may still be
frivolous if it is later revealed to lack legal or factual support.
Here, Plaintiffs’ claims, while not entirely baseless, were ultimately found to lack
substantive merit. This Court determined that Billy was entitled to attorney fees as the prevailing
party due to the significant resources expended in defending against claims that lacked a viable
legal foundation. This Court, further, found that Billy was entitled to attorney fees under the
MLAA because Plaintiffs’ litigation strategy with “unclean hands” resulted in unnecessary legal
expenses for Billy.
C.

Equitable Factors and Impact

Beyond the statutory analysis, this Court also considers equitable principles when
reviewing fee awards. Under Mississippi law, equitable considerations include whether a party’s
conduct resulted in unnecessary litigation, increased costs for the opposing party, or improper

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delays. In this case, the extensive briefing and continued litigation following adverse rulings reflect
a pattern of prolonging the case without a justifiable basis.
The MLAA authorizes fee awards where claims are “without substantial justification.”
Miss. Code. Ann. § 11-55-5. Fee awards for unsubstantiated claims, inter alia, serve a deterrent
purpose, discouraging litigants from pursuing meritless claims that unduly burden courts and
opposing parties. Sanctions, including attorney fees, play a critical role in preserving judicial
efficiency and preventing abuse of the legal system. See Chambers v. NASCO, Inc., 501 U.S. 32
(1991).
In the matter sub judice, awarding fees ensures that the prevailing parties are not unfairly
penalized by defending against claims that lack substantive justification. Additionally, it signals
to future litigants that the courts will not tolerate baseless claims that impose undue burdens on
defendants and judicial resources.
IV.

CALCULATION

As stated above, Billy submitted an itemized billings statement for his attonerys’ incurred
expenses. The starting point for determining the amount of Billy’s attorney’s fees award is to assess
the number of hours reasonably expended on the litigation and multiply those hours by a
reasonable hourly rate. This method of calculating reasonable attorney’s fees is generally known
as the “lodestar method”. See Bay Point Props., Inc. v. Miss. Transp. Comm’n, 304 So.3d 606,609
(Miss. 2020); In re Estate of Gillies, 830 So.2d 640, 645 (Miss. 2002).
In determining the lodestar fee, this Court is guided by both state and federal precedent.
Under Mississippi law, the reasonableness of attorney’s fees is governed by Rule 1.5(a) of the
Mississippi Rules of Professional Conduct which states:

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A lawyer’s fee shall be reasonable. The factors to be considered in determining the
reasonableness of a fee included the following: (1) the time and labor required, the novelty
and difficulty of the questions involved and the skill requisite to perform the legal services
properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular
employment will preclude other employment by the lawyer; (3) the fee customarily
charged in the locality for similar legal services; (4) the amount involved and the results
obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the
nature and length of the professional relationship with the client; (7) the experience,
reputation, and ability of the lawyer or lawyers performing the services; and (8) whether
the fee is fixed or contingent. Miss. R. of Pro. Condud5 1.5(a).
See also, Bay Point Props., Inc., 304 So.3d at 609-10; In re Estate of Gillies, 830 So.2d at 64546.
In addition to the above factors under Mississippi law, the Fifth Circuit has adopted almost
identical factors to be applied in determining the reasonableness of an attorney’s fee award (“the
Johnson factors”) See Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974),
abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 109 S.Ct. 939 (1989).
The Johnson factors are: 1) the time and labor required; 2) the novelty and difficulty of the
questions; 3) the skill requisite to perform the legal service properly; 4) the preclusion of other
employment by the attorney due to acceptance of the case; 5) the customary fee; 6) whether the
fee is fixed or contingent; 7) time limitations imposed by the client or the circumstances; 8) the
amount involved and the results obtained; 9) the experience, reputation, and ability of the
attorneys; 10) the undesirability of the case; 11) the nature and length of the professional
relationship with the client; and 12) awards in similar cases. Id. at 717-719.
Applying either of the two above-mentioned tests to the evidence and proof submitted in
the instant case [Docs. 162-1, 162-2, 162-3] demonstrates that the amount of attorney’s fees sought
by Billy is reasonable. The rates charged by the respective attorneys and staff members are
adequately documented and represent reasonable rates for the time and skill of the attorneys

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involved. This Court, in its previous Orders, discussed thoroughly how Plaintiffs have
painstakingly and unnecessarily extended this litigation. This matter finally has reached a full stop.
V.

CONCLUSION

Billy has provided sufficient evidence of his right to attorney’s fees by prevailing against
Plaintiffs on all claims, as well as the fees incurred by Billy during this litigation proceedings
initiated by the Plaintiffs. Plaintiffs’ Motion for Reconsideration and to Vacate Order Granting
Attorney Fees [Doc. 168] is DENIED.
This Court hereby awards Defendant Billy Merchant an award of attorneys’ fees and costs
in the amount of $165,635.00 for expenses incurred in district and appellate courts. This Court
further approves payment of the additional $6,483.75 for additional time expended in this case
after this Court’s previous Order awarding fees [Doc. 158].
SO ORDERED AND ADJUDGED, this, the 11th day of March, 2025.
/s/HENRY T. WINGATE
UNITED STATES DISTRICT COURT JUDGE

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