Sedgewick Homes, LLC v. Stillwater Homes, Inc. et al

Filing 223

ORDER that Bart and Gretchen Bivins' 196 Motion for Prevailing Party Costs is hereby granted in the amount of $35,400 and Joey and Emily Shoemakers' 205 Motion for Prevailing Party Costs is hereby granted in the amount of $41,122.50. Signed by Senior Judge Graham Mullen on 7/17/2019. (tmg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
5:16CV49 and 5:16CV50
SEDGEWICK HOMES, LLC,

)
)
Plaintiff,
)
)
vs.
)
)
STILLWATER HOMES, INC.,
)
CHRISTOPHER BART BIVINS, and
)
GRETCHEN WYNE BIVINS,
)
)
Defendants.
)
____________________________________)
)
SEDGEWICK HOMES, LLC,
)
)
Plaintiff,
)
)
vs.
)
)
STILLWATER HOMES, INC.,
)
JOSPEPH LYNN SHOEMAKER, and
)
EMILY GROCE SHOEMAKER,
)
)
Defendants.
)
____________________________________)

ORDER

This matter is before the Court upon the Individual Defendants’ Motions for Attorney’s
Fees as prevailing parties in this federal copyright lawsuit. Each motion has been fully briefed
and this matter is ripe for disposition.
I.

FACTUAL BACKGROUND
Defendant Stillwater Homes, Inc. (“Stillwater”) built homes for the Individual

Defendants, the Bivinses and the Shoemakers, in 2015. Plaintiff Sedgewick Homes, LLC
(“Sedgewick”) filed claims against Stillwater for copyright infringement as well as other claims.

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Sedgewick also sued the Individual Defendants for copyright infringement and contributory
infringement.
The gist of Plaintiff’s claims against the Individual Defendants is that after visiting
Sedgewick’s model home and sales office they allegedly provided to Stillwater certain floor
plans and elevations that Sedgewick had made publicly available and asked Stillwater to copy
the plans and elevations. Prior to filing and serving the lawsuits against the Individual
Defendants, Sedgwick did not contact any of the Individual Defendants to inquire as to whether
they had provided any of Sedgwick’s information to Stillwater. The Individual Defendants were
forced to hire counsel, Mr. Gary Beaver, to defend them. Because Individual Defendants are
middle-class families of limited means, Mr. Beaver agreed reduce his billing rate from $410 per
hour to $300 per hour.
Nearly two weeks after counsel had conducted a lengthy Rule 26(f) telephone
conference, Sedgewick’s counsel offered to stay the claims against the Individual Defendants
only if each couple paid Sedgewick $5000, an amount Sedgewick describes as “nominal.” Mr.
Beaver thereafter emailed Sedgewick’s counsel an 8-page letter with exhibits rejecting the offer
to have the Individual Defendants pay for a stay and, instead, laid out the evidence showing that
Sedgwick’s claims against the Individual Defendants were baseless and “tantamount to
economic blackmail on two innocent middle-class families who [Sedgewick] never even
bothered to contact about its suspicions prior to filing the lawsuit.” Mr. Beaver included an
affidavit from Robert Baldwin, Stillwater’s owner, stating that the Individual Defendants had not
given him any of Sedgewick’s materials.
In discovery, the Individual Defendants sought to discover any evidence that Sedgwick
had showing that either the Bivinses or the Shoemakers had ever provided any Sedgwick plans to

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Stillwater. No evidence of that sort was ever produced by Sedgwick to the Individual
Defendants.
After Sedgewick took the depositions of the Individual Defendants, it finally agreed to
stay the claims against them without requiring them to pay in return for the stay. As of the date
of entry of the stay, each couple had paid Mr. Beaver approximately $7000 in legal fees but
owed him substantially more than that.1
After the Court denied both Sedgewick and Stillwater’s motions for summary judgment,
a jury trial was held. At the trial, when asked by Defendant’s counsel why Stillwater sued the
Individual Defendants, David Tucker, the president of Sedgewick, testified as follows:
TUCKER: Well, past experience with other builders shows that if you get the
customers involved in this they will push the builder to come up with a speedy
resolution.
THE COURT: Wait a minute. You joined them in to pressure this guy [Stillwater’s
owner]? Is that what you’re saying?
TUCKER: Well, it certainly helps.
(Doc. No. 206-1, pp. 87-88).
After Sedgewick’s case in chief, the Court granted in part Stillwater’s Rule 50 motion,
leaving only the copyright infringement claim. The jury returned a verdict finding that Plaintiff
owned a valid copyright; Stillwater had access to Plaintiff’s work and there is substantial
similarity between the Quail Valley and the Trent, but that Trent plan was created independently
by Stillwater. Thereafter, Sedgewick moved to dismiss its claims against the Individual
Defendants and the Court granted the motion, dismissing the claims with prejudice. The
Individual Defendants now seek their attorney’s fees as prevailing parties.

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Mr. Beaver states that he stopped billing the Individual Defendants once he learned that Mr. Bivins was looking
into selling his house to pay his outstanding legal bills.

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II.

DISCUSSION
Section 505 of the Copyright Act provides that a district court “may … award a

reasonable attorney’s fee to the prevailing party.” A defendant prevails when the plaintiff’s
challenge is rebuffed, irrespective of the precise reason for the court’s decision. CRST Van
Expedited, Inc. v. EEOC, 136 S. Ct. 1642, 1651 (2016). When a dismissal with prejudice is
entered dismissing a defendant from the lawsuit there has been a “material alteration of [the
parties’] legal relationship” and the defendant is a prevailing party. Claiborne v. Wisdom, 414
F.3d 715, 719 (7th Cir. 2005).
In the Fourth Circuit, courts employ four factors in determining whether to exercise the
court’s “equitable discretion” to award attorney’s fees on the facts of the case, namely: “(1) ‘the
motivation of the parties,’ (2) ‘the objective reasonableness of the legal and factual positions
advanced,’ (3) ‘the need in particular circumstances to advance considerations of compensation
and deterrence,’ and (4) any other relevant factor presented.’” Diamond Star Bldg. Corp. v.
Freed, 30 F.3d 503, 505 (4th Cir. 1994) (quoting Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225,
234 (4th Cir. 1993) (internal quotations omitted)).
The Supreme Court has found that a district court must give “substantial weight” to the
reasonableness of a non-prevailing party’s position in determining whether a court should award
fees, while also considering other relevant factors. Kirtsaeng v. John Wiley & Sons, Inc., 136 S.
Ct. 1979, 1989 (2016). However, while objective reasonableness is an important factor in
assessing fee applications, it is not the controlling one. Id. at 1988. The court:
must take into account a range of considerations beyond the reasonableness of
litigating positions. See supra, at 1985. That means in any given case a court may
award fees even though the losing party offered reasonable arguments (or,
conversely, deny fees even though the losing party made unreasonable ones). For
example, a court may order fee-shifting because of a party's litigation misconduct,
whatever the reasonableness of his claims or defenses. See, e.g., Viva Video, Inc. v.
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Cabrera, 9 Fed. Appx. 77, 80 (C.A.2 2001). Or a court may do so to deter repeated
instances of copyright infringement or overaggressive assertions of copyright
claims, again even if the losing position was reasonable in a particular case. See,
e.g., Bridgeport Music, Inc. v. WB Music Corp., 520 F.3d 588, 593–595 (C.A.6
2008) (awarding fees against a copyright holder who filed hundreds of suits on an
overbroad legal theory, including in a subset of cases in which it was objectively
reasonable). Although objective reasonableness carries significant weight, courts
must view all the circumstances of a case on their own terms, in light of the
Copyright Act's essential goals.
Id. at 1988-89.
The Court will first address the objective reasonableness of the factual and legal positions
advanced by the Plaintiff. “Unless an argument or claim asserted in the course of litigation is so
unreasonable that no reasonable litigant could believe it would succeed, it cannot be deemed
objectively baseless for purposes of awarding attorney fees.” Exclaim Mktg., LLC v. DirecTV,
LLC, No. 5:11-CV-684-FL, 2015 WL 5725703, *7 (E.D.N.C. Sept. 30, 2015). Considering the
evidence presented at trial, the Court cannot find that Sedgewick’s claims against the Individual
Defendants were objectively baseless.
As noted above, however, objective reasonableness is not the controlling factor in
determining prevailing party fee applications. The Court must also assess the motivation of the
parties. At the trial, Sedgewick admitted its motivation for suing the Individual Defendants: to
pressure Stillwater to settle. This bad faith motivation weighs strongly in favor of a fee award.
The next consideration for the Court is the need in particular circumstances to advance
considerations of compensation and deterrence. At the time Sedgewick sued the Individual
Defendants, it had no evidence that they had done anything wrong other than the fact that they
had taken the brochures of the house plans from Sedgewick after visiting its model and had
ultimately built similar homes. Sedgewick did not respond to Individual Defendants’ requests to
provide what evidence it had that they had provided plans to Stillwater. Suing first and asking

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questions later does not advance the goals of the Copyright Act. It is not unusual for a customer
to shop for the best deal on a particular type of house by looking at similar models and house
plans offered by different builders. Rather than proceeding immediately with suing the
Individual Defendants, Sedgewick could have, and should have, sued Stillwater first and then
added the homeowners if it actually found evidence of wrongdoing. However, Sedgwick admits
that it sued these homeowners in an effort to extract a quick settlement from Stillwater. The
Court finds that the need in these circumstances to advance considerations of compensation and
deterrence weigh in favor of awarding fees.
With regard to other relevant factors, each side accuses the other of overly-aggressive
litigation conduct. The Court will not sort through each allegation and make a finding as to
which side exhibited the worst conduct. This factor will not weigh in favor of either side.
Considering each of the factors set out in Diamond Star Bldg., the Court finds that these
factors weigh in favor of a fee award to the Individual Defendants. While the reasonablness of
Sedgwick’s position is a significant factor, as stated by the Supreme Court in Kirtsaeng, it is not
controlling and can be outweighed by other considerations. Here, the Court finds that
Sedgwick’s admitted bad faith motivation for suing these Defendants outweighs any
consideration of the objective reasonableness factor.
Having determined that a fee award is appropriate, the Court now turns to the
reasonableness of the fees requested. When making this determination, the Court uses the
lodestar methodology prescribed by the Fourth Circuit in Grissom v. Mills Corp., 549 F.3d 313,
320-21 (4th Cir. 2008). This requires the Court to (i) calculate the lodestar figure, which is
determined by multiplying the “reasonable hourly rate” by the “hours reasonably expended,” in
light of the factors enumerated in Barber v. Kimbrell’s, Inc., 577 F.2d 216 (4th Cir. 1978) (the

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“Johnson/Barber factors”) (ii) subtract fees for hours spent on unsuccessful claims unrelated to
successful ones, and (iii) award some percentage of the remaining amount, depending on the
degree of success achieved. Grissom, 549 F.3d at 320–21.
The Fourth Circuit has summarized the Johnson/Barber factors to include:
(1) the time and labor expended; (2) the novelty and difficulty of the questions
raised; (3) the skill required to properly perform the legal services rendered; (4)
the attorney's opportunity costs in pressing the instant litigation; (5) the customary
fee for like work; (6) the attorney's expectations at the outset of the litigation; (7)
the time limitations imposed by the client or circumstances; (8) the amount in
controversy and the results obtained; (9) the experience, reputation and ability of
the attorney; (10) the undesirability of the case within the legal community in
which the suit arose; (11) the nature and length of the professional relationship
between attorney and client; and (12) attorneys' fees awards in similar cases.
Spell v. McDaniel, 824 F.2d 1380, 1402 n. 18 (4th Cir.1987).
The Court will address each factor in turn. The time and the labor expended on these
cases appear to be reasonable. Mr. Beaver handled the matters by himself and at a reduced rate
with no guarantee of being fully paid. He was aware from the outset that the Individual
Defendants were of limited means. Mr. Beaver has submitted the affidavits of two experienced
intellectual property attorneys who practice in North Carolina federal courts, including this
district. Both have opined that the work done and time expended were reasonable and
appropriate. Plaintiff argues that Mr. Beaver’s billing was excessive. However, each of the
arguments it advances to support this allegation is without merit and adequately countered by
Mr. Beaver.
The cases did not raise any difficult or novel issues, although the Court does recognize
that federal copyright infringement litigation requires a higher level of skill than the average
case. Regarding opportunity costs, Mr. Beaver’s handing of this case precluded him from
performing work at a much higher rate for immediate payment.

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Because of their limited means, Mr. Beaver charged the Individual Defendants at a rate of
$300 per hour, well below his then normal hourly billing rate of $410. Mr. Beaver’s current
hourly rate is $445. The Court finds that the reduced rate charged is well below the prevailing
market rate for attorney’s fees in this district for copyright litigation by an attorney with Mr.
Beaver’s education and experience. With regard to attorney’s expectations at the outset of
litigation, Mr. Beaver agreed to defend the Individual Defendants at a reduced rate as necessary.
However, once Mr. Beaver learned that Mr. Bivins was considering selling his home to pay his
legal bills, Mr. Beaver told both couples to stop paying the legal bills and wait until the
conclusion of the litigation so that Mr. Beaver could attempt to obtain payment from Sedgewick
if the Individual Defendants ended up prevailing. At this time, a significant portion of the fees
remain unpaid by the Individual Defendants.
The trial in this case was continued several times requiring Mr. Beaver to be involved in
the case longer than anticipated and required him to review more documents and prepare his
clients to testify at trial more than once. These trial delays were not caused by the Individual
Defendants. Regarding the amount in controversy and results obtained, the “degree of success
obtained” is the most critical factor. Hensley v. Eckerhart, 461 U.S. 424, 436 (1983). The
Individual Defendants ultimately had all claims against them dismissed with prejudice. The
Court finds that Mr. Beaver is an experienced business attorney whose practice has included
intellectual property litigation. His submissions in support of the fee award support the fact that
he is competent and experienced. In addition, the case itself is undesirable because of the clients’
inability to pay. Few attorneys would agree to defend clients in federal litigation at a billing rate
significantly below their normal rate with the risk of nonpayment. Moreover, few would carry a
large balance of unpaid fees for years.

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Mr. Beaver indicates that this is the only case in which he has represented these
Individual Defendants so the length of their professional relationship only extends for the length
of this case. Regarding fee awards in similar cases, the Court does not have sufficient
information to make such an analysis.
Employing the methodology prescribed by the Fourth Circuit in Grissom and considering
the Johnson/Barber factors, the Could finds that the amount of attorney’s fees requested by the
prevailing Individual Defendants is reasonable. The Court declines to reduce the fees as the
Individual Defendants obtained complete success as a result of the claims against them being
dismissed with prejudice. Accordingly,
IT IS THEREFORE ORDERED that Joey and Emily Shoemakers’ Motion for Prevailing
Party Costs is hereby granted in the amount of $41,122.50; and
IT IS FURTHER ORDERED that Bart and Gretchen Bivins’ Motion for Prevailing Party
Costs is hereby granted in the amount of $35,400.

Signed: July 17, 2019

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