North American Insurance Agency Inc et al v. Bates

Filing 383

ORDER denying #372 defendant's Application for an Award of Attorney's Fees and Costs Against Plaintiffs and/or Against Plaintiffs' Counsel (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 4/8/2015. (ks)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
NORTH AMERICAN INSURANCE
AGENCY, INC., d/b/a Insurica, et al.,
Plaintiffs,
vs.
ROBERT C. BATES, et al.,
Defendants.

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Case No. CIV-12-544-M

ORDER
Before the Court is defendants Robert C. Bates (“Bates”), Commercial Insurance Brokers,
L.L.C. (“CIB”), Walt Pettit, W. Sam Pettit, Debbie Morris, Walt Pettit CPCU, Inc., and Commercial
Brokerage Services, Inc.’s Application for an Award of Attorney Fees and Costs Against Plaintiffs
and/or Against Plaintiffs’ Counsel, filed September 2, 2014.1 On September 16, 2014, plaintiffs
filed their response, and on September 22, 2014, defendants filed their reply.
I.

Introduction
On May 14, 2012, plaintiffs filed the instant action against Bates. On July 3, 2012, plaintiffs

filed their First Amended Complaint, adding additional defendants and asserting additional causes
of action. On July 3, 2013, plaintiffs filed their Second Amended Complaint, adding additional
defendants and asserting additional causes of action. On November 22, 2013, the Court granted in
part and denied in part defendants’ motion to dismiss. On February 7, 2014, the Court granted

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On August 26, 2014, defendants filed a motion for costs. The Court has ruled on
defendants’ motion for costs in a separate order entered March 31, 2014. As the Court has
already ruled on defendants’ entitlement to costs, the Court will address only the issue of
attorney fees in this Order.

plaintiffs leave to amend their complaint, and on February 13, 2014, plaintiffs filed their Third
Amended Complaint.
This case was then set on the Court’s August 2014 trial docket. On August 1, 2014, the
Court denied plaintiffs’ motion for summary judgment and granted in part and denied in part
defendants’ motion for summary judgment. Specifically, the Court granted summary judgment as
to plaintiffs’ Lanham Act claim, unfair competition claim, trademark infringement claim, breach of
fiduciary duty claim against defendant Debbie Morris, and tortious interference with prospective
economic advantage claim regarding the customers. On August 5, 2014, plaintiffs filed a motion
to dismiss defendants Kim Buker, W. Sam Pettit and Debbie Morris with prejudice. On August 11,
2014, plaintiffs filed an Amended Motion to Dismiss with Prejudice to Include Defendant Walt
Pettit and Various Claims in Addition to Defendants Kim Buker, W. Sam Pettit and Debbie Morris.2
On August 12, 2014, in response to plaintiffs’ motions to dismiss, defendants filed a motion
requesting this Court to decline the further exercise of jurisdiction and to dismiss the remaining state
law claims. On that same date, the Court conducted a hearing on the motions and issued an order
granting the motions. Specifically, the Court granted plaintiffs’ motions and dismissed all claims
against defendants Walt Pettit, Kim Buker, W. Sam Pettit, Debbie Morris, Walt Pettit CPCU, Inc.,
and Commercial Brokerage Services, Inc. with prejudice and all remaining contract and Computer
Fraud and Abuse Act claims with prejudice. Further, the Court found that plaintiffs had confessed
defendants’ motion to dismiss, and the Court declined to exercise supplemental jurisdiction over
plaintiffs’ remaining state law claims and dismissed without prejudice (1) plaintiffs’ breach of
fiduciary duty claim against defendant Bates, (2) plaintiffs’ tortious interference claim against

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Trial was set to commence on August 12, 2014.
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defendants Bates and CIB, (3) plaintiffs’ unjust enrichment claim against defendant Bates, (4)
plaintiffs’ Oklahoma Deceptive Trade Practices Act (“ODTPA”) claim against defendants Bates and
CIB, and (5) plaintiffs’ civil conspiracy claim against defendants Bates and CIB.
II.

Discussion
Defendants now assert that they are the prevailing parties in this case and are entitled to

allowable attorney fees. Specifically, defendants assert: (1) that they are entitled to attorney fees
under the Lanham Act, 15 U.S.C. § 1117(a); (2) that defendants Bates and CIB should be awarded
their costs and expenses, including reasonable attorney fees, for the claims dismissed without
prejudice, which have been re-filed in Tulsa County; (3) that defendants are entitled to discretionary
and mandatory attorney fees under the ODTPA; (4) that defendants are entitled to attorney fees
under Okla. Stat. tit. 12, § 936; and (5) that defendants should be awarded their attorney fees
pursuant to the Court’s inherent authority and pursuant to 28 U.S.C. § 1927.
A.

Lanham Act

The Lanham Act provides that “[t]he court in exceptional cases may award reasonable
attorney fees to the prevailing party.” 15 U.S.C. § 1117(a) (emphasis added). The Tenth Circuit has
held:
being the prevailing party is not, by itself, enough to justify an award
of attorney fees. Moreover, even in exceptional cases, the award of
attorney fees is vested in the discretion of the district court. The
statute itself does not define “exceptional cases,” but the legislative
history to the statute suggests two considerations for prevailing
defendants who seek attorney fees. One, an objective consideration,
is whether the suit was “unfounded.” The other, a subjective
consideration, is whether the suit was brought by the trademark
owner for harassment and the like. The legislative history further
advises that an award of attorney fees to a prevailing party is
authorized where justified by equitable considerations.

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No one factor is determinative, and an infringement suit could
be “exceptional” for a prevailing defendant because of (1) its lack of
any foundation, (2) the plaintiff’s bad faith in bringing the suit, (3)
the unusually vexatious and oppressive manner in which it is
prosecuted, or (4) perhaps for other reasons as well. The Lanham Act
largely vests in the district court the discretion to determine when a
losing plaintiff’s claims or conduct in the litigation are so
“exceptional” as to warrant the assessment of attorney fees. The
focus of the analysis is not only on whether the defendant prevailed,
or concomitantly, whether the plaintiff lost. Not every losing suit is
without foundation, and not every strategic decision by a plaintiff in
bringing suit and in prosecuting it in a manner to enhance the
prospects of success is done for the purpose of harassment or another
improper purpose.
Nat’l Ass’n of Prof’l Baseball Leagues, Inc. v. Very Minor Leagues, Inc., 223 F.3d 1143, 1146-47
(10th Cir. 2000).
Having carefully reviewed the parties’ submissions and the court file in this case, the Court
finds that the instant action is not an “exceptional case” and an award of attorney fees to defendants
is not warranted. Specifically, the Court finds that while the Court granted summary judgment to
defendants on plaintiffs’ Lanham Act claim, this claim was not unfounded or groundless. Further,
the Court finds that there was no bad faith on the part of plaintiffs in bringing this action and
plaintiffs did not prosecute this case in an unusually vexatious or oppressive manner. Finally, the
Court finds no other reason in this case to award attorney fees to defendants in relation to plaintiffs’
Lanham Act claim.
B.

Claims dismissed without prejudice and re-filed in Tulsa County

Defendants Bates and CIB assert they should be awarded their costs and expenses, including
reasonable attorney fees, for the claims that were dismissed without prejudice and which have been
re-filed in the District Court of Tulsa County. As set forth in the Introduction, the claims that were
dismissed without prejudice were the remaining pendant state law claims that defendants, not
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plaintiffs, moved to dismiss. The only authority defendants Bates and CIB rely upon involve cases
where the plaintiffs dismissed claims without prejudice. Defendants Bates and CIB have cited the
Court to no authority for awarding a defendant attorney fees and costs when it was the defendant
who moved to dismiss the claims. Because it was defendants Bates and CIB who moved to dismiss
the pendant state law claims, the Court finds it would be inappropriate for the Court to award them
their costs and expenses, including reasonable attorney fees, for these claims.
C.

ODTPA

The ODTPA provides, in pertinent part:
In any action instituted under the provisions of this act, the court
may, in its discretion, award reasonable attorneys’ fees to the
prevailing party. If in any such action the court finds either (1) . . .
or (2) that the plaintiff has acted in bad faith in instituting the action,
the court shall award reasonable attorneys’ fees to the prevailing
party.
Okla. Stat. tit. 78, § 54(C).
Oklahoma courts generally find bad faith when the claim was made
for oppressive, abusive or wasteful reasons. The court’s inquiry
focuses on the intent of the actor who brought the claim, and does not
involve the quality or quantity of the evidence presented.
Vanguard Envtl., Inc. v. Kerin, 528 F.3d 756, 759 (10th Cir. 2008) (internal quotations and citations
omitted).
Having carefully reviewed the parties’ submissions and the court file in this case, the Court
finds neither mandatory nor discretionary attorney fees under the ODTPA should be awarded in this
case. Specifically, the Court finds plaintiffs did not act in bad faith in instituting this action.
Further, defendants have not shown that plaintiffs asserted their ODTPA claim for oppressive,
abusive, or wasteful reasons. Additionally, the Court finds that defendants have set forth no

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adequate reason for the Court to use its discretion to award attorney fees in this case. Plaintiffs’
ODTPA claim was not a “weak” claim, as this Court denied defendants summary judgment as to this
claim.
D.

Okla. Stat. tit. 12, § 936

Defendants assert they are entitled to attorney fees under Okla. Stat. tit. 12, § 936, which
provides, in pertinent part: “[i]n any civil action to recover for labor or services rendered, . . . the
prevailing party shall be allowed a reasonable attorney fee to be set by the court, to be taxed and
collected as costs.” Okla. Stat. tit. 12, § 936(A). The Tenth Circuit has held:
to recover under section 936, a prevailing party on a labor or services
contract claim must demonstrate that the claim is for labor or services
rendered, not just that the claim relates to the performance of labor or
services. The question is whether the damages arose directly from
the rendition of labor or services, such as a failure to pay for those
services, or from an aspect collaterally relating to labor or services,
such as loss of profits on a contract involving the rendition of labor
and services. The statute applies if recovery is sought for labor and
services as in the case of a failure to pay for them. . . . Its provisions
are inapposite if the suit be one for damages arising from the breach
of an agreement that relates to labor and services.
Merrick v. N. Natural Gas Co., 911 F.2d 426, 434 (10th Cir. 1990) (internal quotations and citations
omitted).
In the case at bar, plaintiffs’ breach of contract claims were based upon various defendants’
alleged breaches of their producer agreements, specifically, defendants’ violations of the noncompete provision of their producer agreements. Plaintiffs’ breach of contract claims were not to
recover for labor or services actually rendered but were to recover for damages arising from the
breach of an agreement that relates to labor and services. Accordingly, the Court finds that section
936 does not apply and that defendants are not entitled to attorney fees under section 936.

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E.

Court’s inherent authority and 28 U.S.C. § 1927

Finally, defendants assert they should be awarded their attorney fees pursuant to the Court’s
inherent authority and pursuant to 28 U.S.C. § 1927. Specifically, defendants assert that the
circumstances of this litigation – particularly the manner in which plaintiffs and their counsel
brought and prosecuted their claims, eventually to be dismissed on the day of trial – so wreak of
impropriety and an abuse of the judicial system that extraordinary relief is compelled.
Section 1927 provides:
Any attorney or other person admitted to conduct cases in any court
of the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs, expenses,
and attorneys’ fees reasonably incurred because of such conduct.
28 U.S.C. § 1927. Further, courts have an inherent power to assess attorney’s fees “when a party
has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Kornfeld v. Kornfeld, 393
F. App’x 575, 578 (10th Cir. 2010) (internal quotations and citation omitted).
Having carefully reviewed the parties’ submissions and the court file in this case, and being
quite familiar with counsel’s actions in this case, the Court finds that an award of attorney fees is
not warranted under section 1927 or this Court’s inherent authority. Specifically, the Court finds
no bad faith on the part of plaintiffs or their counsel.3 Further, the Court finds plaintiffs’ counsel
have not multiplied the proceedings in this case unreasonably or vexatiously. Plaintiffs’ counsel’s
conduct, viewed objectively, does not manifest either an intentional or a reckless disregard of

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In this case, the Court has previously found no bad faith on the part of plaintiffs’
counsel.
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counsel’s duties to the Court. Additionally, the Court finds plaintiffs and their counsel have not
acted vexatiously, wantonly, or for oppressive reasons.
III.

Conclusion
Accordingly, for the reasons set forth above, the Court DENIES defendant’s Application for

an Award of Attorney’s Fees and Costs Against Plaintiffs and/or Against Plaintiffs’ Counsel [docket
no. 372].
IT IS SO ORDERED this 8th day of April, 2015.

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