SMS Financial JDC LP v. Cope et al

Filing 74

ORDER granting in part 55 Plaintiff's Motion for Attorney Fees. Signed by Honorable Robin J. Cauthron on 5/16/16. (lg)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
SMS FINANCIAL JDC, LP,
a Delaware limited partnership,
Plaintiff,
vs.
CARY COPE; P.J.N. CORPORATION
(possibly doing business as
INSURANCE SPECIALTY and/or
INSURANCE SPECIALTY P.I.E.),
an Oklahoma Corporation,
PAMELA J. NEIBAUER; and
CHEROKEE YACHT CLUB,
an Oklahoma Corporation,
ROBERT FERGUSON,
Defendants.

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Case No. CIV-15-505-C

MEMORANDUM OPINION AND ORDER
The Court granted summary judgment in favor of the Plaintiff on February 9, 2016
(Dkt. No. 53). Plaintiff then timely filed a Motion for Attorney Fees (Dkt. No. 55) on
February 23, 2016. Defendants filed a Response (Dkt. No. 69), and Plaintiff replied (Dkt.
No. 71). The Motion is at issue.
Plaintiff sued Defendants to recover Defendant Cary Cope’s indebtedness on a note
secured by a yacht, for possession of the yacht, and for a determination that its interest in the
yacht was superior to all Defendants. On summary judgment, the Court found the subject
Note enforceable against Defendant Cope and ordered him to pay the debt. The Court also
found that Plaintiff’s security interest in the yacht is superior to the interests of all
Defendants. Due to Cope’s and Defendant Pamela J. Neibauer’s inequitable conduct, the

Court left the yacht in possession of the yacht lessee, Defendant Robert Ferguson, and found
that Plaintiff is entitled to the income from Neibauer’s lease of the yacht to Ferguson as
payment on Cope’s debt.
The question now before the Court is whether Plaintiff is entitled to recover
reasonable attorney fees from the Defendants, and if so, from whom.
ANALYSIS
This is a diversity action in which Oklahoma substantive law applies. Plaintiff raises
four Oklahoma statutes which, it contends, entitle it to attorney fees from all Defendants.
The Court will address each statute in turn.
A.

Plaintiff is entitled to recover reasonable attorney fees from Cope.
First, Plaintiff contends that as a prevailing party with respect to the subject Note and

Security Agreement, it is entitled to attorney fees from Cope under 12 Okla. Stat. § 936 and
as a matter of contract. Section 936(A) states in relevant part:
In any civil action to recover . . . on [a] . . . note . . . , unless otherwise
provided by law or the contract which is the subject of the action, the
prevailing party shall be allowed a reasonable attorney fee to be set by the
court, to be taxed and collected as costs.
Defendants do not contest the applicability of § 936(A) and admit that Plaintiff is a prevailing
party as to Cope.1 Having entered summary judgment on the Note in favor of Plaintiff and

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Def.’s Resp., Dkt. No. 69, p. 2. (“Plaintiff is a Prevailing Party as to Cope Only”); id. at
4 (“SMS is thus not a prevailing party except in regards to its money judgment claim against
Cope.”); id. at 9 (“WHEREFORE, Defendants P.J.N. Corporation, Pamela J. Neibauer, and Robert
Ferguson pray the Plaintiff’s Motion . . . be limited to Defendant Cope . . . .”).
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against Cope, the Court finds that Plaintiff is a prevailing party entitled to recover reasonable
attorney fees from Cope under § 936(A).
B.

Plaintiff is not entitled to recover attorney fees from Neibauer, PJN Corporation, or
Ferguson under 42 Okla. Stat. § 176 because they are incidental defendants.
Plaintiff also asserts it is entitled to recover attorney fees from Defendants Neibauer,

PJN Corporation, and Ferguson (the “Other Defendants”) under 42 Okla. Stat. § 176.
Section 176 states, “In an action brought to enforce any lien the party for whom judgment
is rendered shall be entitled to recover a reasonable attorney’s fee, to be fixed by the court,
which shall be taxed as costs in the action.”
This case is an action to enforce a lien within the scope of § 176. Plaintiff contends
that since the Other Defendants denied the superiority of Plaintiff’s interest in the yacht, and
the Court entered summary judgment in Plaintiff’s favor, it is also entitled to attorney fees
from the Other Defendants. The Other Defendants counter that Oklahoma case law limits
liability for attorney fees to Cope only, since they were merely “incidental defendants” to this
lawsuit. Case law supports the Other Defendants’ position.
Oklahoma follows “the general rule that attorney fees are not allowed against
incidental defendants.” HSRE–PEP I, LLC v. HSRE–PEP Crimson Park LLC, 2013 OK
CIV APP 38, ¶ 7, 304 P.3d 461, 463 (discussing Voelke v. Sisemore, 1959 OK 51, 338 P.2d
1080). In foreclosure actions naming the primary debtor and other competing lien claimants,
Oklahoma courts have consistently held the other claimants are incidental defendants and
that § 176 entitles the prevailing creditor to recover attorney fees from the primary debtor

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only. Fourth Nat’l Bank of Tulsa v. Appleby, 1993 OK 153, ¶ 30, 864 P.2d 827, 834-35;
Voelke, 1959 OK 51, ¶ 4, 338 P.2d at 1083; Crimson Park, 2013 OK CIV APP 38, ¶ 10, 304
P.3d at 465.2 The Oklahoma Supreme Court announced this limitation when applying § 176
in the Voelke case:
“Statutes of this character are primarily intended to reimburse the
principal parties to the cause, when forced to resort to the courts to enforce or
defend their rights. In foreclosure cases, it is common knowledge that there
are usually numerous defendants, brought in with the principal one, in order
to clear the title of outstanding equities, liens, and claims. However, we think
the practice observed by the courts generally, if not universally, is to allow
attorney’s fees under such statutes against the principal defendant debtor, and
against the particular res, the subject of the litigation, and not against other
incidental defendants, brought in for the purposes above suggested.”
1959 OK 51, ¶ 3, 338 P.2d at 1082 (citation omitted). When applied, the limitation does not
mean the prevailing party cannot recover its fees relative to incidental defendants; rather, it
means that “[a]ttorney fees awarded to the mortgagee and against the mortgagor in the
principal action should include a fee for the time and effort expended in clearing junior
liens,” claims, and equities. Crimson Park, 2013 OK CIV APP 38, ¶ 8, 304 P.2d at 464.
Even when a lien claimant denies the prevailing party’s superior interest, or actively
asserts its interest against the prevailing party via counterclaim, such a claimant remains
incidental. See Appleby, 1993 OK 153, ¶ 31, 864 P.2d at 835 (“A lien claimant in a

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Exceptional cases arise when the primary debtor is not a party to the lawsuit. Courts have
held unsuccessful lien claimants liable for attorney fees because, when the primary debtor is not a
party to the action, the competing lienholders are principal—not incidental—parties. See Ivey v.
Henry’s Diesel Serv., Inc., 1966 OK 170, 418 P.2d 634; Commercial Disc. Co. v. Midwest
Chevrolet Co., 1956 OK 172, 301 P.2d 356; Okla. State Bank of Ada v. Citizens Bank of Ada, 1998
OK CIV APP 15, 956 P.2d 923; Travis v. Del State Bank, 430 F. Supp. 312, 315 (W.D. Okla. 1976).
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mortgage foreclosure action is an ‘incidental defendant,’ although he files a counterclaim.”);
Crimson Park, 2013 OK CIV APP 38, ¶ 7, 304 P.3d at 464 (“The Supreme Court rejected the
plaintiffs/mortgagees’ argument ‘that [the competing lienholders] cannot be considered
“incidental defendants” within the general rule, because of the force and means they used in
establishing and enforcing their claimed liens’” (quoting Voelke, 1959 OK 51, ¶ 3, 338 P.2d
at 1082)).
At its core, this is an action to foreclose Plaintiff’s secured interest in the yacht
Defendant Cope used to secure the subject Note. Plaintiff and Cope, the sole parties to the
underlying Note and Security Agreement, are the principal parties to the action. Contrary
to Plaintiff’s assertion, the Court finds that Defendants Neibauer, PJN Corporation, and
Ferguson are incidental defendants under Oklahoma law, and thus, Plaintiff is not entitled
to recover attorney fees therefrom.

Moreover, despite the fact that Neibauer, PJN

Corporation, and Ferguson contested Plaintiff’s superior interest either by denial or denial
and counterclaim, they remain incidental defendants.
C.

Plaintiff is not entitled to recover attorney fees from Neibauer, PJN Corporation, or
Ferguson under 12 Okla. Stat. §§ 1580 or 1571.1.
Plaintiff further asserts it is entitled to reasonable attorney fees from the Other

Defendants under 12 Okla. Stat. § 1580, although Plaintiff cites no pertinent cases awarding
fees thereunder. Section 1580 sets out the alternative judgments the Court may award the
prevailing party “[i]n an action to recover the possession of personal property.” The last
sentence states, “The judgment rendered in favor of the prevailing party in such action may

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include a reasonable attorney fee to be set by the court, to be taxed and collected as costs.”
12 Okla. Stat. § 1580.
The Court finds this statute inapplicable to this case because plaintiff did not prevail
with respect to possession of the yacht. Even if it had, because the statute is permissive, and
the Court has already found Cope liable for all of Plaintiff’s reasonable attorney fees in this
action, the Court declines to award fees from the Other Defendants.
Lastly, Plaintiff asserts entitlement to attorney fees from Ferguson pursuant to 12
Okla. Stat. § 1571.1, although it makes no argument to that effect. The Court finds that
§ 1571.1 does not apply to this action.
D.

Plaintiff’s attorney fee is reasonable.
Plaintiff seeks attorney fees in the amount of $75,539.00 based on the hours expended

multiplied by the timekeeper’s hourly rate. Defendants do not challenge the hourly rates
sought by Plaintiff, and the Court finds them to be reasonable. Defendants argue, however,
that the fee is excessive for “a case that was resolved at summary judgment where that
motion was the first and only dispositive motion in the case.” (Def.’s Resp., Dkt. No. 69, pp.
8-9.) The Court takes this to mean that Defendants contest the reasonableness of the hours
expended.
The Court must determine whether the Plaintiff has proven that the hours expended
were reasonable. Oliver’s Sports Ctr., Inc. v. Nat’l Standard Ins. Co., 1980 OK 120, 615
P.2d 291. All that is required of the submitted time records is that they make it possible for
the Court to determine the time allotted to certain tasks and the reasonableness of that time.
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Morgan v. Galilean Health Enters., Inc., 1998 OK 130, ¶ 16, 977 P.2d 357, 364. The time
records submitted by Plaintiff permit this consideration. The attorney affidavit submitted
therewith shifted the burden to Defendants to prove the unreasonableness of the time entries,
and Defendants have not carried their burden. Moreover, in light of the fact that the Court
entered summary judgment approximately two weeks before trial, the Court finds the hours
expended are reasonable.
Oklahoma follows the lodestar method when calculating attorney fee awards. State
ex rel. Burk v. City of Oklahoma City, 1979 OK 115, 598 P.2d 659. Having found both the
hourly rate and hours expended reasonable, all that is left is to calculate the lodestar amount
by multiplying the hours expended by the hourly rate. Based on the time sheets submitted,
the lodestar amount equals $75,539.00. The Court finds that the Plaintiff is entitled to that
amount from Defendant Cope.
As a general rule, an evidentiary hearing is required when deciding a fee award. The
Court, however, is familiar with this matter. The materials submitted by the parties are
thorough and have allowed the Court a full view of the basis for Plaintiff’s request. Thus,
the Court finds a hearing is unnecessary. See Gamble, Simmons & Co. v. Kerr-McGee
Corp., 175 F.3d 762, 774 (10th Cir. 1999) (citing cases).

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CONCLUSION
Having entered summary judgment on the subject Note in favor of Plaintiff and
against Defendant Cope, the Court finds Plaintiff a prevailing party as to Cope only under
12 Okla. Stat. § 936. Plaintiff is therefore entitled to recover reasonable attorney fees from
Cope in the amount of $75,539.00. For the reasons set forth above, Plaintiff is not entitled
to recover attorney fees from Defendants Neibauer, PJN Corporation, or Ferguson.
Accordingly, Plaintiff’s Motion for Attorney Fees is GRANTED in part.
IT IS SO ORDERED this 16th day of May, 2016.

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