Willis et al v. Defendant Debt Care USA et al

Filing 145

Opinion and Order: The Court DENIES Global's Motion 134 for Attorneys' Fees without prejudice and DENIES Global's Bill of Costs 137 without prejudice and grants Global leave to re-raise its Motion and request for costs before the arbitrator if Global achieves success on the merits in arbitration. Signed on 05/07/2013 by Judge Anna J. Brown. (bb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

TINA WILLIS and GARY WILLIS,

3:11-CV-00430-BR

Plaintiffs,
OPINION AND ORDER
v.
NATIONWIDE DEBT SETTLEMENT
GROUP, an Arizona Limited
Liability Company; GLOBAL
CLIENT SOLUTIONS, LLC, an
Oklahoma Limited Liability
Company; and DEBT CARE USA,
Defendants.

JOSHUA L. ROSS
STEVE D. LARSON
Stoll Stoll Berne Lokting & Shlachter, PC
209 S.W. Oak Street, Fifth Floor
Portland, OR 97204
[phone]
Attorneys for Plaintiffs
GEORGE J. COOPER, III
Dunn Carney Allen Higgins & Tongue, LLP
851 S.W. Sixth Avenue, Suite 1500
Portland, OR 97204-1357
[phone]

1 - OPINION AND ORDER

RICHARD W. EPSTEIN
REBECCA BRATTER
Greenspoon Marder, P.A.
100 West Cypress Creek Road, Suite 700
Fort Lauderdale, FL 33309
[phone]
Attorneys for Defendant Global Client Solutions, LLC
ROBERT B. MILLER
Kilmer Voorhees & Laurick, PC
732 N.W. 19th Avenue
Portland, OR 97209
[phone]
Attorneys for Defendant Debt Care USA
BROWN, Judge.
This matter comes before the Court on the Motion (#134) of
Defendant Global Client Solutions, LLC, for Attorneys' Fees and
Global's Bill of Costs (#137).

For the reasons that follow, the

Court DENIES Defendant's Motion for Attorneys Fees and request
for costs.

BACKGROUND
The parties are familiar with the facts of this case from
the Court's prior Opinions and Orders.

Accordingly, the Court

recites only the facts relevant to the pending Motion for
Attorneys' Fees and request for costs.
On April 5, 2011, Plaintiffs filed a class-action Complaint
on behalf of themselves and others similarly situated against
Defendants for alleged violations of federal and state laws that
2 - OPINION AND ORDER

regulate businesses providing debt-negotiation services.
On June 17, 2011, Global filed a Motion to Dismiss.

In the

alternative, Global filed a Motion to Compel Arbitration pursuant
to the Global Agreement and the Federal Arbitration Act (FAA), 9
U.S.C. § 1, et seq.
On July 29, 2011, Defendant Debt Care filed a Motion to
Compel Arbitration.

In the alternative, Debt Care USA moved to

dismiss Plaintiff’s Complaint.
On January 31, 2012, the Court issued an Order in which the
Court denied Defendants’ Motions to Dismiss as premature.

The

Court took under advisement Global's Motion to Compel Arbitration
and deferred Debt Care’s Motion to Compel Arbitration pending
further discovery.

On March 16, 2012, Debt Care filed a

Supplemental Motion to Compel Arbitration.
On March 30, 2012, the Court issued an Opinion and Order in
which it granted in part Global’s Motion to Compel Arbitration
conditioned on whether the Court found the parties had agreed to
arbitrate Plaintiffs’ claims.

In addition, the Court found if

the parties agreed to arbitration, Plaintiffs could recover
punitive damages if justified, and Global’s liability for other
damages was not limited to the fees paid by Plaintiffs to Global
if Plaintiffs prevailed at arbitration.
Nationwide did not file an appearance in this matter, and,
therefore, on April 3, 2012, the Court granted Plaintiffs’ Motion

3 - OPINION AND ORDER

for Entry of Default against Nationwide.
On May 22, 2012, the Court issued an Opinion and Order in
which it granted Debt Care's Supplemental Motion to Compel
Arbitration.
On September 14, 2012, the parties stipulated to a summary
trial on written submissions to the Court to decide the sole
remaining issue in the matter:

Whether the parties agreed to the

arbitration terms that the Court had already found to be
enforceable.
On November 19, 2012, the Court issued Findings of Fact and
Conclusions of Law in which the Court found Plaintiffs’ claims in
this matter are subject to the arbitration terms that the Court
earlier found to be enforceable.
On December 4, 2012, the Court issued Orders, Final
Judgments, and Dismissals referring Plaintiffs' claims against
Defendants Debt Care and Global to arbitration.
On December 18, 2012, Global filed a Motion for Attorneys'
Fees and a Bill of Costs.

DISCUSSION
I.

Attorneys' Fees
“Under the ‘American rule,’ litigants ordinarily are

required to bear the expenses of their litigation unless a
statute or private agreement provides otherwise.”
4 - OPINION AND ORDER

Grove v. Wells

Fargo Fin. Cal., Inc., 606 F.3d 577, 579 (9th Cir. 2010)
(quotation omitted).

Global seeks attorneys' fees on the grounds

that the Global Agreement contains an attorney-fee provision and
Global was a prevailing party in this matter with respect to the
issue of arbitration.

Plaintiffs contend Global was not a

prevailing party within the meaning of the Global Agreement, and,
therefore, Global is not entitled to attorneys' fees.
The Global Agreement provides:
Attorneys' Fees and Costs. In any action brought
by a party hereto to enforce the obligations of
any other party hereto, the prevailing party shall
be entitled to collect from the opposing party to
such action such party's reasonable litigation
costs and attorneys' fees and expenses (including
court costs, reasonable fees of accountants and
experts, and other expenses incidental to the
litigation).
Decl. of Rebecca Bratter in Support of Global's Mot. to Compel
Arbitration, Ex. 1 at 3.

In addition, Oregon Revised Statute

§ 20.096(1) provides:
In any action or suit in which a claim is made
based on a contract that specifically provides
that attorney fees and costs incurred to enforce
the provisions of the contract shall be awarded to
one of the parties, the party that prevails on the
claim shall be entitled to reasonable attorney
fees in addition to costs and disbursements,
without regard to whether the prevailing party is
the party specified in the contract and without
regard to whether the prevailing party is a party
to the contract.
Accordingly, if Global is a prevailing party under the Global

5 - OPINION AND ORDER

Agreement, this Court must award reasonable attorneys' fees and
costs to Global.
As noted, Global contends it is a prevailing party because
it achieved success in its effort to compel arbitration of the
parties' dispute.

Plaintiffs contend Global is not a prevailing

party because it did not obtain a judgment against Plaintiffs,
establish it was entitled to relief on the merits, or effect an
order that materially altered the legal relationship of the
parties.
Under Oregon law, the principles of contract interpretation
are as follows:
[The Court's] objective is to ascertain the
intention of the parties "based on the terms and
conditions of the [contract]." Id. at 469, 836
P.2d 703. [The Court] begin[s] with the wording
of the [contract], applying any definitions that
are supplied by the [contract] itself and
otherwise presuming that words have their plain,
ordinary meanings. Id. at 469-70, 836 P.2d 703.
If, from that vantage point, [the Court] find[s]
only one plausible interpretation of the disputed
terms, [the Court's] analysis goes no further.
Id. If [the Court] find[s] that the disputed
terms are susceptible to more than one plausible
interpretation, however, [the Court] examine[s]
those terms in the broader context of the policy
as a whole. Hoffman, 313 Or. at 470, 836 P.2d
703. If [the Court's] consideration of the
policy's broader context fails to resolve the
ambiguity, then [the Court] will construe the
policy against the drafter. . . . Id. at 470-71,
836 P.2d 703. In all events, interpretation of [a
contract] is a question of law that is confined to
the four corners of the [contract] without regard
to extrinsic evidence. Andres v. American
Standard Ins. Co., 205 Or. App. 419, 424, 134 P.3d
1061 (2006).
6 - OPINION AND ORDER

Tualatin Valley Housing Partners v. Truck Ins. Exch., 208 Or.
App. 155, 159-60 (2006)(quoting Hoffman Constr. Co. v. Fred S.
James & Co., 313 Or. 464, 469-70 (1992)).
Neither Oregon Revised Statute § 20.096 nor the Global
Agreement defines "prevailing party.

Accordingly, the Court must

presume the phrase has its ordinary, plain meaning.
Plaintiffs point to a number of cases in which courts held
under Oregon law that a prevailing party is one who receives
damages or a judgment in their favor or one who defeats another's
claim for damages on the merits.

See, e.g., Berger Farms v.

First Interstate Bank of Or., 330 Or. 16, 20 (2000); Coughlin v.
Shimizu Am. Corp., 991 F. Supp. 1226, 1232 (D. Or. 1998); Am.
Petrofina Co. of Texas v. D & L Oil Supply, Inc., 283 Or. 183
(1978).

These cases, however, were decided under the pre-2001

version of Oregon Revised Statute § 20.096(5)(1999), which
defined prevailing party for purposes of that provision as "the
party in whose favor final judgment or decree is rendered."

The

Oregon Legislature revised § 20.096 in 2001, removed that
definition of "prevailing party," and did not provide another
definition.
The Supreme Court has held "prevailing party" is a legal
term of art generally defined as "a party in whose favor a
judgment is rendered, regardless of the amount of damages
awarded."

Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of

7 - OPINION AND ORDER

Health & Human Res., 532 U.S. 598, 603 (2001)(quotation omitted).
A prevailing party need not prevail on all issues but must
succeed on a significant issue that is fundamental to the case
and establish its entitlement to relief on the merits of its
claims.

Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).

Here Global succeeded in part with respect to its Motion to
Compel Arbitration:

i.e., the Court ordered the parties to

arbitrate this matter.

Global, however, did not succeed on a

significant issue that is fundamental to the case and establish
its entitlement to relief on the merits of its claims.

In fact,

an order granting a motion to compel arbitration is an
interlocutory, unappealable order under the FAA rather than a
final order.

9 U.S.C. § 16(a).

In addition, the Court severed

as unenforceable the forum-selection clause in the Global
Agreement, replaced the forum-selection clause with the
requirement that arbitration occur within the District of Oregon,
and struck as unenforceable those portions of the Limitation of
Liability provision in the Global Agreement that precluded
recovery for punitive damages and limited Global’s liability to
the amount of fees that Plaintiffs paid to Global.

Thus, Global

did not achieve full success on its request for arbitration.
On this record the Court concludes Global is not a
prevailing party within the meaning of that term.

Accordingly,

the Court denies Global's Motion for Attorneys' Fees.

8 - OPINION AND ORDER

The Court,

however, denies Global's Motion without prejudice on the ground
that Global may reraise its request for attorneys' fees before
the arbitrator if Global achieves success on the merits of this
action in arbitration.

See Sylvester v. Abdalla, 137 Or. App.

26, 30 (1995)("Arbitrators have the authority to decide both the
law and the facts involved in the cause submitted to them"
including "[w]hether attorney fees [are] recoverable under the
provisions of [an] agreement" that is the subject of
arbitration.).
II.

Costs
Absent a showing of circumstances not relevant here, an

award of costs is governed by federal law.

See Champion Produce,

Inc. v. Ruby Robinson Co., Inc., 342 F.3d 1016, 1022 (9th Cir.
2003).

Costs generally are awarded to the prevailing party in a

civil action as a matter of course unless the court directs
otherwise.

Fed. R. Civ. P. 54(d).

Because the Court has

concluded Global is not a prevailing party, the Court denies
Global's request for an award of costs.

The Court, however,

denies Global's request for costs without prejudice on the ground
that Global may reraise its request before the arbitrator if
Global achieves success on the merits of this action in
arbitration.

9 - OPINION AND ORDER

CONCLUSION
For these reasons, the Court DENIES Global's Motion (#134)
for Attorneys' Fees without prejudice and DENIES Global's Bill of
Costs (#137) without prejudice and grants Global leave to reraise
its Motion and request for costs before the arbitrator if Global
achieves success on the merits in arbitration.
IT IS SO ORDERED.
DATED this 7th day of May, 2013.

/s/ Anna J. Brown
ANNA J. BROWN
United States District Judge

10 - OPINION AND ORDER