Global Fitness Holdings, LLC v. Federal Recovery Acceptance, Inc.

Filing 459

MEMORANDUM DECISION AND ORDER granting in part and denying in part #385 Motion for Attorney Fees; denying #401 Motion for Attorney Fees; granting in part and denying in part #416 Motion for Attorney Fees: joint motion identifying the amount of prejudgment interest on Global's net judgment due by 8/25/17. Signed by Judge David Nuffer on 8/4/17 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
GLOBAL FITNESS HOLDINGS, LLC,
Plaintiff,

MEMORANDUM DECISION
AND ORDER DENYING
MOTIONS FOR ATTORNEY’S FEES

v.

Case No. 2:13–cv–00204–DN

FEDERAL RECOVERY ACCEPTANCE,
INC.,

District Judge David Nuffer

Defendant.
Plaintiff Global Fitness Holdings, LLC (“Global”) and Defendant Federal Recovery
Acceptance, Inc. (“FRA”) filed cross-motions seeking awards of attorney’s fees and expenses. 1
Each party argues that it is the “successful party” in the case and entitled to recover attorney’s
fees and expenses under their contracts’ attorney’s fees provision. 2 Alternatively, each party
argues that if it is the “unsuccessful party,” any award of attorney’s fees and expenses to the
other party should be reduced pursuant to the attorney’s fees provision based on the other party’s
rejection of a prior offer for settlement. 3 Additionally, Global argues that it is entitled to
prejudgment interest on its liquidated contract damages. 4

1

Global Fitness Holdings, LLC’s Motion for an Award of Reasonable Expenses and Attorneys’ Fees Pursuant to the
Contracts as well as Prejudgment Interest (“Global’s Motion”), docket no. 385, filed Nov. 3, 2015; Federal
Recovery Acceptance, Inc.’s Motion for an Award of its Reasonable Attorney Fees and Expenses (“FRA’s
Motion”), docket no. 401, filed Nov. 11, 2015; Global fitness, LLC’s Renewed Motion for an Award of Reasonable
Expenses and Attorneys’ Fees Pursuant to the Contracts as well as Prejudgment Interest (“Global’s Renewed
Motion”), docket no. 416, filed Nov. 24, 2015.
2

Global’s Motion at 9–13; FRA’s Motion at 13–23, 26–27.

3

Global’s Motion at 15–16; Federal Recovery Acceptance, Inc.’s Opposition to Global’s Motion for an Award of
Expenses, Attorney Fees, and Prejudgment Interest [Dkt. 385] (“FRA’s Response”) at 27–28, docket no. 413, filed
Nov. 20, 2015.
4

Global’s Motion at 26–27.

Because neither party is the “successful party,” Global and FRA’s requests for attorney’s
fees and expenses 5 are DENIED. However, Global is GRANTED prejudgment interest on its net
judgment.
Contents
BACKGROUND ............................................................................................................................ 2
DISCUSSION ................................................................................................................................. 7
The scope of the attorney’s fees provision in the parties’ contracts requires consideration
of all the parties’ claims and defenses to determine the “successful party” in the
case .......................................................................................................................... 9
Because neither party is the “successful party” in the case, neither party is entitled to an
award of attorney’s fees and expenses under the parties’ contracts ..................... 12
Global’s relative success ....................................................................................... 14
FRA’s relative success .......................................................................................... 16
Comparison of the parties’ relative success .......................................................... 18
Global is entitled to prejudgment interest on its net judgment ......................................... 21
ORDER ......................................................................................................................................... 23

BACKGROUND
FRA is a corporation that services contracts for physical fitness centers (“gyms”). It
processes contracts between gyms and their members, arranges and tracks member payments,
keeps members informed of their membership status, and manages delinquent accounts. 6 Global
is a limited liability company that previously owned 36 gyms. 7
In 2008, FRA began providing services to eight of Global’s gyms—the parties entered
into eight contracts for these services, each for a separate gym location. 8 In 2009, the parties
entered into two additional contracts that were not location-specific. 9 In 2011, the parties entered

5

Id.; FRA’s Motion; Global’s Renewed Motion.

6

Joint Proposed Pretrial Order § 2.c., docket no. 343, filed Sept. 23, 2015.

7

Id.

8

Id.

9

Id.

2

into another two contracts that were not location-specific. 10 By 2011, FRA provided services to
all 36 of Global’s gyms. 11
In October 2012, Global sold its gyms to Fitness & Sports Clubs, LLC (“L.A. Fitness”),
and FRA stopped providing services to Global and its members. 12 Global initiated this case on
October 10, 2012, alleging that FRA refused to cooperate with it following the L.A. Fitness
acquisition. 13 Global asserted claims against FRA for tortious interference, promissory estoppel,
conversion, breach of contract, and breach of the implied covenant of good faith and fair
dealing. 14 FRA asserted counterclaims against Global for breach of contract, breach of the
implied covenant of good faith and fair dealing, unjust enrichment, fraud, and negligent
misrepresentation. 15
FRA filed several dispositive motions seeking dismissal of Global’s claims. 16 Global also
filed dispositive motions seeking judgment on its conversion claim and dismissal of FRA’s
counterclaims for breach of contract, unjust enrichment, fraud, and negligent

10

Id.

11

Id.

12

Id.

13

Complaint, docket no. 1, filed Oct. 10, 2012.

14

Global Fitness Holdings, LLC’s Amended Complaint (“Amended Complaint”) ¶¶ 38–73, docket no. 71, filed
Mar. 19, 2014.
15

Defendants’ Amended Answer to Plaintiff’s Amended Complaint and Counterclaim (“Amended Counterclaim”)
at 32–37, ¶¶ 71–110, docket no. 85, filed Apr. 22, 2014.

16

Defendants’ Motion for Partial Summary Judgment on Global’s Promissory Estoppel Claim, docket no. 106, filed
August 4, 2014; Defendants’ Motion for Partial Summary Judgment Re Plaintiff’s Conversion Claim and
Supporting Memorandum, docket no. 108, filed August 4, 2014; Defendants’ Motion for Partial Summary Judgment
Re: Global’s Breach of Contract and Breach of the Implied Covenant Claims and Memorandum in Support Thereof,
docket no. 111, filed Aug. 4, 2014; Defendants’ Motion for Partial Summary Judgment on Global’s Tortious
Interference Claim, docket no. 120, filed under seal on Aug. 4, 2014; Defendants’ Motion for Partial Summary
Judgment Re: Global’s Tortious Interference Claim for Lack of Causation and Memorandum in Support Thereof,
docket no. 121, filed under seal on Aug. 4, 2014; Defendants’ Motion for Summary Judgment Dismissing Plaintiff’s
Claims as Moot, docket no. 122, filed under seal on Aug. 4, 2014.

3

misrepresentation. 17 Before the issuance of rulings on these motions, Global was permitted to
voluntarily dismiss the portion of its breach of contract claim relating to withheld member
account data. 18 The parties also stipulated to the dismissal of FRA’s fraud and negligent
misrepresentation counterclaims. 19
As to Global’s claims, the rulings on the dispositive motions determined:
•

Global had standing and its claims were not moot; 20

•

FRA breached the parties’ contracts by withholding funds from Global, and
Global was entitled to damages in an amount to be determined at trial; 21 and

17

Global Fitness Holdings, LLC’s Motion to Dismiss Paramount’s Fraud (Count IV) and Negligent
Misrepresentation (Count V) Counterclaims and Memorandum in Support, docket no. 47, filed Oct. 9, 2013; Global
Fitness Holdings, LLC’s Motion for Partial Summary Judgment on Paramount’s Fraud (Count IV) and Negligent
Misrepresentation (Count V) Counterclaims and Memorandum in Support, docket no. 66, filed Mar. 4, 2014; Global
Fitness Holdings, LLC’s Motion for Partial Summary Judgment, docket no. 113, filed Aug. 4, 2014.
18

Global Fitness, LLC’s Motion for Voluntary Dismissal of its Breach of Contract Claim Against Federal Recovery
Acceptance, Inc. as it Relates to the Transfer of Data, docket no. 132, filed Sept. 4, 2014; Memorandum Decision
and Order Granting Plaintiff’s Motion for Voluntary Dismissal With Prejudice (“Order on [132] Motion”), docket
no. 244, filed Mar. 30, 2015.
19

Stipulation of Dismissal, With Prejudice, of Federal Recovery Acceptance, Inc.’s Fraud and Negligent
Misrepresentation Claims, docket no. 91, filed May 14, 2014; Order Dismissing, With Prejudice, Federal Recovery
Acceptance, Inc.’s Fraud and Negligent Misrepresentation Claims (“Order on [91] Stipulation”), docket no. 93, filed
May 15, 2014.
20

Memorandum Decision and Order Denying Summary Judgment on Mootness Grounds, docket no. 245, filed
under seal on Apr. 1, 2015.
21

Memorandum Decision and Order Granting in Part and Denying in Part [111] Defendants’ Motion for Partial
Summary Judgment on Plaintiff’s Breach of Contract and Breach of the Implied Covenant Claims (“Order on [111]
Motion”) at 22–26, docket no. 274, filed Aug. 31, 2015; Memorandum Decision and Order Granting in Part and
Denying in Part [113] Plaintiff’s Motion for Partial Summary Judgment on Plaintiff’s Conversion Claim and FRAI’s
Unjust Enrichment and Breach of Contract Claims (“Order on [113] Motion”) at 18–19, docket no. 276, filed Aug.
31, 2015.

4

•

Dismissal was appropriate on Global’s claims for tortious interference, 22
promissory estoppel, 23 conversion, 24 and breach of the implied covenant of
good faith and fair dealing. 25

As to FRA’s counterclaims, the rulings on the dispositive motions determined:
•

Global breached the parties’ contracts by failing to pay FRA contractually
required termination or exit fees, and FRA was entitled to damages in an
amount to be determined at trial; 26

•

Dismissal was appropriate on FRA’s counterclaim for breach of contract
insofar as it related to Global’s request for early transfer of member account
data and notice of termination; 27 and

•

FRA’s counterclaim for unjust enrichment could proceed to trial. 28

Following the rulings on their dispositive motions, the parties entered a stipulation
regarding damages. 29 The parties agreed that Global was entitled to $456,226.23 in damages as
of April 30, 2015, for FRA’s breach of contract. 30 This amount would decrease by $199 per
month due to a service fee for Global maintaining access to FRA’s software. 31 The parties also
agreed that FRA was entitled to $2,954.84 in damages for one day of service due to Global’s
early termination and $7,500 under the term provisions of the parties’ 2009 and 2011 contracts. 32

22

Memorandum Decision and Order Granting [120] Defendants’ Motion for Partial Summary Judgment on
Plaintiff’s Tortious Interference Claim (“Order on [120] Motion”), docket no. 278, filed Aug. 31, 2015.
23
Memorandum Decision and Order Granting [106] Defendants’ Motion for Partial Summary Judgment on
Plaintiff’s Promissory Estoppel Claim (“Order on [106] Motion”), docket no. 277, filed Aug. 31, 2015.
24

Memorandum Decision and Order Granting [108] Defendants’ Motion for Partial Summary Judgment on
Plaintiff’s Conversion Claim (“Order on [108] Motion”), docket no. 275, filed Aug. 31, 2015; Order on [113]
Motion at 13.
25

Order on [111] Motion at 26–29.

26

Id. at 22–26; Order on [113] Motion at 18–19.

27

Order on [111] Motion at 18–22; Order on [113] Motion at 18–19.

28

Order on [113] Motion at 13–18.

29

Stipulation Regarding Damages, docket no. 258, filed June 10, 2015.

30

Id. at 3.

31

Id.

32

Id. at 2–3.

5

Additionally, the parties stipulated to the dismissal of FRA’s counterclaims for breach of the
implied covenant of good faith and fair dealing and unjust enrichment. 33
The case proceeded to a three-day jury trial beginning on October 13, 2015. 34 The only
remaining issues at trial were FRA’s damages for Global’s breach of contract based on:
•

The number and types of accounts subject to a $5.00 per account termination
fee under the parties’ 2008 contracts;

•

The amount of accumulated banking and late fees under the parties’ 2008
contracts; and

•

The amount of banking and late fees under the parties’ 2009 and 2011
contracts. 35

On October 15, 2015, the jury returned its verdict finding that FRA had proven 25,479
accounts were subject to the $5.00 termination fee under the parties’ 2008 contracts, 36 and that
$153,721.38 in late fees were associated with the parties’ 2008 contracts. 37 However, the jury
found that FRA failed to prove any banking fees or other late fees were due under the parties’
relevant contracts. 38

33

Stipulation to Dismissal of Claims for Breach of the Implied covenant of Good Faith and Fair Dealing and Unjust
Enrichment, docket no. 363, filed Oct. 10, 2015; Order Granting Dismissal of Claims for Breach of the Implied
Covenant of Good Faith and Fair Dealing and Unjust Enrichment (“Order on [363] Stipulation”), docket no. 366,
filed Oct. 14, 2015.
34

Minute Entry for Proceedings Held Before Judge David Nuffer, docket no. 364, filed Oct. 13, 2015.

35

Joint Proposed Pretrial Order § 4.a.

36

Verdict § 1:A.1., docket no. 376, filed Oct. 15, 2015.

37

Id. § 1:A.3.

38

Id. §§ 1.A.2., 1:B.5., 1:C.7, 1:b.9.

6

On November 5, 2015, judgment was entered in favor of Global in the amount of
$163,660.01. 39 This judgment represented an offset of the parties’ stipulated damages and the
damages awarded to FRA by the jury. 40
Global and FRA now seek awards of attorney’s fees and expenses, each arguing that it is
the “successful party” in the case and entitled to attorney’s fees and expenses under their
contracts. 41 And each alternatively argue that if it is the “unsuccessful party” in the case, any
award of attorney’s fees and expenses to the other party should be reduced pursuant to the
attorney’s fees provision based on the other party’s rejection of a prior offer for settlement. 42
Global also argues that it is entitled to prejudgment interest on its liquidated contract damages. 43
DISCUSSION
In diversity cases, such as this case, “attorney[’s] fees are deemed to be substantive in
nature, and are determined according to state law.” 44 Moreover, the parties’ contracts expressly
provide that they “shall be governed by the laws of the State of Utah.” 45 Therefore, Utah law
applies to the determination of Global and FRA’s cross-motions for attorney’s fees and
expenses. 46

39

Amended Judgment in a Civil Case (“Amended Judgment”), docket no. 399, filed Nov. 10, 2015.

40
Order Granting Global Fitness, LLC’s Motion to Correct a Clerical Mistake in the Judgment (“Order Granting
[382] Motion”), docket no. 389, filed Nov. 5, 2015; Stipulation Regarding Damages; Verdict.
41

Global’s Motion at 9–13; FRA’s Motion at 13–23, 26–27.

42

Global’s Motion at 15–16; FRA’s Response at 27–28.

43

Global’s Motion at 26–27.

44

Albert T. Smith Co. v. Albertsons, Inc., 826 F.Supp. 1299, 1300 (D. Utah 1993) (citing Bill’s Coal Co. v. Bd. Of
Pub Utils., 887 F.2d 242, 246 (10th Cir. 1989)).
45

Contracts at Enforcement, docket no. 385-1, filed Nov. 3, 2015; Contracts at Enforcement, docket no. 401-1, filed
Nov. 11, 2015.
46

Global’s Motion at 9 n.40; FRA’s Motion at 13 n.46.

7

“In Utah, attorney[’s] fees are awardable only if authorized by statute or contract.” 47 And
“[i]f the legal right to attorney[’s] fees is established by contract, Utah law clearly requires the
court to apply the contractual attorney[’s] fee provision and to do so strictly in accordance with
the contract’s terms.” 48
Each of the parties’ contracts contains the same attorney’s fees provision, which reads:
In the event that either party hereto is successful in any legal action or the defense
thereof with regard to this Agreement, there will be included in the judgment or
decree the reasonable expenses and attorney’s fees of the successful party.
However, if the unsuccessful party had previously offered an amount in
settlement which equals or exceeds the judgment or decree before the addition of
expenses and attorney[’s] fees, then the judgment of the successful party will only
include its expenses and attorney’s fees accruing prior to such offer and will be
reduced by the expenses and attorney[’s] fees of the unsuccessful party incurred
after such offer. Under such formula, the judgment of the ‘successful’ party may
result in a net amount owing to the ‘unsuccessful’ party. 49
Global reads the attorney’s fees provision as applying to only the parties’ contract claims
and defenses. 50 Therefore, Global argues that the parties’ tort claims and defenses should not be
considered in determining which party is the “successful party.” 51 Global maintains that because
it received liquidated damages on its breach of contract claim and a net judgment in the case, it is
the “successful party.” 52 Alternatively, Global argues that even if all the parties’ claims are
considered, it is still the “successful party” in the case. 53 And if it is the “unsuccessful party,”

47

R.T. Nielson Co. v. Cook, 40 P.3d 1119, 1125 (Utah 2002) (internal quotations omitted).

48

Foote v. Clark, 962 P.2d 52, 54–55 (Utah 1998); Jones v. Riche, 216 P.3d 357, 358 (Utah Ct. App. 2009).

49

Contracts at Enforcement.

50

Global’s Motion at 10–11; Global Fitness Holdings, LLC’s Reply in Further Support of its Motion for an Award
of Reasonable Expenses and Attorneys’ Fees Pursuant to the Contracts as well as Prejudgment Interest (“Global’s
Reply”) at 4–7, docket no. 427, filed Dec. 7, 2015; Global Fitness Holdings, LLC’s Opposition to Federal Recovery
Acceptance, Inc.’s Motion for an Award of its Reasonable Attorney Fees and Expenses (“Global’s Response”) at
10–12, docket no. 422, filed Nov. 30, 2015.
51

Global’s Motion at 11; Global’s Response at 10–12.

52

Global’s Motion at 12–13; Global’s Reply at 4–7; Global’s Response at 10–12.

53

Global’s Reply at 7–9; Global’s Response at 14–20.

8

any award of attorney’s fees and expenses to FRA should be reduced pursuant to the attorney’s
fees provision based on FRA’s rejection of its prior offer for settlement. 54
In contrast, FRA reads the attorney’s fees provision as applying to all claims and
defenses in the case because the entire case was “with regard to” the parties’ contracts. 55 FRA
further argues that because all claims and defenses in the case were inextricably intertwined and
involved a common core of facts, all attorney’s fees and expenses incurred in the case should be
awarded to the “successful party.” 56 FRA maintains that when looking at the case as a whole,
and considering how the parties fared on their basic litigation positions and claims and defenses,
it is the “successful party.” 57 FRA also argues that because it is the “prevailing party,” at a
minimum, it is entitled to an award of its taxable costs under rule 54(d) of the Federal Rules of
Civil Procedure. 58 Alternatively, FRA argues that if it is the “unsuccessful party,” any award of
attorney’s fees and expenses to Global should be reduced pursuant to the attorney’s fees
provision based on Global’s rejection of its prior offer for judgment. 59
The scope of the attorney’s fees provision in the parties’ contracts
requires consideration of all the parties’ claims and defenses
to determine the “successful party” in the case
“As with statutory construction, words in a contract must be interpreted according to their
plain meaning unless the context justifies a different interpretation.” 60 Construing the plain

54

Global’s Motion at 15–16; Global’s Reply at 10–12; Global’s Response at 20–22.

55

FRA’s Motion at 14–17; Reply Memorandum in Support of Federal Recovery Acceptance, Inc.’s Motion for an
Award of its Reasonable Attorney Fees and Expenses (“FRA’s Reply”) at 4–7, docket no. 431, filed Dec. 17, 2015;
FRA’s Response at 14–17.
56

FRA’s Motion at 17–19; FRA’s Reply at 7–9; FRA’s Response at 18–20.

57

FRA’s Motion at 19–23; FRA’s Reply at 9–13; FRA’s Response at 20–24.

58

FRA’s Motion at 27 n.107.

59

FRA’s Response at 27–28.

60

Osmond Lane Homeowners Ass’n v. Landrith, 295 P.3d 704, (Utah Ct. App. 2013) (internal quotations omitted).

9

language of the attorney’s fees provision in the parties’ contracts, the scope of the provision is
broad—it applies to “any legal action or the defense thereof with regard to [the contracts.]” 61
The use of the terms “any legal action or the defense thereof” 62 in the attorney’s fees
provision does not support a distinction between legal actions based in contract, tort, or equity. 63
The use of the terms “with regard to” 64 is similarly broad. The terms “with regard to” mean
“with respect to [and] concerning.” 65 And the terms “with respect to” and “concerning”
respectively mean or “with reference to [and] in relation to” and “relating to[.]”66 Given the plain
meaning of these terms, the scope of the attorney’s fees provision is broad enough to encompass
legal actions beyond those seeking only a contract’s enforcement, termination, or the remedying
of a contractual default. Under the plain language of the attorney’s fees provision, whether based
in contract, tort, or equity, a “legal action or the defense thereof” 67 falls within the scope of the
provision so long as it is with respect to or concerning the terms embodied in the parties’
contracts. 68
Global’s claims against FRA included tortious interference, promissory estoppel,
conversion, breach of contract, and breach of the implied covenant of good faith and fair
dealing. 69 The allegations in each of these claims are with respect to and concerning FRA’s

61

Contracts at Enforcement.

62

Id.

63

Energy Claims Ltd. v. Catalyst Inv. Grp. Ltd., 325 P.3d 70, 82 (Utah 2014) (holding that the scope of a contractual
forum selection clause encompassed contract and tort claims).

64

Contracts at Enforcement.

65

Merriam-Webster’s Collegiate Dictionary 1047 (11th ed. 2003).

66

Id. at 257, 1061.

67

Contracts at Enforcement.

68

Energy Claims Ltd., 325 P.3d at 82.

69

Amended Complaint ¶¶ 38–73.

10

obligations under the parties’ contracts to service Global’s member accounts, and to transfer to
Global the funds associated with membership dues. 70 Specifically, Global alleged different legal
theories of liability relating to FRA’s retention of Global’s member account data and the funds it
collected in membership dues following the contracts’ termination and L.A. Fitness’s acquisition
of Global’s gyms. 71 Therefore, Global’s claims and FRA’s defenses to these claims are “with
regard to” the parties’ contracts.
FRA’s counterclaims against Global included breach of contract, breach of the implied
covenant of good faith and fair dealing, unjust enrichment, fraud, and negligent
misrepresentation. 72 The allegations in each of these counterclaims are with respect to and
concerning Global’s obligations under the parties’ contracts to provide proper and timely notice
when terminating the contracts, and to compensate FRA for its services, expenses, and fees. 73
Specifically, FRA alleged different legal theories of liability relating to Global’s termination of
the contracts and the monies FRA was entitled upon the contracts’ termination. 74 Therefore,
FRA’s counterclaims and Global’s defenses to these counterclaims are “with regard to” the
parties’ contracts.
All the parties’ claims and defenses in this case are “with regard to” the parties’ contracts.
Whether the terms “legal action or the defense thereof” in the attorney’s fees provision of the
parties’ contracts 75 refer to the entire case or a single claim or cause of action is therefore of no
consequence. Nevertheless, if the terms “legal action and the defense thereof” are read in context

70

Contracts at Contractor’s Duties.

71

Amended Complaint ¶¶ 38–73.

72

Amended Counterclaim at 32–37, ¶¶ 71–110.

73

Contracts at Engagement and Fee, Warranty and Indemnity, Term, Extra Payment, Notice.

74

Amended Counterclaim at 32–37, ¶¶ 71–110.

75

Contracts at Enforcement.

11

with the broad terms “any” and “with regard to,” the scope of the attorney’s fees provision
requires consideration of the entire case in determining the “successful party.” 76
Accordingly, all the parties’ claims and defenses fall within the scope of the attorney’s
fees provision in the parties’ contracts and must be considered in when determining the
“successful party.”
Because neither party is the “successful party” in the case, neither party is entitled to an
award of attorney’s fees and expenses under the parties’ contracts
The attorney’s fees provision in the parties’ contracts authorizes an award of attorney’s
fees and expenses “[i]n the event that either party hereto is successful in any legal action or the
defense thereof with regard to [the contracts.]” 77
“Utah appellate courts have routinely used the terms ‘successful party’ and ‘prevailing
party’ interchangeably.” 78 “Likewise, Black’s Law Dictionary treats the terms ‘successful party’
and ‘prevailing party’ as synonyms.” 79 “Determining the prevailing party is often an imprecise
process.” 80 “The determination of a ‘prevailing party’ becomes even more complicated in cases
involving multiple claims and parties … and where the ultimate award of money damages does
not adequately represent the actual success of the parties under the peculiar posture of the
case.” 81 Therefore, Utah appellate courts “have developed a ‘flexible and reasoned approach’ for
determining which party has emerged the ‘comparative winner.’” 82

76

Id.

77

Id.

78

A.K. & R. Whipple Plumbing and Heating v. Guy, 94 P.3d 270, 275 (Utah 2004).

79

Id. (citing Black’s Law Dictionary 1145 (7th ed. 1999)).

80

Olsen v. Lund, 246 P.3d 521, 523 (Utah Ct. App. 2010).

81

A.K. & R. Whipple Plumbing and Heating, 94 P.3d at 273 (internal quotations omitted).

82
Olsen, 246 P.3d at 523 (quoting Mountain States Broad. Co. v. Neale, 783 P.2d 551, 557–58 (Utah Ct. App.
1989)).

12

This flexible and reasoned approach “begins by identifying ‘the party in whose favor the
‘net’ judgment is entered.’” 83 However, the Utah Supreme Court has “stressed the importance of
not ignoring common sense when deciding which party prevailed.” 84 While “[t]he ‘net judgment
rule’ will usually be ‘at least a good starting point,’ . . . it should not be ‘mechanically
applied.’” 85 Rather, the flexible and reasoned approach “requires not only consideration of the
significance of the net judgment in the case, but also look[s] at the amounts actually sought and
then balance[es] them proportionally with what was recovered.” 86 “Consequently, ‘a party that
makes an outrageous claim and then receives only a fraction of what it demanded’—though the
net judgment winner—‘will not likely be deemed the successful party.’” 87
The focus of the flexible and reasoned approach is on “which party ha[s] attained a
‘comparative victory,’ considering what a total victory would have meant for each party and
what a true draw would look like.” 88 Therefore, a number of factors must be considered. 89
“These factors include the language of the contract . . . that forms the basis for the attorney[’s]
fees award, the number of claims brought by the parties, the importance of each of the claims
relative to the entire litigation, and the amounts awarded on each claim.” 90
“Employing these factors as a tool for analyzing which party has prevailed permits a
case-by-case evaluation by the trial court, and flexibility to handle circumstances where both, or

83

Id. (quoting Mountain States Broad. Co., 783 P.2d at 556).

84

Neff v. Neff, 247 P.3d 380, 399 (Utah 2011).

85

Olsen, 246 P.3d at 523 (quoting Mountain States Broad. Co., 783 P.2d at 557).

86

A.K. & R. Whipple Plumbing and Heating, 94 P.3d at 277 (internal quotations omitted).

87

Olsen, 246 P.3d at 523 (quoting J. Pochynok Co., Inc. v. Smedsrud, 116 P.3d 353, 359 (Utah 2005)).

88

Id. (quoting J. Pochynok Co., Inc., 116 P.3d at 356).

89

Neff v. Neff, 247 P.3d 380, 398 (Utah 2011).

90

Id.

13

neither, parties may be considered to have prevailed.” 91 “Accordingly, it is possible that, in
litigation where both parties obtain mixed results, neither party should be deemed to have
prevailed for purposes of awarding attorney[’s] fees.” 92 “This is true even where [the
contractual] language states that the prevailing party ‘shall be entitled to’ fees.” 93
Global received a net judgment in this case in the amount of $163,660.01. 94 However,
this does not mean that Global is the “successful party” in the case. The plain language of the
attorney’s fee provision in the parties’ contracts confirms that while the “successful party” is
entitled to an award of attorney’s fees and expenses, the use of the terms “[i]n the event that
either party hereto is successful” expresses the possibility that neither party will be determined
the “successful party.” 95 Moreover, the plain language of the attorney’s fees provision confirms
that all the parties’ claims and defenses must be considered in when determining the “successful
party.” 96
Global’s relative success
Global asserted five claims against FRA: tortious interference; promissory estoppel;
conversion; breach of contract; and breach of the implied covenant of good faith and fair
dealing. 97 Each of these claims related to the two central issues Global raised in the litigation,
i.e., withheld member account data and withheld funds collected in membership dues. 98 And the

91

Id. (internal quotations omitted; emphasis in original).

92

Id.

93

Id. at 398–99.

94

Amended Judgment.

95

Contracts at Enforcement.

96

Supra at 9–11.

97

Amended Complaint ¶¶ 38–73.

98

Id.

14

resolution of these issues and claims had substantial relevance to the parties’ respective positions
in the litigation as a whole.
Global’s tortious interference and promissory estoppel claims, and the portion of its
conversion claim relating to withheld member account data, sought liquidated and consequential
damages in an amount not less than $9,695,459 plus prejudgment interest. 99 Global also sought
punitive damages on its tortious interference and promissory estoppel claims. 100 The portion of
Global’s conversion claim relating to withheld funds collected in membership dues, and its
claims for breach of contract and breach of the implied covenant of good faith and fair dealing,
sought liquidated damages in an amount not less than $466,481.78 plus prejudgment interest. 101
In total, Global’s claims sought $10,161,940.78 in liquidated and consequential damages against
FRA, 102 plus prejudgment interest and punitive damages.
Global’s claims were all resolved prior to trial. Global’s claims for tortious interference,
promissory estoppel, conversion, and breach of the implied covenant of good faith and fair
dealing were dismissed on summary judgment. 103 The portion of Global’s breach of contract
claim relating to withheld member account data was voluntarily dismissed. 104 And the parties
stipulated that Global was entitled to $456,226.23 in damages as of April 30, 2015, on the

99

Plaintiff’s Second Supplemental Rule 26(a)(1) Initial Disclosures (“Global’s Disclosures”) at 7–8, ¶¶ 4–6, docket
no. 401-3, filed Nov. 11, 2015. This amount was calculated by taking the difference between what L.A. Fitness’s
purchase price of Global’s gyms would have been on October 15, 2012, and what the purchase price was on October
25, 2012. Id.
100

Amended Complaint ¶¶ 79–80.

101

Global’s Disclosures at 5–6, ¶¶ 1–3.

102

$9,695,459 + $466,481.78 = $10,161,940.78.

103

Order on [106] Motion; Order on [108] Motion; Order on [111] Motion at 26–29; Order on [113] Motion at 13;
Order on [120] Motion.
104

Order on [132] Motion.

15

portion of Global’s breach of contract claim relating to withheld funds collected in membership
dues. 105
Therefore, Global was awarded damages on only a portion of one of its claims. The
stipulated amount of damages is approximately 98% of the total amount that Global sought on
the claim, 106 and approximately 4% of the total liquidated and consequential damages sought on
all its claims. 107 After accounting for stipulated reductions to the amount of Global’s damages,
and offsetting that amount by the amount of damages awarded to FRA, Global received a net
judgment in the amount of $163,660.01. 108 Global’s net judgment is approximately 2% of the
total liquidated and consequential damages it sought on all its claims. 109
FRA’s relative success
FRA asserted five counterclaims against Global: breach of contract; breach of the implied
covenant of good faith and fair dealing; unjust enrichment; fraud; and negligent
misrepresentation. 110 Each of these counterclaims related to the central issues FRA raised in the
litigation, i.e., Global’s termination of the parties’ contracts and the money FRA was entitled
upon the contracts’ termination. 111 And the resolution of these issues and counterclaims had
substantial relevance to the parties’ respective positions in the litigation as a whole.

105
Stipulation Regarding Damages at 3. The parties further agreed that this amount would decrease by $199 per
month due to a service fee for Global maintaining access to FRA’s software. Id. When judgment was entered, the
total amount of damages awarded to Global, before any offset for FRA’s damages, was $455,231.23. Order Granting
[382] Motion at 2.
106

$456,226.23 / $466,481.78 = 0.978.

107

$456,226.23 / $10,161,940.78 = 0.044.

108

Order Granting [382] Motion; Amended Judgment.

109

$163,660.01 / $10,161,940.78 = 0.016

110

Amended Counterclaim at 32–37, ¶¶ 71–110.

111

Id.

16

FRA initially sought damages in the amount of $4,599,125.04 plus prejudgment interest
on its breach of contract counterclaim. 112 However, FRA later reduced this amount to
$3,675,285.45. 113 On its unjust enrichment counterclaim, FRA sought damages in the amount of
$185,400. 114 And FRA did not identify the precise amount of damages it sought in relation to its
breach of the implied covenant of good faith and fair dealing, fraud, and negligent
misrepresentation counterclaims, but the damages it sought included amounts separate from the
damages amounts identified in relation to its other claims, i.e., damages related to Global’s
expedited request for information and punitive damages. 115 In total, FRA’s counterclaims
initially sought $4,784,525.04 in damages, 116 plus other unidentified damages amounts,
prejudgment interest, and punitive damages. The total identified amount of damages was later
reduced by FRA to $3,860,685.45. 117
Each of FRA’s counterclaims were resolved prior to trial, except for a portion of FRA’s
breach of contract counterclaim. FRA’s breach of the implied covenant of good faith and fair
dealing, unjust enrichment, fraud, and negligent misrepresentation counterclaims were dismissed
by stipulation of the parties. 118 The parties also agreed that FRA was entitled to $2,954.84 in
damages for one day of service due to Global’s early termination and $7,500 under the term

112

Id. at ¶ 79

113

Federal Recovery Acceptance, Inc. and Federal Recovery Services, Inc.’s Third Supplemental Initial Disclosures
(“FRA’s Third Disclosures”) at 2–3, ¶¶ I–II, docket no. 401-4, filed Nov. 11, 2015.
114

Id. at 3, ¶ III.

115

Amended Counterclaim at 34, 36–37, ¶¶ 86–87, 99, 101–102, 110; Federal Recovery Acceptance, Inc.’s
Supplemental Initial Disclosures (“FRA’s First Disclosures”) at 3, ¶¶ 3, 5, docket no. 422-1, filed Nov. 30, 2015;
Federal Recovery Acceptance, Inc.’s and Federal Recovery Services, Inc.’s Second Supplemental Initial Disclosures
at 15–16, ¶ 3, docket no. 422-5, filed Nov. 30, 2015.
116

$4,599,125.04 + $185,400 = $4,784,525.04.

117

$3,675,285.45 + $185,400 = $3,860,685.45.

118

Order on [91] Stipulation; Order on [363] Stipulation.

17

provisions of the parties’ 2009 and 2011 contracts. 119 The jury’s verdict at trial resulted in an
award of $281,116.38 in damages on the remaining portion of FRA’s breach of contract
counterclaim. 120 The total amount of FRA’s damages award was $291,571.22. 121
Therefore, FRA was awarded damages on only a portion of one its claims. FRA’s total
damages award is approximately 6% of the total calculable amount that FRA initially sought on
its breach of contract counterclaim, 122 and approximately 8% of the reduced calculable amount it
sought on the counterclaim. 123 FRA’s total damages award is also approximately 6% of the
identified amount FRA initially sought on all its counterclaims, 124 and approximately 8% of the
reduced amount it sought on all its counterclaims. 125
Comparison of the parties’ relative success
Both parties alleged five claims for relief 126 and the resolution of each of these claims
had substantial relevance to the parties’ respective positions in the litigation as a whole. Both
parties were awarded damages on only a portion of their respective breach of contract claims. 127

119

Stipulation Regarding Damages at 2–3.

120

Verdict §§ 1:A.1., 1.A.3; Order Granting [382] Motion at 2. ($5.00 x 25,479) + $153,721.38 = $281,116.38.

121

$2,954.84 + $7,500 + $281,116.38 = $291,571.22.

122

$291,571.22 / $4,599,125.04 = 0.063.

123

$291,571.22 / $3,675,285.45 = 0.079.

124

$291,571.22 / $4,784,525.04 = 0.060.

125

$291,571.22 / $3,860,685.45 = 0.075.

126

Amended Complaint ¶¶ 38–73; Amended Counterclaim at 32–37, ¶¶ 71–110.

127

Stipulation Regarding Damages at 3; Verdict §§ 1:A.1., 1.A.3; Order Granting [382] Motion at 2.

18

All other claims were dismissed prior to trial—either voluntarily128 or by stipulation 129 or ruling
on dispositive motion130—or resulted in no awarded damages at trial. 131
The fact that the resolution of the parties’ claims occurred at different points in the
proceedings and by different means is inconsequential to the determination of the “successful
party” in the case. “‘[G]enuine success’—in the sense that the litigation ultimately proved
worthwhile—is not the standard for determining the prevailing party for purposes of a fee
award.” 132 The “result achieved” is not weighed “against the sacrifice in time, trouble, and
expense required to attain that result.” 133 In determining the “comparative winner,” the
comparison is to the other party, not to the toll of the litigation process.” 134
Comparing the results achieved by the parties, the percent of the damages awarded to
Global on its breach of contract claim is high in relation to the amount it sought on the claim—
approximately 98%. 135 This percentage is far greater than the percent of the damages awarded to
FRA on its breach of contract counterclaim—approximately 6%. 136 And Global’s damages
award resulted in a net judgment in the amount of $163,660.01. 137 This favors Global’s argument
that it is the “successful party” in the case.

128

Order on [132] Motion.

129

Stipulation Regarding Damages at 2–3; Order on [91] Stipulation; Order on [363] Stipulation.

130

Order on [106] Motion; Order on [108] Motion; Order on [111] Motion at 26–29; Order on [113] Motion at 13;
Order on [120] Motion.
131

Verdict §§ 1.A.2., 1:B.5., 1:C.7, 1:b.9.

132

Olsen, 246 P.3d at 524.

133

Id.

134

Id.

135

Supra at 14–16.

136

Id. at 16–18.

137

Order Granting [382] Motion; Amended Judgment.

19

However, the total amount of liquidated and consequential damages sought by Global in
the case—$10,161,940.78 138—is over twice the total amount of identified damages sought by
FRA—$4,784,525.04 initially, later reduced to $3,860,685.45. 139 Moreover, the percent of
damages awarded to Global in relation to the total amount of liquidated and consequential
damages it sought is very low—approximately 4%. 140 Global’s net judgment is only
approximately 2% of the total amount of liquidated and consequential damages it sought. 141
While the percentage of damages awarded to FRA in relation to the total amount of identified
damages it sought is also very low—approximately 8% 142—it is double the percentage Global
received. This favors FRA’s argument that it is the “successful party” in the case. Nevertheless,
FRA’s percentage is skewed upward because it does not account for the unidentified damages
amounts on FRA’s breach of the implied covenant of good faith and fair dealing, fraud, and
negligent misrepresentation counterclaims. 143
Under these circumstances, and considering the language of the attorney’s fees provision
in the parties’ contracts, the number of claims brought by each party, the importance of each
claim relative to the entire litigation, and the amounts awarded on each claim, neither party is the
“comparative winner.” 144 The parties alleged the same number of claims and were each awarded
damages on only a portion of one of their claims. The amount of damages awarded to Global is
higher than that of FRA, but Global sought greater amount of damages than FRA. And the

138

Supra at 14–16.

139

Id. at 16–18.

140

Id. at 14–16.

141

Id.

142

Id. at 16–18.

143

Id.

144

Olsen, 246 P.3d at 524.

20

amount of damages awarded to each party in relation to the amount of damages they sought is
very low. Therefore, neither party is the “successful party” in this case.
Because neither party is the “successful party” in the case, neither party is entitled to an
award of attorney’s fees and expenses under the attorney’s fees provision in their contracts.
Additionally, because neither party is the “successful party” in the case, the attorney’s fees
provision in their contracts does not apply to the parties’ respective offers for settlement.
Moreover, because the terms “successful party” are synonymous with the terms “prevailing
party,” 145 and neither party is the “successful party,” neither party is entitled to an award of
taxable costs under Rule 54(d) of the Federal Rules of Civil Procedure. 146 No attorney’s fees,
expenses, or taxable costs are awarded to either party.
Global is entitled to prejudgment interest on its net judgment
“[T]he purpose of awarding prejudgment interest is to compensate a party for the
depreciating value of the amount owed over time and, as a corollary, to deter parties from
intentionally withholding an amount that is liquidated and owing.” 147 Under Utah law,
“[p]rejudgment interest may be recovered where the damage is complete, the amount of the loss
is fixed as of a particular time, and the loss is measurable by facts and figures.” 148 In other
words, “[p]rejudgment interest is appropriate when the loss has been fixed as of a definite time
and the amount of the loss can be calculated with mathematical accuracy in accordance with
well-established rules of damages.” 149 In the context of contract damages, Utah appellate court

145

A.K. & R. Whipple Plumbing and Heating, 94 P.3d at 275.

146

Fed. R. Civ. P. 54(d) (permitting an award of taxable costs to the “prevailing party”).

147

Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 210 P.3d 263, 275 (Utah 2009) (internal quotations omitted).

148

Id. at 272 (internal quotations omitted).

149

Id. (internal quotations and punctuation omitted).

21

have held that “prejudment interest is appropriate in cases where the ‘amount due under [a]
contract was ascertainable by calculation and it was only the method to be used in making the
calculation that was uncertain.” 150
Global asserts that the contract damages it was awarded were liquidated and the amount
was ascertainable throughout the proceedings. 151 Specifically, Global asserts that on October 25,
2012, FRA had withheld $503,649.58 of its funds; by January 7, 2013, the amount had decreased
to $471,650.39, by June 10, 2015, the amount had decreased to $456,226.23, and by October 20,
2015, the amount had decreased to $455,231.23. 152 Therefore, Global argues that it is entitled to
prejudgment interest in the amount of $156,339.91. 153
FRA, on the other hand, argues that if Global is entitled to prejudgment interest, it should
only be calculated using the amount of Global’s net judgment—$163,660.01. 154 FRA asserts that
because it was awarded $281,116.38 in contract damages that were liquidated as of the
termination of the parties’ contracts on October 25, 2012, it is entitled to prejudgment interest on
its damages. 155 Therefore, FRA maintains that the prejudgment interest it is entitled to offsets
any prejudgment interest Global is entitled to for its contract damages, leaving only prejudgment
interest on Global’s net judgment. 156
Global is correct in that it is entitled to prejudgment interest on the entire amount of
contract damages it was awarded before any offset for the damages awarded to FRA. However,

150

Id. at 273 (quoting Jack B. Parson Constr. Co. v. State, 552 P.2d 107, 109 (Utah 1976)).

151

Global’s Motion at 26–27; Global’s Reply at 13–14.

152

Global’s Reply at 14.

153

Global’s Motion at 26–27; Global’s Reply at 13–14. Global did not show the calculations it used to reach the
$156,339.91 amount of prejudgment interest it argues entitlement to.

154

FRA’s Response at 29–30.

155

Id.

156

Id.

22

FRA is also correct in that it is entitled to prejudgment interest on the entire amount of contract
damages it was awarded. Both parties’ contract damages represent losses fixed as of a definite
time and their amounts are calculable with mathematical accuracy. 157
Because both parties’ contract damages result in an entitlement to prejudgment interest,
the equitable doctrine of setoff requires that “‘the demands of mutually indebted parties be set
off against each other and that only the balance be recovered in a judicial proceeding by one
party against [the other].’” 158 Therefore, just as with the calculation that lead to the amount of
Global’s net judgment, 159 an amount of net prejudgment interest must be determined by setting
off the total amounts of prejudgment interest each party is entitled to for their respective contract
damages.
However, because both parties’ contract damages are fixed as of the same time—October
25, 2012, when Global terminated the parties’ contracts—and because prejudgment interest is
simple interest, as opposed to compound interest, 160 the calculation of the net prejudgment
interest is appropriately made by simply using the amount of Global’s net judgment—
$163,660.01. Therefore, Global is entitled to prejudgment interest at the rate of 10% per
annum 161 on its net judgment—$163,660.01—from October 25, 2012.
ORDER
IT IS HEREBY ORDERED that:

157

Encon Utah, LLC, 210 P.3d at 272.

158
Bichler v. DEI Sys., Inc., 220 P.3d 1203, 1207 (Utah 2009) (quoting 20 Am.Jur.2d Counterclaim, Recoupment,
and Setoff § 6 (2008)).
159

Order Granting [382] Motion; Amended Judgment.

160

Utah Code Ann. § 15–1–1(2); see also City of Hildale v. Cooke, 28 P.3d 697, 707–708 (Utah 2001).

161

Utah Code Ann. § 15–1–1(2).

23

(1)

Global’s Motion for Attorney’s Fees 162 and Renewed Motion for Attorney’s
Fees 163 are DENIED as to Global’s request for an award of attorney’s fees and
expenses.

(2)

Global’s Motion for Attorney’s Fees 164 and Renewed Motion for Attorney’s
Fees 165 are GRANTED as to Global’s request for prejudgment interest, but only
as to Global’s net judgment—$163,660.01—at a rate of 10% per annum from
October 25, 2012.

(3)

FRA’s Motion for Attorney’s Fees 166 is DENIED.

(4)

By no later than August 25, 2017, the parties shall meet, confer, and jointly file a
motion identifying the amount of prejudgment interest on Global’s net
judgment—$163,660.01—from October 25, 2012.

(5)

Following the filing of the parties’ joint motion, an amended judgment
incorporating the amount of prejudgment interest will enter.

Signed August 4, 2017.
BY THE COURT

________________________________________
District Judge David Nuffer

162

Docket no. 385, filed Nov. 3, 2015.

163

Docket no. 416, filed Nov. 24, 2015.

164

Docket no. 385, filed Nov. 3, 2015.

165

Docket no. 416, filed Nov. 24, 2015.

166

Docket no. 401, filed Nov. 11, 2015.

24