Sellars Absorbent Materials Inc v. Sustainable Textile Group LLC et al

Filing 87

ORDER signed by Judge Lynn Adelman on 6/25/12 granting 81 Motion for Attorney Fees. (cc: all counsel) (dm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
SELLARS ABSORBENT MATERIALS, INC.,
Plaintiff,
v.

Case No. 11-CV-00400

SUSTAINABLE TEXTILE GROUP, LLC, et al.,
Defendants.

DECISION AND ORDER
I summarized the facts of the present case in my April 2, 2012 order granting
plaintiff’s motion for summary judgment. Before me now is plaintiff’s motion for attorney’s
fees and costs and defendants’ objections.
In my April 2 order, I found defendants Sustainable Textile Group, LLC, Sustainable
Solutions, Inc., Strateline Industries of Arkansas, LLC, Circle 360, LLC, S-Line Capital,
LLC, and Kenneth Mourton (collectively “the first group of defendants”) jointly and severally
liable for re-payment of a loan made under a supply/license agreement. I also found
defendants Karyen Joy Nunn, TIG Ventures, LLC, and Nunn Holdings, LLC (collectively
“the second group of defendants”) jointly and severally liable for repayment of a loan made
under a promissory note. These loans are worth over $320,000. I ordered defendants to
give plaintiff possession of the assets securing each loan and to reimburse plaintiff for its
reasonable collection costs, including attorney’s fees. Under the fee-shifting provisions of
the contracts, the defendants liable for each loan are jointly and severally liable for
plaintiff’s collections costs. Plaintiff requests $33,161.39 in collection costs from the first
group of defendants, and $65,142.52 in collection costs from the second group. Plaintiff

calculated its attorney’s fees using the “lodestar” method, multiplying the total number of
hours spent litigating by its attorney’s normal, hourly rate.
Whether a party is entitled to costs and attorney’s fees under a contract is a
substantive issue governed by state law, but the method of quantifying costs and fees is
a procedural issue which in diversity cases is governed by federal law. Metavante Corp.
v. Emigrant Sav. Bank, 619 F.3d 748, 774 n.21 (7th Cir. 2010). A contractual fee-shifting
clause contains an implied requirement that the fees sought be “commercially reasonable,”
meaning that a party’s aggregate costs must be reasonable in light of the stakes of the
case and the opposing party’s litigation strategy. Matthews v. Wis. Energy Corp., Inc., 642
F.3d 565, 572 (7th Cir. 2011).
It is unnecessary to conduct a line-by-line review of plaintiff’s attorney’s bills. It has
been obvious from the start that defendants have financial problems, and that as a result
plaintiff had an incentive to minimize its legal fees. “[W]here there are market incentives
to economize [legal expenses], there is no occasion for a painstaking judicial review.”
Metavante Corp., 619 F.3d at 775 (quoting Taco Bell Corp. v. Continental Casualty Co.,
388 F.3d 1069 (7th Cir. 2004)). Thus, I will not address each of the line-item objections
raised in defendants’ briefs. I will consider only the substance of defendants’ objections.
First, defendants contend that plaintiff’s attorney over-litigated a simple case. I
disagree. While the case should have been simple, defendants made it complicated by
disputing all of plaintiff’s claims no matter how clearly well-founded they were. Defendants
filed lengthy briefs advancing meritless defenses such as lack of consideration,
unconscionability, and economic duress. Thus, the time plaintiff’s attorney spent on this
case was reasonable.
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Second, defendants object to plaintiff’s attorney’s hourly rate contending that plaintiff
should have engaged a collection or foreclosure attorney instead of its regular counsel.
However, plaintiff’s use of its regular attorney, a partner in a large law firm with a billing rate
of $485 per hour, was reasonable. This was not a routine debt collection case, and
defendant made it clear that it would make plaintiff’s attorney’s job difficult. Thus, it made
sense for plaintiff to turn to a trusted and experienced attorney.
Third, some of the defendants in the first group object that they are being improperly
billed for work done on claims against other defendants in the same group. For example,
Kenneth Mourton objects to being held liable for the cost of suing Circle 360, LLC for
collection of the debt owed under the supply/license agreement. These claims are without
merit because the defendants in the first group are jointly and severally liable for plaintiff’s
collection costs. To collect the loan under the supply/license agreement, plaintiff had to
bring suit against all of the defendants in the first group.
Fourth, the first group of defendants claim that they cannot be billed for the cost of
responding to the motion to intervene filed by SSI Holdco, Inc., one of defendants’ other
creditors. SSI Holdco, Inc. intervened because it has a security interest in some of the
same assets as plaintiff, and plaintiff had to respond to the motion to intervene in order to
successfully prosecute its own claims against defendants. Thus, the cost of responding to
the motion to intervene is part of plaintiff’s reasonable collection costs.
Finally, the first group of defendants object to being billed for time plaintiff’s attorney
spent investigating the history of the relationship between defendant Nunn and Martyn
Davis, who works for plaintiff. They argue that this relationship is irrelevant to claims under
the supply/license agreement. I disagree. Nunn is the principal owner of Circle 360, LLC,
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one of the defendants liable for the loan under the supply/license agreement, and she and
Davis worked together to draft the terms of that agreement. Therefore, the history of their
business relationship is relevant to the interpretation of the contract.
THEREFORE, IT IS ORDERED that plaintiff’s motion for attorney’s fees [DOCKET
# 81] is GRANTED.
Dated at Milwaukee, Wisconsin, this 25th day of June, 2012.

s/ Lynn Adelman
LYNN ADELMAN
District Judge

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