CHARLES A. SHAW, District Judge.
This closed diversity matter is before the Court on plaintiff PNC Bank, National Association's ("PNC") Motion for Attorneys' Fees and Expenses Together with Taxable Costs, defendants El Tovar Incorporated and Steven D. Parrish's (collectively "Defendants") Motion for Rehearing, PNC's Motion to Strike the Defendants' Motion for Rehearing, and PNC's Motion for Bill of Costs. Defendants did not file an opposition to PNC's Motion for Attorneys' Fees and Expenses or a Reply in support of their Motion for Rehearing within the time permitted to do so.
On March 26, 2014, the Court ordered PNC to file a verified bill of costs in accordance with Local Rule 8.03(A). The Court stated that defendants would be given time to respond and ordered defendants to file their "specific objections, if any" by April 10, 2014. Order of March 26, 2014 (Doc. 107). Defendants did not file specific objections to the verified bill of costs, but instead filed without seeking leave of Court a "Memorandum in Opposition to the Award of Some, if Not All Attorney's Fees and Other Related Expenses" (Doc. 110). Defendants' Memorandum is an untimely opposition to PNC's Motion for Attorneys' Fees and Expenses, and does not mention any of the items of cost sought in PNC's verified bill of costs. The Court could strike defendants' Memorandum from the record as being filed without leave of Court, but will address it.
All of the motions are ready for decision. For the following reasons, the Court will deny PNC's Motion to Strike, deny defendants' Motion for Rehearing, grant in part PNC's Motion for Attorneys' Fees and Expenses, and grant in part PNC's Motion for Bill of Costs.
This is an action on a promissory note and personal guaranty. On October 31, 2013, the parties filed a Joint Motion for Modification of the Case Management Order which stated in part that the parties had engaged in a mediation on October 30, 2013 that resulted in the parties' agreement to a Consent Order for Appointment of Receiver (Doc. 58). On November 4, 2013, the Court issued the Consent Order for Appointment of Receiver and appointed SH Equities, LLC as receiver for the real property owned by Defendants and commonly referred to as 1853 S. Spring Avenue, 3803 Shaw Avenue, and 4426-28 Cleveland Avenue, St. Louis, Missouri.
On November 25, 2013, PNC filed a motion for an order to show cause why the Defendants should not be held in contempt of Court for failure to comply with the Consent Order for Appointment of Receiver. PNC asserted in its motion that Defendants failed to comply with the Consent Order for Appointment of Receiver in the following respects, among others:
PNC's Mot. for Order to Show Cause at 3-4 (Doc. 64). PNC's motion was supported by the Receiver's affidavit.
Following an evidentiary hearing on December 5, 2013, at which Mr. Shawn Henry testified for the Receiver and defendant Parrish testified, the Court granted PNC's motion for order to show cause and issued an Order finding that
Memorandum and Order of December 5, 2013 at 1-2 (Doc. 80).
PNC filed a motion for summary judgment which was granted by Memorandum and Order of February 11, 2014.
PNC timely filed its Motion for Attorneys' Fees and Expenses on February 21, 2014. Defendants did not respond directly to PNC's Motion for Attorneys' Fees and Expenses, but instead filed a Motion for Rehearing that PNC, in turn, moved to strike. As stated above, defendants filed an untimely opposition to the Motion for Attorneys' Fees and Expenses, instead of responding to PNC's verified motion for bill of costs.
Defendants do not indicate the procedural basis of their motion for rehearing. In the motion, defendants argue that in the Memorandum and Order of February 11, 2014 granting PNC's motion for summary judgment, the Court (1) "did not consider Defendants [sic] detrimental reliance on the Settlement Agreements reached on or about October 4, 2013 and October 30, 2013," (2) "did not credit Defendants for the monies previously paid into the registry of the Court and rent collected by the court appointed receiver," and (3) "awarded attorney fees which included the cost of Plaintiff defending various Counterclaims and Affirmative Defenses; this was not contractually agreed to and that amount should be deducted from the total amount owed." Mot. for Rehearing at 1.
PNC moves to strike the motion for rehearing, accurately stating that the motion cites no Rule, applicable statute, or case law in support. PNC argues that it should not be required to speculate as to whether defendants seek relief pursuant to Rule 59(e), Rule 60(b), or some other theory. As stated above, defendants did not file a reply in support of their motion for rehearing or respond to PNC's motion to strike it, and therefore have not clarified the procedural basis for their motion or offered legal authority to support it.
Motions to strike are properly directed only to material contained in pleadings. The Federal Rules of Civil Procedure define pleadings as "a complaint and an answer; a reply to a counterclaim. . .; an answer to a cross claim . . .; a third-party complaint . . .; and a third party answer." Fed. R. Civ. P. 7(a). "Motions, briefs or memoranda, objections, or affidavits may not be attacked by the motion to strike." 2 James W. Moore, et al.,
The Court now turns to the merits of defendants' Motion for Rehearing. Any motion that draws into question the correctness of a judgment is functionally a motion under Rule 59(e), whatever it has been titled.
A district court has broad discretion in deciding whether to grant a motion under Rule 59(e).
The Court finds that defendants are unable to meet the requirements of Rule 59(e) for any of their three arguments. Defendants' first argument, that the Court "did not consider Defendants [sic] detrimental reliance on the Settlement Agreements reached on or about October 4, 2013 and October 30, 2013," was not raised in defendants' opposition to PNC's motion for summary judgment and therefore is not properly before the Court on the Rule 59(e) motion. Further, the Court rejected defendants' related argument raised in opposition to summary judgment: that defendants obtained alternative financing but PNC failed to cooperate and provide necessary documentation for defendants to secure that financing.
Defendants' second argument, that the Court "did not credit Defendants for the monies previously paid into the registry of the Court and rent collected by the court appointed receiver," was not raised in defendants' opposition to PNC's motion for summary judgment, and therefore is not properly before the Court on a Rule 59(e) motion. The argument also does not establish that the judgment contains a manifest error of fact. Defendants' argument is essentially that they are entitled to a credit against the judgment. This argument does not entitle defendants to relief under Rule 59(e).
Finally, defendants argue that the Court erred by awarding PNC "attorney fees which included the cost of Plaintiff defending various Counterclaims and Affirmative Defenses; this was not contractually agreed to and that amount should be deducted from the total amount owed." Defendants' argument is based on an incorrect factual premise. The Court granted PNC's motion for summary judgment, but did not award PNC a specific amount of attorneys' fees. Instead, the Court directed PNC to file a post-judgment motion for attorneys' fees.
Despite this direction offered in the summary judgment order, defendants did not file a timely opposition to PNC's Motion for Attorneys' Fees and Expenses. Further, defendants' Motion for Rehearing, like their summary judgment opposition, does not cite any case law or contractual language that would limit PNC's ability to obtain reimbursement of its attorneys' fees expended in defending PNC's counterclaims. Defendants' unsupported post-judgment argument fails to establish that the Court made a manifest error of fact or law. Therefore, the third aspect of defendants' Rule 59(e) motion should also be denied.
The Court now turns to PNC's post-judgment motion for attorney's fees, expenses and taxable costs.
In a diversity case such as this, federal courts follow state law regarding an award of attorneys' fees, absent conflict with a federal statute or court rule.
In this case, the various loan documents include attorneys' fee provisions. The Note includes the following language regarding attorneys' fees, expenses and court costs:
Note at 2 (Complaint Ex. A, Frahlman Aff. Ex. C). The Deed of Trust includes the following language regarding attorneys' fees:
Deed of Trust at 4, ¶ 22 (Complaint Ex. F, Frahlman Aff. Ex. D). The Assignment of Rents states that in the event of default, PNC shall have the right "[t]o recover reasonable attorneys' fees to the extent not prohibited by law." Assignment of Rents at 2, ¶ 9.B (Complaint Ex. H; Frahlman Aff. Ex. F). Finally, the Guaranty includes the following provision regarding attorneys' fees, costs and expenses:
Guaranty at 1, ¶ 5 (Complaint Ex. D; Frahlman Aff. Ex. G).
PNC is therefore entitled to recovery of its reasonable attorneys' fees as set forth in the loan documents and Guaranty.
The Court first addresses defendants' argument that despite the foregoing contractual language, PNC cannot recover its attorneys' fees expended in connection with defending against defendants' counterclaims. As previously stated, defendants have not cited any case law or contract language in support of their argument, and the Court finds the argument to be without merit. In Missouri, a trial judge is deemed to be an expert on the subject of attorney's fees.
In this case, as in
Although a trial court has discretion to award reasonable attorneys' fees in Missouri, various factors are appropriately considered to determine the amount of fees to award.
Here, PNC has provided the Court with information concerning the hourly rates customarily charged by its attorneys, but states that each attorney's time was billed at a discounted rate from standard rates charged by the firm.
The Court finds that the hourly rates of PNC's attorneys, as discounted, are reasonable under the circumstances of this case, based on the Court's experience in awarding attorneys' fees and its knowledge of prevailing market rates, as well as the nature and character of the services provided by PNC's attorneys, their expertise and performance, and the results obtained in this case. PNC's attorneys achieved the results sought by its suit: the appointment of a receiver over the property for which PNC loaned money to the defendants, and a judgment of approximately $600,000 against the defendants on the Note and personal Guaranty.
PNC seeks fees of $53,500.00 for 212.40 attorney hours expended by Lathrop & Gage attorneys in this litigation, and $3,500.00 for 11.8 hours expended by the Mayer Brown firm to document a proposed renewal of the Note to El Tovar following its maturity in April 2012 that was never finalized. Mot. for Fees at 2; Frahlman Aff. at 2, ¶ 6. The Court has reviewed the detailed billing records of Lathrop & Gage and Mayer Brown submitted by PNC in support of its motion for attorneys' fees.
Defendants have argued previously that PNC unnecessarily multiplied the litigation. The Court rejects this assertion and places responsibility for multiplication of the proceedings squarely on the defendants. The billing records indicate that PNC incurred at least $15,000 in attorneys' fees directly as a result of having to defend the unsuccessful counterclaims asserted by defendants; $6,500 in fees in connection with the mediation; approximately $3,600 in fees in connection with its Motion to Enforce Settlement; approximately $6,500 in fees in connection with the Motion for Order to Show Cause. In contrast, PNC incurred approximately $20,000 in fees in connection with preparing the filing the suit, obtaining appointment of a receiver, responding to discovery and prosecuting the case to a successful conclusion.
In the untimely opposition memorandum, defendants make the conclusory assertion that all of the fees incurred by PNC are "excessive, considering that bringing the lawsuit in the first place was optional." Defs.' Mem. Opp. at 4-5 (Doc. 110). The Court rejects this assertion. The loan documents as quoted above provide for PNC's recovery of its attorneys' fees expended in collection of the Note and enforcement of the personal Guaranty. PNC's decision to file suit and seek the appointment of a receiver, rather than to engage in a nonjudicial foreclosure as defendants argue it should have, does not change the facts that defendants are in default under the Note and Guaranty, that PNC incurred fees to collect on the Note and Guaranty because of defendants' default, or otherwise cause PNC to forfeit its contractual rights under the loan documents.
Defendants also argue that PNC is not entitled to the $3,500.00 in fees billed by the Mayer Brown firm or $1,522.50 in fees billed by Lathrop & Gage because defendants claim that the parties on two occasions agreed to "an extension" of the matured loan but then PNC unreasonably "unilaterally changed the terms of the agreement in the proverbial `eleventh hour' and after PNC Bank had incurred significant attorney's fees." Defs.' Mem. Opp. at 2. The Court has considered this argument and finds it to be without merit, in part because, as the Court has previously found, no settlement or refinancing agreement was ever reached between the parties and the defendants were in default under the loan documents at all relevant times.
The Court has reviewed the billing records of Mayer Brown and has not identified any time expenditures that it deems unnecessary, duplicative or unreasonable. The Court finds that the hourly rates charged are reasonable for the work involved, whether the rates are evaluated by St. Louis standards or those of Chicago, where Mayer Brown is located.
The defendants challenge four specific time expenditures by the Lathrop & Gage firm as excessive: 3.8 hours to prepare a two-page demand letter; 7.9 hours to prepare for and attend a motion for appointment of receiver; 4.7 hours to prepare a draft mediation statement; and 1.8 hours to review and revise "a simple affidavit" in support of PNC's motion for summary judgment. The Court will address each objection in turn.
While 3.8 hours to prepare a demand letter might seem excessive at first glance, the time records indicate that 2.1 hours of that time was spent making and incorporating multiple changes requested by PNC. This is reasonable. The time expended to prepare for and attend the scheduled hearing on PNC's motion for appointment of receiver is also reasonable. The Court rejects as both speculative and inconsistent with defendants' prior position taken in this litigation, defendants' unsupported assertion "it was a foregone conclusion that a receiver would be appointed given PNC Bank's absolute right to a receiver pursuant to the expressed [sic] terms of the deed of trust." Defs.' Mem. Opp. at 4. The Court notes that defendants' opposition to PNC's motion for appointment of a receiver argued that in spite of the contractual language, appointment of a receiver was an "extraordinary equitable remedy" under Eighth Circuit precedent that should not occur in the instant case.
The expenditure of 4.7 hours to draft a mediation statement is also reasonable. The mediation process is involved and demanding, and is an important tool through which many disputes are resolved at a reduced expense when compared to motion practice or trial. The Order Referring Case to Alternative Dispute Resolution required the parties to provide the neutral, ten days prior to the ADR conference, "a memorandum presenting a summary of disputed facts and a narrative discussion of its position relative to both liability and damages." At the time this case was referred to ADR, the defendants had asserted three counterclaims and numerous affirmative defenses and were actively defending PNC's claims. This was a vigorously contested case and, as such, PNC was required to expend additional attorney time to assert and protect its interests.
The Court rejects defendants' assertion that 1.8 hours to review and revise the Michael Frahlman Affidavit is unreasonable. This detailed, nine-page affidavit by a member of PNC's Commercial Banking Asset Resolution Team incorporated thirteen exhibits and was an important supporting aspect of PNC's successful motion for summary judgment. Further, the expenditure of 1.8 hours revising the affidavit is undoubtedly reasonable where prior time entries indicate that only.5 hours (on December 6, 2013) were spent on the initial drafting of the affidavit and .2 hours (on December 11, 2013) discussing the affidavit with the client.
Finally, the Court denies defendants' alternative request to stay PNC's motion for attorneys' fees and expenses to "grant Defendant leave of court to conduct discovery with respect to the facts and circumstances pertaining to the parties' settlement contract." Defs.' Mem. Opp. at 5. As stated previously, the Court has found that no settlement took place in this matter as defendants admitted in open court that PNC's settlement offer contained a contingency.
For the foregoing reasons, the Court finds that PNC's attorneys' fees, as claimed, are reasonable. The Court will award PNC its reasonable attorneys' fees, pursuant to the language of the loan documents and Guaranty, in the amount of $57,000.
PNC's Motion for Bill of Costs seeks the recovery of its taxable costs as a prevailing party. PNC seeks costs of $1,837.63 it incurred in filing the case, issuing subpoenas, engaging in mediation and making copies. As previously stated, defendants have not made any response to PNC's Motion for Bill of Costs.
PNC seeks costs as follows:
PNC's requests for its costs expended is governed by Rule 54(d), Fed. R. Civ. P., and 28 U.S.C. § 1920. Allowable costs in most cases are limited to the categories set forth in 28 U.S.C. § 1920, and expenses not on the statutory list must be borne by the party incurring them.
PNC is entitled to recover Clerk's fees of $400 for the filing fee, pursuant to § 1920(1).
PNC seeks reimbursement of private process server fees for issuance of subpoenas and process server fees, under § 1920(1). The Eighth Circuit Court of Appeals has held, however, that § 1920 contains no provision for use of a private process server and only allows taxation of service fees by the United States Marshal.
PNC seeks reimbursement of the fees it paid the mediator as an item of taxable cost. The Eighth Circuit has held that mediator's fees do not constitute an item of taxable cost under 28 U.S.C. § 1920.
Finally, PNC seeks costs for in-house photocopies in the amount of $23.63 pursuant to § 1920(4). "Expenses for photocopies `necessarily obtained for use in the case' are recoverable by the prevailing party as costs. 28 U.S.C. § 1920 (2000). Rule 54(d) directs that costs, such as necessary photocopies, `shall be allowed as of course to the prevailing party unless the court otherwise directs.' Fed. R. Civ. P. 54(d)."
Amounts sought for copy expenses must be documented or itemized in such a way that the Court can meaningfully evaluate the request.
PNC supports its copy costs with the affidavit of Ms. Alper-Pressman, which states that PNC incurred costs for copying documents delivered to the Court and opposing counsel in connection with its motion to dismiss and motion for summary judgment.
For the foregoing reasons, the Court will grant in part and deny in part PNC's Motion for Bill of Costs. To summarize, the Court will order the following costs taxed:
Pursuant to the terms of the loan documents and Guaranty, PNC seeks to recover from the defendants certain other expenses of collection it incurred following defendants' default: computer forensics of $751.00 necessary to respond to discovery requests; title company and recording fees of $1,096.00; travel and meals of $32.67; and document delivery services of $60.42. As stated above, the Court will also consider whether PNC can recover from the defendants as contractual expenses of collection the mediator's fee of $900.00 and private process server fees of $514.00.
Under Missouri law, "If a contract provides for the payment of attorney's fees and expenses incurred in the enforcement of a contract provision, the trial court must comply with the terms of the contract and award them to the prevailing party."
The Court finds that PNC is entitled to judgment against the defendants for the contractual expenses of collection it seeks pursuant to the terms of the Note and Guaranty, and the mediator's fee and private process server fees, as all are legal expenses incurred by PNC following defendants' default and in connection with its efforts to collect the Note and enforce the Guaranty.
Finally, PNC asks the Court to "enter an order allowing recovery of" its attorneys' fees, taxable costs and non-taxable legal expenses "for a total judgment of . . . $662,767.68, with interest to accrue thereon from and after December 12, 2013 at the contract rate of 126.41 per diem[.]" Mot. for Attys' Fees at 9-10. The defendants have not responded to this request.
PNC's request for post-judgment interest at the contract rate set forth in the Note is made under § 408.040.1 (2000), Missouri Revised Statutes, which provides for post-judgment interest in non-tort actions as follows:
§ 408.040.1 (emphasis added).
A federal statute, however, provides that "[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court" at an interest rate based on United States Treasury bill yield. 28 U.S.C. § 1961(a). The Eighth Circuit has held that the federal post-judgment interest rate applies to cases tried in federal court, even when the basis for jurisdiction is diversity of citizenship.
For the foregoing reasons, plaintiff PNC Bank's Motion to Strike defendants' Motion for Rehearing should be denied, because a motion to strike may only be directed to a pleading. Defendants' Motion for Rehearing, construed as a motion under Rule 59(e), Fed. R. Civ. P., should be denied as it fails to establish any basis for relief under Rule 59(e). PNC Bank's Motion for Attorneys' Fees and Expenses should be granted as set forth above, and PNC is entitled to judgment against the defendants, jointly and severally, for contractual attorneys' fees in the amount of $57,000.00 and contractual expenses of collection in the amount of $3,293.67. The Clerk will be directed to tax costs against the defendants, jointly and severally, in the amount of $423.63. Postjudgment interest shall accrue at the federal statutory rate, and an amended judgment will issue separately.
Accordingly,
Defs.' Mem. Opp., Ex. A at 1.
The Term Sheet also states that "the indebtedness evidenced by the Loan Documents is now due and payable" and that it "does not represent any waiver by the Bank of the existing defaults nor does this Term Sheet constitute any agreement by Bank that the indebtedness evidenced by the Loan Documents is not now due and payable."
