Docmagic, Inc. v. Mortg. P'ship of Am., L.L.C.

• Decision Date: 04 September 2013
• Docket Number: No. 12–1506.,12–1506.
• Citation: 729 F.3d 808
• Parties: DocMAGIC, INC., Plaintiff–Appellant v. The MORTGAGE PARTNERSHIP OF AMERICA, L.L.C., Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

729 F.3d 808

DocMAGIC, INC., Plaintiff–Appellant

v.The MORTGAGE PARTNERSHIP OF AMERICA, L.L.C., Defendant–Appellee.

No. 12–1506.

United States Court of Appeals,

Eighth Circuit.

Submitted: Jan. 15, 2013.

Filed: Sept. 4, 2013.

Shawn T. Briner, Martin & Leigh, Clayton, MO, Thomas J. Fritzlen, Jr., Martin & Leigh, Kansas City, MO, for Plaintiff–Appellant.

David D. Crane, Devereux & Murphy, Saint Louis, MO, Ryan C. Hardy, Spencer & Fane, Saint Louis, MO, David James Massa, Gallop & Johnson, Saint Louis, MO, Frank Susman, Spencer & Fane, Saint Louis, MO, for Defendant–Appellee.

Before BYE, MELLOY, and SMITH, Circuit Judges.

SMITH, Circuit Judge.

DocMagic, Inc. (“DocMagic”), a California corporation, and Mortgage Partnership of America, L.L.C. (“Lenders One”), a Missouri limited liability company, entered into a service contract (“Agreement”), which included a provision that should a dispute arise, the prevailing party would receive attorneys' fees, other costs, and expenses. DocMagic filed various claims against Lenders One stemming from the parties' Agreement, and Lenders One filed various counterclaims. Both parties succeeded on some of their respective claims. Based on the amount of the award and the number of claims it succeeded on, the district court ¹ found Lenders One to be the prevailing party and awarded it attorneys' fees and costs. DocMagic appeals, seeking reversal of the district court's prevailing-party determination. We affirm.

I. Background

DocMagic is a “provider of mortgage loan document preparation software used in the preparation of, among other things, pre-disclosures and closing documents.” Lenders One “provides mortgage products and services, related products and services on a cooperative basis to [its] Members.” In October 2008, DocMagic and Lenders One entered into an agreement whereby Lenders One agreed to “supply DocMagic with a list of all current Members” and “refer, market and promote” DocMagic's products and services to Lenders One's Members.

The Agreement between Lenders One and DocMagic stated in relevant part:

18. Applicable law, Jurisdiction and Venue: For any legal action arising from or relating to this Agreement in any way, jurisdiction shall be vested solely in the state and federal courts located in the Eastern District of St. Louis, Missouri, and the validity, meaning and effect of this Agreement shall be determined in accordance with the laws of the State of Missouri without regard to principles of conflicts of laws.

19. Attorneys' Fees: In the event of any dispute with respect to or relating to this Agreement in any way, the prevailing Party shall be entitled to reasonable legal fees and other costs and expenses incurred in resolving such dispute, in addition to any other relief to which that Party may be entitled.

DocMagic filed suit against Lenders One, alleging claims for breach of contract, breach of the duty of good faith and fair dealing, rescission, unjust enrichment, tortious interference, and fraud in the inducement. DocMagic also sought a declaratory judgment that it was not obligated to pay Lenders One a marketing fee. Lenders One answered DocMagic's complaint, denying all of DocMagic's claims and asserting certain affirmative defenses. It also asserted counterclaims against DocMagic for breach of contract and unjust enrichment, and sought a declaratory judgment that DocMagic was required to pay marketing fees to Lenders One “on all DocMagic's revenues generated from sale of products and services to [Lenders One] [m]embers, not just new DocMagic customers.” Lenders One then moved for summary judgment on its breach-of-contract counterclaim and on all of DocMagic's claims. The district court denied summary judgment to Lenders One on its counterclaims and all of DocMagic's claims, except that the court found as a matter of law “that DocMagic was required to pay a ten[-]percent marketing fee for Products and Services purchased by Lender[s] One's Members who were DocMagic's preexisting customers.” DocMagic, Inc. v. Mortgage P'ship of Am., L.L.C., No. 4:09CV1779MLM, 2011 WL 2462196, at *4 (E.D.Mo. June 17, 2011).

Following the court's summary judgment order, the case proceeded to trial on the remaining claims. The jury found in favor of Lenders One on DocMagic's claims for (1) breach of the Agreement; (2) evading the spirit of the Agreement; (3) denying DocMagic the expected benefit of the Agreement; (4) misrepresentation regarding marketing and promoting DocMagic's products; and (5) misrepresentation that DocMagic would get a majority of the 20,000 loans closed per month. The jury found in favor of DocMagic on its claim that Lenders One refused to allow DocMagic to attend a conference but awarded zero dollars. It also ruled for DocMagic on its claim against Lenders One for fraud in the inducement. On that claim, the jury awarded DocMagic $243,000.

Lenders One prevailed on its counterclaims against DocMagic for (1) breach of the Agreement by failing to give accurate monthly sales reports and (2) breach of the Agreement for failing to pay the ten percent marketing fee and was awarded $52,500 for the breach-of-the-contract claim. In summary, the jury found in favor of DocMagic on only two of its seven claims, while it found in favor of Lenders One on both of its counterclaims against DocMagic. Both parties moved for attorneys' fees, expenses, and costs as the prevailing party, and the district court found that Lenders One was the prevailing party. The court ordered DocMagic to pay Lenders One $445,615 in attorneys' fees, $9,298.19 in expenses, and $3,188.90 in costs. DocMagic had sought $458,986.50 in attorneys' fees and $56,072.95 in expenses and costs, and $3,977.02 in taxable costs.

In its post-trial memorandum opinion and order the district court construed the attorneys' fees clause in the Agreement to be broad enough to include DocMagic's fraud-in-the-inducement claim. DocMagic, Inc. v. Mortgage P'ship of Am., L.L.C., No. 4:09CV1779MLM, 2012 WL 263091, at *11 (E.D.Mo. Jan. 30, 2012). The court then concluded that, under Missouri law, a trial court must award attorneys' fees to the prevailing party should the contract between the parties include an attorneys' fees provision. Id. (citing Schnucks Carrollton Corp. v. Bridgeton Health and Fitness Inc., 884 S.W.2d 733, 739 (Mo.Ct.App.1994)). To determine the prevailing party, the district court looked to Ken Cucchi Constr., Inc. v. O'Keefe for the Missouri rule that a “ ‘prevailing party is the party prevailing on the main issue in dispute, even though not necessarily to the extent of its original contention.’ ” 973 S.W.2d 520, 528 (Mo.Ct.App.1998). The court also noted that Missouri law “places just as much emphasis [on] successfully defending claims as they do on successfully prosecuting them.” DocMagic, Inc., 2012 WL 263091, at *11.

The district court then observed that both sides recovered damages on their contract claims, causing an offset of the damages awarded. Id. at *12. Adopting Lenders One's view of the law, the court deemed it appropriate to consider the relative amount of each side's award as a factor. Id. The court also considered “the number of claims successfully prosecuted or defended, the amount of recovery in proportion to damages sought[,] and ... who prevailed on the [m]ain [i]ssues.” Id. (quotation omitted). The district court found that the breach of the Agreement was the “main issue” in dispute. Id. at *11. The court pointed out that Lenders One, as the defendant, prevailed by defeating five of DocMagic's seven claims on summary judgment, and Lenders One prevailed on both of its own counterclaims at trial. Id. DocMagic, on the other hand, prevailed on only two of its seven claims and received damages on only one—the fraud-in-the-inducement claim. Id. The court further noted that Lenders One recovered 58 percent of its claimed damages, whereas DocMagic ² recovered only seven percent of what it sought. Id. at *11 n. 5. After weighing the factors, the court concluded that “Lenders One is the prevailing party and shall recover its attorneys fees pursuant to the Agreement.” Id. at *12.

II. Discussion

On appeal, DocMagic contends that the district court erred in awarding Lenders One attorneys' fees, expenses and costs and in declining to award attorneys' fees, expenses, and costs. DocMagic raises four arguments on appeal. First, DocMagic contends that the district court erred because “the parties' agreement requires a determination that DocMagic was the prevailing party.” Second, DocMagic argues that Lenders One could not be the prevailing party because it was awarded “$190,500.00 less than the total monetary judgment awarded to DocMagic.” Third, DocMagic avers that the district court should have awarded DocMagic its costs and denied Lenders One the same because DocMagic was the prevailing party. Fourth, DocMagic asserts that the district court “mischaracterized the extent to which Lenders One successfully defended [itself against] DocMagic's claims, and even if DocMagic was not a prevailing party, the district court should not have found Lenders One to be the prevailing party.”

For its part, Lenders One argues that “there is only a single issue involved in this appeal, to-wit: Did the District Court err in finding that Lenders One is the prevailing party for purposes of an award of attorney's fees, expenses and costs?”

A. Standard of Review

As an initial matter, we address the appropriate standard of review. The parties put forth competing views of our standard of review, each choosing a standard favorable to their arguments. DocMagic seeks de novo review, while Lenders One prefers an abuse-of-discretion standard. Both parties misstate aspects of the applicable standard, which involves both factual and legal determinations by the district court. Our cases are fairly clear on this issue. As we have previously stated:

[W]e review de novo the legal question of whether a litigant is a...