996 F.2d 1144 (11th Cir. 1993), 92-2410, Resolution Trust Corp. v. Hallmark Builders, Inc.

Docket Nº:92-2410.
Citation:996 F.2d 1144
Party Name:RESOLUTION TRUST CORPORATION, an agency of the USA, Plaintiff-Counter Defendant, Cross Defendant-Appellant, Cross Appellee, Duval Federal Savings Assoc., Plaintiff, v. HALLMARK BUILDERS, INC., a Florida corporation, Defendant-Counterclaim Plaintiff, Crossclaim Plaintiff-Appellee, Cross Appellant, Ronald D. Nutt, Defendant Counterclaim Plaintiff-App
Case Date:August 04, 1993
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1144

996 F.2d 1144 (11th Cir. 1993)

RESOLUTION TRUST CORPORATION, an agency of the USA,

Plaintiff-Counter Defendant, Cross

Defendant-Appellant, Cross Appellee,

Duval Federal Savings Assoc., Plaintiff,

v.

HALLMARK BUILDERS, INC., a Florida corporation,

Defendant-Counterclaim Plaintiff, Crossclaim

Plaintiff-Appellee, Cross Appellant,

Ronald D. Nutt, Defendant Counterclaim Plaintiff-Appellee,

Cross-Appellant,

J.C. Concrete & Masonry, Schilke Enterprises, Inc., a

Florida corporation, J.A. Brown, Pence South Brevard Sewer &

Septic Tanks, Inc., a Florida corp., Compfort Makers, Inc.,

a Florida corporation, William G. Gregory d/b/a American

Paint Brush & East Coast Plumbing Co., Inc., John W. Hursey,

Mary A. Hursey, Rinker Materials Corporation, a Florida

corporation, East Coast Lumber & Supply Company, a Florida

corporation, Defendants.

No. 92-2410.

United States Court of Appeals, Eleventh Circuit

August 4, 1993

Page 1145

[Copyrighted Material Omitted]

Page 1146

        Adam G. Adams, III, Julie Hills Tucker, Jacksonville, FL, for appellant.

        David Hillingsworth Simmons, Elizabeth G. Stevens, Drage, De Beaubien, Knight & Simmons, Orlando, FL, for Hallmark Builders, Inc.

        Appeal from the United States District Court for the Middle District of Florida.

        Before COX, Circuit Judge, MORGAN and HENDERSON, Senior Circuit Judges.

        PER CURIAM:

        Both the Resolution Trust Corporation ("RTC"), the appellant and cross appellee, and Hallmark Builders, Inc. ("Hallmark") and Ronald D. Nutt, its president, the appellees and cross appellants, appeal from the judgment of the United States District Court for the Middle District of Florida awarding attorney fees to RTC in the aftermath of its successful suit against Hallmark and Nutt. The matter of attorney fees was referred by the district court to a United States magistrate for a report and recommendation. The magistrate found that the number of hours and the hourly rates claimed by RTC's attorneys were reasonable, and used those figures to calculate a lodestar amount. He then found that there was no basis in the governing precedent for enhancing or reducing that lodestar figure. Nevertheless, the magistrate recommended that RTC be compensated for less than the lodestar, because the total amount was excessive when viewed against the final judgment. The district court adopted the report and recommendation.

        We conclude that the magistrate and the district court, in adopting his recommendation, erred when it reduced the fee award after finding that the lodestar components were reasonable and RTC was completely successful on all its claims.

       I. BACKGROUND

  1. The Underlying Suit

            RTC prevailed in an action against Hallmark and Nutt to collect on two loans made by Duval Federal Savings and Loan Association ("Duval"), RTC's predecessor in interest. Duval had made the two loans for the construction of two homes being built by Hallmark. The notes were secured by mortgages

    Page 1147

    on the property and Nutt, as Hallmark's president, personally guaranteed the notes executed in November 1983.

            Hallmark defaulted on the notes and then filed for bankruptcy protection, pursuant to 11 U.S.C.A. §§ 1101 et seq., identifying Duval as a secured creditor. In its petition to the bankruptcy court, Hallmark never disputed the validity of the indebtedness to Duval or its status as a secured creditor. In its final plan of reorganization, Hallmark agreed to repay the Duval notes in equal installments over a period of three years, but it failed to make any of the payments.

            Duval filed suit in November 1986 in Florida circuit court to collect on the notes and foreclose on the underlying mortgages. In the defense of the state court action and contrary to its position in the bankruptcy court, Hallmark denied liability and asserted twenty affirmative defenses and three counterclaims.

            Before the trial, RTC was appointed receiver of Duval, was subsequently substituted as a party plaintiff in the state court litigation and then removed the case to the United States District Court for the Middle District of Florida. By that time Hallmark had already paid to Duval the $54,000.00 principal on the first loan, but no interest or attorney fees. The accrued interest on that loan was $22,794.89. Hallmark had also paid $75,000.00 on the second loan, leaving the attorney fees and $8,848.23 in principal unpaid. These amounts totalling $129,000.00 were paid to Duval after suit was filed against both defendants. RTC was seeking only the remaining $31,643.12, plus interest, costs and fees by the time the case reached federal court.

            RTC and the defendants, Hallmark and Nutt, filed motions for summary judgment before trial in federal court. The district court heard the cross motions and resolved all issues in favor of RTC on the merits and entered a final judgment for RTC for $50,741.22. That was the amount remaining unpaid on the loans, plus additional accrued interest and costs. The court retained jurisdiction to award reasonable attorney fees to which RTC and its predecessor, Duval, were entitled under their contract with Hallmark and Nutt.

  2. RTC's Motion for Attorney Fees

            RTC filed its motion seeking approximately $145,000.00 in attorney fees. The district court assigned the motion to a magistrate for a report and recommendation. The magistrate concluded that RTC was entitled to reasonable attorney fees under the original contract with Hallmark and Nutt and proceeded to conduct a lodestar analysis to determine the amount of those fees. A lodestar is calculated by multiplying the number of hours reasonably spent times a reasonable hourly rate. E.g., Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565, 106 S.Ct. 3088, 3098, 92 L.Ed.2d 439, 456 (1986).

            The magistrate first considered the reasonable hourly rate component of the lodestar. He found that, with one exception, the rates requested for each of RTC's attorneys were reasonable. In that one instance, the charge found to be unreasonable was reduced to a lesser amount. (Rept. & Rec. at 19).

            Next, the magistrate found that the expended number of hours requested by RTC's attorneys was reasonable. He found that the hours were necessary in part because the defendants' counterclaims and affirmative defenses introduced a level of complexity into this mortgage foreclosure/note collection action that otherwise would not have been present. Because RTC had to prevail on each of the three counterclaims and twenty affirmative defenses before it could collect on the notes, the magistrate recommended that RTC's lawyers should be compensated for that time. (Rept. & Rec. at 22).

            The same law firm represented Duval when it was a party to...

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