Au v. Funding Grp., Inc.

• Decision Date: 21 March 2013
• Docket Number: No. CV 11–00541 SOM–KSC.,CV 11–00541 SOM–KSC.
• Citation: 933 F.Supp.2d 1264
• Parties: Ronald AU, Plaintiff, v. The FUNDING GROUP, INC.; American Home Mortgage Servicing, Inc., nka Homeward Residential, Inc.; Option One Mortgage Corporation, nka Sand Canyon Corporation; Doe Defendants 1–10; Doe Corporations 1–10, Defendants.
• Court: U.S. District Court — District of Hawaii

933 F.Supp.2d 1264

Ronald AU, Plaintiff,

v.The FUNDING GROUP, INC.; American Home Mortgage Servicing, Inc., nka Homeward Residential, Inc.; Option One Mortgage Corporation, nka Sand Canyon Corporation; Doe Defendants 1–10; Doe Corporations 1–10, Defendants.

No. CV 11–00541 SOM–KSC.

United States District Court, D. Hawai‘i.

March 21, 2013.

Ronald Au, Honolulu, HI, pro se.

James B. Rogers, Alston Hunt Floyd & Ing, Chanelle Mari Chung Fujimoto, Debra M. Pruitt, Steven K.S. Chung, Imanaka Asato, LLLC, Gregory A. Ferren, StevenChung & Associates LLLC, Honolulu, HI, for Defendants.

ORDER ADOPTING MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATION

SUSAN OKI MOLLWAY, Chief Judge.

Findings and Recommendation having been filed and served on all parties on February 20, 2013, and no objections having been filed by any party,

IT IS HEREBY ORDERED AND ADJUDGED that, pursuant to Title 28, United States Code, Section 636(b)(1)(C) and Local Rule 74.2, the “Findings and Recommendation to Grant in Part and Deny in Part Defendant Homeward Residential, Inc., formerly known as American Home Mortgage Servicing, Inc.'s Motion for Attorneys' Fees and Costs” are adopted as the opinion and order of this Court.

APPROVED AND SO ORDERED.

FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART DEFENDANT HOMEWARD RESIDENTIAL, INC., FORMERLY KNOWN AS AMERICAN HOME MORTGAGE SERVICING, INC.'S MOTION FOR ATTORNEYS' FEES AND COSTS

KEVIN S.C. CHANG, United States Magistrate Judge.

Before the Court is Defendant Homeward Residential, Inc., formerly known as American Home Mortgage Servicing, Inc.'s (“Defendant”) Motion for Attorneys' Fees and Costs (“Motion”),¹ filed December 21, 2012. On January 2, 2013, SCC filed a Statement of No Position. On January 4, 2013, Defendant filed a Statement of Consultation (“SOC”). Plaintiff Ronald Au (“Plaintiff”) filed an Opposition on February 1, 2013.² Defendant filed a Reply on February 15, 2013.

The Court finds this matter suitable for disposition without a hearing pursuant to Rule 7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawaii (“Local Rules”). After reviewing the Motion, the supporting and opposing memoranda, and the relevant case law, the Court FINDS and RECOMMENDS that the Motion be GRANTED IN PART and DENIED IN PART, and that Defendant be awarded $16,560.39 in attorneys' fees and $14.10 in costs for the reasons set forth below.

BACKGROUND

As the Court and the parties are familiar with the history of this case, the Court includes only those facts relevant to the instant Motion.

On August 11, 2011, Plaintiff commenced the instant action, pleading the following causes of action: 1) breach of contract; 2) breach of promissory estoppel; 3) violation of the Real Estate Settlement and Procedures Act (“RESPA”), federal statutes, Hawaii Revised Statutes (“HRS”) 454 and 454F as amended; 4) intentional or negligent misrepresentation and fraud; and 5) unfair and deceptive practices, HRS Chapter 454f as amended, HRS 480.

On September 6, 2011, SCC filed a Notice of Removal.

On September 22, 2011, Defendant filed a Motion to Dismiss. SCC joined in the motion. On January 17, 2012, Chief U.S. District Judge Susan Oki Mollway granted the motion to dismiss and granted Plaintiff leave to file a motion to amend by February 17, 2012. Doc. No. 38.

Plaintiff timely filed a motion to file first amended complaint, which this Court denied without prejudice. Doc. No. 45. This Court granted Plaintiff another opportunity to file a motion to amend his complaint by May 25, 2012. Id. On May 24, 2012, Plaintiff filed a motion to file second amended complaint. On July 31, 2012, this Court issued an Order Denying Plaintiff's Motion to File Second Amended Complaint (“Order”). Doc. No. 58.

On August 9, 2012, Plaintiff sought reconsideration of the Order. This Court issued an Order Denying Plaintiff Ronald Au's Motion to Reconsider Motion to File Second Amended Complaint and in the Alternative, Motion to File Renewed First Amended Complaint (“Reconsideration Order”). Doc. No. 61. Plaintiff appealed both the Order and the Reconsideration Order on August 23, 2012. On August 24, 2012, 2012 WL 3686893, Chief Judge Mollway affirmed both orders. Doc. No. 64.

On December 11, 2012, Chief Judge Mollway directed that judgment enter in Defendants' favor. Doc. No. 75. The Clerk entered judgment that same day. Doc. No. 76.

The present Motion followed.

DISCUSSION

I. Attorneys' Fees

A. Entitlement to Attorneys' Fees

Defendant argues that as the prevailing party in this action in the nature of assumpsit and/or one on a promissory note or contract in writing that expressly provides for the recovery of an attorney's fee, it is entitled to $25,453.84 in attorneys' fees pursuant to HRS § 607–14. Plaintiff contends that this action is not in the nature of assumpsit and there is no provision authorizing the award of fees.

A federal court sitting in diversity must apply state law in determining whether the prevailing party is entitled to attorneys' fees. See Farmers Ins. Exch. v. Law Offices of Conrado Joe Sayas, Jr., 250 F.3d 1234, 1236 (9th Cir.2001). Under Hawaii law, “[o]rdinarily, attorneys' fees cannot be awarded as damages or costs unless so provided by statute, stipulation, or agreement.” Stanford Carr Dev. Corp. v. Unity House, Inc., 111 Hawai'i 286, 305, 141 P.3d 459, 478 (2006) (citation and quotation marks omitted); DFS Group, L.P. v. Paiea Props., 110 Hawai'i 217, 219, 131 P.3d 500, 502 (2006) (quoting TSA Int'l, Ltd. v. Shimizu Corp., 92 Hawai'i 243, 263, 990 P.2d 713, 733 (1999) (“Generally, under the ‘American Rule,’ each party is responsible for paying his or her own litigation expenses. A notable exception to the ‘American Rule,’ however, is the rule that attorneys' fees may be awarded to the prevailing party where such an award is provided for by statute, stipulation, or agreement.”)).

HRS § 607–14 is a statutory exception to the American Rule. DFS, 110 Hawai'i at 219, 131 P.3d at 502. It mandates the recovery of fees when a promissory note or contract provides for the same, in writing, or when an action is in the nature of assumpsit, and states, in pertinent part:

In all the courts, in all actions in the nature of assumpsit and in all actions on a promissory note or other contract in writing that provides for an attorney's fee, there shall be taxed as attorneys' fees, to be paid by the losing party and to be included in the sum for which execution may issue, a fee that the court determines to be reasonable; providedthat the attorney representing the prevailing party shall submit to the court an affidavit stating the amount of time the attorney spent on the action and the amount of time the attorney is likely to spend to obtain a final written judgment, or, if the fee is not based on an hourly rate, the amount of the agreed upon fee. The court shall then tax attorneys' fees, which the court determines to be reasonable, to be paid by the losing party; provided that this amount shall not exceed twenty-five per cent of the judgment.

Where the note or other contract in writing provides for a fee of twenty-five per cent or more, or provides for a reasonable attorney's fee, not more than twenty-five per cent shall be allowed ...

The above fees provided for by this section shall be assessed on the amount of the judgment exclusive of costs and all attorneys' fees obtained by the plaintiff, and upon the amount sued for if the defendant obtains judgment.

Haw.Rev.Stat. § 607–14 (emphasis added). Attorneys' fees may therefore be awarded under HRS § 607–14 “in three types of cases: (1) all actions in the nature of assumpsit; (2) all actions on a promissory note; and (3) contracts in writing that provides for an attorney's fee.” Eastman v. McGowan, 86 Hawai'i 21, 31, 946 P.2d 1317, 1327 (1997). A court awarding attorneys' fees pursuant to § 607–14 must apportion the fees claimed between assumpsit and non-assumpsit claims, if practicable. See Blair v. Ing, 96 Hawai'i 327, 332, 31 P.3d 184, 189 (2001).

1. Prevailing Party

Section 607–14 states that reasonable attorneys' fee shall be taxed in favor of the prevailing party and against the losing party. The Hawaii courts have noted that “ ‘[i]n general, a party in whose favor judgment is rendered by the district court is the prevailing party in that court, plaintiff or defendant, as the case may be....’ ” MFD Partners v. Murphy, 9 Haw.App. 509, 514, 850 P.2d 713, 716 (1992) (quoting 6 J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice ¶ 54.70[4], at 54–323–54–324, (2d ed. 1992)) (some alterations in original); see also Village Park Cmty. Ass'n v. Nishimura, 108 Hawai'i 487, 503, 122 P.3d 267, 283 (Haw.Ct.App.2005) (citation omitted). Thus, under Hawaii law, in order to be deemed the prevailing party for purposes of § 607–14, Defendant must have obtained final judgment in its favor. The judgment need not result from a ruling on the merits. Ranger Ins. Co. v. Hinshaw, 103 Hawai'i 26, 31, 79 P.3d 119, 124 (2003) (quoting Wong v. Takeuchi, 88 Hawai'i 46, 49, 961 P.2d 611, 614 (1998)); see also Blair, 96 Hawai'i at 331, 31 P.3d at 189 (“[A] defendant who succeeds in obtaining a judgment of dismissal is a prevailing party for the purpose of fees under HRS § 607–14.”). Insofar as the Court entered final judgment in Defendant's favor, there can be no dispute that Defendant is the prevailing party.

2. Attorneys' Fees Provision

Defendant asserts that it is entitled to attorneys' fees in accordance with the attorneys' fee provision in the Mortgage.³ The Mortgage contains a reimbursement provision stating:

28. Reimbursement. To the extent permitted by applicable law, Borrower shall reimburse Trustee and Lender for any and all costs, fees and expenses which either may incur, expend or sustain in the execution of the trust created hereunder or in the performance of any act required or permitted hereunder or by law or in equity or otherwise arising out of...