Bank v. Mpc Investors LLC
| Decision Date | 03 May 2011 |
| Docket Number | Case No: 09-11249 |
| Parties | WELLS FARGO BANK, NA, Plaintiff, v. MPC INVESTORS, LLC, DOMINIC MOCERI, GERALD CARNAGO, FRANCIS V MOCERI, MARIANO MOCERI, PETER K BURTON, ROBERT M KATZMAN, LAURENCE R GOSS, STEVEN BENTLEY, SALVATORE J PALAZZOLO, SEBASTIAN D PALAZZOLO, GREGORY A CARNAGO, AND DOMINIC J. MOCERI, Defendants, |
| Court | U.S. District Court — Eastern District of Michigan |
Honorable David M. Lawson
This case involves the plaintiff-lender's attempt to recover from several general and limited guarantors on a defaulted loan. Judgment on the outstanding debt amount was entered against defendant MPC Investors, LLC (the primary borrower), individual defendant Gerald Carnago and his trust (a limited guarantor), and defendants Dominic Moceri, Francis Moceri, Mariano Moceri, Peter Burton, Robert Katzman, Laurence Goss, Salvatore Palazzo, Sebastian Palazzolo, Gregory Carnago, and their respective trusts (general guarantors). The loan documents contain language obligating the borrowers and guarantors to pay in addition "all attorneys' fees and expenses" incurred by the lender in enforcing the loan agreement. Am. Compl., Ex. 1, Loan Agreement § 8.5; Ex. 3, Guaranty § 8. The plaintiff now moves for attorney's fees totaling $114,458.22 against MPC and the general guarantors, and $106,594.22 against the limited guarantor. The plaintiff filed asupplemental affidavit for additional fees incurred for attempting to collect the judgment against Gerald Carnago amounting to $105,241.85, and additional fees and expenses of $120,097.75 against MPC and the general guarantors. Defendants Gerald and Gregory Carnago oppose the motion on various grounds relating to the amounts claimed, but they do not challenge the plaintiff's right to some amount of attorney's fees under the loan documents.
Subject matter jurisdiction over the case is based on diversity of citizenship. Therefore, the Court must apply the law of the forum state's highest court, which in this case is Michigan law. See Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938); Garden City Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1130 (6th Cir. 1995) (quoting Bailey v. V& O Press Co., 770 F.2d 601, 604 (6th Cir. 1985)). The Sixth Circuit has held that state law governs the award of attorney's fees in diversity cases. Miller v. Alldata Corp., 14 F. App'x 457, 468 (6th Cir. July 6, 2001) (citing Big Yank Corp. v. Liberty Mut. Fire Ins. Co., 125 F.3d 308, 312 & n.5 (6th Cir. 1997)); see also Alyeska Pipeline Serv. Co. v. Wilderness Soc., 421 U.S. 240, 259 n.31 (1967).
The general rule is that "absent express statutory language or an enforceable contract, litigants pay their own attorneys' fees." Mencer v. Princeton Sq. Aptmts., 228 F.3d 631, 636 (6th Cir. 2000) (quoting Alyeska Pipeline Serv. Co. v. Wilderness Soc., 421 U.S. 240, 257 (1975)); Nemeth v. Abonmarche Dev., Inc., 457 Mich. 16, 37-38, 576 N.W.2d 641, 651 (Mich. 1998). However, courts may award attorney's fees to a prevailing party if the parties include a provision in their contract authorizing such an award. See, e.g., Miller, 14 F. App'x at 468 (citing Hall v. Cole, 412 U.S. 1, 4-5 (1973)); Nemeth, 457 Mich. at 38-39, 576 N.W.2d at 651-52; Zeeland Farm Servs. v. JBL Enters., 219 Mich. App. 190, 195-96, 555 N.W.2d 733, 736 (1996).
As with most attorney's fee requests, attorney's fee awards based on contract provisions are limited to "reasonable" fees, and the party requesting the award bears the burden of establishing reasonableness. Zeeland Farm Servs., 219 Mich. App. at 195-96, 555 N.W.2d at 736; Petterman v. Haverhill Farms, Inc., 125 Mich. App. 30, 33, 335 N.W.2d 710, 712 (1983). Federal courts generally rely on the "lodestar method" — "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate" — to calculate presumptively reasonable fees, which may be enhanced or reduced based on other factors such as the success achieved by the attorney. Hensley v. Eckerhart, 461 U.S. 424, 433-35 (1983). State courts generally employ a similar framework, but the recent Michigan Supreme Court case of Smith v. Khouri, 481 Mich. 519, 751 N.W.2d 472 (2008), suggests a slightly different approach to this task. See Int'l-Matex Tank Terminals-Ill. v. Chem. Bank, No. 08-1200, 2010 WL 3222515 (W.D. Mich. June 16, 2010) ().
To determine a reasonable fee, Smith held that "a trial court should begin its analysis by determining the fee customarily charged in the locality for similar legal services... us[ing] reliable surveys or other credible evidence of the legal market." Smith, 481 Mich. at 530-31, 751 N.W.2d at 479. The court should then multiply this rate by but should not be presumed reasonable. Id. at 531, 751 N.W.2d at 479-80; Poly-Flex Constr., Inc. v. Neyer, Tiseo &Hindo, Ltd., 600 F. Supp. 2d 897, 916 (W.D. Mich. 2009). That approach departs from the method used by federal courts in fee-shifting cases, see B& G Min., Inc. v. Dir., Office of Workers' Comp. Programs, 522 F.3d 657, 662 (6th Cir.2008) (), but the Court will apply it nonetheless because state law governs in this context. Big Yank Corp., 125 F.3d at 312 & n.5.
Under the state law method, after reaching the lodestar, a "baseline figure," the court should apply a multitude of factors drawn from case law and court rules to enhance or reduce the award. Smith, 481 Mich. at 533, 751 N.W.2d at 480-81. The court pointed to Wood v. Detroit Auto. Inter-Ins. Exch., 413 Mich. 573, 321 N.W.2d 653 (1982), and Mich. R. Prof. Cond. 1.5(a) as sources for factors courts should consider. In Wood, the court listed six such factors:
(1) the professional standing and experience of the attorney; (2) the skill, time and labor involved; (3) the amount in question and the results achieved; (4) the difficulty of the case; (5) the expenses incurred; and (6) the nature and length of the professional relationship with the client.
Id. at 588, 321 N.W.2d 653 ). These factors overlap with those in Rule 1.5(a) of the Michigan Rules of Professional Conduct, on which trial courts had often relied when adjudicating fee requests:
The Smith court emphasized that "the burden is on the fee applicant to produce satisfactory evidence — in addition to the attorney's own affidavits — that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Smith, 481 Mich. at 531, 751 N.W.2d at 480 (quoting Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)). To support the reasonableness of the hours expended, the fee application must include "detailed billing records" and evidentiary support. Id. at 532, 751 N.W.2d at 480. The court must review these records "line-by-line" to determine whether the time spent on each individual task was reasonable. Poly-Flex Constr., Inc., 600 F. Supp. 2d at 918 (citing Bonkowski v. Allstate Ins. Co., 281 Mich. App. 154, 175, 761 N.W.2d 784, 797 (2008)).
The plaintiff has not submitted any itemized time records to support the claim for attorney's fees. Instead, counsel submitted affidavits of plaintiffs attorneys Edward H. Pappas of Dickinson Wright and Brian M. Moore of Dykema Gossett describing broad categories of tasks with blocks of time allotted to them. Mr. Pappas avers that his hourly rate is $525 and that he spent 21 hours on the case, which he breaks down by general task in a table, in 2009. He also avers that Natalie L. Yaw billed an hourly rate of $205 and spent 45 hours on the case in 2009, similarly broken down generally by task in a table. Pappas avers that Wells Fargo incurred a total of $20,501 in attorneys fees and $1,424.47 in related expenses (totaling $21,925.47) for Dickinson Wright's work. Mr. Moore avers that his hourly rate was $340 in 2009 and $360 in 2010, and that he spent 138 hours on the case through April 30, 2010 (identified in blocks by tasks). He also avers that Joseph H. Hickey's hourly rate in 2009 was $400 and in 2010 was $415, and that he spent 75 hours on the case through April 30, 2010 (broken down in blocks by task). Eric S. Rein's 2010 hourly rate was $490 and he spent 4 hours on post-judgment asset recovery matters in 2010. Wells Fargo incurred a totalof $166,959 in attorney's fees and $10,242.50 in expenses, for a total of $177,201.50 due to Dykema Gossett. No affidavits have been furnished by Joseph H. Hickey, Eric S. Rein, Natalie L. Yaw, or Paul A. Wilhelm, who worked on the case in the post-judgment phase.
Plaintiffs counsel have declined to attach the itemized bills for their attorney's fees, contending that they may contain...
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