Casco, Inc. v. John Deere Constr. & Forestry Co.
| Decision Date | 31 March 2022 |
| Docket Number | CIVIL NO. 13-1325 (PAD) |
| Citation | 596 F.Supp.3d 359 |
| Parties | CASCO, INC., Plaintiff, v. JOHN DEERE CONSTRUCTION & FORESTRY COMPANY, Defendant. |
| Court | U.S. District Court — District of Puerto Rico |
Heriberto J. Burgos-Perez, Mariano A. Mier-Romeu, Ricardo F. Casellas, Casellas, Alcover & Burgos PSC, San Juan, PR, Carla S. Loubriel, Hato Rey, PR, for Plaintiff.
Carmen M. Alfonso-Rodriguez, Eduardo A. Zayas-Marxuach, Henry O. Freese-Souffront, McConnell Valdes, LLC, San Juan, PR, for Defendant.
Before the court is Casco, Inc.’s ("Casco") "Renewed Motion and Memorandum of Law in Support of Verified Application for Attorney's Fees and Costs" (Docket No. 333), which John Deere Construction & Forestry Company ("John Deere") opposed (Docket Nos. 336, 347 and 354). Casco replied (Docket Nos. 346 and 355), and John Deere sur-replied (Docket No. 358). Casco also filed a "Motion for Leave to Supplement Casco, Inc.’s Renewed Application for Fees and Costs (D.E. 333)" (Docket No. 361), which the court granted (Docket No. 362). John Deere subsequently filed an opposition (Docket No. 363), which the court reviewed. For the reasons explained below, Casco's motion for fees and costs is granted in part, in the amount of $855,979.57.
Casco sued John Deere under the Puerto Rico Dealers Act, Law 75 of June 24, 1964, as amended, P.R. Laws Ann. tit. 10 §§ 278 et seq. ("Law 75"), for unjust impairment and termination of a 1986 Dealer Agreement (the "Dealer Agreement") (Counts 1 & 2), as well as for dolus under the Puerto Rico Civil Code, P.R. Laws. Ann. tit. 31 (Counts 3 & 4). John Deere denied liability and counterclaimed against Casco for collection of unpaid invoices due. A highly contested litigation ensued, which included a request by Casco for preliminary injunctive relief that was denied (Docket Nos. 11, 23, 24 and 29); motions for summary judgment by both parties that were denied (Docket Nos. 64, 66, 74, 77, 85, 103 and 117); motions in limine by both parties that were granted in part and denied in part (Docket Nos. 156, 162, 163, 164, 177, 180, 185, 186, 187, 188 and 193); and additional disputes prior to trial regarding pretrial stipulations, disclosures, the counterclaim, and on whether witnesses should testify in the English language rather than through an interpreter (Docket Nos. 198, 200, 201, 202, 203, 208, 206, 213, 218, 228, 235 and 236).
During the nine-day jury trial, the court granted John Deere's request under Fed.R.Civ.P. 50(a) to dismiss Casco's Civil Code claims (Counts 3 & 4) and to enter judgment on its counterclaim (Docket No. 235). The jury found in favor of Casco on its main claims under Law 75 and awarded $1,763,934.00 in impairment and termination damages (Docket No. 243). The court entered judgment for Casco accordingly, together with $216,912.92 for John Deere's counterclaim (Docket No. 249). Thereafter, the court denied Casco's post-judgment motions to vacate dismissal of its Puerto Rico Civil Code claim and to dismiss John Deere's counterclaim (Docket Nos. 264 and 303-1, pp. 4-15).
Further, the court partially granted John Deere's post-judgment motions, to remit the amount awarded by the jury as compensation for John Deere's unjust impairment of the Dealer Agreement from $323,400.00 to $58,000.00 and increase the amount of the award on the counterclaim from $216,919.92 to $219,913.00 (Docket Nos. 269 and 333-1, pp. 22-24 and 26). However, the court denied John Deere's remaining motions to vacate the jury's liability determinations and for remittitur or a new trial on termination damages (Docket Nos. 269 and 333-1, pp. 16-22 and 24-26).
Both parties asserted "prevailing party" status and filed applications for costs under Fed.R.Civ.P. 54, with Casco also seeking attorney's fees under the fee-shifting provision of Article 7 of Law 75, P.R. Laws Ann. tit. 10, § 278e (Docket Nos. 251 and 260). The court denied John Deere's application for costs, concluding that, considering the issues at stake, Casco had prevailed, and that, even considering the feasibility of apportionment, John Deere was not entitled to the amounts it sought to recover as costs under 19 U.S.C. § 1920 (Docket No. 303-1, p. 27). As for Casco's request for attorney's fees and costs, on John Deere's motion, the court dismissed, without prejudice, Casco's request as premature under Local Civil Rule 54 (Docket No. 303-1, pp. 29-31).
The parties appealed to the First Circuit, which affirmed the court's rulings (Docket No. 330). Following the First Circuit's mandate, as prevailing party, Casco moved for recovery of attorney's fees incurred through post-judgment briefing, on appeal, and to litigate its request for fees request ($770,145.59), expert witness fees ($70,621.15), and costs ($17,012.83), for a total amount of $857,779.57 (Docket No. 333, as revised at Docket No. 355 and supplemented at Docket No. 361). John Deere opposed Casco's renewed request (Docket Nos. 336 and 347).
Motions for attorney's fees are subject to Fed.R.Civ.P. 54(d). Regarding costs, the Rule provides that "[u]nless a federal statute, these rules, or a court order provides otherwise, costs – other than attorney's fees – should be allowed to the prevailing party." As for attorney's fees, it specifies that they must be requested "by motion unless the substantive law requires those fees to be proved at trial as an element of damages." Fed.R.Civ.P. 54(d)(2)(A). In a diversity action like the one at bar, state law governs "[t]he grant of attorney's fees." Marrero-Ramos v. Univ. of P.R., 46 F.Supp.3d 127, 131 (D.P.R. 2014).
To this end, Puerto Rico Rule of Civil Procedure 44.1(d) permits the award of attorney's fees to a prevailing party only when the court finds that the losing party, or its counsel, has acted "obstinately or frivolously." P.R. Stat. Ann. tit. 32, App. V, § 44.1(d). Article 7 of Law 75 contains a fee-shifting provision permitting prevailing dealers to recover "attorney's fees" and "expert's fees." P.R. Laws Ann. tit. 10, § 278e. Where, as here, none of the parties have moved for a hearing, the issues have been thoroughly briefed and can be resolved on the papers, the matter is ripe for adjudication on the present record. See, In re Thirteen Appeals Arising Out of San Juan Dupont Plaza Hotel Fire Litig., 56 F.3d 295, 303 (1st Cir. 1995) ().
John Deere objects to the concession of costs or fees to Casco arguing, as a threshold matter, that Casco is contractually barred from recovering those items under the terms of the Dealer Agreement (Docket Nos. 336, pp. 2-4; 347, pp. 2-8). Article 20 of the Dealer Agreement reads:
20. COSTS AND FEES . The Dealer shall be responsible for the payment of all costs, fees and disbursements, including, without limitation all costs of collection, any stamp or other taxes or fees which are required and all reasonable fees and disbursements of counsel for the Company, which are incurred by the Company in connection with the enforcement or termination of this Agreement or the enforcement of any other document required to be executed and delivered hereunder.
(Docket No. 11-1, p. 9). John Deere alleges that under this provision, Casco is responsible for its own costs, fees and disbursements in connection with any dispute under the Agreement regardless of the outcome, and even in the event of termination (Docket Nos. 336, pp. 3-4; 347, p. 3). Casco counters that the article would require Casco to pay John Deere's costs and fees in case John Deere initiated an action to enforce or terminate the Dealer Agreement (Docket No. 355, p. 5).
With the comma placement, Article 20 imposes upon Casco the obligation to pay for all of John Deere's costs and fees if John Deere actively moved to enforce the contract. The word "termination" is placed between "enforcement" left and right, a word that BLACK'S LAW DICTIONARY (10th Ed.) defines as "[t]he act or process of compelling compliance with a law, mandate, command, decree, or agreement." A word is known by the company it keeps. Moving forward, and in keeping with this language, those enforcement actions would presumably call on John Deere to outlay resources in the form of costs and fees, and by extension, to recover them under Article 20. John Deere, however, was not enforcing anything here, but merely defending against the charge that it unjustly impaired and terminated the Dealer Agreement under Law 75.
Case law interpreting fee-shifting clauses with analogous language as that in Article 20, permits parties to recover fees only when the party has sued to compel or make effective an agreement on account of the other party's breach. See Housing Auth. of Champaign Cnty. v. Lyles, 395 Ill.App.3d 1036, 335 Ill.Dec. 463, 918 N.E.2d 1276 (2009) (); Bank of Am., N.A. v. Oberman, Tivoli & Pickert, Inc., 12 F.Supp.3d 1092, 1096 & 1099-1100 (N.D. Ill. 2014) ().
By the same token, the beneficiaries of these types of clauses (here, John Deere) are not entitled to fees if they are the ones who breach the agreement (or, as here, illegally impair and terminate the dealer), force the other party to sue them (here, Casco), and then lose, which is the fact pattern at issue in this case. See BKCAP, LLC v. CAPTEC Franchise Trust 2000-1, 688 F.3d 810, 815-816 (7th Cir. 2012) (...
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