Denton v. Pennymac Loan Servs., LLC, Civil Action No. 4:16cv32.

CourtUnited States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
Citation252 F.Supp.3d 504
Docket NumberCivil Action No. 4:16cv32.
Parties David D. DENTON, Plaintiff, v. PENNYMAC LOAN SERVICES, LLC, Defendant.
Decision Date12 May 2017

Craig Carley Marchiando, Leonard Anthony Bennett, Susan Mary Rotkis, Consumer Litigation Associates, Newport News, VA, for Plaintiff.

Justin Michael Sizemore, Reed Smith LLP, Richmond, VA, for Defendant.



This matter is before the Court on a motion seeking attorney's fees1 and costs, ECF No. 43, and a motion for leave to file supplemental authority, ECF No. 56, filed by Plaintiff David D. Denton ("Plaintiff"). Plaintiff's motion for attorney's fees and costs is filed pursuant to the Fair Credit Reporting Act, 15 U.S.C. §§ 1681o(a) (2) and 1681n(a) (3), based upon Plaintiff's acceptance of Defendant's Rule 68 Offer of Judgment. For the reasons discussed below, Plaintiff's motion seeking attorney's fees and costs is GRANTED, but the amount of such award is less than Plaintiff requested, and Plaintiff's motion for leave to file supplemental authority is DISMISSED as MOOT.

I. Factual and Procedural Background

On May 2, 2016, Plaintiff filed a complaint against Equifax Information Services, LLC, Experian Information Solutions, Inc., Trans Union, LLC ("Credit Reporting Agencies"), and PennyMac Loan Services, LLC ("Defendant"),2 alleging a violation of the Federal Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.

Compl. ¶ 1, ECF No. 1. According to Plaintiff, while acting as his mortgage servicer, Defendant incorrectly reported to the Credit Reporting Agencies that Plaintiff was thirty days delinquent on a mortgage payment, id. ¶ 28, and the Credit Reporting Agencies then deliberately and knowingly published this derogatory information regarding Plaintiff's credit, id. ¶ 29. Prior to filing his complaint, Plaintiff disputed the inaccuracies within his consumer credit report directly with Defendant and with each of the Credit Reporting Agencies. Pl.'s Opening Br. 1, ECF No. 44. However, the dispute process in which Plaintiff engaged did not resolve the dispute in his favor. Id.

Plaintiff alleged two specific claims against Defendant in its capacity as his mortgage servicer: Count Six-violation of 15 U.S.C. § 1681s–2 (b) (1) (A)"by failing to fully and properly investigate" Plaintiff's disputes regarding the inaccurate reporting of his mortgage payment, id. ¶ 70, and Count Seven–violation of 15 U.S.C. § 1681S–2 (b) (1) (B)"by failing to review all relevant information provided by the consumer reporting agencies," id. ¶ 91. While Plaintiff did not demand a specific dollar amount in his complaint, Plaintiff requested relief in the form of actual damages, statutory damages, punitive damages, costs and attorney's fees, specific performance and injunctive relief, and "such other relief the Court deems just and proper." Id. ¶ 99.

Plaintiff's billing records reflect contact with Defendant's counsel on August 18, 2016, to inquire about settlement. Billing Records 19, ECF No. 44–1. Plaintiff initially offered to settle the case against Defendant for $120,000, and on November 10, 2016, Defendant responded with a counteroffer to settle for $5,000. Emails Between Counsel, ECF No. 48–1, at 15. Plaintiff's counsel immediately responded, reducing Plaintiff's settlement demand to $119,000, but explaining that "[w]e will not counter a response that is outside of a reasonable settlement range." Id. As of November 10, 2016, when this settlement discussion occurred, Plaintiff had accrued attorney's fees in the amount of $51,193.75. 2d Rotkis Decl. ¶ 3, ECF No. 52–1. Between November 10, 2016, and November 30, 2016, the parties continued to pursue discovery, including coordinating, preparing for, and taking depositions. Id. ¶ 4. Then, on November 30, 2016, Defendant made the following Offer of Judgment:

Pursuant to Rule 68 of the Federal Rules of Civil Procedure, Defendant Pennymac Loan Services, LLC N.A. ("Pennymac"), by counsel, hereby offers to allow judgment to be taken against it in this action as to all claims asserted against it by Plaintiff David D. Denton ("Plaintiff"), in the amount of (a) Five Thousand Dollars ($5,000.00) for actual, statutory, and/or punitive damages; and (b) all reasonable costs incurred in this action to the date of this offer, including reasonable attorneys' fees incurred as of the date of this offer, as determined by the Court, payable to Plaintiff's Counsel.

Offer of J., ECF No. 41–1 (emphasis added). The same day, Plaintiff accepted the Offer of Judgment and filed a notice of acceptance with the Court. Not. of Acceptance of R. 68 Offer of J., ECF No. 41.

After the parties failed to agree on reasonable attorney's fees, Plaintiff filed a motion seeking attorney's fees and costs, ECF No. 43, and a memorandum and exhibits in support, ECF No. 44. On January 18, 2017, Defendant filed a brief in response, arguing that the Court (1) should reduce Plaintiff's requested fee award due to Plaintiff's limited success and (2) should exclude fees incurred after the Offer of Judgment. ECF No. 48, at 5, 13. Plaintiff filed a reply brief on January 28, 2017, together with additional supporting documentation.

ECF No. 52. On April 7, 2017, Plaintiff submitted a motion for leave to file supplemental authority in support of his motion for attorney's fees and costs. ECF No. 56. Defendant responded with a brief in opposition on April 20, 2017. ECF No. 57. Having been fully briefed, Plaintiff's motion for attorney's fees and costs, and Plaintiff's motion to supplement, are ripe for review.

II. Standard for Attorney's Fees Award
A. Entitlement to a Fee Award

Traditionally, under the "American Rule," each party in a lawsuit bears its own attorney's fees. Hensley v. Eckerhart, 461 U.S. 424, 429, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). However, Congress may shift the attorney-fee burden through a fee-shifting statute, id., such as the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, et seq. Under FCRA, Congress directed courts to award "the costs of the action together with reasonable attorney's fees" to a consumer "in the case of any successful action to enforce liability" under this statute. 15 U.S.C. § 1681o ; see also 15 U.S.C. § 1681n(a)(3).

The parties also may shift and/or limit the attorney-fee burden, such as by an offer of judgment made pursuant to Federal Rule of Civil Procedure 68(a). See Grissom v. The Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008) (holding that, under the Rule 68 offer of judgment in the case, plaintiff was entitled to attorney's fees up to the date of the offer). Under Rule 68(a), a defendant may "serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued." Fed. R. Civ. P. 68(a). If, within 14 days, the plaintiff serves written notice accepting the defendant's offer of judgment, the clerk must then enter the judgment. Id.

After a plaintiff accepts a Rule 68 offer of judgment, a plaintiff may recover attorney's fees according to the "specified terms" in the offer of judgment. Fed. R. Civ. P. 68(a) ; Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, 12 Fed. Prac. & Proc. Civ. § 3005.1 (2d ed. Apr. 2017 update) ("But here again defendants can provide otherwise in their [ Rule 68 ] offers; if the offer explicitly limits the fee award to fees incurred before the date of the offer, further legal work should not be included."); see Guerrero v. Cummings, 70 F.3d 1111, 1114–1113 (9th Cir. 1995) (holding that an offer of judgment for "reasonable attorney fees and costs incurred ... prior to the date of this offer in an amount to be set by the court" unambiguously excluded attorney's fees in preparation of the fee petition). Unless the "specified terms" in the offer of judgment provide otherwise, a plaintiff has two potential avenues for recovery of attorney's fees: (1) under Rule 68, as "costs then accrued," or (2) under a fee-shifting statute, such as FCRA. Cooper v. Verifications, Inc., No. 1:04–CV–385–TS, 2008 WL 5332190, at *4 (N.D. Ind. 2008).

B. Calculation of a "Reasonable" Fee Award

If the plaintiff is entitled to attorney's fees, the Court must then calculate "reasonable" attorney's fees for the case. The United States Court of Appeals for the Fourth Circuit has outlined a three step framework for calculating a reasonable attorney's fee:

First, the court must "determine the lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate." Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009). To ascertain what is reasonable in terms of hours expended and the rate charged, the court is bound to apply the factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717–19 (5th Cir. 1974). Id. at 243–44. Next, the court must "subtract fees for hours spent on unsuccessful claims unrelated to successful ones." Id. at 244. Finally, the court should award "some percentage of the remaining amount, depending on the degree of success enjoyed by the plaintiff." Id.

McAfee v. Boczar, 738 F.3d 81, 88 (4th Cir. 2013), as amended (Jan. 23, 2014) (footnote omitted).3

The calculation of a lodestar figure is "[t]he most useful starting point for determining the amount of a reasonable fee," because it "provides an objective basis on which to make an initial estimate of the value of a lawyer's services." Hensley, 461 U.S. at 433, 103 S.Ct. 1933 ; see Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010) (characterizing the lodestar calculation as "the guiding light of ... fee-shifting jurisprudence") (quotation marks and citation omitted). The fee applicant bears the burden of proving the reasonableness of the hours expended and the requested hourly rates, which generally requires submission of the attorney's own affidavit and timesheets as well as " 'satisfactory specific evidence of the...

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