Good Funds Lending, LLC v. Westcor Land Title Ins. Co.
| Decision Date | 30 March 2020 |
| Docket Number | Civil Action No. 19-cv-00861-RM-MEH |
| Parties | GOOD FUNDS LENDING, LLC, Petitioner, v. WESTCOR LAND TITLE INSURANCE COMPANY, Respondent. |
| Court | U.S. District Court — District of Colorado |
ORDER
This matter is before the Court on Respondent Westcor Land Title Insurance Company's ("Westcor") "Motion for Judgment on the Pleadings and, if applicable, for Entry of an Order of Satisfaction" (ECF No. 14) (the "Motion"). For the reasons set forth below, the Court grants the Motion in part and denies the Motion in part.
On March 22, 2019 Good Funds Lending, LLC ("GFL") filed its Amended Petition to Confirm Arbitration Award for Entry of Judgment (the "Amended Petition"). (ECF No. 3.) The Amended Petition is related to an arbitration between Westcor and GFL which was conducted as a result of a title insurance coverage claim handling dispute. (ECF No. 14, ¶¶ 2-6.) GFL, which is a commercial loan provider, loaned $220,700 to C3 Investments LLC ("C3"), and the loan was insured by Westcor ("Title Policy"). (ECF No. 14, ¶ 2.) C3 defaulted on the loan and despite selling the property securing the loan, GFL was left with a deficiency of $198,350.19. (ECF No. 14, ¶ 3.) Prior to the foreclosure sale, GFL filed a claim on the Title Policy and spent $1,820.25 on a survey related to the claim. (ECF No. 14, ¶ 4.)
GFL objected to how Westcor handled the claim and initiated a claim with the National Arbitration Forum around June 29, 2017. (ECF No. ¶ 5.) After a five-day evidentiary hearing, the Arbitrator issued his Final Award on December 20, 2018. (ECF No. 14, ¶ 7.) The Arbitrator found in favor of GFL on its (1) breach of Title Policy and (2) breach of the covenant of good faith and fair dealing claims. (Id.) Consequently, the Arbitrator awarded GFL the amount of its deficiency ($198,350.19) plus the cost of the survey ($1,820.25) for a total award of $200,170.44, plus 8% statutory interest compounded annually to run from February 10, 2016 until paid. (Id.) However, the Arbitrator found GFL's claims of bad faith, breach of closing instructions, breach of fiduciary duty, and exemplary damages lacked substantial justification and awarded Westcor $70,129.38 (consisting of $48,726 in attorney fees and $21,403.38 in costs). (Id.)
On January 9, 2019, GFL filed a Request and Motion for Modification to Clarify Interest Rate on Compensatory Damages Award to GFL Pursuant to C.R.S. Section 13-22-220(1)(c) ("Clarification Motion"). (ECF No. 14, ¶ 8.) Notably, the Clarification Motion asked the Arbitrator to adjust the interest portion of the Final Award to reflect a 25% default interest rate, compounded daily. (ECF No. 14, ¶ 8.) The Arbitrator found GFL's Clarification Motion was disingenuous and lacked substantial justification, and instead of amending the Final Award, the Arbitrator issued a separate order directing GFL to pay Westcor's attorney fees ($1,000) and additional arbitrator fees ($750) incurred in responding to the Clarification Motion ("Sanction Order").1 (Id.)
On February 8, 2019, Westcor delivered to GFL's counsel a letter and check payable toGFL in the amount of $181,083.00. (ECF Nos. 12-5; 14, ¶ 10.) Westcor calculated the amount based on the following table, which was contained within a Notice of Tender separate from the letter delivered earlier that day but also served on counsel for GFL on February 8, 2019. (ECF No. 12-5, at 8.)
Amount Owed Calculation Award to Good Funds Debt $ 198,350.19 Survey $ 1,820.25 Total $ 200,170.44 Interest Rate: 8%, compounded annually Year 1 (Feb. 10, 2016-Feb. 10, 2017)
$ 16,013.64 Subtotal $ 216,184.08 Year 2 (Feb. 10, 2017-Feb. 10, 2018)
$ 17,294.73 Subtotal $ 233,478.80 Year 3 (Feb. 10, 2018-Feb. 10, 2019)
$ 18,678.30 Subtotal $ 252,157.11 One day interest [(.08/365)*$252,157.11]
$ 55.27 Total due Good Funds as of Feb. 11, 2019
$ 252,212.37 Award to Westcor Fees $ 48,726.00 Costs $ 21,403.38 Fees on Motion $ 1,000.00 Total due Westcor $ 71,129.38 Net payment due Good Funds $ 181,082.99
According to Westcor's calculations, $181,083.00 was the difference between what GFL was entitled to as of February 11, 2019 minus the award to Westcor and the Sanction Order, rounded to the nearest dollar. (Id.)
On March 12, 2019, GFL filed the Amended Petition, which sought to confirm the Final Award and did not reference the Clarification Motion or Sanction Order. (ECF No. 3.) However, in its Answer to the Amended Petition ("Answer"), Westcor attached a copy of the ClarificationMotion, its Response to the Clarification Motion, and the Sanction Order. (ECF No. 12, ¶ 17.)
Westcor's Motion seeks one of three alternatives. First, Westcor seeks an order dismissing the Amended Petition as moot because Westcor has already satisfied the Final Award through its payment on February 8, 2019. (ECF No. 14, at 7-9.) Alternatively, if the Amended Petition is not moot, then Westcor requests the Court to enter judgment confirming the Final Award, in its entirety, including the additional $1,000 in attorneys' fees awarded to Westcor as a result of GFL's Clarification Motion, and enter an order of satisfaction. (ECF No. 14, at 10-11.) If the Court confirms the Final Award but cannot determine satisfaction, then Westcor argues post-judgment interest should accrue at a rate in accordance with 28 U.S.C. § 1961. (ECF No. 14, at 13-14.) Finally, Westcor argues that each party should bear their own attorneys' fees and costs. (ECF No. 14, at 11-13.)
A motion for judgment on the pleadings under Fed. R. Civ. P. 12(c) is reviewed under the same standard applicable to a motion under Rule 12(b)(6). Landmark American Ins. Co. v. VO Remarketing Corp., 619 Fed. App'x 705, 708 (10th Cir. 2015) (citing Aspenwood Inv. Co. v. Marinez, 355 F.3d 1256, 1259 (10th Cir. 2004)). "A motion for judgment on the pleadings under Rule 12(c) is treated as a motion to dismiss under Rule 12(b)(6)." Zevallos v. Allstate Property and Casualty Co., 776 Fed. App'x 559, 561 n.1 (10th Cir. 2019) (citing Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1160 (10th Cir. 2009)). The courts examine whether the complaint's allegations are "enough that, is assumed to be true, the plaintiff plausibly (not just speculatively) has a claim for relief." Corder v. Lewis Palmer Sch. Dist. No. 38, 566 F.3d 1219, 1224 (10th Cir. 2009); see id. at 1223.2 The Tenth Circuit, however,recognizes circumstances under which a court when ruling on a Rule 12(b) or 12(c) motion may consider documents or facts outside the complaint. See Zevallos, 776 Fed. App'x at 561 n.1 (citing Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010) (collecting cases)).
The Court "accepts all facts pleaded by the non-moving party as true and grant all reasonable inferences from the pleadings in favor of the same." Colony Ins. Co. v Burke, 698 F.3d 1222, 1228 (10th Cir. 2012). A motion for a judgment on the pleadings "only has utility when all material allegations of fact are admitted or not controverted in the pleadings and only questions of law remain to be decided by the district court." Tuttle, 2019 WL 2208513, at *2 (). In other words, to prevail on a motion for judgment on the pleadings, the movant must establish an absence of any issue of material fact and entitlement to judgment as a matter of law. Colony, 698 F.3d at 1228.
Westcor first contends this matter is moot because it made full payment on the Final Award on February 8, 2019 - with interest calculated until February 11, 2019 - more than a month before GFL initiated this action. (ECF No. 14, at 7.) As a result, Westcor contends "[t]here is nothing left to fight about." (Id.)
This district has addressed this identical issue on at least two occasions, and the Court is persuaded by the rationale in these cases. In Gorsuch, Ltd. v. Wells Fargo Nat'l Bank Ass'n, the court held a confirmation action is a "summary proceeding separate and distinct from an action to enforce the award." No. 11-cv-00970-PAB-MEH, 2013 WL 4494304, at *2 (D. Colo. Aug. 21, 2013). See also Will v. Parsons Evergreene, LLC, No. 08-cv-00898-DME-CBS, 2011 WL2792398, at *1 (D. Colo. July 15, 2011) (); Zeiler v. Deitsch, 500 F.3d 157, 169 (2d Cir. 2007) ( ). The Gorsuch court determined the plain language of the Federal Arbitration Act ("FAA") did not allow a court to deny a petition to confirm an award simply because it had arguably been satisfied. Gorsuch, 2013 WL 4494304, at *2.
The Gorsuch court rejected the same two cases on which Westcor relies for its argument here: Local 2414 of United Mine Workers of America v. Consolidation Coal Co., 682 F. Supp. 399 (S.D. Ill. 1988) and Derwin v. General Dynamics Corp., 719 F.2d 484 (1st Cir. 1983). Gorsuch, 2013 WL 4494304, at *2. While the Gorsuch court rejected Local 2414 and Derwin on the basis that "[c]oncerns pertaining to dispute resolution in the context of organized labor are not relevant to the matter at hand," (Gorsuch, 2013 WL 4494304, at *2) this Court does not make such a pronouncement. Instead, the Court finds neither Local 2414 nor Derwin dealt with the specific issue of whether purported satisfaction moots the dispute prior to initiating an action to confirm the award. Consequently, the Court finds Local 2414 and Derwin inapplicable.
This Court is persuaded, however, by the rationale that section 9 of the FAA is clear in what it...
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