Harrison Co. v. A-Z Wholesalers, Inc.

• Docket Number: Civil Action 3:19-CV-1057-B
• Decision Date: 24 August 2023
• Parties: HARRISON COMPANY, L.L.C., Plaintiff, v. A-Z WHOLESALERS, INC. and BARKAT G. ALI, Defendants.
• Court: U.S. District Court — Northern District of Texas

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HARRISON COMPANY, L.L.C., Plaintiff, v. A-Z WHOLESALERS, INC. and BARKAT G. ALI, Defendants.

Civil Action No. 3:19-CV-1057-B

United States District Court, N.D. Texas, Dallas Division

August 24, 2023

MEMORANDUM OPINION AND ORDER

JANE J. BOYLE UNITED STATES DISTRICT JUDGE

Before the Court is Plaintiff Harrison Company, L.L.C. (“Harrison”)'s Renewed Motion for Award of Interest and Attorneys' Fees (Doc. 174). Because Harrison is entitled to interest and attorneys' fees but not the total amount requested, the Court GRANTS in part and DENIES in part the Renewed Motion.

I. BACKGROUND

On May 2, 2019, Harrison filed this breach-of-contract and breach-of-guaranty action against Defendant A-Z Wholesalers Inc. (“A-Z”) and A-Z's president and CEO Defendant Barkat Ali. Doc. 1, Compl. Harrison is a regional food distributor that fills orders and distributes products to its customers from its warehouse in Bossier City Louisiana. Doc. 135, Pl.'s App., 2. A-Z is a wholesale distributor that sells various food products, beverages, tobacco products, and other items, primarily to convenience store operators. Doc. 138, Defs.' App., 246.

In March 2011, Harrison executed a credit agreement (the “Credit Agreement”) with AZ to supply A-Z with various products. Doc. 135, Pl.'s App., 22. At the same time, the parties executed a separate guaranty (the “Guaranty”). Id.; Doc. 138, Defs.' App., 24. The Guaranty obligated A-Z to pay “any interest on all past due sums at the rate of 22 percent per annum.” Doc. 138, Defs.' App., 24. Regarding attorneys' fees, it provided, “[A-Z] agrees to pay, in the event the account becomes delinquent and is turned over to an attorney or agency for collection, a reasonable fee. In no event shall such reasonable fee be less than 33%% of the balance due plus all attendant collection costs.” Id. Ali similarly agreed to pay a reasonable fee of no “less than 33%% of the balance due plus all attendant collection costs” if the account became delinquent. Id. And Ali agreed to “pay [Harrison] on demand any sum which may become due to [Harrison] by [A-Z] whenever [A-Z] shall fail to pay the same.” Id. After the parties executed the Credit Agreement and Guaranty, Harrison began selling A-Z cigarettes and other products. Doc. 135, Pl.'s App., 22. However, at some point thereafter, A-Z failed to make payments for the goods that it was receiving. See Doc. 53, Pl.'s App., 16-17.

On May 2, 2019, Harrison sued A-Z and Ali to collect this unpaid balance. Doc. 1, Compl. On July 8, 2021, the Court entered summary judgment in favor of Harrison, awarding Harrison damages totaling $2,575,335.73 plus reasonable attorneys' fees and interest to be determined later. Doc. 153, Mem. Op. & Order, 21. Shortly thereafter, Harrison filed a Motion for Award of Interest, Attorneys' Fees, and Costs (the “Original Motion”). Doc. 154, Orig. Mot. However, before the Court ruled on that motion, Defendants filed a notice of appeal. Doc. 169, Notice Appeal. In light of the appeal, the Court denied the Original Motion without prejudice pending the outcome of the appeal. Doc. 171, Order. The Fifth Circuit affirmed the Court's summary judgment order, Harrison Co. v. A-Z Wholesalers, Inc., 44 F.4th 342 (5th Cir. 2022), and entered judgment on September 2, 2022, Doc. 173, J. On November 15, 2022, Harrison filed a Renewed Motion for Award of Interest and Attorneys' Fees (the “Renewed Motion”) and incorporated the Original Motion by reference under Federal Rule of Civil Procedure 10(c). Doc. 174, Renewed Mot., 2. Harrison argues Louisiana law governs the prejudgment interest and attorneys' fees awards. Id. at 3; Doc. 154, Orig. Mot., 5-7. In the Renewed Motion, Harrison requests

(a) $1,333,388.89 in pre-judgment interest[;] (b) $1,289,879.12 (or, alternatively $998,743.37 if the Court determines that Texas law is applicable) in reasonable attorneys' fees for work Harrison's attorneys performed in this Court; (c) $78,065 in reasonable attorneys' fees for work Harrison's attorneys performed defending against Defendants' appeal; (d) post-judgment interest on the amount the Court awarded in its September 7, 2021 Final Judgment in accordance with 28 U.S.C. § 1961(a); (e) post-judgment interest on the amount the Court awards in response to Harrison's Renewed Motion in accordance with 28 U.S.C. § 1961(a).

Doc. 174, Renewed Mot., 5-6. Defendants respond that they do not owe prejudgment interest, or, if they do, the interest rate should not exceed 7%. See Doc. 179, Renewed Mot. Resp., 1-3. They also argue that Harrison's requested attorneys' fees should be denied because Harrison has not shown the fees are reasonable. See id. at 3-6. The Court considers the Renewed Motion below.

II. ANALYSIS

In its Motion, Harrison requests five awards: (1) prejudgment interest on the principal balance; (2) trial attorneys' fees; (3) post-judgment interest on the principal balance, trial attorneys' fees, and prejudgment interest; (4) appellate attorneys' fees; and (5) post-judgment interest on the awarded appellate attorneys' fees. Doc. 174, Renewed Mot., 5-6. As outlined below, the Court awards Harrison its requested prejudgment interest and trial attorneys' fees but reduces its appellate fee award. The Court also awards post-judgment interest on these awards and the outstanding principal balance.

The Court begins with prejudgment interest. At summary judgment, the Court awarded prejudgment interest but did not decide the amount or the governing law. Harrison argues Louisiana law applies, and Defendants do not dispute its application. The parties' Guaranty provides for prejudgment interest at a rate of 22%. Under Louisiana law, this rate is enforceable. The Court therefore awards Harrison prejudgment interest on the principal balance at a rate of 22% per annum, for a total of $1,333,388.89 in prejudgment interest.^[1]

Similarly, the Court awarded attorneys' fees at summary judgment but did not determine the amount or governing law. Harrison again argues Louisiana law applies, and Defendants again do not brief the issue. The Guaranty specifies a 33 1/3% rate for attorneys' fees. Harrison requests a fee award equal to 33% of the unpaid principal balance and prejudgment interest award. This rate is enforceable under Louisiana law because it is not clearly excessive. The Court therefore awards Harrison $1,289,879.12 in trial attorneys' fees.^[2] On the principal balance, trial attorneys' fees, and prejudgment interest awards, the Court awards post-judgment interest from September 7, 2021, at the federal interest rate of 0.07% per annum.

The Court also awards Harrison appellate attorneys' fees and post-judgment interest on that award. To determine appellate attorneys' fees, the Court applies the Texas lodestar. The Court reduces the requested rate and hours and awards Harrison $60,637.50 in appellate attorneys' fees. And finally, the Court awards Harrison post-judgment interest on the appellate fee award, from the date of this judgment, at the federal interest rate of 5.36% per annum.

A. Prejudgment Interest on the Principal Balance

At summary judgment, the Court held Harrison is entitled to prejudgment interest from Defendants. Doc. 153, Mem. Op. & Order, 19-20. The Court did not decide the amount of interest or what state's law governs the issue. See id. Harrison argues Louisiana law applies and requests prejudgment interest at a rate of 22% per annum, as provided in the Guaranty. See Doc. 154, Orig. Mot., 5; Doc. 174, Renewed Mot., 3. In their Renewed Motion Response, Defendants do not dispute that Louisiana law governs. See Doc. 179, Renewed Mot. Resp., 1-3. Instead, they argue that, under either Texas or Louisiana law, they do not owe prejudgment interest, or, if they do, the interest rate should not exceed 7%. See id. Because Defendants do not dispute that Louisiana law applies, the Court applies Louisiana law on the issue of prejudgment interest. See Friou v. Phillips Petrol. Co., 948 F.2d 972, 974 (5th Cir. 1991) (“A party who inadequately briefs an issue is considered to have abandoned the claim.”); Harrison Co., 44 F.4th at 346 n.1 (5th Cir. 2022) (“A-Z and Ali claim Texas law applies. Harrison claims there is no ‘substantive difference between Texas and Louisiana law' for its claims and so does not dispute applying Texas law. We thus apply Texas law.”).^[3] “State law governs the award of prejudgment interest in diversity cases.” Harris v. Mickel, 15 F.3d 428, 429 (5th Cir. 1994). Under Louisiana law, “[w]hen the object of the performance [of a contract] is a sum of money, damages for delay in performance are measured by the interest on that sum from the time it is due, at the rate agreed by the parties.” La. Civ. Code Ann. art. 2000. Thus, although conventional interest rates are capped at 12% per annum, see La. Stat. Ann. § 9:3500(C)(1), courts applying Louisiana law have enforced prejudgment interest at higher rates when the parties' contract so provides, see, e.g., H-S Int'l, Inc. v. ABO Ventures, Inc., 2016 WL 614698, at *4 (E.D. La. Feb. 16, 2016) (awarding prejudgment interest at the contractual rate of 18%); Emergency Staffing Sols., Inc. v. Morehouse Par. Hosp. Serv. Dist. No. 1, 2011 WL 1337371, at *4 (W.D. La. Apr. 7, 2011) (same). Therefore, under Louisiana law, Harrison is entitled to 22% prejudgment interest under the Credit Agreement.

Under Louisiana law, courts may award prejudgment interest in a breach-of-contract case, “run[ning] from the date of judicial demand,” see Trans-Glob. Alloy Ltd. v First Nat. Bank of Jefferson Par., 583 So.2d 443, 457 (La. 1991),^[4] through the date of judgment, see, e.g., Danna v. Ritz-Carlton Hotel Co., 2020-0116, p. 9 (La.App. 4 Cir. 3/24/21). So Harrison is entitled to 22% interest on the outstanding...