Ja, LLC v. Sarria (In re Sarria)
| Citation | 606 B.R. 854 |
| Decision Date | 20 September 2019 |
| Docket Number | Adv. Proceeding No. 18-06019-JMM,Bankruptcy Case No. 18-00572-JMM |
| Parties | IN RE: Eduardo L. SARRIA and Heather R. Sarria, Debtors. JA, LLC d/b/a Leku Ona, Plaintiff, v. Eduardo L. Sarria, Defendant. |
| Court | United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Idaho |
Alex McLaughlin, GIVENS PURSLEY, LLP, Boise, Idaho, Attorney for Plaintiff.
Matthew Bennett, FOLEY FREEMAN, PLLC, Meridian, Idaho, Attorney for Defendant.
JOSEPH M. MEIER, CHIEF U. S. BANKRUPTCY JUDGE
Before the Court is a motion to consider an award of costs and attorneys' fees (the "Fee Motion") filed by JA, LLC d/b/a Leku Ona (the "Plaintiff"). Dkt. No. 182. On June 25, 2019, Plaintiff obtained a judgment of $2,490 in its action under § 523(a)(2)(A) against Eduardo L. Sarria (the "Defendant"). Dkt. Nos. 178, 179.1 Pursuant to that judgment, Plaintiff now seeks an award of attorneys' fees under Idaho Code § 12-120(3), which provides for awards of attorneys' fees to prevailing parties in cases involving commercial transactions. Dkt. No. 182. Plaintiff also requests an award of costs as the prevailing party under Local Bankruptcy Rule 7054.1. Id. Defendant objected to the Fee Motion on July 23, 2019, Dkt. No. 191, and Plaintiff replied on August 22, 2019. Dkt. No. 194.
On August 29, 2019, the Court heard oral argument on the Fee Motion, and took the matter under advisement. Dkt. No. 197. The Court has considered the parties' briefing and arguments, and this Memorandum of Decision sets forth the Court's findings, conclusions, and reasons for its disposition of the Fee Motion. Rules 7052; 9014.
Defendant and his wife, Heather Sarria, filed a joint chapter 7 petition on May 2, 2018.2 On June 11, 2018, Plaintiff filed an adversary proceeding against both debtors under § 523(a)(2)(A). Dkt. No. 1. Plaintiff alleged Defendant incurred a debt to Plaintiff by false pretenses, false representations, or actual fraud when he billed Plaintiff for food and wine he did not deliver.3 Id. In the adversary proceeding, Plaintiff asked this Court to determine the amount of the debt owed by Defendant to Plaintiff based on Defendant's fraudulent conduct and to order any such debt nondischargeable in Defendant's chapter 7 bankruptcy case. Id. In its complaint, Defendant requested a judgment "in an amount to be proven at trial." Id. at 5. Defendant answered the complaint on July 6, 2018. Dkt. No. 6. On August 23, 2018, the Court issued its pretrial order setting a discovery deadline of March 29, 2019, a motions deadline of April 12, 2019, and trial dates of May 15 and 16, 2019. Dkt. No. 12.
Before the pretrial order was issued, Plaintiff served its first set of discovery on Defendant. Dkt. No. 10. After the pretrial order was issued, Plaintiff propounded three more sets of discovery on September 27, 2018, December 5, 2018, and February 22, 2019. Dkt. Nos. 15, 23, 90. Defendant served two sets of its own discovery on Plaintiff on July 30, 2018, and February 14, 2019. Dkt. Nos. 10, 82.
On September 27, 2018, Plaintiff issued notices to take the depositions of Defendant and Heather Sarria. Dkt. No. 16, 17. Those two depositions were taken on November 13 and 14, 2018. Dkt. No. 48 at 3. On October 11, 2018, Plaintiff served subpoenas on Justo Sarria and George Mendiola. Dkt. Nos. 18, 19. On November 21, 2018, Plaintiff served a subpoena on D.L. Evans Bank. Dkt. No. 22. Shortly thereafter, on December 5, 2018, Plaintiff filed its "Notice of Subpoenas," in which it announced its intent to subpoena seventeen separate entities and individuals to appear at depositions and/or produce documents.4 Dkt. No. 24. On January 18, 2019, Plaintiff subpoenaed documents from Sunwest Bank. Dkt. No. 51.
On January 18, 2019, in response to the high volume of subpoenas issued by Plaintiff, Defendant filed a motion for a protective order, seeking to limit the number of depositions under Civil Rule 30(a)(2).5 Dkt. No. 48. On January 24, 2019, Plaintiff vacated its subpoenas as to the requests for testimony of six proposed deponents.6 Dkt. No. 55. On January 30, 2019, Plaintiff vacated the subpoena it had previously served on John Krueger. Dkt. No. 60. Then, on February 4, 2019, presumably in an effort to clarify the record in advance of a hearing on the motion for a protective order, Plaintiff filed its "Notice of Depositions Scheduled," in which it listed the seven depositions it still intended to take as of the time of the hearing.7 Dkt. No. 64. Over the next eight days, Plaintiff vacated three more subpoenas as to the requests for testimony of Neal Custer, Clay Christensen, and Patricia Elrod. Dkt. Nos. 67, 73. On February 14, 2019, Plaintiff issued notice of its intent to depose Joe Artiach, Marisa Lopez, and Andoni Artiach. Dkt. Nos. 78, 79, 80. On March 18, 2019, Plaintiff scheduled second depositions with Defendant and Heather Sarria. Dkt. Nos. 103, 104.
On February 4, 2019, the Ada County Prosecutor's Office (the "ACPO") filed a motion to quash the subpoena of one of its attorneys, Sherry Morgan (hereinafter, "Morgan"). Dkt. No. 65. The ACPO vigorously sought to prevent Plaintiff from deposing Morgan regarding the ACPO's exercise of prosecutorial discretion in its decision not to prosecute the Defendant based on a report from the Boise Police Department. After extensive briefing, and a hearing on March 28, 2019, the Court ordered that Plaintiff could not question Morgan about the ACPO's exercise of prosecutorial discretion, but that Morgan would otherwise have to respond to deposition questions regarding her personal communications with the Defendant and Heather Sarria. Dkt. No. 120. After the Court issued its order on the motion to quash, the ACPO filed a motion to consider relief from that order. Dkt. No. 152. After yet more briefing on the issues, as well as another hearing, the ACPO's motion to consider relief was denied on May 14, 2019, and the parties then turned their attention towards trial, which was to begin the next day. Dkt. No. 169.
All the while, and partially as a result of the extensive discovery sought as described above, the parties filed and argued a number of motions. First, on January 17, 2019, Plaintiff filed a motion to strike affirmative defenses, which was denied after a hearing on February 26, 2019. Dkt. Nos. 45, 91. One day later, on January 18, 2019, Defendant filed its motion for a protective order, in which it sought to limit Plaintiff's discovery as described above. Dkt. No. 48. This motion was also denied, though the Court notes the motion had merit at the time it was filed and might have been granted had Plaintiff not remediated the issues raised in the motion by preemptively vacating some of its depositions so as to comply with the deposition limits in Civil Rule 30(a)(2). Next, as discussed above, the ACPO filed its motion to quash on February 4, 2019. Dkt. No. 65.
On March 6, 2019, Defendant filed a motion for summary judgment that was denied on April 15, 2019. Dkt. Nos. 94, 135, 137. While the motion for summary judgment was pending, Plaintiff successfully moved to extend the date of the final hearing on that motion because of issues related to Morgan and the ACPO's motion to quash. Dkt. No. 123. On March 28, 2019, Defendant filed a motion to dismiss the adversary proceeding, which was denied on April 3, 2019. Dkt. Nos. 116, 133. Lastly, on April 22, 2019, Plaintiff brought a motion in limine, seeking to clarify the scope of admissible evidence at trial. Dkt. No. 138. The motion in limine was granted after a hearing on May 8, 2019. Dkt. No. 159.
The parties conducted a two-day trial on May 15 and 16, 2019. Plaintiff elected to have two attorneys, Michael Roe and Alex McLaughlin, and a paralegal, Keri Moody, attend both days of trial (hereinafter "Roe," "McLaughlin," and "Moody" respectively). Defendant was represented at trial by a single attorney, Matthew Bennett. At the conclusion of trial, the Court took the matter under advisement. On June 25, 2019, the Court issued its memorandum of decision, accompanied by an order and judgment awarding Plaintiff $2,490 in nondischargeable damages. Dkt. Nos. 178, 179.
On July 9, 2019, Plaintiff filed its Fee Motion, a memorandum supporting its request for fees, a sworn declaration of Roe, and a bill of costs. Dkt. Nos. 182, 183, 184, 185. Roe's declaration contains a "Fees and Costs Listing" that indicates Plaintiff's attorneys' fees in the case totaled $233,076.50 for 779.9 hours of work. Dkt. No. 184 at 63. Plaintiff's counsel voluntarily reduced its request for attorneys' fees to $175,000, citing concerns about "the disparity between the amount in controversy and the amount awarded." Dkt. No. 183 at 3; Dkt. No. 184 at 9. The Court has reviewed Plaintiff's "Fees and Costs Listing" and determined it includes $74,799.50 in attorneys' fees for discovery and $24,703 in attorneys' fees related to the ACPO's motion to quash. Dkt. No. 184, Ex. A. Plaintiff also seeks an award of $7,981.31 in costs for transcript expenses, deposition costs, witness fees and mileage, service of process expenses, and other miscellaneous items. Dkt. No. 183 at 2.
The Supreme Court has held that, under § 523(a)(2)(A), any debt incurred by fraud, including attorneys' fees and costs, is nondischargeable in bankruptcy. Cohen v. de la Cruz , 523 U.S. 213, 223, 118 S.Ct. 1212, 140 L.Ed.2d 341 (1998) ; see also Kilborn v. Haun (In re Haun) , 396 B.R. 522, 526 (Bankr. D. Idaho 2008) (). "That said, to recover attorneys' fees under Cohen , the creditor must be able to recover the fees outside the bankruptcy court under state or federal law." Haun , 396 B.R. at 526 ...
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