Keybank, N.A. v. Hartmann, CIVIL ACTION NO. 6:12-cv-49-GFVT
| Decision Date | 30 December 2014 |
| Docket Number | CIVIL ACTION NO. 6:12-cv-49-GFVT |
| Parties | KEYBANK, N.A., PLAINTIFF, v. RANDALL T. HARTMANN, and EVONNE D. HARTMANN, DEFENDANTS. |
| Court | U.S. District Court — Eastern District of Kentucky |
This matter is before the Court on Plaintiff Keybank, N.A.'s ("Keybank") Amended Motion for Attorney's Fees. [R. 59]. Defendants, Randall T. and Evonne D. Hartmann, did not file a response to Keybank's motion. This matter is fully briefed and ripe for review.
The instant matter centers around Randall Hartmann's personal guarantee of all obligations of Lake Cumberland Marine, LLC ("LCM") to Keybank. LCM was a luxury boat retailer. [R. 51-1 at ¶ 6]. Mr. Hartmann was LCM's managing member, and Evonne Hartmann, Mr. Hartmann's wife, was the owner of LCM's stock. [R. 1-2 at 48]. Keybank and LCM entered into a demand floor plan agreement whereby Keybank provided LCM with a $10,000,000 line of credit in exchange for a security interest in certain business assets of LCM. [R. 51-3 at 3-4]. Additionally, Mr. and Mrs. Hartmann each personally guaranteed LCM's obligations to Keybank. [R. 51-1 at ¶¶ 7-8].
In July 2009, LCM filed a voluntary bankruptcy petition. [R. 51-3 at 6]. Following liquidation of collateral and negotiations between LCM and Keybank, the parties agreed that LCM owed Keybank $1,104,989.86 in outstanding debt. [R. 51-1 at ¶ 19]. However, despite this agreement, the Hartmanns failed to make any payments to Keybank pursuant to their personalguaranties. [R. 51-1 at ¶¶ 36, 46-47].
Consequently, Keybank filed the instant action asserting claims against the Hartmanns sounding in breach of personal guaranty. [R. 1]. On February 18, 2014, this Court granted summary judgment in favor of Keybank. [R. 52 at 19]. The Court awarded Keybank judgment jointly and severally against the Hartmanns in the amount of $1,383,372.73 as of October 22, 2013, plus per diem interest of $189.40 from that date until entry of judgment. [R. 52 at 19]. Further, the Court determined that Keybank was entitled to reasonable attorneys' fees and costs in an amount to be determined by Keybank's submission of a separate fee application. [R. 52 at 19].
Subsequently, on March 17, 2014, Keybank filed a Motion for Counsel Fees and Costs. [R. 54]. Keybank's motion sought attorneys' fees and costs from both defendants, Mr. and Mrs. Hartmann. [R. 54]. However, unbeknownst to Keybank, on March 14, 2014, Mrs. Hartmann had filed a Chapter 7 Petition for Bankruptcy in the United States Bankruptcy Court for the Eastern District of Kentucky. [R. 55]. After it was informed of Mrs. Hartmann's bankruptcy filing, this Court denied Keybank's Motion for Counsel Fees and Costs without prejudice. [R. 58].
Now, Keybank has filed an Amended Motion for Attorney Fees. [R. 59]. This time, Keybank seeks attorneys' fees from Mr. Hartmann individually, rather than from Mr. and Mrs. Hartmann. [R. 59]. In its motion, Keybank contends that the automatic stay imposed pursuant to Mrs. Hartmann's bankruptcy does not preclude this Court from considering a grant of attorneys' fees against Mr. Hartmann alone. The Hartmanns did not file a response to Keybank's motion. Because the Court has already determined that Keybank is entitled to a recovery of attorneys' fees, the only issues before the Court are: (1) whether the automatic stay imposed pursuant to Mrs. Hartmann's bankruptcy precludes Keybank from seeking fees and costs from Mr. Hartmann; and (2) if Keybankis entitled to attorneys' fees and costs from Mr. Hartmann, the amount of fees and costs Keybank may recover.
As a general rule, "neither the protections of the automatic stay during the pendency of the bankruptcy case nor the discharge injunction granted upon the completion of the Debtors' confirmed plan, extend to non-debtor co-defendants." Saleh v. Bank of Am., N.A., 427 B.R. 415, 421 (Bankr. N.D. Ohio 2010) (citing 11 U.S.C. § 362(a) and § 524(e)). In limited circumstances, § 1301 of the Bankruptcy Code extends a co-debtor stay to certain non-debtor individuals who share liability with a Chapter 13 debtor on a consumer debt. Id. (citing 11 U.S.C. § 1301(a); In re McCormick, 381 B.R. 594, 598 (Bankr. S.D.N.Y. 2008)). However, there is no automatic stay in Chapter 7 cases for the non-debtor spouse of a bankruptcy debtor. In re Brown, 507 B.R. 31, at *5 (B.A.P. 6th Cir. 2014).
In the present case, the Hartmanns' guaranties relate to the floor plan agreement of LCM, thus they are not consumer debt. Furthermore, since Mrs. Hartmann filed a Chapter 7 bankruptcy petition, Mr. Hartmann, as a non-debtor spouse, is not entitled to a stay of the instant litigation. Accordingly, this Court may proceed with a determination of the amount of attorneys' fees and costs that Mr. Hartmann is jointly and severally liable for pursuant to his personal guaranty of LCM's obligations.
As noted above, this Court has already determined that Keybank is entitled to recover attorney's fees and costs incurred as a result of this litigation. Given this Court's finding that Mr. Hartmann is not protected by an automatic stay, the only issue remaining before the undersigned isthe amount of fees and costs that may be recovered.
The Sixth Circuit has stated that "[i]n diversity cases, attorneys' fees are governed by state law." Hometown Folks, LLC v. S & B Wilson, Inc., 643 F.3d 520, 533 (6th Cir. 2011) (citing Poly-Flex Constr., Inc. v. Neyer, Tiseo & Hindo, Ltd., 600 F. Supp. 2d 897, 913 (W.D. Mich 2009). This includes the method used by a court to calculate the amount of an attorneys' fees award. Id. at 535; see also Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002) ().
This Court has already determined that the guaranty at issue is governed by the law of Ohio. [R. 38 at 8]. "Under Ohio law, [a] trial court's determination of reasonable attorney's fees must generally begin with a calculation of the number of hours reasonably expended on the case times an hourly fee[,] also termed the lodestar figure." Columbus Truck & Equip. Co. v. L.O.G. Transp., Inc., No. 12AP-223, 2013 WL 3341175, at *4 (Ohio Ct. App. June 27, 2013) (citations and internal quotation marks omitted). Further, "[t]he party requesting attorney fees bears the burden of proving evidence of any hours worked that would be properly billed to the client, proving the attorney's hourly rate, and demonstrating that the rate is reasonable." Id. (internal quotation marks omitted). Moreover, once the requesting party has adequately proven the number of hours worked and the attorney's hourly fee, the trial court may adjust the lodestar figure based on certain factors. Id. (citation and internal quotation marks omitted).
More specifically, the trial court may use the following eight factors to aid in its determination of the reasonableness of attorney fees:
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