Liquid Capital Exch. v. BDC Grp.
| Decision Date | 26 October 2022 |
| Docket Number | 20-CV-89CJW-MAR |
| Parties | LIQUID CAPITAL EXCHANGE, INC., Plaintiff, v. BDC GROUP, INC., Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
a. Overstaffing ........................................................15
b. YEW and Triple B ................................................16
c. Redundant, Repetitive, and Excessive Pretrial Filings ......18
This matter is before the Court on plaintiff's motion for attorneys' fees. (Doc. 167). Defendant timely resists this motion. (Doc. 170). Plaintiff timely replied. (Doc. 175). For the following reasons, the Court awards plaintiff $641,780.80 in attorneys' fees and taxes $1,893.05 in costs for plaintiff.
The Court incorporates the factual background as discussed in its prior orders. (Doc. 85). In short, Triple B worked for defendant under a subcontractor agreement (“Subcontract”) (Doc. 161-47). Triple B sent invoices (“Invoices”) for its work to defendant and assigned its right of payment on those Invoices to plaintiff. (Doc. 66). In turn, defendant sent emails to plaintiff succinctly approving the Invoices for payment or processing. (Doc. 75-2, at 8). Plaintiff calls these emails “Estoppel E-mails.” (Doc. 75-2). Once plaintiff received an Estoppel Email, it funded Triple B, purportedly expecting defendant to pay plaintiff. (Id.). Defendant, however, did not pay plaintiff under some of the Invoices. (Id.).
Plaintiff sued to recover defendant's purportedly-owed payments. (Doc. 66). After the Court resolved Triple B's motion for summary judgment against defendant (Doc. 74), plaintiff moved for summary judgment for breach of the Estoppel Email contracts, breach of the Subcontract, and promissory estoppel. (Doc. 75). The Court denied plaintiff's motion for summary judgment on those claims, as well as plaintiff's motion for reconsideration on the same. (Docs. 80; 88; 100).
This matter was tried before a jury on April 18-22, 2022. (Doc. 163). Defendant moved for a directed verdict, which the Court denied. (Doc. 176). The jury entered a verdict in favor of plaintiff on all counts: breach of contracts, promissory estoppel, fraudulent inducement, breach of subcontract, and breach of duty to pay assignee. (Doc. 163). It awarded compensatory damages of $468,141.59 and punitive damages of $760,000. (Doc. 165).
Plaintiff filed this motion for $713,736.00 in attorneys' fees and $42,149.25 in costs. (Doc. 167, at 3). For the reasons below, the Court reduces plaintiff's requested fee award by $71,955.20 to $641,780.80. The Court also taxes $1,893.05 in costs for plaintiff.
Plaintiff argues that it is entitled to attorneys' fees as the prevailing party on the Breach of Subcontract Claim because the Subcontract states in relevant part that either party is “entitled to recovery of its costs and expenses, including reasonable attorneys' fees and expenses, incurred in enforcing its rights under this Agreement.” (Doc. 1671, at 3). Plaintiff also argues that it is entitled to common law attorneys' fees for all of its claims, because the losing party “has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” (Id.). In the alternative, absent common law attorneys' fees, plaintiff argues that it is entitled to attorneys' fees for all of the claims because the Breach of Subcontract Claim is inextricably intertwined with the other claims. (Id., at 5-6).
Defendant resists with several arguments. (Doc. 170). First, defendant asserts that plaintiff is not entitled to attorneys' fees as the prevailing party on the Breach of Subcontract Claim. (Doc. 170, at 7). Defendant then argues that plaintiff has waived its claim to common-law-attorneys' fees. (Doc. 170, at 4). Defendant argues in the alternative that plaintiff is not entitled to common-law-attorneys' fees because defendant's actions did not “rise to the level of oppression or connivance to harass or injure another.” (Doc. 170, at 4). Defendant also asserts that plaintiff is not entitled to attorneys' fees for all of the claims based off its entitlement to attorneys' fees for the Breach of Subcontract Claim because these claims are “not inextricably entwined.” (Doc. 170, at 9-10).
The Court finds that plaintiff is entitled to reasonable attorneys' fees arising out of the breach of subcontract claim. “When judgment is recovered upon a written contract containing an agreement to pay an attorney fee, the court shall allow and tax as a part of the costs a reasonable attorney fee to be determined by the court.” IOWA CODE § 625.22. Here, the Subcontract provides that “[e]ither Party shall be entitled to recovery . . . including reasonable attorneys' fees and expenses, incurred in enforcing its rights under this Agreement.” (Doc. 161-47 at 7). Parties dispute, however, whether plaintiff acquired this entitlement when Triple B assigned its “right, title and interest in and to certain Accounts” to plaintiff in the Factoring Agreement. (Doc. 170, at 7-8). For the following reasons, the Court finds that plaintiff was entitled to this reasonable attorneys' fee right.
Defendant asserts that plaintiff did not acquire the entitlement to recovery of its costs and expenses because the Court agreed with plaintiff in a prior Order that plaintiff did not receive the right to attorneys' fees under the Subcontract. (Doc. 170, at 7) (citing Doc. 27, at 5). The Court, however, does not read its prior analysis of the Factoring Agreement to shear the right for attorneys' fees from the right to payment. In its earlier Order, the Court did not find that Triple B assigned only a subset of rights to plaintiff. (Doc. 27, at 5). Instead, the Court analyzed whether Triple B assigned its rights and its obligations to plaintiff. (Id.). There, the Court concluded defendant did not show plaintiff had received Triple B's obligations, not that plaintiff had received only a subset of rights. (Id.).
Defendant also asserts that plaintiff's rights as an assignee are limited by the “Notice of Assignment” by which it informed defendant of its right to collect payments. (Doc. 170, at 9). This Notice of Assignment purportedly identifies “payments that are or become due on their accounts to [plaintiff]” and “says nothing about assigning rights under the Subcontract, including rights under Paragraph 32.” (Id.). Far from being “limited to” collecting the existing and future payments,” however, the Notice of Assignment reads thus: “[t]his arrangement also includes the sale and assignment of all existing and future payments that are or become due on their accounts to Liquid Capital Exchange, Inc. under the Uniform Commercial Code.” (Doc. 161-5, at 2) (emphasis added). The Court, thus, rejects this argument as well.[1]
For these reasons, the Court finds that plaintiff is entitled to reasonable attorneys' fees arising out of the Breach of Subcontract claim.
Plaintiff also argues that it is entitled to common-law attorneys' fees for each of its claims. (Doc. 167-1, at 3). Defendant first asserts that plaintiff waived any claim of common-law attorneys' fees. (Doc. 170, at 3). Alternatively, defendant asserts that plaintiff cannot show that defendant's conduct was “oppressive or conniving” in the course of litigation. (Id., at 3). Even if plaintiff could rely on pre-litigation conduct, defendant argues that because the Court found that the question of “punitive damages” was a close call, plaintiff cannot show the higher standard required for common-law attorneys' fees. (Id., at 6).
For the following reasons, the Court denies plaintiff's request for common-law attorneys' fees on each and every of its claims. Although plaintiff did not waive its common-law attorneys' fees request, the Court can only rarely award common-law attorneys' fees based solely on pre-litigation conduct. Here, the Court does not find any conduct before or during the litigation that merits an award of common-law attorneys' fees.
The Court rejects defendant's argument that plaintiff waived its claim for common-law attorneys' fees by failing to raise them in the pleadings. (Doc. 170, at 3). Though Iowa law requires a claim for attorneys' fees to be specifically pleaded, Nelson Cabinets, Inc. v Peiffer, 542 N.W.2d 570, 573 (...
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