SE Prop. Holdings, LLC v. Sandy Creek II, LLC

• Decision Date: 07 January 2014
• Docket Number: CIVIL ACTION NO. 12-00303-KD-M
• Parties: SE PROPERTY HOLDINGS, LLC, Plaintiff, v. SANDY CREEK II, LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of Alabama

SE PROPERTY HOLDINGS, LLC, Plaintiff, v. SANDY CREEK II, LLC, et al., Defendants.

CIVIL ACTION NO. 12-00303-KD-M

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

DONE and ORDERED: January 7, 2014

ORDER

This action is before the Court on the Petition for Attorneys' Fees and Costs and supporting exhibits (Doc. 143) filed by Plaintiff SE Property Holdings, LLC ("SEPH"), which seeks "an award of attorneys' fees and costs against Defendants Nanni Pidikiti, Coast Investment Properties, LLC . . . , George W. Skipper, and Sandy Creek II, LLC . . ." (Id. at 1). Though given the opportunity to do so (see Doc. 142 at 16), no defendant has filed a response to the petition.

Upon consideration, and for the reasons stated herein the Court finds that SEPH's petition is due to be GRANTED in part and DENIED in part as to Defendants Sandy Creek II, LLC ("SC II") and George W. Skipper, III ("Skipper") and is due to be DENIED without prejudice as to Defendants Nanni Pidikiti ("Dr. Pidikiti") and Coast Investment Properties, LLC ("CIP").

I. Procedural History

On June 21, 2013, the Court granted summary judgment in favor of SEPH on its claim for breach of promissory notes against SC II. (Doc. 114). On August 23, 2013, the Court granted summary judgment in favor of SEPH on its claim for breach of guaranty against Skipper.¹ (Doc. 127). Following a bench trial, the Court, on November 6, 2013, found in favorof SEPH on its claims for breach of guaranties against Dr. Pidikiti and CIP. (Doc. 142). Aware that SEPH sought an award of attorneys' fees and costs in this action, the Court then ordered SEPH to file "whatever materials it deems necessary and appropriate to support its entitlement to and claim for costs and fees." (Id. at 16). SEPH timely filed its Petition for Attorneys' Fees and Costs (Doc. 143) on November 13, 2013. The time for filing responses to the petition has expired with none being filed, and the petition is now ripe for adjudication.

On December 12, 2013, SEPH filed notice that it had executed a settlement agreement with Dr. Pidikiti and CIP and requested that those Defendants be given 120 days to fulfill their obligations under the agreement. (Doc. 148). Pursuant to this notice, the Court dismissed this action with prejudice as to Dr. Pidikiti and CIP, "subject to the right of SEPH to reinstate the action against these Defendants within one-hundred twenty (120) days of the date of this Order should the settlement agreement not be consummated." (Doc. 149). Therefore, the Court will DENY without prejudice SEPH's Petition for Attorneys' Fees and Costs (Doc. 143) as to Dr. Pidikiti and CIP, with leave to renew the petition as to these Defendants in the event this action is timely reinstated against them.

II. Analysis

SEPH requests a total award of $246,987.18 in attorneys' fees and costs, consisting of i) $165,394.50 in attorneys' fees and $1,812.27 in costs incurred in litigating this action and ii) $76,638.50 in attorneys' fees and $3,141.91 in costs incurred in litigating to final judgment another action in this district, Vision Bank v. Raley et al., Case No. 1:11-cv-00247-CB-N (hereinafter identified as "the First Action"), in which SEPH asserted breach-of-guarantee claimsagainst other guarantors of the loans at issue in this action. In support of this request, SEPH submits 1) the Declaration of Russel Myles, a partner with the Mobile, Alabama law firm McDowell Knight Rhoedder & Sledge, LLC who is one of SEPH's attorneys in this action, to which is attached itemized billing records and invoices for expenses (Doc. 143-2), and 2) the Declaration of Russell C. Buffkin (Doc. 143-3),² a partner-shareholder with the Mobile law firm Helmsing Leach Herlong Newman & Rouse, P.C. who has "been asked to express an opinion as to the reasonableness of the fees" requested by SEPH in this action.

A. Applicable Law

SEPH claims that it is entitled to an award of attorneys' fees and expenses from SC II and Skipper pursuant to the terms of various contracts between it and them. This action is before the Court on the basis of diversity pursuant to 28 U.S.C. § 1332. "[A] federal court in a diversity case is required to apply the laws, including principles of conflict of laws, of the state in which the federal court sits." Manuel v. Convergys Corp., 430 F.3d 1132, 1139 (11th Cir. 2005) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). It follows, then, that "[f]ederal courts apply state law when ruling on the interpretation of contractual attorney fee provisions." In re Sure-Snap Corp., 983 F.2d 1015, 1017 (11th Cir. 1993). Accord Azar v. Nat'l City Bank, 382 F. App'x 880, 886 (11th Cir. 2010) (per curiam) ("We apply state law in determining the meaning of a contractual attorney fee provision."). "Alabama applies the traditional doctrine[] of lex loci contractus to contract claims . . . The doctrine states that a contract is governed by the laws of the state where it is made except where the parties have legally contracted with reference to the laws of another jurisdiction." Colonial Life & Accident Ins. Co. v. Hartford Fire Ins. Co., 358 F.3d 1306, 1308 (11th Cir. 2004) (citing Cherry, Bekaert & Holland v. Brown, 582 So. 2d502, 506 (Ala. 1991)) (internal quotations omitted). Accord Lifestar Response of Ala., Inc. v. Admiral Ins. Co., 17 So. 3d 200, 213 (Ala. 2009). As found in the Court's previous Orders (Docs. 114, 127), all relevant contracts expressly provide that they are to be governed by the laws of Alabama, and no party has argued that the law of any other jurisdiction should apply. Accordingly, the Court will apply Alabama law to SEPH's claim for attorneys' fees and costs.

B. Entitlement

Alabama recognizes "the American rule, which does not require a losing party to pay the attorney fees of the winning party, as a general rule." Classroomdirect.com, LLC v. Draphix, LLC, 992 So. 2d 692, 710 (Ala. 2008). The Alabama Supreme Court, however, also recognizes that "there are exceptions to that rule." (Id.). One such exception is when attorney fees " ' "are provided for . . . by contract . . . " ' " Id. (quoting City of Bessemer v. McClain, 957 So. 2d 1061, 1078 (Ala. 2006) (quoting Battle v. City of Birmingham, 656 So. 2d 344, 347 (Ala. 1995))) (ellipses added). Under Alabama law, it is well settled that provisions relating to the payment of attorneys' fees are enforceable. See, e.g., Subway Rests., Inc. v. Madison Square Assoc., Ltd., 613 So. 2d 1255, 1257 (Ala. 1993) (holding that "[i]n Alabama, in state law causes of action, attorney fees are recoverable as part of the costs of the action...when provided in a contract"); Knight v. Hired Hand Green, Inc., 775 So. 2d 218, 222 (Ala. Civ. App. 1999) (finding the plaintiff "was necessarily entitled to...attorney fee for collection...pursuant to the clear terms of the contract"). See also, e.g., Smith v. Combustion Res. Eng'g, Inc., 431 So. 2d 1249, 1252 (Ala. 1983); Lewis v. Haleyville Mobile Home Supply, Inc., 447 So. 2d 691, 692-93 (Ala. 1984); Chilton Warehouse & Mfg. Co. v. Lewis, 57 So. 100, 101 (Ala. App. 1911).

With respect to its entitlement to attorneys' fees and costs from SC II, SEPH cites to ¶ 6 of both the original promissory notes (SEPH's Trial Exs. 19, 44. See also Docs. 83-13 & 83-35)and the amended promissory notes (SEPH's Trial Exs. 48F, 49E. See also Doc. 64-1 at 5-16) for the two loans at issue.³ Paragraph 6 in each of these documents is entitled "Attorney Fees" and states (bracketed text found only in the amended promissory notes):

Borrower [SC II] and each endorser or guarantor of this Note agree to pay reasonable actual attorneys' fees and costs incurred by the Holder hereof[, Vision Bank,⁴] in collecting or attempting to collect this Note, whether by suit or otherwise[, and in connection with the loan extension/modification evidenced by this note].

SC II is the only signatory to the promissory notes.

With respect to its entitlement to attorneys' fees and costs from Skipper, SEPH cites to the following provisions from the two guaranties he executed:

1. Guaranty. For valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the undersigned, GEORGE W. SKIPPER, III (hereinafter called "Guarantor"), unconditionally guarantees and promises to pay to VISION BANK, a corporation (hereinafter called "Bank"), or order, on demand, in lawful money of the United States, any and all Indebtedness, as hereinafter defined, of SANDY CREEK II, LLC, an Alabama limited liability company (hereinafter called "Borrower"), to Bank. The word "Indebtedness" is used herein in its most comprehensive sense and pertains to a loan in the principal amount of Five Million Dollars ($5,000,000.00) being made by Bank to Borrower on or about the date hereof (the "Loan"). "Indebtedness" includes any and all advances, debts, obligations and liabilities of Borrower to Bank heretofore, now, or hereafter existing, made, incurred, or created, whether voluntary or involuntary, arising under, pursuant to or in connection with the Note (as hereinafter defined) and/or any and all other Loan Documents (as hereinafter defined), whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, not limited to but including . . . costs of collection, attorney's fees and all other lawful charges, and whether Borrower may be liable individually or jointly with others . . . "Note" refers to the $5,000,000.00 principal amount Promissory Note dated on or about September 30, 2005, from Borrower to the Bank, as the same may from time to time be amended, restated, extended, consolidated, replaced and/or renewed, togetherwith all such amendments, restatements, extensions, consolidations, replacements and/or renewals. "Loan Documents" (or singularly a "Loan Document") refers to the Note, the Mortgage and Security Agreement ("Mortgage") dated on or about the date hereof between Borrower and Bank and relating

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