Rentrak Corp. v. Ladieu (In re Ladieu)

• Decision Date: 25 April 2012
• Docket Number: # 07-10868,Adversary Proceeding # 08-1010
• Court: U.S. Bankruptcy Court — District of Vermont
• Parties: In re: Gregory Ladieu, Debtor. Rentrak Corporation, Plaintiff, v. Gregory Ladieu, Defendant.

In re: Gregory Ladieu, Debtor.Rentrak Corporation, Plaintiff,

v.Gregory Ladieu, Defendant.

# 07-10868

Adversary Proceeding # 08-1010

UNITED STATES BANKRUPTCY COURT DISTRICT OF VERMONT

Dated: April 25, 2012

Chapter 7 Case

Appearances: W. Scott Fewell, Esq.

Burlington, VT 05402

Attorney for Plaintiff

David W. Lynch, Esq.

Colchester, VT 05446

Attorney for Defendant

MEMORANDUM OF DECISION

AWARDING ATTORNEYS FEES TO PREVAILING PARTY ON EACH CLAIM

On January 26, 2012, the Court held a hearing on the application for attorney's fees filed by Rentrak Corporation ("Rentrak" or "Plaintiff") and the opposition and cross-motion for attorney's fees filed by Gregory Ladieu ("Mr. Ladieu" or "Defendant"). At the conclusion of that hearing, the Court ruled it needed further information to make an award of reasonable attorney's fees and costs to "the prevailing party," and gave each party an opportunity to file time and expense records on the contract claim on which it had prevailed and opposition to their adversary's request. The time for post-trial filings has expired, and each party has filed time records and an objection; the matter is fully submitted.

Jurisdiction

This Court has jurisdiction over this adversary proceeding and the instant motions pursuant to 28 U.S.C. §§ 157 and 1334. It is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (I).

Discussion

Rentrak seeks an award of attorney's fees in the amount of $76,728.48 and reimbursement of expenses in the amount of $3,613.69, as part of its nondischargeable debt under 11 U.S.C. § 523(a)(6). The Defendant seeks an award of $39,805.00 in attorney's fees and has filed no request for reimbursement of expenses.¹ The Rentrak debt arises from an Oregon contract and this Court has ruled that Oregon law controls with regard to all contract claims. There is no dispute that the contract between the parties (referred to in this proceeding as their "Agreement") authorizes an award of attorney's fees to the prevailing party in any litigation to enforce the contract:

If any fees or costs are incurred to enforce this Agreement, or if any suit or action is brought to enforce any provision of this Agreement, or for damages for the breach of any terms of this Agreement, the prevailing party shall be entitled, at trial and on appeal, if any, to reasonable attorney fees and costs as awarded by the court.

See doc. # 113, Ex. A ¶ 9.5. However, both parties dispute which Oregon statute governs an award of attorney's fees here, as well as the reasonableness of their adversary's fee request.

Controlling Law Regarding an Award of Attorney's Fees under the Oregon Contract

Turning first to the Oregon statute question, the controversy is whether ORS § 20.075 of Title 2, entitled "Factors for awarding attorney fees" applies, as the Defendant asserts, or whether the controlling statute is ORS § 20.077 of Title 2, entitled "Prevailing party," as the Plaintiff argues. See 2 ORS §§ 20.075 and 20.077.

The prevailing party statute provides as follows:

(1) A court shall consider the following factors in determining whether to award attorney fees in any case in which an award of attorney fees is authorized by statute and in which the court has discretion to decide whether to award attorney fees:

(a) The conduct of the parties in the transactions or occurrences that gave rise to the litigation, including any conduct of a party that was reckless, willful, malicious, in bad faith or illegal.

(b) The objective reasonableness of the claims and defenses asserted by the parties.

(c) The extent to which an award of an attorney fee in the case would deter others from asserting good faith claims or defenses in similar cases.

(d) The extent to which an award of an attorney fee in the case would deter others from asserting meritless claims and defenses.

(e) The objective reasonableness of the parties and the diligence of the parties and their attorneys during the proceedings.

(f) The objective reasonableness of the parties and the diligence of the parties in pursuing settlement of the dispute.

(g) The amount that the court has awarded as a prevailing party fee under ORS 20.190.

(h) Such other factors as the court may consider appropriate under the circumstances of the case.

(2) A court shall consider the factors specified in subsection (1) of this section in determining the amount of an award of attorney fees in any case in which an award of attorney fees is authorized or required by statute. In addition, the court shall consider the following factors in determining the amount of an award of attorney fees in those cases:

(a) The time and labor required in the proceeding, the novelty and difficulty of the questions involved in the proceeding and the skill needed to properly perform the legal services.

(b) The likelihood, if apparent to the client, that the acceptance of the particular employment by the attorney would preclude the attorney from taking other cases.

(c) The fee customarily charged in the locality for similar legal services.

(d) The amount involved in the controversy and the results obtained.

(e) The time limitations imposed by the client or the circumstances of the case.

(f) The nature and length of the attorney's professional relationship with the client.

(g) The experience, reputation and ability of the attorney performing the services.

(h) Whether the fee of the attorney is fixed or contingent.

(3) In any appeal from the award or denial of an attorney fee subject to this section, the court reviewing the award may not modify the decision of the court in making or denying an award, or the decision of the court as to the amount of the award, except upon a finding of an abuse of discretion.

(4) Nothing in this section authorizes the award of an attorney fee in excess of a reasonable attorney fee.

ORS § 20.075.

The Defendant asserts that this provision controls because the instant case is one in which the Court has discretion to award attorney's fees. The Defendant's reliance upon ORS § 20.075 is misplaced. The most straightforward reading of the provision is that it applies only when the award of attorney's fees is both (1) authorized or required under a statute, and (2) within the discretion of the Court. Here, the award is not based upon a statute, but rather a contract; thus, it does not fall within the scope of the first prong of the statute. Further, when taking into account the terms of this provision within the context of the entirety of Title 2, ORS § 20.096 makes clear that where attorney's fees are sought based upon a contract, the Court must award reasonable attorney's fees to the prevailing party. It is not a discretionary award that would trigger application of the second prong of the statute.

The Plaintiff relies upon ORS § 20.096, which provides in pertinent part as follows:

(1) In any action or suit in which a claim is made based on a contract that specifically provides that attorney fees and costs incurred to enforce the provisions of the contract shall be awarded to one of the parties, the party that prevails on the claim shall be entitled to reasonable attorney fees in addition to costs and disbursements . . . .

ORS § 20.096. That is precisely the situation here. The Plaintiff brought claims based upon a contract that includes a provision authorizing the award of reasonable attorney's fees and costs to the party who prevails on a claim brought under the contract.

The statute entitled "Prevailing party" addresses how to implement the award of fees and costs in a contract action. It specifies that the Court must first identify which party prevailed on each claim for which attorney's fees could be awarded:

(1) In any action or suit in which one or more claims are asserted for which an award of attorney fees is either authorized or required, the prevailing party on each claim shall be determined as provided in this section. The provisions of this section apply to all proceedings in the action or suit, including arbitration, trial and appeal.

(2) For the purposes of making an award of attorney fees on a claim, the prevailing party is the party who receives a favorable judgment or arbitration award on the claim. If more than one claim is made in an action or suit for which an award of attorney fees is either authorized or required, the court or arbitrator shall:

(a) Identify each party that prevails on a claim for which attorney fees could be awarded;

(b) Decide whether to award attorney fees on claims for which the court or arbitrator is authorized to award attorney fees, and the amount of the award;

(c) Decide the amount of the award of attorney fees on claims for which the court or arbitrator is required to award attorney fees; and

(d) Enter a judgment that complies with the requirements of ORS 18.038 and 18.042.

(3) Notwithstanding subsection (2) of this section, upon appeal of a judgment in an action or suit in which one or more claims are asserted for which the prevailing party may receive an award of attorney fees, the appellate court in its discretion may designate as the prevailing party a party who obtains a substantial modification of the judgment.

(4) This section does not create a claim to an award of attorney fees in any action or suit in which the court or arbitrator is not otherwise authorized or required to make an award of attorney fees by contract or other law.

ORS § 20.077. The Court has thus far ruled on three claims in this proceeding. Two have their genesis in paragraph 8 of the Agreement, namely, the claim seeking judgment based upon the Defendant's alleged default (the "liability claim") and the claim to enforce the damages provision (the "damages claim"). The third claim was brought by the Defendant for an award of damages for the Plaintiff's violation of the automatic stay, and arose under the Bankruptcy Code.

To determine which party prevailed on each claim, whether an award of attorney's fees is warranted, and if so, how much of an award is reasonable, the Court turns to Oregon law. Oregon courts...