U.S. Bank Nat'l Ass'n N.D. v. Tompkins & Somma LLC
| Decision Date | 13 September 2012 |
| Docket Number | Civil Action Number 2:09-cv-1823-AKK |
| Court | U.S. District Court — Northern District of Alabama |
| Parties | U.S. BANK NATIONAL ASSOCIATION N.D., Plaintiff, v. TOMPKINS & SOMMA LLC, et al., Defendants. |
Before the court is Plaintiff U.S. Bank National Association N.D.'s ("U.S. Bank") motion for attorneys' fees and costs against Defendants Tompkins & Somma LLC and Blake Tompkins ("Tompkins Defendants") and against counsel for the Tompkins Defendants ("Tompkins Defendants' Counsel"), doc. 177; U.S. Bank's motion to compel prejudgment interest against all Defendants, doc. 178; and U.S. Bank's Bill of Costs and the Tompkins Defendants' Objections, docs. 171, 185. For the reasons stated more fully herein, the motion to compel attorneys' fees and costs against the Tompkins Defendants and Tompkins Defendants' Counsel is DENIED. The motion to compel prejudgment interest is GRANTED, and U.S. Bank may recover $70,616.84 from Defendant Pilar Guzman, $70,616.84 from Defendant Eli Galuz, $8,812.85 from Defendant Marc Anthony, and $543.89 from the Tompkins Defendants in prejudgment interest.Finally, the court taxes $8,835.82 in costs against Defendants Pilar Guzman, Eli Galuz, and Marc Anthony.
On May 29, 2012, this court held a jury trial, and the jury returned a verdict in the form of special interrogatories. Doc. 169. On June 6, 2012, consistent with the jury verdict, the court entered a Judgment on the Jury Verdict ordering "judgment for U.S. Bank in the amount of $924,468.18 against Defendant Pilar Guzman; $924,468.18 against Defendant Eli Galuz; $703,809.98 against Defendant Marc Anthony; and $2,500.00 against" the Tompkins Defendants. See doc. 170. On June 15, 2012, U.S. Bank submitted its Bill of Costs, see docs. 171 -176, and moved to compel payment of attorneys' fees and prejudgment interest, docs. 177-178. These motions are fully briefed, docs. 181 - 185, and ripe for adjudication.
U.S. Bank moves to recover "reasonable expenses," including costs and attorneys' fees, on three theories: (1) pursuant to Fed. R. Civ. P. 37(c), U.S. Bank claims it is entitled to recover reasonable expenses incurred "to prove matters [the Tompkins] Defendants failed to admit in response to [U.S. Bank's] Request for Admissions," doc. 177, at 2; (2) pursuant to 28 U.S.C. § 1927 and Ala. Code § 12-19-270, U.S. Bank claims it is entitled to recover reasonable expenses because the Tompkins Defendants' Counsel "unreasonably and vexatiously multiplied these proceedings by asserting frivolous 'affirmative defenses' in bad faith andsubstantially without merit" and also acted recklessly for the purpose of harassing U.S. Bank, doc. 177, at 2; and (3) the court should grant U.S. Bank reasonable expenses against both the Tompkins Defendants and their counsel pursuant to the court's inherent powers because these parties acted in bad faith with vexatious, wanton, and oppressive conduct, id. The court will address each theory of recovery in turn.
U.S. Bank contends that the Tompkins Defendants' sworn denials of certain Requests for Admissions required U.S. Bank to prepare for and present evidence at trial regarding these issues. U.S. Bank alleges that "there was virtually no dispute as to the truth of each" Request, and, as such, claims it is entitled to reasonable expenses pursuant to Fed. R. Civ. P. 37(c).1 Doc. 177, at 3-7. Specifically, U.S. Bank argues that the Tompkins Defendants failure to admit the facts in question required U.S. Bank to prove at trial the following allegedly undisputed issues: that the Tompkins Defendants "(1) [w]ere precluded by the terms of the Closing Instructions from allowing the seller to contribute any more to the transaction than the disclosed $3,000 and that the borrower, defendant Pilar Guzman[,] was required to contribute the remaining $15,278.81; (2) [U.S. Bank] relied on the Tompkins[] defendants['] compliance with the HUD-1 that the borrower contribute $15,278.81; and (3) [t]he check and the funds in the amount of $15,278.81 w[ere] from the seller Marc Anthony, not from the borrower defendant Pilar Guzman." Doc. 177, at 4-5.
The court disagrees and finds no basis to award U.S. Bank any of its expenses. First, contrary to U.S. Bank's contentions, the Tompkins Defendants admitted that they were "prohibited from accepting more than $3,000 from the seller toward the closing costs." See doc. 177, at 3; doc. 177-5, at 3. This admission sufficiently addresses U.S. Bank's first contention for purposes of Fed. R. Civ. P. 37(c). The other related Requests cited by U.S. Bank are not worded so directly as to require an acceptance by the Tompkins Defendants. See doc. 177-5, at 3-5. Second, the Tompkins Defendants maintain ample justification for refusing to admit that U.S. Bank "relied on the representation in the HUD-1 Settlement Statement . . . ." See id. at 6-7. After all, the Tompkins Defendants could notpossibly have any inclination into U.S. Bank's state of mind. Finally, U.S. Bank asked the Tompkins Defendants to admit that seller Mark Anthony actually provided the funds the borrower Pilar Guzman needed to close the loan. The Tompkins Defendants adamantly denied this knowledge, and, in fact, the parties heavily contested the Tompkins Defendants' knowledge of the source of the $15,278.81 at trial. Significantly, the Tompkins Defendants prevailed on this issue because the jury found that they acted negligently—but made no intentional misrepresentations. See doc. 169, at 5. Thus, U.S. Bank is also not entitled to relief under Rule 37(c)(2) for this third contention because U.S. Bank failed to prove "the matter true."
Indeed, the Tompkins Defendants aptly cite Perez v. Miami-Dade Cnty., 297 F.3d 1255, 1269 (11th Cir. 2002), for the proposition that "[t]he implicit message of Rule 37 is . . . that issues obviously subject to dispute should be resolved at trial, not in a discovery motion." Id. (emphasis in original); see doc. 181, at 3. And, here, the issues of U.S. Bank's reliance and the Tompkins Defendants' knowledge regarding the source of closing funds were unequivocally subject to dispute and, thereby, proper for trial instead of a Request for Admission. Therefore, the court DENIES U.S. Bank's Rule 37(c) motion for relief.
U.S. Bank next contends that it is entitled to recover attorneys' fees and costs from the Tompkins Defendants' Counsel pursuant to 28 U.S.C. § 1927 and Ala. Code § 12-19-270 because counsel purportedly acted in bad faith bycontinually litigating certain affirmative defenses. See doc. 177, at 7-9. Title 28 U.S.C. § 1927 provides:
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
28 U.S.C. § 1927. To prevail on a motion under this statute, the requesting party must therefore demonstrate that the attorney "'[1] engage[d] in unreasonable and vexatious conduct; [2] this conduct must multiply the proceedings; and [3] the amount of the sanction cannot exceed the costs occasioned by the objectionable conduct.'" Peer v. Lewis, 606 F.3d 1306, 1314 (11th Cir. 2010) (quoting Schwartz v. Million Air, Inc., 341 F.3d 1220, 1225 (11th Cir. 2003)). Moreover, "[a]n attorney multiplies the proceedings unreasonably and vexatiously 'only when the attorney's conduct is so egregious that it is 'tantamount to bad faith.'" Id. (quoting Amlong & Amlong, P.A. v. Denny's Inc., 500 F.3d 1230, 1239 (11th Cir. 2007)). And finally, "[b]ad faith is an objective standard that is satisfied when an attorney knowingly or recklessly pursues a frivolous claim." Id.
Similarly, Ala. Code §§ 12-19-270 et seq (the "Alabama Litigation Accountability Act") provides in relevant part:
Except as otherwise provided in this article, in any civil action commenced or appealed in any court of record in this state, the court shall award, as part of its judgment and in addition to any other costs otherwise assessed, reasonable attorneys' fees and costs against any attorney or party, or both, who has brought a civil action, or asserted aclaim therein, or interposed a defense, that a court determines to be without substantial justification, either in whole or part . . . .
Ala. Code § 12-19-272(a). For purposes here, the Act defines "without substantial justification" as a defense that is "frivolous, groundless in fact or in law, or vexatious, or interposed for any improper purpose, including without limitation, to cause unnecessary delay or needless increase in the cost of litigation, as determined by the court." Ala. Code § 12-19-271(1). Moreover, the Act provides twelve non-exclusive factors for courts to consider in awarding attorneys' fees, including, inter alia, "[w]hether or not the action was prosecuted or defended, in whole or in part, in bad faith or for improper purpose." Ala. Code § 12-19-273(5).
U.S. Bank claims that it can establish the requisite showing because the Tompkins Defendants abandoned all affirmative defenses, but subsequently "resurrected" the affirmative defenses of contributory negligence, proximate cause, and set-off in the initial Pre-Trial Order. Doc. 177, at 8 (citing doc. 84, at 15). Moreover, U.S. Bank maintains that, after the court found that Defendants could not utilize a contributory negligence affirmative defense, the Tompkins Defendants continued to seek relief under this defense, as well as proximate cause, set-off, and assumption of risk, and asserted these affirmative defenses throughout trial until they abandoned them for the final Jury Charges. Id. at 8-9 ().
The court finds no evidence of bad faith by the Tompkins Defendants' Counsel or...
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