Whitney Bank v. Davis-Jeffries-Hunold, Inc.

• Decision Date: 09 November 2012
• Docket Number: CIVIL ACTION NO. 12-0076-KD-C
• Parties: WHITNEY BANK, Plaintiff, v. DAVIS-JEFFRIES-HUNOLD, INC., MICHAEL SHANE JEFFRIES, and D. ROBERT DAVIS, Defendants.
• Court: U.S. District Court — Southern District of Alabama

WHITNEY BANK, Plaintiff,

v.DAVIS-JEFFRIES-HUNOLD, INC., MICHAEL SHANE JEFFRIES, and D. ROBERT DAVIS, Defendants.

CIVIL ACTION NO. 12-0076-KD-C

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

Dated: November 9, 2012

ORDER

This action is before the Court on Whitney Bank's Response to Court's Order on Damages and Attorney's Fees (doc. 26-1, Exhibit A). Upon consideration and for the reasons set forth herein, Whitney Bank is entitled to damages in the amount of $152,830.67 and its request for attorneys' fees, costs, and expenses is GRANTED in part, as set forth herein.

I. Background

Summary judgment was granted in favor of Whitney Bank and against defendant D. Robert Davis and default judgment was granted in favor of Whitney Bank and against defendants Michael Shane Jeffries and Davis-Jeffries-Hunold, Inc. (Docs. 22, 23) However, the Court declined entry of final judgment pending resolution of the then current amount of damages to which Whitney Bank was entitled including proof of the principal due on the deficiency after the foreclosure sale, accrued interest, and the per diem rate of interest. Also, the Court denied with leave to re-file Whitney Bank's request for attorneys' fees, expenses and costs because of a lack of sufficient information upon which the Court could reach a decision.

Whitney Bank now files under seal its response with additional evidence regardingdamages and its request for attorneys' fees, expenses and costs with supporting documentation. (Doc. 26, 26-1) Whitney Bank mailed a copy to the defendants at their respective addresses of record. (Doc. 26, Certificate of Service; Exhibit A, Doc. 26-1) Defendants did not file a response.¹

II. Jurisdiction and Choice of law

"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." Colonial Life & Acc. Ins. Co. v. Hartford Fire Ins. Co., 358 F.3d 1306, 1308 (11th Cir. 2004) (quoting O'Neal v. Kennamer, 958 F.2d 1044, 1046 (11th Cir.1992)): Manuel v. Convergys Corp., 430 F.3d 1132, 1139 (11th Cir. 2005) ("a federal court sitting in diversity will apply the choice of law rules for the state in which it sits."). As to choice of law, "Alabama follows the principle of 'lex loci contractus,' which 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." Cherry, Bekaert & Holland v. Brown, 582 So.2d 502, 506 (Ala. 1991). The choice of law provisions in the Change in Terms Agreement and the Guaranties provide for application of Alabama law. (Doc. 1-1, 1-2, 1-3) Therefore, the law of Alabama applies in this action.

III. Damages

Previously, the Court found that the "principal balance claimed in the motion for summary judgment ($129,879.00) [was] not consistent with the principal balance in the complaint ($140,540.76)." (Doc. 23, p. 13) Whitney Bank was ordered to provide evidence to resolve this conflict and establish the then current amount of damages to which it is entitled. (Id.)

Whitney Bank states that at the time of foreclosure on December 5, 2011, the deficiency balance on the loan was $129,879.00 with accrued interest in the amount of $8,861.76 ($64.93 per diem),² for a total principal and interest of $138,743.76, plus costs of $1,800 for the appraisal fee, for a total amount due at foreclosure of $140,540.76. (Doc. 26-1) When the complaint was filed on February 9, 2012, Whitney Bank sought a total of $144,891.07 (Doc. 1). This amount included $4,350.31 as the interest accrued from foreclosure through the day the complaint was filed (67 days x $64.93 = $4,350.31). (Id.) Whitney Bank explains that the variance among the amount due at time of foreclosure, the amount requested in the complaint, the amount requested in the motion for summary judgment, and the amount requested in the motions for default judgment is solely because of the accrual of interest. (Doc. 26-1)

The calculations and accrual of interest having now been explained, the Court finds that damages are due to Whitney Bank in the amount of $129,879.00, the deficiency balance due at time of foreclosure, plus interest accrued at time of foreclosure $8,861.76, plus interest accrued from time of foreclosure on December 5, 2011 to July 10, 2012, in the amount of $14,089.91 (217 days x $64.93 per day), for a total of $152,830.67. ³

IV. Attorneys fees

Whitney Bank seeks judgment for attorneys' fees in the amount of $22,438.00⁴ incurred as a result of defendants' default in the terms of the loan and guaranties and the consequentcollection. Alabama "follows the American rule, whereby attorney fees may be recovered if they are provided for by statute or by contract" or "special equity". Jones v. Regions Bank, 25 So.3d 427, 441 (Ala. 2009) (citations omitted); Hartford Acc. & Indem. Co. v. Cochran Plastering Co., Inc., 935 So.2d 462, 472 (Ala. Civ. App. 2006) (citations omitted) (same); see also In re Martinez, 416 F.3d 1286, 1288 (11th Cir.2005) ("Generally, in federal litigation, ... a prevailing litigant may not collect an attorney's fee from his opponent unless authorized by either a federal statute or an enforceable contract between the parties."). Also, a contract provision for attorneys' fees is "susceptible to breach." Army Aviation Center Federal Credit Union v. Poston, 460 So.2d 139, 141 (Ala.1984); see Ierna v. Arthur Murray Int'l, Inc., 833 F.2d 1472, 1476 (11th Cir.1987) ("When the parties contractually provide for attorneys' fees, the award is an integral part of the merits of the case.").

The most recent Change in Terms Agreement executed on September 1, 2009, by Davis-Jeffries-Hunold, Inc. (DJH) provides that if Whitney Bank hires attorneys to collect this debt, then DJH is responsible for Whitney Bank's attorneys' fees, legal expenses, and costs. (Doc. 1-1, p. 12) The Continuing Guaranty signed by Michael Shane Jeffries on April 14, 2006 provides that the Guarantor will pay all costs of collection of DJH's liability to Whitney Bank, including attorneys' fees, expenses, and costs. (Doc. 1-3, p. 1) However, the Continuing Guaranty does not appear to provide for payment of same for enforcement of Jeffries' Guaranty. (Id.) The Commercial Guaranty executed by D. Robert Davis on June 14, 2008, provides that the Guarantor will pay all costs of collection of DJH's liability to Whitney Bank, including attorneys' fees, expenses, and costs and provides for payment of attorneys' fees, expenses, and costs for enforcement of his Guaranty. (Doc. 1-3, p. 7, 8)

Based on the terms of the Agreement and the Guaranties, the Court finds that WhitneyBank is entitled to recover costs, expenses and attorneys' fees. See Peppertree Apartments, Ltd. v. Peppertree Apartments, 631 So.2d 873, 878 (Ala.1993) ("The intention of the parties controls when a court construes the terms of a promissory note, and that intention is to be derived from the provisions of the contract, if the language is plain and unambiguous.") Although the Agreement and Guaranties do not specifically state that the attorneys' fees must be reasonable, that requirement is imposed upon the fee-shifting provisions as a matter of public policy under Alabama law. Willow Lake Residential Ass'n, Inc. v. Juliano, 80 So.3d 226, 241 (Ala.Civ.App. 2010) ("Alabama law reads into every agreement allowing for the recovery of attorney's fees a reasonableness limitation.").

In that regard, "[t]he determination of whether an attorney fee is reasonable is within the sound discretion of the trial court." Kiker v. Probate Court of Mobile County, 67 So.3d 865, 867 (Ala .2010) (citations omitted). Generally, the determination of reasonable attorneys' fees begins with a determination of the reasonable hourly rate multiplied by the hours reasonably expended." Bivins v. Wrap It Up, Inc., 548 F.3d 1348, 1350 (11th Cir. 2008); Norman v. Housing Authority of City of Montgomery, 836 F. 2d 1292, 1303 (11th Cir. 1988). When making this determination, the Court may consider the twelve factors⁵ identified in Pharmacia Corp. v. McGowan, 915 So.2d 549, 552-53 (Ala. 2004) (quoting Van Schaack v. AmSouth Bank, N.A., 530 So. 2d 740, 749 (Ala. 1988)); see also Bivins, 548 F. 3d at 1350 (addressing the twelvefactors⁶ from Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-719 (5th Cir.1974)). "The product of these two figures is the lodestar and there is a strong presumption that the lodestar is the reasonable sum the attorneys deserve." Bivins, 548 F.3d at 1350 (internal citations and quotation omitted).

Once the lodestar is calculated, the utility of these factors may continue when considering whether the Court should adjust the lodestar. Association of Disabled Americans v. Neptune Designs, Inc., 469 F.3d 1357, 1359 (11th Cir. 2006) (citing Hensley v. Eckerhart, 461 U.S. 424, 434 n.9, 103 S.Ct. 1933, 1940 n. 9 (1983)) (noting that the district courts may consider the twelve factors outlined in Johnson, but that "many of these factors usually are subsumed within the initial calculation of hours reasonably expended at a reasonable hourly rate.") Additionally, the Court may utilize its own "knowledge and expertise" to determine the reasonableness of requested attorney's fees. Loranger v. Stierheim, 10 F.3d 776, 781 (11th Cir. 1994). Overall, the movant bears the burden of establishing the "reasonableness" of the attorney's fees by providing specific evidence to support the hours and rates claimed. American Civil Liberties Union of Ga. v. Barnes, 168 F.3d 423, 427 (11th Cir. 1999); Taylor Newman Cabinetry, Inc. v. Classic Soft Trim, Inc., 436 Fed. Appx. 888, 895 (11th Cir. 2011).

A. Reasonable hourly rate

The reasonable hourly rate is generally "the prevailing market rate in the legalcommunity for similar services by lawyers of reasonably comparable skills, experience, and reputation." Blum v. Stenson, 465 U.S. 886,...