Jet Midwest International Co. v. Ohadi, No. 21-1795 (8th Cir. 2024)Annotate this Case
In this case before the United States Court of Appeals for the Eighth Circuit, Jet Midwest International Co., Ltd. (Jet Midwest International) sought attorneys’ fees and costs from Jet Midwest Group, LLC (JMG) and other defendants (collectively referred to as the Ohadi/Woolley defendants). The request was made in connection with a fraudulent transfer action filed under the Missouri Uniform Fraudulent Transfer Act (MUFTA), following a term loan agreement between Jet Midwest International and JMG which JMG failed to repay. The district court awarded attorneys’ fees and costs against the Ohadi/Woolley defendants, who were not parties to the term loan agreement, based on its finding that they conspired with JMG to violate the MUFTA.
On appeal, the Eighth Circuit found that the district court erred in awarding attorneys’ fees and costs against the Ohadi/Woolley defendants based on the term loan agreement since they were not parties to that agreement. However, the court held that the district court's finding of "intentional misconduct" by the Ohadi/Woolley defendants in conspiring with JMG to violate the MUFTA could justify an attorneys’ fees award under the "special circumstances" exception to the American Rule (which generally requires each party to bear its own attorneys’ fees).
The court vacated the award and remanded the case back to the district court to calculate a reasonable attorneys’ fee using the lodestar method (multiplying the number of hours reasonably expended by the reasonable hourly rates), and to determine the extent to which the claimed costs are recoverable under the relevant statute. The court's holding did not limit JMG’s ultimate responsibility for attorneys’ fees and costs under the term loan agreement.
Court Description: [Smith, Author, with Melloy and Erickson, Circuit Judges] Civil case - Attorney's Fees. For the court's prior opinion in the case concerning the parties' loan agreement, see Jet Midwest Int'l Co. v Jet Midwest Grp, LLC, 932 F.3d 1102 (8th Cir. 2019). The Ohadi defendants were not a party to the term loan agreement between Jet Midwest Int'l and Jet Midwest Group and were not bound by the terms of that agreement which included language that Jet Midwest Grp would pay all costs and expenses for both preparing and enforcing the loan agreement; as a result no contractual provision authorizes an award of attorney's fees against the Ohadi defendants; there is no express statutory authorization for an award of attorney's fees under the Missouri Uniform Fraudulent Transfer Act (MUFTA); although there is neither a contractual nor a statutory basis for an award of attorney's fees against the Ohadi defendants, the district court's fact findings support an attorney's fees award under the special circumstances exception to the American Rule in awarding attorney's fees, and the district court did not err in awarding fees to Jet Midwest International; however, in making its award, the district court never set forth its lodestar calculation prior to considering additional factors in calculating the amount of the award, and the award must be vacated and remanded for further consideration; the district court was authorized to hold the Ohadi defendants jointly and severally liable for costs in the Fraudulent Transfer Action, it could only do so under 28 U.S.C. Sec. 1920, and not the Term Loan Agreement; on remand, the district court may determine whether the request for costs incurred in retaining expert witnesses may be awarded as attorney's fees; on remand, the district court should consider whether other costs, such as printing, legal research and court reporter costs, which Jet Midwest, sought are recoverable under Sec. 1920.