USA v. Bell, et al, No. 1:1995cv05346 - Document 277 (E.D. Cal. 2009)
Court Description: ORDER granting in part 269 Motion for Attorney Fees, signed by Judge Oliver W. Wanger on 1/15/09. (Coffman, Lisa)
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USA v. Bell, et al Doc. 277 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA 8 UNITED STATES OF AMERICA, 9 1:95-CV-05346 OWW SMS Plaintiff, 10 v. 11 GLEN D. BELL, JEANETTE BELL, et al., 12 Defendants. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ORDER GRANTING IN PART DUMAS’ MOTION FOR ATTORNEY’S FEES AND COSTS (DOC. 269.) I. Introduction. Before the court for decision is Dumas International LLC’s (“Dumas”) motion for attorneys fees and costs. Nov. 21, 2008. Doc. 269, filed The motion was required by the district court’s September 30, 2008 Order of Distribution. Doc. 267. States opposes the fee request in its entirety. The United Doc. 274, filed Dec. 23, 2008. The underlying dispute on the merits, which was the subject of a one-day bench trial on April 25, 2008, related to the amount due under a 1984 Deed of Trust recorded against residential property previously owned by defendant taxpayers Glenn and Jeanette Bell, and the priority of that deed relative to a 1987 federal tax lien. Findings of Fact and Conclusions of Law were issued September 17, 2008, Doc. 261, as amended to correct 28 1 Dockets.Justia.com 1 clerical and typographical errors, see Doc. 266, along with a 2 Judgement of Extent and Priority of Liens, Doc. 268, filed, 3 October 6, 2008. 4 5 6 II. FACTUAL BACKGROUND. The Bells purchased the subject property in Modesto 7 California in 1984. Finding of Fact (“FOF”), Doc. 261, #9. 8 subsequently obtained a construction loan in the amount of 9 $251,000.00 from Stockton Savings, evidenced by an Adjustable FOF #13. They 10 Rate Note dating to 1984. 11 construction loan and Adjustable Rate Note, a First Deed of Trust 12 was executed by the Bells and recorded in Stanislaus County, 13 encumbering the property as security for a $310,000.00 14 construction note. 15 of Trust secures the repayment of the construction loan, it was 16 deemed to have priority over, as it antedated, any federal tax 17 liens against the property, the earliest of which was recorded in 18 1987. 19 Cal. 1998); FOF #30. 20 of Trust was not finally determined by Bell, 27 F. Supp. 2d 1191. FOF #23. In conjunction with the To the extent that this First Deed United States v. Bell, 27 F. Supp. 2d 1191, 1200 (E.D. The exact amount due under the First Deed 21 22 It is undisputed that Dumas, which is in the business of 23 purchasing “troubled” properties and clearing up defective title 24 problems, is the successor in interest to the original lender. 25 FOF #4. 26 Various estimates of the claim secured by the First Deed of 27 Trust were elicited at trial, ranging from $251,113.00 to just 28 over $1,034,011.00. FOF #37, #109, Conclusions of Law (“COL”) 2 1 #12. The $1,034,011.00 figure reflected Dumas’ position at trial 2 that, in addition to the original principal balance of the 3 construction loan, the Bells had been advanced an additional sum. 4 FOF #45-61. 5 established in a published decision before Dumas became a party 6 to the case. 7 evidence established that Dumas’ assertion that the First Deed of 8 Trust secured unpaid principal and accrued interest of 9 $1,034,011.00 was “not supported by the underlying evidence.” The priority of the First Deed of Trust was Bell, 27 F. Supp. 2d at 1200. Review of all the 10 COL #12. 11 establishing an advance was made or when it was made.” 12 Specifically, there was a “lack of objective evidence COL #11. Dumas also sought to estop the United States from asserting 13 that the note balance due was less than $857,946.54, based on 14 statements made by the United States in correspondence. 15 17. 16 despite a lack of credible evidence, seeks to obtain a windfall 17 under an estoppel theory, to recover $857,946.74 on a loan for 18 which it paid $260,000.” 19 COL #16- This argument was rejected on the finding that “Dumas, COL #30. The district court found the United States’ calculation of 20 the amount due Dumas, $449,999.46, to be consistent with the 21 available evidence, COL #13, #44, and ruled that “Dumas shall 22 recover $449.999.46, plus, additional interest to the date of 23 entry of these Findings of Fact and Conclusions of Law, and 24 attorney’s fees and costs.” Doc. 261 at 44. 25 The United States did not object to the inclusion of an 26 attorney’s fees and costs recovery provision in the decision, as 27 attorney’s fees are authorized by the Note. 28 3 1 2 III. DISCUSSION. Dumas now moves for attorney’s fees in the amount of 3 $62,727.50 and costs in the amount of $14,549.00, for a total of 4 $77,276.50. 5 Local Rule 54-293 governs the award of attorney fees in this 6 District, pursuant to which a party requesting fees must show the 7 following: 8 (1) The moving party was the prevailing party; 9 (2) The moving party is eligible for fees, and the 10 basis of that eligibility; 11 (3) The amount of the fees sought; 12 (4) Information pertaining to the criteria considered 13 in fixing the award; and 14 (5) Other matters required by statute. 15 16 A. Legal Bases for Fee Petition. 17 In support of its fee petition, Dumas cites 26 U.S.C. § 18 6323(e)(3),1 which provides: “If [a] lien imposed by [the 19 government for taxes] is not valid as against a lien or security 20 interest, the priority of such lien or security interest shall 21 extend to...(3) the reasonable expenses, including reasonable 22 compensation for attorneys, actually incurred in collecting or 23 enforcing the obligation secured....” 24 25 26 27 28 1 In headings in its motion for attorney’s fees, Dumas refers to 42 U.S.C. § 1988, which permits awards of attorney’s fees to prevailing civil rights plaintiffs. Section 1988 is inapplicable to this case concerning the priority of a lien relative to a government tax lien. Dumas also invokes the appropriate statute: 26 U.S.C. § 6323(e)(3). 4 1 The Adjustable Rate Note contained an attorney’s fee 2 provision, whereby the lender shall be reimbursed for all its 3 “costs and expenses” incurred in obtaining repayment of the loan: 4 “If the Note Holder has required me to pay immediately in full as 5 described above [for being in default], the Note Holder will have 6 the right to be paid back by me for all its costs and expenses 7 not prohibited by applicable law. 8 example, reasonable attorney’s fees.” 9 Those expenses include, for Ex. 3 at ¶7(e). The Deed of Trust also contained an “attorneys fees” 10 provision that entitles the lender to make disbursements for 11 “reasonable attorneys fees” in the event the borrower fails to 12 make required payments under the Adjustable Rate Note. 13 ¶7. 14 and bear interest at the rate set in the overlying promissory 15 note. 16 Ex. 4 at Such fees “become additional indebtedness” of the borrower, Id. Under California law, when a trust deed provides for 17 attorney’s fees, a beneficiary is entitled to recover such fees 18 that are incurred to protect and enforce his or her secured 19 obligation, and such award has equal priority status with 20 principal amount of the deed of trust. 21 Painting Serv., Inc., 151 Cal. App. 3d 36, 46 (1984). Wutze v. Bill Reid 22 23 B. Prevailing Party Requirement 24 Dumas argues that by virtue of its status as successor-in- 25 interest to Guarantee Bank (and its predecessor Stockton 26 Savings), it is entitled to collect attorney’s fees and costs 27 incurred in this litigation. 28 The United States does not dispute that a prevailing party 5 1 in a dispute over the amount and priority of a lien is entitled 2 to collect fees and costs. 3 that Dumas incurred its fees pursuing the theory upon which it 4 did not prevail, namely that a large sum should be added to the 5 principal balance to reflect an advance given to the Bells by 6 their lender. 7 enforcing the obligation secured” are permitted a priority under 8 26 U.S.C. § 6323(e)(3). 9 from the “loan advance” theory, the respective experts very 10 11 The United States maintains, however, Only fees “actually incurred in collecting or The United States points out that, apart nearly agreed on the balance due on the loan. Dumas sought at trial an award of $1,034,011.00 but 12 eventually obtained a judgment for $455,936.52, less than half of 13 the award sought. 14 “priority of the judgment actually obtained was stipulated by the 15 parties before Dumas entered the case.” 16 it is undisputed that the priority of the existing lien was 17 established well before Dumas became a party, Bell, 27 F. Supp. 18 2d at 1200, the United States has not pointed to any evidence of 19 a stipulation as to the amount due under the First Deed of 20 Trust.2 Critically, the United States asserts that the Doc. 274 at 4. Although 21 22 23 24 25 26 27 28 2 Dumas points out that under Rule 68 of the Federal Rules of Civil Procedure, the United States could have offered a settlement just prior to trial, which would have shifted the burden to pay for costs to Dumas. Fed. R. Civ. P. 68 (“If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.”). Dumas incorrectly suggests that Rule 68 would also have shifted the burden of paying for attorney’s fees to Plaintiff. In Marek v. Chesney, 473 U.S. 1, 9 (1985), the Supreme Court held that the term “costs” under Rule 68 includes attorney’s fees whenever the underlying statute that 6 1 Dumas maintains that the amount due under the First Deed of 2 Trust was disputed by the United States. In large part, this 3 dispute arose from the existence of two separately dated 4 residential mortgage loan statements from December 2003. 5 first mortgage statement, referencing Loan. No. 72888-00527-001, 6 dated December 9, 2003, reflects a principal balance due of 7 $251,112.49 and a past due balance of $60,692.00, while the 8 second statement, referencing Loan. No. 72888-00527-001 ADV, 9 dated December 15, 2003, reflects a principal balance due of The 10 $328.726.76 and a past-due balance of $462,826.85. The original 11 statements were introduced into evidence, together with the 12 mailing envelopes and testimony suggesting that the two separate 13 loan transactions were both secured under the First Deed of 14 Trust. 15 advance sum in the award to Dumas. 16 theory that the advance should be added to the amounts secured by 17 First Deed of Trust. However, the evidence did not support including the Dumas did not prevail on its 18 Absent evidence of a Rule 68 offer prior to trial or a 19 stipulation that the amount actually recovered was never in 20 dispute, Dumas did obtain a substantial judgment in its favor. 21 Dumas had the burden of proof to show the amount due under the 22 lien and, at least in part, satisfied that burden. “[P]laintiffs 23 24 25 26 27 provides for attorney’s fees expressly includes such fees as “costs.” Here, the applicable statute, 26 U.S.C. 6323(e) does not do so, instead providing that the priority of an antecedent lien shall extend to “the reasonable expenses, including reasonable compensation for attorneys, actually incurred in collecting or enforcing the obligation secured....” § 6323(e)(3). 28 7 1 may be considered ‘prevailing parties’ for attorneys fees 2 purposes if they succeed on any significant issue in litigation 3 which achieves some of the benefit the parties sought in bringing 4 suit.” 5 a prevailing party. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). Dumas is 6 7 C. Adjustment of Fee Award to Reflect Partial Success. 8 The district court has discretion to reduce the amount of a 9 fee award to reflect the partial success of the party requesting 10 fees. 11 (in a section 1988 action, district court may determine extent to 12 which a plaintiff prevailed and adjust fee accordingly without 13 regard to any precise formula). 14 United States, 1978 WL 4590, *4 (C.D. Cal., Sept. 13 1978) is the 15 only case, an unpublished decision, that discusses adjustment of 16 fee awards to reflect partial success in the context of 26 U.S.C. 17 § 6323. 18 two-thirds of its lien, and the district court awarded the 19 creditor only two-thirds of its requested fees. 20 See LeMaire v. Maass, 12 F.3d 1444, 1461 (9th Cir. 1993) Nat’l Equip. Rental Ltd. v. In that case, a creditor prevailed as to approximately Id. Here, the United States argues it would not be reasonable to 21 award Dumas even one-half of its fees and costs request because, 22 “[a]lthough it prevailed on approximately half of its lien claim, 23 the documented portion of the lien was never opposed by the 24 United States and it was fully litigated before Dumas ever 25 obtained an interest or became a party.” 26 discussed above, this is not an entirely accurate description of 27 Dumas’ burden at trial. 28 the amount actually awarded, Dumas bore the burden of proving the Doc. 274 at 6. As Absent evidence of a stipulation as to 8 1 amount due under the lien. 2 A large portion of the evidence, roughly sixty (60) percent, 3 presented by Dumas during the bench trial concerned theories upon 4 which it did not prevail. 5 things, the exhibits admitted into evidence, most of which 6 concerned Dumas’ attempt to prove up its loan advance theory. 7 See Doc. 261 at 2-3. 8 reveals an emphasis during trial preparation on discussions with 9 the expert witness, who testified almost exclusively as to This is evidenced by, among other A review of counsel’s billing records also 10 theories upon which Dumas was unsuccessful. See Doc. 270. 11 Accordingly, it is appropriate to award Dumas 40% of its 12 attorney’s fees request based on limited success. 13 Lodestar calculation will be adjusted accordingly. The final 14 15 D. Lodestar Calculation. 16 The basic fee, or “lodestar,” is calculated by multiplying 17 the number of hours reasonably expended by a reasonable hourly 18 rate. 19 (9th Cir. 2008). 20 documenting the hours expended and submitting evidence in support 21 of the hours worked. 22 (9th Cir. 1992). 23 award fees for hours that are not properly documented.” 24 v. Gates, 987 F.2d 1450, 1453 (9th Cir. 1993). 25 “excessive, redundant, or otherwise unnecessary” are to be 26 excluded from the fee request. 27 hourly rate typically is based on “prevailing market rate[s] in 28 the community” for similar work. Camacho v. Bridgeport Financial, Inc., 523 F.3d 973, 982 The prevailing party has the burden of Gates v. Deukmejian, 987 F.2d 1392, 1397-98 “It is an abuse of discretion for the court to Id. at 1452. Stewart Hours that are The reasonable Jordan v. Multnomah County, 815 9 1 F.2d 1258, 1262 (9th Cir. 1987). 2 The Declaration of Frank T. Zumwalt, of The Zumwalt Law 3 Firm, APC, of Modesto California, explains that he spent a total 4 of 228 hours on this litigation, for which he charged Dumas 5 $300.00 per hour. 6 Hollenback, who spent 18.7 hours on the case, for which he 7 charged his normal hourly rate of $325.00. 8 paralegals at the Zumwalt Firm spent 50 hours on this case, for 9 which Dumas was charged $65.00 per hour. 10 Doc. 270. He was assisted by Mr. John J. In addition, The total fee request, based on the time spent and hourly rates, is $62,727.50. 11 The hourly rates charged by Dumas’ attorneys are reasonable 12 and well within prevailing hourly rates for attorneys before the 13 court in the field of debt collection and real estate security 14 transactions. 15 See Doc. 371, Decl. of M. Jensen. The time expended in representing Dumas’ interest in this 16 case, approximately 250 hours over 2 years of litigation, 17 including a one-day bench trial, after adjustment for Dumas’ 18 partial success, were reasonably expended to protect its lien. 19 “A strong presumption exists that the lodestar figure represents 20 a reasonable fee.” 21 n.4 (9th Cir. 2000). Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1119 22 23 24 E. Costs Bill. The district court has also reviewed the Costs Bill, which 25 requests a total of $14,549.00, $13,851.00 of which is expert 26 witness fees due Richard Goldstein, who testified at length at 27 trial about the Advance Loan. 28 adopted by the district court. Doc. 272. His opinions were not Defendant did not prevail on the 10 1 theory advanced by Mr. Goldstein, whose testimony the court found 2 not to be helpful. 3 calculation of interest and unpaid balance under the promissory 4 note were neither hard nor complex. 5 theories about fixing the unpaid balance that were legal 6 conclusions and not helpful to the court as the trier of fact. 7 Moreover, “[a]bsent express statutory authority for shifting 8 expert witness fees, reimbursement for such fees is limited by 9 [Title 28, United States Code] §§ 1821(b) and 1920(3).” The principles underlying Defendants’ Mr. Goldstein introduced Here, 10 the applicable fee statute, 26 U.S.C. § 6323, makes no specific 11 mention of expert witness fees. 12 recoverable. 13 Goldstein’s services is a $40.00 per day fee, afforded witnesses 14 under 28 U.S.C. § 1821(b), for each day’s attendance in court or 15 at a deposition. 16 Defendant to $40.00 in witness fees. 17 // 18 // 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 // 28 // Expert witness fees are not Accordingly, the only costs taxable for Mr. He attended one day of trial, entitling 11 1 The remaining portions of the cost request ($7.00 for 2 recorder’s office fees; $475.00 for court reporter’s fees; and 3 $216.00 for process server fees) are reasonable and necessary. 4 Along with the $40.00 in non-expert witness fees, the costs award 5 totals $738.00. 6 7 8 9 IV. CONCLUSION For the reasons set forth above, Dumas’ request for attorneys’ fees and costs is granted in part. Defendants’ shall 10 recover forty (40%) of its $62,727.50 attorney’s fee request, or 11 $25,091.00 and $738.00 in costs, for a total award of $25,829.00. 12 13 SO ORDERED 14 DATED: January 15, 2009 15 16 /s/ Oliver W. Wanger Oliver W. Wanger United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 12
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