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Crossroads Equity Partners, LLC v. Dogmatic Products, Inc.

United States District Court, W.D. Virginia, Charlottesville Division

July 22, 2014

CROSSROADS EQUITY PARTNERS, LLC, a Virginia Limited Liability Company, Plaintiff,
v.
DOGMATIC PRODUCTS, INC., et al., Defendants.

MEMORANDUM OPINION

GLEN E. CONRAD, Chief District Judge.

This case is presently before the court on the motion for attorneys' fees and expenses filed by the plaintiff, Crossroads Equity Partners, LLC ("CEP"). For the following reasons, the motion will be granted.

Background

On December 13, 2010, CEP loaned Dogmatic Products, Inc. ("DPI") $150, 000.00. The loan is evidenced by a Promissory Note (the "Note"), and secured by an Unconditional Guaranty (the "Guaranty") provided by Reynolds E. Moulton, III and Maura Woodward Moulton.

On October 21, 2011, after DPI failed to make payments required under the Note, CEP filed suit against DPI and the Moultons for breach of the Note and Guaranty. The defendants eventually retained counsel to represent them in connection with the claims brought by CEP. In the answers filed by counsel, the defendants admitted that DPI had not made payments required by the Note; that CEP had demanded payment of all sums under the note and that DPI had not paid such sums; and that a substantial sum was due under the Note and Guaranty.

Relying on the defendants' admissions and a declaration from Charles Lunsford, its owner and manager, CEP moved for summary judgment on March 14, 2012. On April 26, 2012, having received no brief in opposition from the defendants and no further requests for an extension of time, CEP filed a request for entry of summary judgment in its favor. The court entered a final order granting CEP's motion for summary judgment on May 8, 2012.

Exactly one year later, the defendants, after retaining new counsel, filed a motion for relief from the final order, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. The court held a hearing on the Rule 60(b) motion on November 4, 2013. At the conclusion of the hearing, the defendants requested leave to file a declaration or other evidence in support of their motion. By order entered November 6, 2013, the court granted the defendants' request and gave them ten days to submit additional evidence. Thereafter, the defendants filed a seventeen-page declaration from Mr. Moulton along with forty-two pages of exhibits. CEP subsequently requested and obtained leave to depose Mr. Moulton. Following the conduct of Mr. Moulton's deposition, CEP filed a supplemental response on December 12, 2013. By opinion and order entered February 19, 2014, the court denied the defendants' motion.

On March 5, 2014, CEP filed the instant motion seeking to recover attorneys' fees and expenses incurred in opposing the Rule 60(b) motion. The matter has been fully briefed and is ripe for decision.[1]

Discussion

I. Attorneys' Fees

The availability of attorneys' fees in a diversity action is generally governed by state law. See Hitachi Credit Am. Corp. v. Signet Bank , 166 F.3d 614, 631 (4th Cir. 1999) (citing Culbertson v. McCall Coal Co. , 495 F.2d 1403, 1405-06 (4th Cir. 1974)). In Virginia, courts adhere to "the so-called American Rule, ' [under which] a prevailing party generally cannot recover attorneys' fees from the losing party.'" Dewberry & Davis, Inc. v. C3NS, Inc. , 732 S.E.2d 239, 243 (Va. 2012) (quoting Ulloa v. QSP, Inc. , 624 S.E.2d 43, 49 (Va. 2006)). "This rule, however, does not prevent parties to a contract from adopting provisions that shift the responsibility of attorneys' fees to the losing party in disputes involving the contract." Id.

In this case, both the Note and the Guaranty speak to attorneys' fees and expenses. The Note provides that DPI "will pay all reasonable costs and expenses, including reasonable attorney's fees, incurred by [CEP] if [CEP] initiates suit for the purpose of collection of this Promissory Note." Note at 2, Docket No. 1-2. Similarly, the Guaranty provides that Mr. and Mrs. Moulton must pay "all costs and expenses, including reasonable attorneys' fees, which may be incurred in successfully enforcing the payment of any amount or the performance of any Obligation or this Guaranty." Guaranty at 1, Docket No. 1-3. Under the plain meaning of these contractual provisions, CEP is entitled to an award of reasonable fees and expenses incurred in conjunction with its continued efforts to collect the payments due under the Note and the Guaranty.

To properly calculate a reasonable fee award, the court must determine the appropriate lodestar figure. McAfee v. Boczar , 738 F.3d 81, 88 (4th Cir. 2013). This figure is determined by multiplying the number of hours reasonably expended by a reasonable hourly rate. Id . To ascertain what is reasonable in terms of hours expended and rates charged, the court considers the factors set forth in Johnson v. Georgia Highway Express, Inc. , 488 F.2d 714 (5th Cir. 1974) (the "Johnson factors"). Id .; see also Robinson v. Equifax Info. Servs., LLC , 560 F.3d 235, 243 (4th Cir. 2009) ("In deciding what constitutes a reasonable' number of hours and rates, we have instructed that a district court's discretion should be guided by the [Johnson] factors."). Those factors are as follows:

(1) The time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation, and ability of the attorney; (10) the undesirability of the case within the legal community in which the ...

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