United States District Court, E.D. Virginia, Alexandria Division
Katherine R. Dauphin, Plaintiff,
Louis A. Jennings and Beverly L. Hennager, Defendants.
O' Grady United States District Judge.
matter comes before the Court on Movant Jennings Motor
Company, Inc.'s ("JMC") Motion for Attorney
Fees, Dkt. No. 227; Plaintiff Katherine Dauphin's
Praecipe in Support of Previously Itemized Claims, Dkt. No.
230; Defendants' Motion for Leave to File Supplemental
Memorandum in Opposition to Jennings Motor Company, Inc's
Motion for Attorney's Fees, Dkt. No. 271; and Defendant
Louis Jennings' Motion for a Hearing. Dkt. No. 388. For
the reasons set forth below, the Court DENIES the Motions.
the lessor of property previously owned by the Kay Jennings
Family Limited Partnership ("KJFLP"). The president
of JMC is Michael Jennings, a limited partner in KJFLP.
Plaintiff is a general and limited partner in KJFLP.
Plaintiff filed suit to dissolve KJFLP in December 2014. Dkt.
No. l, Exh. 1. The case was removed to this Court on February
9. 2015. Dkt. No. 1. The parties entered into a settlement
agreement in this matter on August 10, 2015. Dkt. No. 133,
Exh. 1. As authorized by the settlement agreement, the Court
appointed a Special Master to, among other things,
"account  to the Court of any and all monies due to
the partnership or paid from partnership assets since 2013,
and whether any party must repay funds to the partnership. In
addition, the Special Master will determine whether the
former tenant is liable for any breach of the lease
agreement." Dkt. No. 133, Exh. 1, ¶ 3. The Special
Master accepted briefing by the partners respecting demands
for repayment and alleged moneys due to the partnership. To
this end, Defendants filed a specification of claims against
JMC asserting that JMC breached its lease with KJFLP.
Plaintiff also filed a claim alleging that Defendant Louis
Jennings misused Partnership funds. The Special Master held a
hearing on April 13, 2016 to resolve all of the parties'
claims. The Special Master issued a report on May 13, 2016
finding that JMC was not liable for the alleged breaches of
the lease and that Louis Jennings owed $62, 043.49 to the
Partnership. The report was adopted by the Court on July 11,
2016. Dkt. No. 55.
December 22, 2016, JMC moved for attorney's fees. Dkt.
No. 257. Section 18.4 of the Lease provides that "[i]n
the event of default by either party, the prevailing party
will be entitled to costs, reasonable attorney's fees and
interest[.]" Id. at 2, ¶ 8. JMC contends
that the Special Master's decision regarding the claims
against JMC constituted a default against the Defendants, JMC
was the substantially prevailing party in the dispute, and
therefore it is entitled to its attorney's fees.
December 23, 2016, Plaintiff filed a Praecipe in Support of
Previously Itemized Claims asserting that certain amounts
payable by the Partnership should be shifted to the
Defendants as individuals. Specifically, Plaintiff demands
that: (1) Louis Jennings should be held responsible for the
$62, 043.49 identified in the Special Master's May 13,
2016 Report; (2) Plaintiff should receive an award of fees
incurred in pursuing the claim detailed in the May 13 Report;
(3) the entire cost of the appointment of the Special Master
should be shifted from KJFLP to Defendants; (4) the costs of
the accounting of Partnership assets should be shifted from
KJFLP to Defendants; (5) Defendants should be ordered to pay
pre-judgment interest from the date they filed the Complaint
until the principal sums are paid. Plaintiff contends that
this liability shifting is justified under the terms of the
Partnership Agreement. Dkt. No. 260, at 3 (quoting Dkt. No.
184, Exh. 1, First Am. ¶ Second).
February 15, 2017, Magistrate Judge Theresa Buchanan issued a
Report and Recommendation addressing the apportionment of
fees for activities undertaken at the behest of the Special
Master. Dkt. No. 298. Judge Buchanan recommended "that
the Court find that all attorneys' fees for work
performed at the direction of the Special Master, whether by
counsel for defendants ... or by counsel for Katherine
Dauphin or Michael Jennings ... be deducted from the gross
proceeds of sale of the properties prior to division into
shares for each partner and distribution." Id.
at 4. This recommendation encompassed fees incurred in the
hearings before the Special Master. Id. at 4-7.
Judge Buchanan expressly excluded fees and costs incurred
"for work on behalf of Jennings Motor Company Inc., as
that entity was not a partner but rather a tenant."
Id. at 19. The Court adopted Judge Buchanan's
findings. Dkt. No. 342.
demands for fees and costs in the Motions before the Court
fall squarely within the Court's prior orders,
particularly its adoption of Judge Buchanan's February 15
Report and Recommendation.
JMC's Fees and Costs
February 15 Report and Recommendation, Judge Buchanan
expressly omitted JMC's attorney's fees from the
awards attributable to the Partnership assets. See
Dkt. No. 298 (permitting Michael Jennings to submit a
statement of fees "but not for work on behalf of
Jennings Motor Company Inc., as that entity was not a partner
but rather a tenant."). The Court adopted that Report
and Recommendation, Dkt. No. 342. Pursuant to those
decisions, JMC's fees are not payable by KJFLP.
the Report and Recommendation did not address JMC's
argument that fees are warranted pursuant to the lease
agreement, that agreement does not support a fee award. As
discussed above, § 18.4 of the lease agreement provides
that "[i]n the event of default by either party, the
prevailing party will be entitled to costs, reasonable
attorney's fees and interest[.]" Dkt. No. 257, at 2,
¶ 8. But the proceeding before the Special Master on May
13, 2016, was not an action for default as provided by the
describes Defendant's filings with the Special Master as
"complaints" and JMC's response as an
"answer" but these terms of art do not transform
the Special Master's hearing to account for the
partnership assets into an adversarial legal proceeding to
establish default. Rather, Judge Buchanan found that the
briefings and presentation of evidence to the Special Master
were necessary conditions to KJFLP's accounting of money
owed to the Partnership. Dkt. No. 298 at
5-6. In this sense, the prevailing party in the Special
Master's hearing was KJFLP because it was able to resolve
accounting disputes and move closer to generating the highest
value for its assets. While JMC was relieved of its duty to
pay money back to KJFLP this relief was incidental to the
object of the hearings. Accordingly, the attorney fee clause
in the lease agreement between JMC and KJFLP is inapplicable
to the fees and costs incurred in the hearings before the
Special Master. For this reason, JMC's Motion is denied.