Bryce v. Lawrence (In re Bryce)

In re: BRIAN JOHN BRYCE and CATHERINE GRACE BRYCE, Debtors.BRIAN JOHN BRYCE and CATHERINE GRACE BRYCE, Plaintiffs, v. BRETT LAWRENCE and JANE DOE LAWRENCE,husband and wife and their marital community; JAMES SPOONERand JANE DOE SPOONER, husband and wife and their marital community;and EXCEL FUNDING, INC., a corporation licensed to do business in the State of Washington, Defendants.

Case No. 09-48516

Adversary No. 10-04099

UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA

Entered: October 17, 2013

Below is the Order of the Court.

____________

Paul B. Snyder

U.S. Bankruptcy Judge

(Dated as of Entered on Docket date above)

MEMORANDUM DECISION ON JOINT

APPLICATION FOR COMPENSATION OF

ATTORNEYS' FEES AND

REIMBURSEMENT OF COSTS

NOT FOR PUBLICATION

This matter comes before the Court on a Joint Application for Compensation of Attorneys' Fees and Reimbursement of Costs (Joint Application) filed by Brian and Catherine Bryce (Plaintiffs/Debtors). Based on the pleadings and arguments presented, the Court's findings of fact and conclusions of law are as follows:

I

PROCEDURAL HISTORY

The Plaintiffs filed a Chapter 13 petition in U.S. Bankruptcy Court for the Western District of Washington on November 12, 2009. On January 14, 2010, Defendant Brett Lawrence filed a proof of claim in the Plaintiffs' bankruptcy case in the amount of $145,552.55 (Proof of Claim). On April 27, 2010, the Plaintiffs filed the present adversary proceeding.

Trial was held in this matter on September 10, 11, and 12, November 19 and 20, and December 14, 2012. At trial, the Plaintiffs pursued multiple claims against the Defendants. These claims can be broken down into three categories: federal statutory claims, Washington State statutory claims and Washington State common law claims. The federal statutory claims are for violations of the Truth in Lending Act (TILA), Home Ownership Equity Protection Act (HOEPA) and Real Estate Settlement Protection Act (RESPA). The Washington State statutory claims are for violations of the usury statute, Mortgage Brokers Practices Act (MBPA), and Consumer Protection Act (CPA). The Washington State common law claims are for unconscionability, civil conspiracy, breach of fiduciary duty, misrepresentation and fraud, breach of the duty of good faith and fair dealing, breach of contract and for attorney's fees.

On March 1, 2013, the Court entered a Memorandum Decision and Judgment awarding the Plaintiffs damages for violations of TILA in the amount of $2,000, HOEPA in the amount of $22,260.89, RESPA in the amount of $1,180 and the Washington State usury statute and MBPA through the CPA in the amount of $43,540, for a total damage award of $68,980.89 to be set-off against Lawrence's Proof of Claim. On May 2, 2013, Lawrence filed an Amended Proof of Claim. The Proof of Claim amount has not yet been determined. In the March 1, 2013 Judgment, the Court indicated that the issue of whether any additional relief is warranted, including any entitlement to attorneys' fees, shall be separately noted for hearing.

The Plaintiffs filed the Joint Application on August 2, 2013. In the Joint Application, the Plaintiffs seek an award of the following fees and costs: (1) to Impact Law Group (Impact Law) in the amount of $55,996.74, plus costs of $1,782.74, in affirmative relief, and an amount limited to offset the Proof of Claim filed by Defendant Lawrence in the amount of $2,725; (2) to the Law Offices of Antoinette Davis (Davis Law) in the amount of $74,077.07, plus costs of $723.24, in affirmative relief, and an amount limited to offset the Proof of Claim in the amount of $3,634; and (3) to Guidance to Justice Law (Guidance) in the amount of $43,625, plus costs of $2,290.08, in affirmative relief, and an amount limited to offset the Proof of Claim of $1,250.

In the Reply in Support of Joint Application for Compensation of Attorneys' Fees and Reimbursement of Costs, additional fees were sought for the time expended in bringing the Joint Application. Subsequent to the September 6, 2013 hearing, supplemental declarations were filed by each of the applicants to which time records were attached to support the request. The Defendants filed a response to the supplemental fee requests.

II

DISCUSSION

The Plaintiffs seek an award of attorneys' fees incurred in pursuing only the causes of action for which they were successful. Accordingly, the Plaintiffs seek an award of fees incurred in litigating the TILA (except for rescission), HOEPA, and RESPA (for failure to respond to the Qualified Written Request) claims, and the MBPA and usury claims through the CPA.

An award of fees related to the TILA and HOEPA causes of action are being sought pursuant to 15 U.S.C. § 1640(a)(3). This section authorizes "the costs of the action, together with a reasonable attorney's fee as determined by the court" in the case of any "successful action." Similar language authorizes an award of reasonable costs and fees in a successful RESPA action. 12 U.S.C. § 2605(f)(3). Pursuant to RCW 19.86.090, any person injured by aviolation of the CPA can recover their actual damages, together with the costs of the suit, including reasonable attorney's fees. In its March 1, 2013 Memorandum Decision, the Court determined that the Defendants committed a per se violation of the CPA in violating the MBPA and state usury statute. An award of reasonable attorney's fees and costs is therefore appropriate under RCW 19.86.090.

Prior to evaluating the specifics of the Joint Application, there are several preliminary matters that were discussed at the September 6, 2013 hearing and either agreed to by the parties or ruled on by the Court. The Court will briefly address each of these points in this Memorandum Decision.

A. Preliminary Matters

1. Liability

Although there are several named Defendants in this adversary proceeding, the Plaintiffs stated at the September 6, 2013 hearing that relief is only being sought in the Joint Application against Defendant Lawrence and his marital community. No relief is being sought against the remaining Defendants or the separate property of Jane Doe Lawrence, who was dismissed from this proceeding by Court order entered February 14, 2011 (ECF No. 50).

2. Affirmative Relief

In evaluating the Joint Application, one issue that arose was the distinction between the Plaintiffs' entitlement to affirmative relief as opposed to limiting relief to an offset of any fees awarded against Defendant Lawrence's Proof of Claim. The Plaintiffs acknowledge that they are not entitled to any affirmative relief regarding the causes of action that are barred by the statute of limitations.

At the hearing, the parties acknowledged that the issue of affirmative relief is dependent upon the Proof of Claim. The total amount of the Proof of Claim has not yet been determined.By agreement, the Court will first reduce the Proof of Claim by the amount of fees and costs awarded, and then revisit the issue of affirmative relief if necessary.

3. Chapter 13 Bankruptcy Fees

In the Joint Application, the Plaintiffs seek an award of fees both for services performed in the Plaintiffs' underlying Chapter 13 case and in the adversary proceeding. Although it is difficult to determine from the time records submitted which time entries are for services unrelated to the adversary proceeding, based on the charts prepared by the applicants, the evidence indicates that Impact Law seeks $4,993.45 in fees and Guidance $5,800 in fees and $500 in costs, for a total award of Chapter 13 fees and costs in the amount of $11,293.45. Although such fees may be payable in the context of the Chapter 13 case, the Plaintiffs have not provided any basis for an award of such fees in the adversary proceeding to be paid by Defendant Lawrence. Accordingly, such fees are denied without prejudice to seeking approval in the underlying Chapter 13 case in compliance with the Bankruptcy Code and Local Rules, including 11 U.S.C. § 330 and Local Rules W.D. Wash. Bankr. 2016-1.

4. Allocation Between Applicants

Although Plaintiffs' counsel are now associated with three separate law firms, a Joint Application was filed. As indicated by the Court at the September 6, 2013 hearing, any reductions are to the Joint Application as a whole. In this Memorandum Decision, the Court is not making an allocation as to individual fee request reductions.

B. Lodestar Analysis

The general rule in our legal system is that each party must pay its own attorney's fees and expenses. Congress has created an exception in federal fee-shifting statutes, such as 15 U.S.C. § 1640(a)(3) and 12 U.S.C. § 2605(f)(3), to ensure that federal rights are adequately enforced. The same is true of the fee-shifting provisions of RCW 19.86.090.

In determining the reasonable amount of attorney's fees to be awarded under federal and state fee-shifting statutes, the court is to conduct a lodestar analysis. A lodestar approach calculates a reasonable attorney fee by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate. Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 546, 130 S. Ct. 1662, 1669 (2010). This calculation results in a "presumptively reasonable" fee award. Morales v. City of San Rafael, 96 F.3d 359, 363-64 (9th Cir. 1996).

While courts have considerable discretion in determining the amount of a fee award, they must explain the weight given to each factor considered. The applicant bears the burden of proof to establish that its hourly rate and hours expended are reasonable. Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S. Ct. 1933, 1941 (1983).

In calculating the lodestar, the Court must first determine whether the hourly billing rate is reasonable. The Court determines the appropriate hourly billing rate by evaluating the prevailing market rate in the relevant legal community. In this case, the hourly billing rate for Ms. Darling Hill of Impact Law is stated as $250 per hour and $260 per hour effective January 1,...