United States District Court, W.D. Missouri, Western Division
FERNANDO J. GAITAN, Jr., District Judge.
Pending before the Court are (1) Plaintiff's Motion for Attorneys' Fees, Costs and Expenses (Doc. No. 116); (2) Plaintiff's Motion for an Order Enforcing a Judgment for a Specific Act (Doc. No. 134); and (3) the parties' most recent Status Reports (Doc. Nos. 146 and 147).
I. Motion for Attorneys' Fees (Doc. No. 116)
Plaintiff moves for its attorneys' fees pursuant to the Court's Orders of March 5, 2014 (Doc. No. 105) and March 20, 2014 (Doc. No. 113). Specifically, plaintiff requests an award of $650, 585.43, representing attorneys' fees, costs, and expenses.
This case arose out of a series of agreements entered into in 2007, 2010, and 2012 between Block and Defendant Lutgardo Acevedo-López ("Acevedo"). All of the agreements related, in one way or another, to Acevedo's operation of franchised tax return preparation outlets in nine cities and towns in western Puerto Rico using client information and records belonging to Block.
In 2012, Acevedo defaulted on his payment of substantial amounts owed to Block under his agreements, including more than $500, 000 in royalties owed under a 2007 franchise agreement, $30, 000 owed under a 2010 settlement agreement, and $800, 000 owed under a 2012 assisted acquisition agreement and promissory note. When Acevedo failed to cure his defaults after notice and an opportunity to do so, Block terminated Acevedo's franchise agreement and demanded that Acevedo comply with his post-termination obligations under that agreement. Those obligations included payment to Block of all amounts owed to it by Acevedo and compliance by Acevedo with post-termination covenants in which he agreed to deliver to Block its client records and to refrain from operating a tax preparation business for a limited period within 25 miles of his formerly franchised locations.
Acevedo failed to comply with... Block's demands, and on November 1, 2012, Block filed this action, seeking payment of the amounts owed to it under Acevedo's franchise agreement, settlement agreement, and promissory note, as well as injunctive relief enforcing the post-termination obligations contained in Acevedo's franchise agreement. (Doc. 1.) Block also sought the attorneys' fees, costs and expenses it incurred in this action, as provided for in Section 16(a) of Acevedo's franchise agreement (Doc. 1-2 at 14, § 16(a)) and in Acevedo's promissory note (Doc. 1-5 at 6).
Acevedo counterclaimed alleging breach by Block of the 2012 assisted acquisition agreement between the parties (pursuant to which Acevedo had delivered his promissory note), tortious interference with business relations, and defamation. (Doc. 35.)
The case was... litigated for almost a year and a half, including an interlocutory appeal to the Eighth Circuit Court of Appeals. On March 5, 2014, the Court granted Block's motion for summary judgment on all of the claims and counterclaims in the case (Doc. 105), denied Acevedo's cross-motions for summary judgment, to dismiss for lack of jurisdiction, and to transfer venue ( id. ), and awarded Block its attorneys' fees in this action as provided for in its franchise agreement ( id. at 25). On March 20, 2014, following motions by Acevedo to stay the final injunctive relief ordered by the Court and for reconsideration of the Court's summary judgment decision, the Court clarified its Order of March 5, 2014, and again awarded Block attorneys' fees (Doc. 113).
Doc. No. 116, pp. 1-2.
"In a diversity action, state law governs the availability of attorney's fees where no conflicting federal statute or court rule applies." Weitz Co. v. MH Washington , 631 F.3d 510, 528 (8th Cir. 2011) (citing Burlington Northern R. Co. v. Farmers Union Oil Co. , 207 F.3d 526, 534 (8th Cir. 2000)). Under Missouri law, "[i]f a contract provides for the payment of attorney's fees in the enforcement of a contract provision, the trial court must award them to the prevailing party.'" Lee v. Investors Title Co. , 241 S.W.3d 366, 368 (Mo.Ct.App. 2007) (quoting White v. Marshall , 83 S.W.3d 57, 63 (Mo.Ct.App. 2002)).
In determining the reasonableness of attorneys' fees requested pursuant to a contractual agreement governed by Missouri law, the court should consider: "(1) the time expended; (2) the nature, character and amount of services rendered; (3) the nature and importance of the litigation; (4) the degree of responsibility imposed on the attorney; (5) the amount of money involved; (6) the degree of professional ability, skill, and experience called for and used; and (7) the result obtained." Coral Group, Inc. v. Shell Oil Co., No. 4:05-CV-0633-DGK, 2013 WL 4067625, at *4 (W.D. Mo. Aug. 12, 2013); see also Weitz , 631 F.3d at 528-29.
As an initial matter, defendant asserts that not all of the fees sought are traceable to a contract which provides for the payment of attorneys' fees. Although certain agreements between the parties (the Franchise License Agreement dated August 28, 2007, and the Promissory Note) provide for the imposition of all costs incurred and reasonable attorney's fees in the event of default or collection efforts, defendant asserts that the 2010 Settlement Agreement entered into by the parties has no provision allowing for an award of attorneys' fees. Defendant also argues that certain attorneys' decision to engage in block billing makes it impossible to assess the amount of time associated with work related to the Settlement Agreement. Defendant argues the Court should apply a 20% across the board reduction to Block's fee request to adjust for time spent on the Settlement Agreement claim.
In reply, however, plaintiff notes that under the express terms of the parties' Franchise License Agreement, failure to pay amounts owed under the Settlement Agreement also constitutes a default of the Franchise License Agreement, which does include an attorneys' fees provision. Section 16(a) of defendant's Franchise License Agreement provides at follows:
Upon expiration or termination of this Agreement for any reason, or upon its transfer or assignment as permitted herein, all rights of Franchisee hereunder shall end, and Franchisee shall, at Franchisee's sole cost and expense (unless a successor agreement is entered into pursuant to section 4):
(a) Promptly pay all sums owing to Block and its subsidiaries and affiliates. In the event of termination for any default of Franchisee, such sums shall include all damages, costs and expenses, including reasonable ...