Opinion
Civil No. CCB-02-4111
February 2, 2004
MEMORANDUM
Having obtained summary judgment in its favor, the plaintiff in this mortgage dispute has filed a motion for attorneys' fees and costs pursuant to Local Rule 109 and Rule 54(d) of the Federal Rules of Civil Procedure. The parties have fully briefed the motion and no oral argument is necessary. Local Rule 105.6. The court will now grant the motion.
The court's earlier opinion (docket no. 16) included a brief statement of the case's facts.
Various indemnification agreements entered by the defendants entitle the plaintiff to seek fees and costs in this litigation. First, a promissory note that the plaintiff purchased from the original lender stipulates that "the Note Holder will have the right to be paid back by me [the defendants] for all of its costs and expenses in enforcing this Note to the extent not prohibited by applicable law, whether or not a lawsuit is filed. Those expenses include, for example, reasonable attorneys' fees." (Promissory Note ¶ 7(D), Pl.'s Mot. Ex. A.) The deed of trust securing the note likewise indicates that "[i]f Borrower fails to perform the covenants and agreements contained in this Security Instrument,. . . then Lender may do and pay for whatever is necessary to protect the value of the Property and Lender's rights in the Property. Lender's actions may include . . . paying reasonable attorneys' fees. . . . Any amounts disbursed by the lender . . . shall become additional debt of Borrower secured by this Security instrument." (Deed of Trust ¶ 7, Pl.'s Mot. Ex. B.) In addition, in the Seller/Borrower Affidavit that the defendants signed when they sold the property at issue, the defendants agreed to "save, defend, keep harmless, and indemnify the [mortgage company] and its title insurer [the plaintiff in this litigation]. . . of and from all loss, damage, cost, charge, liability or expense, including court cost and attorney's fees, which it may sustain, suffer or be put to under its policy or policies of title insurance or otherwise on account of the omission or misstatements of information contained in this Affidavit. . . ." (Seller/Borrower Aff. at Covenant 1, Pl.'s Mot. Ex. D.) As was established in the court's earlier summary judgment ruling (docket no. 16), the defendants indicated falsely on this affidavit that the property being sold was unencumbered, whereas in fact the defendants owed some $140,000 under the promissory note and deed of trust.
Fee provisions such as these are enforceable under Maryland contract law. See, e.g., Hess Constr. Co. v. Bd. of Educ. of Prince George's County, 669 A.2d 1352, 1354 (Md. 1996) (noting that attorney's fees may be awarded "where parties to a contract have an agreement regarding attorney's fees"). As the beneficiary of an assignment of the original lender's claims ( see Pl.'s Opp'n and Cross-Mot, for Summ. J. Ex. S), the plaintiff may seek a fee award based not only on the Seller/Borrower Affidavit, but also on the note and deed of trust. See, e.g., Pub. Serv. Comm'n of Md. v. Panda-Brandywine, LP, 825 A.2d 462, 469-70 (Md. 2003) (indicating that contract rights are generally assignable).
The defendants have raised several objections to an award of fees, none of which are persuasive. First, contrary to the defendants' suggestion, the closure of the case pending appeal does not bar this court from entertaining the plaintiffs motion. The court retains jurisdiction to consider matters, including the award of fees and costs, that do not affect the judgment but rather are "collateral to the main cause of action." See White v. N.H. Dept. of Employment Security, 455 U.S. 445, 451 (1982); Hicks v. S. Md. Health Sys. Agency, 805 F.2d 1165, 1167 (4th Cir. 1986). Second, as was noted above, the assignment of the original lender's rights permits the plaintiff to seek fees under the note and deed of trust; no additional showing of "privity" is required. Moreover, the promise to indemnify the lender's "title insurer" for damages resulting from false statements in the Seller/Borrower Affidavit applies directly to the plaintiff. Third, the fees the plaintiff seeks are reasonable in light of the factors that bear on the reasonableness of an attorney's fee. See Reisterstown Plaza Assocs. v. Gen. Nutrition Ctr., Inc., 597 A.2d 1049, 1057 (Md. 1991) (basing a contractual fee award on the factors listed in Maryland Rule of Professional Responsibility 1.5(a)); cf. Friolo v. Frankel, 819 A.2d 354, 356, 364-71 (Md. 2003) (listing factors that generally apply to determining the fee award in cases involving a fee-shifting statute). Specifically, the requested fee (some $62,000) is not, as the defendants claim, disproportionate to the recovery (roughly $150,000). See, e.g., Reisterstown Plaza, 597 A.2d at 1057 (holding that a fee award of $141,784.42 was not disproportionate in a case where the recovery totaled only $79,337.91); Fed. Leasing, Inc. v. Amperif Corp., 840 F. Supp. 1068, 1078 (D. Md. 1993) (noting that while a comparison between the fees and the recovery "may be a relevant factor in determining the reasonableness of the fees, it is not dispositive per se"). Nor is it relevant that the plaintiff voluntarily dismissed certain counts of its complaint, considering that the counts on which it prevailed afforded it a complete recovery. Overall, the hourly rate and hours worked indicated by the plaintiffs counsel appear reasonable in light of the complexity of the case, the fee customarily charged, the experience of counsel, and the billing rates of attorneys in the geographic area.
The court will not discuss the factors in greater detail because the defendants have not specified what factors, apart from disproportionality and the dismissal of some counts, render the fee unreasonable in their view. The defendants have requested the opportunity for additional briefing (Def.'s Opp'n at 2), but they have shown no good cause for that request.
Finally, the plaintiffs fee award will include fees and costs associated with the state foreclosure action that preceded this litigation in federal court. As expenditures resulting from the defendants' false representations, these costs are covered by the defendants' indemnity agreements. The court, therefore, has jurisdiction to award them, just as it could award other damages under the provisions at issue. See Mortgage Investors of Wash. v. Citizens Bank Trust Co. of Md., 366 A.2d 47, 50 (Md. 1976) (indicating that "an agreement to pay an attorney's fees is a contract of indemnification"); cf. Oilman v. Wheat, First Sees., Inc., 896 F. Supp. 507, 510 (D. Md. 1995) ("Potential attorneys' fees should be considered in determining whether the amount in controversy in a diversity action exceeds the jurisdictional threshold." (citing Mo. State Life Ins. Co. v. Jones, 290 U.S. 199, 202 (1933))). Accordingly, the plaintiff will recover the full amount of its request ($62,264.50). ( See Bill of Costs, Pl's Mot. Ex. E.) This recovery will, of course, preclude any award of the same fees and costs in state court.
As was explained in the court's previous opinion, the plaintiff intervened in the state action to protect the new owners of the property from foreclosure based on the prior undisclosed mortgage. The plaintiff then purchased the mortgage from the original lender, obtaining an assignment of all claims under the mortgage note and deed of trust. It initiated this action in federal court to recover its costs.
The plaintiff has reserved the right to seek additional fees and costs associated with the pending appeal of this case.
A separate Order follows.
ORDER
For the reasons stated in the accompanying Memorandum, it is hereby Ordered that:
1. the plaintiff's Motion for Attorney's Fees (docket no. 21) shall be GRANTED;
2. the defendants shall pay attorney's fees and costs to the plaintiff in the amount of $62,264.50; and
3. copies of this Order and the accompanying Memorandum shall be SENT to counsel of record.