Nosek v. Ameriquest Mortgage Company et al

United States Bankruptcy Court
District of Massachusetts
In re: 	)
)
JACALYN S. NOSEK, 	) 	Chapter 13
DEBTOR. 	) 	Case No. 02-46025 -JBR
____________________________________)
)
JACALYN S. NOSEK, 	) 	Adversary Proceeding
PLAINTIFF, 	) 	No. 04-4517
)
v. 	)
AMERIQUEST MORTGAGE COMPANY,)
DEFENDANT 	)
)
MEMORANDUM OF DECISION ON MOTION TO ASSESS ATTORNEY’S FEES AND
COSTS
This matter came before the Court for hearing on the Plaintiff’s Motion to Assess
Attorney’s Fees and Costs [#108] in which the Plaintiff seeks fees and costs in the amount of
$86,215.00 and $2,395.80, respectively, and the Opposition of Ameriquest Mortgage Company
[#118]. For the reasons set forth herein, the Motion is ALLOWED, albeit in an amount
significantly lower than that requested.
Background
The facts established after trial in this adversary proceeding are set forth in In re Nosek,
2006 WL 1867096, *6 (Bankr. D. Mass. June 30, 2006). The facts pertinent to the issues now
before the Court can be summarized as follows.
The Plaintiff filed a multi-count complaint against the Defendant. She obtained partial
summary judgment as to the issues of liability on two of those counts, namely that the Defendant
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The Defendant’s opposition to the summary judgment motion argued that the motion
was filed two days after the deadline set by the Pretrial Order. The two affidavits submitted in
opposition to the summary judgment motion do not address the RESPA issue.
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violated the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605(e), by failing
to respond to the Plaintiff’s July 23, 2004 qualified written request, which, in turn, is a per se
violation of M.G.L. c. 93A (“Chapter 93A”). 1 The Court left the issue of the amount of damages
for trial. Following trial, the Court awarded the Plaintiff only $1.00 for damages under RESPA,
stating:
In the instant case, the Plaintiff failed to establish how she was
damaged by the Defendant not responding to her qualified written
request. In testimony, the Plaintiff suggested that due to the
Defendant’s failure to respond, she was unable to refinance her
mortgage. While the Court is sympathetic and may agree with the
Plaintiff’s assertion, she did not provide a basis to award actual
damages. No documents were offered as evidence of the proposed
refinancing. No evidence was proffered [that] refinancing was
even offered; there is no evidence of the terms of a refinancing
which the Plaintiff could expect to receive. The Court only heard
the testimony of the Plaintiff. The Court does not mean to suggest
that the testimony was not credible. In the instant case, the Court
found all of the witnesses to be credible. Instead the Court is
frustrated because it was not provided with any numbers upon
which to calculate an award for actual damages.
Id. at *5 (emphasis added).
While acknowledging that RESPA damages may include emotional distress damages, the
Court denied an award for emotional damages and noted “[i]n order to award emotional distress
damages for the RESPA violation, the Plaintiff must show a causal link between the violation
and the emotional distress. The Plaintiff failed to do this.” Id. at *6. Similarly, finding that the
Plaintiff’s proof of actual damages under Chapter 93A suffered the same infirmities as that
proffered to establish actual damages under RESPA, the Court awarded the Plaintiff statutory
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Judgment entered for the Defendant on Count One (Truth in Lending violation), Count
Four (unjust enrichment), Count Seven (lost income). The Court lacked jurisdiction to try Count
Six, a claim for intentional infliction of emotional distress.
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damages of $25.00. Id. at *8. For the same reasons as stated under Count Two, the Court finds
that the Plaintiff provided insufficient evidence upon which the Court may base damages.” But
this does not mean that the Court did not find that the Plaintiff had been damaged. To the
contrary, the Court found she had been harmed as part of its decision to grant partial summary
judgment on the issue of liability under RESPA and Chapter 93A. The Plaintiff’s failure of
proof related to the lack of evidence quantifying the harm and thus the Court limited the
damages to the statutory amounts.
The Plaintiff also prevailed on her claim for breach of the covenant of good faith and fair
dealing and was awarded $250,000. Judgment entered for the Defendant on three of the
remaining counts. 2 Following entry of judgment, the Plaintiff filed her Motion to Assess
Attorney’s Fees and Costs. In the Motion, she requests attorney’s fees and costs incurred during
the period from February 2004 through May 2006 although the bulk of the work was done in
connection with the trial. The fee application has been prepared with the detail required by
MLBR 2016-1.
The Defendant filed a notice of appeal but, assuming that the judgment is final, this Court
has jurisdiction to hear the request for attorney’s fees. White v. New Hampshire Department of
Employment Security, 455 U.S. 445, 450 at n.14, 102 S.Ct. 1162, 1166 at n.14, 71 L.Ed.2d 325
(1982). The award of attorneys fees, although based upon success in the underlying action, are
not part of the compensation for the injury giving rise to the action. Nevertheless, the Plaintiff’s
claim for intentional infliction of emotional distress is yet to be decided.
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Position of the Parties
The Plaintiff asserts she is entitled to recover all of her fees and costs, including those
incurred prior to the qualified written request under RESPA and those incurred in connection
with exploring the possibility of filing a class action. She argues she is entitled to recover for
work done because the counts all arise from one common set of facts.
The Defendant argues that the Plaintiff cannot be awarded any damages as her RESPA
claim was not a “successful action,” an award of nominal damages is an insufficient basis for the
award under RESPA and Chapter 93A, and that RESPA preempts an award of attorney’s fees
under chapter 93A. Alternatively, the Defendant argues that if the Court does award attorney’s
fees, most of the fees sought are not recoverable as they did not relate to either the RESPA and
Chapter 93A counts.
Discussion
Under the so-called “American Rule,” “the prevailing litigant is ordinarily not entitled to
collect a reasonable attorneys’ fee from the loser.” Alyeska Pipeline Co. v. Wilderness Society,
421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975). “[W]hen Congress has chosen
to depart from the American rule by statute, virtually every one of the more than 150 existing
federal fee-shifting provisions predicates fee awards on some success by the claimant; while
these statutes contain varying standards as to the precise degree of success necessary for an
award of fees--such as whether the fee claimant was the ‘prevailing party,’ the ‘substantially
prevailing’ party, or ‘successful’ --the consistent rule is that complete failure will not justify
shifting fees from the losing party to the winning party.” Ruckelshaus v. Sierra Club, 463 U.S.
680, 684, 103 S.Ct. 3274, 3277 (1983).
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Massachusetts has also provided for fee shifting in Chapter 93A cases whenever the court
finds a violation of Chapter 93A § 2. M.G.L. c. 93A § 9(4). Thus as with the federal fee shifting
statutes, success in the Chapter 93A action is fundamental to any award of attorneys’ fees.
Attorneys’ Fees under RESPA
11 U.S.C. § 2605(f) provides in pertinent part:
Whoever fails to comply with any provision of this section shall be
liable to the borrower for each such failure in the following
amounts:
(1) Individuals: In the case of any action by an individual, an
amount equal to the sum of--
(A) any actual damages to the borrower as a result of the failure;
***
(3) Costs: In addition to the amounts under paragraph (1) or (2), in
the case of any successful action under this section, the costs of the
action, together with any attorneys fees incurred in connection
with such action as the court may determine to be reasonable under
the circumstances.
The Defendant is correct in its assertion that absent damages caused by a RESPA
violation, there is no “successful action” under RESPA. Collier v. Wells Fargo Home Mortgage,
2006 WL 146170, *6 n.9 (N.D. Tex. May 26, 2006); Caddell v. Citimortgage, Inc., 2006 WL
625970, *6 n.9 (N.D. Kan. Feb. 14, 2006); Hutchinson v. Delaware Savings Bank, 410 F.
Supp.2d 374, 348 (D.N.J. 2006); Byrd v. Homecoming Financial Network, 407 F. Supp.2d 937,
946 (N.D.Ill. 2005); Cortez v. Keystone Bank, 2000 WL 536666, *12 (E.D.Pa. May 2, 2000).
The Defendant, however, is incorrect in asserting that the Plaintiff suffered no actual damage
from its RESPA violation. 	There is a difference between a plaintiff’s inability to quantify her
damages and suffering no damages. 	In the former instance, nominal damages may be awarded;
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such an award supports a finding of liability. Although there are no RESPA cases addressing
this issue, the cases involving other fee-shifting statutes support this notion. See Potomac Elec.
Power Co. v. Electric Motor and Supply, Inc., 262 F.3d 260, 265-66 (4th Cir. 2001), cert.
denied, 535 U.S. 927, 122 S. Ct. 1297, 152 L.Ed. 2d 209 (2002)(award of nominal damages is
sufficient to support liability under RICO). In the instant case the Plaintiff testified that she was
unable to refinance her mortgage as a result of the RESPA violation and the Court found her
testimony credible. As noted the Court was frustrated because it was not provided with the
calculations upon which to base an award. Thus, because the Court refused to speculate as to the
amount of actual damages, it awarded nominal damages instead.
As the Supreme Court has instructed in Farrar v. Hobby, 506 U.S. 103, 112, 113 S.Ct.
566, 121 L.Ed.2d 494 (1992), “a plaintiff who wins nominal damages is a prevailing party under
§ 1988.” “The touchstone of the prevailing party inquiry must be the material alteration of the
legal relationship of the parties in a manner which Congress sought to promote in the fee statute.
Where such a change has occurred, the degree of the plaintiff's overall success goes to the
reasonableness of the award under Hensley, not to the availability of a fee award vel non.”
Texas State Teachers Ass' v. Garland Independent School Dist., 489 U.S. 782, 792-93, 109 S.Ct.
1486, 1494, 103 L.Ed.2d 866 (1989). This same test should be applied to RESPA actions.
Although RESPA uses the words “successful action” rather than “prevailing party,” the intent is
the same. Ruckelshaus, 463 U.S. at 684, 103 S.Ct.3277.
Moreover, in the recent case, Boston’s Children First v. City of Boston, 395 F.3d 10 (1st
Cir. 2005), the First Circuit reviewed the Farrar opinion and determined that Farrar’s holding
“recognizes that nominal damages are ‘a material alteration of the legal relationship between the
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parties’ because ‘[a] judgment in any amount, whether compensatory or nominal, modifies the
defendant’s behavior for the plaintiff’s benefit by forcing the defendant to pay an amount of
money he otherwise would not pay.’” Id. at 14-15 (quoting Farrar, 506 U.S. 103, 112, 113 S.Ct.
566). The Plaintiff achieved an award of damages, albeit nominal and therefore her RESPA
action was successful.
Having found that the Plaintiff’s action was successful, the statute mandates an award of
attorney’s fees. It is only the amount of the award left to the Court’s discretion. de Jesus v.
Banco Popular de Puerto Rico, 918 F.2d 232, 233 (1st Cir. 1990)(successful action under Truth
in Lending Act compelled award of attorneys’ fees).
Attorney’s fees under chapter 93A
The Court need not linger over the Defendant’s threshold argument that the Bankruptcy
Code preempts the Plaintiff’s right to seek fees under RESPA. It does not. The Defendant’s
reliance upon Walls v. Wells Fargo, N.A., 276 F.2d 502 (9th Cir. 2002) is misplaced.
Recognizing that there is case law to the contrary, the Walls court joined those courts that have
found the attempted use of the Fair Debt Collections Practices Act (“FDCPA”) to address
alleged violations of the discharge injunction of § 524 of the Bankruptcy Code improper.
The Bankruptcy Code provides its own remedy for violating § 524,
civil contempt under § 105. To permit a simultaneous claim under
the FDCPA would allow through the back door what Walls cannot
accomplish through the front door--a private right of action. This
would circumvent the remedial scheme of the Code under which
Congress struck a balance between the interests of debtors and
creditors by permitting (and limiting) debtors’ remedies for
violating the discharge injunction to contempt.
Id. at 510. In the instant case the Plaintiff has not yet received a discharge.
The Defendant also argues that the Plaintiff’s award of nominal damages under Chapter
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93A was based upon the finding that its RESPA violation was a per se violation of Chapter 93A.
Under Hershenow v. Enterprise Rent-A-Car, 445 Mass. 790, 840 N.Ed2d 526 (2006), a mere
technical violation, without more, does not support a claim under Chapter 93A. In other words,
as with RESPA, a plaintiff must prove that she was damaged. But as set forth above, Chapter
93A does not require quantification of those damages any more than RESPA does. Instead the
statutory damages stands to compensate harm that is otherwise not quantifiable. As with
RESPA, the amount of the award reflects upon the reasonableness of the fees; it does not bar
their award.
Amount of Fees
Before deciding the amount to be awarded, the Court will address the arguments raised
by the Defendant with respect to certain categories of fees. First, the Defendant asserts, without
citation, that neither the specific RESPA violation at issue herein nor Chapter 93A permit a
plaintiff to recover attorneys’ fees incurred prior to a the date when a response to a letter is due.
Nothing in the statutes language compels such a conclusion. Moreover common sense dictates
that competent counsel would research and investigate the alleged violations before any demand
is sent. Common sense dictates that such services should be included in the award.
The Defendant argues that time spent exploring whether this case should be expanded
into a class action should not be included in the fee award. The Plaintiff’s attorney counters that
he had conversations with other practitioners who had clients whose mortgagees were held by
the Defendant as well as consultations with seasoned trial attorneys. This is not an unreasonable
practice. To the contrary it reflects prudent practice.
The Defendant asks the Court to deny compensation for the time spent in preparing the
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Plaintiff’s unsuccessful post-trial motion to amend the complaint. The Court agrees this time
should not be included. Similarly the time spent by the Plaintiff’s counsel on the issue of this
Court’s jurisdiction over the claim for intentional infliction of emotional distress cannot be
charged to the Defendant. The Court also agrees that the 0.35 of an hour spent in connection
with the Chapter 13 Trustee’s motion to dismiss is incorrectly included in the fee application.
Finally the Court turns to the Defendant’s argument that the Plaintiff is not entitled to
fees incurred in connection with the trial. As the Court has previously stated, the Defendant’s
conclusion that the Plaintiff “lost” at trial is not correct. The Plaintiff failed to quantify her
damages; she was able to sustain her burden that she was damaged by the Defendant’s actions.
Nevertheless, the Court is mindful that the ultimate award under the fee-shifting counts was only
$26.00. Moreover, the Defendant’s liability under these counts was established prior to the trial
when the Defendant failed to challenge the Plaintiff’s motion for partial summary judgment on
the issue of liability under RESPA and Chapter 93A. Further, the Court is mindful that the
Plaintiff’s failure to quantify her damages, while not fatal to her establishing that she had been
harmed, is relevant to the reasonableness of attorney’s fees incurred in connection with the trial.
The only issue to be tried under the RESPA and Chapter 93A counts was the extent of her
damages but the Plaintiff did not quantify that amount at trial. Nevertheless the same facts
relevant to her claims of injury under RESPA and Chapter 93A also proved her successful
breach of covenant claim. They are sufficiently intertwined that it would be a waste of the
Plaintiff’s counsel’s time and this Court’s resources to attempt to assign each separate time entry
to only one cause of action. Such an exercise of frustration and perhaps futility is not required.
Rini v. United Van Lines, Inc., 903 F. Supp. 234, 238 (D. Mass. 1995); Wasserman v.
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Agnostopoulis, 22 Mass. App. Ct. 672, 682, 497 N.E.2d 19 (1986).
This Court is experienced in reviewing fee petitions and awards attorneys’ fees. It is an
important aspect of many of the bankruptcy cases that come before the Court on a regular basis.
The Court has reviewed numerous applications such as the one currently before the Court. The
Court is quite familiar with this adversary proceeding and the efforts of the Plaintiff’s counsel.
The Court recognizes that this case is the result of a long and arduous course between the parties.
To a great extent the Defendant has participated in, if not directly caused, the Plaintiff to incur
many of the fees requested. On balance after reviewing the time records submitted and in light
of the awards under RESPA and Chapter 93A, the Court awards attorneys’ fees in the amount of
$45,000 and costs of $2,395.80.
A separate order will issue.
Dated: September 19, 2006 	__________________________
Joel B. Rosenthal
United States Bankruptcy Judge
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