Newby et al v. Treyled Life Settlements LLC

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
KENNETH NEWBY AS TRUSTEE OF THE §
ANTONIO AND JULIET GRACE CAMPOS §
2021 INSURANCE TRUST, ET AL., §
Petitioners/Cross-Respondents, §
§
v. § CIVIL ACTION NO. 4:25-CV-0866
§
TREYLED LIFE SETTLEMENTS, LLC, §
Respondent/Cross-Petitioner. §
MEMORANDUM AND RECOMMENDATION
The Court affirmed an arbitration award in favor of Respondent on January
15, 2026. 1 ECF 81 (adopting ECF 77). Now before the Court are Respondent
Treyled’s Motion for Award of Attorney’s Fees and Petitioners’ Response. ECF 83;
ECF 84. Having considered the parties’ submissions and the law, the Court
RECOMMENDS that Treyled’s Motion be GRANTED.
I. Legal Standards
Federal Rule 54(d)(2) permits a prevailing party to file a motion for attorney’s
fees no later than 14 days after the entry of judgment. The Motion must “(ii) specify
the judgment and the statute, rule, or other grounds entitling the movant to the award;
1 The District Judge referred the case to the Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1)(A)
and (B), the Cost and Delay Reduction Plan under the Civil Justice Reform Act, and Federal Rule
of Civil Procedure 72. ECF 53.
United States District Court
Southern District of Texas
ENTERED
April 07, 2026
Nathan Ochsner, Clerk
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(iii) state the amount sought or provide a fair estimate of it; and (iv) disclose, if the
court so orders, the terms of any agreement about fees for the services for which the
claim is made.” Id.
A party that successfully defends a court challenge to an arbitration award
may be awarded attorneys’ fees. Delek Ref., Ltd. v. Loc. 202, United Steel, Paper &
Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union, AFLCIO,
891 F.3d 566, 573 (5th Cir. 2018) (citing Int'l Ass'n of Machinists & Aerospace
Workers, Dist. 776 v. Tex. Steel Co., 639 F.2d 279, 284 (5th Cir. 1981)); see also
Metro. Sec. Servs. Inc v. Pro. Ass'n of Ct. Sec. Officers, No. 4:22-CV-02186, 2023
WL 6445792, at *5 (S.D. Tex. Sept. 29, 2023) (holding that district courts may
award attorney’s fees after confirming arbitration award). The Fifth Circuit has held
that attorney fees should be awarded to a party who successfully defends a challenge
to an arbitration award if the challenge is “without justification.” Metro Sec. Servs.,
2023 WL 6445792, at *5 (quoting Delek Refining, 639 F.2d at 573). “Justification”
refers to the type of challenge made to the arbitration award. Id. Fees will not be
awarded to the defending party if the challenge was to the jurisdiction or authority
of the arbitrator because such a challenge is always justified. But, if the challenge
was to the merits of the arbitrator’s decision, even if the challenge was not frivolous,
fees may be awarded to the party who defended the challenge. Id. (citations
omitted). To avoid paying fee awards, the losing party at arbitration often
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“attempt[s] to transform [a merits] claim into an excess-of-powers claim.” Delek
Refining, 639 F.2d at 574 (quoting Hous. Ref., L.P. v. United Steel, Paper &
Forestry, Rubber, Mfg., 765 F.3d 396, 412 (5th Cir. 2014)).
If the district court decides to award fees, the court determines the amount of
the award by the lodestar method. Loeb-Defever v. Mako, L.L.C., No. 24-20410,
2026 WL 483894, at *11-12 (5th Cir. Feb. 20, 2026) (remanding attorney’s fees
judgment in copyright case for recalculation using lodestar method). The lodestar
method requires “multiplying the number of hours reasonably expended on the
litigation by a reasonable hourly rate.” Id. (citing McClain v. Lufkin Indus., Inc.,
519 F.3d 264, 284 (5th Cir. 2008). There is a “strong presumption” that the lodestar
amount is reasonable. Saizan v. Delta Concrete Prods. Co., 448 F.3d 795, 800 (5th
Cir. 2006). However, a court may adjust the lodestar based on the factors identified
in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).2 Loeb-
Defever, 2026 WL 483894, at *11. The Johnson factors are:
(1) the time and labor required; (2) the novelty and difficulty of the
questions; (3) the skill requisite to perform the legal service properly;
(4) the preclusion of employment by the attorney due to acceptance of
the case; (5) the customary fee; (6) whether the fee is fixed or
contingent; (7) time limitations imposed by the client or the
circumstances; (8) the amount involved and the results obtained; (9) the
experience, reputation, and ability of the attorneys; (10) the
“undesirability” of the case; (11) the nature and length of the
professional relationship with the client; and (12) awards in similar
cases.
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Id. n. 9.
II. Analysis
Treyled seeks $444,390.29 in attorney’s fees for successfully defending the
challenge to the arbitration award, plus $80,000 in conditional appellate fees. The
Trust3 argues that Treyled is not entitled to any fees because its challenge went the
authority of the arbitrator rather than the merits of his decision. Alternatively, the
Trust argues that the most Treyled is entitled to as reasonable and necessary fees is
$231,920.33, plus $70,400.00 in appellate fees.
A. Treyled is entitled to an award of attorney’s fees.
Just as it did in its Motion for Vacatur (ECF 61-1), the Trust argues that it
challenged the Arbitrator’s authority under Section 10(a) of the FAA, not the merits
of his decision. The Trust contends: (1) the Arbitrator did not address its affirmative
defenses and thus did not issue an award on issue issues before him; (2) the
Arbitrator’s Award violates public policy because it violates the collateral source
rule; (3) the Arbitrator’s Award betrayed the “essence” of the contract; and (4) the
Arbitrator exceeded his authority by allowing Treyled to earn a commission for
unlicensed life settlement brokering. ECF 84 at 7-9. In confirming the Arbitration
3 Petitioners, Kenneth Newby, Steven Campos, Jeanne Campos-Grech, and Joseph Campos, as
Trustees of the Antonio and Juliet Grace Campos 2012 Insurance Trust, are referred to collectively
as the Trust.
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Award, the Court rejected the Trust’s arguments, concluding that the Trust did not
meet its burden under § 10(a) because it proved only that “it vehemently disagrees
with the Arbitrator’s conclusions and rejection of its affirmative defenses.” ECF 77
at 7. The Court also rejected the Trust’s argument that the Arbitrator’s decision
violated the essence of the contract, implicitly holding that the Trust’s argument
went to the correctness of the Arbitrator’s decision. Id. at 7-8. Further, the Court
held that the Fifth Circuit does not recognize a public policy defense to the
confirmation of an arbitration award under § 10. Id. at 9.
Under the Fifth Circuit’s decision in Delek Refining, whether Treyled is
entitled to attorney’s fees depends on the type of challenge the Trust lodged against
the arbitration award, not whether the challenge was ultimately successful. 639 F.2d
at 573-74. The reasoning in the Memorandum and Recommendation for
confirmation of the Award, which was adopted in full by the District Judge, supports
the conclusion that the Trust in fact challenged the merits of the Arbitrator’s Award,
not his authority to issue the Award. See ECF 77. The Trust recognizes that a party
who argues the arbitrator “ignored the contract’s plain language” can be required to
pay the defending party attorney fees, but it offers no persuasive distinction for why
its argument here that the Arbitrator ignored the essence of the contract does not
entitle Treyled to an award of fees. ECF 84 at 6-7. Much like the types of cases
referenced in Delek Refining, the Trust is attempting to transform its merits
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challenge into a challenge that the Arbitrator exceeded his powers. The Court
concludes that the Trust’s challenge is “without justification” because it goes to the
“intrinsic merits’ of the dispute rather than the arbitrator’s authority. Thus, the
challenge to the intrinsic merits of the arbitral award justifies an award of fees to
Treyled, even if the challenge to the merits was not frivolous. Delek Refining, 639
F.2d at 573.
B. Treyled’s fee request should be reduced.
Treyled has submitted evidence in support of its fee application in the form of
an Affidavit of Counsel and redacted invoices. ECF 83-2; ECF 83-3. The Trust
argues that Treyled’s lodestar fee request of $444,390.29 is not reasonable and must
be reduced by:
(1) the fees Treyled claims in connection with Treyled’s prosecution of
its unsuccessful Motion to Dismiss for Lack of Personal Jurisdiction
and Motion to Dismiss for Improper Venue; (2) unreasonable fees that
Treyled claimed in connection with staffing menial tasks with
inappropriately expensive lawyers; (3) fees supported by redacted
billing entries that render it impossible to gauge the reasonableness of
the litigation activity reflected therein; and (4) a flat 22% discount on
the fees Treyled claims after applying the foregoing reductions, which
is equal to the smallest service period discount that GDC itself actually
applied to Treyled’s invoices.
ECF 84 at 10. The Court agrees that some reduction of the requested fee is
appropriate, but not in the amounts contended by the Trust.
First, the Court rejects the Trust’s argument that fees for Treyled’s motions to
dismiss for lack of personal jurisdiction and improper venue are not reasonable or
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necessary because the motions were denied. The motions were not frivolous and the
motion to transfer venue was granted. The Court also rejects the Trust’s argument
that the invoices are too heavily redacted to allow for reasonable analysis. This case
does not require the segregation of fees. The invoices are sufficiently detailed for
the Trust to pose its objection that Treyled unreasonably used expensive lawyers for
menial tasks. Indeed, the Court finds this objection well-founded and will reduce
the award by the amount recommended by the Trust for this category of fees,
$15,894.50.
In addition, the Court agrees with the Trust that the billing rates should be
discounted. Treyled seeks fees based on attorney hourly rates of $945-$2,245 per
hour and paralegal hourly rates of $495 to $785 per hour, rates which include
multiple fee increases during the course of litigation. ECF 83-2. This was not a
complicated case involving novel issues or a highly specialized area of law. The
Trust suggests a 22% discount across the board based on the fact that in several
service periods, counsel for Treyled agreed to discount their rates by 30-61%. Id.
Twenty-two percent is the lowest discount given during any period. Id. While a
party is not limited to recovery of negotiated discount rates, it is support for the
argument that the full “rack” rate differs from the customary rates charged by
lawyers. The Trust applied the 22% discount to the amount of fees left in each
service period after applying its other deductions. ECF 84 at 17. Using the Trust’s
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methodology and applying the 22% discount across the board to the remaining fee
amount after the Court’s recommended deductions results in a reduction of
$127,268.97.
Finally, the Trust points out that Treyled’s request for $80,000 in appellate
fees appears arbitrary. It is not supported by the Affidavit of Treyled’s counsel or
any other evidence. Applying the same 22% discount applied to other fees, Treyled
contends that the appellate fees should be capped at $70, 400. The Court agrees
appellate fees in the amount of $70, 400 is reasonable.
C. Conclusion and Recommendation
For the reasons discussed above, the Court RECOMMENDS that Treyled’s
Motion for Award of Attorney’s Fees be GRANTED IN PART. The Court
RECOMMENDS that the Final Judgment entered in this case incorporate an award
of $298,226.82 in attorney’s fees, and $70,400.00 in conditional fees in the event of
an unsuccessful appeal by the Trust.
The Clerk of the Court shall send copies of the memorandum and
recommendation to the respective parties, who will then have fourteen days to file
written objections, pursuant to 28 U.S.C. § 636(b)(1)(C). Failure to file written
objections within the time period provided will bar an aggrieved party from attacking
the factual findings and legal conclusions on appeal. Douglass v. United Servs. Auto.
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Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc), superseded by statute on
other grounds.
Christina A. Bryan
United States Magistrate Judge
Signed on April 07, 2026, at Houston, Texas.
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