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1st Source Bank v. Neto

United States District Court, N.D. Indiana, South Bend Division

June 13, 2018

1ST SOURCE BANK, Plaintiff/Counter-defendant,
v.
JOAQUIM SALLES LEITE NETO, et al., Defendants/Counter-plaintiffs.

          OPINION AND ORDER

          JON E. DEGUILIO JUDGE UNITED STATES DISTRICT COURT

         Now before the Court is Plaintiff 1st Source Bank's (“1st Source”) Motion For Attorneys' Fees, Costs, and Expenses [DE 112] in response to the Court's granting summary judgment [DE 110] on its claim for breach of contract against Defendants Joaquim Salles Leite Neto (“Neto”) and Wells Fargo Bank Northwest, National Association, in its capacity as Owner Trustee (“Wells Fargo”) (collectively, “Defendants”). For the reasons that follow, the Court finds that the attorney fees and costs sought by 1st Source in the amount of $149, 784.43 are reasonable and allowable, and that the principal, interest, late fees, and charges of $2, 537, 362.52 (plus interest accruing until the entry of final judgment) are consistent with the terms of the documents executed and breached by Defendants.

         I. Background

         In granting 1st Source's motion for summary judgment on January 25, 2018 [DE 110 (as incorporated herein)], the Court found that Wells Fargo admittedly executed and defaulted under the terms of the Note [DE 79-7] and the Loan & Security Agreement [DE 79-8] which 1st Source was entitled to enforce. The Court also determined that Neto had admittedly signed a personal Guarantee for that loan which unconditionally guaranteed to 1st Source his payment of the Note in full when due [DE 79-9]. Despite this personal liability, Neto did not pay the obligations owed to 1st Source. Given the breach, the Court held that 1st Source was entitled to receive the total amount of principal, interest, late fees, and other charges, pursuant to the terms of the documents.[1] Moreover, the Court concluded that 1st Source was entitled to an award of attorney fees, expenses, and costs incurred in this litigation, consistent with section 1 of the Note, section 5(b) of the Loan & Security Agreement, and section 2 of the Guarantee [DE 79-9]. As a result, the Court provided 1st Source an opportunity to establish the amount of fees and expenses owed.

         In support of an award for such damages, 1st Source has filed (1) the affidavit of Alice J. Springer (a named partner of the law firm Barnes & Thornburg LLP, who has represented 1st Source throughout this matter), which explains the type of legal work performed and the education/experience of those performing it [DE 112-1 at 1-7]; (2) Exhibits A and B to Ms. Springer's affidavit, which consist of itemized fees and expenses, accompanied by descriptions of the work performed/expenses incurred, identification of the billing personnel, and disclosure of the time billed/amounts charged [DE 112-1 at 8-69]; and (3) an affidavit of Richard Rozenboom (1st Source's Vice President and Senior Work-Out Officer, who has personal knowledge of the amounts owed under the loan documents as of February 20, 2018) [DE 112-2]. Defendants have not filed any response to the motion.

         II. Discussion

         It is uncontested that Indiana law provides the basis for deciding whether fees can be awarded in a breach of contract action. Indiana adheres to the American rule, under which, in the absence of a statutory provision or an agreement providing for fees, each party is required to pay its own attorney fees. See Osler Inst., Inc. v. Forde, 386 F.3d 816, 818 (7th Cir. 2004) (citing Willie's Construction Co. v. Baker, 596 N.E.2d 958 (Ind.Ct.App. 1992)); see also Reuille v. E.E. Brandenberger Const., Inc., 888 N.E.2d 770, 771 (Ind. 2008) (“Parties to litigation generally pay their own attorney fees, but may certainly agree by contract to do otherwise.”) (citation omitted). However, when a contract exists allowing for the recovery of attorney fees, the provision will be enforced according to its terms unless it violates public policy. Id. (citing Harrison v. Thomas, 761 N.E.2d 816 (Ind. 2002)). The overriding concern in determining whether a fee-shifting provision should be upheld is whether enforcement makes the prevailing party whole. Walton v. Claybridge Homeowners Ass'n, Inc., 825 N.E.2d 818, 825 (Ind.Ct.App. 2005).

         In this case, the Note is subject to the terms of the Loan & Security Agreement [DE 79-7 at 1]; which, in turn, states:

Customer also shall pay to Bank . . . any fees, costs, expenses, penalties, or interest incurred by Bank in connection with this Agreement, any Note or any of the Collateral, including without limitation, fees, costs, or expense of . . . and (vi) all attorneys' and other professionals retained by Bank in connection with any of the foregoing, or any exercise of other remedies upon occurrence of default . . . .

[DE 79-8 at 2].

The Guarantee also states that Neto unconditionally guarantees:
the payment in full when due . . . of all amounts payable by the Borrower to the Lender, including, but not limited to, any and all reasonable counsel fees and other expenses . . . under the Loan Agreement and the other operative documents.

[DE 79-9 at 3].

         Defendants have not asserted that the fees and expenses incurred by 1st Source, as detailed in Ms. Springer's affidavit and the itemized bills, are not allowable under the terms of the loan documents and Guarantee. The fee-shifting provisions are broad and encompass the time and expenses related to litigating this case and enforcing 1st Source's rights under the terms of the contracts executed by Defendants. Thus, in order to make 1st ...


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