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JP Morgan Chase Bank, N.A. v. Winget

United States District Court, E.D. Michigan, Southern Division

July 5, 2017

JPMORGAN CHASE BANK, N.A., Plaintiff/Counter-Defendant,
LARRY J. WINGET and the LARRY J. WINGET LIVING TRUST, Defendants/Counter-Plaintiffs.



         I. Introduction

         In the words of Judge Batchelder, [b]efore [the Court] is the latest episode in a longstanding saga that must now come to a close.” JPMorgan Chase v. Winget, 15-1924 (6th Cir. Feb. 6, 2017). Regrettably, this commercial dispute resists closure. J. P. Morgan Chase (Chase) is the administrative agent for a group of lenders that extended credit to Venture Holdings Company, LLC (Venture) under a credit agreement. In 2008, Chase sued Larry J. Winget (Winget) and the Larry J. Winget Living Trust (Winget Trust) to enforce a Guaranty and two (2) Pledge Agreements entered into by Winget and signed by Winget and the Winget Trust in 2002, guaranteeing the obligations of Venture. As will be explained, the Court entered a judgment in favor of Chase that enforced the Guaranty and Pledge Agreements against Winget and the Winget Trust, as separately liable. It also entered an order awarding Chase attorney fees and costs incurred in connection with enforcing the Guaranty. As will also be explained, following the revelation that Winget transferred all of the Winget Trust's assets to Winget, Chase has claimed that the transfer was fraudulent.

         Before the Court are the following motions:

Chase's Supplemental Motion for Costs and Expenses of Collection Pursuant to Final Judgment (Doc. 709)
Chase's Motion for Judgment on the Pleadings (Doc. 699)
Chase's Motion to Compel Compliance with Court Order (Doc. 719)
Chase's Motion to Compel (Doc. 720)

         For the reasons that follow, Chase's motion for costs and expenses will be held in abeyance pending a ruling from the Court of Appeals for the Sixth Circuit on Winget's appeals.

         Chase's motion for judgment on the pleadings will be granted as to liability only on its constructive fraud claim.

         Chase's motions to compel will be granted.

         II. Chase's Motion for Costs and Expenses

         A. Relevant Background

         After years of litigation and multiple appeals, the Court entered an Amended Final Judgment against Winget and the Winget Trust in the amount of $425, 113, 115.59 and limiting Chase's recourse as to Winget as to $50 million as provided for in the Guaranty (Doc. 568). Winget appealed the Amended Final Judgment. The Court of Appeals for the Sixth Circuit affirmed. JP Morgan Chase v. Winget, No. 15-1924 (Feb. 6, 2017).

         The Court also issued an order awarding Chase $11, 154, 874.65 in attorney fees and expenses (Fee Order) associated with its efforts to enforce the Guaranty and Pledge Agreements through May 31, 2015. (Doc. 671). Winget and the Winget Trust have appealed the Fee Order.

         Winget then moved for partial satisfaction of the Amended Final Judgment, contending that his payment of $50 million satisfied the Fee Order (Doc. 672). The Court denied the motion (Satisfaction Order). (Doc. 683). Winget and the Winget Trust have appealed the Satisfaction Order.

         Winget's appeal of Fee Order and the Satisfaction Order was heard by the Court of Appeals for the Sixth Circuit on June 13, 2017.

         During the pendency of these appeals, Chase has moved for the costs and expenses incurred since the issuance of the Fee Order in the amount of $2, 000, 316.24, which it says is the amount of costs and expenses incurred by Chase for the services of Sidley Austin LLP and Dickinson Wright PLLC between June 1, 2015 and November 30, 2016.

         In response, Winget argues:

I. The Court should refrain from deciding this motion until the Sixth Circuit has decided Winget and the Trust's pending appeal of the Fee Order and Satisfaction Order
II. Chase should not be awarded expenses related to the prosecution of its fraudulent transfer claim
III. Chase's attorneys' hourly rates grossly exceed the prevailing market rate and should be significantly reduced
IV. Chase's attorneys' hours are excessive and reflect duplicative work and over-staffing
V. Chase's attorney and paralegal rates are excessive and inappropriate to the extent they charge professional rates for administrative tasks
VI. Chase's fees should further be reduced to exclude excessive, inappropriate or otherwise unrecoverable “expenses, ” including research fees, travel costs, fees associated with inappropriate collection actions taken by Chase, vague entries, redacted invoices

         In reply, Chase argues:

I. There Is No Basis for a Stay Pending Resolution of Winget's Appeal of this Court's Prior Ruling on Costs and Expenses
II. Chase Is Entitled to All Costs and Expenses Incurred in Collecting the Guaranteed Obligations from the Trust
III. The Court Has Already Determined that the Rates Incurred and Paid by Chase are Reasonable
IV. Winget's Argument that Chase's Attorneys' Hours Reflect Duplicative Work and Overstaffing Is Unsupported
V. Chase Is Entitled to Recover the Time Spent by Paralegals
VI. Winget's Other Proposed Reductions Are Without Merit

         B. Discussion

         Winget and the Winget Trust's argument that the Court should stay a ruling on Chase's motion pending the outcome of the appeal has merit. In opposing a stay, Chase says:

Winget cannot wield an appeal to delay Chase's collection of the fees and expenses he is obligated to pay. At most, the Sixth Circuit will have ruled by the time the Court decides this Motion and will provide guidance, or, the Sixth Circuit will have not ruled and Winget can seek to have any appeal consolidated with an appeal from the resolution of this motion. In either case, delay is not warranted.

(Doc. 718 at p. 6).

         The problem for Chase is that the Sixth Circuit has not yet ruled on the appeals but the appeals have been submitted. So, there is no guidance from the Sixth Circuit and consolidation at this point is not an option. It would not be prudent for the Court to award Chase additional costs and expenses under the circumstances. In the event of a reversal of the Fee Order and/or Satisfaction Order, Chase would have to modify its request.

         That said, the Court does note that Winget and the Winget Trust's additional arguments are not likely to carry the day. As Chase notes, the Court has already found the attorney hourly rates reasonable. The Court has also already found that Chase is entitled to all of the costs of collection on the Amended Final Judgment which included prior cases. Chase's fraudulent conveyance claim which was necessarily precipitated by Winget's revocation of the Winget Trust is related to Chase's efforts to collect on the Amended Final Judgment. At best, Winget and the Winget Trust may be able to convince the ...

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