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Metlife Bank, N.A v. John Badostain

May 4, 2011

METLIFE BANK, N.A., PLAINTIFF,
v.
JOHN BADOSTAIN, JON L. LEWIS, BRIAN J. NEVILLE, MICHAEL D. MCLEAN, AND EAGLE HOME MORTGAGE, LLC, DEFENDANTS.



The opinion of the court was delivered by: Honorable Candy W. Dale Chief United States Magistrate Judge

MEMORANDUM DECISION AND ORDER AWARDING ATTORNEY'S FEES

On December 30, 2010, the Court granted Plaintiff's motion for an award of attorney's fees incurred as a result of having to defend against Defendants' motion for Rule 11 sanctions. (Mem. Dec. and Order, Dkt. 41.) In accordance with the Court's order, Plaintiff filed a petition for requested fees with supporting declarations, (Dkt. 42), and Defendants filed an objection to the amount of the requested award. (Dkt. 43.) Having reviewed the parties' submissions, and for the reasons set forth below, the Court will award Plaintiff the amount of $14,224.50 in attorney's fees.

BACKGROUND

The factual background of this case was outlined in the Court's previous Memorandum Decision and Order. (Dkt. 41.) Because the parties are familiar with the facts, the Court recounts them here only as necessary to explain the award of fees.

In late 2009, Defendant John Badostain left his position as Regional Sales Leader at MetLife Bank, N.A. ("MetLife") and went to work in a similar position for one of MetLife's competitors -- Defendant Eagle Home Mortgage, LLC ("Eagle"). In his position as MetLife's Regional Sales Leader, Defendant Badostain oversaw MetLife's branches in the Mountain West Region, which included all branches in Idaho, as well as branches in Nevada and Utah. Shortly after Defendant Badostain went to work for Eagle, several of MetLife's loan officers in branches throughout Idaho left their employment with MetLife and went to work for Eagle.

MetLife instituted the present action alleging that Defendant Badostain, and three other former employees, solicited MetLife employees, causing a "mass exodus" of loan officers from MetLife to Eagle. MetLife claims that this alleged solicitation breached certain contractual obligations that the individual defendants had entered into as part of their employment with MetLife. MetLife also claims that Eagle was complicit in the above alleged solicitation and thereby is liable for tortious interference with contract.

Based on similar factual allegations arising outside of Idaho, MetLife also brought suit in the United States District Court for the District of Nevada against John Badostain and Eagle Home Mortgage of California, Inc.*fn1 See MetLife Bank, N.A. v. Riley, 3:10-cv-122-ECR-VPC (D. Nev. 2010) [hereinafter District of Nevada Order]. The law firm Payne & Fears, LLP, represents Mr. Badostain and the Eagle defendants in both cases.

On July 16, 2010, following initial discovery and an informal warning to MetLife regarding Defendants' intention to file motions for sanctions in both cases, Defendants provided MetLife with draft motions for Rule 11 sanctions relating to both cases. The draft motions were substantively identical; both alleged that counsel for MetLife violated Rule 11 by filing complaints containing factual contentions "that have absolutely no evidentiary support." (Def.s' Mot. For Rule 11 Sanctions at 2, Dkt. 28.) In both cases, defense counsel failed to provide MetLife with the supporting declarations referenced in the motions. After receiving the draft motions, counsel for MetLife requested copies of the declarations relating to both cases, but did not receive the declarations until August 20, 2010, when defense counsel filed formal motions for Rule 11 sanctions in the District of Nevada and with this Court. MetLife opposed the motions for sanctions and filed motions for attorney's fees in both cases under Rule 11(c)(2).

On October 13, 2010, the District Court for the District of Nevada denied the defendants' motion for sanctions without a hearing. District of Nevada Order at 6. The court held that the draft motion, unaccompanied by the relied upon declarations, did not comply with Rule 11's safe harbor provision.*fn2 Id. at 5. The court appeared troubled by the defendants' failure to provide the declarations upon plaintiff's request, stating that "[t]he court cannot conceive of a reason that defendants declined to provide the declarations referenced in their draft motion upon plaintiff's requests, but hopes that such conduct does not reflect a deliberate attempt to impede cooperation between the parties." Id. The court, however, did not find clear evidence that defendants had filed their motion for a nefarious purpose and denied MetLife's motion for attorney's fees. Id. at 6.

On November 30, 2010, this Court held a hearing on Defendants' motion for sanctions and MetLife's motion for an award of fees incurred as a result of opposing the motion. Following the hearing, the Court issued a Memorandum Decision and Order, (Dkt. 41), denying Defendants' motion for sanctions and granting MetLife's motion for fees. Like the District Court for the District of Nevada, this Court denied Defendants' motion on procedural grounds -- finding the service of a draft motion unaccompanied by the declarations relied upon in the motion inadequate for the purposes of Rule 11's safe harbor requirement, which contemplates the service of a "filing ready motion" 21 days prior to the filing of the actual motion with the court. See Truesdell v. Southern California Permanente Medical Group, 293 F.3d 1146, 1151 (9th Cir. 2002).

Unlike the District Court for the District of Nevada, this Court granted MetLife's motion for fees. The Court found that fees were warranted under Rule 11(c)(2) primarily for two reasons: (1) Defendants' motion contained a misstatement of law on a key issue, which Defendants left in their motion even after being notified in writing by Plaintiff's counsel that the draft motion for sanctions contained the same misstatement; and (2) Defendants' motion emphasized the theory and merits of their case, which is improper in a motion for Rule 11 sanctions. See Fed. R. Civ. P. 11, Advisory Committee notes to 1993 Amendments ("Rule 11 motions . . . should not be employed . . . to test the legal sufficiency or efficacy of allegations in the pleadings; other motions are available for those purposes. Nor Should Rule 11 motions be prepared to emphasize the merits of a party's position . . . .").*fn3

Pursuant to the Court's order, MetLife submitted a Petition for Attorney Fees, (Dkt. 42), and supporting declarations setting forth the amount of fees and how they were incurred. (Dkt. Nos. 42-1 and 42-2.) MetLife seeks $22,561.50 in fees. (Pet. For Atty. Fees at 3, Dkt. 42.) This sum includes both the fees that were incurred solely in connection with MetLife's opposition to Defendants' motion for sanctions in the District of Idaho, and the fees for the work done simultaneously in connection with both the District of Nevada and the District of Idaho cases. MetLife refers to the joint work as "indivisible," and submits that "exactly the same legal research was used in both this case and Nevada . . . . If the Nevada case never existed, Plaintiff still would have incurred this sum of $22,561.50." (Id. at 2-3, Dkt. 42) (emphasis in original). Alternatively, MetLife states that, "if the Court believes the 'indivisible fees' should be apportioned equally to each case, then the appropriate fee award would be $14,224.50." (Id. at 3). The alternative figure is calculated by "taking all fees that were incurred solely for the Idaho case ($5,887.50), plus 50% of the 'indivisible fees' ($8,337.00)." (Id.)

MetLife's petition for fees and supporting materials set forth the hours worked on the cases, the attorneys who worked on the cases, the rates of the various attorneys, and a brief description of the work performed for each of the billing entries.

Defendants do not object to MetLife's counsel's billing rates or to the particular billing entries listed in the petition for fees. (Def.s' Obj. to Pl.'s Pet. For Atty. Fees at 2, Dkt. 43.) They do, however, object to a fee award that would include fees and costs incurred in connection with the District of Nevada action. (Id.) Defendants also object to an award of fees in connection with MetLife's Motion to Strike, (Dkt. 33), which was filed in ...


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