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Fifth Third Bank v. Revelation Energy, LLC

United States District Court, S.D. West Virginia, Huntington Division

June 6, 2019

FIFTH THIRD BANK, an Ohio Banking Corporation, Plaintiff,
v.
REVELATION ENERGY, LLC, a Limited Liability Company, and REVELATION ENERGY HOLDINGS, LLC, a Limited Liability Company, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. CHAMBERS UNITED STATES DISTRICT JUDGE

         Pending before the Court is Plaintiff Fifth Third Bank's Renewed Motion for Attorneys' Fees. ECF No. 65. For the foregoing reasons, the Court GRANTS the motion and ORDERS Plaintiff to submit its calculation of attorneys' fees and costs no later than June 20, 2019. Defendants may file a response no later than June 27, 2019. Once the Court has determined the amount of fees and costs recoverable, an amended judgment order shall be filed.

         I. BACKGROUND

         As more fully set out in the Court's April 18, 2019 Memorandum Opinion and Order, (ECF No. 59), the present matter arises from multiple defaults by Defendants on two loans and a subsequent forbearance agreement.[1] Apr. 18, 2019 Memo. Op. & Order, at 2-3, ECF No. 59. In return for Plaintiff's agreement to forbear its rights under the Loan Documents, Defendants stipulated to owing a principal amount of $7, 662, 684.94, agreed to a new repayment plan to include accruing interest, and consented to bear the costs and attorneys' fees reasonably required to enforce the Forbearance Agreement. Forbearance Agreement, at 2-3, 8, ECF No. 33-6. This agreement selected Ohio law as governing. Id. at 12.

         On April 18, 2019, this Court granted summary judgment in favor of Plaintiff, finding no legal excuse for Defendants continued defaults. Plaintiff was permitted to calculate the outstanding principal and accrued interest under either the Forbearance Agreement or the underlying Loan Documents. Apr. 18, 2019 Mem. Op. & Order, at 1. In relevant part, the Court found Plaintiff was under no obligation to negotiate further repayment terms after Defendants' most recent default. Id. at 5. Ultimately, Plaintiff sought relief under the Forbearance Agreement. Pl.'s Supp. Brief, at 1, ECF No. 60. Plaintiff now moves for attorneys' fees.[2] Renewed Mot. Att'y Fees, ECF No. 65.

         II. LEGAL STANDARD

         Under the “American Rule, ” parties generally bear their own costs in litigation. In contract actions, Ohio court's allow for exceptions to this rule when “(1) a statute creates the duty to pay fees, (2) the losing party acted in bad faith, or (3) the parties contract to shift fees.” The Scotts Co. v. Cent. Garden & Pet Co., 256 F.Supp.2d 734, 748 (S.D. Ohio 2003) (citing McConnell v. Hunt Sports Enterprises, 725 N.E.2d 1193 (Ohio Ct. App. 1999)). However, “contracts for the payment of attorney fees upon default of a debt obligation are void and unenforceable” as a matter of public policy. Wilborn v. Bank One Corp., 906 N.E.2d 396, 401 (Ohio 2009). The primary concern is that borrowers in contracts of adhesion have unequal bargaining power, and thus no meaningful choice as to their terms. Id.

         In spite of this public policy concern, the Ohio legislature has provided statutory carveouts for the enforcement of attorneys' fees in certain contracts of indebtedness. When a commitment to pay such fees arises in connection with the enforcement of any written evidence of indebtedness- other than for personal, family, or household purposes-those fee-shifting clauses can be exempted from the general policy-based prohibition. Ohio Rev. Code Ann. § 1319.02. To qualify under this statute, the contract in question must be judicially enforced, in excess of $100, 000.00, and only obligate a reasonable amount of fees. Id.

         III. DISCUSSION

         Plaintiff contends the public policy concerns are not invoked in the instant case, proposing the Ohio Supreme Court's holding in Wilborn v. Bank One Corporation illustrates this. Renewed Mot. Att'y Fees, at 2 (citing 906 N.E.2d 396, 401 (Ohio 2009)). Alternatively, Plaintiff claims the statutory exception under Ohio Revised Code § 1319.02 applies. Id. at 3. Since the latter statement is certainly true, [3] the Court analyzes the instant case-with relative ease-under this statute.

         The Forbearance Agreement enshrined a commercial debt in excess of $100, 000.00 and permitted the recovery of attorneys' fees in any action brought to enforce this agreement. Forbearance Agreement, at 3, 8. Defendants counter that Plaintiffs suit was not “reasonably required, ” as mandated by the Forbearance Agreement, because Plaintiff “simply refused to work with [Defendants].” Defs.' Resp., at 2, ECF No. 66. However, as this Court has explained prior, Plaintiff was under no obligation extend repayment terms ad infinitum. Plaintiff received a judgment in its favor, (ECF No. 63), and is thus entitled to attorney's fees. All that is left is to determine a reasonable amount of fees.

         IV. CONCLUSION

         For these reasons, the Court GRANTS Plaintiff 's Renewed Motion for Attorneys' Fees, (ECF No. 65), and ORDERS Plaintiff to submit its calculation of attorneys' fees and costs no later than June 20, 2019. Defendants may file a response no later than June 27, 2019 The Court DIRECTS ...


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