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Sterling Savings Bank v. Thornburgh Resort Co. LLC

United States District Court, D. Oregon

March 23, 2015

STERLING SAVINGS BANK, a Washington Chartered Commercial Bank, Plaintiff,
v.
THORNBURGH RESORT COMPANY LLC, an Oregon Limited Liability Company, Defendant.

Charles R. Markley, Sanford R. Landress, Greene & Markley, P.C., Portland, OR, Attorneys for Plaintiff

Gary Underwood Scharff, Law Office of Gary Underwood Scharff, Portland, OR, Heather A. Brann, Portland, OR, Attorneys for Defendant.

OPINION AND ORDER ON ATTORNEY FEES AND COSTS

GARR M. KING, District Judge.

Plaintiff Sterling Savings Bank ("Sterling") successfully obtained a declaration that the claims Thornburgh Resort Company, LLC ("Thornburgh") made against Sterling were invalid. I dismissed the counterclaims alleged in Thornburgh's First Amended Answer and Counterclaims.

Pending before the Court are Sterling's Motion for Order Awarding Plaintiff Attorneys' Fees and Costs Against Defendant [95] and Thornburgh's Motion to Strike Markley Declaration [98]. Because Markley filed a Supplemental Declaration correcting any errors in his initial Declaration, Thornburgh's Motion to Strike is denied as moot.[1] Sterling seeks attorney fees in the amount of $178, 713.50[2] and costs in the amount of $1, 238.43.[3]

BACKGROUND

To resolve the pending motions, the following facts are relevant from my January 5, 2015 Opinion and Order granting summary judgment to Sterling.

Thornburgh began designing and obtaining permits for a destination resort on its land in about 2004. Parker Group Investments, LLC ("PGI") agreed to invest in Thornburgh's project and, in exchange, Thornburgh agreed to grant PGI an interest in its property as security for the payment of any loan PGI obtained.

On November 19, 2007, Sterling Savings Bank loaned $10, 956, 000 to PGI pursuant to a promissory note (the "Note"). Thornburgh was not a party to the Note. PGI, Thornburgh, and others executed and delivered to Sterling a Line of Credit Trust Deed on Thornburgh's property; the Trust Deed encumbered Thornburgh's real property and secured the Note. The Note was also secured by cash owned by PGI in the amount of $7, 229, 655 ("Cash Collateral") held in a § 1031 exchange account.

On December 17, 2007, unbeknownst to Thornburgh, Sterling arranged for the disbursement of the Cash Collateral to pay down other debts owed to Sterling. Pl.'s Mem. in Supp. of Mot. for Summ J. 2 (presenting the disbursement as a fact); Pl.'s Answer to Def.'s First Am. Countercl. ¶¶ 18, 21. Sterling did not request replacement collateral immediately. There is evidence Sterling attempted to obtain replacement collateral several months later, but no evidence it succeeded.

The PGI loan fell into default. Sterling commenced a non-judicial foreclosure of the Trust Deed in October 2010. Two days before Sterling was scheduled to foreclose, Sterling sold the Note and Trust Deed.

On March 11, 2011, Thornburgh filed for Chapter 11 bankruptcy in an attempt to stop the foreclosure. Thornburgh then brought an adversary proceeding in Bankruptcy Court against Sterling and other defendants in May 2011. It alleged Sterling caused Thornburgh $20 million dollars worth of damage by, among other things, disbursing the Cash Collateral without obtaining replacement collateral. Sterling and the other defendants in that case admitted to the release but denied "all other allegations." DeLashmutt Decl. Ex. S, at ¶ 11 [62].

The Bankruptcy Court lifted the stay. One day before the scheduled foreclosure, Thornburgh brought a declaratory and quiet title action against several entities in Deschutes County. The nonjudicial foreclosure of the Trust Deed occurred on August 31, 2011.

Sterling then brought this declaratory action. After a period of abatement and an attempt at mediation, the litigation commenced again with Thornburgh's First Amended Answer and Counterclaims. After consideration of the parties' cross-motions for summary judgment, I granted Sterling's motion and denied Thornburgh's motion. As I explained in the Opinion and Order, I concluded Sterling's disbursement of the Cash Collateral constituted only an equitable defense to liability under the suretyship contract and not a basis for counterclaims.

In its motion, Sterling also sought attorney fees under ORS 20.105(1), which required me to award attorneys' fees if I determined there was "no objectively reasonable basis" for Thornburgh's counterclaims. I concluded proper application of the principles in the Restatement demonstrated Thornburgh had no reasonable basis to bring its counterclaims against Sterling in this court. As a result, I concluded Sterling, as the prevailing party, is entitled to its attorney fees. However, I urged the parties to confer and attempt to settle Sterling's attorney fee request, and I indicated I would carefully consider all objections.

Sterling now seeks the following fees: 66.2 hours of Markley's time at a rate of $425 per hour, or $28, 135; 373.6 hours of Landress' time, at rates of $300 to $350, for $128, 410.50; 68 hours of Steinberg's time, at a rate of $310, for $21, 080; and a total of $1, 088 for paralegal time.

DISCUSSION

I. Motion for Attorney Fees

Thornburgh attempts to reopen the issue of whether Sterling is entitled to attorney fees at all under ORS 20.105, but it is too late for its new arguments. Based on the summary judgment briefing presented to me, I concluded Sterling is entitled to its attorney fees. Thornburgh gives me no compelling reason to reconsider my conclusion. See Smith v. Clark Cnty. School Dist., 727 F.3d 950, 955 (9th Cir. 2013) (reconsideration of a court's order must show newly discovered evidence, a change in controlling law, or that the ...


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