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Burt v. deNoyo

United States District Court, D. Oregon, Eugene Division

March 16, 2017

JAMES BURT, Plaintiff,
v.
CHRISTINE DENOYO, Defendant and KEY TRADING LLC, RAFAEL DENOYO, DAVID SULLIVAN, and PETER LARKIN, Judgment Defendants.

          OPINION AND ORDER

          ANN AIKEN, UNITED STATES DISTRICT JUDGE

         This dispute over attorney fees arises out of a factually and procedurally complicated case involving plaintiff James Burt's ("plaintiff) claims against judgment defendants Key Trading LLC, Rafael deNoyo, David Sullivan, and Peter Larkin ("judgment defendants").

         BACKGROUND

         In 2005-2006, plaintiff entered into an investment agreement with judgment defendants for two million dollars. PL's Compl. ¶¶ 13-15 (doc. 1); Burt v. Key Trading LLC, 2014 WL 5437070, *1 (D.N.J. 2014). After plaintiff learned the investment scheme was fraudulent, he sought counsel and demanded restitution. PL's Compl. ¶ 19; Burt, 2014 WL 5437070, at *1. In 2010, the parties entered into a settlement agreement in which judgment defendants agreed to repay plaintiff most of his two million dollars. First Am. Compl., Ex. 2 at 26 (doc. 32-2). In 2012, plaintiff filed suit against judgment defendants in the United States District Court for the District of New Jersey for breach of contract, alleging that judgment defendants had failed to make the agreed-to payments. PL's Compl. ¶ 44; Burt, 2014 WL 5437070, at *1. In October 2013, the parties again entered into a settlement agreement. PL's Compl. ¶ 45, Ex. 3; Burt, 2014 WL 5437070, at *1. Judgment defendants again defaulted. PL's Compl. ¶ 46; Burt, 2014 WL 5437070, at *2. In June 2014, the New Jersey District Court entered judgment against judgment defendants for $1, 800, 000. PL's Compl. ¶ 47; Burt, 2014 WL 5437070, at *2.

         In July 2014, plaintiff filed this action against defendant Christine deNoyo ("Mrs. Jordan"), the ex-wife of judgment defendant Rafael deNoyo ("Mr. deNoyo"); plaintiff generally accused Mrs. Jordan of aiding and abetting Mr. deNoyo in both the initial fraud and in his attempts to evade his responsibilities under the settlement agreements. PL's Compl. 1. Mrs. Jordan and Mr. deNoyo divorced in 2000, and Mrs. Jordan remarried in 2003. Jordan Decl. ¶¶ 3, 4 Jul. 31 2014 (doc. 19). Mrs. Jordan had, however, maintained a joint Wells Fargo bank account with Mr. deNoyo during the time period relevant to judgment defendants' fraudulent activities and their breach of multiple settlement agreements with plaintiff. PL's Compl. ¶ 36, Ex. 5; Def.'s Mem. Opp'n Emergency Order Show Cause 1 (doc. 18); Jordan Decl.¶¶ 3, 4 Jul. 31, 2014. Mr. deNoyo regularly deposited money from his Key Trading account into Mrs. Jordan's account, and many of the deposits were contemporaneous with the 2005-2006 investment fraud and obligations under the 2010 and 2013 settlement agreements. PL's Compl. ¶ 36, Ex. 5. Based on these undisputed facts, plaintiff accused Mrs. Jordan of engaging in fraudulent conveyance, securities fraud, civil RICO, and conversion. First. Am. Compl. ¶¶ 66, 76, 78, 113, 120 (doc. 32). Mrs. Jordan responded to plaintiffs claims by asserting that the purpose of the Wells Fargo account she shared with Mr. deNoyo was to make it easier for him to pay his court-ordered child and spousal support payments, and to pay those of Mr. deNoyo's bills that directly impacted their two children, such as the mortgage. Jordan Decl. ¶¶ 7, 8, 9 Jul. 31, 2014.

         After a multi-year discovery battle, I entered summary judgment on December 5, 2016, in Mrs. Jordan's favor. Order Grant. PL's Mot. Summ. J. (doc. 88). While I certainly sympathized with plaintiffs plight as a fraud victim, did not approve of judgment defendants' repeated breach of their contractual agreements, and wanted to honor the New Jersey District Court's 2014 judgment for plaintiff, there was insufficient evidence against Mrs. Jordan regarding her knowledge of her ex-husband's activities to survive summary judgment. Id. Mrs. Jordan now moves for attorney fees. For the reasons set forth below, Mrs. Jordan's motion is denied.

         STANDARDS

         In a diversity action in federal court, state law governs the availability and amount of attorney fees. In re Larry's Apartment, LLC, 249 F.3d 832, 838 (9th Cir. 2001); Kern Oil & Refining Co. v. Tenneco Oil Co., 792 F.2d 1380, 1388-89 (9th Cir. 1986).

         Or. Rev. Stat. §59.115(10) ("59.115") provides that Oregon courts "may award reasonable attorney fees to the prevailing party in a [securities fraud] action under this section."

         In determining whether to award fees under a discretionary statute like 59.115, Oregon courts must first consider the eight non-exclusive factors listed in Or. Rev. Stat. § 20.075(1) ("20.075(1)"). McCarthy v. Or. Freeze Dry, Inc., 957 P.2d 1200, 1204-05 (Or. 1998). 20.075(1) provides:

A court shall consider the following factors in determining whether to award attorney fees in any case in which an award of attorney fees is authorized by statute and in which the court has discretion to decide whether to award attorney fees:
(a) The conduct of the parties in the transactions or occurrences that gave rise to the litigation, including any conduct of a party that was reckless, willful, malicious, in bad faith or illegal.
(b) The objective reasonableness of the claims and defenses asserted by the parties.
(c) The extent to which an award of an attorney fee in the case would deter others from asserting good faith claims or ...

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