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United States v. Staton

United States District Court, D. Hawaii

September 27, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
RONALD B. STATON; BRENDA L. STANTON; NAVY FEDERAL CREDIT UNION; CAPSTEAD MORTGAGE CORPORATION; STATE OF HAWAII, Defendants.

          FINDINGS AND RECOMMENDATION DENYING IN PART AND GRANTING IN PART DEFENDANTS NAVY FEDERAL CREDIT UNION AND CAPSTEAD MORTGAGE CORPORATION'S MOTION FOR ATTORNEYS' FEES AND COSTS

          KEVIN S.C. CHANG UNITED STATES MAGISTRATE JUDGE

         Before the court is Defendants Navy Federal Credit Union and Capstead Mortgage Corporation's (collectively “Lender Defendants”) Motion for Attorneys' Fees and Costs (“Motion”), filed May 4, 2018. The Court finds this matter suitable for disposition without a hearing pursuant to Rule 7.2 (d) of the Local Rules of Practice for the United States District Court for the District of Hawaii (“Local Rules”), after careful consideration of the parties' submissions and the applicable law, the Court FINDS AND RECOMMENDS that Lender Defendants' Motion be GRANTED IN PART and DENIED IN PART.

         BACKGROUND

         The Court and the parties are familiar with the extensive factual and procedural history of this case, therefore, the Court includes only those facts relevant to the disposition of this Motion.

         On June 4, 2012, the United States of America (“Plaintiff”) filed this action seeking to reduce federal tax assessments to judgment and to foreclose federal tax liens on real property. Judgments were entered on September 30, 2014 and November 25, 2014 in favor of the Plaintiff. In February 2015, Plaintiff and Defendant Capstead Mortgage Corporation (“Defendant Capstead”) executed a Stipulation and Order Regarding Priority Between Plaintiff and Lender Defendants (“Stipulation”). In this Stipulation, Plaintiff and Lender Defendants Capstead agreed that Defendant Capstead would have priority over Plaintiff's tax liens. They further agreed that Defendant Capstead would be entitled to $35, 000.00 in attorneys' fees and costs plus any fees and costs over that amount that were incurred by it after the date of the Stipulation for “necessary affirmative legal action”. Stipulation 8. On February 24, 2015, the Stipulation was sent to the Court. On March 2, 2015, Judge Kay issued an Entering Order which stated:

On February 24, 2015, counsel submitted to Chambers a proposed Stipulation and Order Regarding Priority Between Plaintiff United States of America and Defendants Capstead Mortgage Corporation and Navy Federal Credit Union (“Stipulation”). The Stipulation states that the “amount owed to Capstead under the Staton Mortgage, as of 2/2/2015, is $297, 421.35. Stipulation 7. It also states that the “total amount of legal fees and costs owed to Capstead for defending this case is $35, 000.00. Id. 8. However, because these figures have not been established, the Court is unable to issue an Order approving the Stipulation at this time.

ECF No. 115.

         On April 10, 2018, Judge Kay issued an Order Confirming Sale, Approving Commissioner's Report, and Determining Priority of Future Disbursement, which among other things, reserved consideration of the distribution of the sale proceeds “pending a final determination of: (a) the reasonable amount of attorneys' fees and costs to which Capstead Mortgage Corporation is entitled . . .” . ECF No. 330.

         On May 4, 2018, Lender Defendants filed the present Motion and a Bill of Costs. This Court, on May 9, 2018, issued an Entering Order (“EO”) striking the Bill of Costs, saying in pertinent part, “[i]nsofar as the Bill of Costs fails to comply with Local Rule 54, 2, it is HEREBY STRICKEN”. Doc. No. 359. On May 11, 2018, Lender Defendants filed a Motion to Set Aside Order Striking Bill of Costs, or in the Alternative, for Leave to Re-File Bill of Costs (“Motion to Set Aside”). The Court on June 25, 2018, denied the Motion to Set Aside.

         Plaintiff filed its Objection to the Motion for Attorney Fees by Capstead Mortgage Company and Navy Federal Credit Union on June 8, 2018.[1]Defendants Brenda Staton and Ronald Staton (collectively, “Defendants Statons”) filed their Objection to the Motion for Attorney's Fees Filed by Capstead Mortgage Company and Navy Federal Credit Union on June 13, 2018.[2] A Reply was filed by Lender Defendants on June 22, 2018.

         On July 9, 2018, the Court directed Plaintiff and Defendants Statons to file responses to Lender Defendants' argument regarding the 2015 stipulation by August 1, 2018. Plaintiff filed its Brief in Response to the Court's July 9, 2018 Minute Order on July 25, 2018. On August 1, 2018, Defendants Statons filed their Response to Court's July 9, 2018 Minute Order.

         DISCUSSION

         Insofar as Judge Kay has already determined that Lender Defendants are entitled to reasonable attorneys' fees and costs, this Court need only evaluate the reasonableness of the requested fees and costs. See Order Confirming Sale, Approving Commissioner's Report and Determining Priority of Future Disbursements filed on April 10, 2018. ECF No. 330

         A. ...


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