Opinion
Bankruptcy Case No. 03-42400, Adv. Proceeding Case No. 04-6134.
September 1, 2006
Jay A. Kohler, Idaho Falls, Idaho, Attorney for Plaintiffs. W. Brent Eames, Rexburg, Idaho, Attorney for Defendants Greg and Diana Thomason.
Craig Christensen, Pocatello, Idaho, Attorney for Defendant New Britain Investors, LLC.
Monte Gray, Pocatello, Idaho, Attorney for Defendant R. Sam Hopkins.
R. Sam Hopkins, Pocatello, Idaho, Chapter 7 Trustee.
MEMORANDUM OF DECISION RE PHASE ONE ATTORNEY FEES AND COSTS
Introduction
After the Court issued its Memorandum Decision, Docket No. 138, disposing of the issues considered during Phase One of the trial of this action, Defendants Greg and Diana Thomason ("Debtors") and Defendant New Britain Investors, LLC, each filed motions seeking an award of attorney fees and costs as against Plaintiffs. Docket Nos. 140-42; 144-150. Plaintiffs filed objections to the requests. Docket Nos. 155-160. A hearing was conducted on the fee motions on August 3, 2006 and, at its conclusion, the Court allowed the parties additional time to supplement the record with fee affidavits and responses. The parties have done so. Docket Nos. 178; 187. The Court has carefully considered the arguments of the parties and their submissions. This Memorandum constitutes the Courts findings, conclusions and disposition of the issues raised by the fee motions. Fed.R.Bankr.P. 7052; 9014.
Chapter 7 Trustee R. Sam Hopkins does not object to the request for fees based upon his understanding that fees are only sought as against Plaintiffs and not the bankruptcy estate. Docket Nos. 143; 153.
Factual Background
Plaintiffs Thomason Farms Inc., together with it principals, Byron, Marilynn, Nicholas and Sandra Thomason, filed a multi-count complaint in this adversary proceeding against chapter 7 Debtors Greg and Diana Thomason, William Forsberg, New Britain Investors, LLC, and Debtors' chapter 7 Trustee, Sam Hopkins. The Court ordered that the issues raised in the action be bifurcated for trial. The first portion of the trial, referred to as Phase One, involved the parties' claims to rights in certain properties known as Agren, Teton Pastures, Homestead, Farmstead and Sonja's House; Debtors' ownership of stock in Thomason Farms, Inc.; ownership of certain cattle; and the amount due New Britain on a promissory note secured by mortgages against the Teton Pastures property. On June 9, 2006, the Court issued its Memorandum of Decision addressing these issues.
Relying upon various state and federal statutes and rules, Debtors and New Britain now seek payment from Plaintiffs of attorney fees and costs incurred thus far in this action. New Britain contends that it was a prevailing party, and that it is entitled to recover costs of $5,291.63 and attorney fees totaling $78,297.44 under the terms of its contract and pursuant to Idaho R. Civ. P. 54(e), Idaho Code § 12-120(3) and L.B.R. 7054.1. Debtors also argue that they prevailed in Phase One, and that they should recover costs of $1,751 and attorney fees totaling $18,930 under those same statutory provisions. Plaintiffs disagree.
The parties also asserted entitlement to fees as the prevailing party under Fed.R.Civ.P. 54(d) and Dist. Ct. L. Rule 54.1. Those rules do not apply in bankruptcy proceedings, except to the extent incorporated by the Federal Rules of Bankruptcy Procedure. See Fed.R.Bankr.P. 1001 (stating that the bankruptcy rules govern proceedings in cases under title 11 of the United States Code; Fed.R.Bankr.P. 7054 (incorporating portions of Fed.R.Civ.P. 54). Debtors' argument concerning Idaho Code § 12-120(3) was not raised in their pleadings, but was asserted as a possible theory of recovery in their Answer, Docket No. 19, and raised specifically at the hearing.
For the reasons discussed below, the Court will grant New Britain's motion and award it attorney fees in the amount of $75,091.35 and $2,853.01 in costs incurred to enforce the promissory note. Debtors' request for fees and costs will be denied.
Disposition
A. New Britain's Costs and Fees. 1. Arguments of the Parties.
New Britain owns a promissory note executed by the individual Thomason Plaintiffs secured by a real estate mortgage on the Teton Pastures property. Despite vigorously contesting the validity of the note and mortgage in the complaint and pretrial activities, upon commencement of Phase One of the trial, Plaintiffs stipulated that the New Britain note and mortgage were valid and enforceable. As a result of the parties' stipulation on the record, the only issues remaining for trial were the amount of the debt; the interest rate applicable to the debt; the amount New Britain should be allowed to recover for attorney fees and costs in connection with enforcing its rights under the note and mortgage; and whether New Britain should be entitled to foreclose on the property.
New Britain contends, based upon Idaho Code §§ 12-120 and 121-21, together with its loan contract with Plaintiffs, it is entitled to recover all of its costs and attorney fees associated with enforcing its rights under the note. Those fees include all those incurred during Thomason Farms' earlier unsuccessful chapter 12 case through Phase One of the trial in Debtors' bankruptcy case. It seeks reimbursement of Mr. Christensen's fees and costs in the amount of $65,398.24 for representing it throughout this adversary proceeding, and in the amount of $18,190.83 for Mr. Thomson, who has represented New Britain in the state court foreclosure action. Supp. Aff. at 3, Docket No. 178; Aff. of Dale P. Thomson at 4, Docket No. 149.
In its Memorandum, the Court decided that New Britain's calculations of the amounts due on the note were basically correct, and the Court adopted its numbers as the balance due. In addition, the Court confirmed that New Britain had utilized the correct interest rate in figuring the balance due. While New Britain's note and mortgage are in default, the Court declined to enter an order allowing New Britain to foreclose at this time, since the Court decided that Trustee Hopkins should be allowed to sell the farm property securing the New Britain loan. Finally, the parties agreed to reserve any issues about the amount of fees and costs recoverable by New Britain until after the Phase One issues were resolved by the Court.
To determine the prevailing party under state law the Court must, in its discretion, "consider the final judgment or result of the action in relation to the relief sought by the respective parties . . . and the extent to which each party prevailed upon each of such issue or claims." Idaho R. Civ. P. 54(d)(1)(B). Because the Rule "mandates an award of fees only to the party or parties who prevail `in the action'" the fact that a party is not successful on one claim is not fatal to a determination that the party is the prevailing party. Israel v. Leachman, 72 P.3d 864, 867 (Idaho 2003). Based upon this standard, the Court concludes New Britain is the prevailing party in the action as it received all of the relief it requested, except for foreclosure, which instead will be conducted by the chapter 7 Trustee, the result of which will ultimately be the same for New Britain.
Plaintiffs apparently do not contest that New Britain prevailed at trial, and that it is entitled to an award of fees incurred during Phase One. Instead, Plaintiffs argue the amounts claimed by New Britain for fees must be reduced. Plaintiffs assert New Britain's participation during the Phase One trial was largely unnecessary in light of the pretrial stipulation between the parties. Plaintiffs also contend New Britain's fee request amounts to "double billing," late fees and interest assessed by the attorney against its client may not be recovered, and New Britain's attorney's practice of billing his time in quarter-hour increments is inappropriate. Plaintiffs assert no fees should be awarded for New Britain's actions taken in Thomason Farms' failed chapter 12 bankruptcy case, which was dismissed in 2003, prior to the commencement of this adversary proceeding.
2. New Britain is Entitled To Recover Attorney Fees and Costs Under Applicable State Law.
Although there is no general right to recover attorney fees from another party in connection with litigation under the Bankruptcy Code, "a prevailing party in a bankruptcy case may be entitled to an award of attorney fees in accordance with applicable sate law if state law governs the substantive issues raised in the proceedings." Thomason Farms, Inc. v. Tri-River Chemical Co. ( In re Thomason Farms, Inc.), 02.2 I.B.C.R. 107, 108 (Bankr. D. Idaho 2002) (citing Ford v. Baroff, 105 F.2d 439, 441 (9th Cir. 1997)). The amount due New Britain claimed to be due on its promissory note and mortgage under state law was challenged by Plaintiffs in this litigation. Under Idaho R. Civ. P. 54(e)(1), a prevailing party is entitled to attorney fees when such an award is provided by statute or contract. Under Idaho Code § 12-120(3), a prevailing party is entitled to an award of fees and costs in an action to collect upon a promissory note. See Beard v. George, 23 P.3d 147, 152 (Idaho 2001). In addition, here the note provides that New Britain may recover its fees incurred in any suit to enforce its terms. These contractual provisions are enforceable under Idaho law. Thomas v. Arkoosh Produce, Inc. 48 P.3d 1241, 1250 (Idaho 2002) (quoting Ayotte v. Redmon, 718 P.2d 1164, 1164-65 (Idaho 1986)).
The promissory note gives New Britain grounds upon which to seek fees and costs related to legal proceedings to collect payment upon its note. Although the Court's copy of New Britain's note is very difficult to read, the Court understands it to state: "If suit is instituted to collect this note or any portion thereof, [illegible] to pay in addition to the costs and disbursements as are allowed by law, such additional sums as the court may adjudge reasonable as attorney's fees [illegible] suit." Promissory Note, Trial Ex. 300. Therefore, New Britain is entitled to collect from those who signed the note its fees incurred in taking legal action to collect on the note and enforce the mortgage.
New Britain began its enforcement action by initiating a state court foreclosure suit against Plaintiffs on March 23, 2000. Mem. Decision at 42, Docket No. 138. Thereafter, before entry of judgment against Plaintifffs, Thomason Farms amended its bankruptcy schedules in its pending chapter 12 case to include New Britain as a creditor and Teton Pastures as property of its bankruptcy estate. Thomason Farms' actions effectively stayed the state court proceedings, and as a result, New Britain was involuntarily drawn into the bankruptcy case. After the dismissal of Thomason Farms' bankruptcy case without entry of a discharge or payment in full of New Britain's loan, Plaintiffs instituted this adversary proceeding in connection with Debtors' chapter 7 bankruptcy case. One of the claims asserted by Plaintiff was to quiet title to the Teton Pastures property. New Britain was named as a defendant in Plaintiffs' action. New Britain asserted a counterclaim against Plaintiffs, again seeking to collect its promissory note and enforce the mortgage.
As can be seen, there has been a continuing course of litigation between the parties spanning several years in the state court action and two bankruptcy cases. As a result, the Court concludes that all fees and costs incurred by New Britain in the various legal proceedings to enforce its contract with Plaintiffs may be recovered under applicable state law. Put another way, New
Britain is not limited to recovery of only those attorney fees and costs incurred in connection with the latest adversary proceeding, as Plaintiffs contend.
Concluding there is a legal basis supporting New Britain's request, the Court must determine the amount of such an award, and in doing so, must consider:
(A) The time and labor required.
(B) The novelty and difficulty of the questions.
(C) The skill requisite to perform the legal service properly and the experience and ability of the attorney in the particular field of law.
(D) The prevailing charges for like work.
(E) Whether the fee is fixed or contingent.
(F) The time limitations imposed by the client or the circumstances of the case.
(G) The amount involved and the results obtained.
(H) The undesirability of the case.
(I) The nature and length of the professional relationship with the client.
(J) Awards in similar cases.
(K) The reasonable cost of automated legal research (Computer Assisted Legal Research), if the court finds it was reasonably necessary in preparing a party's case.
(L) Any other factor which the court deems appropriate in the particular case.
Idaho R. Civ. P. 54(e)(3). While the Court must consider all of the above factors in determining a reasonable fee award, it need not make specific findings as to each. Smith v. Mitton, 104 P.3d 367, 376 (Idaho 2004).
a. Plaintiff may Recover Reasonable Attorney Fees for the Bankruptcy Case.
Considering the experience of Plaintiff's bankruptcy counsel, Mr. Christensen, the complexity of the issues involved, and the hourly fees charged by other attorneys who practice in this District, the $150.00 hourly rate used by Plaintiff's attorney in calculating his fee is a reasonable one.
New Britain and its attorney expended a significant amount of time in the bankruptcy cases of Thomason Farms and in this case in an effort to enforce its note and mortgage against Plaintiffs. Plaintiffs have repeatedly contested New Britain's claim. It was not until the first day of trial in this action that Plaintiffs formally abandoned most of their asserted defenses to New Britain's claim. As a result, New Britain's participation in all aspects of Phase One of the trial of this adversary proceeding was necessary. Certainly, New Britain had an interest in the outcome of the adversary proceedings because Plaintiffs were seeking to quiet title to the property securing its note, Teton Pastures. Moreover, the collection history between the parties since commencement of the state court law suit, throughout Thomason Farms' chapter 12 bankruptcy case, and now during this adversary proceeding, clearly supports New Britain's determination that its interests had to be actively represented during Phase One.
Plaintiffs, however, raise a valid concern in objecting to counsel's practice of billing his time in quarter-hour increments. While New Britain may have no objection to this approach, to the extent that New Britain seeks to recover attorney fees from Plaintiffs, it must show they are reasonable in amount. This Court has consistently held that, in order to properly document the reasonableness of attorney services, attorney time should be billed out in tenths of hours. See In re Voechting, 03.4 I.B.C.R. 237, 238 (Bankr. D. Idaho 2003) (explaining the problems with billing in quarter hour time increments); In re Castorena, 270 B.R. 504, 512 (Bankr. D. Idaho 2001) (requiring attorney to account for services in no larger increments than tenths of hours); In re Combe Farms, Inc., 257 B.R. 48, 55-56 (Bankr. D. Idaho 2001) (requesting attorney time be billed in tenth of hour increments). To compensate for counsel's flawed approach to time-billing in this context, the Court concludes a five per cent across-the-board reduction is appropriate to protect Plaintiffs from any potential, unjustified inflation in the amount of attorney fees awarded.
In addition, the Court concurs with Plaintiffs that a deduction of $970.17 is required to reflect interest charged by counsel to client on past due payments. Plaintiffs are responsible for payment of reasonable attorney fees-they are not liable for interest charges on payments occasioned by New Britain's delay in paying its attorney.
After considering all the factors enumerated in Idaho R. Civ. P. 54(e)(3), the Court finds and concludes New Britain is entitled to recover $61,206.67 for services provided in the bankruptcy cases by Mr. Christensen.
The Court arrived at this dollar amount by deducting interest charges in the amounts of: $48.41, $5.10, $4.05, $31.19, $134.89, $194.59, $139.62, $85.89, $65.21, $70.25, $61.19 and $129.78 for a total deduction of $970.17, and then reducing the remaining fees by 5%: ($65,398.24-970.17) × 95% = $61,206.67.
b. New Britain May Also Recover Attorney Fees and Costs Incurred in State Court.
Mr. Thomson initially represented New Britain by commencing the state court foreclosure action. Once New Britain became involved in Thomason Farms' bankruptcy case, New Britain retained Mr. Christensen. However, there is no doubt Mr. Thomson provided necessary and appropriate services to New Britain. His hourly fee was $150.00 until August 2005, when his hourly rate increased to $185.00. Based upon the Court's extensive experience with hourly rates charged by local counsel to secured creditors, the Court concludes Mr. Thomson's hourly rate was reasonable and commensurate with his experience and ability.
Plaintiffs object to Mr. Thomson's inclusion of late fees in his fee request as well. Again, the Court concludes it would be unreasonable to require Plaintiffs to compensate New Britain for such charges. The Court therefore will deduct the $1,805.09 in accrued late fees from this award.
The Court deducted the following labeled as service charges: $81.96, $88.79, $96.96, $100.47, $101.99, $107.43, $10.00, $10.00, $320.00, $24.84, $25.74, $43.38, $44.04, $44.70, $45.36, $46.03, $46.72, $46.72, $62.05, 63.70, $63.69, $66.81, $67.80, $61.06, $34.76, $35.28, $28.59 and $29.02.
Plaintiffs further object to the $5,000 in fees New Britain was previously awarded by the state court in connection with the entry of a default judgment against Debtors Greg and Diana Thomason. They contend that amount should be deducted from the fees they owe. Indeed, the entry of a default money judgment against two of the individuals jointly and severally liable for the balance due on the promissory could raise interesting issues. But this is not such an issue. Under the attorney fee provision in the promissory note, the Plaintiffs each agreed to be jointly and severally responsible for payment of reasonable attorney fees incurred by New Britain in connection with any suit initiated to collect the debt. The Court therefore concludes Plaintiffs are liable for the full amount of New Britain's fees. Of course, Plaintiffs would be entitled to appropriate credit if New Britain receives payment for fees awarded in the judgment against Debtors.
After considering all of the factors set forth in Idaho R. Civ. P. 54(e)(3), the Court concludes New Britain may recover $13,884.68 for attorney fees for Mr. Thomson's services.
Mr. Thomson requested $15,689.77 in attorney fees. The Court deducted the $1,805.09 in interest charges to arrive at a reasonable fee amount of $13,884.68.
c. New Britain is Entitled to an Award of Costs. The parties' contract is also unambiguous in providing that New
Under L.B.R. 7054.1 a cost bill is not timely prior to the entry of judgment. The procedural stance of this action requires the Court to treat New Britain's cost bill as timely in order to effectively and economically move this matter forward. New Britain is not further involved with Phase Two of the trial because all the claims pending between Plaintiffs and New Britain were disposed of during Phase One. Thus, it is appropriate that the Court consider New Britain's bill of costs even though no final judgment has been entered in this action.
Britain may recover its costs incurred in enforcing the note and mortgage. New Britain seeks a total of $5,291.63 in costs, but it is not entirely clear whether it bases its request on Idaho or federal bankruptcy law. Regardless of the basis, some of the items of costs claimed may not be recovered.
Idaho R. Civ. P. 54(d)(1) allows an award of costs to the prevailing party in a state court action. See Burns v. County of Boundary, 818 P.2d 318, 319-20 (Idaho 1991) (affirming the trial court's award of costs and fees provided for under the parties' contract, the amount of which must be calculated pursuant to Idaho R. Civ. P. 54). As a matter of right, the prevailing party is entitled to the costs actually incurred for filing fees, fees for service of pleadings and documents, witness fees, travel expenses of witness, certified copies of documents admitted at trial, reasonable costs for exhibit preparation, bond premiums, expert witness fees, deposition charges and charges for one copy of a deposition. Idaho R. Civ. P. 54(d)(1)(C). Fed.R.Bankr.P. 7054 and corresponding L.B.R. 7054.1 also provides for costs to the prevailing party including clerk's fees and service fees, trial transcripts, deposition costs, and copies of papers and exhibits. L.B.R. 7054.1(c).
In addition to the above costs, Idaho R. Civ. P. 54(d)(1)(D) allows the trial court to award discretionary costs to the prevailing party. "Discretionary costs are additional items of cost not enumerated in Rule 54(d)(1), and can include such items as long distance telephone calls, photocopying, faxes, travel expenses and postage." Automobile Club Ins. Co. v. Jackson, 865 P.2d 965, 971 (Idaho 1993). While the court is granted discretion to award these costs, "the burden is on the prevailing party to make an adequate initial showing that these costs were necessary and exceptional and reasonably incurred, and should in the interests of justice be assessed against the adverse party." Id.
Plaintiffs' object to several of the claimed costs by New Britain. Plaintiffs' concerns about charges for faxes, postage and copies, together with the payment to Todd Erickson in the amount of $1,007 to commence foreclosure, are well taken. While New Britain appears to base its claim to the fax, photocopy and postage costs on the fee provision contained in the note, neither state law nor bankruptcy law entitles New Britain to recover these items as litigation costs, as a matter of right, from Plaintiffs. And while some of these costs could be recoverable under state law as discretionary costs, New Britain failed to make the showing required by Idaho R. Civ. P. 54(d)(1)(D) that they were "necessary and exceptional costs reasonably incurred, and should in the interest of justice be assessed against the adverse party." See also Automobile Club Ins. Co., 865 P.2d at 971. New Britain also failed to meet its burden to show the $1,007 payment to Todd Erickson should be awarded as a discretionary cost under state law. Thus, New Britain is not entitled to costs in the amount of $1,858.62.
Plaintiffs expressed concern at the hearing that costs may be doubled billed by way of inclusion within the request for attorney fees. There does not appear to the Court to be any double billing and Mr. Christensen filed a supplemental affidavit to confirm no duplicate charges are included. See Supp. Aff., Docket No. 178.
This sum includes the $1,007 payment and $604.75 in photocopy charges and $40.31 in postage claimed by Mr. Thomson, Ex. A, Docket No. 149, together with Mr. Christensen's charges of $163.00 for faxes, $41.00 for postage and $2.56 for copies, Ex. A, Docket No. 141.
In reviewing the remaining costs, the Court finds the only costs sufficiently described as required by this Court's rules under L.B.R. 7054.1 and relevant state law are filing fees in the total amount of $302; deposition costs of $2,341.01; and service fees of $210.00. See Exs. A, Docket Nos. 141; 149. New Britain failed to assert a basis under either state or bankruptcy law for recovering recording fees, photocopying, fax, postage and title company litigation guarantee fees.
Accordingly, New Britain is entitled to recover $2,853.01 in costs from Plaintiffs.
B. Debtors May Not Recover Attorney Fees or Costs.
Debtors also ask to recover attorney fees and costs from Plaintiffs incurred in Phase One of the litigation. They point out that the issues resolved at trial included Plaintiffs' claims to determine ownership of four parcels of real property, ownership of corporate stock under Idaho's corporate law and the corporation's bylaws, and ownership of cattle. Resolution of all these issues was controlled by Idaho law. Debtors contend they prevailed in rebuffing Plaintiffs' claims to these assets because, instead, the Court declared them (with the exception of the cattle) to be property of Debtors' bankruptcy estate under 11 U.S.C. § 541(a). Because they prevailed, under Idaho R. Civ. P. 54(e)(1), Debtors assert that Idaho Code § 12-120(3) provides a basis for awarding attorney fees:
In any civil action to recover on an open account, account stated, note, bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of goods, wares, merchandise, or services and in any commercial transaction unless otherwise provided by law, the prevailing party shall be allowed a reasonable attorney's fee to be set by the court, to be taxed and collected as costs.
The term "commercial transaction" is defined to mean all transactions except transactions for personal or household purposes. The term "party" is defined to mean any person, partnership, corporation, association, private organization, the state of Idaho or political subdivision thereof.
Idaho Code § 12-120(3). Although an award of attorney fees to the prevailing party is mandatory under this provision of the Idaho law, attorney fees "are not appropriate . . . unless the commercial transaction is integral to the claim, and constitutes the basis upon which the party is attempting to recover." Merrill v. Gibson, 87 P.3d 949, 954 (Idaho 2004).
There is a fundamental flaw in Debtors' fee request. While state law did indeed dictate the extent of Debtors' interests in the property at issue, the action was, essentially, one to determine whether the assets were property of the Debtors' bankruptcy estate. At bottom, then, it is the federal bankruptcy law, not state law, that formed the legal basis for the defenses to Plaintiffs' claims. While Debtors actively participated in defending against Plaintiffs' assertions of ownership of the real and personal property in question, because Debtors had filed a bankruptcy case, it was the chapter 7 trustee, Defendant Hopkins, who is the official representative of the interests of the bankruptcy estate in the action. See 11 U.S.C. §§ 704(a) and 542(a) (trustee is accountable for, and entitled to possession of, all property of bankruptcy estate). Simply because Debtors agreed with and cooperating in presenting the trustee's position that the assets were owned by their bankruptcy estate is not to say Debtors "prevailed" in this action. More precisely, Defendant Hopkins prevailed.
Defendant Hopkins has not requested an award of attorney fees and costs from Plaintiffs in this action.
In addition, even assuming state attorney fee law applied, Debtors could properly assert a claim, and they were "prevailing parties," the actions to quiet title in the real property did not involve the validity or breach of a commercial lease or other contract. Merrill, 87 P.3d at 954-55 (holding that Idaho Code § 12-120(3) does not apply to quiet title actions); Treasure Valley Concrete v. State of Idaho, 978 P.2d 233, 237 (Idaho 1999) (holding that Idaho Code § 121-20(3) does not apply to real estate transactions or to issues involving the ownership of property). Therefore, as to any claims litigated concerning the four parcels of real property, no attorney fees could be recovered.
The same is true regarding the resolution of the other issues raised during Phase One. The test for application of the state statute is "whether [a] commercial transaction comprises the gravamen of the lawsuit, that is, whether the commercial transaction is integral to the claim and constitutes the basis upon which the party is attempting to recover." Dennett v. Kuenzli, 936 P.2d 219, 230 (Idaho Ct.App. 1997) (quoting Spence v. Howell, 890 P.2d 714, 727 (Idaho 1995)). The Court's determination of stock ownership rights under corporate bylaws and state law did not implicate a commercial transaction.
Debtors also assert an entitlement to reimbursement of costs totaling $1,751. See Fed.R.Bankr.P. 7054 ("The court may allow costs to the prevailing party . . ."). Whether litigation costs may be recovered is a procedural matter, and in this District, that procedure is set forth in L.B.R. 7054.1. High Country Bed Breakfast, Inc. v. Amresco Independence Funding, Inc. ( In re High Country Bed Breakfast, Inc.), 02.2 I.B.C.R. 89, 90 (Bankr. D. Idaho 2002). The rule permits the prevailing party to file and serve its cost bill "[w]ithin fourteen (14) days after entry of judgment. . . ." But in this instance, Debtors' claims for costs is premature, because Debtors and Plaintiffs will be actively involved in the remaining course of this litigation. Phase Two of the trial will focus on Plaintiffs' claims that the debt owed by Debtors to Thomason Farms, Inc. should be excepted from discharge under § 523(a). Therefore, it is too early to determine who prevailed in this action, and whether Debtors should be allowed to recover their costs. Depending upon the outcome of Phase Two, if a proper basis exists, Debtors may seek recovery of costs after conclusion of the litigation.
In addition, Debtors' form of cost bill provides the Court with inadequate details about the nature and purpose of the items claimed. If resubmitted, attention should be paid to making a proper showing concerning the details of all charges, that the costs were necessarily incurred and reasonable in amount, according to L.B.R. 7054.1.
Conclusion
New Britain is entitled to recover $75,091.35 in attorney fees, and $2,853.01 in costs, from Plaintiffs. These fees and costs were all necessarily incurred by Plaintiff to enforce the promissory note and are reasonable in amount. Debtors' request for fees will be denied. There is no legal basis for their claim. Debtors' request for an award of costs will be denied without prejudice until Phase Two of the trial is completed.
This figure includes Mr. Christensen's fees of $61,206.67, and Mr. Thomson's fees of $13,884.68.