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Jones v. Ameriquest Mortgage Co.

March 10, 2009

SHIRLEY JONES, PLAINTIFF,
v.
AMERIQUEST MORTGAGE COMPANY, AMERIQUEST MORTGAGE SECURITIES,INC.,AND AMC MORTGAGE SERVICES, INC., DEFENDANTS.



The opinion of the court was delivered by: Judge Coar

Magistrate Judge Schnekier

MEMORANDUM OPINION AND ORDER

Plaintiff Shirley Jones filed this action seeking statutory damages and rescission of her mortgage for alleged violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq. She has filed the instant motion seeking supplemental attorney's fees and costs incurred after September 19, 2006.

BACKGROUND

On January 31, 2006, this Court granted Plaintiff summary judgment on liability, holding that Ms. Jones was entitled to rescission and statutory damages for Defendants' failure to rescind her mortgage loan. Jones v. Ameriquest Mortgage Co., et al., No. 05 C 432, 2006 U.S. Dist. LEXIS 3788 (N.D. Ill. Jan. 31, 2006). Plaintiff had two alternative theories of liability, the first premised on a disclosure statement that failed to define the intervals for Plaintiff's loan repayment (the "Disclosure Statement"), the second on a one-week rescission right notice that Defendants included alongside the TILA-mandated three-day rescission right notice (the "One-Week Form"). Id. at *10. On July 17, 2006, this Court's summary judgment decision held that the Disclosure Notice violated the TILA, but that genuine issues of material fact remained as to whether the One-Week Form did as well. Id. at *26. "Once [a district court] has entered judgment giving the plaintiff all the relief that it was seeking, the plaintiff's remaining ground merged in the judgment, which ended the case in the district court." Hamm v Ameriquest Mortgage Company, 506 F.3d 525, 527 (7th Cir. 2007)(quoting Indiana H.B. R.R. Co. v. American Cyanamid Co., 916 F.2d 1174, 1183 (7th Cir. 1990)). Thus, on the basis of the Disclosure Statement's violation of the TILA, this Court awarded Plaintiff $2,000 in statutory damages, rescission of the mortgage, and also required her to tender the rescission amount of $23,693.11 to Defendant Ameriquest Mortgage Securities-all of the relief Plaintiff was seeking. See Dkt. 119. On September 19, 2006, this Court awarded Plaintiff $62,064.75 in attorney's fees and $5,298.57 in costs. See Dkt. 148.

Defendants appealed the summary judgment ruling. The appeal was consolidated with Hamm v. Ameriquest Mortgage Co., No. 05 C 227 (N.D. Ill.), a case presenting identical issues and in which a different district court granted summary judgment in favor of defendants on both the Disclosure Statement and One-Week Form issues. On October 17, 2007, the Seventh Circuit affirmed the summary judgment ruling for Plaintiff and reversed the district court's decision in Hamm with respect to the Disclosure Statement issue. Hamm v Ameriquest Mortgage Company, 506 F.3d 525 (7th Cir. 2007). The Seventh Circuit did not reach the issue of the One-Week Form. Id.

Plaintiff now seeks an additional $47,642.00 in attorney's fees and $1,803.77 in costs incurred in connection with the appeal, after the original September 19, 2006 attorney's fees and costs award. Defendant initially opposed the motion on the grounds that it should be stricken for Plaintiff's failure to comply with Northern District of Illinois Local Rule 54.3, which governs attorney's fees and related non-taxable expenses. However, on May 19, 2008, Magistrate Judge Schenkier held that the parties' failures to comply with Local Rule 54.3 did not cause either side to suffer prejudice and did not impair this Court's ability to determine the supplemental petition on the merits. This Court therefore proceeds to the motion on its merits.

ANALYSIS

Defendants advance two main arguments in opposition to Plaintiff's request for additional attorney's fees and expenses. First, Defendants argue that Plaintiff is not entitled to fees on an issue that she did not win on appeal (i.e., the One Week Form issue). Second, Defendants argue that the fees are unreasonable-e.g., that the billing rates are excessively high, that the fees sought exceed the value of the judgment, and that Plaintiff billed for work that should not be counted toward the calculation of attorney's fees or costs. Each argument will be addressed in turn.

1. Attorney's Fees and Costs for Unsuccessful Claims

In any action in which a person is determined to have a right of rescission under Section 1635 of the TILA, the TILA-violating creditor is liable for "the costs of the action, together with a reasonable attorney's fee as determined by the court." 15 U.S.C. § 1640(a)(3). See de Jesus v. Banco Popular de Puerto Rico, 918 F.2d 232, 233-34 (1st Cir.1990); Zagorski v. Midwest Billing Services, Inc., 128 F.3d 1164, 1166n.6 (7th Cir. 1997) ("The First Circuit has held that the award of attorney's fees to a successful plaintiff in an action under the [TILA] is mandatory" and reasoning that because the language of the attorney's fees provision in TILA is identical to the parallel provision in the FDCPA, attorney's fees were also mandatory under FDCPA) (citing de Jesus).

"It is a 'settled proposition that congressional goals underlying the Truth-in-Lending Act include the creation of "a system of private attorney generals" who will be able to aid the effective enforcement of the [TILA].'" Clay v. Johnson, 77 F.Supp.2d 879, 887 (N.D.Ill. 1999), rev'd on other grounds, 264 F.3d 744 (7th Cir. 2001) (citing Sosa v. Fite, 498 F.2d 114, 121 (5th Cir. 1974)). To effectuate this goal, Congress has provided for mandatory fees to all successful plaintiffs, realizing that "most TILA plaintiffs are not 'model borrowers.'" Id. (quoting Semar v. Platte Valley Fed. Sav. & Loan Assoc., 791 F.2d 699 (9th Cir.1986)). Congress did not intend for TILA to apply only to sympathetic consumers; Congress designed the law to apply to all consumers, who are inherently at a disadvantage in loan and credit transactions. Thus, because the "attorney's fees provision is phrased in mandatory, rather than discretionary terms, it is evident that fees may be denied a successful plaintiff only in the most unusual of circumstances" such as bad faith, obdurate conduct, unjust hardship, or special circumstances. Id. (quoting de Jesus, 918 F.2d at 234 & n. 4).

Against this, Defendants argue that attorney's fees and costs are inappropriate here because "attorney's fees should be awarded only for the preparation and presentation of claims on which the plaintiff has prevailed." Defs.' Br. 11. Defendants argue-and Plaintiff does not dispute-that the majority of Plaintiff's counsel's work in Jones' appeal was devoted to briefing and arguing the One-Week Form issue, and that the Disclosure Statement issue was the subject of the attorney's labor in Hamm's appeal. (The same firm represented both Hamm and Jones in theconsolidated Seventh Circuit appeal.) In Hensley v. Eckerhart, the Supreme Court held, with respect to the Civil Rights Attorney's Fees Act:

In some cases a plaintiff may present in one lawsuit distinctly different claims for relief that are based on different facts and legal theories. In such a suit, even where the claims are brought against the same defendants . . . counsel's work on one claim will be unrelated to his work on another claim. Accordingly, work on an unsuccessful claim cannot be deemed to have been expended in pursuit of the ultimate result achieved. The congressional intent to limit awards to prevailing parties requires that these unrelated claims be treated as if they had been raised in separate lawsuits, and therefore no fee may be awarded for services on the unsuccessful claim. 461 U.S. 424, 434-35, 103 S.Ct. 1933, 1940 (1983). However, "because Hensley only disapproves of awarding attorney's fees for time spent on unsuccessful claims for relief that are unrelated to successful claims . . . time spent on unsuccessful, related claims may be compensated." Mary Beth G. v. Chicago, 723 F.2d 1263 (7th Cir. 1983) (citing Hensley, ...


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