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PNC Bank v. Innovative Dental Group, LLC

United States District Court, N.D. Illinois, Eastern Division

May 30, 2017

PNC BANK, NATIONAL ASSOCIATION, Plaintiff,
v.
INNOVATIVE DENTAL GROUP, LLC II, AJAYPAL SINGH, and DIMPLE TEJANI Defendants.

          ORDER

          SARA L. ELLIS, JUDGE

         The Court grants in part PNC Bank National Association's petition for attorneys' fees [38]. The Court awards PNC Bank National Association $26, 264.00 in attorneys' fees. See Statement for further details.

         STATEMENT

         PNC Bank National Association (“PNC”) brings this petition for attorneys' fees in the amount of $39, 685.00. In June 2016, PNC filed a complaint against Innovative Dental Group, LLC, II (“IDG”), Ajaypal Singh, and Dimple Tejani (Defendants) alleging breaches of a promissory note and two commercial guaranties. PNC also filed a petition and affidavit of attorneys' fees and costs in October 2016. On March 13, 2017, this Court granted PNC's motion for summary judgment on its claims and ordered IDG, Tejani, and Singh to pay PNC the full amount outstanding on the promissory note, $462, 716.12, plus daily interest. The Court also granted in part and denied in part PNC's request for attorneys' fees and litigation costs and ordered IDG, Tejani, and Singh to pay PNC $4, 444.77 for PNC's litigation costs. The Court denied without prejudice PNC's motion for attorneys' fees, finding that PNC's request did not provide adequate documentation of the fees it requested. PNC filed a second petition [38], which is now before the Court.

         In August 2010, PNC loaned IDG $875, 000 pursuant to a promissory note (the “Note”). As security for the Note, IDG executed a commercial security agreement in favor of PNC granting PNC a security interest in its accounts receivable, deposit accounts, inventory, equipment, and other personal property. Singh and Tejani each executed a commercial guaranty in favor of PNC (the “Guaranties”), guaranteeing payment of the Note and agreeing to pay all expenses incurred in enforcing the guaranties, including attorneys' fees and costs. In August 2013, Defendants entered into a modification of the Note and the Guaranties (the “First Modification”), after defaulting on the Note in May 2013. In October 2015, Defendants entered into another modification of the Note and the Guaranties (the “Second Modification”), after defaulting on the Note in July 2015. Defendants again defaulted after failing to make a December 2015 payment.

         I. Scope of Work

         Defendants argue that PNC is only entitled to recover attorneys' fees resulting from the event that gave rise to this particular lawsuit, which they argue is the default in January 2016.[1]Defendants note that more than 60% of PNC's requested fees relate to “prior litigation or negotiations between the parties.” Doc. 41 at 3. However, PNC argues that it is entitled to recover attorneys' fees incurred prior to January 2016 because those fees were associated with the enforcement of the Note and Guaranties, which started on April 26, 2013 when counsel began working to negotiate and draft the First Modification.

         Under Illinois law, “the general rule is that each party bears the burden of its own attorney's fees, but parties to a contract may alter this rule.” River E. Plaza v. Variable Annuity Life Ins. Co., No. 03 C 4354, 2008 WL 623617, at *3 (N.D. Ill. Mar. 4, 2008) (citing Powers v. Rockford Stop-n-Go, Inc., 761 N.E.2d 237, 240, 326 Ill.App.3d 511, 260 Ill.Dec. 393 (2001)). Contractual fee-shifting provisions are strictly construed. Id. (citing Powers, 761 N.E.2d at 240). Illinois law requires a court to give “clear and unambiguous contract terms their plain meaning.” Rexam Beverage Can Co. v. Bolger, 620 F.3d 718, 735 (7th Cir. 2010).

         The Note and the Guaranties at issue each provide that PNC may recover attorneys' fees resulting from its efforts to collect on the Note and enforce the Guaranties, regardless of whether a lawsuit is filed as part of those efforts. The Note provides that:

[PNC] may hire or pay someone else to help collect this Note if [IDG] does not pay. [IDG] will pay [PNC] that amount. This includes, subject to any limits under applicable law, [PNC]'s attorneys' fees and [PNC]'s legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals and any anticipated post-judgement collection services.

Doc. 31 at 19. The Guaranties each state that Singh and Tejani:

agree[] to pay upon demand all of [PNC]'s costs and expenses, including [PNC]'s attorneys' fees and [PNC]'s legal expenses, incurred in connection with the enforcement of [the Guaranties]. Lender may hire or pay someone else to help enforce this Guaranty, and the Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include [PNC]'s attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services.

Doc. 31 at 23-24, 28-29. The Guaranties also provide that Singh and Tejani are liable for attorneys' fees and legal expenses owed by IDG to PNC.

         The parties modified the Note and the Guaranties by the First Modification and the Second Modification, but each of those agreements provides for the continuing validity of the attorneys' fees provisions. Moreover, each modification explicitly provides for the payment of PNC's attorneys' fees and costs in connection with the modifications.[2] The Second Modification further states that past due and current attorneys' fees are owed to PNC and were estimated at that time to total ...


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