U.S. Bank, National Association v. Tara Retail Group, LLC, 636 B.R. 439

Background

Tara Retail Group owned the Crossings Mall; a single culvert bridge was the only public access and was damaged after a historic flood. A 2016 disbursement request from a Capital Expenditure Account to repair the culvert was denied because the Loan Agreement conditions were unmet.
UBS Real Estate made a $13.65M loan in 2013; the loan was assigned to U.S. Bank and later to COMM 2013 Crossings Mall Road, LLC (Comm 2013). Wells Fargo served as master servicer.
Tara sued the lenders/servicer in an adversary proceeding alleging multiple claims (breach of contract, breach of fiduciary duty, tortious interference, accounting, punitive damages, declaratory relief). The court dismissed five claims and granted summary judgment to the Third-Party Defendants on the remaining two.
Third-Party Defendants moved under Federal Rule 54 (Bankr. R. 7054) to recover attorneys’ fees and litigation expenses under §11.13 of the Loan Agreement, which obligates the debtor to reimburse the Lender for reasonable costs (including attorneys’ fees) incurred defending actions related to the loan documents.
Court held Comm 2013 eligible to recover (it filed a proof of claim); U.S. Bank and Wells Fargo may not recover here because U.S. Bank and Wells Fargo did not file proofs of claim and Wells Fargo is not a “Lender” under the Loan Agreement (and the Pooling & Service Agreement was not of record).
Court awarded Comm 2013: $503,308.30 in attorneys’ fees (after paraprofessional rate cap and 10% block-billing reduction), $9,597.29 in contract-based litigation expenses (denying vague $54,807 “Professional Services” and $3,697 air travel), and $12,433.43 in taxable costs; denied $2,506 pro hac vice fees.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Entitlement to attorneys’ fees under Loan Agreement §11.13	Loan Agreement permits Lender to recover reasonable fees and expenses incurred defending actions related to loan documents; Third-Party Defendants are Lenders or indemnified parties	Debtor disputed applicability for some defendants and contested reasonableness	Court found §11.13 applicable and enforceable; award warranted to qualifying Lender (Comm 2013)
2. Whether U.S. Bank and Wells Fargo may recover here	U.S. Bank and Wells Fargo sought fees as parties who incurred defense costs	Debtor: fees are pre-petition claims; Wells Fargo is not a “Lender”; failure to file proof of claim bars recovery	Only Comm 2013 awarded fees because U.S. Bank and Wells Fargo did not file proofs of claim and Wells Fargo is not a Lender under the Loan Agreement; PSA not considered (not in record)
3. Reasonableness of billed rates, hours, and billing entries (including redactions and block billing)	Third-Party Defendants: hours and rates reasonable given complexity; redactions protect privilege	Debtor: rates, paraprofessional charges, block billing, and redactions prevent proper review; seek reductions	Court found attorneys’ rates reasonable; capped paraprofessionals at $250/hr, reduced unidentified paraprofessional rates, and applied 10% reduction to block-billed entries >0.5 hrs; limited effect of redactions; lodestar adjusted accordingly
4. Taxable costs and loan-agreement expenses (pro hac vice, transcripts, travel, professional services)	Third-Party Defendants sought statutory costs under 28 U.S.C. §1920 and contractual reimbursement for various litigation expenses	Debtor objected to some items or to lack of specificity	Court taxed $12,433.43 under §1920/1921 (denied $2,506 pro hac vice), awarded $9,597.29 contractual expenses but disallowed $54,807 “Professional Services” and $3,697 air travel for vagueness/lack of justification

Key Cases Cited

Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. 121 (2015) (American Rule and when contractual/statutory fee-shifting applies)
Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (fee-shifting standards)
SummitBridge Nat’l Invs. III, LLC v. Faison, 915 F.3d 288 (4th Cir. 2019) (pre-petition contract claims for post-petition fees and proof-of-claim analysis)
McAfee v. Boczar, 738 F.3d 81 (4th Cir. 2013) (lodestar methodology and three-step fee analysis)
Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235 (4th Cir. 2009) (lodestar and Johnson factors application)
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) (twelve Johnson factors for fee reasonableness)
Hensley v. Eckerhart, 461 U.S. 424 (1983) (reductions for limited success and billing reasonableness)
Blum v. Stenson, 465 U.S. 886 (1984) (prevailing market rates for hourly fees)
Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437 (1987) (limits on taxable costs under §1920)
LaVay Corp. v. Dominion Federal Sav. & Loan Ass’n, 830 F.2d 522 (4th Cir. 1987) (necessity of deposition transcripts for taxation of costs)