Federal Deposit Insurance Corporation v. Rothenberg

Background

Silicon Valley Bank made three loans to Michael Brent Rothenberg: $300,000 under a 2014 promissory note, $562,500 under a 2015 credit agreement, and $750,000 under another 2015 credit agreement. The agreements required Rothenberg to pay the lender’s attorney’s fees and legal expenses if he failed to repay the loans.

After Rothenberg failed to repay the loans, Silicon Valley Bank sued him and Rothenberg Ventures, LLC, in California state court. The state court later dismissed the claims against Rothenberg Ventures. The California Department of Financial Protection and Innovation closed Silicon Valley Bank on March 10, 2023, and appointed the Federal Deposit Insurance Corporation as the bank’s receiver. The FDIC removed the remaining action to federal court and later obtained summary judgment on the three remaining breach-of-contract claims. The Clerk entered judgment on June 6, 2024.

Fee Motion

The FDIC then moved for attorney’s fees under the loan agreements and California Civil Code § 1717. That statute permits reasonable attorney’s fees in a contract action when the contract provides for them and requires the court to determine the prevailing party. The FDIC requested $117,986.70, including time spent preparing the fee motion and reply. Rothenberg did not oppose or otherwise respond to the motion.

To recover fees under § 1717(a), the FDIC had to show that the contracts authorized fees, that it was the prevailing party, and that the requested fees were reasonable. The court concluded that the loan agreements authorized fees and that the FDIC was entitled to fees for enforcing them.

Reasonableness of the Fees

The court applied the lodestar method, which generally calculates fees by multiplying reasonable hours by a reasonable hourly rate. The FDIC reported billing rates ranging from $555 to $845 per hour for attorneys with different levels of experience. The court found that the rates, although high, were within prevailing market rates for similar cases in the Northern District of California.

The FDIC’s attorneys claimed 132.1 hours for the litigation and an additional 31.9 hours for preparing the fee motion. The court found the hours reasonable in light of the litigation’s length, the related state-court proceedings, and the motion practice required to conclude the case.

The court nevertheless found arithmetic errors in the requested lodestar calculation. For example, certain entries for attorney Kenneth Keller used a rate higher than his stated $808 hourly rate. The court stated that the billing rates and hours were reasonable but corrected the calculation.

Disposition

The court granted the FDIC’s motion for attorney’s fees and awarded $117,939.7.