WFCM 2016-LC25 West Bay Area Boulevard, LLC v. Tyler

Background

West Bay Area Boulevard, LLC sued Cheryl Tyler under a guaranty securing an $8.35 million loan to Kornbluth Texas, LLC. The court had previously granted West Bay’s motion for summary judgment on liability. This opinion addressed the damages recommended by United States Magistrate Judge Ona T. Wang in a report and recommendation.

Judge Wang recommended a deficiency award of $3,785,183.97, prejudgment interest at 10% per year, post-judgment interest at 10% per year, and attorneys’ fees of $402,600.75. Tyler objected only to the recommendation that West Bay receive $153,427.50 for fees paid to Okin Adams Bartlett Curry LLP, which represented the borrower in bankruptcy proceedings.

Okin Fees

Tyler argued that the Okin fees were not expenses “incurred by Lender” under the guaranty and that an “employment applications” entry represented unrecoverable fees for pursuing fees. The court held that Tyler had forfeited these arguments because she did not present them to Judge Wang despite having the opportunity to do so.

The court also rejected the arguments on their merits. Applying Texas law, which the parties agreed governed the guaranty, the court interpreted the guaranty’s promise that Tyler would reimburse West Bay for reasonable out-of-pocket expenses, including counsel fees, incurred in collecting the guaranteed obligations or enforcing the guaranty. The court concluded that West Bay incurred the Okin fees by paying them. It also found that West Bay had shown the fees were reasonable. Judge Wang had already reduced the Okin fees by five percent for vague or administrative entries, and Tyler did not identify a specific additional improper charge.

Remaining Damages and Disposition

Neither party objected to the recommended deficiency amount, interest, or non-Okin attorneys’ fees. Judge Broderick therefore reviewed those portions for clear error and found none. He adopted the report and recommendation in its entirety and granted West Bay’s motion for summary judgment.

The Clerk was directed to enter judgment against Tyler and award West Bay:

- A deficiency amount of $3,785,183.97; - Prejudgment interest at 10% per year, stated as $581.65 per day; - Post-judgment interest at 10% per year; and - Attorneys’ fees of $402,600.75.