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United States v. Bell

January 15, 2009

UNITED STATES OF AMERICA, PLAINTIFF,
v.
GLEN D. BELL, JEANETTE BELL, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

ORDER GRANTING IN PART DUMAS' MOTION FOR ATTORNEY'S FEES AND COSTS (DOC. 269.)

I. Introduction

Before the court for decision is Dumas International LLC's ("Dumas") motion for attorneys fees and costs. Doc. 269, filed Nov. 21, 2008. The motion was required by the district court's September 30, 2008 Order of Distribution. Doc. 267. The United States opposes the fee request in its entirety. Doc. 274, filed Dec. 23, 2008.

The underlying dispute on the merits, which was the subject of a one-day bench trial on April 25, 2008, related to the amount due under a 1984 Deed of Trust recorded against residential property previously owned by defendant taxpayers Glenn and Jeanette Bell, and the priority of that deed relative to a 1987 federal tax lien. Findings of Fact and Conclusions of Law were issued September 17, 2008, Doc. 261, as amended to correct clerical and typographical errors, see Doc. 266, along with a Judgment of Extent and Priority of Liens, Doc. 268, filed, October 6, 2008.

II. FACTUAL BACKGROUND

The Bells purchased the subject property in Modesto California in 1984. Finding of Fact ("FOF"), Doc. 261, #9. They subsequently obtained a construction loan in the amount of $251,000.00 from Stockton Savings, evidenced by an Adjustable Rate Note dating to 1984. FOF #13. In conjunction with the construction loan and Adjustable Rate Note, a First Deed of Trust was executed by the Bells and recorded in Stanislaus County, encumbering the property as security for a $310,000.00 construction note. FOF #23. To the extent that this First Deed of Trust secures the repayment of the construction loan, it was deemed to have priority over, as it antedated, any federal tax liens against the property, the earliest of which was recorded in 1987. United States v. Bell, 27 F. Supp. 2d 1191, 1200 (E.D. Cal. 1998); FOF #30. The exact amount due under the First Deed of Trust was not finally determined by Bell, 27 F. Supp. 2d 1191.

It is undisputed that Dumas, which is in the business of purchasing "troubled" properties and clearing up defective title problems, is the successor in interest to the original lender. FOF #4.

Various estimates of the claim secured by the First Deed of Trust were elicited at trial, ranging from $251,113.00 to just over $1,034,011.00. FOF #37, #109, Conclusions of Law ("COL") #12. The $1,034,011.00 figure reflected Dumas' position at trial that, in addition to the original principal balance of the construction loan, the Bells had been advanced an additional sum. FOF #45-61. The priority of the First Deed of Trust was established in a published decision before Dumas became a party to the case. Bell, 27 F. Supp. 2d at 1200. Review of all the evidence established that Dumas' assertion that the First Deed of Trust secured unpaid principal and accrued interest of $1,034,011.00 was "not supported by the underlying evidence."

COL #12. Specifically, there was a "lack of objective evidence establishing an advance was made or when it was made." COL #11.

Dumas also sought to estop the United States from asserting that the note balance due was less than $857,946.54, based on statements made by the United States in correspondence. COL #16-17. This argument was rejected on the finding that "Dumas, despite a lack of credible evidence, seeks to obtain a windfall under an estoppel theory, to recover $857,946.74 on a loan for which it paid $260,000." COL #30.

The district court found the United States' calculation of the amount due Dumas, $449,999.46, to be consistent with the available evidence, COL #13, #44, and ruled that "Dumas shall recover $449.999.46, plus, additional interest to the date of entry of these Findings of Fact and Conclusions of Law, and attorney's fees and costs." Doc. 261 at 44.

The United States did not object to the inclusion of an attorney's fees and costs recovery provision in the decision, as attorney's fees are authorized by the Note.

III. DISCUSSION

Dumas now moves for attorney's fees in the amount of $62,727.50 and costs in the amount of $14,549.00, ...


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