United States District Court, W.D. Kentucky, Paducah Division
KSA ENTERPRISES, INC. et. al. PLAINTIFFS
BRANCH BANKING & TRUST COMPANY DEFENDANT
MEMORANDUM OPINION AND ORDER
N. STIVERS, CHIEF JUDGE UNITED STATES DISTRICT COURT
matter is before the Court on Defendant's Motion for
Attorneys' Fees (DN 97). The motion is ripe for decision.
For the reasons provided below, the motion is GRANTED.
claims of Plaintiffs KSA Enterprises, Inc. and Pain
Management Resources, PSC (collectively
“Plaintiffs”) arose from a series of business
loans and the alleged conduct by Defendant Branch Banking
& Trust Company (“BB&T”) in connection
with the banking relationship created by those loans.
Plaintiffs brought the underlying action initially asserting
claims for breach of contract, fraud, negligent
misrepresentation, fraud in the inducement, unjust
enrichment, and punitive damages against BB&T. (Compl.
¶¶ 39-69, DN 1). On September 23, 2015, this Court
dismissed Plaintiffs' claims for breach of contract,
negligent misrepresentation, and fraud in the inducement.
(Mem. Op. & Order 15, DN 13). This Court granted summary
judgment on Plaintiffs' remaining claims on September 5,
2017, and concurrently entered a judgment in BB&T's
favor. (Mem. Op. & Order 21, DN 92; J. 1, DN 93). On
January 14, 2019, the Sixth Circuit affirmed these rulings.
See KSA Enters., Inc v. Branch Banking & Tr.
Co., 761 Fed.Appx. 456 (6th Cir. 2019).
the subject loan agreements contained an attorneys' fees
provision providing, in relevant part:
[I]n the event the Bank voluntarily or otherwise should
become a party to any suit or legal proceeding . . . the
Borrower and Guarantors agree to pay the reasonable
attorneys' fees of the Bank . . . that may be incurred by
the Bank. The Borrower and Guarantor shall be liable for such
attorneys' fees and costs whether or not any suit or
proceeding actually commenced.
(Def.'s Mot. Att'ys' Fees Ex. 2, at 5, DN 97-3;
Def.'s Mot. Att'ys' Fees Ex. 3, at 5, DN 97-4;
Def.'s Mot. Att'ys' Fees Ex. 4, at 5, DN 97-5;
Def.'s Mot. Att'ys' Fees Ex. 5, at 5, DN 97-6;
Def.'s Mot. Att'ys' Fees Ex. 6, at 5, DN 97-7).
In light of these provisions and the judgment entered and
affirmed in its favor, BB&T now moves to recover
attorneys' fees in the amount of $335, 042.64.
(Def.'s Mem. Supp. Mot. Att'ys' Fees 6, DN 97-1
[hereinafter Def.'s Mem.]; Bailen Decl. ¶ 8, DN
114-1). Plaintiffs respond that Kentucky law does
not permit banks to recover attorneys' fees except where
there has been a default or the bank sues to enforce a loan
agreement or collect on the debt. (Pls.' Resp. Def.'s
Mot. Att'ys' Fees 2, DN 101 [hereinafter Pl.'s
Resp.]). In a similar vein, Plaintiffs also insist that the
provision above only allows recovery of attorneys' fees
if BB&T takes action to collect a debt or enforce the
loan agreement after a default. (Pls.' Resp. 3)
Court has jurisdiction over this action under 28 U.S.C.
§ 1332 as there is complete diversity between the
parties and the amount in controversy exceeds $75, 000.
attorneys' fees provisions in the loan agreements entitle
BB&T to reasonable attorneys' fees incurred by
BB&T “in the event the Bank voluntarily or
otherwise should become a party to any suit or legal
proceeding[, ] . . . whether or not any suit or proceeding
actually commenced.” (Def.'s Mot. Att'ys'
Fees Ex. 2, at 5; Def.'s Mot. Att'ys' Fees Ex. 3,
at 5; Def.'s Mot. Att'ys' Fees Ex. 4, at 5;
Def.'s Mot. Att'ys' Fees Ex. 5, at 5; Def.'s
Mot. Att'ys' Fees Ex. 6, at 5). Plaintiffs'
contention that the language of the loan agreements does not
provide for attorneys' fees except upon default is
without merit. BB&T clearly was made a party to this
lawsuit-by Plaintiffs no less-which entitles BB&T to
recover attorneys' fees under the explicit terms of the
other argument that a bank can only recover attorneys'
fees when it sues to collect on a debt must likewise be
rejected because, “[i]n Kentucky, a party can recover
attorneys' fees when a specific contractual provision so
provides.” Pharmacy Corp. of Am. v. Concord
Healthcare Grp., LLC, No. 3:17-CV-00037-GNS, 2017 WL
3623803, at *6-7 (W.D. Ky. Aug. 23, 2017) (citing Aetna
Cas. & Sur. Co. v. Kentucky, 179 S.W.3d 830, 842
(Ky. 2005); Secura Ins. Co. v. Gray Constr., Inc.,
717 F.Supp.2d 710, 722 (W.D. Ky. 2010)). The cases Plaintiff
cites are inapposite.
DePriest v. Hardymon, 209 Fed.Appx. 525 (6th Cir.
2006), the Sixth Circuit interpreted contractual language
between the parties in concluding that the defendant was
entitled to recover only amounts expended in pursing its
counterclaim under the subject note, as specified by the
terms of the note. Id. at 529. Similarly, in
Adkins v. Chrysler Financial Corp., 344 Fed.Appx.
144 (6th Cir. 2009), the Sixth Circuit focused on the
language of the parties' agreement and found that,
because “the words ‘under this Agreement'
limited Chrysler's right to attorneys' fees to those
actions arising directly under the Security Agreement,
” attorneys' fees were not recoverable.
Id. at 148. In Our Lady of Bellefonte Hospital,
Inc. v. Tri-State Physicians Network, No. 06-141-HRW,
2007 WL 2903231 (E.D. Ky. Sept. 27, 2007), a sister court did
not rule on attorneys' fees at that time because that
issue was premature. Id. at *9. Instead, the court
specifically recognized that “a party can recover
attorneys' fees when a specific contractual provision so
provides, ” which is precisely what the agreements
state in the present case. Pharm. Corp., 2017 WL 3623803, at
*6-7 (citations omitted). Accordingly, BB&T may recover
decided attorneys' fees are recoverable, the next task is
to determine whether the amounts sought by BB&T are
reasonable. See Inn-Grp. Mgmt. Servs., Inc. v.
Greer,71 S.W.3d 125, 130 (Ky. 2002); see also Capitol
Cadillac Olds, Inc. v. Roberts,813 S.W.2d 287, 293
(Ky. 1991) (“The trial judge is generally in the best
position to consider all relevant factors and require proof
of reasonable from” the party seeking attorneys'
fees . . . .”). An affidavit submitted by BB&T sets
out the charges for their attorneys' work, as well as an
invoice more specifically reflecting the tasks performed in
this litigation and how long each task took. In this
affidavit, Attorney Neal Bailen, a partner with the law firm
of Stites & Harbison, asserts that $325, 042.64 is
reasonable for several reasons: Plaintiffs sought damages
totaling nearly $5.45 million; discovery involved voluminous
amounts of electronically stored information, including tens
of thousands of pages of bank records, emails, and other