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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`CASE NO. 4:12-CV-461
`Judge Mazzant
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`CASE NO. 4:12-CV-543
`Judge Mazzant
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`UNITED STATES OF AMERICA
`Ex rel. Michael J. Fisher, Brian Bullock and
`Michael Fisher, Individually and Brian
`Bullock, Individually
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`v.
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`HOMEWARD RESIDENTIAL, INC., f/k/a
`American Home Mortgage Servicing, Inc.,
`ET. AL.
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`§
`UNITED STATES OF AMERICA
`Ex rel. Michael J. Fisher, Brian Bullock and
`§
`§
`Michael Fisher, Individually and Brian
`§
`Bullock, Individually
`§
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`§
`v.
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`§
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`OCWEN LOAN SERVICING, LLC., ET. AL. §
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`MEMORANDUM OPINION AND ORDER
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`Pending before the Court are (1) Motion by Relators’ Counsel Fish & Richardson P.C. to
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`Compel Arbitration (Dkt. #337 Homeward; Dkt. #539 Ocwen) and (2) Relators’ Counsel Boyd &
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`Associates’ Emergency Motion to Enforce Settlement Agreement (Dkt. #348 Homeward;
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`Dkt. #550 Ocwen). After reviewing the pleadings, the Court finds the Motion by Relators’
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`Counsel Fish & Richardson P.C. to Compel Arbitration (Dkt. #337 Homeward; Dkt. #539 Ocwen)
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`is denied. Relators’ Counsel Boyd & Associates’ Emergency Motion to Enforce Settlement
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`Agreement (Dkt. #348 Homeward; Dkt. #550 Ocwen) is granted.
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`Case 4:12-cv-00461-ALM Document 368 Filed 03/03/17 Page 2 of 9 PageID #: 17985
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`BACKGROUND
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`The pending dispute arises from Fish & Richardson (“Fish”) and Boyd & Associates’
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`(“Boyd”) joint representation of Michael J. Fisher and Brian Bullock (the “Relators”) in False
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`Claims Act suits against Homeward Residential, Inc., Ocwen Financial Corporation, and Ocwen
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`Loan Servicing, LLC. See United States of America v. Homeward Residential, Inc., No. 4:12-cv-
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`461 (E.D. Tex. 2012); United States of America v. Ocwen Loan Servicing, LLC, No. 4:12-cv-543
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`(E.D. Tex. 2012). Fish and Boyd dispute the fees incurred during the joint representation and
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`whether the dispute should be resolved through arbitration.
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`On December 29, 2014, Fish and Boyd entered into a Letter Agreement governing their
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`representation of the Relators. The Letter Agreement describes the work to be done by each firm,
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`litigation expenses, and fee sharing. The Letter Agreement provides that each firm shall “be paid
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`their respective statutory attorneys’ fees incurred (1) prior to and (2) after the date of the settlement
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`or award, as awarded to the firms, respectively, by the Court or agreed to in settlement.” The
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`Letter Agreement further states that
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`any disputes relating to the construction, interpretation, enforcement, execution or
`implementation of this Agreement, shall be resolved by alternative dispute
`resolution. . . . Alternative dispute resolution means that the parties agree to submit,
`initially, all disputes to an independent mediator mutually agreed to by the
`parties. . . . In the event the parties are unable to resolve their disputes through
`mediation, the parties agree that the mediator shall require the parties to submit
`their disputes to an independent arbitrator selected . . . by JAMS.
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`Between January 2015 and June 2016, the parties engaged in discovery, motion practice,
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`and trial preparation. On June 22, 2016, the parties reached a mediated settlement proposal, subject
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`to final approval by the U.S. Department of Justice and the Ocwen Board of Directors. The
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`mediated settlement proposal provides that Ocwen Financial Corporation, Ocwen Loan Servicing,
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`2
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`Case 4:12-cv-00461-ALM Document 368 Filed 03/03/17 Page 3 of 9 PageID #: 17986
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`LLC, and Homeward Residential, Inc. agree to pay a total of $30,000,000 to settle the suits. The
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`mediator’s proposal states:
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`1. Ocwen shall pay the sum of $30,000,000.00 as follows:
`(a) $15,000,000.00 shall be paid to the Government and Relators (“the Settlement
`Amount”), to be apportioned among the parties in accordance with
`31 U.S.C. § 3730(d)(2).
`(b) $11,444,000.00 shall be paid to Fish & Richardson for reasonable attorney’s
`fees, costs, and expenses necessarily incurred in the litigation (“F&R Fee
`Award”).
`(c) Sam Boyd, Roger Sanders, and their respective law firms may petition the court
`for payment of reasonable attorney’s fees, costs, and expenses necessarily
`incurred in the litigation (“Boyd/Sanders Fee Award”). Ocwen may challenge
`the request. If the cumulative amount of the Boyd/Sanders Fee Award as
`determined by the court is less than $3,556,000.00, the difference shall be paid
`to F&R.1
`1The cumulative amount of attorney’s fees, costs, and expenses incurred by
`Boyd and Sanders is based on a summary of fees and costs provided to the
`mediator by counsel for Relators on June 14, 2016. According to that
`summary, Boyd has incurred $3,175,000.00 in fees and $125,000.00 in
`costs, and Sanders has incurred $254,000.00 in fees and $2,000.00 in costs.
`Without suggesting a view of whether these fees and costs are reasonable
`or necessarily incurred in the litigation, this proposal is intended to establish
`enough of a reserve that would enable Boyd and Sanders to petition the
`court for all fees and costs incurred by them and their representative firms
`through June 14, 2016.
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`On October 12, 2016, the Court held a status conference on the issue of attorney’s fees.
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`Fish argued that Boyd had not produced billing records and that Boyd’s attorney’s fees and costs
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`were unsubstantiated by the amount of work Boyd performed during the litigation. The Court
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`ordered counsel to exchange fee statements and costs (Dkt. #332 Homeward; Dkt. #535 Ocwen).
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`The Court further referred counsel to mediation regarding the fee and cost disputes before the
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`Honorable David Folsom (Dkt. #332 Homeward; Dkt. #535 Ocwen). On November 2, 2016,
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`counsel participated in a mediation before Judge Folsom. Counsel were unable to resolve the
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`dispute, and on November 14, 2016, Judge Folsom recommended that the Court require arbitration
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`pursuant to counsel’s December 29, 2014 Letter Agreement (Dkt. #336 Homeward; Dkt. #538
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`3
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`Case 4:12-cv-00461-ALM Document 368 Filed 03/03/17 Page 4 of 9 PageID #: 17987
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`Ocwen). That same day, Fish emailed a Demand for Arbitration to JAMS and served a hardcopy
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`of the demand on Boyd on November 15, 2016. Boyd indicated that it would not agree to submit
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`the dispute to arbitration.
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`On November 17, 2016, Fish filed the pending Motion by Relators’ Counsel Fish &
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`Richardson P.C. to Compel Arbitration (Dkt. #337 Homeward; Dkt. #539 Ocwen). Fish argues
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`that counsel’s December 29, 2014 Letter Agreement contains a valid arbitration provision and the
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`fee dispute falls within the scope of the arbitration provision. Fish states that the Letter Agreement
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`provides that “any dispute relating to the construction, interpretation, enforcement, execution or
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`implementation of this Agreement, shall be resolved by alternative dispute resolution.” Fish notes
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`that the accuracy of fee claims and billing statements “unquestionably relates to the construction,
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`interpretation, enforcement, execution or implementation” of the Letter Agreement. Fish asks the
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`Court to compel Fish and Boyd to engage in arbitration to apportion the fees awarded in the
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`mediated settlement proposal.
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`On December 8, 2015, Boyd filed a response (Dkt. #343 Homeward; Dkt. #545 Ocwen).
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`On December 15, 2016, Boyd filed Relators’ Counsel Boyd & Associates’ Emergency Motion to
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`Enforce Settlement Agreement (Dkt. #348 Homeward; Dkt. #550 Ocwen). In both the response
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`and the motion, Boyd argues that the fee dispute is not within the scope of the arbitration provision.
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`According to Boyd, the mediated settlement proposal “settled the statutory attorneys’ fee
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`allocation issue, and it requires this Court, not an arbitrator, to make a final decision regarding
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`Relators’ law firms’ statutory fees.” Boyd further argues that Fish does not have standing to
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`compel arbitration because under the mediated settlement proposal, only Ocwen may dispute
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`Boyd’s statutory fee request. Boyd also states that Fish should be judicially estopped from arguing
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`the fee dispute is subject to arbitration because Fish previously argued that the Court should order
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`Case 4:12-cv-00461-ALM Document 368 Filed 03/03/17 Page 5 of 9 PageID #: 17988
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`the parties to exchange billing records and attend mediation. Boyd asks the court to “summarily
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`enforce” the mediated settlement proposal because it settles the amount of fees to be awarded to
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`Boyd, conditioned upon the Court’s approval of the fees.
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`On December 29, 2016, Fish filed a response (Dkt. #353 Homeward; Dkt. #555 Ocwen).
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`Fish responds that under the mediated settlement proposal the Court will consider the
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`“reasonableness and necessity of the overall amount of $15 million that Ocwen has agreed to pay
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`the law firms, collectively.” Fish argues that while the Court will determine whether the settlement
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`amount is reasonable, the arbitrator will determine “the precise amount each firm is entitled to
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`receive from the fixed pool of $15 million mandated by the forthcoming settlement.” Fish
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`reiterates that arbitration will result in an allocation of the mediated settlement proposal award and
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`is “wholly consistent with the Court’s consideration of the reasonableness and necessity of the
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`total amount of the fees and costs.”
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`On January 9, 2017, Boyd filed a reply (Dkt. #357 Homeward; Dkt. #559 Ocwen). On
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`January 17, 2016, Fish filed a sur-reply (Dkt. #360 Homeward; Dkt. #561 Ocwen).
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`LEGAL STANDARD
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`“The Federal Arbitration Act (“FAA”) expresses a strong national policy favoring
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`arbitration of disputes, and all doubts concerning the arbitrability of claims should be resolved in
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`favor of arbitration.” Wash. Mut. Fin. Grp., LLC v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004).
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`The FAA, “leaves no place for the exercise of discretion by a district court, but instead mandates
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`that district courts shall direct the parties to proceed to arbitration on issues as to which an
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`arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218
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`(1985).
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`Case 4:12-cv-00461-ALM Document 368 Filed 03/03/17 Page 6 of 9 PageID #: 17989
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`When considering a motion to compel arbitration, the Court must address two questions.
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`Graves v. BP Am., Inc., 568 F.3d 221, 222 (5th Cir. 2009) (citing Fleetwood Enters. Inc. v.
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`Gaskamp, 280 F.3d 1069, 1073 (5th Cir. 2002)). “First, whether there is a valid agreement to
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`arbitrate, and second, whether the dispute in question falls within the scope of the arbitration
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`agreement.” Id. In regard to the first question of contract validity, the Court should apply
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`“ordinary state-law principles that govern the formation of contracts.” Id. at 222 (citing First
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`Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995). The second question of scope is
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`answered “by applying the ‘federal substantive law of arbitrability . . . .’” Id. (quoting Mitsubishi
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`Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)).
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`ANALYSIS
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`Boyd argues that Fish does not have standing to compel arbitration or to dispute the
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`allocation of fees under the mediated settlement proposal. Boyd contends that under the mediated
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`settlement proposal, only Ocwen may dispute Boyd’s statutory fee request. However, the
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`mediated settlement proposal does not state that only Ocwen may dispute Boyd’s statutory fee
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`request. It states that the firms may submit their fee statements to the Court and the Court will
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`determine the reasonableness of fees and expenses necessarily incurred in the litigation. This
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`allows the interested stakeholders to challenge the requested fees for reasonableness. As a party
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`to both the Letter Agreement and mediated settlement proposal, Fish has standing to compel
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`arbitration or to dispute the fees under the mediated settlement agreement.
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`The Court finds a binding agreement to arbitrate exists between Boyd and Fish. Counsel’s
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`joint representation of Relators is governed by the December 29, 2014 Letter Agreement between
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`the firms. The Letter Agreement contains an “Alternative Dispute Resolution” provision that
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`requires the firms to resolve disputes relating to the Letter Agreement through mediation and, if
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`Case 4:12-cv-00461-ALM Document 368 Filed 03/03/17 Page 7 of 9 PageID #: 17990
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`mediation is unsuccessful, through arbitration. The Letter Agreement was entered into by two
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`sophisticated parties and contains a valid arbitration provision.
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`However, the statutory attorney’s fee dispute does not fall within the scope of the
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`arbitration provision.
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`Fish states that the Letter Agreement addresses each firms’ responsibilities in the litigation
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`and how the firms will share in any recovery. Fish argues that the disagreement regarding the
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`legitimacy and allocation of attorney’s fees thus relates to the “interpretation, enforcement,
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`execution or implementation” of the Letter Agreement and is within the scope of the arbitration
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`provision. This argument is without merit.
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`First, the False Claims Act provides that the Court will award the parties settling a claim
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`an amount that “the court decides is reasonable for collecting the civil penalty and damages.”
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`31 U.S.C. § 3730(d)(2). The statute further provides that the parties shall “also receive an amount
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`for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable
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`attorneys’ fees and costs.” Id. The review of attorney’s fees is statutorily assigned to the Court.
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`Further, the mediated settlement proposal states that “the following proposal is hereby
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`made for the full and final settlement of all claims . . . including any claims by counsel for Relators
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`for attorney’s fees, costs, and expenses under the False Claims Act (“FCA”), 31 U.S.C. § 3730.”
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`Accordingly, the firms agreed that the mediated settlement proposal fully and finally settled any
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`claims relating to attorney’s fees. Fish cannot avoid this language in the mediated settlement
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`proposal by stating that any dispute relating to fees falls under the Letter Agreement’s arbitration
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`provision. By entering into the mediated settlement proposal, Fish agreed to fully and finally settle
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`all claims by Relators’ counsel for attorney’s fees.
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`Case 4:12-cv-00461-ALM Document 368 Filed 03/03/17 Page 8 of 9 PageID #: 17991
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`Moreover, the Letter Agreement provides that each firm shall be paid their respective
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`statutory attorney’s fees as “agreed to in settlement.” The parties agreed in the mediated settlement
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`proposal that Boyd “may petition the court for payment of reasonable attorney’s fees, costs, and
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`expenses necessarily incurred in the litigation.” The parties further agreed that if the Court
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`determines that the cumulative amount of Boyd’s attorney’s fees, costs, and expenses is less than
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`$3,300,000, the difference shall be paid to Fish. The mediated settlement proposal notes that the
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`“proposal is intended to establish enough of a reserve that would enable Boyd . . . to petition the
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`court for all fees and costs.” The statutory attorney’s fees issue does not fall within the scope of
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`the arbitration provision because the parties agreed in the Letter Agreement that statutory
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`attorney’s fees would be awarded as agreed to in settlement. In settlement, the parties expressly
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`agreed that the Court would determine the payment of reasonable statutory attorney’s fees.
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`Fish further argues that the mediated settlement proposal does not preclude the parties from
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`arbitrating the precise amount each firm is entitled to receive from the fixed pool of $15 million in
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`the mediated settlement agreement. However, the mediated settlement agreement clearly states
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`that the Court will determine whether the cumulative amount of Boyd’s attorney’s fees, costs, and
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`expenses is less than $3,300,000. The mediated settlement agreement does not state that an
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`arbitrator may allocate these fees. Fish acknowledged that the parties agreed in settlement that the
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`Court would resolve the attorney’s fees dispute. In an email regarding the dispute, Thomas
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`Melsheimer of Fish stated that “all the firms will follow the same process for fees under the
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`settlement agreement terms . . . that we have accepted. It is our hope, still, that we can work it all
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`out among ourselves but if we cannot we will all go to the Court under the provisions set out in
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`the agreement” (Dkt. #348 Homeward; Exhibit 3, Dkt. #550 Ocwen, Exhibit 3).
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`Case 4:12-cv-00461-ALM Document 368 Filed 03/03/17 Page 9 of 9 PageID #: 17992
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`Fish’s motion to compel arbitration is therefore denied. Relators’ counsel may petition the
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`Court for payment of reasonable attorney’s fees, costs, and expenses necessarily incurred in the
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`litigation.
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`CONCLUSION
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`It is therefore ORDERED that the Motion by Relators’ Counsel Fish & Richardson P.C.
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`to Compel Arbitration (Dkt. #337 Homeward; Dkt. #539 Ocwen) is hereby DENIED.
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`Relators’ Counsel Boyd & Associates’ Emergency Motion to Enforce Settlement
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`Agreement (Dkt. #348 Homeward; Dkt. #550 Ocwen) is hereby GRANTED.
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`9
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