Corvallis Hospitality, LLC v. Wilmington Trust, National Association as Trustee for the Benefit of the Holders of LCCM 2017-LC26 Mortgage Trust Commercial Mortgage Pass-Through Certificates, Series 2017-LC26; Midland Loan Services, Inc.; Beacon Default Management, Inc.; and K-Star Asset Management, LLC

Summary

The United States District Court for the District of Oregon addresses defendants’ motion for relief and entry of judgment arising from Corvallis Hospitality, LLC’s default on an $18 million commercial loan. The court holds that the plaintiff’s claim concerning an erroneously authorized insurance payment is moot because the payment was refunded, and determines that the plaintiff owes outstanding principal, interest, fees, costs, and other amounts under the loan agreement. The court also finds the contractual attorney-fee and cost provision enforceable and the requested fees reasonable in part.

Holdings

1. Corvallis Hospitality's breach-of-contract claim concerning the Marsh USA insurance payment was moot because defendants had provided a full refund and the borrower failed to establish any additional legally recoverable damages.
2. Corvallis Hospitality owed the outstanding principal, enforceable default interest, late fees through the acceleration date, reasonable expenses, the yield-maintenance premium, special-servicing fees, a liquidation fee upon resolution of the loan, and interest on advances as authorized by the loan agreement and related documents.
3. Section 11.13 of the loan agreement required Corvallis Hospitality to pay or reimburse defendants for reasonable, actual attorney fees and costs incurred in enforcing the loan obligations, even though the agreement did not use the phrase prevailing party.
4. The requested attorney hours and Perkins Coie rates were reasonable, but Jenner & Block's hourly rates were capped at the highest rates requested for Perkins Coie attorneys.
5. William Lawson was liable as guarantor because the guaranty made him responsible for the loan when Corvallis Hospitality asserted a meritless defense to payment, and the court found the H.B. 4204 defense meritless.

Questions Presented

1. Whether Corvallis Hospitality's breach-of-contract claim concerning the mistaken Marsh USA insurance payment was moot after defendants refunded the payment.
2. Whether Corvallis Hospitality owed the outstanding principal, default interest, late fees, expenses, yield-maintenance premium, special-servicing fees, liquidation fee, and interest on advances under the loan agreement.
3. Whether the loan agreement required Corvallis Hospitality to pay reasonable, actual attorney fees and costs incurred in enforcing the loan obligations.
4. Whether defendants' requested attorney hours, hourly rates, and litigation costs were reasonable.
5. Whether William Lawson was liable as guarantor under the guaranty after Corvallis Hospitality asserted a meritless defense to payment.

Disposition

other