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TA Operating LLC v. Comdata, Inc.

Court of Chancery of Delaware

April 2, 2018

TA OPERATING LLC, Plaintiff, Counterclaim-Defendant,
v.
COMDATA, INC. and FLEETCOR TECHNOLOGIES, INC., Defendants, Counterclaimants.

          GRANTING PLAINTIFF'S FEE APPLICATION AND DENYING DEFENDANTS' FEE APPLICATION

          Chancellor Andre G. Bouchard, Judge

         WHEREAS:

         A. On December 15, 2010, TA Operating LLC ("TA") and Comdata, Inc. executed a merchant agreement (the "Merchant Agreement") with an expiration date of January 2, 2016.

         B. On December 14, 2011, TA and Comdata executed a RFID agreement and an amendment to the Merchant Agreement that extended its expiration date to January 2, 2022.

         C. On November 2, 2016, Comdata purported to terminate the Merchant Agreement based on TA's alleged breach of the RFID agreement.

         D. On November 30, 2016, TA filed a Verified Complaint (the "Complaint") against Comdata and its parent company, FleetCor Technologies, Inc. ("FleetCor") asserting four claims: Count I sought declaratory relief under the Merchant Agreement, Count II sought specific performance for defendants' breach of the Merchant Agreement, Count III asserted that defendants breached the implied duty of good faith and fair dealing under the Merchant Agreement, and Count IV asserted a claim under the Tennessee Consumer Protection Act ("TCPA").

         E. On December 22, 2016, Comdata and FleetCor filed a counterclaim, which was amended on February 23, 2017 (the "Counterclaim").

         F. On March 27, 2017, TA filed a Verified Supplement to the Complaint alleging, among other things, that in November and December 2016, defendants represented that their fee proposals "reflected substantially similar terms to those that Defendants had agreed with [TA's competitors]."'[1]

         G. On September 11, 2017, after a four-day trial, the court issued a post-trial Memorandum Opinion ("Opinion") (i) ruling that TA was entitled to a judgment in its favor against Comdata (but not FleetCor) on Counts I and II of the Complaint, and on defendants' Counterclaim; (ii) ruling that Comdata was entitled to a judgment in its favor on Count IV (the TCPA claim); (iii) dismissing Count III as moot; and (iv) directing the parties to submit a form of final judgment and a schedule for resolving the issue of attorneys' fees and costs, H. On October 17, 2017, after the parties were unable to agree on a procedure for resolving the issue of attorneys' fees and costs, the court entered a scheduling order setting forth a process for resolving the parties' competing applications for attorneys' fees and costs and reserved entry of final judgment until the issue of attorneys' fees and costs was resolved.

         I. On October 24, 2017, TA submitted affidavits in support of its request for an award of attorneys' fees and costs under Section 13(c) of the Merchant Agreement.

         J. On October 31, 2017, defendants filed an application for an award of attorneys' fees and costs under the TCPA with respect to Count IV of the Complaint.

         K. The parties each filed briefs in opposition to the other side's application for an award of attorneys' fees and costs.

         NOW, THEREFORE, on this 2nd day of April, 2018, IT IS HEREBY ORDERED as follows:

         I. TA's Fee Application

         1. TA contends that it is entitled under Section 13(c) of the Merchant Agreement to an award for all of the attorneys' fees and costs it incurred in this litigation as the prevailing party. Section 13(c) states as follows:

In the event either party shall engage an attorney to enforce, protect, or preserve any rights it might have under this Agreement, the prevailing party in such suit shall be entitled to recover its reasonable attorney's fees and associated costs, in addition to any other relief to which it may be entitled.[2]

         2. In support of its application, TA submitted affidavits from senior members of its legal team quantifying the total amount of attorneys' fees and costs it incurred in this litigation at $9, 975, 623.36 for the period from inception through September 30, 2011[3]

         3. Defendants "do not dispute that TA is entitled to recover the majority of its fees and costs" but do contend that "TA is not entitled to recover the attorneys' fees and costs it incurred for its failed non-contractual TCPA claim and its failed claim against FleetCor."[4] Based on a line item review of the invoices submitted by TA's counsel, defendants contend that $1, 076, 912.84 should be deducted from TA's fee request: $1, 051, 339.84 for the TCPA claim and $25, 573.00 for the claims against FleetCor.[5]

         4. In its reply, TA maintains that it is entitled to an award of all the fees and costs it has incurred in this litigation, and provides supplemental affidavits from its counsel quantifying the additional fees and costs it incurred from October 1, 2017 to November 30, 2017 at $388, 644.30.[6] Based on a review of the line items identified in defendants' opposition, TA also submits (without conceding that any amount should be deducted from its request) that the amount attributable to the TCPA claim and the work associated with FleetCor would be no more than $529, 598.54 in total, consisting of $520, 648.94 for the TCPA claim and $8, 949.60 for the claims against FleetCor.[7]

         5. Under Tennessee law, which governs the Merchant Agreement, [8] "the cardinal rule for interpreting contracts is to ascertain the intention of the parties and give effect to that intention."[9] Importantly, as the Tennessee Court of Appeals recently stated, "[contractual provisions creating a right to recovery of attorneys' fees are strictly construed and will be interpreted as an exception to the American rule 'only when a contract specifically or expressly provides for the recovery of attorney fees.'"[10]

         6. In support of its position that this court should adopt an "all-or-nothing" approach to interpreting Section 13(c) of the Merchant Agreement, TA relies primarily on the Tennessee Court of Appeals' decision in Brunsting v. Brown, which construed a provision similar to Section 13(c):

In the event any party hereto fails to perform any of its obligations under this Agreement or in the event a dispute arises concerning the meaning or interpretation of any provision of this Agreement, the defaulting party or the party not prevailing in such dispute ... shall pay all costs and expenses incurred by the other party in enforcing or establishing its rights hereunder ...[11]

         The core issue on appeal was whether the trial court erred in applying this provision to award the appellees fees for claims on which they did not prevail. The appellate court, which affirmed, ...


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