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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

PERFECTING CHURCH, MARVIN

WINANS, and CYNTHIA FLOWERS,

Case No. 09-cv-13493

Plaintiffs, Hon. Gerald E. Rosen

v.

ROYSTER, CARBERRY, GOLDMAN

& ASSOCIATES, INC., et al, 

Defendants.

__________________________________/

OPINION AND ORDER

OF MONETARY JUDGMENT

At a session of said Court, held in

the U.S. Courthouse, Detroit, Michigan

on September 8, 2010 

PRESENT: Honorable Gerald E. Rosen

United States District Judge

I. INTRODUCTION

Plaintiffs Perfecting Church, Marvin Winans, and Cynthia Flowers brought this

action against Defendants Royster, Carberry, Goldman & Associates, Inc. (RCGA),

Martin Royster, Lloyd Banks, Toine Murphy, and Shannon Steel claiming damages for

violations of federal and State of Michigan securities laws, and from common law fraud,

deceit, or manipulation, in connection with the purchase or sale of securities. After the

Court entered Default Judgment against Defendant RCGA, Plaintiffs submitted affidavits
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to support their request for $790,807.65, including damages, interest, attorney fees and

costs. Having had an opportunity to review Plaintiffs’ submissions, the Court is now

prepared to enter a monetary award. This Memorandum Opinion and Order sets forth the

Court’s decision.

II. FACTUAL AND PROCEDURAL BACKGROUND

During the period of August 2007 to May 2008, Plaintiffs invested with

Defendants a total of $407,042.45 (Aff. of Cynthia Flowers, Dkt.# 43, ¶¶ 7, 8, 10, July

14, 2010). This total included Plaintiff Perfecting Church’s three investments of

$25,000.00, $35,000.00, and $225,000.00, Plaintiff Marvin Winan’s single investment of

$55,627.75, and Plaintiff Cynthia Flowers’s single investment of $66,414.70. Id.

Defendants guaranteed a 10% per month return on Plaintiffs’ investments. On May 1,

2009, Defendants executed agreements confirming the appreciation in Plaintiffs’

investments and account balances totaling $654,204.44, including $437,756.34 for

Plaintiff Perfecting Church, $101,006.05 for Plaintiff Marvin Winans, and $115,442.05

for Plaintiff Cynthia Flowers (Flowers Aff. ¶ 16). When Defendants failed to make

scheduled payments to Plaintiffs on their investments, Plaintiffs brought this action.

On July 2, 2010, the Court entered an order granting Plaintiffs’ Motion for Default

Judgment as to Defendant RCGA. The Court, however, withheld entering a monetary

award at that time and directed Plaintiffs to file affidavits showing an accounting of the

amount due in damages.

On July 22, 2010, Plaintiffs submitted an affidavit along with account balance
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 Plaintiffs’ second affidavit [Dkt.# 52] did not include an updated list of damages and

statutory interest, so this total is based on the amounts listed on page five of Plaintiffs’ first

affidavit [Dkt.# 43].

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statements reflecting the amount due in damages and interest. The affidavit requested

damages, interest, attorney fees and costs pursuant to MCL §§ 451.810(a) and

451.2703(1), but it failed to include an itemization of the work performed and costs

incurred by Plaintiffs’ attorneys. After further instruction from the Court, on August 25,

2010, Plaintiffs submitted a second affidavit including hourly billing invoices for all legal

work and an itemization of costs related to this case from June 2009 through July 2010. 

The affidavits requested $720,449.361

 in damages including statutory interest, $711.79 in

costs, and $66,601.00 in attorney fees.

III. DISCUSSION

A. PLAINTIFFS ARE ENTITLED TO ACTUAL DAMAGES

Plaintiffs calculated damages totaling $654,204.44 based on the account balance

agreements issued by Defendants on May 1, 2009. These agreements reflected the

promised 10% monthly return on Plaintiffs’ principal investment. A person may “recover

the consideration paid for the security, together with interest at 6% per year from the date

of payment.” Mich. Comp. Laws Ann. § 451.810(a). The language of 

§ 451.810(a) makes clear that Plaintiffs may only recover their actual damages, measured

as the difference between the consideration paid for their securities and any amount

received upon tender of their securities. Kirkland v. E.F. Hutton & Co., Inc., 564 F.
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Supp. 427, 446 (E.D. Mich. 1983).

Here, Plaintiffs’ consideration paid is the principal amount initially invested with

Defendants. Because Plaintiffs did not receive any payments from Defendants, Plaintiffs

are entitled to their full principal, which is $407,042.45. The Court finds no legal support

for Plaintiffs’ claim to the appreciated value of their initial investment, as reflected in the

May 1, 2009 agreements. Accordingly, the Court grants Plaintiffs an award for damages

in the amount of $407,042.45 plus 6% interest from the date of payment.

B. PLAINTIFFS ARE ENTITLED TO COSTS AND REASONABLE FEES

The Court determines the reasonableness of attorney fees primarily by multiplying

the billing rate customarily charged for similar legal services in the same locality by the

number of hours spent on the case. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983);

Smith v. Khouri, 481 Mich. 519, 530-31 (2008). Here, the Court does not take issue with

the hourly rates of the Clark Hill attorneys, whose rates range up to $450 per hour

depending on attorney skill and experience. The Court finds these rates are

commensurate with the billing rates of other large Detroit area firms. “[T]he court is

entitled to rely on its own knowledge of attorney’s fees in its surrounding area in arriving

at a reasonable fee....” Andrade v. Jamestown Hous. Auth., 82 F.3d 1179, 1190 (1st Cir.

1996).

The Court does, however, find the total hours billed for the attorney work to be

excessive. A portion of the billing entries relate to litigation against Defendants Lloyd

Banks, Toine Murphy, and Shannon Steel. Although these are all co-defendants who may
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be jointly and severally liable in this case, the Court entered this Default Judgment only

as to Defendant RCGA. Therefore, the Court finds it unreasonable to grant fees for work

pertaining to the remaining Defendants.

The Court also finds some duplicative or redundant billing entries in counsels’

billing invoices. For example, many entries consist of conference calls between various

Clark Hill attorneys. The billing invoices contain separate entries by each attorney for the

same call, regardless of the attorney’s participation in the call or substantive work

resulting from the call. Given the high number of calls placed by attorneys to other

attorneys within the firm, it is unreasonable to allow Plaintiffs to recover separate fees for

each attorney on a single call, particularly for a default judgment.

None of this is intended as criticism of the quality of work Plaintiffs’ counsel

performed in this case. The Court is aware of the significant amount of time and effort

Plaintiffs’ counsel expended in successfully challenging Defendant RCGA’s Chapter 13

bankruptcy plan. The Court believes, however, that the opposing party should only be

taxed with reasonable costs and fees associated with work related specifically to the

Default Judgment as to Defendant RCGA.

For the foregoing reasons, the Court finds that Plaintiffs’ requested fee award

should be reduced by 25%. Accordingly, the Court awards Plaintiffs $49,950.75 in

attorney fees. The Court finds that this amount is reasonable in relation to the award of

damages. In addition, the Court finds Plaintiffs’ request for costs, which consists mainly

of service of process and filing fees, to be reasonable and awards Plaintiff the full
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$711.79 in costs.

CONCLUSION

For all of the foregoing reasons,

IT IS HEREBY ORDERED that Plaintiffs be awarded $407,042.45 as damages in

this case.

IT IS FURTHER ORDERED that Plaintiffs be awarded $49,950.75 in attorney

fees and $711.79 in costs for a total award of fees and costs in the amount of $50,662.54.

IT IS FURTHER ORDERED that Plaintiffs be awarded accruing pre-judgment

interest on damages pursuant to MCL § 451.810(a) plus accruing post-judgment interest

on the total Judgment pursuant to 28 U.S.C. § 1961.

IT IS FURTHER ORDERED that this Court will retain jurisdiction of this matter

to effectuate the terms of this Judgment.

s/Gerald E. Rosen 

Chief Judge, United States District Court

Dated: September 8, 2010

I hereby certify that a copy of the foregoing document was served upon counsel of record on

September 8, 2010, by electronic mail and upon Royster, Carberry, Goldman and Associates,

Inc., c/o Martin Royster, 19710 Chesterfield, Detroit, MI 48221 by ordinary mail.

s/Ruth A.Gunther 

Case Manager