500 B.R. 174
S.D. Fla.2013Background
- Involuntary petition filed against Maury Rosenberg by Petitioning Creditors; petition later transferred to SD Fla and dismissed by Judge Cristol for lack of standing; Eleventh Circuit affirmed dismissal against petitioners; Rosenberg sought attorney’s fees and costs and damages under 11 U.S.C. § 303(i) in Fla proceedings; Judge Cristol awarded § 303(i)(1) fees and costs; Judge Seitz later awarded § 303(i)(2) damages after a jury found bad faith; Appellants appeal Fee Order and Final Judgment consolidating two appeals; questions include timeliness, appellate fees, damages, fees-on-fees, and agency liability of Lyon and USB
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of Rosenberg’s Fee Motion | Rosenberg’s motion timely under reservation of jurisdiction | Motion untimely under Local Rule 7054-1(F) | Not untimely; court did not abuse discretion |
| Authority to award appellate fees under § 303(i)(1) | Appellate fees permitted to advance its policy of fee shifting | Rule 38 limits appellate fees; unclear authority | Bankruptcy court may award appellate fees under § 303(i)(1) |
| Fees for damages claims under § 303(i)(2) versus § 303(i)(1) | Damages fees permissible as part of § 303(i) costs; not restricted | Damages fees arise from § 303(i)(2) and not from § 303(i)(1) | Fees for damages properly awarded under § 303(i)(1) where appropriate |
| Fees on fees (fees incurred litigating the Fee Motion) | Time spent establishing entitlement to fees is compensable | Requests for fees on fees improper | Feespermitted under § 303(i)(1) as part of the fee award |
| Liability for fees and costs (Lyon/USB agency liability) | Fox acted within Lyon’s scope and Lyon liable | Only petitioners are liable under § 303(i)(1) | Lyon liable; USB may be liable post-merger; agency principles applied |
Key Cases Cited
- In re S. California Sunbelt Developers, Inc., 608 F.3d 456 (9th Cir. 2010) (fee shifting under § 303(i) includes appellate fees)
- John Richards Homes Bldg. Co., L.L.C., 405 B.R. 192 (E.D. Mich. 2009) (§ 303(i) scope to dismissal and related proceedings)
- Glannon, 245 B.R. 882 (D. Kan. 2000) (agency of petitioning creditors may be liable under § 303(i)(1))
- In re Cadillac by DeLorean & DeLorean Cadillac, Inc., 265 B.R. 574 (Bankr.N.D. Ohio 2001) (enables consideration of appellate or related fees under § 303(i))
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (fee-shifting statutes support appellate fee awards; Rule 38 rationale not controlling)