Opinion
Case No. 8:11-bk-22258-MGW
2020-04-03
IN RE: FUNDAMENTAL LONG TERM CARE, INC. Debtor.
Robert F. Elgidely, Esq., Fox Rothschild LLP, Special Counsel for Trustee James L. Wilkes, II, Esq., Colin M. Esgro, Esq., Rainey C. Booth, Jr., Esq., Wilkes & McHugh, P.A., Counsel for Probate Estates
Robert F. Elgidely, Esq., Fox Rothschild LLP, Special Counsel for Trustee
James L. Wilkes, II, Esq., Colin M. Esgro, Esq., Rainey C. Booth, Jr., Esq., Wilkes & McHugh, P.A., Counsel for Probate Estates
MEMORANDUM OPINION AND ORDER APPROVING TRUSTEE’S APPLICATION TO EMPLOY ROBERT F. ELGIDELY AND THE LAW FIRM OF FOX ROTHSCHILD LLP AS SPECIAL COUNSEL (Doc. 2258)
Michael G. Williamson, United States Bankruptcy Judge
THIS CASE came before the Court for hearing on January 27, 2020, on the Trustee's Application for Entry of an Order Authorizing the Employment of Robert F. Elgidely and the Law Firm of Fox Rothschild LLP as Special Counsel (the Employment Application). The Estates of Juanita Jackson, Elvira Nunziata, Arlene Ann Townsend, Opal Lee Sasser, and James Henry Jones (together, the Probate Estates) filed an Objection and First Supplement to Objection (the Objection) to the Employment Application. Thereafter, Genovese Joblove & Battista, P.A. filed a Limited Response to the Objection and the Trustee filed a Response to the Objection.
Doc. 2258.
The Estate of Joseph Webb was also a creditor in the case and was represented by Wilkes & McHugh, P.A., but is not named as an objecting creditor in the Objection.
Docs. 2259 & 2260.
Doc. 2262.
Doc. 2266.
The Court is familiar with the record of the main case and associated adversary proceedings, has reviewed the Employment Application, Objection, and Responses, and has considered the representations and arguments by counsel for the parties at the hearing. Based on the record, the Court determines that Robert F. Elgidely and the law firm of Fox Rothschild LLP (1) do not hold or represent any interest adverse to the bankruptcy estate, (2) did not fail to disclose any relevant connection to any interested party in this case, and (3) are not disqualified from employment by the Trustee under 11 U.S.C. § 327(a) or Fed. R. Bankr. P. 2014. Accordingly, the Objection will be overruled, and the Employment Application will be approved.
A. BACKGROUND
1. The Bankruptcy Case
On December 5, 2011, the Estate of Juanita Jackson filed an involuntary Chapter 7 petition against Fundamental Long Term Care, Inc. (the Debtor), and an order for relief was entered in the bankruptcy case on January 12, 2012. On January 23, 2012, Beth Ann Scharrer (the Trustee) was appointed as the Trustee of the Chapter 7 estate.
Doc. 1.
Doc. 6.
In February and March 2012, the law firm of Wilkes & McHugh, P.A. (Wilkes) filed six proofs of claim (one on behalf of each Probate Estate) seeking the recovery of over $2 billion from the bankruptcy estate. The claims were predicated on prepetition negligence or wrongful death judgments against nursing homes where the decedents had resided before their deaths, and on proceedings supplementary to collect the judgments from entities that appeared to have some relationship with the nursing homes.
Claim Nos. 1 through 6.
To administer the bankruptcy estate for the benefit of the six creditors, the Trustee began investigating and pursuing potential fraudulent transfer, alter ego, and other related claims arising out of an alleged prepetition "bust-out" scheme involving entities known as Trans Health Care, Inc. (THI) and Trans Health Management, Inc. (THMI). According to the Trustee, THI's corporate parent and its primary shareholder had first conspired to allow THI's two primary secured lenders to loot THI and THMI in order to repay approximately $75 million in loans. Then, THMI's assets had been transferred to a number of entities and individuals known as the "Fundamental Entities" for far less than their fair market value. Finally, to complete the alleged bust-out scheme, THMI's remaining shell had been transferred to the Debtor, which was created for the sole purpose of acquiring THMI's liabilities, and THI was permitted to go out of business before being put into a state court receivership.
Before March 2006, THI owned a number of subsidiaries that operated nursing homes throughout the United States, and THMI provided administrative support for the nursing homes.
In re Fundamental Long Term Care, Inc ., 527 B.R. 497, 504 (Bankr. M.D. Fla. 2015).
While the Trustee's investigations were pending, the Probate Estates had been pursuing virtually identical claims in state court. Accordingly, the Court determined that the related proceedings should be litigated in one forum with all of the parties as participants, and that the forum should be the bankruptcy court because it has jurisdiction over property of the estate wherever located. "So the Court required a single proceeding – involving the Trustee, the creditors, and the targets – for resolving any fraudulent transfer, alter ego, and other related claims."
Id . at 505.
Id . at 506.
2. The Non-Troutman Targets
Over the next four years, the Trustee and the Probate Estates jointly litigated claims against at least twelve defendants other than Troutman Sanders LLP (the Non-Troutman Targets). The Non-Troutman Targets included Fundamental Long Term Care Holdings, LLC; THI of Baltimore, Inc.; Fundamental Administrative Services, LLC; Murray Forman; and Leonard Grunstein (together, the Fundamental Parties); GTCR Fund VI, L.P.; GTCR Partners VI, L.P.; and Edgar D. Janotta, Jr. (together, the GTCR-Related Parties); General Electric Capital Corporation (GECC); Ventas, Inc.; Ventas Realty Limited Partnership (together, Ventas); and Rubin Schron.
By December 2015, the Court had entered the following orders approving compromises of the bankruptcy litigation against the Non-Troutman Targets:
1. On October 23, 2015, the Court entered an order approving a compromise among the Trustee, the Probate Estates, and the Fundamental Parties, under which the Fundamental Parties agreed to pay the sum of $18.5 million to the bankruptcy estate or the Probate Estates.
2. On October 28, 2015, the Court entered an order approving a compromise with targets known as the Quintairos Defendants, under which the Quintairos Defendants agreed to pay the sum of $1.25 million to the bankruptcy estate.
3. On October 28, 2015, the Court entered an order approving a compromise with the GTCR-Related Parties, under which the GTCR-Related Parties agreed to pay the sum of $1.5 million to the Probate Estates.
4. On October 28, 2015, the Court entered an order approving a compromise among the Probate Estates, the Trustee, and a target known as the THI Receiver, under which the THI Receiver agreed to pay the sum of $700,000 to the bankruptcy estate.
5. On October 28, 2015, the Court entered an order approving a compromise with GECC and Ventas, under which GECC agreed to pay the sum of $1.5 million and Ventas agreed to pay the sum of $250,000 to the Probate Estates.
Doc. 1847.
Doc. 1854.
Doc. 1858.
Doc. 1857.
Doc. 1859.
As a result of these compromises with the Non-Troutman Targets, therefore, the bankruptcy estate recovered gross settlement proceeds totaling $23.7 million. Of the total recoveries, the sum of $16.45 million was paid by the Non-Troutman Targets to the bankruptcy estate, and the sum of $7.25 million was paid by Non-Troutman Targets directly to the Probate Estates. From the amount paid to the bankruptcy estate, the Trustee distributed $9,036,089.89 to the Probate Estates. Thus, the Probate Estates received an aggregate sum of $16,286,089.90 from the bankruptcy litigation.
Doc. 1988 (entries dated November 10, 2015 and November 23, 2015).
Of the $16.2 million received by the Probate Estates, however, each individual probate estate actually received only $1 million, less a $50,000 "future cost reserve." The balance of the distribution paid to the Probate Estates from the bankruptcy litigation was disbursed to Wilkes in payment of Wilkes' attorney's fees and other charges. Consequently, the six Probate Estates received less than $6 million from their total distribution of $16.2 million, and the remaining $10 million was used to pay Wilkes' attorney's fees and costs.
Doc. 2217, Estate of Juanita Jackson, et al. v. Beth Ann Scharrer , No. 8:17-cv-1545-T-23, at pp. 3-4 (M.D. Fla. May 30, 2019).
But the fees and costs charged by Wilkes exceed the $10 million that he received by more than $7 million. Accordingly, Wilkes reached an agreement with the representatives of the Probate Estates to defer "the remaining [$7,352,104.38] balance of the attorney's fees for collection from any future settlements."
In other words, Wilkes charged the Probate Estates fees and costs totaling $17,620,368.40 on the Probate Estates' gross recoveries totaling $16,286,089.90 for the bankruptcy litigation.
Doc. 2217, Estate of Juanita Jackson, et al. v. Beth Ann Scharrer , No. 8:17-cv-1545-T-23, at p. 4.
3. Troutman Sanders
On June 2, 2014, the Trustee filed suit against Troutman Sanders LLP (Troutman Sanders) and others (the Troutman Suit). At the time, the Trustee was represented by Steven M. Berman, Esq. and the law firm of Shumaker Loop & Kendrick LLP (together, Shumaker) as special litigation counsel, but Shumaker withdrew as the Trustee's litigation counsel in December 2015.
Adv. No. 8:14-ap-00486-MGW.
Docs. 1893 & 1901.
On January 11, 2016, the Trustee filed an application to employ Robert F. Elgidely (Elgidely) and the law firm of Genovese Joblove & Battista, P.A. (the Genovese Firm) as special counsel in the Troutman Suit. On February 9, 2016, following a hearing, the Court entered an Order approving the employment of Elgidely and the Genovese Firm. In the Order, the Court noted that "[t]he Probate Estates, who would benefit from any recovery in the Troutman Adversary, supported the employment application."
Doc. 1914.
Doc. 1927.
Id . at p. 2.
On February 4, 2016, the Court entered an order directing the parties to the Troutman Suit to mediation and to endeavor to agree upon a mediator. On April 6, 2016, the Trustee, the Probate Estates, and Troutman Sanders participated in a one-day mediation in which Robert M. Fishman, Esq. (Fishman) of Shaw Fishman Glantz & Towbin LLC served as the mediator. The mediation resulted in an impasse.
Adv. No. 8:14-ap-00486-MGW, Doc. 75.
Adv. No. 8:14-ap-00486-MGW, Doc. 83.
Eight months later, on December 16, 2016, the Trustee filed a motion to approve a compromise of the Troutman Suit that had been entered by the Trustee and Troutman Sanders (the Compromise Motion). Generally, the proposed compromise provided for Troutman Sanders to pay the sum of $6.5 million to the Trustee. After payment of the Trustee's fees and costs, the compromise would result in a distribution to the Probate Estates of $2,797,952.16. The Probate Estates objected to the Compromise Motion. During a hearing conducted on March 6, 2017, Wilkes explained the basis for the Probate Estates' objection to the Compromise Motion as follows:
Doc. 1999.
Doc. 2011, at p. 10, and Doc. 2108, at p. 1, ¶ 4.
Docs. 2006-2007 & 2107.
I know why the estates can't settle. They're not going to get any cash . There's 7 million in deferred attorney fees that were paid to buy the Troutman case for Ms. Scharrer. So out of the whatever – if the whole $6 million – and nobody took any other fee, it would just go to the old retro fees that were deferred for this .
Doc. 2034, Transcript of Hearing Held March 6, 2017, at pp. 39-40 (emphasis added).
Essentially, Wilkes was dissatisfied with the Trustee's settlement of the Troutman Suit because the projected $2.8 million distribution to the Probate Estates from the settlement was insufficient to pay Wilkes' deferred attorney's fees in the amount of $7,352,104.38.
On May 1, 2017, the Court conducted an evidentiary hearing on the Compromise Motion, and on May 17, 2017, the Court entered an Order granting the Compromise Motion (the Troutman Compromise Order).
Docs. 2112 & 2122.
Doc. 2127.
On May 31, 2017, the Probate Estates filed an appeal of the Troutman Compromise Order. On May 30, 2019, the District Court entered an Order in the appeal that (1) reversed the determination in the Troutman Compromise Order that the Probate Estates lacked standing to object to the Compromise Motion, and (2) remanded the issue of whether the Trustee's settlement of the Troutman Suit without the Probate Estate's approval violated a Settlement Term Sheet signed by the Trustee and the Probate Estates.
Doc. 2129.
Doc. 2217.
On August 2, 2019, this Court entered its Memorandum Opinion and Order on Remand (the Remand Order). In the Remand Order, the Court found that the Trustee entered into the compromise with Troutman Sanders in her capacity as Trustee of the Chapter 7 estate, and that she had the exclusive authority in that capacity to compromise the estate's claim against Troutman Sanders without obtaining the Probate Estates' direction or approval.
Doc. 2228.
On August 16, 2019, the Probate Estates filed a second appeal of the Troutman Compromise Order and Remand Order.
Doc. 2231.
4. The Employment Application and Objection
Elgidely and the Genovese Firm represented the Trustee as special counsel in the Troutman Suit from the date of the Order authorizing their employment in February 2016 through the compromise with Troutman Sanders in December 2016, and through the Probate Estates' first appeal of the Troutman Compromise Order from 2017 to 2019.
On November 6, 2019, the Trustee filed an Agreed Motion for Conditional Substitution of Counsel. In the Agreed Motion, the Trustee stated that Elgidely's last day of employment at the Genovese Firm was October 23, 2019, that his first day of employment at the law firm of Fox Rothschild LLP (Fox Rothschild) was October 28, 2019, that the Trustee had elected to continue with Elgidely's representation, and that the Trustee would file an application to employ Elgidely and Fox Rothschild as special counsel.
Doc. 2253 (emphasis in original). The Motion was filed as an Agreed Motion to reflect the agreement between the Genovese Firm and Fox Rothschild. The Probate Estates were not parties to the Motion.
On November 13, 2019, the Court entered an Order Granting Trustee's Agreed Motion for Conditional Substitution of Counsel, which conditionally substituted Elgidely and Fox Rothschild for the Genovese Firm and directed the Trustee to file an application to employ Elgidely and Fox Rothschild as counsel pursuant to § 327 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure.
Doc. 2256.
On November 27, 2019 the Trustee filed the Employment Application. In the Employment Application, the Trustee seeks to employ Fox Rothschild with regard to the Probate Estates' second appeal of the Troutman Compromise Order. Specifically, Elgidely states in his Declaration in Support of the Employment Application that the scope of the representation is the Trustee's defense of the Probate Estates' appeal of the Troutman Compromise Order and the Remand Order.
Doc. 2258.
Doc. 2258, Ex. 1, ¶ 3.
The Probate Estates filed the Objection to the Employment Application. Generally, the Probate Estates assert in the Objection that the Employment Application should not be approved because of the following six disqualifying conflicts of interest between Fox Rothschild and the bankruptcy estate:
Docs. 2259 & 2260.
1. Fox Rothschild "is opposing counsel in numerous state court cases pending in Pennsylvania that were filed by clients represented by the Probate Estates' counsel in this matter."
2. Fox Rothschild represents "Golden Living affiliates – a nursing home chain owned by Fillmore Capital, LLC," which is owned by Ron Silva, "a former partner of litigation target and former Troutman Sanders partner Leonard Grunstein."
3. Fox Rothschild "has represented litigation target General Electric Capital Corporation as recently as 2007."
4. Fox Rothschild bears a disqualifying conflict that was previously borne by the Genovese Firm because of Troutman Sanders' payment of $200,000 to the Genovese Firm to fund the Trustee's defense of the Probate Estates' appeal of the Troutman Compromise Order.
5. Attorney Robert M. Fishman mediated the dispute between the Trustee and Troutman Sanders on April 6, 2016, and is now a partner at Fox Rothschild. According to the Probate Estates, they were "highly involved in the mediation and Mr. Fishman acquired confidential information from the Probate Estates related to the very litigation which Fox Rothschild now seeks approval of its employment to litigate."
6. Fox Rothschild and Troutman Sanders were co-counsel in an appeal filed in the Second District Court of Appeal in 2015.
Doc. 2259, ¶ 6.
Id .
Doc. 2259, ¶ 7.
Doc. 2259, ¶ 8.
Doc. 2258, Declaration of Elgidely in Support of the Application, ¶ 4d.
Doc. 2260, ¶ 5.
Doc. 2260, ¶ 6.
B. CONCLUSIONS OF LAW
The Employment Application is filed pursuant to 11 U.S.C. § 327(a), which provides that a trustee, with the court's approval, may employ one or more attorneys or professional persons "that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee's duties under this title." A "disinterested person" is defined in the Bankruptcy Code as a person who "does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or for any other reason."
The Eleventh Circuit Court of Appeals has held that a professional has an interest adverse to the estate if he:
possess[es], or serv[es] as an attorney for a person possessing, either an economic interest that would tend to lessen the value of the bankruptcy estate or that would create either an actual or potential dispute in which the estate is a rival claimant ... or ... a predisposition under the circumstances that render such a bias against the estate.
In re New River Dry Dock, Inc ., 497 Fed. Appx. 882, 886-87 (11th Cir. 2012) (quoting Electro-Wire Products, Inc. v. Sirote & Permutt, P.A. (In re Prince) , 40 F.3d 356, 361 (11th Cir. 1994) ) (quoting Roger J. Au & Son, Inc. v. Aetna Ins. Co ., 64 B.R. 600, 604 (N.D. Ohio 1986) ).
In determining whether a professional holds an adverse interest, the issue is whether he was able to make unbiased or impartial decisions in the best interest of the estate.
In re New River Dry Dock, Inc ., 497 Fed. Appx. at 887.
Rule 2014 of the Federal Rules of Bankruptcy Procedure implements the disinterestedness provisions of § 327(a) by requiring professional persons to make certain disclosures at the time that they seek approval of their employment. Specifically, a professional must set forth "the person's connections with the debtor, creditors, or any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee." Under the rule, a professional must disclose all "connections" to parties in interest "that are not so remote as to be de minimis ."
In re Fullenkamp , 477 B.R. 826, 834 (Bankr. M.D. Fla. 2011) (quoting In re Leslie Fay Cos., Inc ., 175 B.R. 525, 536 (Bankr. S.D.N.Y. 1994) ).
At the hearing on the Employment Application and Objection, the Probate Estates did not pursue their assertion that the Employment Application should be disapproved because of Fox Rothschild's alleged conflicts of interest. Instead, the Probate Estates claimed that their primary objection to the Employment Application was based on Fox Rothschild's failure to disclose its "connections" to parties in interest in the case. According to the Probate Estates, the "most notable" undisclosed connection was Fox Rothschild's employment as co-counsel with Troutman Sanders in an appeal in state court in 2015. At the hearing, however, the Probate Estates acknowledged that the matters involved in the state court appeal were not related to the bankruptcy case, and the Probate Estates did not explain how Fox Rothschild's representation in the state court appeal was material to any issue in the bankruptcy.
At the outset of the hearing, the Probate Estates complained that the Trustee initially filed her motion to substitute counsel in the District Court, rather than the bankruptcy court. Elgidely explained that the motion was filed in District Court first because of approaching deadlines in the appeal, and concerns by the Genovese Firm as to its obligations in the case in view of the deadlines. (Doc. 2268, Transcript of January 27, 2020 hearing, pp. 15-16, 21). The transcript of the January 27, 2020 hearing will be cited hereafter in this Opinion as "January 27, 2020 Transcript."
January 27, 2020 Transcript, at p. 18.
Id . at p. 17.
Id .
Further, the Court has considered all of Fox Rothschild's alleged "connections" to the bankruptcy estate or to the Probate Estates and determines that they do not amount either to disqualifying conflicts of interest under § 327(a) or to material and relevant connections that Fox Rothschild was required to disclose under Rule 2014. Elgidely and Fox Rothschild do not hold or represent an economic interest that would tend to lessen the value of the bankruptcy estate, or that would create an actual or potential dispute in which the estate is a rival claimant, or that would create a predisposition or bias against the estate.
See In re New River Dry Dock, Inc ., 497 Fed. Appx. at 886-87.
First, Fox Rothschild's role as opposing counsel to the Probate Estates' counsel in cases in Pennsylvania is not a disqualifying conflict or relevant connection. The Probate Estates' attorney is not a creditor in this bankruptcy case, and the Probate Estates did not provide any information to show that the Pennsylvania cases are related to this bankruptcy case in any way. The simple fact that two law firms oppose each other in unrelated matters is not a disqualifying conflict.
Second, Fox Rothschild's representation of "Golden Living affiliates" is not a disqualifying conflict or relevant connection. The Golden Living affiliates themselves are not creditors, defendants, or targets in this bankruptcy case. Additionally, the Golden Living affiliates' alleged connection to an individual known as Leonard Grunstein is remote and irrelevant. To make the alleged connection, the Probate Estates followed a multi-link chain of relationships from the affiliates to Fillmore Capital, LLC to Ron Silver to Leonard Grunstein. And even then, the remote connection is irrelevant because all claims against Mr. Grunstein in this bankruptcy case were previously dismissed with prejudice and Mr. Grunstein is no longer a creditor or interested party in the bankruptcy.
Third, Fox Rothschild's representation of General Electric Capital Corporation "as recently as 2007" is not a disqualifying conflict or relevant connection. The representation occurred thirteen years ago, and the matter is closed. Section 327(a) and Rule 2014 were not intended to burden attorneys in bankruptcy cases with investigating and disclosing prior, unrelated representations from more than a decade before their employment by the bankruptcy trustee.
January 27, 2020 Transcript, at p. 9.
See In re Fibermark, Inc ., 2006 WL 723495, at *11 (Bankr. D. Vt. Mar. 11, 2006) ("Moreover, any determination of the sufficiency of the disclosures produced pursuant to Rule 2014 should be made by balancing the plain language of the rule's mandate that applicants disclose ‘all connections,’ in order to maintain integrity of the professional appointment process in bankruptcy cases, against the common sense analysis of what connections are reasonably defined as pertinent to the ultimate question of disinterestedness, so that competent professionals do not find the requirements of representing parties in bankruptcy cases so burdensome as to deter them from doing so .") (emphasis added).
Fourth, Troutman Sanders' alleged payment of $200,000 to the Genovese Firm for its work in defending the Probate Estates' appeal of the Troutman Compromise Order is not a disqualifying conflict or relevant connection with respect to Fox Rothschild. Most importantly, the payment was never made. Further, the Troutman Compromise provides for Troutman Sanders to make the payment to the bankruptcy estate , not to the Trustee's attorney, after the entry of a final non-appealable order approving the fees and costs incurred by the Trustee in connection with the Troutman Compromise and appeal.
Id . at p. 13.
Doc. 1999.
Fifth, Robert M. Fishman's service as mediator between the Trustee and Troutman Sanders on April 6, 2016, is not a disqualifying conflict or relevant connection with respect to Fox Rothschild. Fishman is now a partner with Fox Rothschild, but the one-day mediation occurred four years before the Trustee filed the Employment Application. Additionally, the interests of the Trustee and the Probate Estates were aligned at the time of the mediation. In other words, the Trustee and the Probate Estates initially worked together to assert their claims against the litigation targets, and any recovery that the Trustee obtained from Troutman Sanders through the mediation would be used to pay the Probate Estates on their claims in the case. Finally, Fishman did not receive any confidential information during the mediation. At the time of the mediation, the claims against Troutman Sanders were fully developed and available in public documents. The documents presented to Fishman as mediator, for example, included transcripts from the trial that had been conducted in the bankruptcy proceedings prior to the mediation. The trial and the transcripts were public events and publicly available documents. The only document presented to Fishman that was not publicly available at the time of the mediation was a draft complaint against Troutman Sanders that was prepared by the Genovese Firm, but the draft document did not contain confidential or secret information and was shared and ultimately filed.
January 27, 2020 Transcript, at p. 11.
Sixth, Fox Rothschild's representation of a client as co-counsel with Troutman Sanders in a state court appeal in 2015 is not a disqualifying conflict or relevant connection. As indicated above, the Probate Estates refer to the 2015 representation as the "most notable" connection between Fox Rothschild and a party in interest, but acknowledge that the matter involved in the state court appeal was unrelated to this bankruptcy case.
Id . at p. 17.
In conclusion, the Trustee states in the Employment Application that she selected Fox Rothschild as special counsel with respect to the Probate Estates' appeal of the Troutman Compromise Order because Elgidely, who is a partner with Fox Rothschild, has served as her lead counsel in the estate's claims against Troutman Sanders for nearly four years, and because Fox Rothschild has independent experience in the handling of bankruptcy appeals. Under § 327(a) of the Bankruptcy Code, a trustee may employ disinterested professionals to assist her in carrying out her duties, with the court's approval. "In exercising its approval function, however, the bankruptcy court should interfere with the trustee's choice of counsel only in the rarest cases, such as when the proposed attorney has a conflict of interest, or when it is clear that the best interest of the estate would not be served by the trustee's choice."
Doc. 2258, ¶¶ 18-19.
In re Persaud , 496 B.R. 667, 670-71 (E.D.N.Y. 2013) (quoting In re Smith , 507 F.3d 64, 71 (2d Cir. 2007) ).
Here, the Probate Estates allege that conflicts were created by Fox Rothschild's representation of other clients in other cases, but none of the matters "in any way related to any conceivable issue that may arise" in this bankruptcy. Further, the Probate Estates allege that conflicts were created by Troutman Sanders' payment of $200,000 to the Genovese Firm and by Fishman's receipt of confidential information as mediator in the Troutman Sanders dispute, but these alleged conflicts were not supported by the facts or record. In summary, the conflicts and connections alleged by the Probate Estates are remote and baseless.
In re Huntco Inc ., 288 B.R. 229, 236 (Bankr. E.D. Mo. 2002).
For the reasons set forth above, the Court determines that the Trustee's employment of Elgidely and Fox Rothschild for the limited purpose of defending the Probate Estates' appeal of the Troutman Compromise Order more than satisfies the standards for employment under § 327(a) of the Bankruptcy Code and Rule 2014 of the Bankruptcy Rules, and is in the best interest of the estate.
Accordingly, it is
ORDERED :
1. The Objection is OVERRULED and the Employment Application is APPROVED.
2. None of the disclosures or representations set forth in the Declaration of Robert F. Elgidely in support of the Employment Application constitutes a conflict of interest or impairs the disinterestedness of Fox Rothschild or otherwise precludes the Trustee's employment of Elgidely and Fox Rothschild to defend the Probate Estates' appeal of the Troutman Compromise Order.
3. The Trustee is authorized to employ Elgidely and Fox Rothschild as her Special Counsel in accordance with the terms and conditions set forth in the Employment Application.
4. Fox Rothschild is authorized to render professional services to the Trustee as described in the Employment Application.
5. The contingency fee previously approved by the Court will be allocated between Fox Rothschild and the Genovese Firm in a manner agreed upon by those firms, or, as may be determined by this Court at the appropriate time if an agreement cannot be reached. The aggregate contingency fee payable to Fox Rothschild and the Genovese Firm will not exceed the contingency fee previously approved by this Court.
6. The Debtor's estate will continue to be responsible for the reimbursement and/or payment of all necessary and reasonable costs incurred in connection with the employment including, but not limited to, photocopies, travel expenses, court reporter fees, and expert witness fees. Fox Rothschild, however, is authorized to advance payment of these costs (in its sole and absolute discretion) on behalf of, and to seek reimbursement of these costs from, the Debtor's estate.
7. All requests for payment of Fox Rothschild's fees and costs under this Order shall be included in an
Doc. 1927.
Application for Allowance of Compensation and Reimbursement of Expenses in accordance with the provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, Local Rules, guidelines established by the Office of the United States Trustee for the Middle District of Florida, and any other applicable procedures and orders of the Court.