Opinion
Case No. 8:11-bk-22258-MGW
04-22-2021
IN RE: FUNDAMENTAL LONG TERM CARE, INC., Debtor.
John H. Genovese, Esq., Genovese Joblove & Battista, P.A., Former Special Counsel to Chapter 7 Trustee James L. Wilkes, II, Esq., Wilkes & Associates, P.A., Counsel for the Probate Estates
John H. Genovese, Esq., Genovese Joblove & Battista, P.A., Former Special Counsel to Chapter 7 Trustee
James L. Wilkes, II, Esq., Wilkes & Associates, P.A., Counsel for the Probate Estates
MEMORANDUM OPINION AND ORDER (1) OVERRULING PROBATE ESTATES' OBJECTION TO FINAL APPLICATION FOR ALLOWANCE OF HOURLY COMPENSATION TO GENOVESE JOBLOVE & BATTISTA, P.A., AND (2) APPROVING FINAL APPLICATION FOR ALLOWANCE AND PAYMENT OF HOURLY COMPENSATION TO GENOVESE JOBLOVE & BATTISTA, P.A.
Michael G. Williamson, United States Bankruptcy Judge
On December 13, 2016, Beth Ann Scharrer, as Chapter 7 Trustee, and Troutman Sanders LLP (Troutman) entered into a Settlement Agreement to resolve an adversary proceeding filed by the Trustee against Troutman. Under the Settlement Agreement, Troutman agreed to pay the Trustee (1) $6.5 million, plus (2) up to $200,000.00 in additional consideration to enable the Trustee to pay the approved hourly fees incurred by her counsel, Genovese Joblove & Battista, P.A. (the Genovese Firm), to prosecute a Rule 9019 motion to approve the Settlement Agreement.
The Trustee filed the Rule 9019 motion, and the Estates of Juanita Jackson, Elvira Nunziata, Joseph Webb, Arlene Anne Townsend, Opal Lee Sasser, and James Henry Jones (the Probate Estates) filed an objection. After a trial on the motion and objection, the Court entered an order approving the Settlement Agreement (the Troutman Settlement Order). The Probate Estates filed two appeals and, after a lengthy appeals process, the District Court affirmed the Troutman Settlement Order.
The Genovese Firm has now filed its application for hourly fees pursuant the Settlement Agreement. The Probate Estates object to the application, primarily asserting that the Genovese Firm's receipt of fees from both the Trustee and Troutman reflects a conflict of interest.
Doc. No. 2311.
Doc. No. 2328, p. 11.
But a final order approving a bankruptcy settlement under Fed. R. Bankr. P. 9019 binds creditors and has preclusive effect on all matters that were or should have been raised in the proceeding. Here, the Settlement Agreement expressly authorized Troutman to pay the Trustee up to $200,000.00 on account of the Genovese Firm's allowed fees, the Probate Estates actively participated in the Rule 9019 proceedings and subsequent appeals, the appeals are concluded, and the Troutman Settlement Order is a final order approving the Settlement Agreement. Consequently, the Probate Estates are precluded from challenging the Genovese Firm's application for approval and payment of its hourly fees.
I. Background
On December 5, 2011, the Estate of Juanita Jackson filed an involuntary Chapter 7 petition against the Debtor, and an order for relief was entered on January 12, 2012. Beth Ann Scharrer was appointed as the Trustee of the Chapter 7 estate.
On June 2, 2014, the Trustee filed a complaint against Troutman and two individuals (the Troutman Litigation). The original complaint contained five counts alleging negligence and fraud. On December 8, 2015, the Court entered an order dismissing Count I of the complaint with prejudice, and dismissing Counts II through V without prejudice.
Adv. Pro. No. 8:14-ap-00486-MGW, Doc. No. 1.
Adv. Pro. No. 8:14-ap-00486-MGW, Doc. No. 62.
On January 11, 2016, the Trustee filed an application to employ the Genovese Firm as special counsel to represent her in the Troutman Litigation on a contingency fee basis. The application was approved on February 9, 2016.
Doc. No. 1914.
Doc. No. 1927.
On May 6, 2016, the Trustee filed an amended complaint in the Troutman Litigation. The amended complaint contained four counts alleging civil conspiracy, aiding and abetting fraud, aiding and abetting conversion, and aiding and abetting breach of fiduciary duties.
Adv. Pro. No. 8:14-ap-00486-MGW, Doc. No. 85.
A. The Settlement Agreement
On December 13, 2016, the Trustee and Troutman entered into a Settlement Agreement to Resolve, Release, and Bar Claims . Under paragraph 5 of the Settlement Agreement, Troutman agreed to pay the Trustee $6.5 million (the Settlement Payment) within 30 days of the Settlement Agreement's effective date. Paragraph 6 of the Settlement Agreement provides:
Doc. No. 1999, p. 24.
6. Additional Consideration to Estate. Trustee's counsel, Robert F. Elgidely, Esq. and Genovese Joblove & Battista, P.A. (together, "GJB"), shall apply to the Court for allowance and payment of the reasonable hourly fees and costs they incur in connection with the prosecution of the Motion to Approve this Settlement Agreement and any appeals of the 9019 Order (the "GJB Hourly Fee Application(s)"). Within ten (10) business days after entry of the final non-appealable order(s) approving the GJB Hourly Fee Application(s), Troutman shall pay up to a total of TWO HUNDRED THOUSAND AND 00/100 DOLLARS ($200,000.00) to the Debtors' bankruptcy estate in order to enable the Trustee to pay such fees and costs to GJB. In determining whether an order approving the GJB Hourly Fee Application(s) is final and non-appealable, the Parties shall rely on the same standard of finality as set forth in paragraphs 2(i-v) for the 9019 Order.
Doc. No. 1999, pp. 33-34.
In exchange for the Settlement Payment and Additional Consideration, the Settlement Agreement provided for Troutman to receive a Bar Order enjoining Barred Persons, as defined, from asserting any claim against Troutman relating to the matters identified in the Settlement Agreement. The Probate Estates and their attorneys are Barred Persons under the Settlement Agreement.
Doc. No. 1999, pp. 27-31.
On December 16, 2016, the Trustee filed a motion to approve the Settlement Agreement under Fed. R. Bankr. P. 9019 (the Rule 9019 Motion). On December 28, 2016, the Court entered an order that directed the Trustee to serve the Rule 9019 Motion on all creditors and parties in interest, set a deadline for filing objections, and scheduled preliminary and final hearings to consider approval of the Rule 9019 Motion.
Doc. No. 1999.
Doc. No. 2001.
The Probate Estates filed an initial objection, and later filed an amended, limited objection to the Rule 9019 Motion on two grounds: (1) the Settlement Agreement and Bar Order deprived them of control over the Troutman Litigation, which they said was given to them in a prior Settlement Term Sheet between the Trustee and the Probate Estates (the Term Sheet), and (2) the Settlement Agreement does not resolve Troutman's claims against the Probate Estates.
Doc. No. 2006.
Doc. No. 2107.
On May 1, 2017, the Court conducted a trial on the Rule 9019 Motion and objection. At the conclusion of the trial, the Court announced its ruling that the Settlement Agreement satisfied the standard for approving compromises set forth in In re Justice Oaks II, Ltd ., and that the Rule 9019 Motion was granted. In making its ruling, the Court specifically found that the Bar Order was fair and equitable:
Doc. No. 2112.
898 F.2d 1544, 1549 (11th Cir. 1990).
In this case, though, the need for a bar order is not theoretical. If the history of this litigation reflects anything, is that absent a bar order, Troutman Sanders would pay $6.5 million and immediately be sued again for yet other causes of action.
Doc. No. 2127, p. 26.
The Court further found that the Probate Estates had referred to additional claims that they held against Troutman, but that they had been unable to articulate or define those claims when given the opportunity. Essentially, the Court recognized that the Bar Order was "absolutely necessary, fair, and equitable to a law firm that's paying $6-1/2 million for something that happened over 11 years ago," and that Troutman was "paying for a bar order" by making the $6.5 million Settlement Payment and paying up to $200,000.00 in Additional Consideration for prosecution of the Rule 9019 Motion. On May 17, 2017, the Court entered its written Order Granting Trustee's Verified Motion to Approve Compromise of Controversy with Troutman Sanders LLP (the Troutman Settlement Order).
Doc. No. 2127, pp. 26-27.
Doc. No. 2127.
B. The Appeals
On May 31, 2017, the Probate Estate filed a notice of appeal of the Troutman Settlement Order. The Probate Estates' statement of issues on appeal involved their standing to object to the Rule 9019 Motion, whether the Settlement Agreement violated the Term Sheet, the entry of the Bar Order against the Probate Estates and their attorneys, and Troutman's funding of the Trustee's prosecution of the Settlement Agreement and Bar Order.
Doc. No. 2129.
Doc. No. 2131, pp. 195-198.
On May 30, 2019, the District Court remanded the matter to the Bankruptcy Court to determine the limited issue of "whether the Trustee's settling with Troutman Sanders without approval from the Probate Estates violated the Settlement Term Sheet" between the Trustee and the Probate Estates. On August 19, 2019, the Court entered a Memorandum Opinion and Order on the remanded matter, and determined that the Trustee's settlement with Troutman did not violate the Term Sheet.
Doc. No. 2217.
Doc. No. 2228.
On August 16, 2019, the Probate Estates filed a second notice of appeal related to the Troutman Settlement Order. The Probate Estates' statement of issues in the second appeal involved the alleged deprivation of their rights under the Term Sheet, the entry of the Bar Order, Troutman's funding of the Trustee's prosecution of the Rule 9019 Motion, and the Court's denial of the Probate Estates' prior motion for recusal.
Doc. No. 2231.
Doc. No. 2237, pp. 129-132.
On September 30, 2020, the District Court entered an order affirming the Troutman Settlement Order, including this Court's finding that the Trustee complied with the Term Sheet and had the exclusive authority to compromise with Troutman, and this Court's approval and entry of the Bar Order. The District Court later entered an order denying the Probate Estates' motion for rehearing of its order.
Doc. No. 2295.
On February 19, 2021, Troutman paid the settlement amount of $6.5 million to the Trustee.
See Doc. No. 2298, ¶ 51.
C. The Genovese Firm's fee applications
On February 22, 2021, the Genovese Firm filed an application for approval and payment of its agreed share of the contingency fee earned under the order authorizing its employment as special counsel to the Trustee. On March 3, 2021, the Court entered an order awarding $2,236,426.04 to the Genovese Firm as its total fees and costs under the contingency arrangement and, shortly thereafter, entered its Findings of Fact and Conclusions of Law supporting the award. The Probate Estates have appealed the order approving the earned contingency fee.
Doc. No. 2300. The total contingency fee is allocated between the Genovese Firm and Fox Rothschild, LLP because Robert F. Elgidely, Esquire, the primary attorney in the matter, moved from the Genovese Firm to Fox Rothschild during the representation.
Doc. Nos. 2304, 2320. The Trustee had employed the Genovese Firm on a contingency fee basis under 11 U.S.C. § 328(a). Under § 328(a), the Court may not later alter the terms of an approved contingency fee agreement unless the terms "prove to have been improvident" in light of developments that could not have been anticipated at the time of the employment. For the reasons stated in the Findings of Fact and Conclusions of Law, the Trustee's employment of the Genovese Firm under the contingency fee agreement was not improvident.
Doc. No. 2316.
On March 11, 2021, the Genovese Firm filed the application that is now before the Court for allowance and payment of hourly compensation pursuant to the Settlement Agreement (the Application). The Settlement Agreement authorized the Genovese Firm to apply to the Court for approval of the hourly fees and costs that it incurred to prosecute the Rule 9019 Motion for approval of the Settlement Agreement.
Doc. No. 2311.
The Application seeks fees in the amount of $200,000.00 for the period from December 16, 2016 (the date the Trustee filed the Rule 9019 Motion) to November 13, 2019 (the date that the Genovese Firm was no longer obligated to the Trustee as special counsel). This three-year period covered the Genovese Firm's services related to the Probate Estates' objection to the Rule 9019 Motion, the parties' substantial discovery in preparation for trial on the Rule 9019 Motion and objection, representation of the Trustee and presentation of the Settlement Agreement at the trial, and the Probate Estates' first appeal of the Troutman Settlement Order. A summary of the hours spent by the Genovese Firm, broken down by attorney and hourly rate, reflects that its attorneys spent more than 1,581 hours in its representation of the Trustee and that the total fees for the period exceed $953,576.50.
Doc. No. 2256.
Doc. No. 2311, Exhibit 1. The Genovese Firm did not attach its time records to the Application, stating that "a substantial portion of such time entries are subject to the attorney-client privilege and are attorney work product," but that it "will produce redacted copies of such time records or will file them under seal if the Court requests them." Doc. No. 2311, p. 8, n. 5.
D. The Probate Estates' Objection
On April 1, 2021, the Probate Estates filed their objection to the Application (the Objection), primarily alleging that the Genovese Firm is seeking fees "from both the Trustee and Troutman Sanders LLP, opposing parties in litigation," which "clearly displays a conflict of interest" by the Genovese Firm. Consequently, the Probate Estates claim that the Genovese Firm's Application should be disallowed under 11 U.S.C. § 328(c) because it is not a disinterested party. In addition, the Probate Estates assert that the Genovese Firm has already been compensated for its services to the Trustee through its contingency fee arrangement, and that the Court should conduct a hearing under 11 U.S.C. § 330 to determine the reasonableness of the fees requested in the Application.
Doc. No. 2328, p. 11.
Doc. No. 2328, p. 16.
Doc. No. 2328, pp. 13, 18.
Strikingly, the Probate Estates further state in the Objection that:
While working to obtain and uphold the Troutman Compromise and Bar Order, [the Genovese Firm] was aware that the Probate Estates owed deferred attorney's fees in the amount of $7,352,104.38 (Doc. 2217), yet resolved and defended the settlement of the bankruptcy estate's claims against Troutman Sanders LLP for a total of
$6.5 million. Of this $6.5 million, only $2,797,952.16 is to be distributed to the Probate Estates (Doc. 2011, at p. 10, and Doc. 2108 at p.1, ¶4).
Doc. No. 2328, p. 12.
As noted by the District Court in the first appeal of the Troutman Settlement Order, (1) the "six probate estate representatives combined received less than $6 million" from $23.7 million in total recoveries by the bankruptcy estate, (2) the estates were paid out pursuant to "settlement statements" between the estate representatives and the Probate Estates' attorneys, and (3) the Probate Estates themselves will not benefit from any further recoveries. Instead, any "further pursuit of the Troutman litigation would only benefit the Probate Estates' counsel" because any additional proceeds would only be applied to counsel's $7.3 million in deferred fees.
On May 30, 2019, the District Court wrote: "Over years of litigation, the Trustee in Fundamental's bankruptcy generated $23.7 million in settlements, from which the Trustee's professionals retained about $7.4 million ... and the Probate Estates received about $16.2 million .... But in accord with agreements, titled ‘Settlement Statement[s],’ between the Probate Estates' attorneys and each estate's representatives, each estate received from the Trustee's settlements a million dollars less a $50,000 ‘future cost reserve.’... The remainder was paid to the attorneys. As a result, although the Trustee paid the Probate Estates more than $16 million from the $23.7 million in settlements, the six probate estates' representatives combined received less than $6 million. The Probate Estates' attorney's fees and costs consumed the remaining $10 million.
However, $10 million failed to satisfy the Probate Estates' anticipated attorney's fee and accumulated costs. Accordingly, a representative of each probate estate and an attorney from Wilkes and McHugh, P.A. stipulate in the Settlement Statements to defer "the remaining [$7,352,104.38] balances of the attorney's fees for collection from any future settlements." (Doc. No. 2217) (citations omitted).
Doc. No. 2331, p. 6, n. 1.
II. ANALYSIS
A. Rule 9019
Under Fed. R. Bankr. P. 9019(a), the bankruptcy court may approve a compromise or settlement "on motion by the trustee and after notice and a hearing," and notice "shall be given to creditors, the United States trustee, the debtor, and indenture trustees as provided in Rule 2002 and to any other entity as the court may direct." The rule allows a trustee "with court approval after notice and hearing, to compromise or settle claims of the estate."
In re CS Mining, LLC , 574 B.R. 259, 272 (Bankr. D. Utah 2017).
The Code provides for due process protection for settlements under Rule 9019(a) by requiring that a debtor in possession give creditors and parties in interest "adequate notice and opportunity to be heard before their interests may be adversely affected." (Citations omitted). Rule 9019 further protects interested parties "[b]y requiring court approval following a hearing before any compromise or settlement may be enforced" to ensure a transparent settlement process and provide "other creditors an opportunity to voice their concerns." (Citations omitted).
In re Reagor-Dykes Motors, LP , 613 B.R. 878, 885-86 (Bankr. N.D. Tex. 2020) (emphasis in original).
Once the due process requirements of notice and a hearing are met, the bankruptcy court must "apprise itself of all necessary facts to make an intelligent evaluation and to make an independent judgment as to whether the settlement presented is fair and equitable." In the Eleventh Circuit, bankruptcy courts generally consider four factors, known as the Justice Oaks factors, in making the determination: (1) the probability of success in the litigation, (2) any difficulties in the matter of collection, (3) the complexity of the litigation, and the expense, inconvenience, and delay attending it, and (4) the paramount interest of creditors and a proper deference to their reasonable views.
In re Ortiz , 619 B.R. 273, 275 (Bankr. M.D. Fla. 2020) (quoting Romagosa v. Thomas , 2006 WL 2085461, at *5 (M.D. Fla. July 25, 2006), aff'd sub nom , 236 Fed. Appx. 498 (11th Cir. 2007) ).
In re Justice Oaks II, Ltd ., 898 F.2d 1544, 1549 (11th Cir. 1990).
B. Res judicata effect of an order approving a compromise under Rule 9019
For an order to be entitled to res judicata effect in a later dispute, it must be a final judgment on the merits by a court with jurisdiction, the parties must be the same, and the causes of action must be the same. "An order approving a settlement under Rule 9019 has res judicata effect as a final order."
In re Cook , 535 B.R. 877, 885 (Bankr. N.D. Fla. 2013).
In re Reagor-Dykes Motors , 613 B.R. at 887.
With respect to such settlement orders, the first two res judicata requirements are readily met because a bankruptcy court clearly has jurisdiction to enter an order approving a compromise under Rule 9019. The third requirement is also met, because it is generally recognized that a "creditor and party in interest is required to receive notice of a settlement before approval pursuant to Rule 9019 and is considered a party to the settlement for res judicata purposes." Finally, the fourth requirement is met where a settlement term is apparent in a Rule 9019 motion and creditors had a full and fair opportunity to object to the settlement term. In that circumstance, an order approving the settlement under Rule 9019 is entitled to res judicata effect in a later action challenging the term because the two cases involve the "same cause of action."
In re Reagor-Dykes , 613 B.R. at 888.
Id . at 888.
For example, in the recent case of In re George Washington Bridge Bus Station Development Venture, LLC , the District Court considered the "narrow question of law: Whether the Bankruptcy Court erred by barring Appellant from asserting claims inconsistent with the Bankruptcy Court's settlement order pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure." In that case, the debtor was the developer of property owned by the Port Authority, and the debtor filed a motion to approve a settlement agreement with its lender and the Port Authority. The settlement provided that the debtor's general contractor was not prohibited from suing the lender and Port Authority in other courts, to the extent that the suits were not inconsistent with the settlement . The contractor objected to the provision in the settlement that restricted its right to sue third parties. The bankruptcy court approved the settlement over the contractor's objection, and the contractor appealed. The District Court concluded that the contractor was bound by the terms of the settlement order because it had received notice of the motion and had been heard on its objection, and because the settlement order's preclusive effect applied to all issues necessarily litigated in the Rule 9019 proceeding.
In re George Washington Bridge Bus Station Dev. Venture LLC , 2021 WL 738755 (S.D.N.Y. February 25, 2021).
Id . at *1.
Id . at *3.
Similarly, in In re Licking River Mining, LLC , the bankruptcy court approved a settlement under Rule 9019 whereby the debtor released all of its avoidance claims against its lenders, the lenders released their liens on the debtor's equipment, and the equipment was retained by the debtor for disposition in its sole discretion. A different creditor later asserted an interest in the equipment as a senior lien to the estate's interest, and the Court found that the doctrine of res judicata precluded that creditor's collateral attack on the settlement order. In other words, the settlement order satisfied all of the requirements for res judicata because (1) the creditor had received notice of the settlement under Rule 9019 and was a party to the settlement proceedings, (2) the settlement's provision for the release of liens was apparent in the settlement agreement, so that the creditor had a full and fair opportunity to object, and (3) the creditor's lien was at issue in the settlement proceeding and was therefore the same "cause of action" as its later assertion of the lien.
605 B.R. 153 (Bankr. E.D. Ky 2019).
In re Licking River Mining, LLC , 605 B.R. at 158.
Id . at 159-60.
C. The Troutman Settlement Order
Here, the Trustee entered into the Settlement Agreement with Troutman, and the Settlement Agreement conspicuously provided that Troutman would pay the Trustee the Settlement Payment of $6.5 million, plus Additional Consideration of up to $200,000.00 to enable the Trustee to pay the fees incurred by the Genovese Firm in prosecuting the Rule 9019 Motion. The Trustee filed the Rule 9019 Motion to approve the Settlement Agreement, and the Rule 9019 Motion was served on all creditors and parties in interest on the master mailing matrix in the bankruptcy case.
The Probate Estates received the Rule 9019 Motion and timely filed an objection and amended objection, which was vigorously contested through pre-trial discovery and trial. Following a trial, the Court issued its findings and conclusions and entered the Troutman Settlement Order approving the Settlement Agreement.
The Probate Estates twice appealed the Troutman Settlement Order. The appeals focused on the Probate Estates' standing to object to the Settlement Agreement, and on their primary grievances that the Settlement Agreement deprived them of control over the Troutman Litigation and that the Bar Order stripped them of their rights against Troutman. The Probate Estates' statement of issues on appeal referred to Troutman's funding of the Trustee's prosecution of the Rule 9019 Motion, but there is no indication that the Probate Estates pursued that issue in either of the appeals. In any event, the appeals are concluded and the District Court affirmed this Court's entry of the Troutman Settlement Order.
The Troutman Settlement Order is a final judgment on the merits and is entitled to res judicata effect. The Probate Estates were parties to the Settlement Agreement and Rule 9019 Motion for res judicata purposes, and Troutman's funding of the Genovese Firm's hourly fees was an issue that was or could have been litigated in the Rule 9019 proceeding and appeals. Consequently, the Probate Estates are precluded from collaterally attacking the Troutman Settlement Order by challenging the Genovese Firm's Application for approval of its hourly fees.
D. Reasonableness of the Genovese Firm's hourly fees
The approved Settlement Agreement authorized the Genovese Firm to apply for allowance of the reasonable hourly fees that it incurred in prosecuting the Rule 9019 Motion. In determining the amount of reasonable compensation to be awarded to a professional under 11 U.S.C. § 330(a), the bankruptcy court "shall consider the nature, extent, and the value" of the professional's services, taking into account all relevant factors.
11 U.S.C. § 330(a)(3). The relevant factors listed in § 330(a)(3) include the time spent on the services, the rates charged for the services, whether the services were necessary or beneficial to the case, whether the services were performed within a reasonable amount of time, whether the professional person had skill and experience in the bankruptcy field, and whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in non-bankruptcy cases.
Here, the Genovese Firm certifies that its attorneys spent more than 1,581 hours over the three-year period covered by the Application. As shown above, the period covered the Probate Estates' objection to the Rule 9019 Motion, four months of contentious pre-trial preparation, the trial in May 2017 on the Rule 9019 Motion and objection, and the Probate Estates' first appeal of the Troutman Settlement Order. The first appeal remained pending for two years and involved voluminous records and difficult arguments and analysis. The Genovese Firm's efforts during the three-year period between December 2016 and November 2019 are set out in the Application and known to this Court.
Doc. No. 2311, p. 13.
Doc. No. 2311, pp. 10-13.
In addition, the attorneys with the Genovese Firm are highly experienced, well-established practitioners in the bankruptcy field and appear regularly before this Court. As set forth in the Application, the rates charged for their services in this case range from $180.00 per hour to $680.00 per hour. The Genovese Firm represents in the Application that the rates are consistent with the hourly rates it charges other clients in similar bankruptcy cases, and that the rates have been approved in other bankruptcy cases both for the Genovese Firm and for other counsel of comparable reputation and experience.
Doc. No. 2311, pp. 25-26.
--------
Finally, the Genovese Firm successfully performed the work that it was employed to perform. The Genovese Firm was initially retained under a contingency fee agreement to prosecute the Troutman Litigation. At the time of the initial employment, the Trustee's complaint against Troutman had been dismissed by the Court. The Genovese Firm filed an amended complaint on behalf of the Trustee, litigated with Troutman in the adversary proceeding, and ultimately negotiated the Settlement Agreement between the Trustee and Troutman. The Genovese Firm's contingency arrangement with the Trustee had been approved and was a matter of record when the Settlement Agreement was entered. The Settlement Agreement provided for Troutman to pay $6.5 million, plus up to $200,000.00 to enable the Trustee to pay the reasonable fees incurred by the Genovese Firm in prosecuting the Rule 9019 Motion for approval of the Settlement Agreement.
The Genovese Firm prosecuted the Rule 9019 Motion in evidentiary proceedings in this Court, and defended the Settlement Agreement in the Probate Estates' first appeal of the Troutman Settlement Order. The Settlement Agreement produced a significant benefit to the bankruptcy estate that the estate would not otherwise have received. Troutman has in fact paid the settlement amount of $6.5 million to the Trustee, which yielded more than $2.7 million to the estate for distribution under the Bankruptcy Code.
Through the Application, the Genovese Firm seeks an award of $200,000.00 in accordance with the approved Settlement Agreement. It asserts that the fees incurred during the three-year period covered by the Application actually totaled $953,576.50 – far in excess of the amount authorized by the Settlement Agreement. Based on this record, the Court determines that the attorney's fees requested by the Genovese Firm in the Application are reasonable and that the fees should be approved.
Accordingly, it is
ORDERED :
1. The Probate Estates' Objection to Final Application for Allowance and Payment of Hourly Compensation to the Law Firm of Genovese Joblove & Battista, P.A. as Former Special Litigation Counsel for the Chapter 7 Trustee (Doc. No. 2328) is OVERRULED .
2. The Final Application for Allowance and Payment of Hourly Compensation to the Law Firm of Genovese Joblove & Battista, P.A., as Former Special Litigation Counsel for the Chapter 7 Trustee (Doc. No. 2311) is APPROVED .
3. Genovese Joblove & Battista, P.A. is awarded fees in the amount of $200,000.00, which amount represents 100% of the fees requested in the Application.
4. Upon entry of this order, Beth Ann Scharrer, as Chapter 7 Trustee, is authorized and directed to pay the allowed fees to Genovese Joblove & Battista, P.A.
Attorney John H. Genovese is directed to serve a copy of this Order on interested parties who do not receive service by CM/ECF and file a proof of service within 3 days of entry of the Order.