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Ross v. Thomas

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


June 6, 2011

JOEL ROSS, ERIC LEVINE, AND JERDE DEVELOPMENT COMPANY, PLAINTIFFS,
v.
STANLEY E. THOMAS AND S. THOMAS ENTERPRISES OF SACRAMENTO, LLC, DEFENDANTS.

The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.

OPINION AND ORDER

I. INTRODUCTION

By Order entered December 21, 2010, this Court appointed Melanie L. Cyganowski as Receiver in this matter, authorizing her "to administer and collect" certain interest of Stanley E. Thomas and S. Thomas Enterprises of Sacramento, LLC (together, the "Debtors") "to the extent necessary to satisfy" the $13,534,904.04 joint and several judgment entered against them by this Court on October 12, 2010 (the "Judgment").*fn1 In the same Order, and upon Judgment Creditors' ("Creditors") request, this Court held Thomas in contempt of Court.*fn2

Now before the Court are (1) the Receiver's Application for Allowance of Commission, Fees, Costs, and Expenses ("Receiver's Application")*fn3 and (2) Creditors' Application for Award of Attorneys' Fees Incurred in Addressing Defendant Thomas's Contempt as Compensation for Creditors' Expenses as Aggrieved Parties ("Creditors' Application").*fn4 For the reasons that follow, the Receiver's Application is granted in its entirety, and the Creditors' Application is granted in part.

II. BACKGROUND

The background of this case, and the reasons for my appointment of a Receiver and decision to hold Thomas in contempt, are laid out in great detail in the December 21st Appointment and Contempt Order, and are further reflected in the transcript of an Oral Argument held in this Court on December 17, 2010, on an Order to Show Cause issued at Creditors' request.*fn5 In short, after this Court entered the Judgment against Debtors on October 12, 2010, they appealed.

However, because they did not file a supersedeas bond, Creditors' enforcement of the Judgment during the pendency of the Appeal was not stayed. Accordingly, a Restraining Notice was served upon Debtors on October 29, 2010, forbidding Debtors to make or suffer any sale, assignment, transfer, or interference with any property in which he or it had an interest.

Thomas violated the Restraining Notice.*fn6 As a result, Creditors' Georgia counsel (SGR) and New York counsel (Tashjian & Padian ("T&P")) "settled on a multi-state strategy" to address Thomas's conduct.*fn7 SGR would seek emergency relief from the federal court in Atlanta, and would work with T&P in New York to prepare papers seeking to have Thomas held in contempt for violating the restraining notices. In accordance with that strategy, T&P requested an Order to Show Cause (1) why Debtors should not be (i) enjoined from taking certain actions with respect to four specific properties controlled by Debtors, (ii) ordered to turn over the Certified Checks, and (iii) ordered to turn over stock certificates of any of the companies in which Debtors held interests ("Debtors' interests"); (2) why this Court should not appoint a Receiver to administer and collect Debtors' interests; and (3) why Thomas should not be held in contempt of court. I granted the Order on December 12, 2010.*fn8

Following briefing and oral argument, I appointed Cyganowski Receiver "[p]ursuant to Fed. R. Civ. P. 64 and CPLR § 5228(a)," and authorized her to administer and collect Debtors' interests in (i) any of the LTDs and (ii) any other limited-company or corporation ("Debtors' interests") to the extent necessary to satisfy the Judgment; Debtors retain the power to improve, lease, repair, and/or sell those interests for the purpose of satisfying the Judgment, but may do so only with the prior approval of the Receiver.*fn9 I indicated that

[t]he Receiver is entitled to reimbursement by Debtors for necessary expenses and a commission of Eight Hundred and Thirty-Five Dollars ($835) per hour, not to exceed five percent of the sums received and disbursed by her, and is authorized to engage and employ persons, including accountants, attorneys, investigators and experts, to assist in the carrying out of her duties and responsibilities, such individuals to be reimbursed for necessary expenses and compensated at an hourly rate.

I also ordered Debtors immediately to turn over to the Receiver any stock certificates representing Debtors' interests and held Thomas in civil contempt of Court. I ordered Thomas to purge his contempt either by (1) unwinding the transaction that led to the encumbrance of the Cayman Islands Land or (2) posting a supersedeas bond in the full amount of the Judgment ("Appeal Bond"). Thomas was also ordered to pay ten thousand dollars per day for each day after December 20, 2010 until January 20, 2011 that he remained in contempt, and to be jailed for every day following January 20, 2011 that he remained in contempt. In an order dated December 30, 2010, I clarified that Thomas was to pay his contempt fines to the Receiver ("12/30 Order").

The same day, Debtors moved the United States Court of Appeals for the Second Circuit to stay enforcement of the payment provisions of the Appointment and Contempt Order and the 12/30 Order (together, the "Contempt Orders") (the "Stay Motion"). The Second Circuit stayed enforcement conditioned on Debtors' filing a supersedeas bond in the amount of one-hundred thousand dollars. On January 5, 2011, Debtors filed a supersedeas bond in that amount (the "Stay Bond"), but both the Receiver and Creditors alleged deficiencies in such bond as not in conformance with either the Contempt Orders or the Second Circuit's order. In an attempt to remedy the deficiencies in the bond, the Receiver filed an opposition to the Stay Motion in the Second Circuit (the "Stay Opposition") on the grounds that the bond: (a) omitted from its factual recitations that it was issued with respect to the appeal from the contempt order and did not set forth the purpose of the Bond; (b) did not recite that, in accordance with the Court's Orders, the one-hundred thousand dollars should be paid to the Receiver upon the determination by the Second Circuit -- were it to so decide -- that the appeal was denied; and (c) did not make clear whether the Stay Bond would be available to pay the full amount of the daily contempt fees which, by the time the Stay Motion was decided, would likely be far in excess of one-hundred thousand dollars.

After the filing of the Stay Opposition, Creditors requested that the Second Circuit adjourn adjudication of the Stay Motion to afford Thomas additional time to secure financing and take steps to purge his contempt by posting a bond for the full amount of the Judgment by January 20, 2011. By Order dated January 11, 2011, the Second Circuit agreed to adjourn its hearing of the Stay Motion and granted a stay of enforcement of the payment provisions of the Contempt Orders for nine days conditioned on the Debtors' posting a second supersedeas bond for ninety-thousand dollars.

Also during this same time period, Creditors requested that the Receiver and her counsel review and authorize various proposed settlements involving assets owned by Thomas and his affiliated entities. In connection with one such proposed settlement, on January 18, 2011, the Receiver received $19,866.15 in proceeds, to be held in escrow, as a condition of her having authorized a sale of certain restrained real property controlled by Thomas located in Sarasota, Florida. In addition, Thomas sought authority from the Receiver and the Court to consummate the sale of certain real property he controlled in the Cayman Islands (the "Cayman Islands Sale") so that he could obtain the funds necessary to secure the ultimate satisfaction in full of the Judgment and all expenses associated with it, thereby (a) purging his contempt, (b) staying all further enforcement of the Judgment during the pendency of the appeal to the Second Circuit, and (c) obtaining a release of all restraints presently in effect arising from the entry of the Judgment and related proceedings.

On January 18, 2011, I entered an order signed on January 14, 2011 (the "Settlement Order") lifting the restraints contained in the prior Orders of this Court to the extent of permitting Thomas to consummate and close on the Cayman Islands Sale enabling Thomas to provide the Receiver with fourteen million dollars to be held in escrow. Thereafter, Thomas closed and consummated the Cayman Islands Sale and caused fourteen million dollars to be delivered to the Receiver on January 18, 2011, which funds were held in escrow by the Receiver. In the Settlement Order, I directed the Receiver to hold in escrow all proceeds not used to procure a conforming Appeal Bond, which proceeds would be available to pay

(i) such fees, costs, and expenses of the Receiver and her counsel as shall be allowed by the Court on application by the Receiver . . . , and (ii) such other amounts as the Court may award in favor of any party hereto upon application to the Court . . . .*fn10

All remaining amounts, I directed, were to be "remitted by the Receiver to Thomas upon the termination of the Receivership, or further Order of this Court."*fn11

As part of the global settlement entered into by the parties pursuant to the Settlement Order, the Receiver also withdrew a "limited objection" she had filed to the Disclosure Statement for the Rim Debtors' Third Amended Joint Plan of Reorganization (the "Plan") in their consolidated Northern District of Georgia Chapter 11 bankruptcy cases. The Rim Debtors' proposed Plan contemplated the disposition of assets of the Debtors (particularly of Thomas) that were restrained by the terms of the Appointment Order.

On February 8, 2011, I entered another order directing the Receiver to release from escrow and remit to a named surety sufficient funds to obtain a supersedeas bond in the amount of the Judgment and to pay the surety's premium for issuance of the appeal bond ("Bond Order").*fn12 After the Receiver paid the surety for the face amount of the bond and the premium, $369,915.11 remained in escrow held by the Receiver.*fn13 In accordance with the Bond Order, Creditors calculated that over a period of two years, $64,967.54 in post-judgment interest would accrue on the Judgment (the "Interest Amount").*fn14

III. DISCUSSION

A. Receiver's Application

The Receiver now applies for allowance of payment of $299,519.55, providing as support a detailed list of professional services rendered; computerized time records; a summary sheet of the attorneys and paraprofessionals and their corresponding initials, billing rates, and the number of hours incurred by Receiver's Counsel, along with computerized time records of Counsel; and a computerized printout of the disbursements of the Receiver and her Counsel, actually and necessarily incurred in the performance of the Receiver's duties. Debtors object to the Receiver's Application, maintaining that it should be rejected in its entirety because (1) the Rules of the Chief Judge of the New York State Court of Appeals "preclude[] a receiver from using the services of his or her law firm in the absence of a 'compelling reason'"*fn15 and (2) the Receiver "improperly seeks reimbursement for services that her own submissions demonstrate fall well beyond the appropriate scope of her appointment."*fn16

1. Applicability of the Rules of the Chief Judge of New York

Section 36.2 of Title 22 of the New York Compiled Codes, Rules and Regulations governs "Appointments by the Court." Subsection (c)8 of part 36.2 of the Rules provides that

[n]o receiver or guardian shall be appointed as his or her own counsel, and no person associated with a law firm of that receiver or guardian shall be appointed as counsel to that receiver or guardian, unless there is a compelling reason to do so.*fn17

Debtors argue that, because the Appointment Order "specifically invokes [N.Y.C.P.L.R. § 5228(a)] as the statutory authority for" the appointment of the Receiver -- a provision of New York law -- and because "New York law expressly prohibits a receiver from employing the services of his or her law firm to assist him or her in execution of the duties of the receiver," I must reject the Receiver's instant application,*fn18 at least to the extent it seeks allowance for services "illegally provided by other individuals at [the Receiver's] law firm," which amount to $192,603.50.*fn19

I note at the outset that the Appointment and Contempt Order specifically authorized the Receiver to retain counsel of her own choosing and did not prohibit her from retaining her own law firm, OSH&R. Indeed, this Court was unaware of part 36.2 when it issued the Appointment Order and knew the Receiver had retained her own law firm as Counsel. And despite Debtors' full knowledge of the same, they have remained silent until now concerning the Receiver's retention of OSH&R.

Of course, oversight as to the applicability of a Rule does not excuse its application. But part 36.2 was not and is not applicable to the receivership in this case, for two reasons. First, whether a federal court should appoint a receiver in a diversity action -- a power it holds in equity -- is governed by federal law.*fn20

"[A]lthough a state statute may provide a vehicle for the appointment of a receiver, such a statute does not change the nature of the federal courts' equitable powers."*fn21

It is true that this Court invoked a New York state statute -- N.Y.C.P.L.R. § 5228(a) -- when appointing the Receiver pursuant to Federal Rule of Civil Procedure 64, under which "every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment."*fn22 But my power to appoint a receiver is governed by federal law, even if "the practice in administering an estate by a receiver . . . must accord with the historical practice in federal courts or with a local rule"*fn23 -- here, N.Y.C.P.L.R. § 5228(a). And, at least in this Court's view, the process by which a federal court appoints a receiver does not fall within "the practice in administering an estate" such that a federal court is bound by local rules setting forth certain requirements for and prohibitions on state courts' appointment of receivers and guardians.*fn24 Nor does a receiver's retention of her counsel fall within "the receiver's dealings with the property"*fn25 such that it, too, would be governed by a local rule. Therefore, in the absence of any federal restraints analogous to those supplied by part 36.2 on the method of appointment or a receiver's retention of counsel, I hold that the Receiver's retention of OSH&R was proper.

Second, the history and genesis of part 36 reinforce its inapplicability to a receivership created by a federal court judge sitting in diversity jurisdiction.*fn26

Former Second Circuit Judge Sonia Sotomayor carefully recounted that genesis in Kraham v. Lippman:

New York courts appoint fiduciaries to assist courts and litigants in a number of capacities, including as guardians for incapacitated persons, receivers for properties involved in foreclosure proceedings, and guardians ad litem for children involved in litigation. In general, fiduciary appointees are private attorneys who are compensated from the assets of the individuals or businesses they have been assigned to represent or manage, and many fiduciary positions are highly remunerative. Because judges historically have had unregulated discretion to make these appointments, the process has been susceptible to abuse -- for example, by judges' choosing appointees based on political connections -- and has long been a subject of public attention and controversy. Beginning in 1967, New York undertook a number of reforms in the hopes of eliminating corruption in the process, but none successfully alleviated the problem. In January 2000, public concerns about political influence in court fiduciary appointments reached a peak, after the press published a letter written by two disgruntled attorneys seeking to perpetuate their receipt of Brooklyn Supreme Court appointments as a political reward for service to their party.

In response to the explosion of public concern generated by the letter's disclosure, and the resulting impairment of public confidence in the judicial system, Chief Judge Judith S. Kaye announced a comprehensive program to reform the appointment process. To further this purpose, she established a Commission on Fiduciary Appointments (the "Commission") and an Office of the Special Inspector General for Fiduciary Matters (the "Special Inspector General"), and charged them with gathering data on appointments and making recommendations for improved practices. After conducting far-reaching investigations, these bodies released to the Chief Judge detailed reports documenting widespread problems in the appointment process, including appointments based on political party connections. For example, the Special Inspector General found that one county political leader had received nearly one hundred appointments, another had received over seventy-five appointments, and an attorney whose small law firm employs another county leader had received nearly one hundred appointments. In light of these findings, the Commission recommended that political party leaders, their immediate relatives, and the partners, legal associates, and other employees of their law firms be prohibited from receiving judicial appointments while the leaders served and for two years after resigning their positions.

In consultation with the Administrative Board of the Courts and with the approval of the New York Court of Appeals, Chief Judge Kaye responded to these recommendations by adopting a new part 36 of the Rules of the Chief Judge.*fn27

This history makes clear that part 36 was enacted to curb some of the dysfunction inherent in a (state) judiciary that is elected rather than appointed. Federal judges are, of course, also capable of political favoritism, but their appointment for life rather than election for a fixed term renders the federal judiciary far less susceptible to the types of abuses part 36 was enacted to curb, providing further support for my holding that part 36.2 does not apply to this Court's appointment of a receiver in this action or her retention of counsel. Accordingly, Debtors' objection to the Receiver's Application on this ground fails.*fn28

2. The Scope of the Services for Which the Receiver Seeks Reimbursement

Debtors also contend that the Receiver should be denied reimbursement for her services in connection with two proceedings: (1) her intervention in the United States Bankruptcy Court for the Northern District of Georgia to oppose Debtors' reorganization plan; and (2) her appearance before the Second Circuit Court of Appeals to object to Debtors' request for a stay of the contempt pending appeal based on the sufficiency and validity of Debtors' supersedeas bond. Both objections are without merit.

a. Applicable Law

As noted above, Rule 66 provides that "the practice in administering an estate by a receiver . . . must accord with the historical practice in federal courts or with a local rule."*fn29 Under New York law, a "receiver may exercise only such powers as are granted pursuant to statute, as delimited by court order."*fn30 "A Receiver is an officer of the court and not an agent of the mortgagee or the owner. . . . [Her] duty is to preserve and operate the property, within the confines of the order of appointment and any subsequent authorization granted to [her] by the court."*fn31

b. Application

Under N.Y.C.P.L.R. § 5228(a), receivers may be authorized "to administer, collect, improve, lease, repair or sell any real or personal property in which the judgment debtor has an interest or to do any other acts designed to satisfy the judgment."*fn32 The Appointment and Contempt Order, as noted above, authorized the Receiver to to administer and collect Debtors' interests in (i) any of the LTDs and (ii) any other limited-company or corporation ("Debtors' interests") to the extent necessary to satisfy the Judgment; Debtors retain the power to improve, lease, repair, and/or sell those interests for the purpose of satisfying the Judgment, but may do so only with the prior approval of the Receiver.

i. Objection to the Rim Debtors' Plan of Reorganization

One of the essential underpinnings of the Rim Debtors' Plan was a contemplated capital contribution to be made by Old Milton -- an entity solely controlled by Thomas -- to fund distributions to certain creditors in the Rim Debtors' bankruptcy cases. Those distributions were to be made on the effective date of the Rim Debtors' Plan and, as described above, derived from the Certified Checks that comprised the proceeds of a loan that Thomas procured for Old Milton from a third party -- by further encumbering assets that he controlled -- in violation of the restraints imposed on him by New York law and the Appointment Order.

Thus, the Rim Debtors' proposed Plan contemplated the disposition of assets of Debtors -- particularly of Thomas -- that were restrained by the terms of the Appointment Order.*fn33 I appointed the Receiver to "administer and collect the Debtors' interests" to the extent necessary to satisfy the Judgment against the Debtors; this encompassed all actions necessary to prevent the dissipation of any proceeds of the Certified Checks for purposes other than the satisfaction of the Judgment. Accordingly, the Receiver's objection to the Rim Debtors' Plan fell "within the confines of the order of appointment."*fn34

ii. The Second Circuit Intervention

The Receiver appeared in the Second Circuit to assure that the Debtors were required to post a proper bond that complied with the terms of the Contempt Orders. In particular, she sought to ensure that, as Receiver, she would "collect" one-hundred thousand dollars of Debtors' interests -- then bonded -- upon any denial of the Debtors' appeal by the Second Circuit. Accordingly, her actions fell within the scope of the Appointment Order.

3. Receiver's Request for Additional Compensation for Time and Expense in Responding to Judgment Debtors' Objection

As part of the $299,519.55 allowance for which the Receiver applies, $7,500 is "for payment of any additional fees and expenses of the Receiver and/or OSH&R for services performed after the date of this Application (but prior to the Receiver's discharge) rendered in connection with this Application and any other related fees and expenses, including payment for expenses incurred for computerized legal research that have been incurred but not yet recorded, as to which nothing has been paid to date."*fn35 In her Reply Declaration, the Receiver also seeks to "reserve the right to request the allowance of additional fees and expenses (both for [the Receiver] and for [her] counsel) in the event of [an] appeal [of this ruling], to be paid from any available remaining proceeds of the Receivership or, if necessary, from the proceeds of the supersedeas bond procured by the Receiver for the Judgment Debtors' account in connection with their pending appeal from the Judgment."*fn36

Debtors do not oppose the Receiver's request for reimbursement for fees, costs, and expenses incurred in the preparation of the instant Application.

Nor in their sur-reply do they object to the Receiver's request to apply for an allowance of additional fees and expenses associated with any appeal of this ruling.

Indeed, there is no reason why a Receiver -- like any party entitled to an award of attorneys' fees -- should not be "entitled to compensation 'for time reasonably spent in preparing and defending' the fee application"*fn37 -- i.e., "fees on fees."

Debtors' objection, instead, is to the "unspecific" nature of the future services for which the Receiver requests $7,500.*fn38 Responding to Debtors' (proper) objection, I asked the Receiver to supplement her Application by providing additional support for the fees and expenses incurred after her initial (March 4, 2011) filing of the Application. Those expenses, according to the Receiver's June 1, 2011 Sur-Reply Declaration, amounted to an additional $44,191.11, which the Receiver attributes to the "vigorous opposition filed by the Judgment Debtors" to her Application:

When I first filed my Fee Application, I did not foresee more than 7.5 hours of additional services to be performed. Among other reasons, I believed that the Judgment Debtors had agreed, as part of the Settlement Order filed with the Court on January 24, 2011, to the allowance of the Receiver's commissions and the fees and expenses of OSH&R, except with respect to any challenge based on reasonableness. [But] [b]ecause of the vigorous opposition filed by the Judgment Debtors, both myself and my counsel have been required to spend time analyzing, reviewing, and researching the papers filed in opposition to the Fee Application by the Judgment Debtors, and also preparing a reply in further support of the Fee Application.*fn39

Having carefully reviewed the Receiver's Sur-Reply Declaration, and the detailed time records attached as exhibits, I conclude that the Receiver is entitled to reimbursement for all of this additional $44,191.11 in fees "for time reasonably spent in opposing [Debtors' objection] and in . . . defending [her] initial fee application."*fn40 Therefore, the Receiver's Application for $336,210.66*fn41 in fees is granted in its entirety.

However, only $304,947.57 is available in escrow. Although this Court's previous orders envisioned that the Receiver's allowance would be paid out of this escrow account, there is no reason why that allowance -- all of which stems in the first instance from Thomas's contemptuous conduct -- should be limited by the arbitrary amount of funds remaining in escrow after the posting of the Appeal Bond and transmittal of the Interest Amount.*fn42 Contrary to Debtors' contention, the escrow account does not define "the outer limits of [Debtors'] financial exposure."*fn43 Rather, the escrow fund is one potential source of attorneys' fees and expenses. My reasons for previously directing that any fees be paid out of the escrow account was to ensure that there would be at least some funds available to satisfy the Receiver's and Creditors' requests for such fees, in light of Thomas's multiple attempts -- prior to being held in contempt -- to tie up every last dollar he had in assets unreachable by Creditors. Those escrow funds' having been depleted entirely, Debtors are now directly liable to the Receiver for the balance of her Application -- $31,263.09.

B. Creditors' Application

In a separate application, Creditors apply for an award of $134,125.27 in attorneys' fees, providing as support the declarations of attorneys Gerald Padian (T&J) and Colin Delaney (SGR) attesting to their firms' work addressing Thomas's contemptuous conduct; the reasonableness of the work done and time spent on tasks related to Thomas's contempt; the reasonableness of the rates charged to Creditors for the work; and that the rates are their firm's customary rates for work of this nature.*fn44 Attached to their declarations are copies of their firms' billing statements for the periods during which Creditors "dealt with [] Thomas's contemptuous conduct."*fn45 Debtors object to Creditors' Application on the grounds (1) that they seek "compensation for work performed as part of the enforcement and collection activities that [Creditors] had launched long before they became aware of the transaction that formed the basis of their contempt motion"*fn46 and (2) that Creditors' lawyers' time entries are too vague to support an award of attorneys' fees.

1. Applicable Law

"[T]he sanctions for civil contempt serve two purposes: to coerce future compliance and to remedy any harm past noncompliance caused the other party. . . . The compensatory goal . . . can only be met by awarding to the plaintiff any proven damages."*fn47 "The amount awarded should be the fees and costs incurred by the aggrieved party as a direct product of the contemptuous conduct."*fn48

Moreover, "it is appropriate for the court . . . to award the reasonable costs of prosecuting the contempt, including attorney's fees . . . ."*fn49 "[W]hile willfulness may not necessarily be a prerequisite to an award of fees and costs, a finding of willfulness strongly supports granting them."*fn50

2. The Scope of the Services for Which Creditors' Attorneys Seek Fees

Having closely reviewed the clear and detailed time entries*fn51 attached to the attorney declarations submitted in support of Creditors' Application, I conclude that $129,379.27 of those entries reflect reasonable costs incurred "as a direct product of [Thomas's] contemptuous conduct"*fn52 -- not as a result of Creditors' attempts to enforce the Judgment, as Debtors contend.*fn53 Debtors' argument overlooks the fact that it was Thomas's contemptuous conduct that resulted in the drastic diminution in assets reachable by Creditors to satisfy the Judgment.*fn54 Absent that contemptuous conduct, the extraordinary restraints I placed on Thomas's ability to control certain of his proprietary interests -- above and beyond the restraints already imposed as a result of Creditors' enforcement efforts -- would not have been necessary. Nor would the restraints and charging orders sought and obtained by SGR attorneys in Atlanta federal court have been necessary absent Thomas's contemptuous conduct -- restraints that cost Creditors money in the form of attorneys' fees both to obtain and to unwind (when Thomas finally purged his contempt by posting the supersedeas bond).

In sum, all of the costs incurred by Creditors to obtain and enforce the terms of the Appointment and Contempt Order and the emergency relief granted in Atlanta federal court were a "direct product of [Thomas's] contemptuous conduct," including Creditors' attorneys'

* discussions regarding how to address Thomas's contemptuous conduct, preparations for court appearances and filings seeking relief for that conduct, and research into the highly complex business transactions that constituted Thomas's contemptuous conduct;*fn55

* development of strategies for implementing, and implementation of, this Court's Appointment and Contempt Order, including working with the Receiver to effect the turnover of the Certified Checks and Thomas's interests in certain properties;*fn56

* discussions, research, and actions taken regarding the means by which Thomas might purge his contempt by unwinding the Old Milton transaction, including objecting to the Rim Debtors' Plan;*fn57

* responses to Debtors' motion to stay this Court's contempt order and evaluations of and responses to Debtors' allegedly deficient Stay Bond;*fn58

* efforts taken to facilitate Thomas's sale of the Cayman Islands Land and to execute the Settlement Order;*fn59

* actions taken to unwind restraints imposed as a result of Thomas's contemptuous conduct;*fn60

* research and actions taken to ensure that the Appeal Bond was properly posted (one of the means by which Thomas was ordered to purge his contempt).*fn61

Therefore, subtracting $4,746 in fees which I hereby find were not incurred as a direct result of Thomas's contemptuous conduct -- namely, fees incurred for researching "whether other creditors of judgment debtor are necessary parties . . . to a judgment creditors action to enforce judgment,"*fn62 addressing the United States Attorney's Office's proposed motion to intervene,*fn63 and determining the Interest Amount*fn64 -- Creditors are entitled to an award of $129,379.27 in fees. Finally, for the same reasons I did not limit the Receiver's reimbursable expenses to the funds held in escrow, Creditors are not prevented from recovering fees for addressing Thomas's contemptuous conduct simply because the escrow fund is depleted. Therefore, Debtors are now directly liable to Creditors for $129,379.27.

IV. CONCLUSION

For the foregoing reasons, it is HEREBY ORDERED that:

1. The commission, fees, costs and expenses of the Receiver and her counsel requested in the Receiver's Application, as modified by the Receiver's Sur-Reply Declaration, are allowed in full in the aggregate amount of $336,210.66;

2. The attorneys' fees requested in the Creditors' Application are allowed in part in the aggregate amount of $129,379.27;

3. As soon as practicable following entry of this Opinion and Order, the Receiver is hereby permitted and directed to remit the sum of $304,947.57 to OSH&R (which amount is inclusive of the Receiver's allowed commissions);

4. Debtors are hereby liable to the Receiver in the amount of $31,263.09 and to Creditors in the amount of $129,379.27;

5. The Receiver, and her counsel, shall be exempt from liability of any kind, nature or description arising from the good faith performance of her duties, responsibilities and obligations as Receiver;

6. The Receiver shall be permitted to seek payment for such fees and expenses incurred in connection with any appeal taken from this Opinion and Order granting the Receiver's Application;

7. The Receiver is hereby discharged and released from any and all duties to administer and collect any of Debtors' interests or to do any other acts designed to satisfy the Judgment;

SO ORDERED.


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